Should You Be Buying for Capital Appreciation?

In this Property Spotlight, we are looking at Capital Appreciation and how much I factor it in when making my Property investment purchases. Some developers and investors will heavily weight their buying decisions on this important part of a Property’s value. But capital appreciation (from price or value rises in the property market) is something…

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Pushing up the value of property (Part 2)

Finance costs tend to be the greatest expense for any investor and those looking to hold and rent a property will need to think carefully about finance to be on the right path towards guaranteeing a profit. Any increase in the value of a property following a refurbishment can be potentially drawn out using finance…

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Pushing up the value of property (Part 1)

Knowing how and when to do a property up to guarantee a profit is one of the key tools of success in a property investor’s armoury and I, for one, like to use “forced appreciation” as it is known, whenever I can. Let’s consider what this is. “Appreciation” is the increase in the value of…

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Compounding Part 7

In the end it comes down to simple supply and demand. Demand for property is increasing with changes in society – there are many smaller family units and singles who want to live alone, a trend that is set to continue. And demand for property is increasing with the explosion of legal immigration, especially from…

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Compounding Part 6

The most obvious implication is that property works best when treated as a long-term investment. This is why I, and others, champion the view that once you have bought a property, unless there are compelling reasons for doing so (and these might be personal as well as property related) you really should never sell. If…

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Compounding Part 5

Now let’s apply these principles to property. With every year that property prices increase, the increase builds upon the increase of the year before. In other words price growth is compound and not linear. I’m sure you know what I’m trying to say but let me explain anyway According to the Nationwide, average house prices…

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Compounding Part 4

For me, the key thing is to be on the right side of compounding, and to be the beneficiary and recipient. Now, when you study compounding you’ll find some strange phenomena. Before we look at its impact upon property let’s look at a couple of simple financial examples. Let’s suppose you deposit £100 in the…

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Compounding Part 3

Ultimately it’s a question of degree. If your cash flow is haemorrhaging uncontrollably and you are going to go broke in a few short months, then I agree this is not a good strategy. But if you can cover the negative cash flow, either from other income or, even better, by setting aside some of…

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Compounding Part 2

Now, let me say straight up that I have no problem with investors creating short term gains in property. I do it myself all the time. My favoured method of doing so is refurbishment – buying a property needing some work, whether repair, improvement, modernisation and upgrading, or perhaps a combination of some or all…

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Compounding Part 1

It’s interesting how many people, when they find out what I do for a living, smile knowingly and say words to the effect of “ah, bad luck, it’s not possible to make money in property nowadays, is it?” I usually smile back and say something like “yes, it’s not like it used to be” and…

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