Property investment is big news. Recently, investors are moving away from more traditional investment products and putting their money in bricks and mortar. But why? The answer is simple. It’s safer.
In the past, investors invested their money on the stock market. But this has all changed. The collapse of Lehman Brothers, Washington Mutual, WorldCom and Enron have all contributed in making investors suspicious. They want to put their money in to something quantifiable, not something like the stock exchange, which nowadays seems more like gambling rather than investment.
A lot of investors then turned towards precious metals such as gold. The internet, television and newspapers are flooded with adverts for companies telling you that now is the best time to invest in gold. Promising great returns and marketing it as an inflation proof investment. But remember, all that glitters is not gold. One of the biggest disadvantages of investing in gold is the fact that there is no income from gold. It is all capital gain/loss and if it goes down in price, you make a loss in real terms.
However, this isn’t the case with property investment. If an investor invests in property they can get huge yields on their investment. Take for example buy to let property, if an investor buys a property for £120,000 and rents it out making £12,000 a year which works out at as a gross yield of 10%. Meaning that in ten years time, the investor will have 100% return on their investment as well as an asset that is still bringing in income.
Student investment is even more lucrative. Many investors are deciding to purchase rooms in private halls of residence. These can generate yields of up to 14% and with the number of students rising each year, their definitely won’t be a shortage of investment. These massive yields coupled with the capital gain, mean that student property investment is a smart move.
The same can be said for ‘off-plan’ property investment. This is when an investor invests in a property with a developer that is not yet completed. Often, developers need a number of sales before the banks will offer them finance to build the development so this is when savvy investors can make their biggest gains. With developers desperate to make the sales, they often have deals such as buy three properties get one free. This sounds like something you’d find in a supermarket, but it’s certainly achievable if you invest right.
“FRA Financial Group Founder Joe RoosEvans is an industry veteran who has built one of the nations’ most successful Independent Marketing Organizations – Financial Resources of America and its affiliated companies, including FRA Financial Group. For more information visit here