The property industry is full of opportunities. Whether you are planning for the future with a buy-to-let to add to your retirement fund or as a path to financial freedom, property is seen as the most secure way to protect and grow your wealth.
Hopefully these points below will help you to understand property as a route to building financial wealth through investment.
People will always need somewhere to live
Property will always be an investment that offers sustainable, long-term value. As the population grows so does the need for houses. There is one main factor that would pose a threat and that is a significant reduction in the area’s population. Providing you research the area you want to invest in, you will be on the right path to becoming successful.
Safe investment with large returns
Buying property is regarded as relatively safe and can bring large returns. These returns are increased through the use of leverage. If you leverage a property deal, it simply means you are using borrowed capital to finance the deal, increasing your return on investment.
Property is the only investment in which leverage can be used to increase return on capital.
However, unlike stocks, property value doesn’t usually double within a year. Nonetheless as a long-term investment property can match the growth of stocks with less volatility.
Unlike buying stocks or investing spare cash into an index fund, financing property often requires a large capital. On the plus side, the amount of capital required is reduced with borrowings from a banks or lenders. Most people invest in property for the long-term rental income or for future growth in the property’s value.
Ideally you would invest to seek a combination of the two.
Don’t be fooled, there is risk
Property investment has the potential for financial risk, since several factors can influence the success or failure.
Smart developers and investors will seek to optimise these factors to minimise potential risks.
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