New research reveals that property investment is the preferred method of investment for generating returns for 40% of Britons. And more than half (55%) would consider playing an active role in managing their investments, according to a YouGov survey of 2,000 British adults commissioned by spreadbetting provider InterTrader.
The survey also reveals that 38% of respondents say they do not trust financial professionals to generate positive returns with their money. But investors could face costly mistakes if they ’go it alone’ managing their investments, according to Mistoria Group, leading student property investment specialists.
The firm is urging investors to consider carefully whether they can manage their investment and all the compliance requirements that go with it.
Mish Liyanage, Managing Director of The Mistoria Group says: “While it is well recognised that a good property investment can bring better returns than stocks, shares and pensions, the key question is how much control should you take in managing your investment – or is it wise to leave it to the experts?
“Investors need to be up-to-date with all the latest legislation and fully understand their responsibilities as a landlord. There is a huge amount of paperwork and if you get it wrong, you could face severe penalties. For example, if you don’t have HMO or selective licenses in properties which need them, you could be liable for a fine up to £20,000. In addition, breaking any of the license conditions can result in fines of up to £5,000.
“Another important consideration is that if you want to purchase the right investment property, regardless of its location in relation to where you are based, you can do this as an ‘armchair investor’. You can take advantage of some of the best yields across the UK, for example student accommodation in the North West, with the help of the right property investment firm.”
The secret to a successful armchair investment is to work with the right partners, continues Liyanage: “It is important to buy from a developer with a proven track record; use a letting agent that specialises in the rental sector you are looking to be in eg student, residential, DSS, commercial or retail. Each of these is a specialist field and if not undertaken by an experienced agent, can lead to the failure of a potentially good investment.”
If the property investment is to provide an extra income or a pension, it is best to use an agent. But if you want to be a full time investor, and have the time to do so, go it alone. Whatever you do, make sure you carry out thorough research, before making any decisions on how you will manage your investment.
“Agents will charge between 10%-15% to find tenants and manage your property portfolio. But in the case of student lets, it is usually only 1%-1.5% of the total yield, still leaving a very healthy 9-10% return on investment each year.
“If you have an agent looking after your property, all you have to do is check your bank account to make sure your investment yield has paid. You won’t have to worry about obtaining the correct licenses and keeping them up to date; paying utilities; organising repairs; resolving tenant complaints; chasing rent arrears; and providing the annual gas, electricity and PAT certificates.”
This article first appeared on Every Investor on 4th August 2014