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In the UK, real estate investment is one of the most common investment types. Investing your money into property can be a great way to build wealth and meet your financial goals.
Like any new venture, however, it’s important to do enough research on the topic of property investment before getting started.
That’s why we’ve put together this detailed guide to real estate investing in the UK, with 25 essential property investment tips that every investor needs to know.
If you’re unsure of where to begin when investing in property, keep reading for easy-to-follow and informative property investment advice so you can start building a rental property business today.
Property investment is, by definition, the act of buying a property to make a profit. This profit could come from rental income, capital gains from the sale of the property, or both.
So what is an investment property? An investment property is a property that is purchased to generate a return on investment.
An investment property comes in the form of an apartment, house, commercial office, or really, any kind of property that can be let out or sold for profit.
A property investor is somebody who purchases one or several properties to rent them out or sell them for a higher cost. A property investor can be a single investor or a group of investors buying investment properties together.
If you want to purchase a buy-to-let investment property, you can do this in different ways.
You could either buy a property with the help of a property investment company or invest privately by purchasing a property in an auction or via a real estate portal.
Before you consider how to buy an investment property, you need to learn about everything involved with property investment, including the costs, responsibilities, and how to make sure your investment is successful.
Luckily, if you continue reading our property investment tips guide, you’ll learn about all of the essential information you should know.
What is a property investment company, you ask? A property investment company is a company that works with property developers and connects investors with the best property investment opportunities.
Essentially, property investment companies are there to help property investors find the lucrative, well-located properties they’re looking for. And often, these properties come with a below-market value price tag.
You may be familiar with property investment tips that tell you how to get into property and start investing, but what about why you should invest?
There are so many benefits to property investment, including the ability to:
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It goes without saying that before you begin any new venture, especially one as big as buying an investment property, you should know precisely what you’re getting into in terms of risk.
Property, like any venture, comes with a level of risk. But this doesn’t mean you should shy away from investing in property.
As businesswoman Mellody Hobson once said:
“The biggest risk of all is not taking one.”
That’s why the second instalment of our property investment tips focuses on preparing you for the risks involved.
So what are the basics and the risks of property investment that you need to know about?
Put simply, the main risks behind property investment fall under the property market itself and the tenants that live in your property.
When you invest in property, you’ll buy your property at a certain price with the intention of being able to sell it for a larger amount. This allows you to make capital growth returns on your investment.
If property prices fluctuate negatively and your property drops in value, it may be difficult to sell it for more than you purchased it for.
The likelihood of this happening in the UK is low, particularly if you know which areas to invest in. Even so, every sensible soon-to-be property investor needs to think about this risk as a possibility.
While property price fluctuations can affect capital growth returns, rental market changes can affect rental returns.
In the same way that property prices can drop, average rental costs can also decrease if an area is suddenly less desirable to live in, and therefore sees lower rates of rental demand.
With the rental market in the UK more in-demand than ever before, this is an unlikely risk, particularly in popular rental cities and towns.
However, it’s important to be mindful that the rental market can change and affect your investment, and that’s why carrying out market research is such an unmissable property investment tip.
One of the pitfalls of investing in property, specifically with buy-to-let investment, lies with the tenants you choose to rent your property out to.
While rare, there’s always a small chance that you could come across unreliable tenants who may end up paying their rent late, leaving you with void periods where you’re losing money.
This is one of the risks that many investors don’t think about, so preparing for this is one of the key property investment tips to know about before you even begin your venture.
Have these risks got you worried about your property investment venture?
You can do things to minimise risks when buying an investment property. These are:
The best way to minimise any risk of your investment being affected by negative property market fluctuations is to research the market in detail.
Because purchasing a property in a UK property hotspot will reduce the chances of a risky investment by ensuring the likelihood of high capital growth and rental market growth is strong.
Look at past market performance, pay attention to whether the area has a large population of young professionals and students (suggesting a stable rental market), and research future market predictions.
You should also think about whether any regeneration occurs in the area surrounding the property, as this could further boost growth.
