Taking advantage of expertise in property investments
The truth about property investments vs. stock market portfolios is that property investments knock the spots off the stock market. If you’d bought an average-value house 90 years ago, your capital growth today would be around 47,000%. The same investment in shares would have grown by just 11,000%.
When you invest in property:
- The rental yield is higher than the dividend yield on shares;
- You can take advantage of the benefits of gearing in property investment and make a money profit you don’t have; and
- You can benefit from tax deductibles to reduce your income tax liability.
If you’re like most people, you won’t know where to look for investment opportunities. So you’ll go to a financial advisor, who will sell you an investment on the stock market. You’ll miss out on the benefits of investing in buy-to-let property because a financial advisor isn’t allowed to advise on investing in property that is directly held.
In this post I’m going to look at how working with a property investment company can get you the advantages that investors with property benefit from every day.
What is a property investment company?
Most property investment companies buy properties and then invite investors to invest with them. The investors get a proportion of the investment profits, in the same way that stock market investors get paid a dividend. They are, in effect, property funds.
Other property investment companies aim to educate their clients on how to invest in property, helping them take advantage of the ebbs and flows of the property market. When you know how to do your research and due diligence, you’ll make better investment decisions and benefit from higher rental yields and stronger-than-average capital growth.
Four direct benefits of working with a property investment company
1. Early exposure to property investment opportunities
When you work with a property investment company that has close links with developers, you’ll get opportunities to invest in off-plan property at the earliest stages. Developers will have a public launch when they offer investors off-plan properties, but property investment companies get an even earlier opportunity: and this is when the real money is usually made. As they say, the early bird catches the worm: these off-market, pre-launch sales can offer exceptional investment potential.
2. Negotiating the best terms
As a property investor, you’ll make more profit by being an ace negotiator. Both types of company are expert at negotiating techniques, and both have the benefit of negotiating on multiple properties. As an individual investor, the discount you can negotiate on a single property is probably lower.
It is one of the distinct advantages of working with a property company that works with clients, rather than one that has investors: the negotiated discount is passed on to you, rather than eaten away in company costs, employee wages, and bonuses.
3. Access to research
As with all investments, your long-term profitability depends on you buying the best properties. A property fund has a team of researchers who buy and sell properties according to a secret formula you’ll never know. You have to place your entire trust in them, without them trusting you to know how they make investment decisions.
A property investment company that also looks to educate its clients is open about its research. In fact, it will show you how to do your research. With all its property investments, you’ll know exactly why it makes sense to buy. The best property investment companies will offer their research to you, free of charge. That saves you time and effort and gives you a real basis on which to make investment decisions.
4. Access to trusted professional advice
You’ll need to partner up with certain professionals to ensure that the investment process runs smoothly. A solicitor will ensure that everything is above board. A mortgage advisor will make certain that you get the cheapest buy-to-let mortgage – and that’s going to have a significant positive impact on the return on your investment.
By partnering up with a property investment company, you’ll accelerate your knowledge of property investing. You’ll also be able to leverage off their expertise, access their research, and take advantage of the early-stage opportunities they negotiate with developers.