Diversifying Your Property Portfolio

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Diversifying Your Property Portfolio

With any type of investment, there are pros and cons by choosing to diversify. By diversifying your property portfolio and investment types, you can reduce the risk but it can also take a lot more time and effort to manage different investment types. Its important to spread your portfolio but equally as important to spread it wisely. There is no point buying a student property just to diversify, this should be used for longevity and to create a monthly cash flow that is all but guaranteed. You should use your residential for capital growth and the likes of holiday lodges for both.

Having a range of different property types can be more complicated than sticking to one property investment strategy but there are plenty of benefits of diversifying your property portfolio.

A rapidly growing trend for UK property investment is investing in holiday accommodation, due to the huge demand for UK staycations. So, if you are thinking of adding a new type of property to your portfolio, this is an option worth considering.

These are some of the key pros and cons of adding holiday lets to your portfolio:

Pros

 

High ROI

You are hitting a market that is proving to be very lucrative right now, so there is an opportunity for high ROI. For example, our luxury lodges in Scotland have a guaranteed ROI of 50%.

 

Spreads the risk

If you have different types of properties, for example student and residential. If the student market is down it does not follow the same trend as the residential market and vice versa. When expanding your portfolio its essential to diversify to protect yourself against any economic changes out of your control.

 

Minimal effort

Unless you are managing the lettings yourself, there is minimal effort required to invest in holiday properties. If you invest in a property like the ones on our Landal Barnsoul resort, you simply put up the capital and the lettings are managed for you, so you can sit back and watch the money going into your account. It’s a complete hands off investment which can save you time to utilise the rest of your portfolio which occupies more of your time.

Cons

 

Could be a short-term trend

Nobody knows when the pandemic will end and whether travelling abroad will be as popular as it was, or how long it will take for foreign holiday bookings to get back to pre-pandemic levels. While many travel experts are predicting that UK staycations are going to be in high demand for at least a few years, there could be a drop-off in UK holiday bookings in a year or two. However, an investment with guaranteed ROI will ensure that this will not affect your profits. Also its important to take the history of the “holiday investments” into account. Although for many years the have never led the pack in terms of home grown investments they have always ran at a steady pace and even prior to the pandemic where seen as lucrative by many, simply due to the lack of work needed to hold the investment.

Property prices are high

 If you are looking at buying a cottage or other type of holiday home in areas that are popular for UK staycations, the prices are going to be high. House prices have been increasing and you would need a to pay a large amount of money for most holiday properties. Luxury lodges offer a solution if you are looking for a smaller investment, with lodges starting at around £60,000 and new developments ensure there are more of these types of properties available to buy

There are lots of different options for investing in holiday accommodation, so it is important to choose a property type and letting type that suits your financial goals. If you are looking for a high short-term ROI or a long-term investment, holiday homes located in popular destinations can offer you both.

Take a look at one of the many ways to diversify your property portfolio with the holiday home investments that we currently have available and leave your details if you would like us to call you to provide more details.

Or to speak to an Investment Consultant about building or diversifying your property portfolio either call or email us on:

0151 433 9300

contact@advantageinvestment.co.uk

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