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How to Invest in Rental Property as a Beginner (10 Tips for 2024)

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    10 Handy Tips for Beginner Buy-to-Let Investors

    Interested in real estate investing but unsure how? RWinvest is here to help.

    Property investment is one of the safest and most commercially viable ways of investing your money, but it can be incredibly complicated. Beginners to real estate investing may find it tricky working out how to get started.

    Luckily, we here at RWinvest have put together this blog post, aimed at providing simple tips on investing in real estate for beginners which will give you the edge when getting into property investment.

    This blog post on investing in rental properties for beginners will give you 10 easy-to-follow tips for buying your first rental property.

    After reading, you’ll learn how to invest in rental property as a beginner, as well as how to figure out your financial goals and how to start investing.

    Topics include:

    • Should I invest in a rental property as a beginner?
    • What do I need to invest in rental property as a beginner?
    • The best places to invest in property
    • How much money do you need to start owning rental properties?
    • How to start investing in rental properties?

    And much more!

    Keep reading this property investment blog to investing in rental property for beginners UK.

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      Determine Your Goals

      1. Before you get started, the first essential tip for how to invest in rental property as a beginner is to determine your goals.

      By understanding what you want out of real estate investing, you can decide what strategy you want to follow and how long you plan to stay in your investment before selling.

      Ask yourself:

      • Are you planning for retirement?
      • Do you just want a passive income flow, or are you prepared to run your portfolio as a business?
      • Do you just want extra cash on the side or sizeable returns later on?
      • Do you want short-term returns, or are you willing to wait before seeing sizeable returns?

      By answering these questions, you will inform every action involved in real estate investing and help determine what type of property investment strategy you’re looking for – something we will discuss in tip two.

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      Choose a Rental Property Investment Strategy

      2. Now that you know your goals and whether you’re looking at a short-term or long-term investment, it’s time to consider what rental property investment strategy is best for you.

      Wondering how to start investing in rental properties? There are different types of investment property that you should explore.

      Below, you can find five of the most popular investment strategies for UK property investors.

      They are:

      • Residential Rental Property –  The most simple form of rental income. Here, investors will buy a home to rent to a tenant. This can be a house or a flat.
      • Student Accommodation – Purchasing purpose-built student accommodation to rent specifically to student tenants. Usually these are flats, but can be houses as well.
      • Commercial Property/Business Property – Buying a property to rent to businesses or corporations. Office space, shops and other business spaces are all commercial property.
      • Buy to Sell/House Flipping – Purchasing a home, increasing its value and then selling it for a profit. Usually involves making repairs and adding furnishings.
      • Holiday Lets/Vacation Rentals – Investing in a vacation home and renting it out on a short-term basis to holiday goers. You can buy vacation rentals both domestically and abroad.

      Each of these strategies comes with its own pros and cons and will be differently suited depending on your goals.

      You can learn all about the pros and cons of each strategy and how to start investing in rental properties by checking out our property investment strategies  guide.

      If you’re interested specifically in student property, you can also read our dedicated guide.

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        How to Invest for Monthly Income

        One of the most attractive benefits of property investment is the ability to earn a monthly income through rent. If you want to take advantage of this perk, your investment strategy should involve buy-to-let as opposed to buy-to-sell.

        As previously mentioned, buy-to-let covers diverse opportunities such as residential rentals, student accommodation, holiday lets, and renting out commercial properties.

        Buy-to-Let Investment Guide

        Want to become a successful buy-to-let investor? Get our free investment guide today for all the latest tips!

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        Off-Plan vs Completed Property

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        Familiarise Yourself With the Costs of a Rental Investment

        3. Another critical tip you should know if you want to learn how to invest in rental property as a beginner is to understand the costs involved.

        Aside from the upfront purchase price of investment properties – the current UK average property price is £292,000 according to the Land Registry’s House Price Index – there are several other costs you’ll need to be prepared to pay.

