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Taking Advantage of the Profitability of Your London Investment Property

By Parmdeep Vadesha

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Published: 09Dec2008
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London is one of the most popular markets for property investors. With its great employment opportunities and high salaries, many people find the city an appealing place. Additionally the UK capital is seen as a good choice for investors with a long-term approach. If you have a London investment property and you intend to hold on to it for a considerable period of time, then you're in a good position.

Even though London has experienced a short downturn in recent times, it's still regarded as a strong option for several investment opportunities because of its status as one of a very few number of genuinely international capitals. Some of the assets that make the city appealing for many property investors are its financial services infrastructure, airports, schools and universities.

High demand for rental properties

If you have a London investment property and you're renting it out, then you're on the right track. According to research from the Centre for Cities, the UK is expecting more than 3 million people renting privately by year 2021. This means that - based on the current trends - a fifth of new homes have to be rented to fill the demand at that particular time. It cannot be denied that the demand for rental properties is rising steadily. The reason for this is simple: There isn't enough supply. Add to that the current state of many would be homebuyers who would rather opt to rent than make the decision to buy due to declining prices or the difficulties involved in obtaining the best mortgage product.

Where you should invest in London

When investing in London, the one major thing to consider is if you're more interested in rental income as a source of overall return or in capital appreciation. If you're a landlord, you need to have a particular level of rental income to provide funds for your investment. If your goal in property investing is achieving capital growth, then you have made a good choice of location. In Central London, house prices have experienced capital appreciation of 217% over a decade, according to Landlord Mortgages. Meanwhile, buy to let investments in Central London have seen average annual rental yields of 4.7% and 5.9% in Manchester and the North West.

Buy below market value

The best strategy for a property investor to take is to buy properties below their market value. One way of doing this is to find desperate sellers of cheap properties before they are turned over to auction houses and estate agents. When you deal with desperate sellers, you can be ensured of acquiring properties for 80% or less of its real market value. That means substantial savings on your part.

There are many people who think that it's impossible to locate vendors who are willing to sell their properties for significantly lower prices. However, there are compelling reasons why several sellers choose to accept heavily discounted property prices. There are those who need to emigrate abroad and need to divest themselves of their property immediately. Some have been unable to keep up with their mortgage obligations and have opted to put up their properties for a quick sale. Others have inherited out-of-town properties and don't want the bother involved in tending the property. Others still have lost their jobs or are undergoing divorce or are facing repossession.

People will always see property as a way to earn profits and guarantee income. And if the property is located in such a highly profitable area such as London, the chances of becoming more successful as a property investor increases. Thus, if you have a London investment property, it makes sense to take advantage of the profitability it offers.

Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide - http://www.Property-System.com

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