Investments for Income – Non-Financial Alternative Income Investments

Will Greece leave the Euro? Will Spain default on its debt? Will the global economic recovery fail? Will equity markets crash again?

There are the questions that Investors of all shapes and sizes are asking, but unfortunately, no-one really has any coherent answer. So with such uncertainty surrounding the fate of investments held in money market assets like shares, bonds and cash, most Investors and Financial Advisors are questioning the wisdom of holding the majority of investment portfolios in traditional asset classes, and are instead seeking out solid alternative investments based on the acquisition of tangible, physical property assets that are unlikely to depreciate to nothing – and which will always retain some capital value whilst generating often very high annual incomes.

Property investments are of course the first and most obvious port of call for the average Investors, as well-positioned and well-managed property assets are capable of generating income yields far exceeding the paltry returns on cash deposit accounts; and whilst inherently illiquid, property values are unlikely to fall in the long-term due to the fact that many markets have already shown a significant decline in value, allowing Investors to buy close to the bottom at reduced prices, further enhancing yield.

Not all markets offer such a great opportunity however, and the on-going costs and complexity of property management and tax liabilities make direct investments in many markets quite risky for the long-term Investor. There are of course a range of hands-off options for those considering property assets as investments for income, form property funds to REITs and new innovative structures such as property bonds – where a larger portfolios benefiting from economics of scale and independent management are accessible through the issuance of fixed income binds to private Investors who take a direct charge over the assets, without having to take direct ownership.

For those prepared to take on more risk, emerging markets also offer some interesting income opportunities, especially where Investor capital can facilitate short term developments where completed properties can be sold directly into the local market with buyer assisted financing. One such opportunity exists in Brazil where investors have the option to fund social housing developments, which are ultimately sold into the local market on completion with guaranteed mortgages supplied and underwritten by the State for low income families.

Whilst property investment are seen by most a s a stable, low risk investment, potential participants are – as always – advised to source the assistance of an Advisor with experience of identifying and delivering low-risk real estate projects designed to capitalise on opportunity, whilst ultimately managing downside risk.

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