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Is Investing in Property Right for You?

Across the world, private individuals are choosing to invest in property as a way to save for their retirement. They have rightly identified it as a relatively easy way to quickly make extra cash, and pay for an asset that can be sold when it is time to retire.However, as with all forms of investment, it is still possible to lose money rather than make it. Without a doubt, before you spend any money, you need to seek more detailed advice from a qualified financial advisor, but what you read below will give you some idea of whether investing in property is the right option for you.

Do you have enough spare cash?

In theory, you can get a mortgage, and use the rent to make sure it is paid on time. This can work, but, in reality, investing on this basis is unwise. Even in a buoyant market, the chances are that your property will be empty at some point, or a tenant will not pay their rent for a couple of months.

As with any business, cash flow is important. You need to have money in the bank to deal with emergencies. If you do not have that sort of backup, your investment will fail the first time something unexpected happens.

Can you afford to have the money tied up?

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It is important to bear in mind that once invested in property, it could take time for you to get your money out again. Even if you manage to sell your house or flat almost straight away, it will still take you a couple of months to get your money.

To be successful, you need to be prepared to have your money tied up for several years. This is because any profits that you plan to make can easily be swallowed up by legal fees, taxes and other costs. Dipping in and out of the property market is usually a fast way to lose money, so you need to be careful, and think before you invest.

Finding a property

The key to making money from property is research. You have to identify an area where demand for rental property is high, and likely to continue to grow. Sometimes you will find opportunities in your own area, or country, but you should also be prepared to look further afield.

For example, currently, foreign investors are investing their hard-earned money in the UK. In that country, there is a housing shortage. The population is growing and employment levels are high, but the price of housing means that people just cannot afford to get on the housing ladder. It is a golden combination. Demand for rental property is high and likely to remain so because the value of housing is rising so much faster than wages. It further means that people are not likely to be able to afford to buy. However, they do have enough money coming in to be able to reliably pay their rent.

In some parts of the UK, this combination of factors means that rents are rising in double figures. As a result, Estate Agents in York have seen an increase in investors from abroad making enquiries about buying in the city.

Always seek professional advice

Before you take the final step and buy a property, it is very important to seek professional advice. Last but not least, you need to understand the tax implications of owning this type of investment vehicle.

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