Only You Can Make the Right Property Investment
21 April 2012
There is no shortage of information out there telling us what we should and shouldn't be investing in. But when it comes right down to it, you are the only person who can make the right investment, for you, because only you know what is right for you.
Thank fully, with the mass adoption of the internet the world is a very small place, and literally full of investment opportunities – especially now, so there are plenty to choose from.
But, I hear you ask, what kind of things determine the right investment for me? And this is exactly why I am saying only you can choose the right property investment for you; only you know what your expectations and hopes are for the investment, your ambitions, your desires and your appetite for risk. All we can do is lay out a few choices and what hopes/expectations they fulfil, and allow you to match yourself to the right investment.
Investor 1: I Want A Safe Retirement Fund
Stock markets have been the source of pension fund earnings for decades, but when the stock market fell apart in the financial crisis, it left millions of us with a lot less in our pension pot than we expected and needed. Ever since then more and more people have sought to invest in property, which may not earn as much on a good cycle, but certainly will never lose as much on a bad one.
Investment has always been about balancing risk and reward, but the crash certainly tipped the scales in favour of reducing risk. This not only meant choosing property over the stock market, but for many it went further to choosing only the properties with the lowest risk attached. Thank fully, unlike the stock market, it is fairly easy to find properties with next to no risk attached.
French leasebacks have become very popular in the post crash world. During the boom they were shunned for their 3% average rental yield, but with the scales set to safety the fact that this yield was guaranteed by the solid French government became far more important than its relatively small size. On top of that French property prices hadn't fallen by anywhere near as much as most places, around 5%, and started growing again in 2010.
Hotel Room Investments
Because of the way they are structured, hotel room investments also became very appealing to those looking for a safe retirement. Becoming part of the mainstream hotel stock, such deals usually come with guaranteed rental yields of 5-8 per cent, and sometimes also with guaranteed buy back deals of 125% or 150% after 5 years or so. The best deals are those where the buy back is optional, allowing you to take the higher price be it the buy back or an open market sale.
For much the same reasoning as hotel rooms are popular, so are SIPP deals. As you may know, SIPP investments can not be residential, they must be commercial, but resort properties that come under the resort management, hotel room investments as laid out above are considered commercial because they are under the management of a commercial entity. So, people can tie the two together, by investing in hotel rooms and put them into their SIPP, which gives the investment additional ooomph in the form of tax breaks etc.