Bill Maher landed in hot water recently after he said he welcomed another recession if it meant that Donald Trump would lose his presidency. Forget the politics for a moment and the fact that Maher could easily afford a recession on his salary. Instead, let’s focus on his defence. Maher suggested that it didn’t matter whether he wished for one or not, we were due to a recession. He’s right of course. Recessions come around like clockwork and seem to be completely unavoidable. Since there hasn’t been one in a while, it’s only a matter of time before the economy takes a turn for the worse once more. What does this mean?
It means that individuals should be looking for ways to invest. One thing we know happens in a recession is that savings often get washed away. If you have hundreds of thousands in savings right now, you need to think about investing it. Even if you don’t have savings, it’s still worth considering this option because there are other ways to get in on the action and essentially make sure you are protected with a backup in the wake of a financial fallout.
This brings us to property. Short of investing in precious metals, the property is arguably the surest and safest investment option. Invest in property, and you can keep your money safe for years, maybe even decades. It’s certainly not as volatile as other investment possibilities, and that’s probably what you’re looking for. You want something that is safe but also has the potential to bring a huge ROI. Well, that’s property investments in a nutshell. Let’s look at this in a little more detail.
Choosing Your Path
The first step is to consider whether you should invest to sell or invest in letting. Investing to let is the long-term option whereas selling will put the money you make right back in your bank account. As such, if you’re worried about the chance of a recession buying to let is arguably your best option.
Even then there are a few possibilities you can think about. For instance, you could buy to let a home, an apartment, a block of apartments or even a holiday home. Right away, if you fear the chance of a recession, there’s one choice that you should avoid, and that’s the holiday home. You see, holidays are luxuries and in a recession luxuries are the first thing to go. People take fewer holidays which means that making money off an investment like this is going to be more difficult.
It’s between a house and apartments then or potentially offices. But again, offices are risky because when you buy offices, you’re hoping that businesses will be booming. Of course, this won’t happen through a recession.
The best bet would be to buy apartments to rent out in the city. You should probably start at one. This can provide a comfortable second income and essentially give you an easy life. You’ll always have money to fall back on with this single real estate investment option.
Why Not Buy More Than One?
Think about the game of Monopoly because actually, it can teach you a lot about the property investment game. First, you buy the house which is fine, and then you buy three more houses. Eventually, you might end up with a hotel. Unfortunately, at this point, things can get a little risky. What if your houses need maintenance? Unless you are making substantial profits, then maintenance bills really could take you through the ringer. This is exactly what happens if you pick up that maintenance chance card in Monopoly and the effect is quite similar to a real-life maintenance situation. You’ll have bills that you may not be able to afford.
You can win big by taking risks with real estate, but if you want to keep your finances healthy, one or two apartments are all you need.
Can You Invest Without An Investment?
You may like the idea of investing in property but not have any money to do it right now. You can still invest, and there are a couple options. You can find other people to go in on the investment with you. By doing this, you each only pay a few thousand and share the profits between you. Alternatively, you can take out a personal loan. With personal loans, you can borrow as much as 150K which is more than enough to get that apartment.
You will be taking on a sizeable amount of debt. But you should be able to pay this off gradually with the money that you’re making from letting it out. The issue here is that your investment will be built on a loan so you will have to keep a check on repayments and make sure that you are not in the position where your income stops. Empty properties can be a real killer for investors.
Who Should Be Your Tennant?
There are plenty of choices for tenants. Students can be a good option, particularly if you buy apartments in the city. Students need affordable places to stay, and they aren’t usually interested in all the bells and whistles. You can also get them to sign a guarantor agreement which means that if they can’t pay for one month, then someone else will.
The only issue with the students that you need to consider is those summer months. It’s crucial that you make sure that you take into account the months through the year where no one will be using the property at all. That said, there are various ways around this including fitting it into your budget.
We hope this helps shed some light on real estate investments and whether it is something that you should get involved in. At the very least real estate can be a great way to keep your money secure even in the wake of a recession or any other problem in the economy. Make the right choices, and you also stand to gain huge profits in the short and long term.