Investing in real estate is a long term strategy, and it requires careful consideration. However, with the right strategy and an effective tax planning structure, homeownership can continue to work hard for your whole family.
What we know is property goes up in value over time. Typically a home will double in value every seven to 10 years. Even with Brexit jitters, real estate is considered a good place to park your savings.
In this article, we cover some of the benefits property offers you and your family.
Property To Boost Your Monthly Income
Although investing in property has the initial outlay, i.e. the deposit which many families use their life savings and the purchase costs; the property returns the value in ongoing rental income and also capital gain on the eventual sale. After the purchase costs, renting your property with the right weekly rent should pay the mortgage repayments, any maintenance and other running costs associated with the property.
Ideally, the level of rental income will also provide extra cashflow after all outgoings and thus add extra to your monthly income. It is the extra income that property investors want and with many rental properties returning a surplus, they can eventually replace their day job and become full-time investors.
Even with one investment property, if it is cash flow positive, it allows you to use the extra income to keep your family secure, or treat them to holidays or reinvest it in adding value with renovations, for example.
Property Passed On When You Die
Not only will property benefit you during your lifetime, but there are many advantages for your family when you die as well, such as being able to access the house’s worth. This is a way to keep your family financially secure in the event of your death.
To complete estate administration when you die, you must have completed a will, and your family members must file for Estate Tax and explain the assets that the estate procures. Then, the estate can be sold or transferred, and your family members can have access to the monetary worth of the investment; however, they may need the help of a probate lawyer to deal with any complications during the process.
Property Increases Your Pension
Many individuals are also now choosing to opt for investment in property, rather than in a pension, due to a general distrust around the performance of current pensions and the ability to access them. However, owning a rental home can work for you and your family when you retire by boosting your state pension. A balanced investment portfolio is recommended and property can be a great asset for producing a regular income, even if you have failed to save for a pension.
Property Bought For A Child
There are many options for how assets including property are managed in a discretionary Trust. You may wish to allow an asset to be gifted to a child for example. Think ahead and take action that provides you with peace of mind. There is no guarantee that future generations will be in a position to buy their own home due to housing market instability and steep property prices.
When there is economic uncertainty, it’s easy to do nothing but inaction also comes at a cost, i.e. less return on your savings. Whatever the market conditions it’s wise to work on what you can control and ideally have a balanced portfolio that includes investing in assets like property.
Caveat emptor: Always seek advice from professionals before making any investment decisions.
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