Property investment is a solid tangible asset, but there is more to it than just bricks and mortar.

We’re all human, so when you’re making decisions around property it’s important to consider the emotions and feelings involved.  For example:

• Is that oceanside holiday unit a good rental investment, or is it really you who wants your own luxury unit on the beach?
• Is it possible to invest with a friend and still keep a great friendship?

Clarifying your motivations and feelings will put you in good stead when making investment decisions.

Be honest with yourself about why you’re buying

A holiday unit at a top tourist destination could be a great investment – if it’s a true investment, not just a luxury.  If you’re purchasing purely for investment, you’ll let the property for half the year at twice the normal rental, recouping a return just as good as a permanent letting fee.  But don’t fall into the trap of thinking you’ll use it solely as a personal holiday property and make large capital gains from it as well.  Because you’ll have none of the tax advantages of being able to deduct expenses, it will be luxury with a high price tag.

Property investment with a friend

Friendship and property investment are two things that don’t usually mix well.  Although pooling resources with a friend could put you in a stronger financial position for purchasing property, this approach is riddled with financial and emotional risks.  If a joint investment is the only way for you to begin property investment, there are a few things to consider:

• Clarify your financial values – do you want the same things?
• Make sure your attitudes match – do you share the same financial values and feelings about financial risk?
• Consult with a legal professional to arrange a written contract – this is a business transaction, subject to formal rules that you have both agreed upon and understand.

The old adage not to mix business with pleasure could serve you well.  If an investment is worthwhile, usually it’s worthwhile doing yourself.  After all, once you’ve accrued profit from your property investment, you’ll have plenty to spend on a holiday house, with no strings attached.