Property has long been an integral part of the investment market, but should you view it as a short or long term investment? With the property market staying strong and UK house prices rising the fastest since February, either time span will likely provide investors with a healthy return on investment. However, there are pros and cons to each. Whether you looking to purchase luxury property or something more affordable, the same rules apply, so let’s look at the differences between short and long term property investment.
Short Term Property Investment
With online services such as Airbnb taking over the short term rental market, it makes more sense than ever to use property as a short term investment. Rather than having to find tenants yourself, you will be connected via a third party. This allows for a constant and reliable stream of tenants for your buy to let property.
Furthermore, according to data analysis by Inside Airbnb, you could make a year’s worth of rent in just 60 days. This is why many landlords are now using services like this as a short term investment to gain a sizeable profit margin. Even with traditional renting, you should see a return of 7% for a short term property investment.
Long Term Property Investment
There are, however, a few problems with short term property investment. Firstly, short term markets tend to be volatile, while over the long term they are stable. This means that there is a higher risk involved in short term investments. One in five Brits now believe house prices are set to fall.
By investing for the long term, you will not only see a larger pay off (even if you have to wait longer for it) but the risk of losing money is diminished. While there may be a temporary drop in prices, over the long term, houses will always appreciate in value. Private equity investor Jason Sugarman recommends placing your money into long term projects, so that you can guarantee a return on investment and enjoy financial stability in an otherwise potentially volatile market.
While property still seems to naturally lend itself to long term investments, you shouldn’t write off the possibility of thinking short term. The market remains strong, despite public perception, and there is the potential to use online holiday letting to make a profit even more quickly.