Buy to Let property investment is one of many options available to investors today. Why then do so many firmly believe in it as one of the very best ways to achieve solid, reliable and profitable returns?
We look at just some of those key reasons here and the reasons why you might look to property for your next investment.
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LONG TERM TRACK RECORD
Since first being tracked in the UK property has always grown in value over the long term. This is despite temporary readjustments in the market during times as the Dotcom Bubble in the early 2000’s and the Financial Crisis of 2008 for example.
Taking a 20-year viewpoint (data from Nationwide’s House Price Index), the average price of a property in the UK was £77,698 in Q1 2000, and is now £217,911 (Q1 2020). This represents an incredible increase of 180.46%
Property, when invested in wisely, will always increase over the medium to long term.
THE POWER OF LEVERAGING
If you have savings of £30,000 then the amount of money you can invest in the stock market, in a business, a savings account or even in Bitcoin is £30,000.
However in property the same amount of money can be leveraged by way of a mortgage and used to buy a property worth up to 4 times that amount at £120,000. This is based on a sensible level of borrowing at 75% LTV (Loan to Property Value).
Despite only having invested in 25% of that property you can then go on to benefit from 100% of the rent returns as well as 100% of future capital growth from the asset.
A TANGIBLE BRICKS AND MORTAR INVESTMENT
Unlike unpredictable investment vehicles such as stocks and shares, pension plans and angel investing, a buy to let property investment and how well it performs can be directly influenced by the decisions you make.
The location you choose to invest in, the property type, and the tenant market you target are all factors which you can decide upon and which will have a direct impact on your returns you receive.
Smart property investment is a more reliable and predictable investment than the other asset classes mentioned.
THE MAGIC OF COMPOUND INTEREST
Put simply Compound Interest is earning interest on interest on interest and so on. World renowned investor Warren Buffet credits the principle as one of the key forces that has grown his wealth.
Take the example of a property purchased at £150,000. Moderate annual growth of 3% will result in a new value of £154,500. However further growth of 3% in year two becomes 3% of this new figure (£154,500) and very quickly the value is £159,139. After year 5 this increases to £173,891, and an impressive £201,587 after year 10!
Use our Compound Interest Calculator to explore the power of Compound Interest for yourself.
Smart investing can be highly rewarding and thoroughly enjoyable.
The elements described above are all to your huge advantage, however crucial to your success is also carrying out the necessary research and due diligence. Market research, target tenant audiences, accurate financial projections as well as other key factors are all vital to how your investment will perform.
As with any type of investment mistakes in property can be costly, both financially and emotionally. We recommend engaging with key professionals such as a property investment partner, a mortgage broker, and accountant amongst others to ensure you avoid any such pitfalls.
Details of the key partners that should make up your property investment power team can be viewed here.
Our vast experience of property investing allows our clients to benefit from the confidence and peace of mind that comes from making sound investment decisions. Our knowledge removes the guesswork that can often be associated with property investing and provides our clients with a hands off and hassle free process.
It’s often said that the best time to invest in property was yesterday. The next best time is today.
Get in touch with our Investment Team today to arrange your complimentary Discovery Call where we can discuss your next steps to profitable property investment.
“Fantastic service! Would recommend to anyone interested in starting out or expanding their property portfolio. Martin and the team were very thorough to find a property which ticked all my boxes! Their expertise and guidance has been crucial to securing my second rental property. Thank you!”