Reduce your chances of getting bad tenants by conducting thorough tenant screening, whether you do this yourself or use a rental property management company.
Tenant screening reveals things like employment history and runs credit checks so that landlords can be made aware of any financial issues.
You could also state that you’ll charge a late fee on delayed rent payments in your landlord agreement, making them aware of the exact date that rent is due.
Being ready to invest in property doesn’t only mean knowing about the different risks involved.
You should ask yourself the following questions to better understand whether you’re ready to make a property investment venture.
If the answer is no, you should reconsider buying an investment property and instead carry on saving your money so that you can comfortably invest later.
If you’ve found yourself reading our top property investment tips guide, then it looks like you are prepared to do some research before you invest.
While this guide is a great start, you should expect to do more research. Research the property market in-depth and stay on top of market trends to get the most out of your property investment venture.
Reading property news coverage on reliable websites like The Guardian is a good way to stay updated on the property market.
Being a property investor comes with certain rules and responsibilities. We wouldn’t be doing our job with this property investment guide without letting you know what some of those rules entail.
So, what do you need to know about?
Keep in mind that these rules mainly apply to landlords, so if you’re not looking to manage the property yourself, then these may not be relevant to you personally.
If you’re not ready to accept the risks mentioned in this section of our property investment guide, you may not be in the right mindset to buy an investment property.
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If you’ve spent time reading up on property investment tips and are now looking for information in property investment guides like ours, you will likely have come across the term ‘lucrative investment’.
And, of course, every investor wants their property venture to be lucrative.
But you might be wondering:
What makes an investment in property profitable? Can’t you just buy the first property you like the look of and expect the high returns to follow?
There are four main pieces of property investment advice that you need to keep in mind if you want to ensure your venture will succeed.
Rental yields separate a good buy to let investment from a bad one.
Without high enough rental yields, you won’t make rental returns that are significant enough to give you an attractive income while covering fees such as mortgage payments and rental income taxes.
So what is a rental yield exactly?
The simplest way to describe a rental yield is as a percentage figure that property investors use to determine the profitability of a buy-to-let investment.
A good property investment rental yield would usually be anything above 5-6%, with yields of 8% or over considered highly lucrative.
Under no circumstances should you invest in a property without researching its assured or projected rental yield.
Capital growth in property investment is the term used to describe an increase in the value of a property over time.
Over the years, property prices will typically grow in value. In some cases, this growth can be higher than usual due to various factors.
Regeneration and market demand are two of the most common reasons for capital growth. That’s why so many people invest in Manchester, with Manchester property investment offering great capital growth returns due to ongoing regeneration.
Be sure to pay close attention to capital growth potential when looking for your property investment opportunity.
For a property investment venture to work, high rates of rental demand are needed.
After all, having a continuous stream of reliable tenants is necessary to get income on a rental home.
Some areas may experience more rental demand than others, particularly tenant groups like students and young professionals.
That’s why, if you’re looking to target these tenant groups, you need to know about the areas and the types of property that typically see high tenant interest.
If you’re interested in a buy-to-let investment strategy, thinking about tenant demand is crucial.
Timing is everything when it comes to property investment. The perfect time to buy an investment property is when the market performs well.
So what does this mean?
If you’re buying an investment property, you’ll want to do so when:
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Many different strategies are available to those who wish to invest in property.
For many people, the decision is made early on as to which type of investment they want to make.
Some people will know that they want to invest in buy-to-let property from the beginning, so this is the strategy they’ll lead with.
However, if you’re new to the property world, you may not know which strategy is right for you.
To help give you some context, we’ve provided a breakdown in this section of our guide with some of the most popular property investment strategies that every soon-to-be investor needs to know:
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The two main types of investment strategy – buy to let and buy to sell – tend to offer the best returns and are an all-around favoured choice for investors.
But how do the two strategies compare? What are their pros and cons? And which is the better choice for property investment?
Buy to let is when an investor buys a property to rent out to earn rental income.
Buy to sell, or ‘flipping property’, is a property investment strategy involving purchasing and selling a property for profit. This is also often known as ‘property development’.
