Real estate investments claim to offer a ‘real-world’ utility, practicality, and considerably lower risk than some may believe. Property is a significantly less aggressive, more stable investment opportunity where options like office parcels and apartment complexes don’t have direct trades on an exchange. You will, however, find large corporations in possession of properties there.
The security allows real estate a certain protection from the volatility that a majority of investing floors see in daily swings of values. Where in the world though should you invest? Read more here to see if the UK has been a good region for investors in real estate.
What are the reasons people choose property as an investment?
Property is safe, particularly for those who may be just getting their feet wet in the investment world. The risks for the owner are minimal because there are so many possibilities that come with real estate.
Any elevation in value is a profit come time for the sale, generation of income is always a possibility as a rental, not to mention the utility of using it as a primary residence.
A key component for investors is the surrounding culture pertaining to homeownership. For instance, in the UK, ‘an Englishman’s home is his castle,’ meaning owning a home is favorable. While in other countries, the idea of not owning property is the norm, such as in France. Learn if property in the UK is still a good investment at https://www.moveyourmoney.org.uk/2019/12/12/is-property-in-the-uk-still-a-good-investment/ .
The first critical step will be to research the market in your preferred region to see how properties move in order to know if real estate is the right choice for your specific investment portfolio. In helping with the decision, there are factors you should take into consideration:
- The Amount of Capital: As a beginning investor, be mindful of your capital or the amount of money you’re capable of investing in a property. Traditionally, there was a deposit required to foray into this arena. Today, platforms exist, allowing minimal funds to begin the process.
- Devotion Time: Overall, in any type of investment plan, you can choose the amount of time that you want to devote to your portfolio. You can either be very active or hands-on, or you can choose to be passive or hands-off. Most people do a balance of the two.
In an active capacity, there is a need to purchase the real estate plus maintain the property and manage the tenants. With passive circumstances, there are usually professionals hired for property acquisitions and management.
For those who choose the middle of the road, you may buy a piece of real estate but then decide to hire someone else to do the upkeep and maybe another person to help manage the tenants.
- Liquidity: Your money will be tied up into the parcel. You need to ensure that your finances are such that you can withstand a waiting period for cash flow if you’re required to sell the property to regain the funds. It could involve an extended period until a buyer agrees to the price point and the terms.
Depending on the private funding and the type of investment platform, these can lock cash up for extended periods as well. The suggestion is that REITs are highly liquid with the ability to buy and sell simply. These are recommended for those just beginning.
- Level of Risk: The claims found in this investing article stand behind real estate, stating it fits nicely and can account for a majority of investor’s portfolios, even those seasoned and labelled substantially ‘well-off.’ Those in the latter category often have their money tied into properties outside their primary and secondary residences.
As someone who might be just starting on your path, it’s crucial to do an incredible amount of research on the market for which you’re hoping to focus the majority of your funds. There is no doubt that the UK has been seeing an increase in the value of land over time and would, therefore, also have property value elevations. The demand for homeownership makes for an ideal supply, but where is the price point? What could you do with £50K? Something to think about.
Is real estate a good investment? It is a good, safe, lower risk investment if appropriately done with careful consideration, proper research, and given the right demographic — ideal for a newbie investor.