15 Mar Here’s how to kickstart your career in property investment
Property investment has long been an attractive sector for people who want to make some money. While it’s categorised as an alternative asset class compared with traditional investing in stocks and shares, property investment is lower risk than others.
For example, if you’re considering jumping into alternative investments such as art, cryptocurrency or fine wine, then you are looking at very high risks along with the possibility of high returns. Property investment, however, offers a more stable and comparatively low risk investment path.
Is now a good time to learn about property investment?
We’re living through difficult economic times around the world because of the pandemic. But property investment remains a positive asset class for investors. As residential and commercial property aren’t traded directly on an exchange, there is some protection for the asset class from the extreme volatility of the market.
If you’re considering whether to branch out and try property investment, online learning is a good option. People who are brand new to property investment should take advantage of a professional course, rather than try to muddle their way through. It may feel tempting to dive right in, but it’s always worth fully understanding the basics before you risk your investments.
The Professional Diploma in Property Investment Programme offered by Shaw Academy covers the complete beginner’s guide to understanding the sector. All of the basics are covered including what you should consider before deciding to go ahead, investment strategies and whether this is the right path for your career. Before we look more closely at the course, here’s some reasons why property investment could be a good choice for you.
Why invest in property anyway?
Whether you invest in property with a view to capital gains when you sell, or to rent it out, you should benefit financially from the investment. Culturally, attitudes towards property ownership differ. For example, in the UK it has long been considered a mark of success, while in other European countries renting is far more accepted as a normal way of life.
In countries like the UK the demand for housing always outstrips supply, leading to constant development and construction. This means plenty of opportunities for investors, and for the past 40 years or so prices have been climbing high. Since 1989, UK house prices have risen by 308% according to the UK House Price Index. If we compare this with the UK stock market that has risen by 228% over the same time period, it’s clear that housing is a good option for investors.
Buying your own house or flat to live in is a form of property investment, as you will likely benefit from the higher value of the property when you decide to sell. But many property investors choose to buy properties to rent out – the buy-to-let market. This gives the investor two ways of making money. They are the increase in value of the house over time, and the regular rental income that will exceed mortgage payments.
Buy-to-let gives you more control as am investor, as it’s up to you when you sell, when you raise the rent and ultimately what the property looks like. If you decide to rent out on a long-term basis then you will have a relatively stable source of income. However, in many countries you need a large deposit in the first place.
For those new to property investment, this initial outlay can be off-putting. In the UK, a typical deposit is 25% of the total price of the property. So, if we look at London, for example, this means the deposit is generally well over £100,000. There is then stamp duty to think about. This is currently on hold due to the pandemic but that won’t last much longer.
Investing in property through real estate investment trusts (REITs)
Many people choose to invest through REITs in the UK. These were introduced in 2007 to open up property investment to more investors. Many of these trusts are listed on the stock market. REITs are particularly attractive because they offer a reliable source of income. This is because they have to distribute 90% of rental income from the properties in question to investors in the form of dividends.
Investors who want to cut the stock market out of their strategy could choose a private property fund instead. These funds collate investors’ money and use it to buy property. The real estate is then managed by a team that takes a fee from the investors. In exchange they offer some of the profit. However, these aren’t an option for most investors as they need huge minimum investment. This makes them primarily an investment option for wealthy people only.
For beginners and those who don’t have access to a large amount of money to start with, there are newer ways to invest in property. Tech platforms over recent years have opened up property investment through crowdfunding and property lending. Crowdfunding allows investors to buy a smaller share of a property along with a group of other small investors. Property lending is when investors get together and loan a pool of money to a person secured against a property they own.
These new property investment platforms open up property investment to people who don’t have a huge stake to invest. However, you do need to know what you’re doing with these platforms, and they are best for those with experience.
This is where studying property investment online can help. By getting the basics under your belt before you invest any money, you will have a much higher chance of making a return.
Shaw Academy’s 16-week property investment course teaches the fundamentals of property investment theory. The modules go on to show you how to apply theory, develop an investment strategy, understand how to make a return, learn about various deals t get started and, crucially, property understand risk management.
All investments come with a certain amount of risk, and it’s no different with property. Take your time, learn the basics and work out the best strategy to get you where you want to go.