Continuing on from our first article on the benefits of hands-free property investments, where we already listed five of the most popular advantages, we’ll now go on to give you another handful. And almost certainly give you something to ponder when it comes to your own money and property investing:
Plenty of diversity on offer
With hands-free property investing, it’s possible to choose from residential or commercial property, or a mix of both. You can also look into care home leases (a growing industry), student accommodation or even hotel rooms. There also exists diversification within property funds themselves. The majority of Peer 2 Peer Lending companies, for instance, will advise spreading your loan out to take in several different projects. This would have the advantage of offsetting any potential difficulties with a borrower who is having trouble making his or her regular monthly payments.
Can make a good profit in short time scale
You could buy a couple of properties off-plan (i.e. before they are even built) and then flip them on completion in around nine months to a year’s time. Usually the property will then be worth quite a bit more, so you’ll have made money by doing nothing apart from having researched the initial investment opportunity.
Don’t need much cash
Certainly, if you’re planning on putting money into a Crowdfunding project or a Peer 2 Peer Lending scheme, then you’re talking about a few hundred pounds (rather than £20,000 to £30,000 as you would with a deposit for buy to let). In other words, you don’t need to be rich to be a hands-free property investor.
Returns can be higher
With landlords having to pay stamp duty on second homes, and the cutting of landlord mortgage interest relief, profits from hands on buy to let investments aren’t as high as before. However, that’s not the case with many hands-off property strategies. Some funds, for instance, offer six to seven per cent interest. And that’s compared to around just two per cent that traditional high street banks and other lending institutions are offering.
Investments don’t have to be local
Passive property investments mean someone else is managing it, meaning it doesn’t matter where the property in question is located. It could, for instance be in Europe, while you yourself are based in the UK.
Provided you trust the company you have invested with, or your renovation partner etc. then you can just sit back and let them get on with it.
So, as you can see from the above, well-researched hands-free property investing can save you time, headaches, sleepless nights and result in higher returns than traditional ‘hands-on’ self-managed buy to let. It’s also less expensive to get involved in the first place, since most property funds ask for cash upfront.
These funds can be regulated by the Financial Conduct Authority, giving you peace of mind and the confidence to know the funds are being run properly and in line with government regulations.