Pearl Lemon Properties

 Looking for the best area to invest in London properties. Pearl Lemon Properties offer a great range of property investment in London.

Again, this blog is going to focus on strategies for long term investments.

But it will be worth taking a look at the advantages and disadvantages of both long and short-term investments to help see which one is better for you.

 

Advantages: Long Term

Effort

 

If you want to take a super passive role in your investment, then the long term is the way to go.

After purchasing a property, you can hand it off to professional property management services and hire cleaning and maintenance staff. 

On the other hand, if you want to take a more active role, then by all means you go for it! It’s your property after all.

 

Equity

 

With a long term investment, you could build equity over time.

Equity is how much you could make on your property if you were to sell after paying off the mortgage. 

In other words, it is “the difference between how much your home is worth and how much you owe on your mortgage.”

So, if you have a property that is worth $300,000, and you owe $200,000 on the mortgage, then your equity is $100,000. This is assuming you sell at the fair market value.

Therefore the more equity you have, the bigger the profit you can turn later down the road. 

In simple terms, you want more equity.

 

Hedge Against Inflation

 

An inflation hedge is an investment that is supposed to protect the investor against the decreased purchasing power of a currency that results from its loss of value because of 

things like inflation.

Long-term capital gains, which are properties held a year and one day or more, are taxed more favorably, ranging from 0% to 20% depending on your tax bracket. 

Short term capital gains, properties held for less than a year, are typically taxed at a range of 10%-37%.

There are also tons of tax-deductible expenses if you go the route of renting out your property, including:

• Property tax.
• Property insurance.
• Mortgage interest.
• Property management fees.
• Property repairs, capital improvements, or ongoing maintenance.
• Advertising expenses

 

Disadvantages: Long Term

Vacancies

 

Even if you are using your long term investment as a rental property, there is a good chance that there will be vacancies at times.

Not only are these periods where you won’t be making any money off of your property, but there may be expenses you have to pay out of pocket.To counteract this, be very proactive in finding tenants, and be sure to market your property.

 

Poor Tenants

 

If you rent your property out, there is the risk that tenants can do more harm than good.

Whether that be damaging your property, unexpected vacancies, or not paying rent.

To avoid this, be sure to screen your potential tenants and run the proper background checks.

 

Depreciation

 

One of the strategies with long term investing involves taking advantage of appreciation, which is when the value of your property increases over time (more on this later).

However, it is possible that your property depreciates, or loses value.