VFI Investment Strategies

There are numerous property investment strategies, and selecting the right one for you is critical. Your investment strategy choice should be the key factor in selecting the location and type of property that you invest in. In Italy there are typically two prime Investment Strategies:

Buy To Sell:

Buying property off-plan before the development starts, and then selling at, or before, completion and realizing the capital growth gained during the development cycle. By investing 30% of the property value on signing contracts and with annual property increases of 10-15%, you can realize a 20- 32% gain on the value of the property during the development period, equating to over a 100% return on the investment made. For this strategy, it is best to select a high quality, appealing property in a high growth area, which is close to all facilities and therefore very easy to sell on.

Exp: With the new ICMZ ruling on coastal development over 29,000 mile shoreline of the Mediterranean there is now no better time to invest in coastal properties . These properties where always in demand anyway for rental and re sale but with the new agreement on coastal development this will undoubtley boost coastal real estate and their worth will now go up because they effectively become more exclusive than ever before.

Buy to Rent:

Like buy to sell, buy to let involves buying off-plan before the development begins and then holding the property at completion for letting purposes, realizing both capital growth and income. With the right developments, the cost of mortgages and property management should be covered by the rental income, enabling long term capital gain without further investment. High quality apartments with an abundance of facilities, close to restaurants, bars and

Why Invest in Italy?

The key factors to be considered when making a property investment decision can be summarized simply, as:

A. Capital Growth - both historic and projected

B. Risk of the Investment

C. Ease of conducting business in the country

D. Financial Products available to support gearing the investment

A. Capital Growth

Numerous economic factors have fuelled high levels of growth in the Calabrian property market over the last few years, the level of investment in the infrastructure and the growing awareness and popularity of Calabria as an all year round holiday destination. This has resulted in Calabria becoming one of the fastest growing property investments markets in Europe, with annual property price increases of around 15-20%.

The ongoing investment in infrastructure, the growing popularity of Calabria as a holiday destination, and the relatively low prices compared with other popular European destinations such as Spain, France, Portugal, and other Mediterranean Islands support the expected and continued increase in property prices in Calabria/Italy for the foreseeable future.

B. Risk of the investment

Italy is one of the most secure places to invest, which is a major factor when making any investment decision. Here are some of the key points about Italy that we feel make it a good investment opportunity:

C. Ease of Conducting Business

Good mortgage and loan products are readily available on the market and are at very competitive rates.

The Italian legal system is highly evolved and modernized and if you are using an independent lawyer, the investment is extremely secure.

Bank Bonds are taken out against the investors initially invested funds. The bonds are taken out on 100% of investors funds. The developer must provide evidence of the bond to lawyers before the funds can be released. This bond is taken to the cost of the developer.

D. Leveraging the Investment

The finance options available and hence the level of gearing that you can make on your investment is one of the key factors that will determine the return on your investment. This should have an even greater impact than the increase in property prices, as it acts as a multiplier to the property market growth rates.

Readily available low contribution loans are fundamental in gearing your investment, and Italy now has a wide range of loans and mortgage products available making it an excellent location for gearing your investment. shops or high quality 2/3 bedroom penthouses and townhouses close to popular areas and facilities, with great views are best suited for renting.

Today's investors are always looking for the next market and, as a result, the wide choice of countries to invest in has grown significantly over the last few years, providing a wide and, at times, confusing choice.

Finding the property hotspots is only a part of the challenge. Investors need to balance this with the risks of investing in that market, along with the ease of conducting business. The finance options and investment gearing will also provide the investor with a much stronger investment decision whilst minimising the opportunity for significant losses.

Some of the key questions that you need to consider (apart from the predicted growth rates) when making an investment decision are:

What finance options are available, in what currency and what rates?

The level of financing or ‘gearing’ that you can make on your property investment is one of the key factors that will determine the return on your investment. This should have an even greater effect than the increases in property prices, as it acts as a multiplier to the property market growth rates.

For example, if you invest in an emerging country with say a 30% growth per year without a financing option, then a £50,000 investment could be worth £84,500 in two years, providing a £34,500 gain and a 69% return on investment, and typically at a high level of risk.

If you invest the same £50,000 in a strong market, with annual property price growth at say 15% and good finance options, for example financing at 80% LTV, then £50,000 could be invested in property worth £250,000. The investment could be worth £330,625 over two years, providing a gain of £80,625 and 161% return on the investment in a much safer and more stable market.

Overseas Property Rental Potential

The area is popular with people from northern Italy and also with Germans and Scandinavians who have discovered its natural beauty and reasonable prices. During the holiday season there is already strong demand for rental property. Investors need to be aware that the rental market is developing and the lucrative UK market is virtually untouched.

As awareness of the area increases and availability of holiday rental property increases (further increasing awareness and visitor numbers) there should be strong growth in high season rental demand.

Low season rental demand is also likely to increase as facilities are improved and more of the new property owners start to use and promote the area and their property in the low season.

Conclusion

The area stands to benefit from massive inwards investment in its infrastructure. Each year the higher property prices in the north of Italy migrate further south as property investors seek out value for money. This area has the right location and climate, it is getting the right infrastructure investment, it just needs additional publicity, holiday home buyers and overseas property investors to discover it and the prices will increase strongly.

This is a chance to get there before the professionals and own an overseas property that could turn out to be an excellent investment.