A Guide to Property Bonds in the UK

There are many ways to make money from property investment without having to invest huge sums in buying a house. While it may be financially out of your reach to purchase a buy-to-let investment property, buying property bonds might be the thing for you, and you can still end up netting you quite a nice profit.

What are property bonds?

For those just beginning to look for investment opportunities, you may find yourself coming across the term ‘property bonds’. But what are they? In layman’s terms, bonds represent pieces of a whole, in this instance, part-ownership of a property.

How exactly do property bonds work?

Let’s look at an example. Property A is set to be the location of a new building. In order to finance the purchase of the land and construction, a lot of money is needed. Instead of one person/group risking all of this money, bonds are created, and multiple people are able to stake smaller portions, all adding up to the overall cost.

With multiple parties inputting the finances, not only are they risking a smaller amount, but the property could end up with higher value. The more people that participate, the quicker it can be completed, and the better chance of a return on investment and higher profit.

Who would benefit most from a property bond?

There are two main groups of investors that benefit the most from property bonds.

First-time investors will see this as a great way to begin their investment portfolio journey. The risks are much less than solo-investing, and most of the hard work and planning is done for them. They do not need to think about what to build on the land, they do not need to spend time obtaining licenses and permits, and they do not need to worry that they will lose all of their life savings.

Hands-off investors also benefit from property bonds. While they can invest a small or large sum – they generally don’t want to become involved in the minute details, preferring to leave that to those in-charge. This can be because of lack of knowledge/information, or they may have split their finances and be investing in multiple properties at once and simply not have the time.

Risks and Rewards

There are still risks involved in investing in property bonds. Firstly, a return on investment or profit is never assured. While the risk may be lessened, it is still recommended you seek advice from a professional and to closely examine your own financial situation.

If you are ready to invest in property bonds, you might want to use the help of a professional advisor to find the best bonds available in your area.

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Slater Forbes are one of the leading property investment companies specialising in off-plan property

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