Property Investors need to become more Fearless in the market
The past year brought with it much uncertainty in the face of Brexit ambiguity. Prices fell for property leading many to fear that we may face a property price crash. To compound this uncertainty, we are now facing a very different hurdle in the market in the way of the coronavirus.
Despite this, the property market is soldering on with prices rising in many areas of the UK. Since the decision had been confirmed surrounding the UK’s relationship with the EU, investor activity has climbed in the market.
However, negative perceptions are persisting in the market with many continuing to hold off, this is stopping individuals making the leap. Property Investors in the market need to change their behaviour and overcome their fears to their own benefit and that of the wider market.
Overcoming the fear
We all know that fear has a big impact in the world of investments. Investors tend to be risk adverse, and the more uncertainty they face, the more likely they are to shy away from a potentially profitable investment opportunity.
This is often the result of a lack of market knowledge and an overreliance on dominant media agenda. Over hyped media reports draw the most attention and thus sales. You will have to seek out credible investment advice before making a commitment to make an informed decision about an investment in the field.
Contrastingly, this does allow greater opportunities for savvy property investors that are willing to do more advanced research into the field or seek credible advice and information. The more you understand a situation, the better equipped you are for making better decisions in the niche. Property is a fantastic example of this.
Diversify your approach
Property is a hugely diverse area to invest in. There are different types of property (commercial, residential) and ways to market your property (HMO, buy-to-let) that allow you to make the most money from your investment. Whilst an area of the property market may come under scrutiny, other areas of property investment are very likely thriving.
Even with Brexit dominating the media agenda over the past few years, we have not seen too much disruption in the market. With the UK’s confirmed withdrawal from the EU set to take place at the close of 2020, investors have been boosted by the clarity, and we have seen increased investor behaviour over the past few months. There may be a case for the new disruption in the market, coronavirus, to have an even greater effect. Ultimately only time will tell.
With property, you can opt to be safe or choose a riskier approach for the appeal of greater returns, usually over a reduced time frame. Whatever method you choose, it is important to be flexible in your approach.
What are your motivations as Property Investors?
Knowledge can be gained through a variety of ways, including but not limited to education and mentorship. However, it is important that property investors understand what motivates them when it comes to investing in the property market.
Identifying a few key criteria, such as your current financial situation, the time frame and amount of investment combined your level of risk will have a big factor in your investment strategy. The answers to these questions will determine the approach you go on to take that will best fit your financial needs.
Whatever your end goal here, you must dig deep to find the best property investment for you. Speaking to a professional in the property investment market is a great way to learn about the options available to you.
Diversify your portfolio
Whether you have opted for low or high-risk property investments, we always encourage you to diversify your portfolio to mitigate any sizeable fluctuations in the market.
Putting all your metaphorical eggs into one basket is never advised. Where possible, opting for a range of lower and higher risk investments will give you the opportunity to take advantage of higher levels of return but have a secure fallback option. The approach stabilises the risk and reward.
Investing in high risk property can lead to financial ruin or significant gain. Low level risk, although likely to provide a steady return, can leave many feeling they are missing out on the possibilities the market can offer smart investors.
You can go further with diversification by including the sector of investment, term of investment, location of the investment or capital required. There is no magic formula for perfecting your property investment portfolio. As it is dependent on your personal needs and is also unable to adapt to constant trends in the market,
Whilst many boast of a theoretical approach, gut feeling, although advised with caution, has provided property investors with big wins in the past. Investing is a very personal choice and you should opt to do what feels right for you.
A shift in investment behaviour
We are currently seeing a shift in more property investorsinvestors becoming aggressive in the market, and it appears to be working.
Whilst the number of landlords has fallen, cited as tax and regulatory changes, those that have remained in the market have bought up more property, the average portfolio size now stands at 1.93, the highest we have seen in over a decade.
This is due to a few reasons, the first being an increase in the portfolio landlords taking a business approach to the market, with more and more small-time or accidental landlords fleeing the market. With regulations making a single buy-to-let less profitable than it once was, those with larger portfolios, their core business, are benefiting.
Renters are also staying put for longer than they had in the past. This results in less properties coming to the market, with tenants feeling a greater sense of security in recent years. With more people relying on rental property, fearless investors willing to increase the size of their portfolio are benefiting.
Be more fearless
What makes a fearless and often successful property investor is the need to critically analyse the information in front of you. Many are swayed by ‘expert option’ only to miss out on opportunities. This uncertainty will only remain for as long as it is tolerated.
As a property investors, the same advice has been applicable for many years. You must focus on the long game the property market has a history of remaining a strong investment asset. We see less drastic rises and falls and is less effected by the wider economy.
Putting both the Brexit and coronavirus saga behind, the property market should continue to attract property investors in the medium to long term.
We are likely to face a bump in the road, but so too will every other industry, very likely to a greater effect. Adopting a fearless attitude will be an advantage to those that seek out real opportunities in the market now, capitalising on lower prices with a view to long term gains.