One of the best ways to position your portfolio for best results is to learn how to strike the right balance between yield and growth.
…with Buy-to-Let Property
Firstly, it’s important to understand that different types of investments are best suited to yield or growth and will fit with different investor goals. Property investments with an emphasis on rental yield represent those longer-term strategies with a forward-thinking focus.
For example, a buy-to-let property will likely produce a strong, consistent yield provided that you choose property in a sought-after area, e.g. a student town. You may be comfortable simply with a reliable stream of steady yield to support your financial situation in a stable way.
However, there is plenty of opportunity for growth within the buy-to-let market should you choose to invest in up-and-coming hotspots where property prices are likely to increase. If you’re not in a rush to see major returns on your investment, you can choose those properties with a slower growth rate, such as a town where a major regeneration project will not be complete for another five years.
Or you can choose university towns or other similar locations where demand is fierce for good quality accommodation with higher and higher expectations all the time. In the latter situation, you are much more likely to see your investment grow more quickly for a stronger, livelier yield.
When it comes to investing in buy-to-let in areas with a large student population, the potential is clear. This market has witnessed less volatility in recent times than any other real estate sector which makes it a safe investment choice should that be part of your criteria.
…with Purpose-Built Student Accommodation
While the buy-to-let market is growing stronger every day across university towns and other sought-after locations such as the Northern Powerhouse, there is another area where property investment growth is booming: student accommodation.
One of the most crucial factors that affects property investment yield and growth is the relationship between supply and demand. This is the main reason why student accommodation yields are some of the best in the property market, because demand is constantly outstripping supply and this trend looks set to continue.
Purpose-built student accommodation is an investment that offers high yield and low interest rates with a robust structure that has withstood multiple economic downturns. Should you wish to invest on a larger scale, there is great scope to diversify across different cities and towns to minimise risk within a stable asset class.
Taking a Risk
Risk is another factor that plays an important role in the yield-growth relationship. We recommend speaking to an expert to ascertain the level of risk that you are comfortable with before moving forward and building a strong investment portfolio.
With new student builds cropping up across the UK, accommodation standards are improving all the time. The UK higher education system continues to be one of the most sought-after in the world and with a higher number of students than ever before, the potential for property investors is substantial.
Our team of professional property investors offer advice on all aspects of property investment and provide access to market-leading products with the aim to minimise risk and maximise returns. For further advice and support, please contact us directly on 0203 281 7433 or drop an email to [email protected]