Investing in property is an incredible adventure to set foot on and one that will bring you multiple benefits, some instantly and some long term, but both equally as worthwhile. Many investors turn their hand to real estate investing due to the security it offers in comparison to other types of investment.
By investing in real estate an investor owns a tangible asset. This brings peace of mind to many as they typically have higher levels of control whilst investing in these types of assets compared to intangible assets such as stocks.
As well as feeling greater levels of security when investing in real estate, there are a variety of other benefits investors are likely to experience.
ControlAs aforementioned, lots of investors feel they have greater control of their investment when they invest in property. Part of the appeal of investing in property and earning a side income is the element of being your own boss.
Securing an investment property can often be a big project which needs a lot of time, effort and attention, but this is dedication that investors thrive for as it is their project. By making decisions and taking a project from one step to the next an investor witnesses the process of their investment coming together - giving them gratitude, satisfaction and excitement.
Cash flowIt's common for investors to begin their property investment journey with the aim of earning a side income. A key benefit of property investment is the opportunity to produce a steady monthly income or an instant return of investment.
Due diligence is important in determining if a property investment is right for the investor’s objectives and whether it will produce a solid cash flow after expenses. This will demonstrate the quality of the investment and ultimately make the investor’s purchase decisions.
With the most popular goal of property investment being to earn an additional income, return on investment is a major benefit that usually turns the heads of investors.
InflationQuite often, rents increase with inflation, offering investors protection from inflation in a sense. With inflation, investors are set to receive a higher income from their investment as when the cost of living increases, so do rental prices.
Additionally, when inflation hits, the number of renters often begins to climb as people don’t feel secure enough to commit to a mortgage as they tend to become increasingly expensive. This causes the demand for rental housing to grow.
DiversityProperty investment offers multiple options, from Buy-to-Lets to Flips. Investors can choose an investment that works for them and fits their goals.
The variety of options also presents the opportunity for investors to diversify their portfolio -refraining from ‘placing all of their eggs in one basket’. By adding different investment types to their portfolio investors can mitigate risk.
AppreciationWhen investing in a property the majority of investors opt for a property they can add value to, increasing its appeal. This is a way investors can add instant appreciation to a property allowing them to earn and receive more for the property than they purchased it for through selling it on or renting it at an appropriate price that earns them a solid ROI.
In most cases, properties will also appreciate over a number of years. Consequently, this gives investors the opportunity to increase rents, bringing them greater income. Meanwhile, as years go on an investor can sell the property for a greater price than they purchased for simply as a result of property appreciation.
LeverageInvesting in anything is a major commitment but the process of a property investment project which adds value to the property is an especially big commitment. Luckily, there are a variety of options made available to assist those looking to invest in property.
A great benefit of investing in real estate property is the opportunities given via banks, mortgage lenders and others, however, it is particularly important due diligence is carried out surrounding each option as each presents their own risk.
ConclusionProperty investment brings investors a great variety of benefits, only some of which are covered in this article.
By choosing to become a property investor, investors can experience being their own boss - making decisions, managing projects and handling the process efficiently to reach their end goal. This control keeps investors coming back as they gain experience in an industry that allows them to make money whilst they sleep.
By carrying out extensive due diligence and ensuring they are adequately prepared, investors commit to projects which will bring them either a set monthly income or an instant ROI via a sale.
With inflation directly affecting rental prices and property appreciation investors can use it to their advantage. A key benefit of inflation for property investors is that demand for rental properties often rises, therefore, as well as raising current rental prices they can capitalise on the opportunity of further investments.
Many benefits come from investors diversifying their property portfolio. Through diversification investors reduce their risk as they are no longer reliant on one investment type. This strengthens their abilities and opportunities as an investor.
Investors can greatly improve a property by adding value to it either cosmetically or through complete renovation. Either way, by doing so, the property experiences immediate appreciation - instantly taking the investor closer to achieving ROI. Meanwhile, properties are also likely to appreciate over time, providing greater benefits to investors who have held onto their property.
There is more than one way to do things, even in the investment industry. Although they are paired with alternative risks, investors have the option of securing funding for their investment elsewhere, potentially increasing their budget or freeing savings. It is vital, however, due diligence is carried out prior.
Disclaimer: This is information based on our knowledge gained throughout years of experience, education and learnings. This information is open to interpretation, therefore, you must carry out your own due diligence regarding the subject.