Investing in Property

As periods of volatility in the markets continue, many people are pinning their pension hopes on property. Investing in global property can suit those looking for long-term investments, as real estate continues to be one of the most popular vehicles and looks set to continue as such for the foreseeable future.

There are two potential ways in which to make a return on property; rental, which delivers an income by letting to tenants and flipping (buying, improving and selling for profit later at a higher price). Rather than buying property yourself, you can also obtain these potential benefits by investing indirectly in a fund. Impartial advisers such as Forth Capital can provide insight and advice as to the best course of action.

Property demand and prices ebb and flow, so it is important to recognise that property investment is for the longer-term. If you are willing to wait out the potential market downturns, the profits can be impressive when house prices increase at a later stage.

International Property Investment 

If you are considering investment options, overseas property can offer better capital growth and higher yields than property in the UK, especially in London as the property market is perceived as high-risk with inflated prices. International investing provides a broader range of opportunities in selecting investments. It can widen investment diversification beyond domestic property and add new potential sources of return, whilst also mitigating some risk associated with different countries and economies.

Many significant global economic events such as Brexit, political changes in the US and Europe and the end of recession in countries such as Russia have had significant impacts on property investments. With bonds and equities facing tough times in recent years, property can sometimes be regarded as a safe haven.

There is also the added advantage of having property abroad that you can stay or move into if you choose. Some housing markets abroad exhibit characteristics which allow foreigners to find good deals. For example, as the 2008 recession hit the US, real estate prices plummeted, and some prices have not yet fully recovered. There are some good opportunities to be found.

Buying in unfamiliar countries, however, can present some challenges. Institutions, regulations, costs and risks must be taken into account and enlisting expert help when buying property is essential. Property experts such as Forth Capital continually research new markets which may represent investment hot-spots, for example where there are attractively priced properties in jurisdictions in which the prices have fallen dramatically. In general terms, it can be wiser to invest in more established markets which will be a safer, long-term investment.

Regardless as to your preferences, make sure that your chosen property is in an easily accessible location with local amenities nearby and in a popular location. It is important to bear in mind that some tourist hotspots virtually close down at the end of the tourist season.

It can be hard to understand and get to grips with the different taxes and legislative regimes relating to property ownership in a different country. Managing the property yourself from the UK can also be difficult, and marketing your property through local estate agents is almost invariably a good idea, but there will be fees to take into account. If you are letting the property, you will also need to make sure that it meets certain standards. Factor in additional costs such as maintenance and cleaning costs as well as void periods in income.

Income tax must be paid on any rent you receive. You can deduct some expenses from rental income to reduce taxable profits, but these must only relate to your lettings business and not personal use. Forth Capital are experts in foreign taxation and can provide advice. You will also require the services of a lawyer to negotiate the various legal systems; ideally a specialist recommended by your national chamber of commerce or an Embassy.

Can I Transfer My Pension into Property?

Investing in property can be a way to control, consolidate and simplify your pension. There can be a better return on your investment when compared with standard pensions, as well as security over an asset to protect your capital. Consult with professional advisors to understand your options.

It is often a matter of financial freedom for pension savers, as some of your pension capital may be eligible for transfer into alternative investment vehicles.

Many are concerned that pensions now offer little value and are looking at alternative options such as investing in property. For example, if you are a homeowner and run your own business, you may be able to release up to 75 percent of your pension.

Taking your future and investment into your own hands can be advantageous but is not without its risks. In a traditional shares and stocks fund, you may achieve somewhere in the region of 5 percent growth in the near term future, which may not provide the capital you require at pensionable age; investing in property could provide a higher return.

Clearly, in buying property, you should take your time over identifying options and committing to a purchase. Seek as much advice as possible, conduct research and search through as many property resources and websites as you can. The more informed you are, the more likely you are to secure a good investment.

The larger your portfolio, the more complex financing becomes, despite the increased flexibility. Finance strategies should be tailored to your property portfolio, in which case you will require professional advice.

Investors appetite for building a property portfolio shows no sign of abating; now may be the time to use your pension capital to invest wisely in property. Why not contact our expert team at Forth Capital for further information and advice.