Do you like to invest in property?
Property is one of the most exciting assets to invest in for many people, definitely the one that interests me the most.
Today I was asked, how do you get involved in the property market if you can't afford, or don't want to take on a whole project?
Below I share some thoughts and ideas for alternative ways to get involved in the property market, beyond just buying a property outright. *I am not making specific recommendations as I am not a financial advisor*
1: Stocks of Property Companies
Many of the top developers and managers of property in the UK and for that matter, the world, have listed companies on public stock exchanges. Buying shares in property companies offer an easy way to get involved in the industry with small steps and little effort.
2: REIT's - Real Estate Investment Trusts
REIT's are a type of security that invests in property through property holdings directly or through mortgages/debt that backs other property holdings. REIT's often are structured in a way that many tend to be dividend or income-focused. These could be a rewarding option if your primary focus is generating income on a more regular basis. Some REIT's on the other hand look at longer-term gains from trading in property.
Crowdfunding is a relative newcomer to the property industry. However, it has allowed people to participate in funding projects for tiny amounts of money, from £10 in some instances. With crowdfunding, a developer would run a round of funding online where people can invest (lend their money to the developer) in small amounts with the developer providing an expected timeframe for completion and the expected return.
My recommendation: Research the developer, look into their track record, start small.
4: Equity Partnership Investment (Project Funding)
This form of investment is a more sophisticated funding platform for investment in developments. FSA Regulated companies run These types of investments, minimum investments usually start from around £20,000, and they require that as an investor you have the funds and understanding to invest in these opportunities. They offer a very well researched and evaluated project with strict controls and agreements with the developers and other parties. These types of investments also have a set expected timeframe that usually spans from 18 - 36 months. The most significant benefit with such an investment is the security of ownership in the property title.
My recommendation: Find a company with a good track record, understand what you're getting in to and how long your money will be tied up.
Keep in mind that with all of these, patience is a great help.
These are just some of the options out there for those looking to get involved in the property market.
What other ways do you like to utilise to get involved in the property market?