When is the Best Time to Start Investing in Property?

Property investments have several benefits over other types of investments. Real estate provides a more predictable cash flow than stocks, bonds, or mutual funds. Most properties increase in value over time, allowing you to keep up with inflation; they may also provide higher returns due to positive leverage.

They’re also excellent investment options, with the potential to generate ongoing passive income and leave you with valuable assets to pass on to your children.

However, there are a few things you should think about before you decide to invest. Purchasing property can be expensive, even before you factor in maintenance costs and potential income gaps between tenants.

property investment

You’ll also need to be aware of the current circumstances that influence investment decisions. Property prices are very likely to be affected by crises and political tensions. For starters, Brexit has caused a shift in the UK property market. While it has made investors more wary of investing in real estate, a poll featured in one of our previous articles revealed that half of those polled were optimistic that real estate activity would pick up post-Brexit.

So far, we’ve seen the country’s real estate market maintain its integrity despite political upheaval.

Certain parts of the market have even slightly dropped in price, which may be an opportunity for you to make your move. After all, when it comes to property investments, timing is everything.

When you have sufficient funds

property investment

When purchasing property, you have a number of payment options to choose from. Most people, however, choose to put down a deposit and pay a mortgage.

The amount you put down as a deposit, total household income, and your credit score all play a role in whether or not you qualify for a mortgage. Even before you speak with a mortgage broker, check your credit score.

You should pay off your debts, credit cards, and loans before applying for a mortgage, as a higher credit score increases your chances of getting a good mortgage.

You could, on the other hand, pay for property in cash if you have the entire amount ready when making an offer to buy a property. Of course, being a cash buyer necessitates large sums of money, and it’s unlikely that someone just starting out on the property ladder will be able to put down the full amount.

property investment

However, you might want to think about this arrangement if you’re in your 40s or 50s and looking to invest. You might have enough money saved up at this point.

Being a cash buyer also has its benefits, such as increased security, a faster turnover process, and no interest.

Whether you choose a mortgage or a cash purchase, investing is a good idea, especially at this age. You should begin looking into property investments that can provide you with long-term passive income.

After working hard for most of your life, you should be able to enjoy the fruits of your labour, and investing in property could help. With the UK’s life expectancy currently at 81, you have plenty of time to consider whether this is the best option for you.

Income from property investments, in addition to a pension, could provide you with a comfortable and meaningful retirement.

The market conditions are favorable.

The real estate market is affected by supply and demand. Before you put money down on a house, find out if the market conditions are favorable to you. A buyer’s market is one such condition to keep an eye out for.

property investment

This occurs when supply exceeds demand, causing market prices to fall. During the pandemic, we saw this happen. In fact, experts from Zoopla, Right move, and the Centre for Economics and Business Research (CEBR) predict a 5% drop in house prices by the end of 2021.

While a buyer’s market may occur when the national economy is in a slump—a similar phenomenon occurred during “The Great Recession” in 2008—it may be the ideal time to make an property investment at a significantly lower price.

In contrast, a seller’s market can occur when demand exceeds supply. Because of the scarcity, bidding wars erupt, driving up prices. Needless to say, the current market situation is not ideal for investors.

Overall, there are numerous advantages to investing in real estate, so make sure that when you do make a move, you are doing so to get the best deals at the best possible times!

by Rachel Buscall

by Rachel Buscall

Co-Founder & Managing Director at New Capital Link. Having started her career in the financial sector, Rachel demonstrated a natural flair for entrepreneurship.

New Capital Link

Alternative investment specialists offering structured opportunities across the UK & Overseas.

New Capital Link is a boutique London-based introducer that offers unique UK & global investment opportunities worldwide.

Recent Posts

Follow Us

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

What are the key risks?

1. You could lose all the money you invest

If the business offering this investment fails, there is a high risk that you will lose all your money. Businesses like this often fail as they usually use risky investment strategies. 

Advertised rates of return aren’t guaranteed. This is not a savings account. If the issuer doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is.

These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.

2. You are unlikely to be protected if something goes wrong

The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here. https://www.fscs.org.uk/what-we-cover/investments/ or

Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here. https://www.fscs.org.uk/check/investment-protection-checker/

The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here. https://www.financial-ombudsman.org.uk/consumers

3. You are unlikely to get your money back quickly

This type of business could face cash-flow problems that delay interest payments. It could also fail altogether and be unable to repay investors their money. 

You are unlikely to be able to cash in your investment early by selling it. You are usually locked in until the business has paid you back over the period agreed. In the rare circumstances where it is possible to sell your investment in a ‘secondary market’, you may not find a buyer at the price you are willing to sell.

4. This is a complex investment

This investment has a complex structure based on other risky investments. A business that raises money like this lends it to, or invests it in, other businesses or property. This makes it difficult for the investor to know where their money is going.

This makes it difficult to predict how risky the investment is, but it will most likely be high.

You may wish to get financial advice before deciding to invest.

5. Don’t put all your eggs in one basket

Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. 

A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest

If you are interested in learning more about how to protect yourself, visit the FCA’s website here: https://www.fca.org.uk/investsmart

For further information about minibonds, visit the FCA’s website here.https://www.fca.org.uk/consumers/mini-bonds