Much better returns than leaving money in the bank:
Returns of 10% per year or even higher are possible with a buy to let property. This is much higher than the standard bank saving account interest rate, which is usually between 0.60%-1.25%.
£10,000 savings in the bank = £80 annual return at 0.80%
£10,000 invested in a BTL Property = £1,000 annual return at 10.00%
Property is the safest asset class:
While I believe investment portfolio diversification into other assets such as stocks and crypto is a very good thing, it is important to remember that those asset classes are especially crypto is highly volatile.
Property offers an extremely predictable cash flow; it appreciates in value, thus keeping up with inflation; it provides a higher return because of positive leverage; and it offers equity growth through debt reduction.
Leverage bank finance:
Leveraging bank finance to purchase property is great, as you can borrow 75% of the value while only needing 25% cash up front. Couple this with interest rates at an all time low, now is a great time to leverage finance to invest.
If you have £25,000 and ask the bank to lend you £75,000 so you can buy £100,000 of shares or crypto, they will show you the door and laugh you out of the room!
Of course, you can easily leverage trade stocks and crypto using apps such eToro or Trading212. But, unless you are a trading ninja there is a good chance a market dip will leave you broke, living under a bridge and eating cold beans.
Whereas if you ask to borrow the same £75,000 to buy a £100,000 house the bank will send out a surveyor, complete a rental stress test and if the property is valued at the £100,000, they will happily lend you the money at a low manageable interest rate.
The benefit of capital growth and compounding:
The average capital growth rate in the UK has historically been 3.8% per annum.
Let’s say for example you invest £25,000 cash, borrow £75,000 of a mortgage then hold the property for 20 years. The property value after 20 years based on 3.8% capital growth per annum with the added bonus of compounding value will be worth £210,837.12.
An asset worth £210,000 for an initial investment of £25,000, sounds like a sweet deal to me!
Property rents rise annually:
Currently in the UK rents rise at an average rate of between 3-5% per year.
This means based on the example above if you were to initially begin renting the property at £600 per month in 20 years you would be expecting to achieve a monthly rental income of £1083. Average yearly rental rises = An inflation killer.
Population increase = Supply decreases & demand increases
Population growth within an area means more people will need homes, it’s a simple fact! When the number of prospective residents grows at a faster rate than the supply of new properties, this makes the value of current housing increase.
You don’t have to look far from home to see this concept in action. The supply of new housing in the UK has been unable to keep up with demand for quite some time now, resulting in a booming housing market. It is estimated across the UK there has been a deficit of 1,000,000 new homes required between 2009-19.
At McAtamney Property Investment we want to demystify the notion that property investing is difficult. Life is already complicated enough; property investing doesn’t need to be!
We offer a wide range of services from property sourcing, refurb management, property management and we’ll even find you a suitable tenant if you want.
If you want to invest for a more secure future and a little extra cash every month but don’t have the time, or simply can’t be arsed, feel free to sit back and let us do the hard work.
For a simplified stress free approach to property investing contact us today to set up a meeting, which will help you secure your financial future.