20th January 2021
In these unprecedented times, everyone’s looking for new and creative ways to manage and supplement their finances
So long to savings accounts. Interest rates never really recovered from the crash of 2008, with no return in sight to the 5% highs of last decade. The stock market is appealing, but more volatile than ever. The advent of convenient trading apps has opened the gates to uninitiated amateur traders, and lots more people are losing money than making it. In these unprecedented times, everyone’s looking for new and creative ways to manage and supplement their finances, but with so many priced out of the market, even the reliable model of buying and renting out property is becoming less and less feasible.
So what if there was a way to reap the consistent and reliable returns of property investment, without having to stump up deposits or take out mortgages for the purchasing costs? Even better – no dealing with tenants, agencies and repairs? The answer to this question is what fractional property investing seeks to provide.
What is fractional property investing?
Think of it like investing in the stock market. You trade shares freely, buying when the price is low and selling when it’s high. Except instead of investing in a company stock, you’re investing in property. This type of hybrid investment model seeks to combine the sharp growth opportunities of residential property with a much more flexible investing style, and a much lower entry point.
Another similarity this model shares with trading stocks is the investment amount you commit to. With fractional property investing, you could theoretically start with as little as £1. But it provides the huge advantage of being able to enter this market sector, no matter your income level or investment allocation, and without needing large amounts of upfront cash.
A further plus-point is the more passive nature of the investment. Unlike independent property ownership, where you’re responsible for the tenant placing process, all the administration and maintenance, investing via a platform removes these mundane and laborious tasks and responsibilities. Overall, it’s a much quicker and easier than the traditional house buying and selling process. You’ll also see all of your buying costs returned should you choose to sell your ‘slice’ – in stark contrast to traditional property buyers who must accept the irretrievable costs of stamp duty and legal fees.
“It provides the huge advantage of being able to enter this market sector, no matter your income level or investment allocation, and without needing large amounts of upfront cash.”
Overall, it’s a much more liquid exchange than the traditional house buying and selling process but still gives the advantages of rental income and capital growth associated with traditional property investments.
You don’t need a business degree to know that the number 1 rule of investing is diversification. You may already have an array of investment strategies, whether that includes a CFD account, stocks and shares ISA, or even bricks-and-mortar property. Market volatility isn’t a deterrent to some – in fact, it can be quite the opposite. The current climate may – somewhat cynically – provide dazzling money-making opportunities for the brave. Whatever course you decide to embark on, fractional property investing is a great way to spread the risk. Whether you’re pulling back or jumping in at the deep end, it’s always a good idea to shore up your portfolio with less volatile investments.
Our Assetz Exchange platform facilitates the quick buying and trading of slices of property, with up-to-the-minute reporting on how your investments are performing. We support socially responsible property investing, supplying much-needed housing to charities who provide supported living, aid to vulnerable people, and eco-homes.
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