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Many property investors will automatically consider residential property investment as their strategy of choice.
However, some investors decide to invest in commercial property to buy residential flats or houses.
Let’s compare the two options in terms of their pros and cons.
Residential property investment is when an investor buys a property that will function as somebody’s home.
Commercial property investment involves buying a rental property intended for commercial purposes. Which? categorises commercial properties as retail space, office space, and industrial space.
Some people want to invest in property, but don’t plan on investing in buy-to-let or buy-to-sell property. In this case, some alternative investment strategies could be considered.
Some alternative ways people invest in the property include:
If you’re not set on the more traditional ways you can invest in property, read about the many different property investment strategies to get some further inspiration.
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Alongside thinking about the type of property investment strategy you’re interested in pursuing, you should also decide on the type of property you want to invest in.
By ‘type of property’, we don’t just mean whether you should invest in a house vs an apartment.
You should think about whether an off-plan, new build, or refurbished property is right for you.
Unsure what these terms mean?
Keep reading as we explore each of these options in the fifth instalment of our property investment tips.
You may be familiar with the term off-plan property. If not, it’s time to familiarise yourself.
Off-plan properties haven’t yet been built but are available to buy. This means they may still be in the planning or construction stages.
Off-plan property investment is incredibly popular as it offers a range of benefits, and exploring off-plan investments is a key property investment tip.
So what are these benefits?
As developers often list off-plan properties at below-market value rates, you can save money.
You’ll attract tenants due to people being more drawn to brand-new properties.
You could maximise capital growth returns. This is because by the time your property is complete, it’s likely it could be worth more than the price you initially paid.
Now, let’s look at the downsides.
One of the things some people dislike about off-plan property investment is the fact that you can’t view the property before you buy it.
This puts many people off from buying off-plan, but it’s important to know that many off-plan properties are available to view through a virtual reality tour.
With virtual reality tours, you can see what an off-plan property is expected to look like once completed and can even take a tour of the surrounding area from the comfort of your home.
New-build properties are very similar to off-plan properties, with the main difference being that they’re already completed.
Generally, a new build home is a property completed within the last few years.
Unlike off-plan properties, new builds will have likely been lived in by tenants. Potential buyers can also view them since they are ready and completed at the time of purchase.
Here are some benefits of buying a new build for your investment:
The only real downside to buying a new build property is that some tenants may prefer a more classic property style, such as a period home.
By researching your target tenant, you can make sure you’re investing in a type of property that your target tenant group will be most interested in.
A refurbished property is a property that has been purchased and renovated to look more modern.
This often includes period properties that need to be updated without losing their original period features.
Investors more drawn to the renovation side of property investment will favour this type of property.
And there are benefits:
However, investors who aren’t prepared to put time and money into renovating a property should opt for a new build or off-plan property for their investment.
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Location matters a lot when it comes to investing in property.
But why is this?
Well, in the UK, the property market can differ city by city. Property prices in Liverpool won’t be the same as those in London, for instance, and in certain areas, qualities like high rental yields and strong capital growth are more common.
This is why one of the number one pieces of property investment advice that you’ll come across time and time again is to research different areas.
Here are some of the key things you should focus on when researching different locations for your buy-to-let investment.
Rental yields are so important if you want to secure the best property investments possible, and the area you choose to invest in plays a big part in the type of rental returns you can expect to find.
This is because areas with a combination of low average property prices and high average rental costs will usually result in strong yields.
If you’re buying a property with the help of a property investment company, then you’ll already know the projected or assured rental yield that comes with each opportunity.
However, if you’re investing more privately, without using an investment company, you can work out potential rental yields for an area by finding out its average property price and average rental cost.
For high rental yields, you can look at buy-to-let investment properties in North West cities like Liverpool and Manchester.
Liverpool property investment offers some of the best property investments for rental returns, with yields as high as 10% in certain postcodes.
Manchester boasts a gross average rental yield of 8.46%, while Liverpool’s current average is 7.15%.
