How To Choose Where To Invest

Many investors are naturally unsure where to invest. Within the country you live in there's the option of investing locally or at a distance. And then there's the choice of your country or overseas. It can be difficult to come to the right decision. The issues are numerous and interact with each other. Let's bring clarity to this difficult decision process.

Investing Within Your Country

Here are the factors that are going to make the biggest difference where you choose to invest:

Control

Some investors wish to retain completely control, in which case investing locally is much easier. Other investors may intend to place their property under management, in which case distance becomes far less important.

The Property Deal

We mean the particular combination of price, discount and rental yield that together makes up the totality of the deal you are considering. I live in Hove, on the South Coast, and it is very difficult to find locally the combination of low price, big discount and high rental yield that makes up my individual strategy. So it happens that most of my UK portfolio is in the Midlands and North West of England.

How You Choose To Source

If you intend to run advertising, talk to estate agents and then view every property yourself, finding property locally is a big plus.

But work with a sourcing company like Axis and you will be presented with properties across the country. Since we have relatively few deals - maybe 25 in a year, its quite unlikely that we will have one where you live!

Your Preferred Tenants

If you want to exclusively rent to families with young children it will determine the type of property that is suitable. Similarly for professional tenants. It may be that property suitable for your chosen tenants is not available easily where you live.

When you consider these key points you will see that the decision about where to invest is multifaceted and there is a good deal of interplay between these issues.

The Most Important Consideration...

In our experience the quality of the deal overrides almost all other considerations. There is no point in investing in a poor deal wherever it is located or whatever the tenants.

Our experience is that most successful investors go where the best deals are, particularly if they are time-poor and choose to rely on Axis to find and package good investment opportunities.

Investing Abroad

There are only two reasons, in our view, to invest abroad. The first reason is that you want a second home, and you hope it will also be a good investment. That's a great reason to buy, but your selection of property will naturally be driven by the location you want to live in.

Axis doesn't sell 'second homes' so we are not good advisers if this is your goal. Buying a second home can be a great idea, it's just not our investment focus.

The second reason to invest abroad is that you can make investments that will do better than buying in the UK. That's often a very difficult decision, at best you try to decide with less information that you have in the UK.

What do we mean by 'do better'?

Give you faster growth than the UK
Give you higher rental returns than the UK
Give you a faster cash profit than the UK
Be less risky than the UK

In the years leading up to 2007 there were many markets where you could achieve this - emerging markets like Brazil, Eastern European markets like Romania, African markets like Morocco and South Africa and many more.

What happens if you are not totally sure about the potential returns? Should you still invest? Our view is that if overseas investments are going to be your only investments the answer is an emphatic 'no'!

But if you invest overseas as a planned development of your portfolio to spread your risk and increase the potential return in capital or income, then carefully measured overseas investment is a good idea.

Less Certainty Leads To Greater Stability

Paraxodically, there is both less certainty and more opportunity for investors today than perhaps at any time in the last 70 years! Given this situation, we believe it's prudent to take a more measured view. In our eyes the best balance between risk and reward is available in the larger, more developed first world countries.

Right now Axis chooses one overseas location - the USA. We believe it offers the very best risk / reward profile and some simply extraordinary opportunities for profit. We are huge fans of the UK and would never recommend an investor to choose the USA as a preferred investment destination. But if you are going to invest overseas as well as in the UK, then we believe that the USA is the best bet - and a very good one at that!