Given the relatively difficult climate that investors have faced over the last decade or so, it is hardly surprising that there is some scepticism about investing in UK property.
Mandatory Credit: Photo by Rich Bowen/LNP/REX (1668611f)
Property ‘For Sale’ signs and boards around north west London
Estate agents signs in London, Britain – 27 Feb 2012
However, there are major financial benefits to investing in the right property assets. Resistance to investing comes in many forms – here we hope to dispel a couple of these myths.
It is too risky
Naturally, as with any investment you make, there will be an element of risk. We appreciate that you will have taken time to save enough to make a property investment and understand this is a big deal.
Property investments are one of the most secure investments you can make. Given that you have identified a property with the potential for profitable rental yields and in a good area, there is little reason why a property investment will fail.
Investing with a specialist company and identifying the right property asset will help further increase the likelihood of a profitable investment. Unlike other investments, whereby you make money once you have sold your shares, a property investment is a passive, steady stream of income.
You need lots of money
A common myth surrounding property investment is that you need a high initial start-up. Sure, if you want to buy property outright, the cost will be high. However, there are many options for property investment beginners that don´t have a massive amount of disposable income.
You can apply for a buy-to-let mortgage, similar to a standard mortgage and is based on the rent you are likely to receive for the property. Alternative assets, such as care home properties or student let properties can also be invested in for a much lower amount, sometimes as little as £5,000.
It’s a bad time to invest
With the economic outlook in the UK currently appearing bleak, some will advise against investing in property in the current climate.
However, there are various arguments to counter this. First, cities in the North are actually seeing major economic growth. Cities such as Manchester and Liverpool are seeing growth as high as 7.5%.
In addition, with property prices at a low, now may be the best time to snap up a property bargain. Holding onto property past the fallout of Brexit could see some real value in this long-term investment.
Its time consuming
If you wish to go it yourself, there is certainly weight to the argument that this investment type is time consuming, particularly if you are running your own HMO property.
However, if you opt to invest through a developer or introducer of investments, the only time you put in is the initial investment. From here, the developer will manage the property investment for you.
This is particularly relevant when investing in an alternative property asset, such as a student property room. Developers seek funding and manage the money you invest. You are guaranteed a return after a pre-requisite amount of time, often with the option to reinvest. This frees up time for you to focus your efforts elsewhere.
To conclude
Property investments are a safe, passive investment, with plenty of variables to consider. Ensure that you have done your own research before investing and invest within your budget.
FJP Investment is an introducer of UK and overseas property-based investments to a global audience of high net worth and sophisticated investors, institutions as well as family offices.