4 Myths of Property Investment You Shouldn’t Believe
4 Myths of Property Investment You Shouldn’t Believe
Property investment is highly regarded as a secure and stable source of income. Compared to other investment vehicles, property is far more predictable than any other investment asset. Unlike stocks or bonds which can be highly unpredictable, property prices tend to follow a consistent and steady pattern. However, with every type of investment comes some element of risk. These intricacies and complications can lead to myths about the property investment market, that can often put off first-time investors.
Here at CityRise, we strongly believe property investment is an asset that should not be overlooked. To put it simply, society will always need housing. Therefore, there will always be a demand for property. As a result, property investment is a safe investment choice. Of course, there are more complex details to consider, which is where the property investment myths come about. We have compiled some common myths about property investment that may be leading you to question your investment decision, but have little to no truth behind them.
“Post-pandemic is not a good time to invest”
First of all, the idea of a ‘good time to invest’ in itself is a myth. Trying to choose the ‘right time’ is often just an excuse made by investors to stall their decision. An expert investor is able to adapt to the market in terms of where and what they buy. For example, while it might not have been ‘the right time’ to invest in a city-centre, student accommodation last year, it was the perfect time to invest in commuter towns and areas with open space. The property market is bound to fluctuate and change, especially if you are working towards a long-term investment. Therefore, the concept of a ‘good-time’ to invest is a myth.
Secondly, if anything, the post-pandemic era has proven to be the ideal time to invest. The housing market has reached record-breaking levels of activity, and rental demand has hit an all-time high. Despite the country being in a period of financial uncertainty, the property market has not suffered. Also, a major factor driving momentum in the market is the supply and demand imbalance. The continual demand for housing, combined with a chronic undersupply (which is not expected to change any time soon), positions the present time as a great opportunity for property investment.
“You need a lot of money”
A common myth about property investment is that you need to be extremely wealthy. This has put off a lot of first-time investors, but it is simply not the case. The important factor to remember about property investment is that it is about aligning your investment with your current financial situation. For example, a smaller budget means you start with a smaller investment, such as a one-bed unit. Then, you get your foot in the door. As your cash flow begins to build up and you start making lucrative profits, you are able to make your way up to larger properties. You’ll have more fluidity to finance larger investments that offer more lucrative returns.
The point to take away from this is, property investment is a ladder. Investors will start off with little experience and little money. Over time, you can climb up the ladder and more and more investments will become accessible to you. In no way do you need to be a millionaire to invest in property.
Many investors get their foot in the door by leveraging existing equity in their homes or tapping into their savings. Others may purchase off-plan, which means they can acquire property at today’s pricing but not having to settle until a later date. Of course, it’s important to try and enter the investment with a financially responsible attitude, but the idea that you need to be extremely wealthy to invest in property is a myth.
“You shouldn’t invest in property before it has been built”
This statement is definitely a myth, as investing off-plan is one of the most lucrative investment opportunities. If you choose to invest off-plan, you can secure the purchase at a discounted price before any capital appreciation has been built up. Consequently, you will receive instant equity at the point of completion.
This myth stems from investors who are not using a reputable developer. However, finding a reputable developer who has a portfolio of successful, completed properties, launched off-plan, will massively reduce your risk. Additionally, a reputable developer will give you a clear idea of potential rental yields and capital growth based on their expert knowledge. Off-plan developments are also much more appealing for tenants as they are brand new and purpose-built. Therefore, they are built with the end-user in mind. Tenants would be willing to pay more for a premium design that suits their needs.
On top of this, the myth stems from investors who want instant gratification from their property. Some investors will be reluctant to invest off-plan as they want to access their rental returns instantly. Therefore, they are reluctant to wait months or years for completion. However, property investment is a mid to long-term strategy. Investors who choose to invest off-plan will see the highest rental yields and long-term capital growth. If you want to make stable, long-term returns then off-plan investing is the right choice.
“There is too much risk involved”
As mentioned previously, every investment strategy comes with some element of risk. Property, however, is by far the most secure and predictable asset of all. You only need to look back and compare the performances of different investment vehicles to see the drastic difference. Holding stocks in businesses, for example, runs a high risk of liquidation. Time and time again we see fluctuation in the stock market, which results in a loss of money. Therefore, it’s no wonder people assume the same for the property market if they put all the investment assets under one umbrella.
However, this is a huge myth. Property investment always manages to recover from downfalls. Losing money is extremely unlikely in property investment. The most common, but still unlikely, way that you could lose money is if you were forced to sell your property for a lower price you bought it for. This instance is extremely unlikely, as you would only ever sell your investment at a price that provides you with profit. Most investors will choose to hold onto their property until it significantly improves in price. Hence, we encourage property investment to be a long-term investment rather than short-term gains. That way, it will always be a predictable and safe investment.
Whatever way you look at property, it is by far the safest and most profitable investment vehicle out there. The market consistently shows resilience in the face of hardship, last year being the perfect example. History has shown us that the property market continues to grow on an upwards trajectory and with the right amount of patience, your property will not lose you any money. In the example of stocks and shares, your money is out of your control. Property investment, on the other hand, is a much safer choice. After all, the property market is the backbone of our society.
That is not to say property investment comes without risk, which is why here at CityRise, we would advise you not to jump onto the ladder without doing substantial research first. Our team of experts are familiar with every corner of the property investment world and can advise you every step of the way. If you do wish to speak to one of our expert team members, you can rest assured that your first step into the property world will be a safe and profitable one.
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