Property seems like something you ought to be investing in. But is property investment really right for you?
Try our quick quiz to find out if you’re investing in property for the right reasons….
* Would you like an investment that is virtually guaranteed to appreciate?
Yes, values have been slow to appreciate over the last five years in many areas outside London but historically they have always risen in the long term. (Factors like a surplus of demand over supply and the cyclical nature of the property market will always see to that.) It’s not a matter of if the property you invest in this year will be worth more, but when.
* Would you like a monthly income?
Property will earn you rent each and every month in addition to the capital appreciation. And this monthly income is guaranteed year after year as long as your property is occupied.
* Do you have some cash to invest?
Property investment works best for those who have some cash to start with. This way, it’s easier to raise more money to invest in more property and you also benefit from leverage.
* Are you looking for tax efficiency?
There are ways of buying, owning or selling property that reduce your tax liability and can in some cases allow you to legally avoid paying tax altogether! Ask any good tax/financial adviser and they’ll be glad to explain the methods that will work for you. (You also get your rent before the taxman gets his hands on it not after – always nice!)
* Can you think medium-long term?
Property investments tend to work best when thought of as a medium-long term investment. That way, you can benefit from the cyclical nature of the market – jump in when prices are lower and jump out when they rise.
* Do you want a tangible investment?
This is probably one of the most compelling reasons for getting involved in property ever. In some countries property is called real estate for this very reason – it really is ‘real’! You can see, visit and touch your investment. Even use it yourself if you ever need to.
Property isn’t a paper investment that could easily vanish in a future financial crisis. It can’t easily be stolen by a conman or cyber crook.
* Do you want an ‘interesting’ investment?
Buying, renting and selling property can be addictive once you get involved! You can choose the property you want to buy, renovate it, get involved with tenants and collect the rent if you like. (And yet, if you’re not in the slightest bit interested it can be a totally hands off investment too.)
* Are you wary of the alternatives?
Things like stocks and shares, pensions or even keeping your cash in the bank. Any sensible investor will spread their investments of course. But there’s definitely a place for owning real, tangible assets as part of any sensible investment strategy.
How did you score? Like anything else investing in property needs to be carefully thought through. But if you can answer ‘YES’ to all or most of these questions then property is more than likely an investment you should consider.
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