Property – The Perfect Investment For Building Wealth
All across the UK people are clamoring for a way to have their hard earned money go further and further as they grow into old age.
Adequately preparing for the future means understanding that there will be a point where you are either unable or unwilling to work a 9-5 job to support yourself, so proper wealth building tactics when you’re young is essential. In fact, the younger you start investing, the more money you’ll make once everything is all said and done so long as you stick to your guns and don’t shut things down prematurely.
One such vessel for building wealth is none other than property investment. Some people elect to invest in the portion of a property, such as a hotel investment, whereas others will invest in a home that will be later rented out to locals in need, such as a student accommodation investment.
The reason why this is such a great way to hold on to your money and grow it is as numerous as the properties you could possibly purchase. Let’s go over why property has been one of the greatest and easiest ways for people to grow their net worth:
Appreciation Of Property
As more and more people come to the UK, with a total population growth that averages to something around 1% a year if you take the data from the past ten years, property will continue to appreciate at a steady pace. On top of that, the amount of money you initially purchased the house for won’t be able to buy as much in say, 10 or 20 years simply because of inflation and other trends. Market statistics show an average growth of 3.1% across the UK in the past year. While not every year is as favorable as this one, that’s a significant amount of money per year, and it adds up quickly if you plan on owning a property for a considerable amount of time. Dips in the market shouldn’t be a cause for panic, this is a long term investment and it will nearly always even out in the long run to end up making you money.
Let Your Tenants Pay Your Bills
The biggest challenge that comes along with owning a property is the mortgage. If you buy to let, this challenge can be effectively reduced to a non-issue. So long as you screen your tenants properly and charge the right amount of money every month in rental fees, all of the associated costs of the property can be paid with rent money while you sit back and let your property appreciate in value year after year. The mortgage, taxes, and all applicable fees that come with having a property are managed very well if you pick the right spot, looking for investment hotspots in the UK is a great place to start.
Figure out how much rent is in a given area on average and then compare that to the price of the property itself. With some rough estimates of electricity, water, and yearly taxes, you’ll be able to see if it’s a smart decision. Many banks offer mortgage calculators on their websites, so that’s also a great way to see what kind of mortgage you’ll be able to handle while still maintaining a positive cash flow.
Tax Write-Offs Galore
Being a landlord comes with some extra responsibility. First off, you’re going to have to pay taxes on the income you receive from your tenants, but luckily you can end up saving a lot more money on this income compared to your regular income if you know which tax write-offs to take advantage of. Essentially, anything deemed an “allowable expense” when considering your buy to let property can be written off and you’ll keep more rental income than you expected. You only pay tax on the profit, which is made from subtracting these allowable expenses from the total amount accrued over the course of the year. Things like the costs of general maintenance and upkeep as well as your council tax, water rates, and electricity bills can all be written off against your profit made. There is a bit of a reduced tax burden on your mortgage interest payments as well, but it isn’t a full write off for mortgage payments, unfortunately.
There is also a relief for having to replace items that have become damaged beyond repair. If appliances or things like curtains need replacing because they had to be replaced, you can get some tax relief on the value of the item replaced, so long as the item replacing it is similar in function and purpose and is for the exclusive use of your tenants.
Investment Stability
Some investments are tricky, stocks and bonds are unpredictable, and it’s uncertain whether a certain asset might completely shatter in value or continue to appreciate over time. “Property is one of the few investments that has shown time and time again to be able to withstand any amount of economic hardship” says Stuart Williams, Founder of Thirlmre Deacon Property Investment, a property investment consultancy in London. This is simply due to the fact that people always need a place to live, and there’s only so much land out there to live on. That’s why property investment will always reign supreme over other forms of investment for years to come, as the stability offered and consistent rate of appreciation means long term stability.
Conclusion
Based on all of the reasons above, it’s no secret why some of the richest people in the nation have gotten their wealth at least in part through property investment. So long as you make sure to study market statistics and do your due diligence when it comes to choosing who you let rent in your building, it’s a fantastic way to move your financial future ahead positively for years to come. For some people, their investment property effectively functions as their pension as they plan on selling the property once the mortgage has been paid. By this point in time, they pocketed money from their tenants as well as the fact that the property may have doubled in value since they first purchased it. Seems like a no-brainer, doesn’t it?
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