Hi James,
Based on the fact that you mentioned you have no interest in using a property as a holiday home and its purely an investment I feel you have some different options open to you. I have recently been down this road in some depth. I have invested in various properties in various locations previously but frankly with the current economic climate this time I was far more cautious. I have some friends who work within investment banks and for economic data analysis outfits and the predictions are not pretty. Im a firm believer in property as an investment but my personal feeling is that right now the 2nd tier buyer who will essentially provide me with my profit is not there and doesnt look like being for some time, this is the same for most markets, there is an oversupply of product that the developers cant seem to give away, and while i except that over the long term you will probably make money by snapping up one of these bargains, you will have plenty of competition and for me the risks are too high and outcome too unpredictable.
There are some clever property based investments out there now that are actually using the current economic crisis in a clever way. One I have just invested in is basically providing pre-sales to developers which allows them to unlock construction finance. I like this as I know the developers are struggling (like the man on the street) and need this and so know I am in a position of strength. I only invested 30k and have no further capital exposure risk, I will never own the property so have no closing costs, my capital is in escrow and cannot be touched (yes zero risk to capital) and the developer has all the hassel of re-selling my unit providing me with my 25% annualized return, which incidentally he is contracted to do prior to selling any other units on his development. If he cant he contractually has to buy it back still providing me with my return. Worst case he doesnt have my money the bank does (via an escrow agent) and I get that back with interest should it all go wrong. It just goes to show how desperate the construction industry is for finance right now.
There is a fair bit of paperwork in fairness but to me its the type of thing that is reactive to market conditions, safe and makes sense offering potential upside with no downside including being stuck with a property that you cant move for a long time.