Here in the United Kingdom, investing in property (or real estate, for my friends in the USA) or describing yourself as a ‘property investor’ is no longer considered particularly interesting or prestigious. Everyone you speak to, it seems, has at least one residential investment property, usually known as a ‘buy-to-let’.  And if they don’t own any investment property, they’re at least talking about property. House prices, interest rates, fixed-rate mortgages, etc., etc. We have a weird fascination about houses. Why?

I can’t answer for others, but I can tell you why I am a property investor and why I’d encourage you to consider property as a serious way to make serious money, if you haven’t already started. And for those of you who’ve already moving ahead, I encourage you to stay on course, no matter what the doom and gloomers say.

If you have spare cash saved up, you should get it to work for you. Interest rates are at an all time low and the returns on cash are, in reality, negative. Why? Because of inflation. Any fixed amount of money in your bank account will be worth less this time next year, than it is today. Now I’m not saying you shouldn’t have any cash. We all need some liquidity for those rainy days (or weeks, or months). But if you’re smart, you’ll know that you’ve got to find ways of making the money that you have, make even more money.

So why property? Here are some interesting points summarising the benefits to investing in property:

You don’t need money

OK, maybe a little. Very few other investments allow you to purchase an asset with other peoples’ money (usually the bank’s) and pay this back with other peoples’ money (the rental income from tenants). This incorporates something very powerful, known as leverage (which I’ll talk about in a future article). This single factor, unique to property, is reason enough to compel the savvy investor to make property a key component in his overall investment portfolio.

You’ll make more money with what you already have

What the above point also means is that the return on your cash invested can be very high, when compared to other investment classes (stocks, bonds, currencies or just cash).

Your property will be worth more

Over the long term (and by that I mean at least 7 years), property prices generally rise. Of course there are many factors which determine by how much the value of your property asset will change, but assuming you get the basics right, the price of your investment property will go up over time.

‘Buy one – get one free’

Not quite, but kind-of. You can use the increased value of one property to release cash for a down-payment on another (and use the bank’s money for the rest). This ‘benefit’ comes with a health warning – you need understand property financials well and be confident about where prices are going, before you consider this strategy. But when the conditions are right, you can start to build a portfolio of property assets without necessarily having to dip into your own pocket

More and more people need somewhere to live

- In general terms, if you’re investing in the United Kingdom, the demand for housing exceeds the current and forecast supply. The UK is a relatively small country with a growing population in need of housing. If you understand basic economic theory, you’ll know that prices rise when demand exceeds supply. Demographic factors in the UK, such as the size of the student population, a growing working population as a result of uncontrolled immigration from the EU and elsewhere, an increase in the number of single-person households means there is huge pressure on the existing supply of homes. The government has great plans to build more housing, but all forecasts point to a long-term shortage of homes. This means one thing – in the right areas prices will go up. By the way, if you do a little research and study demographic trends, you can easily find many places around the world where this applies

Tax benefits

Depending on the tax laws of the country in which you choose to invest, chances are you’ll be able to deduct many expenses against your rental income and lower your overall tax liability. These include: mortgage interest, service charges, maintenance costs, travel expenses, and depreciation of furniture are just a few of the examples. Again, compared to some other asset classes, there are numerous opportunities to save on your tax bill with property.

So there are a few very basic reasons why I invest in property. Over the long-term, if you follow a few basics and learn and apply the correct financial discipline to your investment strategy, you’ll find investing in real estate to be very rewarding – in more ways than one.