House Prices Set To Rise In 2007
HOUSE PRICES SET TO RISE BY UP TO 7% IN 2007
Recent reports from the Nationwide Building Society has indicated that house prices in the UK are set to increase on average by up to 7% in 2007.
Hometrack on the other hand takes a more conservative view predicting a 4% increase.
So who should you believe ??
The answer is that it is impossible to accurately predict what the increase will be although the general conscensus is that property prices are sure to rise.
So when is the best time to invest in property?
The answer simply is now !
Even if prices increase by only 4% there is no better investment for your money!
The example below is from a client that we have helped this week to get their 1st investment property. His name has been changed but the figures are the real amounts.
EXAMPLE - Mr Smith has bought a property for £100,000 this week which should be worth at least £4000 more this time next year.
He has done this by taking out a buy-to-let interest only mortgage and putting down a 15% deposit. Thus leaving him with an £85,000 mortgage at a discounted rate of 5.19% fixed for two years which means that his monthly mortgage will be £367.63.
He then lets the property for £525 per calendar month giving him a monthly profit of £157.37 (£1888.44 over 12 months) less buildings insurance of £25 per month (£300 over 12 months ) which means his net profit will be £1588.44.
If we take this figure and add on the rise in the value of the property this would mean that the total profit for the year will be £5588.44 minimum.
This is a 37.25% yearly return on his initial £15,000 investment !
Go to any high street bank and ask them if they will pay you over 35% interest on £15k and see how far you get !
Don't worry if you haven't got £15k to invest as later this week another client will be completing on his 2nd investment property having only paid £7200 as a deposit !
His yearly return on his investment will be a staggering 46.42%!!!
