Jasper Barclay is a renowned property expert with a vast property portfolio worldwide, books published on investment and successful seminars running across Europe, Jasper is now a consultant within the financial world.
“In today’s financial climate there are many investment options available to you, stocks & shares, ISA’s, pensions, savings accounts, SIPPS etc so why invest in property?
1. More millionaires have been created through property than any other form of investment.
Most wealthy people have used property to grow their assets- many started off with very small deposits and now have vast property portfolios. Why? Because regardless of recessions property always grows in value!
2.Who can do it?
Property investments are not just for the wealthy. It doesn’t take vast sums of money to get involved because with low cost properties comes low deposits. With low deposits and financing available ordinary people can become wealthy with the right strategy.
It’s often said that property offers the security of ‘bricks and mortar’, but let’s take a look at why it’s one of the safest and potentially most profitable investment markets. Banks have always recognised property as an excellent security. The reason they’ll lend you up to 90% of the value of your property is that they know property values have never fallen long-term. In fact, the entire banking system is underpinned by the continual growth of residential property. So while property prices do fluctuate over time the homeowner market will always underpin property values. As the chart below demonstrates- despite dips due to recession the value of your property will always grow long term. Another factor that adds to the security of residential property as an investment is that you can insure it against most risks.
4. Consistent capital growth
Good capital city residential property has an unequalled track record of producing high and consistent capital growth. This means that not only are you receiving an income from your rental but also that your property is gaining value. Therefore in ten years’ time your property will be worth considerably more than when you purchased it. If you have a secure exit strategy then you can sell your property when you choose and make a profit. An exit strategy is something which enables you to sell when you want to. Cities with high demand for housing by locals not tourists are ideal markets. The better your property selection – where you buy, what you buy, local demand and infrastructure – the better your returns could be.
5. An income that grows
The rental yields you receive from your investment property allows you to pay your mortgage. This enables you to invest in multiple properties especially in areas where demand outstrips housing such as London, Moscow, and Istanbul. If you invest your money in a bank the interest you will receive can be up to around 3%. Purchasing where demand is high you could be collecting up to 12% per annum. So not only are you achieving your rental which outstrips the interest at the bank but you have a safety net against inflation due to capital growth on the property. Where else can you make this kind of money?
6. You are in control
Property is a great investment because you make all the decisions and have direct control over the returns from your property. Your property belongs to you and cannot be affected in the same way as your pension can be should your pension company collapse or the stock market crash or the commodities market falls dramatically. You need to choose carefully so that you have someone who can manage your property on your behalf- this is key to investing in areas where you do not live. Then you can simply sit back and enjoy the rewards.
7. Tax benefits
Property investors are able to take advantage of a range of tax benefits including tax deductions and depreciation allowances, capital allowances, offset purchases such as furniture packs, travel to visit your purchase and a whole range of other advantages which are at arm’s length from your domicile tax positions.
8. Do you trust Pensions?
people will have insufficient funds from the government to offer a proper standard of living when they retire. Today the rate is only £102.15 for a single and £163.35 for a couple (if you have full contribution levels) So even if your pension company survives until you retire will you really have enough money to live the life you deserve?
9. SIPPS- were they really a golden opportunity?
The much-trailed proposal by the UK government to allow UK personal pensions to hold residential property assets was dashed by the Chancellor, Gordon Brown. In a speech to the UK parliament on 5th December 2005, the proposal to allow self-invested personal pensions (SIPPS) to hold UK and foreign residential property was withdrawn, dashing the hopes of many who had hoped to put holiday and main residences inside their pensions and take advantage of the generous tax reliefs on offer. Press reports have shown that many advisers contacted clients to suggest that buying a second home using a SIPP in France, for example, was a golden opportunity to both buy a dream home and secure a huge tax advantage. However, the chancellor getting wind that there would be a huge exodus of money invested overseas and supported in main by tax deductions meant that the route was always going to be fraught with problems.
10. Do your own research
Sensible investment in your own property portfolio is a sure way to make money in the long term. Ensure that you invest with a company who offers due diligence on every aspect of your investment and relevant safeguards for your money. Research the best areas for investment and make sure that these are reflected in the marketing material your property company is giving you. Don’t base your judgment on glossy brochures and dazzling pictures as these can easily be manipulated and may not reflect the true investment picture. Similarly many people pick locations because they liked them whilst on holiday but a wise investor will consider rental prospects, exit strategy, capital growth, taxation, economics and law before investing.
Jasper has advised clients on behalf of GEM Invest Ltd please visit www.geminvest.net for further information on simple, low entry ways to start your property portfolio.