31 July 2018

Building wealth with property

Whether you are buying your own home or thinking about an investment property, real estate can be a great option for solid wealth creation. Invest strategically and you can reap huge rewards.

Simon Lugton, Managing Director of Lugton’s Real Estate, offers his insight as to why real estate is a viable investment opportunity and shares expert tips on how you can get started to build your real estate portfolio.

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Why do you consider real estate to be a solid investment option?

I believe that real estate has some great benefits that you probably don’t experience in other investment classes such as shares or term deposits. Historically, property has been less volatile than equities and real estate values invariably track upwards. Plus you have the added benefit of being able to leverage your real estate investments through your bank mortgage, it’s reasonably liquid and there are often associated tax benefits in owning real estate.

Would you say real estate should be a long or short-term investment choice? 

I would say that success through property investment requires a long-term commitment. Short-term speculation leaves you at the mercy of short-term market fluctuations which can frequently occur in real estate.

How do you go about building a real estate portfolio?

Firstly I would say never underestimate research – the property, the area, the past and the forecasted future values. The more data you have, the more informed your decisions will be.

Following that my other tips would be:

  • Budget and save hard for the initial deposit
  • Buy as early as you can with modest, realistic expectations – first rung on the ladder!
  • Always repay principal as well as interest to increase equity faster
  • Repurchase when your increased equity allows 

What should you look for in an investment property? 

A mixture of reasonable yield but also good capital gain prospects. Lower maintenance properties are preferable to control outgoings. Desirability to rent to minimise vacancy risk. And finally my personal preference are properties that also appeal to owner occupiers as well as investors which greatly enhances liquidity possibilities across all market conditions.

What are the main challenges in starting your real estate investment portfolio?

The main challenge is saving your initial deposit but remember it is all relative to the size of the asset you are buying. 

Once you have secured your property the main challenges will be: 

  • Sticking to your long-term plans in the wake of changing personal circumstances or market conditions
  • Consistent portfolio upkeep
  • Dealing directly with tenants – I recommend employing a professional property manager to avoid issues arising from this 

What do you see as the main benefits in owning real estate as an investment?

Real estate in my opinion has always been a solid and reliable investment choice. Not only can it generate a positive income source, can also rise in value overtime and allow you to leverage the equity to fulfil other investment opportunities. 

For more information about how you can start building your wealth through real estate, speak to your favourite Lugotn’s salesperson. 

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