I’ve been in the property investment business for almost 30 years and during this period opportunities have come and gone but I’ve yet to discover an asset class that performs better.
Gold, silver, crypto (gambling in my opinion) and stocks and shares have yet to outperform the results I’ve generated from property, and will continue to do so.
Let me explain: As at Sept 2021 the average house price in Scotland is £180,3341. In2000 it was £51,5872 meaning house prices have grown around 250% in 21 years.
But take the £51,587figure and apply inflation since 2000 (average of 2.8%p.a1.) then today’s house price should be £88,799. And yet it’s £91,535 more, which is 177% of the original investment over inflation.
Now I have never been one to invest in property at those high prices, but my property values have risen just the same.
You can invest in lower value property and spread your risk as it’s always a numbers game at its core. If you understand the dynamics, it’s like the McDonald’s of property investing. Just keep duplicating it.
What do I mean? If you get the rental charge per month, occupancy rate, loan to value, interest rates and overheads right you’ll always be guaranteed to make money.
Most people say, “I can’t be bothered as I don’t want the hassle.” What hassle? If you have a managing agent looking after it or you’ve invested in a property fund, then you are literally paid to wait.
What do I mean ‘paid to wait’? Most investors like myself offer different levels of service depending on how hands on or hands off you want to be and remember the property is generating income every month in rent while it appreciates, and you can either draw down or reinvest that income.
Let me give you an example. I bought a property (I’ve bought several over the years and another 17 this year so far) in July 1999 for £10,000. It’s a one-bedroom flat and since then I’ve generated a top-line rent of around £80,000 against it to offset against overheads (i.e. interest costs, insurance, repairs, managing agent etc).
At some point before the credit crunch, I got a re-mortgage of £27,695 (a lifetime tracker at base plus 1.15%) which means I have none of my own money in and got cashback (tax free as you don’t get taxed on re-mortgaging property, only selling) from the bank to invest in more property.
This is an infinite return on my investment as I have no money in it anymore and I still earn money every month.
As I said at the beginning… “it’s probably the best performing asset class’ I meant it. As for the value? Well, I’m paid to wait on it going up.
About the author
Jim Parker is a leading Scottish landlord and also runs multi-branch East Coast lettings agency Fife Properties.
Data sources: 1 Bank of England and Scottish Land Registry details 2 Homelet