ARLA (The Association of Residential Letting Agents) open their info on Buy-to-Let in this way:
“It was designed to stimulate the growth of the Private Rented Sector by encouraging private investors to take the opportunities given by low, highly competitive, interest rates and the reasonable certainty of sustained capital growth over the coming years. Whilst in 2008/9 financing has not been so readily available it still remains an attractive investment with property being more affordable and the possibility that prices will rise again when the credit market along with the property market moves forward”
And that’s just it - times have changed and where, during the boom years, buying into property through buy-to-let was seen as a sure bet, in recent times the fall in the value of bricks and mortar has made people question this investment choice.
When I speak to people about my plans their reactions can be split into 2 camps - those hugely in support, believing that I should buy into the new low prices before they rise again, and those who wouldn’t touch buy-to-let with a bargepole. One fund manager friend predictably said “I can name 10 better investment choices for you in the long term”.
Well, please tell me if I’m wrong but I don’t know of any other investment which, over the long term, offers such good leverage opportunities to grow my ownership of assets. If I invested in a particular company or fund, I wouldn’t be able to approach an organisation for finance in the same way as I can approach a mortgage lender. Or, if I could, they would ask me to secure that loan against something ‘real’ - guess what that would be…property!!
Yes, just like stocks and shares, the value of property can go down as well as up but there is always something tangible, a physical asset, with value that ‘cannot’ go to zero, and when your equity rises in a property, this can be used to increase your asset base.
So it seems to me that buy-to-let is a great investment choice but ONLY if it’s for the long term and the figures add up (that’s why I made the property decision spreadsheet thingy). One thing that really helps make the figures add up is to buy below market value and that is a real priority of mine. I’ll post about it soon.
With thanks to Pete from his Property Journey website, where he's sharing every success and failure on his ongoing journey from property amateur to buy-to-let entrepreneur. Follow him at http://propertyjourney.tumblr.com, Twitter: @propertyjourney and find him on Facebook.