Investing your money in buy-to-let is a recipe for disaster. You can forget about making the fortunes that many landlords were making up to as recently as the middle of the 2010s. A much better way to try and make a million is by buying UK shares following the stock market crash.
Buy-to-let has turned into a nightmare for many new landlords. Profits have fallen through the floor as tax costs have risen and fees have grown. Landlords also have to contend with increased regulation on top of the usual headaches that day-to-day buy-to-let management involves. And the rocketing property prices which allowed many buy-to-let investors to make a million are now at an end.
You’d be much better off using your money to buy shares following the stock market crash. The price recovery that UK shares enjoyed in early spring has well and truly run out of steam. This means that many stocks that were oversold during the market crash continue to trade at bargain-basement levels. And in my view this provides a brilliant opportunity for eagle-eyed investors to get rich and retire early.
Investing in buy-to-let with UK shares
It’s still a good idea to invest in the British property market. But a better way to do this is by buying UK shares. There’s an abundance of companies specialising in all areas of the market to suit the requirements of even the most demanding investor.
If you still want to play buy-to-let then that’s fine. It’s probably not a bad idea as rents continue to balloon all over the country. I reckon a great way to do this is by buying shares of the PRS REIT (LSE: PRSR) though.
This UK share invests in new-build family homes in the private rented sector (or PRS). The supply crunch in this segment of the market is particularly severe as home ownership among middle-aged Britons has plummeted. The PRS REIT has revved up construction rates to capitalise on this opportunity, too, and it was building 2,750 new homes as of the end of June.
Grab some 5% dividend yields
Buying shares in the PRS REIT is a particularly-good idea for dividend hunters. For the current financial year (to June 2021) the yield sits at a monster 5.4%. And real estate investment trust (or REIT) rules mean that investors can expect big dividends to keep coming down the pipe. These stipulate that at least 90% of annual profits be distributed to shareholders in the form of dividends.
The PRS REIT has fallen 20% in value since the beginning of 2020. And this provides investors with an exceptional buying opportunity. Buying undervalued UK shares like this following the stock market crash can turbocharge your returns over the long run. I’d happily but this property star for my own ISA today.