Real Estate Investment: Guarantees and benefits

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The pros and cons of real estate investment

Rental property is no longer seen as the budget-return investment vehicle for those with low expectations. Indeed, building a rental property portfolio can be a hugely rewarding venture for those who are willing to play the long game. Residential rental property is an effective market for even the most inexperienced of investors as, with careful assessment of the viability of tenancy, amenities and location, a regular annual return can be enjoyed until such point as an investor decides to sell.

Guaranteed annual rental returns

A recent report based on NCREIF findings has revealed that private real estate investment saw an average of more than 8-percent returns in the first decade of the millennium. Given the long-term nature of such investment, critics have countered that the infrequency of appraisal in the market, particularly in comparison to highly volatile equities or bonds, had an unnaturally smoothing effect on the data. Nevertheless, firms such as Pierre & Vacances Property Investment are testament to the stability of rental real estate, offering guaranteed annual returns as a result.

Financial advantages to buying property abroad

Although these documented returns are encouraging, it is important that any investor understand the lack of liquidity in such portfolios. That is to say, unlike equities or bonds, property transactions can take months, rather than minutes, to complete, therefore making a property portfolio a difficult asset to convert into cash. Given this reality, it is important that a prospective investor take into account other advantages that may swing the decision, particularly the VAT rebate that is offered to UK investors who purchase property in France. In order to ensure that there is no gap in rental return that might necessitate raising funds, it is vital that each market is fully explored for potentiality.

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