Advantages of Property Investment

By Andrew Marshall

Properties will always be valuable. If you invest in a business it can go bust but this isn't really the case with property. Prices may change but people will always need homes. The demand for housing will never disappear, so the possibility of being able to sell an investment property will always be there. This is particularly the case at the moment with much of the UK suffering from a lack of housing.

A major plus of property investment compared to other forms of investing is that you can rent it out as its value increases. With most investments you have to sit back and wait before cashing in at a later date. With property investment you can be gaining an income in the form of rent, which can be used to pay the mortgage. So, as well as making money on the investment, you are making money on the rent.

Another thing that sets property apart from other investments is the possibility of obtaining a mortgage to pay for it. A high proportion of the money you need to invest in a property can be borrowed, meaning you don't need a hundred percent of the capital.

With property there is less risk. It is very unlikely that a property's value is suddenly going to be wiped out. There are fluctuations in the market but the value is almost always going to increase in the long term. Sometimes prices will rise quickly and sometimes less so, but it will usually rise over a period. Many properties are currently worth less than they were a few years ago (due to the current economy) but they are likely to grow again. The vast majority of properties will be worth more in five years time than they were five years ago. Patience may at times be required with property investment, but it will usually pay off in the end.

If you are looking for a very long term investment then property is the way to go. Over something like thirty years property will usually rise significantly. It may not rise as much in the future as it did between the 1960's and the 1990's, for example, but it will still rise significantly. Investing in just one property can for some produce enough returns for retirement. If it is possible to invest in several properties the possibilities are endless.

One disadvantage of investing in property is that it is an expensive investment. If only looking to invest a small amount then property isn't for you. When investing in a business you can invest in a few shares (or even one share), but with property you are probably looking at a six figure sum. However, as already mentioned, you don't need it all in cash; you can borrow it. Although the outlay may be a lot, for those who can afford it the return could be much more significant than other types of investment.

Many previously rundown areas have improved over time. Investing in such areas can be a good choice. It is a little risky as a lack of improvement could mean only a small return, or perhaps none at all. This means choosing the right area is of crucial importance. Many previously rundown areas have seen a dramatic change in fortunes and are now sought after areas to live in, with property prices having soared. Properties in such areas can be bought relatively cheaply.

Is now a good time to invest in property? The property market is not at its strongest at the moment but that doesn't mean it is not a good time to invest. The immediate future is not easy to predict but property prices will eventually rise again. It is possible to buy for less than it was a few years ago, and that could make now the perfect time to invest.