There are many different types of investment, all with their own potential strengths and weaknesses. Whilst some prefer the high stakes of stocks and shares, others want more stability and less risk. Property investment can provide a stable and lucrative source of income, with many different options to choose from. However, as we know, the property market can be volatile and there are potential pitfalls to look out for. With this in mind, should you invest in property?
Property Market
Just like in any market, property will fluctuate in cost according to the current financial climate. Therefore, potential investors should try to wait until the market is healthy before putting any money on the line. Fortunately for potential investors, the property market has been booming in recent years. Both house and rent prices have been rising steadily, in most part due to the pandemic. Covid-19 and the subsequent lockdowns led to many people choosing to make changes to their lives. One of the major changes that we have seen is more people choosing to move to a new area, whether that’s to downsize, move closer to family or swap city life for a rural escape. With the property market being so healthy, it has never been a better time to invest but what are your options?
Traditional Investment
When we think of property investment, often the first thing that comes to mind is simply buying property outright. There are a number of ways in which you can invest in this way. Obviously, one of the most straightforward methods is purchasing a property for yourself and allowing it to increase in value. In this instance, you benefit from owning your own home, whilst also investing in the future.
You could also buy a property, renovate the space in the hope of reselling straight away and receiving a much faster return on your investment. Of course, this often requires a lot of further investment and work but it’s a relatively sure-fire way to boost profits.
One of the most popular forms of property investment is buy-to-let. This is where an investor purchases a property or multiple properties and then rents it out to tenants. This can provide a steady, reliable return on your investment- especially if you have long-term tenants. However, as a landlord, you will take on many responsibilities, which need to be factored into your decision.
Traditional property investment often provides much more control and stability but growth can be slow. You will also have to be more hands on when compared with other types of investment and start-up costs, such as deposits, can be costly.
Shares
For those looking for a simpler, less hands-on approach, Real Estate Investment Trusts (REITs) could be the ideal solution. Just like with any trust, REITs will make many investments in different properties and then shareholders can earn money, if and when the share price increases. REITs can also provide an income in the form of dividends.
Investing in real estate trusts offers a more straightforward method for those looking into property. Particularly when you compare this to the responsibilities involved with being a landlord of renovating a space. However, as with any foray into stocks and shares, there are no guarantees and there are always risks involved. This being said, with a decent starting capital and careful investment, it’s possible to make substantial earnings with REITs.
Help
As we have found out, there are many ways in which to invest within property, all with their own benefits and drawbacks. It can be difficult to know where to begin and how to approach your investment. Fortunately, the team at Salhan Accountants offer comprehensive financial services, including landlord and property management. Those who are looking into this type of investment can receive expert help from Salhan Accountants.
