10 top investment tips for 2007

“Property tips can come in two ways, where/ what to buy and how to buy. Let’s look to score on both fronts in 2007”, comments Chris Howard, MD of 4:Property.

A. What/ where to buy

Assuming that you are looking for capital gain in 1-2 years, then the hottest properties are probably located in:

1. Montenegro

Montenegro is the new Croatia with beaches and beautiful fjords, recently gained independence from Serbia and acceptance into the UN and application to the EU soon. The increased access to beaches and mountains in the form of new motorways and cheap carrier airport connections will ensure increased tourism and increased property prices.

2. Romania

Romania is a very different animal, with the opportunities coming in residential properties for Romanians; the tourism opportunity is there but smaller by comparison. Romania has ski and sea but the pace of change will be different, look to ski in the short term and sea over a longer run. For continuing opportunities look to residential investment in Bucharest and the other commercial centres.

3. Bulgarian ski, near Sofia

As the property markets of the new joiners settle into solid growth and out of the hyped rush of initial investment, the quality locations come through. The Sunny Beaches and Bansko’s of this world may well face over supply, but the ‘SuperBorovets’ ski region is a growing opportunity for second homes for the residents of Sofia and for international investors. Watch this space, especially on the golf development.

4. Cape Verde

The ground up opportunity that has been causing a stir over the last 18 months, with planned the development of four airports over the next ten years in ‘Caribbean style’ resorts on the sandy islands of Cape Verde, readily accessible to Europe, just off the African coast. Land and properties are available and there is strong conviction of returns, the timing may be less certain, good as part of a portfolio, does that suit your timetable?

5. The Americas

The Americas contain more than just the USA; Canada, the Caribbean, Central America and South America are all seeing great interest in tourism developments and residential growth. This is accentuating Americans (from the USA) to choose to holiday closer to home to avoid the current ‘international issues’. Look for quality developments in prime locations and especially where there is limited supply. The American economy may be wobbling again, so pick the right locations and this is good as part of a portfolio.

As for good practice when you are investing, what will help? Here are 5 top tips in that department, in no particular order, they are all important in their way, ignore them at your peril.

They can be summarised in two aphorisms, ‘know what you want’ and ‘don’t let the thrill of the chase blind you to the consequences of the capture’.

1. 2nd home or investment

Are you looking for a 2nd home (which depends upon what you like and want) or an investment (which to sell easily depends upon what other people like and want)? It is important to know which, and if you are compromising to achieve both objectives, then be prepared to meet neither in full. Maximum returns may not come from somewhere you like, and looking for somewhere for the family may drive a different type of property. Ideally invest some money for one aim, and separate funds for the other.

2. DIY Property or a financial investment

Do you like managing properties, or are you really doing this to make a handsome financial return? If the former, then do buy properties and be prepared for the management and the tenant issues; if the latter why not seek to place investments which gain from the active property markets but leave you to spend your own time as you wish.

Build a portfolio of investments that make the most of the activity across the active markets to spread your risk..

3. One property or a portfolio to meet your needs?

Effective investment requires a spread of risk, and a portfolio is acknowledged as performing more reliably than any one investment. If you are looking for reliable investment returns, don’t put all your eggs in one basket, manage your investment by spreading your funds into a group of independent projects; that way any volatile events, positive or negative will only impact part of your savings. Otherwise a negative event impacting your one investment will hit the whole of your wealth.

4. Homework

Before everything else, do your homework, understanding the property market you are investing in is crucial. Either do that yourselves or invest with others who will do that for you, whether your local investment club or place your funds in companies with local knowledge; either way it is crucial to making good choices.

5. Changing Markets – look ahead

Property markets are always changing, and investors need to know what will deliver results in the future, not the past. Do keep abreast of current developments, listen to the news and the property press with that in mind; they will point you to the profits in future years. Some observers will be right, and some wrong, but form your own opinion and back it.

Chris Howard is the Managing Director of 4:Property offering investors the opportunity to share in developers profits through the 4:Property Projects operating in the UK and overseas. For more information, visit 4you.uk.com.