To get the most out of your property investment venture, you need to pay attention to capital growth.
The entire UK has seen consistent house price growth over the last year, hitting record highs in 2022.
However, some areas have better growth than others.
The North West region, home to Liverpool and Manchester, is predicted to see the UK’s highest house price growth rates.
In their latest residential property market forecast, Savills predict 11.7% average growth for the North West by 2027.
The same growth rate is predicted for areas like Leeds, Preston, and Middlesborough.
This highlights the strength of the North of England compared to the South, with a five-year negative growth of -1.7% in store for London.
To ensure your investment property generates plenty of rental demand, you should invest in property in an area that’s classed as a rental market hotspot.
After all, you don’t want to put all that money, time, and energy into making your perfect property investment just to find your property untenanted.
Cities with high populations of students and young professionals, such as Manchester and Birmingham, tend to offer the best investments if you want high rental demand.
This is because these tenant groups are more likely to rent properties before getting onto the property ladder and buying their own home.
Northern parts of the UK offer the best options for investing in property. But you can also consider the popular Midlands city of Birmingham.
If you had to narrow your choice down to three UK cities that offer the best UK investment opportunities, you should opt for Manchester, Liverpool, and Birmingham.
These areas are good for:
Read our guide to the best places to invest in property in the UK to learn more.
Another crucial factor when trying to find out “how to invest in property?” is identifying your target tenant.
Identifying the best investment property for your target tenant helps you discover the best properties to invest in and can help you get one step closer to a successful investment.
By deciding who your ideal tenant is and what they’re looking for, you can purchase a property that appeals to them.
Renting to student tenants is popular in the UK, particularly in key university cities.
Students make great tenants due to the high demand for student accommodation in the UK.
But that’s not all.
Because most students tend to be respectful of their landlords, they’re often more likely to pay rent on time to keep their accommodation and avoid any issues.
Most residential buy-to-let property investment opportunities are targeted at young professional tenants.
This is because the rental market in the UK is primarily dominated by young people living and working in UK cities.
This tenant group may not yet be ready to join the property ladder and buy a house of their own to become homeowners.
Also, despite Government schemes like Help to Buy, young people struggle to afford homes due to rising house prices.
Either way, the UK’s high number of young professional renters has massively contributed to high tenant demand rates.
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It’s essential to create a property investment budget before buying an investment property.
Having a budget in mind helps you find the best property investments for you.
After all, you don’t want to use your property investment funds to pay above your means for a property that may have the same potential behind it as a property with a lower price.
But you’re probably wondering:
How do you get started with planning a detailed property investing budget, and what costs do you need to factor in?
Here is some property investment advice on how to plan your investment budget and the main costs involved with an investment in property.
Think about the money you have coming in and the regular outgoings you pay every month for things like mortgage repayments, bills, food, and day-to-day living costs.
Then, think about your potential incomings and outgoings once you start investing in property, factoring in costs as possible outgoings.
You might be excited to get started with your property investing journey, but that doesn’t mean you should purchase a portfolio of multiple properties or invest in a block of flats straight away.
The key to planning a budget is to start small. Even if you have a huge budget and can afford to buy 10 properties right away, it may be better to buy two or three to start.
As obvious as it sounds, you need to remember to buy properties within your means.
The UK has a wide choice of affordable properties for investors with smaller budgets, so whether you want to know how to invest £50k or £500k, you’ll find the perfect investment for you.
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When it comes to investing in property for beginners, deciding how you’re going to pay for the investment is a big element to consider.
For many investors, using a buy-to-let mortgage seems like the most suitable route to take.
If you want to know how to get an investment property when you haven’t got access to the entire immediate funds, you can opt for a buy-to-let mortgage to streamline the process.
Find out more about buy-to-let mortgages in this section of our property investment tips UK guide.
Similar to a regular mortgage, you can take out a loan on a buy-to-let property.
You’ll pay a deposit, otherwise known as a downpayment, and pay monthly mortgage repayments.
Different mortgage brokers and mortgage providers offer varying interest rates for buy-to-let mortgages.
