November 10, 2011
Could Property Investment Replace the Savings Account?
According to recent statistics the number of first-time investors buying into the residential property market has risen dramatically over the course of 2011. Different experts have different explanations for the new trend however Hillreed Homes’ Corporate and Marketing Manager, Jo Richards, believes it is because those individuals with pots of money sat in savings accounts have finally come to realise they can get a better return through property investment.
With banks and interest rates the way they are at the moment, savers are lucky to get a 3% return on their savings pot. Plough the same amount of money into property investment though and it is possible to get double the return in the long run.
For example, a £350,000 family home in the South East has the potential to generate upwards of £1600 rental income per month. By putting a deposit of 25% on the house (approximately £90,000) and securing a buy to let mortgage for the remainder, a property investor can theoretically make two to three hundred pounds profit per month…which far outweighs the interest that would accumulate by leaving the money in a savings account.
Of course the property market is a bit more fickle than a savings account, but looking long term property prices have continued to steadily rise and it is thought they will continue to do so in the future. What’s more, the profits from property investment can be used in the present or saved as a retirement nest egg, plus you end up owning a piece of real estate that will always be in demand.
