Why invest in HMO investments?
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In this low interest rate environment, the search for high yield has intensified.
The typical bank savings rate is a meager 1.5% to 2.5% (June 2016). While the real cost of living is increasing at a faster rate than savings which means that the average saver is getting worse off as each month goes by.
Those savers that are nearing retirement age are being hit the hardest because they do not have much debt, they are not benefitting from the low rates of interest while their savings are quite simply not making enough to sustain themselves in retirement. This is a real concern.
Hands-off investments like Housing Multiple Occupants (HMO’s) are ideal for the property investment strategy because they provide high yield and a good level of capital protection. Typically providing accommodation to Professionals, Students and Sheltered Housing. Investment returns on these properties range from 17%+.
House prices will carry on increasing
The UK still has a serious shortage of housing caused by a number of social and demographic factors. Unlike other European countries, our population is expanding significantly and it is predicted to reach 70 millions by 2020 compared to 63.7 millions today. More people living in the UK means that the demand for housing will carry on increasing therefore driving up the price of property for the foreseeable future. According to the Office of National Statistics there will be an annual shortfall of housing in the UK of over 100,000 properties each year for the next decade. This could mean a 1 million housing shortfall by 2025 if current trends continue.
High Demand
A number of factors have combined to push up rental demand including an increase in immigration, more people living alone and rising house prices stopping first time buyers onto the ladder. This is excellent news for landlords who are finding that their Buy to Let properties are being let extremely quickly while their rental income keeps increasing.
Our HMO investment opportunities are in the very best of locations with large populations. Close to city centre amenities, professionals in the workplace and city attractions.
Low Interest Rates
Interest rates have been at an all time low for 6 years making borrowing increasingly cheaper. With mortgage payments currently at their lowest, and ever increasing monthly rent, landlords are enjoying significantly higher rental income making it an ideal time to invest in the property market in the UK.
Hands Free
A specialist advisor will be appointed to manage your unit to ensure that you receive “hands-free” returns. This is a perfect option for overseas investors or busy individuals who do not have the time to personally manage the day-to-day running of their property investment.
Risk Averse
Property investment is said to be “the most risk-averse, hands off and financially rewarding option.” In fact, individuals on the Times Rich list, “40% created their wealth through property. The other 60% invested in property as a means of growing and protecting the wealth that they created in other industries. In fact, more millionaires attain their wealth through property than any other type of investment.” In addition, “Property with strong cash flow can ride uncertain times such as during a recession for simple reason that it meets a basic need: housing. People will always need a place to live, even during difficult times. They would do everything just to have roof over their heads. They are prepared to forgo other luxuries just to have enough money to pay for their rents or mortgage.” Moreover, “Real estate has typically provided returns over and above the rate of inflation. This is important as it can protect your capital from the erosive effects of rising prices.”
Best Performing Asset Class
Research shows that in April 2015, “buy to let property was highlighted as the best performing asset class when researchers compared its returns to other investment types such as UK shares, cash ISAs, government bonds and commercial property. Since 1996, buy to let investors will have achieved returns of almost 1,400% – highlighting that every £1,000 invested into buy to let property would be equivalent to £14,897 today.”