This also depends on how much deposit you have and how long you want the mortgage for.
If you’re using a buy-to-let mortgage to buy an investment property, the minimum deposit you need to put down is usually 25% of the property’s value.
The more you have for a deposit, the lower your repayments will be and the better your chances of securing a mortgage.
Minimum investment of £40,000
What kind of property investor do you want to be?
By this, we mean having a hands-off vs a hands-on property investment.
Do you want to be a full-time or part-time landlord who owns and manages rental properties as their primary source of income?
Or do you want to generate income from property investment alongside your day-to-day career?
You need to consider this as it helps you realise whether you need to hire a rental property management company to help you run your investment.
Property management means overseeing the management of a property. Usually, property management is provided as a service where a property manager runs certain day-to-day tasks on behalf of the investor.
Property managers can help with the following:
One of the main reasons people hire a property management company to manage their property portfolio is that they don’t need to worry about the responsibilities involved with managing a property.
This hassle-free approach is popular with investors who want to take a step back from the functional duties and demands of owning a rental property.
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It’s often said that you learn something new every day, but in the world of property investment this is something you should take to heart.
The best investors never stop learning about the property market as this way they can stay ahead of the curve when it comes to changes occurring in the property market.
There is always more information you can learn, and with how fast changes can happen in today’s climate it is important to keep up to date.
The buy-to-let market is a smaller chunk of the overall UK property market. How the market grows or falls will dictate how the buy-to-let market can operate, so you should keep an eye on statistics such as how house prices grow and the expected 5 year growth.
Here are several ways you can keep up to date with news about the UK housing market.
A good way of keeping up with the latest in the property market is by following property news blogs, written by experts in the field.
These are regularly updated with all the latest goings on in real estate, providing useful summaries of information that investors need to know. This way you can keep informed of important topics likely to affect the property market without needed to trawl through facts and figures on your own.
We here at RWinvest regularly update our property news blogs, with a team of dedicated writers who keep a close eye on the property market for any developments or changes that occur.
Signing up for email updates from several different sources is a good way of having important news sent to you without having to spend time scrolling through Google to find what you need.
This way you can have the latest news sent straight to you from reputable sources.
It’s important to find several email updates to sign up for rather than just one source of information. This way you can get the most accurate information without having to determine if where you are getting your information from is biased.
Setting up Google alerts for words that commonly come up, such as ‘property investment’, ‘UK housing market’ and ‘buy-to-let property’, is also a good way of getting updates by email. This way Google does the searching for you, and finds reputable sources for what you need.
A good way of tracking how house prices are changing across the UK and in individual regions is through house indexes. These track the sale of properties over time, which allows you to see where house prices are rising.
As a buy-to-let investor, there are three main indexes you can keep track of.
The Land Registry’s UK House Price Index tracks all transactions within a given month to provide data on how the entire UK house market is performing, as well as breaking down data by each nation, region and city.
However, this data normally takes two months to collect, so it is not the most up to date index available, even if it is the most accurate due to the amount of data. While there are several other house price indexes available that are updated faster, this is the most accurate.
The Homelet Rental Index is also important for buy-to-let investors to keep track of, as it follows how rental prices go up or down in a given month. This is important to track as it gives you an indicator of how much rent you should be charging.
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A property portfolio is the overall group of properties that you own. While it is best when beginning to invest to only start with one property, over time you may decide you want to expand your buy-to-let investment portfolio by purchasing more properties.
Diversifying your portfolio means purchasing properties of different types or in different areas than your existing ones, to spread out how you invest your money.
There are several reasons why you should consider diversifying your investment portfolio over time.
Investing in different areas of the UK to those currently in your property investment portfolio is a good way of spreading your investments out.
Different areas of the property market grow at different rates depending on local circumstances, such as population growth and regeneration.
With this in mind, investors should consider investing in properties around the UK to make the most of regional variations in housing markets.
For example, The South West and the North West had the largest 12-month growth in July 2022, with respective increases of 20.7% and 18.1%, according to the UK House Price Index.
