The returns from investing in property are lower today than they have been in the past but investors are still keen on bricks and mortar. Property is just more tangible than stocks and shares. But, before diving in you need to manage your expectations and know exactly what your overheads are going to be.
Property Expert Series: Kristen Durose from Red Star Wealth
- Part 1: Introducing Kristen Durose from Red Star Wealth
- Part 2: Section 24 And What It Means For Buy-To-Let Landlords
- Part 3: What Investors Need To Know About The Changes In Stamp Duty
- Part 4: How Does Capital Gains Tax On Property Work?
- Part 5: Is There Still An Appetite For Investing In Property In 2017?
- Part 6: Buy To Let Limited Companies - Why Are Landlords Considering Them?
- Part 7: What Will A Post-Brexit Housing Market Look Like?
- Part 8: Can I Use My Pension To Invest In Property?
- Part 9: What Can Go Wrong With Property Joint Ventures?
Investing In Property In 2017
Amy: Do you think there's still an appetite for property investment? Do you think there's still a buoyant marketplace or do you think the market is taking a knock?
Kristen: I think, in the UK, we definitely have this mentality that investing in property, in bricks and mortar, is a very safe investment.
There is this mindset of, 'I can see it, therefore it must be safe'. And, I think, investors are drawn to that.
There is a housing shortage - we'll make no bones about that. And, it's very expensive to get on the property ladder, as we know.
So, I think investors do see a relatively safe investment in property. But, it's not only that it is safe but also that there is the perception that investing in property gives good returns.
Kristen: There is a perception that it's unlikely that any house you buy is going to stand empty. But investors need to plan for void periods.
If you have used a mortgage or some other form of finance to buy the property, the repayments need to be made whether somebody is paying you rent or not.
So, you must plan for void periods as, at some point, they will happen. Even changing from one tenant to the other could take a month.
You need to know you have the finances to cover times when you have no income. Moreso if you have used borrowings in order to get that property.
Insurance, Upkeep and Maintenance
Kristen: Other things to be aware of are the upkeep and maintenance. So, it's still the landlord's responsibility to take out insurance for the building and most finance houses - definitely mortgages - are going to insist that you have at least building insurance.
That is going to have to be paid for along with gas and fire safety checks and things like that.
As an investment advisor, I get a lot of people asking me whether it is better to buy property or invest in stocks and shares instead.
And there are pros and cons to each option.
But, I still talk to a lot of people who like the idea of being able to look at their investment.
It's there in front of me. I know where it is.
When you are handing the cheque over to an investment funds manager you are only getting a figure on a piece of paper. For some people that can be a bit unnerving.
So there's still an appetite for investing in property but the huge returns that we have seen in the past are not possible at the moment. So, I think it's about managing your own expectations.
There are very few people who will stand to make an instant fortune in property these days and understanding that fact is key.
Amy: Yeah, that's great advise. Thank you.
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