The reputation of the property market has taken a battering during the economic downturn.
The sector may not be as hot as it was prior to the bubble bursting, but it is making a steady resurgence, particularly buy-to-let.
Lower prices for houses, rising rents and favourable mortgage deals are tempting investors with enough capital, particularly in comparison to low savings rates and the current volatility of the markets.
The market can offer benefits in diversification but you will initially need a strong base of tenants that will sit on longer leases.
The franchise advantage
The advantages of a franchise model when starting in the sector are numerous, particularly for those who aren’t quite confident enough to go into business for themselves. Jumping head first into property without support can potentially lead to some incredibly expensive mistakes, but the risk is lessened with a franchise.
Jumping head first into property without support can potentially lead to some incredibly expensive mistakes, but the risk is lessened with a franchise
Constant support and guidance from an experienced team is invaluable, particularly in the early stages, and an established brand will allow you to gain the trust of potential clients much more swiftly.
While buy-to-let is the predominant franchise option, there are alternative routes, with the commercial sector also looking promising for investors. Large office blocks will form a good base but then start to diversify your portfolio with the addition of cinemas and gyms.
This will allow your yields to grow in good time. A specific sector that seems to be growing at a nice pace is private healthcare, as more households are choosing to pay for their own healthcare and more high-quality hospitals have been built in recent years.
What to consider
With both sectors, it is also very important to always consider future trends. In the commercial sector, as investors stick to the high street, be wary that online sales are booming. Invest in properties that will have a large part to play in future trends, such as click-and-collect services.
High street blocks may offer convenience and big spaces for a wide variety of services, but consider how obsolete these places may become in a decade’s time.
The final issue to consider is sustainability. With rising awareness about energy-efficiency performances, more properties should adopt ‘green’ improvements such as roof solar panels, loft insulation and double-glazing. These factors will attract occupiers to increase their leases and keep buildings consistently occupied.
There are rules on how to play the property sector. But if you strategise the game well, it won’t be long until you see healthy returns.