        These can include property taxes or ongoing expenses/monthly expenses like:

        • Stamp Duty Land Tax
        • Legal fees
        • Land Registry fees
        • Extra cash to deal with any unexpected costs
        • Property management costs
        • Capital Gains Tax on the sale of property
        • Landlord insurance

        If you’re asking how much money do you need to start owning rental property, you’ll likely need around £30k at a minimum for your initial investment. This includes a 25% mortgage deposit, stamp duty fees on a £100k property, a cash buffer, and legal fees.

        While there are ways to reduce these operating expenses, like buying off-plan property or using the payment plans from a property investment company, the bottom line is real estate investing can be pricey. The required deposit for an off-plan property purchase can often be as little as 15% – 20%, so this is why investing in off-plan rental property can be a better value option.

        You should also be sure to pay off any outstanding debt before investing, including paying off a credit card or other fees. High-interest debt can affect your credit score and make it harder to borrow a buy-to-let mortgage.

        You can learn more about a breakdown of all the costs involved with UK property and the latest property taxes by reading our in-depth guide to “how much money do you need to invest in property?”

        • Buy to let mortgage payments
        • Down payment on a mortgage

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          Biggest Investment Mistakes to Avoid

          As a beginner to the investment world, it can be easy to fall prey to common pitfalls. The biggest investment mistakes to avoid include not giving your investments ample time to grow and investing money that you might need in the near future.

          It’s important to have clear goals in mind for your investment, as well as a fully thought-out long term plan. It’s never too early to start envisioning your exit plan, as to whether you plan to sell up or not, and when and how this might take place.

          Remember to be aware of any extra fees or costs involved and keep some funds as a buffer in case of unexpected expenses.

          Understand Buy to Let Mortgages and Real Estate Financing Options

          4. With the average UK property value now surpassing £290,000, many real estate investors have been priced out of the market.

          For this reason, you may need a buy-to-let mortgage to secure your first investment property.

          If you intend on renting out a property and earning monthly income, normal real estate mortgages won’t be appropriate. Instead, you’ll need a specialist buy to let mortgage.

          These mortgages work slightly differently from traditional mortgages. The majority are interest-only, which means you will only pay the interest each month without covering the overall debt.

          Come to the end of your mortgage term; you will need to pay off the total debt by either selling the real estate investment property or re-mortgaging.

          The main differences between buy-to-let mortgages and ordinary real estate mortgages are:

          • Higher down payments and fees tend to be much higher.
          • The minimum down payment/deposit for a buy-to-let mortgage is usually 25% of the property’s value.
          • Mortgage loan interest rates are higher.
          • You will need to earn £25,000 per year.

          If you decide to opt for a buy-to-let mortgage, be sure to speak to a financial advisor to help you with your financial decisions, wealth management, and personal finance.

          You can learn all about buy-to-let mortgages in our complete guide.

          Buy-to-Let Investment Guide

          Want to become a successful buy-to-let investor? Get our free investment guide today for all the latest tips!

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          Off-Plan vs Completed Property

          The ultimate guide to help you choose whether to invest in off plan or completed property in 2024.

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          Man counting house price, home insurance cost, property value or rent on paper. Realtor or real estate agent writing offer. Mortgage, saving and buying apartment. Money and small building on table.

          Consider a Property Management Firm for Passive Income

          5. One of the main questions you should ask yourself when investing in rental property for beginners is whether you want to be a landlord.

          Being a landlord can be a big responsibility. Not only do you need to provide a good rental property, but you also need to be aware of landlord-tenant laws and your legal obligations.

          This can be a big issue for those looking for real estate properties as most real estate investors will likely rent property alongside a full-time job, meaning they will have little time to fulfil their landlord duties.

          If this is the case, you will likely need to hire the services of a property management company when investing in the housing market.

          By doing this, the property management company will charge around 10% of your rental income and will handle all landlord duties so that you can have a completely hands-off investment with passive income.

