Property; the best investment?
It's in our psyche bricks and mortar are safe investments. When you look at history it's easy to understand why.
Could Property be the best investment?
Here are 4 compelling reasons for thinking so.
1. Investment properties economical cycle
Whatever the state of the economy you can profit.
History shows that in a thriving economy capital growth becomes strong and rental income remains flat, while in a struggling economy rental income rises and capital growth remains flat or as we've seen recently, reduces.
So at any time one of the profit streams counters the other, making for a more stable investment environment than most.
Just now we are in the rising income and flat capital growth stage.
You can invest 6.66 times more money than you have into property, because you can borrow using a mortgage (85% loan to value at time of writing this post).
The advantage is that in times of capital growth you gain 6.66 times...
3. Capital Growth
Gearing and capital growth example:
If you had £100,000 to invest you could buy £666,666 worth of property. The rent should pay the monthly borrowing costs.
If property had a capital growth of 5% then you will see your property grow by £33,333.30 (£666,666 x 5%).
This is a 33% increase on your original £100,000 investment.
According to the Halifax Property Index average value of properties have risen from £107,247 in May 2002 to £160,941 in May 2012 a 50.06% increase. This includes a drop of of 18.33% since the peak in December 2007.
Investments that offer income and capital growth are few and far between. Buy-to-let investments are one of the few.
In the majorirty of areas rental income is on the rise.
Demand for good quality rental properties is still increasing
Recently BM Solutions showed an average 4.8% growth in rental yields. (Sourced from the data of Landlords that have rent guarantee insurance)
The average percentage changes to rental yields regionally were;
North West up by 6.3%
North East up by 6.3%
Greater London up by 4.8%
South West up by 5%
East Anglia up by 5.3%
South East up by 5.2%
It is time to invest?
We keep hearing that more aand more new properties need to be built.
In May this year a Commons communities select committee report said 230,000 households were forming each year, but in 2011 only 110,000 new homes were built.
In any business if you had a demand twice over for your product you either make more product or raise your prices.
As landlordsor buy-to-let investors you can do the same and buy more property and even raise your prices.
There are risks that need to be considered, but if you are interested in finding out about expanding the number of residential properties you own, or are starting out then contact us at Martin & Co. Click here to find your local office
Our advice is free - we will go through your investment requirements and create with you an action plan , so that you can succesfully achieve your goals. It also gives us the chance to show you how good we are, which we hope and beileve will persuade you to buy other services from us when you need them.
We wish you all the best