So, you’re considering investing in property? Even in a crowded market and after a series of government measures aimed at penalising landlords, investing in buy-to-let residential property can still provide a decent return.
Because of historically low interest rates. leaving your money in the bank isn’t an attractive option if you want to make your savings work for you.
The kind of financial products or stocks-and-share investments you’d need to invest in to gain anything like the returns you might expect from property will, inevitably, involve higher risk than you might be willing to take.
That’s not to suggest investing in property carries no risk, or even a low risk, it all depends on what type of property you’re thinking of buying and, as ever, location is key.
Assumptions about the movement of ‘the property market’ are largely outdated. We live in an age where there are lots of sub-markets within the same city or town, often within a few streets of one another.
Each has its own dynamic and influencing factors, for example you can have a buoyant market in one area and only a few of miles away, things can be more sluggish.
People frequently ask us if the property market has been affected by Brexit, or a recovering economy or a weak pound.
Prices in some areas may have been affected while others have been left untouched by these external influences; it really depends on what’s for sale and who’s interested in buying.
House prices may not be rising in value with every passing week, the way they did a generation ago, but that doesn’t mean property can’t provide a healthy profit.
There are different rules and pitfalls to consider and a lot can depend on your age; first time buyers are seldom as young as they were a generation ago. Most will have had to save for a deposit, often over many years, and so many of those taking their first step on the property ladder are in your early or mid-thirties or even in their forties.
Middle aged people who have invested in property as a ‘nest egg’ to ensure they have a comfortable retirement have had to plan carefully.
There are more opportunities – and greater temptation – than ever before – to liquidate your portfolios and many people leave it too late to benefit from tax mitigation, such as various allowances.
But at the same time there’s rarely been a better time, for those who can afford it, to source a great value, buy-to-let mortgage.
It’s always advisable to spread your assets and to have equities and bonds as well as property to avoid the ‘eggs in one basket’ dangers.
For most people, your main investment is your home so, if you’re buying additional properties, you will have more exposure to a single class of asset.
If you’re involved at the right time, your property can gain in value and it has the potential to make money for you. The longer you leave it, the less you will benefit. For example, if you buy your first property in your thirties, you’ve already lost several years in which you could have benefitted from compound interest.
The most important thing you can do before you invest is to talk to lots of experts, do your own research and then you’ll be much better placed to make an informed decision.
*Disclaimer: All investment carries risk and it is important you fully understand these risks and are willing to accept
Gregor Cope is a co-director of the Scottish Property Centre, based in Shawlands, Glasgow.
For information on potential property investment opportunities contact your local Scottish Property Centre branch or visit: www.scottishpropertycentre.net