          While this will eat into your income, it is often recommended for beginners to real estate investing as quite often they are not ready or able to fulfil the duties of a landlord.

          You can learn more about property management by checking out our new guide to how to manage your investment property.

          Off Plan Investment Guide

          The ultimate guide to investing in off plan property, from the best off plan strategies and locations to costs and benefits.

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            Focus on Rental Yields and Capital Appreciation for Property Investments

            6. When evaluating the investment potential of real estate, it’s essential to focus on rental yields and capital appreciation.

            Rental yields are a percentage figure that shows the return on investment you’ll earn through rent.

            It is calculated by dividing the annual rental income by the original property purchase price and multiplying it by 100.

            This is to calculate gross rental income (rental yields without factoring in expenses). Calculating NET rental yield is more difficult as you will need to know the costs.

            If you’re buying with a property investment company, many companies will tell you exactly what NET yields you will earn, whereas if you’re buying through a property portal or auction it will be a lot harder to find out.

            Generally speaking, the higher the NET yields the more you are likely to make from your rental income, as it is a higher percentage of your investment returning to you each year.

            On the other hand, capital appreciation is the growth in a property’s price over time. You can look at predictions for future price growth in an area or look at past house prices for a specific property to inform how future growth will occur.

            By focusing on these two factors, you can ensure you find a good rental property offering a positive cash flow.

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              Research the Right Location

              7. In the UK, not every area is made equal for real estate investment.

              With substantial regional variations, property prices, growth, rental yields, and rental demand vary wildly per city or area.

              When investing in property, you will want to invest in an area with a strong housing market.

              You will, therefore, need to do plenty of research to help determine which location is the right one for you and your investment properties.

              This is an aspect of investing in real estate that beginners often overlook, so make sure you don’t make this mistake!

              Thankfully, we’ve done the hard work for you and have calculated the latest average house prices, rental yields, price growth potential, and rental demand for the UK’s top residential property hotspots.

              The current top 10 best places to invest in income property are:

              By choosing these cities and towns, you can ensure a supply of long-term tenants for the future and make sure you can keep collecting rent for years to come.

              You can learn about buying income property in all these cities in detail with our best places to invest in the UK property guide.

              Buy-to-Let Investment Guide

              Want to become a successful buy-to-let investor? Get our free investment guide today for all the latest tips!

              Download Guide Guide - Buy to let investment guide

              Off-Plan vs Completed Property

              The ultimate guide to help you choose whether to invest in off plan or completed property in 2024.

              Download Guide
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              Start Small When Climbing the Property Ladder

              8. With dreams of financial freedom, you may feel eager to climb the property ladder and rush into buying rental property and building a successful property portfolio.

              And while real estate investment is undoubtedly a great idea in 2024, caution is key for long-term success. Beginners in real estate investing sometimes tend to jump the gun and bite off more than they can chew, which can end badly.

              By starting off small and buying a single property in a property hotspot like Liverpool, you can familiarise yourself with the UK property market and learn what it takes to make a successful real estate venture.

              While your cash flow will be less at the start, you’ll quickly learn how to maximise cash flow safely and efficiently.  Going slow is generally a good idea when investing in real estate as a beginner.

              After this, you can re-invest your earnings and add more properties to your portfolio. For instance, you could buy one rental property per year in different UK investment hotspots and safely build up your property portfolio.

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              Benefit from a 28.8% price growth forecast across the next five years on our latest North West development.

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                Choose Off-Plan Property to Save Money

                9. Another great tip if you’re wondering how to start investing in rental properties is with off-plan.

                Like with any investment, it’s crucial to save as much money as possible to increase the potential for huge returns, and one way of doing this is by buying off-plan property.

                Off-plan property is a new build property that hasn’t yet been completed but is available for purchase. You can buy both residential buy-to-let and student accommodation off-plan.

                The main benefit behind buying off-plan property is the cost, with developers offering below-market value prices as an incentive to invest.

