Looking for the best investment option, and feeling slightly daunted by the choice?
Well, first of all, congratulations! You’ve built up some capital, and you’re ready to grow your wealth – but I understand the inertia of too much choice is stopping you from taking the next step.
With the bewildering range of investment choices out there such as ISAs, pensions, shares and property, no-one can blame you for feeling a little daunted about which is the best investment option for you.
I’ll take a moment here to mention bitcoin and cryptocurrency. The key issue with these currencies is that there is no guarantee that applying due diligence will minimise the risk. If you’re still curious, by all means feel free to explore further.
As an experienced property professional, I’d like to offer you my take on how property investment may – or may not be – the best investment solution that’ll make your money work the hardest.
I’ve also provided some key tips and advice on the best way to get started if you decide property investment is a good option for you.
DISCLAIMER: This blog should not be taken as financial or tax advice. This is general, publicly available information, and I highly recommend you speak to an accountant about your individual circumstances before any investment – in property or otherwise.
Why might property be the best investment option for you?
There are several good reasons to look into property investment, although each comes with their own pros, cons and caveats.
A safe investment
Ever heard the term ‘safe as houses’? Property is widely acknowledged to be one of the safest investment options for a number of reasons.
Property is (literally) a concrete asset that can grow your capital the longer you leave it. Because of how tangible it is, it’s often easier for people to get their heads around property than, say, stocks and shares – which you can’t just reach out and touch.
Even though property values can go up and down, it’s very rare you see a property that’s less valuable now than it was 10 years ago.
NOTE: However, that doesn’t mean you shouldn’t do your due diligence on the area, upcoming developments etc. first – and diversify, of course!
It’s accessible
Property is also one of the most accessible asset classes, and is relatively easy to get into compared to some of the other options.
Considering how much training you would need to successfully invest in the stock market, you can get started in property investment without the need for complex analysis or research (although I still recommend you do some!).
Finance options
Mortgages are readily available, and finance is cheap. If you’re just starting out and have yet to buy your first investment property, you technically only need the deposit to get started (usually a minimum of 20%).
You can also apply for bridging loans – for instance, if you were thinking about doing a flip – although this is a more expensive option.
Fast returns
Some investors love the excitement of buying up relatively cheap properties and renovating them before selling them on for a much higher price – known as ‘flipping’.
This way of doing things in property can mean you get a very good return on your investment in as little as six months, and is attractive if you want to quickly build up your experience and portfolio.
TIP: There is greater risk in taking this approach, and there are always things that can go wrong. If you’re not confident in taking on a project like this yourself, there are plenty of project managers who can help.
Regular income
If you prefer a regular income from your property, you can make it work for you by investing in a buy-to-let and gaining rental income. This form of passive income has been described as “making money while you sleep” so you can see the appeal.
As long as you can factor the cost of unexpected repairs and maintenance into your budget, and keep on track of the lifecycle of your white goods etc. this is an excellent option.
Family Security
Investment in property can also benefit your family, particularly if you buy property as a limited company rather than a private individual. There is a tax difference between buying as a limited company and becoming one later, so do exercise caution here.
Again, I am not a financial adviser, and strongly advise that you seek specialist advice. In my experience what you pay for the services of an IFA is very little compared to how much they can save you.
Leverage funds
Investing in property also gives you the benefit of leverage, enabling you to apply for loans and mortgages to buy more properties and grow your portfolio, in a way that other asset classes (stock and shares, for example) do not.
Easy to manage
If you decide to become a landlord – and aren’t just flipping properties and selling on for attractive returns – you can choose a reliable letting agent to manage it for you. Or, you can have all the thrill of handling everything yourself, as more of a career choice.
Either way, provided you are able to grow your wealth in a steady, predictable way and ensure your bills are covered, you can sit back and enjoy the knowledge that you’re really making your money work for you.
Provide a home
Landlords often get a bad rap. If you enjoy helping others, you’ll have the feeling that comes with providing someone with a safe home to live in – and that’s something people are always going to need.
Questions to ask yourself before investing in property
It may seem like a relatively solid investment, however, as I mentioned, property investment isn’t for everyone. Here are a few questions that I recommend asking yourself before setting out to invest in property.
- What’s your investment strategy? Do you want a long-term capital gain or a good yield now that provides a regular income?
- What are your reasons for investing? Retirement, family inheritance, altruism?
- How long can you invest for? An initial lump sum for long term growth, or a quicker yield to enhance current income?
- What is your monthly budget? It may sound obvious but make sure you have enough capital for investment and don’t leave yourself short.
- What is your risk appetite? Are you a risk taker, or risk averse?
Advice from an property professional
You may be feeling slightly impatient to invest your money in property, but it’s worth taking the time to look over the best investment option that’s definitely right for you. Remember, there’s a great deal of information out there and you need the facts, not the hype.
So, how do you find all these properties? How do you ensure they are viable? What strategy do you want to go for? Enter your investment team. These people will ensure that you are kept right through the whole process. Let’s take a look at them:
A solicitor will help coordinate the legal aspects of your property transaction. Your property sourcer will have essential information on upcoming sales – just ensure they’re Propertymark-certified.
It also really helps to have a mortgage broker, accountant and financial advisor on board. This might sound like a lot to deal with, but each one will bring their own skills to the table. With them at your back, you can feel empowered and supported.
It would be great if your investment started making money as soon as you deposited funds, but it doesn’t quite work that way, sadly! The next best thing is being fully informed and undertaking your due diligence; when it comes to property investment, knowledge is power.
Conclusion
Thanks for taking the time to read. I hope this blog has been helpful to you and offered food for thought about how property may – or may not – be the best investment option for you.
If you’re not sure which type of property investment suits your needs then don’t worry, as that’s something an investment specialist should be happy to help you with.
In the meantime, ask yourself those questions. Are you patient, or impatient? How soon would you be looking to see returns? Are you a risk taker or risk averse? All good to know.
Wherever you decide to invest your money, good luck and don’t hesitate to seek further information should you need to.
If you have any questions on property investment, you’re more than welcome to contact me – I’m always happy to listen and provide some free advice.
As long as you can factor the cost of unexpected repairs and maintenance into your budget, and keep on track of the lifecycle of your white goods etc. this is an excellent option.
Written by John Nicol
Founder, Ascension Property Investments
Get in touch on 01383 603091 or email me via [email protected]
