Uncertainty Spurs Demand For Rental Properties
There is little doubt that there has been a great deal of economic uncertainty in recent years. Investments that appeared safe and secure a few years ago, are now feared and treated with trepidation by investors. Where returns of 10-15% were once the norm for low to medium risk investment we now see returns that barely beat inflation. Investors are still looking for returns, they still need to invest their monies somewhere so this naturally increases the demand for investment properties.
Investment properties have long since been viewed as a relatively safe investment. Yes, they are subject to the same risks as any other investment and there will be peaks and troughs in terms of the returns that are available. What they have going in their favour is the fact that th ey are tangible assets and, if necessary, they have a dual purpose, they can be lived in as well. Also, property has a history of increasing in value over the medium to long term and only a fool would argue that this trend won’t continue.
The downside of rental properties is that they are always a substantial investment and they lack liquidity in the fact that they can’t be sold immediately in the same manner as stocks and shares. In order to compensate investors for this the returns to tend to be higher. In other words, as a ‘thank you’ for tying your money up medium to long term, you get paid a greater amount. It is basic economics and indeed very much common sense.
As demand is high for investment properties you need to ensure that you buy your property in the right location and at the right price. Just because demand is high does not automatically mean that you will achieve huge returns and indeed you do need to conduct some research. An investment property is not a free pass to make money but if you are sensible it will generate you a healthy annual return as well as capital appreciation.
In an ideal world, we would have some form of guarantee in terms of the return that we would receive as well as a clear indication of how long we can expect this return. Inexperienced investors may also look for the property to be managed on their behalf in order to achieve the best possible returns and avoid any potential headaches. In a normal scenario, if you were to be given these guarantees and someone manged your investment on your behalf you would expect the returns to be reduced or a fairly hefty fee to be charged.
However, one in developer in Pattaya, Thailand has come up with the perfect investment. The New Nordic Group are currently offering a 10% p.a. rental guarantee for periods of between five and twenty years. On top of that, they will manage the property on your behalf and will even guarantee to pay you the return on a monthly basis regardless of if your property is occupied or not.
There really is nothing for the investor to do apart from collect their return each month. The ‘rent’ will be paid into the bank account of your choice and can even be shown as income for those wishing to apply for a retirement visa.
It is not hard to understand why this kind of deal is spurring demand for investment properties.