Forget buy-to-let: I think these 2 FTSE 250 shares can help you obtain a £1m ISA

Investing in these two FTSE 250 (INDEXFTSE:MCX) stocks could produce higher returns than a buy-to-let property in my view.

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Although buy-to-let has historically been a worthwhile investment, today the FTSE 250 may offer less risky and faster-growing opportunities.

With regulatory changes, refreshed tax rates and increasing difficulty in obtaining a mortgage, buy-to-let may be losing appeal at a time when a number of mid-cap stocks offer improving growth prospects and appealing valuations.

With that in mind, here are two FTSE 250 real estate investment trusts (REITs) that could be a better means of making a million compared to investing in buy-to-let properties.

Workspace

Office, studio and warehouse rental specialist Workspace (LSE: WKP) released an encouraging business update on Thursday which covered the first quarter of its financial year. It has seen a good level of customer demand during the period, with enquiries averaging 1,060 per month. This is up on the 1,021 from the same quarter of the previous year, while lettings are up sharply from 88 last year to 121 in the first quarter of the current year.

Looking ahead, the company’s flexible offer could continue to be popular at a time when the economic prospects for the UK remain uncertain. Its pipeline of new projects appears to be healthy, while it remains well-placed to capitalise on acquisition opportunities as they become available.

With Workspace forecast to post a rise in earnings of 13% in the current year, it seems to have a sound growth strategy. The company’s price-to-book (P/B) ratio of 0.8 suggests that investors may have factored in the risks facing the business from wider economic weakness. As such, now could be an opportunity to buy the stock while it offers a wide margin of safety.

Tritax Big Box

Another FTSE 250 REIT, Tritax Big Box (LSE: BBOX), also seems to offer an appealing long-term investment outlook. The company focuses on large logistics facilities in the UK which are becoming increasingly popular among a wide range of businesses. This trend looks set to continue over the long term, with online shopping expected to make up an increasing proportion of total retail spend over the coming years.

Since the stock trades on a P/B ratio of 1.2, it seems to offer good value for money at the present time. Although there may be cheaper REITs on offer elsewhere in the FTSE 350 at the present time, the growth opportunities that the company has could help it to outperform the wider sector.

With Tritax Big Box having a dividend yield of 4.4%, it could generate impressive total returns over the long run. As with many REITs, it offers a higher level of diversity than may be possible from investing in buy-to-let properties. This may mean it has lower risks than having a buy-to-let portfolio. Due to its growth prospects, it may also deliver higher returns that increase an investor’s chances of making a million over the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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