August 2010

Friday, 13 August 2010

Could property become a realistic alternative for investors?

 

Many people who rely on income from savings will be wondering what to do next with rates on deposit accounts struggling to get above 2%. Low savings rates are symptomatic of the state of the economy and are here to stay for the foreseeable future so could property prove to be a viable alternative?

 

Residential property investments haven’t looked very attractive in recent years due to falling property values but perhaps it’s time to look again now that we have more stable prices and very low rates of return for savers. Let’s ignore capital growth and look solely at yield. Residential investment property in Norwich is currently yielding up to 6.5% before costs and taxes. If investors have the stomach to take on a house in multiple occupancy the return could be as much as 7.5% gross and if investors are prepared to look at mixed residential and commercial properties the returns are even higher.

 

Of course there are many more things to consider with this type of investment and many more pitfalls than if one were to put one’s feet up and wait for the building society statement to come through the letter box but as we enter unchartered water for investments we will all have to make our money work harder than ever before.