Property bonds are fast replacing becoming a professional landlord for a number of reasons, we find. When our consultants discuss bonds with potential investors, the same pain points often rear their heads in conversation.
We’ll get onto those a bit later, but before that it’s worth considering the potential financial draws of the opportunity.
Why invest in property bonds? With the right strategy, it’s possible for investors to diversify their portfolios into property, open themselves to fixed interest returns, spread their interests across numerous properties and more, all from short-term timeframes with interest paid every six months.
With those potential benefits and more at play, the right property bonds could represent a profitable opportunity for people to grow their savings in the UK’s favourite industry; all without becoming a landlord. So, what is it specifically about bonds that make them a better proposition than owning a second property?
Why invest in property bonds instead of purchasing homes?
Property bonds simply don’t offer the stresses that being a landlord can, in our view. We mentioned common pain points before, some of which include:
Stamp duty: The rates of stamp duty on additional properties combined with the government’s decision to gradually withdraw mortgage interest tax relief on private rental properties has seen the private rented sector slowing by 20% this year. For many, it’s becoming simply too expensive to be a landlord in the current market, with bonds a more attractive financial option
Problem tenants: Sometimes, despite the best of due diligence being performed, landlords can still end up with disruptive or problem tenants that are more trouble than they’re worth. It can sully property as an investment opportunity, leave landlords stressed and put problems on their plate they may never have foreseen that bonds simply don’t provide
More secure returns: Though it’s true some properties in the UK are able to offer landlords yields upwards of 10%, property maintenance and other factors will consistently eat into profits. Explore the market and there are fixed interest bonds available that offer potentially high yields for investors without them having to reinvest in the property itself
Higher potential yields: As above, research has shown that there are areas in the north that are providing landlords with double-figure yields. These are mostly in student hotspots though, a factor that turns off 7 out of 10 landlords. Economic factors including Brexit also means those yields are likely to fluctuate; fixed interest bonds can be a better option to consider
These are just some of the reasons why property bonds can be a better option for investors to consider instead of purchasing a property with buy-to-let in mind.
They can offer a less hands-on way to potentially achieve financial growth through the property market. Investigate the market too and there are property bonds out there that can offer high yields, fixed interest returns and short-term opportunities over a two-year period as well as diversifying a portfolio.
Expert property consultants are shifting a big portion of traditional investment capital toward property bonds and 2018 is expected to be a record year for subscriptions within the property bond market.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas. Products include the new release of property bonds from UK property developer The High Street Group.