Property investment, both domestic and international, is growing rapidly among the UK’s individuals and institutions right now. There’s a lot of strong advice being passed around for new landlords and seasoned property tycoons alike, but there are also a few things that even the most experienced investors have a tendency to forget when in fact it would be a good idea to keep them in mind.
Inflation is Good
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As far as property investment goes, inflation is great. As the cost of living increases, so do land and construction costs and this restricts construction of new properties. With fewer new properties therefore coming onto the market, this in turn pushes up the value of existing stock – and for investors who own some of that existing stock this means capital growth.
Nobody is Psychic
It’s part of human nature to like certainty, so it’s easy for investors to convince themselves that they know exactly what is going to happen in the property market, or at least exactly which dangers are looming and need to be prepared for. However, nothing – not even the most confident and robustly evidence-backed expert forecast – is set in stone, and the unexpected is a fact of life in a global economy. It is not possible either to be quite sure what is around the corner, or to prepare for every single eventuality. For this reason, flexible contingency plans and the ability to exit your investment quickly if necessary can be very valuable.
Markets are Cyclical
Even experienced investors can find themselves quite easily drawn into the current sentiment surrounding a market to the point where they forget that things are going to turn around sooner or later. A market that rockets up will eventually feel gravity start to take hold, and investors who buy during a boom without preparing for this will usually come to regret it. By the same token, markets that sink will eventually regain their buoyancy and those who already hold investments in such a market should think carefully about whether to bail out or to try to weather the storm in pursuit of long-term benefits.
Over managing is Bad
If there are any areas where micromanaging tends to be a good thing, property investment is not one of them. Property is just not a short-term market, so trying to engage with every change or setback in the wider property sector or in your investment is a waste of time, energy and, often, money. Neither is property an especially flexible or liquid asset, so making major changes such as selling your property in the face of every rent decrease or fall in value is likely to cost you even more when, in fact, holding onto your investment like the long-term asset it is would quite likely have paid off in the end.