Select Portfolio’s top 4 considerations for your next property investment.
Property investment has long been popular with savers looking to place their trust in tangible assets, over the more elusive stocks and shares. Providing stability, long-term security and a steady income, property investment is more appealing than ever.
If you’re considering investing in property, here are our top 4 considerations you’ll need to make before taking the plunge.
1. Rental returns
For many property investors, monthly or annual rental returns are the ‘bread and butter’ of any purchase. Most investors look for returns that are high enough to justify the initial capital outlay, cover any additional costs and that generate worthwhile profits.
Rather than simply purchasing in your home town, consider regions with higher than average rental yields, such as Manchester or Liverpool.
New-build investment properties such as those in Grove House, Caer Rhun Hall and Newton Manor offer assured yields. This guarantees a minimum rental return for a set period. Many enjoy the security of an assured rental yield and can immediately weigh up the return against the initial outlay.
2. Long term ROI
Capital appreciation potential is an important aspect of a successful property investment. Being aware of market trends can provide a significant advantage in identifying capital appreciation potential.
Markets which are relatively inexpensive right now, but are either increasing in price or receiving high levels of investment, provide a great opportunity for capital appreciation. The government’s unwavering support for the Northern Powerhouse project means that, while property in Manchester and Liverpool is currently much cheaper than in London, these prices are set to skyrocket – with investors standing to make significant gains.
Specialist property, such as care homes, look set to face a dramatic increase in demand, due to our ageing population. The inevitable requirement for more property like this indicates significant capital appreciation potential. The opportunities available from Select Portfolio also offer an assured sell-back option at the end of the investment term, giving investors a profitable exit within a defined period.
We all know that buying property is all about location, location, location. So researching the locations with significant demand for rental property is important.
In popular regions like London, Liverpool and Manchester, demand for rental property is high and supply is low; providing both the ability to charge higher rental rates, and ensuring there’s a consistent flow of potential tenants living and working nearby.
The importance of location is not limited to traditional buy-to-let. For hotel investment it’s important to know that the region has a strong enough tourism industry to provide a healthy demand for hotel accommodation.
For example, the tourism industry in Conwy is growing year-on-year; making this the perfect destination for our Caer Rhun Hall Hotel investment.
It’s also important to consider all the purchase costs, and any additional and ongoing fees which will add to your capital outlay.
Buy-to-let investors will need to factor in the 3% increase in stamp duty, as well as upcoming cuts to the tax relief they are able to claim. There are often annual maintenance charges due, or ground rent for properties within communal buildings as well as the additional costs of furnishing a property.
‘Alternative’ property assets on the other hand do not include these additional costs. Because hotels and care homes are classed as commercial property they are stamp duty exempt up to investment of £149,000. Due to the fully-managed nature of these investments, maintenance and upkeep charges are usually factored in to your investment, meaning you don’t have to pay out any additional funds on a monthly or annual basis.
Typically managed and maintained by specialist operators, investors purchase a completely passive income-generating asset.
If you’re considering investing in UK property contact a member of our team on +44 (0)1202 765011 for more details on the options available.