Property as an investment has its merits and drawbacks just as any other method of investing your money. So let’s look at what these are. It is certainly one of the more traditional ways of putting your money away. It can be one of the things we most look to achieve is home ownership so let’s see why.
The Benefits Of Home Ownership
The benefits of home ownership are great and there aren’t too many risks and drawbacks. Obviously where you are talking about buying your own residential house then it stands to reason that you need somewhere to live and why be paying off someone else’s mortgage? You will be accumulating value in equity in the home and once paid off you can rest easy in retirement knowing you have no rent or mortgage to worry about. You can also do what you want with the property in terms of decoration and renovation. But the only real downside will be that you have all the maintenance and repair responsibilities which can be costly if you don’t plan ahead, whereas if you rent these types of things will all be the responsibility of the landlord which takes a great deal of the headache out of things.
What About Buy To Let?
If you are happy in the property you are in, whether it is rented or owned then maybe you have considered purchasing a property with the intention of renting it out to others. This is a good way of making a rental income and securing another long term asset in the property. You should find that if you have a good credit record then it is not that difficult to get a buy to let mortgage although you may find that the deposit required is a bit larger than that of a simple residential mortgage. You should also be aware that it will be a requirement to take out landlord’s insurance and that you are liable for any repairs and keeping the property in a habitable state will be down to you. You should make your calculations include the possibility of periods when the property is empty between tenants and if you have problem tenants who are behind in their rent, in these scenarios you are still legally responsible for paying the mortgage and your credit rating may be affected if not and in more serious cases the property could be repossessed.
Does Renting Ever Make More Sense
Are there scenarios where renting makes more sense than buying? Yes if you are not settled and looking for a short term place to live, for example, any residency of less than two years and then there would be little chance of creating enough equity to be worthwhile as you are unlikely to be in positive equity before this point. Other times are certain areas might be too expensive to buy in but you can afford to rent. Or if you are in insecure employment and may have an unexpected lay off or dip in earnings
Other Ways Of Investing In Property
There are different ways of investing in property other than homeownership. You can invest in commercial property, buying and letting out industrial premises or retail spaces, or even mixed-use properties that are a mix of residential and business units. There is also an increase in crowd-funded property investment opportunities where you can become a part-owner of a property investment along-side dozens or even hundreds of other investors.