Investing in property is confusing. Opportunities are wide ranging from the vanilla residential to the more exotic commercial investments. Within these subcategories there are a multitude of different markets, differentiated by local or regional influences, tax treatment and wider economic factors. Evaluating each factor is a challenging task. Equally, traditional property investment routes, such as buy-to-let, typically expose the smaller scale investor to a lack of diversification and increased tax liabilities. Now, as technology solutions become available, platforms such as Brickowner are able to provide tax efficient diversified opportunities prospected by experts in their niche previously unavailable to the small-scale individual investor wishing to earn monthly income.
Appreciating the complexity of the property market is key to interpreting wider market trends. Nationwide Building Society has reported a reduction in annual residential house price growth in August to 2.1% from 2.9% in July. However, this drop only considers a narrow period of time and does not reflect regional or local market factors. For example, Between January 2005 and June 2017, the ONS recorded average monthly house price increases of 0.746% and 0.266% for London and the North East retrospectively. Therefore, different regions of the country are exposed to different market forces. Moreover, locally, pockets of property experience wildly different price changes. Trends also vary depending on the timescale viewed.
Additionally, commercial property investors observe diverse trends – in different sectors. commercial property sectors are divided by retail, hotel and serviced apartments, industrial and logistics, leisure activities and office space activities. Furthermore, these sectors can be broken down into further subcategories. Commercial property investments, as with residential property investments, see different sectors and subsectors perform at different levels. Therefore, there is a wide array of information that has to be considered by the individual investor if they wish to enter the property market.
Evidently, the individual investor faces a number of challenges. Using a specialised property investment expert would aid the identification of strong property investment opportunities. Equally, the individual buy-to-let investor is subject to certain tax implications. Many potential individual property investors are priced out of the market for investments in either residential property (due to the fact that house prices are consistently rising faster than wage growth) or industrial/commercial properties as they require high minimum investments. Even if all those hurdles can be overcome, their investment is often highly inflexible or illiquid. These issues prevent potential investors from earning a regular income in the property market and can be overcome using a property crowdfunding platform, such as Brickowner.
Using a crowdfunding platform as an aggregator allows individual property investors to enter the market in a tax efficient and diversified way, while benefiting from the higher returns available to industrial sized investments. Additionally, using a crowdfunding platform can provide access to a secondary market, where buyers and sellers can easily trade investments – making the length of an investment more flexible than was previously for users of crowdfunding platforms or traditional property investors.
The modern property investor should consider property crowdfunding platforms as an alternative to traditional property investment strategies. Individuals using property crowdfunding can make investments with ease, while benefiting from: diversification, specialised expertise, a flexible secondary market, monthly income and preferential tax treatment compared to traditional small-scale buy-to-let investors. Using a crowdfunding platform to access property experts easily and cheaply helps solve a long-term issue that has plagued traditional property investments, while also avoiding newly introduced tax measures that apply to buy-to-let owners. For more information on property crowdfunding platforms, you can read our blog here.