1. Simple but highly effective
Far removed from complex investment options, shrouded in jargon, buy-to-let property investment is simple and streamlined.
You don’t need to understand economics, markets or financial jargon. You simply buy a property using mortgage finance and rent it out to a tenant.
Provided you choose a good property in a good area with solid rental demand, and maintain the property over the years, this property will continue to produce an ongoing, passive, inflation-linked rental income year after year, as well as steady capital growth over the long term.
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Register for free property investment training at http://www.res-invest.com/
2. Proven, tried-and-tested system
Buy-to-let property investment is a system of wealth creation that has been proven and tried-and-tested by countless ordinary investors, as well as the world’s wealthiest property owners, institutional investors such as pension funds, and listed property companies, all of which, essentially, are large-scale buy-to-let specialists.
They simply acquire quality portfolios of commercial properties utilising corporate property finance or by issuing shares or units, and rent these properties out to tenants.
In addition to the monthly rental income generated by the properties in the portfolio, the value of the properties also appreciate over time, raising the value of the portfolio.
3. Low risk investment
Unlike many traditional investments, buy-to-let property investment does not expose investors to the extreme market volatility and fluctuations that have become the norm in recent times - risks beyond the control of an individual investor.
For example, if an investor invests R500 000 directly in an entry-level buy-to-let property and rents this property out for R5 000 per month, the annual income from this property would be R60 000 (R5 000 x 12 months), which translates into a 12 percent return (R60 000 return / R500 000 invested * 100) over 12 months. Register for free property investment training at http://www.res-invest.com/
Buy-to-let property investment is far less susceptible to fickle investor sentiment and market volatility.
Of course, as with all investments, there are some inherent risks involved in investing in a buy-to-let property.
However, unlike the many risks traditional investments entail, the risks in property investment can be managed and mitigated -if not eliminated - through tried-and-tested risk management strategies the investor can implement easily and cost-effectively.
4. High and multiple return investment
Buy-to-let property yields investment returns are far superior to any other asset class, because they produce both ongoing passive income and capital growth.
For example, if an investor invests R500 000 directly in an entry-level buy-to-let property and rents this property out for R5 000 per month, the annual income from this property would be R60 000 (R5 000 x 12 months), which translates into a 12 percent return (R60 000 return / R500 000 invested * 100) over 12 months.
If the property also increased in value during the year by 8 percent, this would produce a further R40 000 return on the R500 000 investment, bringing the total return to R100 000 (income at R60 000 and capital growth at R40 000) for the year - a 20 percent return in the first year.
If inflation at 5 percent is factored in, the ‘real’ return would be 15 percent in the first year. And, as the rental increases each year and as house price growth recovers, the returns become more even impressive with each passing year.
Register for free property investment training at http://www.res-invest.com/
Register for free property investment training at http://www.res-invest.com/
5. Hedge against inflation
Buy-to-let property investment has proven to outperform inflation. Firstly, property price growth, while experiencing short-term fluctuations, continues to keep pace with inflation over the long term. In fact, it is widely recognised that inflation boosts physical asset prices like gold, silver, oil and property.
Given the stunning simplicity of the property investment model, buy-to-let investors thoroughly understand their investments, and always know exactly where their money is - in bricks and mortar where they can see and touch it. Register for free property investment training at http://www.res-invest.com/
Secondly, and similarly, the monthly rental income generated by a buy-to-let property keeps pace with inflation year after year, as the rental increases each year by the amount stipulated in the lease - generally 10 percent - or at least the inflation rate. This means that the income is also hedged against inflation.
6. Gearing
Buy-to-let property investment allows ordinary investors to harness the power of gearing - borrowing the money required to invest in an asset and using the asset acquired itself as security for the loan.
Of course, not all assets lend themselves to the practice of gearing. No bank will lend you R500 000 to buy shares, but banks will most certainly lend you R500 000 to buy a property through a mortgage or home loan, if you are creditworthy and have chosen a good property.
7. Retain control
Many investors simply hand over their hard-earned money to an unknown third party - be it a financial adviser, a banker or an asset manager - without really understanding the investment options.
In doing so, these investors relinquish control over their investment and can do nothing to influence the performance of their investment.
Given the stunning simplicity of the property investment model, buy-to-let investors thoroughly understand their investments, and always know exactly where their money is - in bricks and mortar where they can see and touch it.
They are also not at the mercy of the performance of asset managers, but can actively manage their portfolios, making decisions that are truly in their own best interests.
first published in Property24
Register for free property investment training at http://www.res-invest.com/
Register for free property investment training at http://www.res-invest.com/
