Why do I like property investment so much? In my eyes Property Investment seems like an easy lazy mans way to make some money and provide passive income. Why do I think this?
I can only speak with my own experience and this is my experience of property investment:
In February of 2002 I bought my first house, this was against advice from my work colleagues and friends who were telling me houseprices which averaged Â£92,256 (Halifax data) were too expensive and will drop any time soon. Against all the advice I recieved I decided to take the plunge as I needed somewhere to live and I didn’t want to rent forever.
My first house was a 2 year old 3 bed semi-detached property on a fairly new estate. The house had been repossessed by the bank and the estate agent had it on the market for a few months with little interest. The house was on the market for Â£80k so I put an offer in for Â£78k It was a price that I could comfortably afford. To my disappointment the agents already had a higher offer and were going to proceed with that one. I was quite dissappointed and carried on my search for a house.
About 3 weeks later the same agents called me back to ask me if I was still interested in the property as their buyer had pulled out. Of course I was still interested, she then proceeeded to ask me if I would like to pay any more for the house? Well of course not! I asked her if I needed to pay any more to secure the house and she said NO. I think she was a little inexperienced as an agent, but a very nice lady. And bingo that was my first purchase.
Boom, Boom, Boom!!
I lived in that house for a couple of years, doing some small home improvements to the garden, bedrooms etc. By mid 2003 the UK had experienced a boom in house prices, the average UK house price then was Â£132,589 (Halifax data). The house that I bought was now worth about Â£110k estimated by comparing average sales of similar properties in the area. I was more than delighted with this as I could sell the house and make a cool Â£30k in profit. The profit was on paper but I’d never made so much money without doing too much before. I was hooked I wanted more, more, more!
I wanted to repeat this sucess and went about looking for books that could teach me, I was hungry for more information and quickly put together a small library of property investment books. Check my recommended book list. After reading these books I put together a plan to buy more houses. I bought my second and third property in 2004. In 2004 I bought four properties. In 2005, 2006 and 2007 I kept buying and buying going on and on.
Today average UK house prices are at Â£197,039 (Halifax data for December 2007) my first house is now worth about Â£145k again estimated by comparing to other sales in the area. That is very healthy growth in value and I think we are safe in thinking that this growth is in line with the belief that UK house prices double every seven years. I now have over 40 proprties in my portfolio which is worth nearly Â£4million on paper. Business is good, except for some problem tenants, but tenant problems are just part of the job of being a landlord.
Oh BTW I’m not too worried about the property prices dipping this year as I’m in it for the long term.