                For instance, Central Park, a Liverpool apartment complex, has flats available from £164,950, far below the price that these apartments would fetch when fully built.

                Just be sure to do your due diligence and research the developer thoroughly to ensure they are reliable and will deliver your property on time and of good quality.

                You can learn all about off-plan property in our helpful property investor guide.

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                  Invest with a Property Investment Company

                  10. The final tip for those asking how to invest in rental property as a beginner is to do so with an investment company.

                  While the answer to the questions “Should I invest in a rental property as a beginner?” and “can I invest in rental property as a beginner?” is yes, the process can be tricky.

                  Not only do you need to ensure your rental property is a good investment, but you’ll also need to complete a bunch of legal paperwork which can be off-putting for a beginner property investor.

                  Thankfully, you can instead use the services of a property investment company like RWinvest. Not only will investment companies find you an ideal investment property for your goals and budget, but the majority of the paperwork will be handled for you.

                  You can learn more about property investment companies and the benefits of investing by clicking the link and reading the free guide.

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                  Best Way to Invest Your Money in Property

                  If you have a certain amount in mind that you want to invest you may be wondering how to best use those funds.

                  Best Way to Invest £50k in Property

                  Although property prices in the UK market are much higher than in previous years, £50,000 is still a decent amount to start investing in property with. Typically, a buy-to-let mortgage can be used to acquire a more expensive property, and any remaining funds you have can be used as a buffer in the case of unexpected expenses. Gains made from rental income will usually be used to pay the monthly cost of the mortgage.

                  If a mortgage doesn’t appeal to you, you could consider a payment plan option on an off-plan property. Going off-plan, investors can pay less than the market price of the property, making it an ideal investment for those with savings of £50,000.

                  Best Way to Invest £100k in Property

                  When it comes to investing £100,000 in property, it is possible to use these funds as a starting point to create a property portfolio. By choosing a property in an area with high potential for capital growth, you can usually take on a shorter-term mortgage and use released equity in the future to acquire another property.

                  If a property portfolio doesn’t appeal to you, you can use your savings to acquire a more luxurious property with a higher monthly rental income and a high potential for capital gains when the time comes to sell up.

                  Best Way to Invest £200k in Property

                  For those with a higher-than-average initial investment pot, there are diverse opportunities to make the most out of your venture.

                  If you split your investment between several more affordable properties with mortgages or payment plans, it’s possible to maximise rental income with a property portfolio.

                  Alternatively, you could invest in a property without the use of a mortgage or payment plan, and generally start seeing returns quicker.

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                  Find the Right Rental Property and Invest in Real Estate With RWinvest Today

                  Attention all beginner investors! Real estate investing shouldn’t have to be difficult, so invest with RWinvest today and take all the difficulty out of rental property investing.

                  With over 18 years of experience in residential and student property, RWinvest is one of the biggest names in real estate investing. We are experts at guiding beginners through the investment processes and leaving them with secure high income buy-to-let properties.

                  Named the North West’s Best Property Business 2020 and nominated as Business of the Year 2021, RWinvest is an acclaimed property investment company with over 75,000 investors.

                  You can buy properties today from just £164,950 with massive NET rental yields available up to 6.5%!

                  We have affordable down payment property plans so you can secure an investment property with a low deposit for off-plan property, and often not pay again until a number of months. This is perfect for those investing in real estate as beginners, as it helps to spread out the cost of investing.

                  Invest today and achieve financial independence by securing substantial monthly cash flow with exclusive investment opportunities only available with us.

                  Secure your ideal rental property now by clicking the link below and have a quick chat with one of our property specialists today to help find your ideal investment home and explore the latest investment opportunities.

                  For further reading on property investment, take a look at our guides and blog posts answering the following questions:

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                  Patrick Faulkner

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                  Patrick is a property content writer at RWinvest. Keeping a close eye on the UK property market, Patrick helps our readers stay informed and up to date on the latest market news and statistics.


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