This growth continued into 2023, with the regions seeing increases of 6.97% and 5.82% on the year, respectively.
Therefore, in 2024, these would likely be good areas to invest in, as your properties would potentially grow in value at a faster rate.
Another way of diversifying your investment portfolio is to spread out your investments across multiple properties.
Different properties will have different rental yields and rental prices, so you may be able to find more profitable properties in addition to ones you already own.
This way, as well, if there are issues with a property you already own, you can continue to earn income from other properties while you resolve the problem.
Investing in multiple properties helps to secure your investment, as it makes it less likely that you will not see a positive return on your investment.
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As mentioned earlier, you earn returns from your investment properties in two ways:
Rental income, which you collect from tenants each month to create a consistent cash flow of passive income.
Capital growth, where the value of your property grows over time so you can hopefully sell the property for more than you bought it for.
Many investors choose to focus on one of these methods of income over the other, as it is rare to find a property where you will see strong returns through both methods.
Would you prefer to have a monthly cash flow of income to do with as you please, or would you rather have a more sizeable return on your investment in one go that takes time to develop?
There are several benefits to focusing on earning rental income as your primary method of getting returns on your investment:
However, there are some cons to consider as well:
Focusing on capital growth with your buy-to-let properties has several benefits you should consider:
Despite these positives, there are some reasons why investing for capital growth might not be for you:
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Investing can be risky. Even though property investment is one of the safer methods due to the stability of the housing market, there can be issues that arise.
As well as this, unexpected events could arise in your own life which means investing is no longer a viable option for you. Divorce, pregnancies, moving house, losing your job, there are numerous life events which could come out of nowhere that require most of your time and money.
As such, it is important to be able to exit from your investments with a plan in mind beforehand, just to be safe from what life can throw at you.
Here are a few suggestions for ways you can pull out of investing if the time comes.
This exit strategy gives you the best of both worlds, as it allows you to gain profit on the properties you choose to sell whilst being able to pay off any mortgages or debts on the properties you choose to keep investing in.
You can sell your property with tenants living in it, so long as you explain why you intend to sell before you put the property on the market.
You can either select properties which are underperforming to sell, or ones which have benefited the most from capital growth. Your choice depends on how you want to continue with the properties you will still own.
While this is a drastic step, you may decide that you no longer wish to invest in property and that it is time to sell the investment properties you currently own.
This will see you generate a lot of funds when the sales go through, given how capital growth will hopefully have affected the market value of your properties.
However, there will be a Capital Gains Tax you need to pay on the money you generate, so you will not be taking home the entire profit.
It will also take a long time to sell your properties, so this exit strategy is not one you can jump into and expect to see profit from instantly.
Alternatively, you may not want to deal with the hassle of selling your properties and may instead choose to pass on your properties to a beneficiary to take ownership of.
This way, you won’t need to go through the trouble of selling your properties, but you also won’t be able to earn any income from the sale.
This exit strategy is good if you wish to help a family member or loved one achieve financial security, as they will be able to become a property investor at a much lower cost.
You can continue to benefit from the rental income you will collect from the property until you feel it is time to leave the market and pass the properties onto your beneficiary.
Property investment can be daunting when you are taking your first steps. Finding the right kind of properties to invest in, understanding how to pay for your buy-to-let property and what to do once you have invested are all subjects that can be complicated to navigate on your own.
As such, you should try and get in touch with experts in investing to get a better understanding of property investment and what kind of goals you should set for yourself.
Here are some examples of experts you could seek property investment advice from.
If you are unsure of your goals when investing, or the budget with which you can invest, you should consider discussing your situation with a financial advisor.
They can advise you on if property investment is right for you, as well as suggesting a realistic budget to invest with based on your financial situation.
Speaking to a financial advisor is recommended before you start investing, as they will be able to give a professional opinion on whether property is the right investment strategy for you.
In regards to the housing market in general, it may be worth your time to speak with an estate agent to discuss your options.
They will have a good understanding of both the national housing market and the market of the area around you, and should hopefully be able to steer you towards areas with a combination of high rental yields and affordable prices.
