WHY INVEST IN REAL ESTATE?
When we look at investment markets, investment in property has a strong reputation for delivering stability, alongside excellent rental and capital growth returns over the long term. As a market the property sector has also delivered significantly less price fluctuation than other asset-classes. The stability of real estate means it is often the preferred asset class for building stable wealth.
Property delivers steady and consistent yields and is often seen as a ‘safe haven’. Investors tend to purchase property with interest only mortgages to create a surplus of rent enabling the property to become an income producing asset.
One of the most appealing things about investing in property is the potential for capital growth. Property prices have historically risen in stable markets over the medium to long term.
No other ‘retail’ investment class allows investors to leverage their position in the same way as property. Leveraging your capital by securing a mortgage against the property enables you to achieve returns that would require a much higher level of personal funding than with other investment classes. The use of a mortgage acts like a magnifying glass: as the market moves upwards, your potential returns are multiplied.
Diversification should be at the heart of building any investment portfolio, but property is often neglected by financial advisers. However, property can deliver superior returns and lower volatility than the equity markets. Property can also be used to lower the risk of other investments when considering a combined portfolio.
All asset classes are affected by market volatility, but property is more resilient to external economic forces and often holds its underlying value better than other asset classes. This means that unlike other asset classes, property is much less exposed to short term volatility.
Most property investments can be structured in a way to take advantage of tax benefits that would not be available for other investment vehicles, further strengthening the ability to maximise the potential of your available capital. For example, we often advise clients on the benefits of investing in a company structure to maximise tax efficiency.