What are your investment objectives?

My original investment objectives was to buy one investment property on a repayment mortgage that would be mine when I retired so that I could sell it and have a lump sum in my retirement. My objectives changed over the years but I do have a financial objective linked to a time period.

In my capacity as property investment consultant I always ask clients what their property investment objectives are. Some clients have a clear financial/time period in mind but some also just state that they think it’s a good idea and that they want to do it, often to leave to their children as a legacy.  I try to probe their motivations and often show them that they actually need to buy less property than they originally envisaged. Invariably they buy more than they need but that’s fine – it keeps me in a job! However I think that having a set financial objective linked to a time period is important. i.e. how much capital do I want to generate over what period of time? This is fairly easy to work out and I encourage all property investors to do this. Here is an example:

Mr X is 40 and wants to have financial freedom by the time he is 50 (over 10 years). He wants to generate £500K over the next 10 years. I have a spreadsheet which works this out but the answer is that he only needs to buy five £100K property investments to achieve this based on historic growth. To do this (assuming 15% deposits and some costs) he needs to invest approximately £90K. This is a 550% return on investment. This might seem a bit simplistic but it the best way to forecast the growth.

Forecasts can also be amended to sell property and create an income in the future so that retirement or an income in retirement from property is achievable.

There will be issues of Capital Gains Tax and Inheritance Tax, which are referred to in Section 10.