Property can be a great way to make money – something that we have been considering of late. Without a doubt, the most favoured way for making real money in the UK has been through property and property investing, but as it becomes ever more difficult for first-time buyers to get a foot on the property ladder, the question in recent times has become: how can ordinary Britians participate in the property market and take advantage of the many possibilities that a stable property portfolio can offer? For starters, find the right partner when you’re thinking about property investment UK.
Here are some of the reasons why property investing is such a good vehicle for wealth creation, and also at some of the benefits of a strong and stable property portfolio.
Is property a good investment?
Firstly, with property, you can leverage your investment. For example, if you take a loan of £ 10,000, chances are you can only buy stocks or bonds to that value. However, when buying a home, you can put down £10,000 and finance the rest of it, so if your home costs £ 100,000, you can finance the remaining £ 90,000.
This means that you enjoy an asset that is increasing in value, while you’re paying it off.
With property, you can ‘force’ appreciation. This sounds funny, but the value of your home is going to increase on its own by around 5% every year – more in some areas, but by doing improvements to your home, you can increase its value too. Something that you can’t really do with other investments.
Property can also yield regular cashflows.
Once your property is paid off, you can rent out that property and enjoy a regular, additional income. This income is referred to as “passive” income and when managed correctly, can be reinvested into other opportunities or further properties. The best part about property investing is that when you secure a second home for investment, the renters are paying off the loan on your investment.
Remember that when you rent property, you’re paying someone else’s mortgage.
What are the benefits of a stable property portfolio?
The earlier you start the better, there is no way around that but the beauty of property investing is that you can start at just about any phase of your life. It does take planning and proper execution however and you should seek some solid advice first. However, once you have two or even three properties in your portfolio, your financial reality changes dramatically.
For starters, as the equity in your properties increases over time, you have a stronger negotiating ability with lenders when you need to access lines of credit for further investing or when you need to access cash during difficult financial periods. Ask anyone who has property in their investment portfolio how much easier getting through lockdowns was.
Get the right advice, plan for it properly and never spend more than you can.