The coronavirus devastated the economies of different nations. Despite the efforts of most countries to balance the health and economic interests, every industry has taken a hit.
The real estate investment is no exception. While property sales in the United Kingdom are significantly affected, there have been signs that the pandemic can lead to higher confidence in the world of real estate investment.
Of course, many people would believe that the pandemic could only pose a risk to the investing industry. I also have the same thought. But I was wrong. Experts say that property investment is safer than you might think during this unprecedented time.
What makes real estate safer than other types of investment? How to invest in real estate while maximising the best results? What are the other investment opportunities you should take advantage in the UK?
In this guide, you will know them all. Now, fasten your seat belt as we’re about to take off.
Reasons Why Real Estate Investment is a Safer Choice?
It is More Stable than other Types of Investment
Unlike the other forms of investment, real estate is more stable especially in the long run.
Stocks, for example, carry more volatility and are easily affected by economic crisis. In commercial real estate, on the contrary, the influence of the pandemic won’t be seen due to the unique nature of the market.
Another thing that makes real estate stable is that it is is a physical asset that you, as an investor, can utilise although the value depreciates.
During the financial crisis in 2008, real estate markets fell 20% or 25%.
On the other hand, stocks fell more quickly in a few weeks and didn’t recover as fast as folks have expected.
Of course, it’s early to predict how the real estate market will be in the future.
But we can use market reactions to H1N1, SARS, and other previous pandemics as good indicators for the future.
Previous pandemics caused volatility in the real estate investment before. But it stabilised in a maximum of six months.
Even in Covid 19, real estate investment remains stable. For me, I believe it will continue to be one of the safest and the most reliable places to invest this 2020.
How to Lower Your Risks When Investing
The real estate market has the potential to increase a high yield or ROI. But it’s still risky just like the other types of investment.
New equity projects, for example, could be a perfect place to invest because you could still receive solid returns on your investment even if property prices decline
A debt investment opportunity is another safe form of investment you should try. While the ROI is lower than other options, losing money won’t be a big dilemma.
How to Invest in Real Estate While Maximising the Results?
There are many people that attempted to invest in real estate. But only a few succeeded. When you’re planning to invest in the same market, how to get started? I understand how you feel that’s why I have collected these tips from UK experts. Read on for more information!
Having a Clear Focus is Key
The life of an investor is quite overwhelming. So, having a clear focus can play a crucial role. Before investing in a property in the UK, determine what you really want.
Do you want to own assets for your business? Do you prefer a holiday home that generates revenues even when not in use? Ask these questions before anything else.
A Timeframe is Worthwhile
Since you already knew your goal, it will be easy to create a timeframe and determine the right form of investment for you.
Let’s say, you want to acquire profits within a short span of time. If yes, flipping could be the most ideal solution you can have although it comes with a high risk and cost.
If you prefer a higher ROI over a long period, buy-to-let investment could be a suitable choice. You can expect yields that range from 7 to 12%. But ongoing maintenance costs, interest rates, and periods of vacancy can affect your experience.
Don’t Over Leverage
It’s tempting to use more than a 50% mortgage to buy a property. While it can be hard to avoid, your efforts will pay off in the coming years.
If you have to re-mortgage, it’s advisable to shorten the duration of the funding option. Don’t extend the paying period to years to avoid high interest rates and other expenses.
A full ownership of a property can drive more returns. But it could be risky for beginners. The trick here is to invest in a real estate investment trust (REIT) or fund. Well-structured, these forms of investment provide more liquidity and minimise risks.
Review Your Plan
Planning is another factor that new investors fail to perform. But not all are the same. As a beginner, keep notes of your investment. Then, plan ahead. Also, review and modify your investment plans once in a while.
Create and Develop an Exit Strategy
Timing is vital in real estate investment. It is important to know when to pull out your investment to cut losses. So, don’t forget to create an exit strategy. This saves a lot of time and reduces stress when the need to liquidate arises.
Invest in Property Development
The popularity of home buying has lead to the rise of property development as a means of investment.
If you’re planning to invest your money into real estate, property development should be on top of your mind.
Generally, property development can make a quick return and cut development costs. But be sure to weigh the drawbacks in mind to feel confident with your decision.
Save and Avoid Unnecessary Expenses on Tax Payments
Savings on tax payments has also been associated with real estate investment. But don’t overlook the importance of hiring an accountant and other qualified specialists.
You can also buy a property from a private seller. It is just necessary to know the seller’s personal circumstances to minimise the risks and enjoy immediate results. Also, don’t be afraid to ask for technical assistance from an expert.