There's always been (and always will be) debates to be had about when the best time to invest in property is. Some say it's when the market is low so that you can wait for the inevitable upturn. Some say it's when demand is high so you can take advantage of a booming market. So, when is the best time?
When you have a diverse portfolio?
Many property investors are convinced that having a portfolio that covers a range of property types is essential. While certainly advantageous to present your portfolio as having several options available, it doesn't have a requirement from anybody usually to have a certain number of different property types. If there is to be a diverse portfolio, then the ideal scenario is because it was the most viable at the time and has given you the best returns on your investment than for the bragging rights of an extensive portfolio.
So, in our opinion, it's worthwhile investing in property regardless of the portfolio slot it could fill if it's financially viable and provides a significant return.
On a downturn?
This is a tricky one as it's highly subjective as to what a property downturn is. There are peaks and troughs throughout any lifecycle and beyond significant industry legislation changes – the property market has been very robust in the current economic climate. Operating within a downturn or investing with the belief that the price is low, often yields a poor return on investment, as there's too much depending on the "upswing" that may never come. Sometimes there is depreciation that remains, so reliance on an upturn isn't good practice.
The way we've operated at the Heaton Group is that we've bought property for less than we expect it will eventually be worth, but the beauty of property development is we've made it highly sought after and valuable. When we took over the Sorting Office in Preston, we could have held onto the land or put out poor quality/specification properties and made a profit, but instead made high specification apartments that were desirable. This spurred the local area to improve too, given the transformation from a run-down area into something people wanted to own and live in.
We've identified local regeneration areas by local councils also to assist with this, so ultimately, we'd say that buying cheap property in a downturn is only a tiny fraction of the work required to make a real profit.
If you're reliant on buying property when it's cheap – this can be a very long-term strategy to achieve your objectives eventually.
When there's high demand?
While almost failsafe, high demand pushes up prices and as such could ultimately eat any potential margins unless done at the right time. High property prices can often ruin potential rental yields too.
Central Manchester has exceptionally high demand, but property is so expensive there, even with high rent, the return can be low in relative nature to the initial outlay. This would have to be done with a long-term strategy in mind as although the property market is robust, to generate a good return you may have to hold the property for a reasonable amount of time to make a significant return on the initial investment.
With this strategy, it is often better to have a high number of these at any one time to ensure that there's a definitive income.
The property market in the UK is famously robust, Brexit had a minimal effect and while it did stop a number of investors making moves in the UK property market, those that did were surprised with the fact that it was still a viable option with minimal disruption. Funds could still be processed; legislation was no blocker, and the properties themselves were still in high demand.
There was even a general election announced in the UK which did slightly affect the value of the currency; however, it was always likely, regardless of the result that the property market would continue to be strong.
So, while investing during a period of economic uncertainty is something people may seek to avoid, it's not something that has as big an effect as you'd think as the property market is highly resilient and continued as usual with minimal disruption.
We'd love the opportunity to discuss your investment options with you – if you feel like now may be a good time to invest or need more information, please do get in touch by filling out our contact form here or get in touch on 01942 251 945