When it comes to a recession, this can actually present fantastic opportunities and rewarding avenues for investors in many different ways and we take a look at some of these below.
With interest rates remaining so low, as at the time we write this they continue to be 0.5%, this is helping to keep the cost of financing residential buy to let property really quite low, because although low interest rates are bad news for savers, for investors looking to finance investment property they are actually really good news. If the cost of borrowing is low and the rental income medium to high, then you can quickly see why low interest rates really are fantastic news for any property investor.
We pretty much all know that The Bank of England has once again confirmed that the UK is back in recession, and it is fair to say that whilst this may not seem a great thing for most of us, it can be for the rental market. This generally means that tenants are more likely to be more financially aware about their decisions and will generally stay in the same property for a longer period of time. This makes renting our properties even more of a safe bet for investors, especially when the rental demand for properties is so high during a recession anyway.
According to various industry reports, rental yields increased by around 0.4% in May 2012, which means that the average rental income is around £700 per month. Of course, this is just an average, but there can be no doubt that rental income across the board has continued to rise, because as with anything in life, when the demand is greater than the supply, you can often set the prices that you want to achieve.
With more and more people turning to renting, especially families that 5 years ago would of probably landed a mortgage no problem, owning properties that you can rent out is now a total winner for investors, especially if you have a decent sized portfolio that all chip in a few hundred pounds a month in income. It also means that rental tenants are staying longer as we mention previously but if you do lose a tenant, there will be many more just around the corner meaning that your property shouldn’t stay empty too long.
Although investing during a recession can have its negatives, it is important to realise that no matter how bad things are, you should still be able to make some decent money as an investor, especially if you make the right choices from day one.