I've found that investing in property has presented opportunities to connect with likeminded individuals, find out their stories, strategies, objectives, and ultimately the reasons why they got into property in the first place. It's a fascinating sector to be in, and with the UK's population set to grow by 3.2 per cent in the next decade, housing will be more necessary than ever. It's a sector that an investment in for the long-term will be worthwhile. Not convinced? Here's the four reasons I've found that people invest in property, and why it works so well.
When I first started out in property investment, I, like many others, made it my mission to surround myself with knowledge and capability; building a network of reliable sources from whom I could learn and grow my experience.
As a sector, property brings people together in a huge number of ways. It also offers a wealth of rewards to individuals who build firm strategies and look at property from a long-term perspective. I've found that some people can be misled thinking property is an overnight 'get rich quick' scheme, allowing you to generate thousands of pounds with very little effort.
This simply isn't the case.
The rewards generated by successful property investment are certainly lucrative, particularly to first-time investors, but they have to be worked for. The financial returns aspect of property is attributed heavily to the reasoning as to why people invest in property:
1. Cash Flow
One of the most common reasons investors venture in property is to generate, or add to their monthly cash flow. A stable monthly income from property can benefit investors in numerous ways including:
Leave full time employment whilst still being able to maintain a lifestyle.
Build a pension pot more efficiently and be able to retire sooner.
Create a method of generating savings for children.
Enhance spending power and increase the quality of life.
Investors looking for strong and regular monthly cash flow will typically tend to look at greater yields on their investment properties, and may prefer investments such as HMOs (House of Multiple Occupation) or R2SA's (Rent To Service Accommodation).
HMO properties when done correctly, can generate a significant increase of rental income opposed to traditional buy to let homes, but they do come with a significant extra amount of legislation and work needing to be done in order to operate one legally.
R2SA isn't too dissimilar, but involves letting your property to an individual or company who will pay a fixed rate, whilst letting the property as serviced accommodation to individuals themselves. It is crucial when using this method to find a company, individual, or even local authority with proven credibility when it comes to R2SA.
2. Grow Wealth
Some investors I have spoken to regarding their reasoning behind property investment relates to wanting their capital to grow. It is commonly seen as a way to out perform other potential asset investments.
Long term asset wealth in property is generated by rising property prices and values. The current demand for housing, mixed with the forecast growth in population I mentioned earlier, are part of the driving factors to growing property values and house prices. By owning a portfolio of assets growing in demand and therefore value, it is a certain method of growing your personal wealth.
It has become a common phrase within property that investing in bricks and mortar is more worthwhile than shares or gold. It certainly feels that way when you build a successful property strategy, but getting to that point is no easy feat.
3. Legacy and Inheritance
As property is such a rewarding long term investment, many investors use it as a method to secure a legacy and a financial future for their children; whether that be through the physical asset itself, or through the cash generated by a sale.
Establishing a hands-free property investment strategy, where components are managed on your behalf, gives you the ability to take back control of your time. This time can further be used on spending it with family, allowing you to create a legacy of memories whilst also securing the financial future for both yourself and your children.
4. Financial Reliability
One of the most crucial things to consider when we invest is that we don't want to lose money. Every asset class you consider is never 100 per cent fully safe, but property is certainly a firm choice over other aspects.
Unlike a number of newer or more speculative asset types, property is known as being 'safe as houses', and always yields results in the long run. Even in the event of a market downturn or crash, you can still generate financial income from property, and be certain that the market will both heal and grow in the future.
As of today, there are a growing number of investable assets individuals can look into. Companies are tapping into social media to promote a range of products, whilst cryptocurrency continues to remain a popular choice and also the growing trend of NFTs (Non-fungible tokens).
Yet despite the sheer number of assets you could opt to invest in, property still remains one of the most lucrative. Stability is very much the key to success, and having your own stable investment strategy within property is a driving factor. But the property sector itself remains far more stable than other investable assets. Even if there is a downturn or market crash, history has taught us that the sector will heal quickly over a small number of years.
Reportedly, 90 per cent of worldwide millionaires invest in property, irrespective of how they earned their fortunes. It's safe to say however that a considerable sum of that portion have been able to sustain their wealth and even grow it through property.
When it comes to property as a platform for building wealth over other methods, the number of income avenues speak for themselves:
STOCKS & SHARES
Price increases over time
Price increases over time
Still not convinced property is a viable investment avenue for you? Don't worry, it took me a significant amount of due diligence and soaking up knowledge before being able to readily commit.
Part of the reason I love the property sector so much, in addition to meeting new people and learning new strategies, is helping new investors find their feet and make the right investments. I've been in that position, and know how easy it can be to be star struck by so-called 'gurus' with countless false promises.
If you're looking to make the plunge and invest in property, but are unsure on the types of investment you should be making, the strategies to build or the best types of people to connect with, I'd be more than happy to help you find your way; just drop me a message by clicking here or give me a call.