There are many downsides to investing in property but you also need to consider the risks of alternative investment strategies. Property prices may have further to fall in the short term and funding a buy-to-let purchase may be hard or impossible but it may be worth the effort.
Property Investment Up Sides
- It is a buyers market and if you have a property the rental market is strong and looks set to remain so for some time.
- Renting is growing even more rapidly with ownership out of favour. Life styles are changing in a way that favours rented homes.
- Property values tend not to fluctuate as much as other investments. They retain considerable value even in dire circumstances.
- Property is still seen as good security for a loan and interest rates are in landlords’ favour.
- Rental income is steady and more or less reliable. Rent beats bank interest and many riskier investment returns.
- If a property investment is ‘washing its face’, covering all costs and mortgage payments you are growing your equity value
- The layman finds property investment easier to understand than stocks and shares never mind more complex investment products.
- You can change or use property for a range of purposes and it should always retain the land value at the very least.
- There is the probability that values will again increase over time leading to capital gains. Just have an exit plan as it will be a slow process.
Special Property Investment Upsides
- A second home that can act as a holiday retreat but bring in casual income can fulfill a dream. It may be unconventional as a houseboat, converted windmill or an American apartment.
- Overseas property carries a currency risk or potential reward. Sterling, dollars, euros and Yen have been stable currencies but what rate you buy at may not be what the rate is when you come to sell.
- You can get personal satisfaction and other rewards from property that do not come with normal investments
There always seems to be a housing shortage and successive governments have been unable to square this circle of supply and demand.
Property is a hedge against hyperinflation and also provides a well worthwhile rental income.
Like all investments try to consider the downside and risks set against the return and the alternatives available.
For more Downsides of Investing in property read
