Investing in Residential Property

Investing in the Private Rented Sector (PRS) remains popular with private investors from all walks of life because it is the one asset class that enables the ‘man on the street’ to leverage their investment using bank financing.  You only have to look at the numbers of investors seeking to acquire additional PRS assets.

And despite what some may think, lenders are still willing to lend, principally because residential property is seen as a safe asset class.  Total returns from residential property have a history of strong performance and have out-performed other commonly held asset classes.  It should also be remembered that in the event that an investor defaults, the lender has first charge over the asset, so lending on residential property is generally considered to by relatively low-risk.

Lending landscape

Of course, lending has reduced over the past 3 years as the banks have been forced to strengthen their balance sheets.  They’re in the position to be able to pick and choose who they lend to and, perhaps understandably, have become more cautious and stricter with their lending criteria.  In this new lending landscape, lenders are cherry picking only to the ‘best’ applicants.  So step one, before seriously considering making an investment in property, is to check your credit score and make reparations if there are any issues. Read more of this post