When is the Best Time to Start Investing in Property?
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Property investments hold a number of advantages over other types of investments. Compared to stocks, bonds, or mutual funds, real estate offers a more predictable cash flow. Most properties appreciate in value, allowing you to keep pace with inflation; they could also offer higher returns due to positive leverage.
They’re also great investment options that could generate ongoing passive income, leaving you valuable assets to pass on to your children.
However, there are a number of considerations that you need to think about before you’re actually ready to invest. Buying property could cost you a lot of money—and that’s excluding maintenance costs and potential income gaps in between tenants.
Additionally, you’ll also have to be aware of the current circumstances that come into play with investments, too. Crises and political tensions are very likely to affect property prices. For one, Brexit has triggered a change in the UK property market. While it’s made investors more cautious about investing in real estate, a poll featured in one of our previous articles revealed that half of the people that were surveyed were actually hopeful that real estate activity would pick up post-Brexit.
We’ve seen the country’s property market keep its integrity despite the political turbulence, thus far. Certain parts of the market have even dipped slightly in price, and this may be an opportunity for you to make your move. After all, timing is very important when it comes to property investments.
When you have enough capital
There are a variety of payment schemes that you can choose from when buying property. However, most people opt for putting down a deposit and paying a mortgage.
If you get a mortgage it is determined by the amount you put down as a deposit, total household income, and your credit score. Check your credit score even before you speak with a mortgage broker. You may want to pay off debts, credit cards, and loans before you apply for a mortgage, as you’re more likely to get a good mortgage with a higher credit score.
On the other hand, you could also pay for property in cash, as long as you have the full amount ready upon offering to buy a property. Of course, being a cash buyer requires huge capital, and it is unlikely that someone who’s just getting on the property ladder would be able to put down the full lump sum.
Although, you could consider this arrangement when investing in your 40s and 50s. At this point, you may have had enough money saved up. Being a cash buyer also comes with its advantages, such as greater security, a quicker turnover process, and zero interest.
Whether you’re opting for a mortgage or becoming a cash buyer, investing, especially at this age, is a good idea. You should start looking at investments that could give you long-term passive income.
You should be able to enjoy the fruits of your labour after working hard for most of your life, so investing in property could help. With the UK’s life expectancy currently at 81-years-old, you still have a lot of time to think about whether this is the ideal option for you.
In addition to a pension, income from property investments could provide you with a comfortable and meaningful retirement.
The market conditions are right
The real estate market fluctuates based on supply and demand. Before putting money down on a property, find out if the market conditions are in your favour. One such condition to look out for is when the market is a buyer’s market.
This happens when supply exceeds demand, driving down market prices. We’ve seen this happen during the pandemic. In fact, experts from Zoopla, Rightmove, and the Centre for Economics and Business Research (CEBR) predict there will be an approximate 5% dip in house prices by the end of 2021.
While a buyer’s market may occur during moments where the national economy is at a lull—a similar phenomenon was seen in “The Great Recession” in 2008—it might be the perfect window of opportunity to make an investment at a significantly lower price.
Conversely, a seller’s market could happen when demand is greater than supply. This shortage results in competitive bidding, driving up prices. Needless to say, this particular market condition isn’t exactly the best for investors.
Overall, there are a number of benefits to investing in real estate, so make sure that when you do make a move it is to get the best deals at the best possible times!