With property prices now much lower than they were at the peak of the market, it has become far easier to source below market value properties that have excellent prospects for capital growth in the long term when the market fully recovers.
(PRWEB UK) 16 March 2012
For those people who are still undecided about where the best place is to invest, despite the recent surge in buy-to-let mortgages, Colordarcy.com reveal their 7 reasons why property investment remains one of the best ways to save and generate an income.
1. Benefit From Lower House Prices
Analysts at Colordarcy.com are keen to point out that we are now reaching the end of a long period of falling house prices. The benefit of this to the buy-to-let investor is that this has led to an increase in distressed sales and lower prices as homeowners become desperate to sell. This means it’s a buyer’s market for those with the cash to invest.
2. Enjoy High Incomes And Long-Term Capital Growth
Loxley McKenzie MD of Colordarcy.com said “With property prices now much lower than they were at the peak of the market, it has become far easier to source below market value properties that have excellent prospects for capital growth in the long term when the market fully recovers.
However, the ability to negotiate discounts is one of the most important skills a property investor needs to make sure sizeable equity is locked in and yields will be high from day one”
3. Rising Rents Mean Rising Profits
In a market where mortgage lending is tight, rental markets see rapid growth and this is happening in most property markets at the moment including the UK. Rents have been rising by an average 1% a month in the UK for the past 12 months to the point where average rents hit an all-time high of £876 a month.
There are few signs that the restrictions on mortgage lending will be lifted anytime soon which means rents can only continue to rise for those unable to get on the mortgage ladder.
4. Investors Can Use The Bank’s Money To Build a Portfolio
Mortgage lending might be restricted for first time buyers, but for those with cash to invest one of the benefits for buy-to-let investors is that they can have the pick of available properties.
There are now 486 mortgage products on offer compared to 386 a year ago and average interest rates have dropped from 5% a year ago to 4.79% according to Colordarcy.com.
5. Gearing and Leverage
Used to great effect by those who amassed fortunes from property investment prior to 2008, being in a position to take advantage of gearing is still one of th benefits of buy-to-let investing and another reason why buy-to-let is so popular. With all the new mortgage products on offer, investors can now take advantage of one of the secrets to property wealth – gearing and leverage.
The beauty of investing in property according to Colordarcy.com is that for every 20% an investor puts in, they get five times the capital appreciation on that amount. Assuming rental payments cover 125% of the monthly mortgage payments, investors can expect to make enough money from their first property to invest in the next property and so on.
6. Tax Breaks
One of the main benefits of being a buy-to-let investor is that investors get to avoid Mr Taxman (at least some of the time).
A landlord is able to deduct costs from the taxable portion of rental income, and the interest portion of mortgage repayments as well as some of the maintenance costs connected with a property.
7. Property Is A Tangible Asset That Will Rise In Value Over Time
Unlike stocks and shares, property is a tangible asset that will continue to grow over time. Property prices rise on average by around 5% a year (Source: FT) which is far more than cash savings accounts and ISAS which return 0.89% and 2.54% respectively (Source: Moneysupermarket).
Notes to the editor:
Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Atlanta, Brazil, Florida, Turkey and the United Kingdom.
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