How To Choose The Right Property Investment

2017-11-20


Of all the asset classes, property is currently the world’s largest[1]. In 2016, commercial property value grew by 7% and residential property by 5% worldwide . With this in mind, the lure of property investment is understandable. Investing in property can be lucrative, but it does come with risks. Each property project that you invest in needs to be something you believe in or something you feel is a sound investment. So, how can you make sure that you choose the right project for you?



Five Steps To Finding The Right Property Project


1. Budget

As an investor, one of the most important considerations is your budget. How much can you afford to spend on your property? Depending on the type of investment opportunity, you may be asked for a large sum of money, for example for a buy to let property. Alternatively, you may choose a smaller sum or several smaller sums spread over different projects to spread the risk, known as diversifying your portfolio. Investing in property has become a possibility for a much wider demographic recently with property crowdfunding, where you can often select the amount you want to invest (a minimum usually applies), so you ensure you are within your budget.


2. Quality

Another important consideration of your project is the quality of build. One question you can ask yourself is “would I be happy to live here?” If the answer is no, then it may not be the right property investment for you. The quality of the building will be down to its location. Is it in a thriving, in demand area or is it somewhere where house prices are declining and buying activity is slow? The quality will also come down to the developers used, such as their reliability, place in the industry, style of design and materials favoured.


3. Due diligence

As an investor in property, you want to make sure that every aspect of the project has been vetted and approved. From financial compliance that holds your money safely to checking that each developer and project has been carefully detailed. At Homegrown, we undertake a vast due diligence process, so we only invest in projects that meet our strict property investment criteria. Each aspect of the site, developer and materials has been checked and approved. Like most investments, your capital is at risk but a strict vetting process helps mitigate this.


4. Confidence

With any project, you need to have faith in your investment. This can be helped in a variety of ways, from having regular contact with your investment company, to being provided with the key performance data during the project duration. When you are looking for an investment opportunity, it is essential to find out where your confidence in the project will come from and who is monitoring the development. When investing through a third party, have confidence that you can contact them at any time with any question you may have, something that may be more difficult with a larger company.


5. Return

Finally, the project is only worth investing in if you are satisfied with the likely return that you will receive. Your property investment company should provide you with regular updated expected figures and while this will never be guaranteed, it can give you an idea of the return to help make your investment decisions easier.



If you would like to find out more about investing in our property development projects, do get in touch by emailing info@homegrown.co.uk. To learn about an example of a project we have done, please read more about Kingston here.


Source:

Savills / Residential Property / How Much Is The World Worth?


Your capital is at risk if you invest in property. This includes illiquidity (the inability to sell assets quickly or without substantial loss in value), and the loss of invested capital if the wider property market or an individual property suffers a reduction in value. Investments on Homegrown are not covered by the Financial Services Compensation Scheme. Past performance and forecasts are not indicative of future performance. For more information see our full risk warning. Homegrown Group Limited is authorised and regulated by the Financial Conduct Authority (FRN: 694952). Investments through Homegrown are equity investments.
Future performance is not guaranteed and is based on projections only. Your capital is at risk if you invest in property. For more information see our full risk warning.