Why invest in Real Estate?
It’s well documented that ‘bricks and mortar’ when invested correctly provide a safe, sound, solid investment for ones portfolio and arguably, individuals with a balanced portfolio should have 50%+ in real estate.
At the moment we are in a very precarious position of artificially high stock markets, quantitative easing and low oil prices. Its common knowledge that the US and elsewhere are essentially kicking the can, and the longer they do that, the greater the expected fall.
Real estate is a great asset class with little correlation to the stock market, which means that it can over time reduce portfolio risk and increase returns in a properly structured portfolio
Real estate tends to go up in value, can provide cash flow from rental income, and offers tax benefits and incentive. Also, over time, equity value increases as the loan is paid down and appreciation can be forced by making improvements to the property
By investing in real estate that’s essentially recession proof (a member of our team can explain why we believe this for chosen offerings), it provides a low risk hedge against the potential downturn, providing sufficient insurance, rather than over exposure.
Of the offerings available on the market, there are REIT’s etc, however as some of our team have experienced first hand, the negative aspect of pooled investment is that while some go up, others may go down neutralizing the gain. Also it’s a cash investment, whereas with direct ownership, an investor has greater opportunity to build wealth.
By investing in individual properties in multiple locations, there is sufficient hedging, but you remain in control.
Some of the investments offer leverage. Lets say for example, you bought a £150,000 apartment and pay 30% and use a house loan for the balance. So a £45,000 (which can sometimes be spread over 24 months) investment with rental of £850 per month, so £10,200, is that a good yield? The tenants pays off the property and you also enjoy the appreciation. A good investment?