Mortgages: In its 2011 Spring Market Outlook, Knight Frank recently reported extensively on the state of British real estate investment. UK mortgage lending levels saw an all-time low of 27,000 in November 2008. By January 2011, there were just 28,500 approved mortgages, representing a 29% drop from the previous month, and the lowest number of approved mortgages since early 2009.
That is not to say that some investors are not successful in their bid to find suitable mortgage finance. Shop around extensively for mortgages as rates and offers vary greatly from one financial institution to another. Then work towards a real estate investment strategy to best suit your personal risk level.
Other ways to finance real estate investment
- Real Estate Investment Trust (REIT): Used worldwide as a vehicle to establish a real estate investment group, REITs operate in a similar way that mutual funds provide for stock investments. The advantages of a real estate investment trust include less individual capital outlay and tax exemptions of at least 90% of the profits attained, provided funds are returned directly to the investors, and not immediately re-invested in real estate. Such alternative means to raise finance for real estate investing have become increasingly popular amongst investors who can't quite raise the finance to go it alone.
- No money down or no down payment options: A lack of funds does not necessarily mean an investor cannot bid for lucrative real estate investment opportunities. If the deal is right, funding can often be found. No (or low) money down options include sourcing a low interest rate mortgage or using an equity release scheme which offers credit from the equity in your existing property, still with the tax benefits of a normal mortgage.
- Syndicates. Companies offering real estate investment services can bring together groups of investors to purchase directly into property as a joint-venture. This gives investors greater buying power for less capital outlay than if they were to invest alone. As all the research is done by professional property advisors on behalf of the syndicate, investors avoid the inconvenience of practical issues such as the buying, letting, management and selling of the properties and, in most cases, they need not even visit the country in which their syndicate is purchasing.
As with all so-called investment opportunities, it is important to weigh up the suitability and risks involved before committing to a plan. Ensure you source real estate investment services that are provided by carefully vetted professionals. They will make it their business to source potentially lucrative real estate investment opportunities around the globe. As trusted advisors, they conduct all the necessary due diligence on their investors' behalf, offering the best investment finance solutions, along with carefully structured exit strategies.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.