Guest blog: when is the right time to invest in real estate?

By Andy Foote, Director of SevenCapital

Over the years, the idea that there is a prime time to enter the buy-to-hire market has emerged. Characterized by the perfect combination of attractive interest rates and affordable – but growing – real estate prices, this prime investment moment would hopefully align with an investor’s specific financial plans, allowing them to maximize returns.

But if the past 12 months have taught us anything, it’s that the real estate market can thrive in some of the most unexpected situations. As the UK was in the midst of a global pandemic and its eighth recession, the property market made history with an average property price of over £ 300,000.

With this unprecedented growth, the question arises: is there a “right” time to invest in real estate? We all know real estate investing is a game of waiting and potentially more lucrative in the long run, so determining the right time for you is arguably more important than planning the market.

Financial situation

More often than not, making money is the primary focus of any investment asset and the root of any portfolio. Establishing your financial position is a crucial part of the Buy-to-Let process – in simple terms, where are you now and where do you want to be? By setting this early, you can build incremental milestones into your plans, which can provide you with a more personalized and accurate timeline, rather than trying to time the market.

When considering how much you can afford to spend on your Buy-to-Let portfolio, you should also think about the other aspects that come with this avenue of investing, such as taxes and mortgage payments. These extra expenses, combined with the added responsibilities that come with owning a home, underscore the importance of staying on budget.

Instead, gradually scaling a portfolio is often a more efficient way to build substantial passive income. This approach can also make your long-term goals more achievable, providing diversity and growth potential while reducing risk. It’s important to remember that the more properties you have, the more open you are to exposure – gradual scaling can help you build sustainably.

Once you know your current financial situation and where you want to be in the future, this will give you an idea of ​​a specific timeframe to work and when to start your buy-to-hire journey. There are many tools, such as the SevenCapital Investment Calculator, that give investors an idea of ​​where to start and what to expect later.

Your portfolio

If you are already an investor, whether in the field or in the field, you probably already know that rental property usually performs better over the long term. But if you are looking to invest in more assets, you should consider your existing portfolio and its performance first.

If your goal is to achieve financial freedom in the future, you’ll want to diversify your portfolio to maximize the chances of reaching, or even exceeding, this milestone. A diversified investment portfolio can be achieved in a number of ways, ranging from a combination of property types, such as houses and apartments or residential and commercial properties, to investments at different price points.

By making sure you have this level of variety within your portfolio, you will be able to attract a wider range of tenants, which in turn could reduce the risk of your investment and make it less vulnerable to market fluctuations. The changes we’ve seen in tenant demand over the past 12 months underscore the importance of a strong portfolio, especially with the unexpected transition to more suburban areas and larger properties we’ve seen.

For investors with an empire made up of different locations and / or property types, these evolving tenant demands would have had much less impact on their portfolio performance. In order to increase the longevity of a real estate empire, taking your portfolio into account and diversifying can often lead to more successful investments than waiting for a perfect market.

The future

The “right” time to invest in real estate should depend more on your personal finances, but the future should also be a key consideration. This ties in with the previous factors, with your long term milestones and real estate forecast having the capacity to influence your portfolio in the years to come.

The past 12 months have accelerated the real estate market, in terms of technological advancements and changing tenant demands, which is reflected in subsequent real estate forecasts. With more suburban hotspots, such as Bracknell and Slough, rising through the ranks and offering more options for those building a portfolio, there are now even more opportunities for investors to identify potentially lucrative investments.

But your long-term goals should always be at the center of your investment plans, which can often make your decisions much more manageable. For example, if you intend to invest for early retirement later on, you will likely be looking for emerging real estate locations that are undergoing regeneration. By investing in these areas, you could benefit from natural capital growth for many years to come, as well as more affordable entry prices.

So whether you are an existing investor or looking to get started in your first real estate investment, it is important to remember that the “right” time is unique to every investor. As we have seen over the past year, the UK property market is resilient to say the least, and with other factors, such as your financial position, portfolio and future, generally having more influence. on a successful portfolio, these considerations are essential. .

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About Mary Moser

Mary Moser

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