As domestic and international stocks and shares markets are now so volatile, many people are looking to invest their money in other ways to save for the future. One of the most popular ways of doing this is to buy an investment property -- either at home or abroad. People may, for example, buy a property in their home town and then let it out to tenants or they may buy a property abroad which they partly use as a holiday home and which they also let out to other people to bring in some extra cash. In either case -- if you get your investment property choices right -- you could both bring in a regular income and make sure that you have a valuable investment for the future which will hopefully appreciate in value.

Things to consider when buying an investment property
If you have some spare cash or the resources to purchase an investment property then your first decision should be what kind of property to buy. Whilst some people feel more comfortable buying properties in the UK to rent out, others will use the purchase of a holiday home abroad as a means of investing their money. In some cases parents will buy a property when their kids go to college -- the kids (and their friends) can be a source of rental income and the property investment will hopefully bring a return when their college days are done.

Before making the decision to proceed you also need to think about how much the investment property will cost you both in terms of initial outlay and in regular and irregular outgoings. It's wise to have a budget in place before you start to ensure that you can afford the payments you may have to make on the property both in terms of mortgage repayments and in upkeep and maintenance.

If you do not have a lump sum that will buy a property outright then you will need to arrange a mortgage to pay for it in the first place. If you are buying a property to rent out to tenants in the UK then you will probably be guided towards a buy to let mortgage. This kind of mortgage has been specially designed to help individuals buy a property which they will then use for rental purposes.

If you are looking to buy a property abroad then you may need to get a mortgage in the country in which you are buying. Bear in mind that the rules and regulations of the country in question will almost invariably come into place here. Alternatively, many UK banks now offer special overseas mortgages that allow their customers to buy property abroad via a mortgage raised in the familiar financial territory of the UK.

It's important to do some research before you buy any investment property -- at home or abroad. For example, there may be little or no point in buying a house in your home town to rent out if the market rental value is less than the mortgage payments you will be making. That said, some people may view rental income as a way of discounting the cost of property ownership and may budget for a monthly shortfall accordingly. Whilst you may not make a lot of short term profit, you must be looking for longer term growth which requires a solid understanding of the area in question and re-saleability. So, check out rental averages in the area in which you want to buy and dig deep to understand likely demand for property there -- now and in the future.

There are also other costs to consider. For example, if you buy a property -- either at home or abroad -- and then opt to have an estate agency manage your lettings then you'll have to pay them fees for doing so. You also need to consider furnishing the property before letting it out -- in general terms you'll get higher rents for furnished properties but, of course, you need to factor in the costs of buying the furniture in the first place. These days, mum's old sofa just won't cut it - furniture in rental accommodation must meet current fire safety standards.

It's also important to think about maintenance and other ancillary costs such as insurance and so on. If you buy a property that is part of a flat or other kind of complex then you may have to pay service or maintenance fees. And, of course, you can never tell when something may go wrong with the property and when you may need to pay to have repairs, cleaning or maintenance. Finally, bear in mind if you are looking to let the property that you may have periods where you don't have a tenant in place in which case the property won't be earning you any money but you will still be required to make the monthly mortgage payments.

Making the best of buying an investment property
Many people looking to buy an investment property will try and buy properties under market rate to get the best returns. So, they may, for example, look to buy flats and houses at repossession auctions or they may look at run-down properties that need some work. It's also always a good idea to talk to estate agents in the area where you wish to buy as they can be an invaluable source of advice on rental costs and so on in the area. For foreign property purchases, you will also need to find some unbiased advice (so forget the local estate agents who will have a vested interest in selling property) as to the area's current and future values and demand. Some understanding of the country, its political regime, historical stability and so forth is also essential. Whilst buying in relatively mature markets such as Spain may yield lower returns than some of the emerging markets, you are less likely to be left with a worthless property in the middle of a war zone! There is little doubt as to the substantial potential capital gains, with some emerging markets showing year-on-year increases in excess of 100%. Whatever you decide, do your homework thoroughly before making any level of financial commitment and ensure that you obtain advice from those who don't have a hidden agenda.


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