Real Estate

How to Get into Property Investment

There are a few ways of getting into the real estate market, an investor needs to consider how hands on they want to be. It can be boiled down to two main categories.

The Direct Route:

  • Buy to Let
  • Buy to Refurbish to Let
  • Buy to Flip
  • Refurbish to Flip
  • Property Development

This works for people who are willing to take a bit more of a risk and rely on their own decisions. It can be more daunting for a novice investor but it’s typically more rewarding. This method is a lot more hands on and requires more of a time & monetary investment – but with higher risk, there is higher reward.

The Indirect Route:

  • REIT’s (Real Estate Investment Trusts)
  • Property Unit Trusts
  • Property ISA’s
  • Share in Listed Property Companies 
  • Property Bonds & Loan Notes
  • Peer to Peer Lending

This is a great route for first time investors that don’t want to risk a significant amount of capital, it allows you to dip your toe into the market and grow confidence in your ability. It’s a lot more hands off and typically you’ll be part of a group of investors so it’s a great place to gain experience and knowledge.

Real Estate Recommendations

The real estate market has benefited from a recent 24-month bull market, with double digit year on year price rises across most of the UK. This has benefitted many landlords who have held properties for a number of years as they have not only been receiving a yield but they have also seen significant capital growth on their investments.

The predicted effects on the markets and the economy through Brexit and then the Covid 19 pandemic did not materialize and the support from the government through their furlough schemes and business interruption loads actually put a lot of money into the economy. When this is combined with an undersupply of property (which has always been an issue in the UK) we have seen significant house price inflation.

For real estate investors scrambling to buy a property while achieving some value, this has been nearly impossible with many properties going for above asking on the market and at retail prices at auction.

Things are changing, however

You will have seen what has happened recently in the UK with multiple changes in leadership in the past couple of months and a mini budget that sent the markets into a spin. We are experiencing a cost-of-living crisis and interest rates are rising to combat inflation, which is spiraling out of control. 

The recent economic shock has taken the sting out of the real estate markets and it is now becoming a seller's market.

Many long-term investors are looking to exit their property holdings to take advantage of the capital gains and to avoid increased costs on their loans due to predicted interest rate rises. Many of these investors have been on historically low rates as their mortgages and loans traced the base rate, but as these rises, the costs of servicing this debt will also rise and if they are not prepared for this, they will look to sell and cash out.

On the flip side, this could be a great opportunity to acquire assets that have been off the market for a long time. If you want location, then you will be able to potentially get a real estate investment at value and where one generation exists, another generation will look at this as an opportunity to start acquiring assets and building a portfolio with what they want rather than feeding on the scraps.

It's going to be a rocky road as the economy looks like it will be heading in to a recession, but property generally passes the test of time and we may see a slow down or a slight tail off in prices (and potentially some falls in certain areas) but 2023/24 could be fruitful for some investors if they get their timing right and enter the market before it starts to rise and if they acquire the right type of investment for their strategy.

Investors will factor in to their costing interest rates between 3 & 4 % as a norm and this is still historically low, thus they should be able to make the markets work for them in the medium to long term.

The Property Buying Company advises you to watch and observe in the short term, do your research and pick your strategy so that you are ready to jump in when you feel the timing is right and get investing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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