Property investment can be a tricky process, with lots of benefits, but also lots of pitfalls to avoid. Unless you really know your stuff, it can be a bit daunting. For this reason, many people turn to property investment companies, to help guide them through their journey to becoming a successful investor.
The fact is that most people don’t have the luxury of being able to commit full time to property investment, which leaves precious little time for the extensive legwork that really does need to be done. Property investment companies make it their business to secure their clients safe investments that provide them with a regular flow of income.
Repossessions & Renovations
Typically speaking, property investment companies tend to target properties that have been repossessed and that are in a state of disrepair. The service they offer is appealing to those people that either don’t have the time, the skill or the will to do it for themselves.
The Advantages
Property Identification is one area in which having a property investment professional in your corner will really help. Of course, it is possible to do the research yourself, but even if you do, you may not have access to the information or the contacts a property company may have.
Paperwork is another aspect that you’ll be spared if you use a professional service, and with a property purchase, there can be an awful lot of it. A good property investment firm will take care of all the documentation for you.
Property Management is one of the key aspects to investing in property, as it takes up the most amount of time. Whether we’re talking about compiling rental agreements, sorting out repairs or dealing with non paying tenants, the management arm of property investment companies can take much of the sting out of any issues that arise.
Guaranteed Profits are something that all investors seek and depending which company you use, there will usually be some kind of promise along these lines. It will usually come in the form of a ‘guaranteed predicted monthly income’, but whichever way it is offered, it’s not something you’ll have if you do everything yourself.
The Disadvantages
The most obvious ‘con’ of employing a property investment company relates to the cost of doing so. Typically this kind of organisation will charge you a monthly fee, which can be as much as 15-20% of your profit. However, when annual returns of around 20% of the total value of the property are on offer, there’s plenty of profit to go round.
Trust is something that you’ll need plenty of when working with this kind of enterprise, as you are putting everything under their control – especially when it comes to the property management side of things.
Research will help you determine which are the best and most reputable companies to use. As with any kind of business, there will some great ones and some not so good, so doing some checking on a property investment company’s track record will help you avoid trouble.
Associated costs are something you will have very little control over when you let a 3rd party take care of everything. Depending on the duration and type of investment opportunity you take part in will determine how many associated expenses arise. Should you be investing in a short term new build enterprise, the costs will generally be included with the deal that’s put to you, but if you’re in it for the long haul and want to create a ongoing property portfolio, there are all sorts of extra fees that will arise.
You will pay over the odds for property management services when you compare what’s being done with how much it would cost to do it yourself, but it might be a cost worth paying if you simply don’t have the time to take care of everything on your own.
In Summary
Property investment companies that offer a guaranteed return are essentially a good thing, as long as you don’t mind taking a back seat and putting your faith in the professionals. What needs to be looked at is the bigger picture and if the cost incurred as part of the service are all inclusive, there’s no real need to be worried.
The key word in the whole equation is “guaranteed”, as when you attempt to invest in property independently of a property professional, you won’t have any assurances. You’ll simply have to rely on your own knowledge and expertise. You will get all of the profits to keep for yourself, but if you ultimately make less because you took a wrong turn somewhere, a bigger percentage of a smaller amount is basically the same thing and it comes with a whole lot more stress and running around.
Our advice would be that if you are able to, trust in the professionals, especially if the assurances they offer on exit profits are written down as part of the contract. However, if you’re in anyway unsure, book one of our courses here and we will be happy to assist you.
