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Why invest in property? Our top 5 reasons
02/12/2019
Property investments are sustainable. Its returns are consistent.
With the roller coaster rides of the world's leading stock markets and banks hardly giving you any returns on your savings, many people wonder what to do with their hard earned money and savings. Yes, there are booming industries and many people will tell you to invest in renewable energy, cryptocurrencies or internet start-ups because of the potential the shares of related companies have on the stock market. And true, investing in a successful start-up or a trendy industry may give you high returns and even prosperity in the short term, and if lucky, even in the long term.
But there is the problem. While any investment bears its risks, investing in trendy industries or start-ups has multiple risks. The pace of change in today's world is very fast and what is trendy today, may reveal itself as a flop tomorrow. If you like to play games and love the risk of gambling, these investments may be the right thing for you. But they may drive you into despair as well.
If you're looking for a sustainable investment, with a minimal risk and consistent returns over time, property and real estate investments may be the right thing for you.
There are no real losers among property investors
Investing in property and real estate is substantially different from investing in the stock market. Investing in property is a true investment, while investing in stocks is more of a game where one can lose or win. It is very hard to predict the future of the company you're buying shares of unless you really know the company inside out. And even then, it remains difficult to forecast the future of the industry the company is part of without being an absolute expert in this industry. If the industry gets hurt by any factor, chances are big that the specific company shares you've invested in will be hit too.
Properties are different as not being part of an industry or market. Even after the big property bubbles earlier this decade, people managed to buy properties at low prices, revamped them, and made substantial profit by refurbishing them. Other people have seen their property drop in value during the crisis, but where still able to make income through renting out the property while waiting for property prices to go up again. In real estate, you are much more in control of your profits than on the stock market.
Property offers consistent and sustainable returns over the years
As an investor, you are looking for consistent returns that you can save or reinvest. Property investments offer just that. If you invested in a property, you can rent it out on the short-term market or long-term market and receive weekly or monthly payments from your tenants.
Long-term contracts with your tenants are usually less of a hassle than the short-term or holiday rental market. The tenant will take care of the maintenance inside the property and just transfer you the rent on a regular basis, monthly in most cases.
The short-term market, or the holiday rental market, may be more profitable, but also come with more time and energy investment. Holiday makers will expect a fully functional property upon arrival and if there is anything wrong, they expect you to be there as soon as possible to fix it. Bed linen and cleaning needs to be done before and after every booking and you will need to keep track of your bookings and answer any questions from potential clients before they make their booking. There are dedicated property management companies who can help you with this, but obviously outsourcing these tasks will cost you money too.
Nevertheless, short-term rentals are more profitable than long-term rentals. But if you are looking to invest in a holiday home or resort property, make sure to choose an all-year round holiday destination like Cyprus, the Algarve in the south of Portugal or Cape Verde, offering tropical temperatures all year round. This will increase the length of the rental season, boosting your returns on your investment even further.
Enjoy unique tax- and other advantages
When buying a property, you are often eligible for a unique set of tax advantages, especially if you buy your property abroad. Many tourist destinations attract foreign investment with tax incentives and other advantages like a "residence through investment" scheme.
A good example is Portugal, a country in Europe's south, which has been very successful in attracting foreign investment. For northern European retirees, Portugal offers the possibility of an income tax free pension and for non-Europeans. So many retirees from the UK, Ireland, the Netherlands, Germany, Belgium and France have invested in a house under the Portuguese sun that the country is now nicknamed Europe's Florida. For non-Europeans, it offers the Golden Visa scheme, which allows for a residency and work permit in Portugal for people investing €350.000 or more in property. As Portugal is part of the Schengen Area, this visa also allows for free travel and the possibility to conduct business in any of the Schengen Member countries.
The perfect combination of good returns and enjoyment
If you've decided to invest in a property on one of the world's tourism hotspots, you may not only have invested in high returns, but also in your and your family's enjoyment. Think of spending your holidays in your own dream property under the sun, and generating income through the holiday rental market whenever you or your family are not there. This means that your investment in a property under the sun will not only give you returns, but also free holidays for the rest of your life.
Real Estate Investments are a perfect for retirement planning
Sure, there are many possibilities to cater for your retirement, your job or career being the most important one. But investing in real estate at a younger age, when banks still are confident in providing you with a long-term loan, can be a great supplement to your pension when you get into retirement age. Many people think of investing in a second home only around that age, meaning that a part of the potential profit they can make with their second home will be used to pay off a loan. If you invest in property at a younger age by using a loan, this investment in your pension becomes very affordable and by the time you get into retirement, the returns will even be higher as your second home is paid off. When buying abroad, make sure to purchase your second home in a country without any limitations to foreign property ownership. For example, if you buy a property in Cape Verde, Cyprus or Portugal, the full title deeds will be on your name with the right to be inherited by your next of kin. Your investment then not only caters for your retirement, but also retirement and enjoyment of your children.
Find the right advise and be smart
But buying a property is not something you do in one go. Like any investment, it needs professional advice, careful planning and strategic thinking. Depending on your needs, location of the property is key. You would not want to buy an apartment in an area where demand for short- or long term lettings is poor. Also, in order to maximise the returns of your investment, the property should at all times be bought on, or wherever possible, below market price.
Listen to the advice of property experts who keep an eye on the market at all times and often have directly negotiated prices with the property developers. Consultation services for your property of the sun usually cover the whole process, from working with you to define the search criteria, sourcing and locating suitable opportunities that meet that criteria and then guiding you through the purchase and successful ongoing management of your new investment. Don't let your dream wait. Contact us today and benefit from free consultancy services and expert advice on your property under the sun in Cape Verde, Cyprus or Portugal.