This will help you understand more about the housing market in detail, and combined with the investment strategy you will have planned with your financial advisor, this gives you a good idea of how you want to invest your money.
When it comes to investing in buy-to-let property, there are arguably no better experts than a property investment company.
Specialising in helping clients find the best investment opportunities across the UK, property investment companies are able to answer questions you may have about investing in property as well as tailor an investment strategy to fit your needs and budget.
Here at RWInvest, we pride ourselves on supporting our clients through every step of their property investment journey. Our Client Care and Post-Sales teams help clients long after the sale has been completed.
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If you want to ensure your properties consistently increase in value over time, it is important to ensure they will still meet what tenants are looking for.
There are several ways you can go about increasing the value of your property over time, and many of these methods are not as expensive as you might think.
You could try:
This helps to boost the capital growth of your property over time.
You want to ensure your property increases in value over time, and keeping it updated and in line with market trends is a good way of helping this along.
For example, during the COVID-19 pandemic, many tenants chose to focus on properties with more floor space and outdoor space due to the rising number of professionals working from home.
Therefore by adding outdoor spaces such as a balcony or extending the floor space of the property through an extension, you are able to meet market demands to help drive up the value of your property.
If you have your heart set on a particular investment property that happens to be out of your price range, you will need to consider alternate forms of paying for the property.
While payment plans and buy-to-let mortgages are perfectly viable options, they mean having to continue paying for the property over time. Unless you are able to generate the necessary money, this could be difficult.
An alternate way of investing out of your budget is to invest with a partner, combining your budgets to split the returns on a larger or more expensive property. This way you can also expand your buy-to-let portfolio quicker, as you are investing less money each time.
You can often benefit from each other’s unique skills, expertise or knowledge to help make your investment profitable. By working as a team you can help get the heavy lifting involved with investing done quicker and easier.
However, there are complications that arise with investing with a partner.
Arguments may happen which could fracture the working relationship, making it more difficult to manage your investment property.
You will also see less returns when investing with a partner than you would if you were to invest on your own, due to having to split the profit you make.
If you choose to use a buy-to-let mortgage, you will both be individually held responsible for it, and if your partner is unable to keep up with the mortgage repayments then your credit score will be affected as well.
To learn more about investing with a partner and if it is right for you, try our handy guide on the subject.
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As mentioned earlier, the best investor never stop learning. A good way of becoming more knowledgeable about the property market is by connecting with tradesmen and other investors.
This way you can share what you have learnt about the property market and investing with like-minded individuals, and they can do the same with you.
Here are several reasons why you should consider networking to help learn more about investing:
If you are new to investing then it is very easy to get overwhelmed by the amount of information out there. There are dozens of key terms to remember and understand, as well as lots of facts and figures to keep an eye on.
By talking to other investors who are further along their journeys into property investment, you are able to talk to people who have been in the same position you are.
This way, they can help you get to grips with what you need to know and understand, without having to spend hours scrolling through spreadsheets and blog posts to find out what you need.
Additionally, tradesmen look at the property market from a different viewpoint to your own, and so you may be able to learn more from their perspective about issues to look out for in properties. These could be things such as common faults that occur with properties, or ways to increase the market value of your property.
If you own buy-to-let property, you will eventually have to deal with repairing or renovating what you own if you want to keep your tenants happy.
A property in a state of disrepair will look unappealing to renters, and lower the amount of rent you can charge for the property. In addition failing to handle issues raised by your tenants could lead to legal issues down the line.
Having a network of tradespeople you trust on the line is essential for landlords, as unless you possess the expertise to repair your property yourself then relying on experts is always better than attempting DIY.
Therefore having people you know and already trust to do good work is important as a property investor, as relying on strangers can be risky sometimes.
While your main focus should be on investing in UK property, given the stability of the housing market and the potential for growth, you may wish to consider also researching property markets from around the world.
Several property markets are large enough to affect the global housing market if something were to happen, and as well as this there are several housing markets that present intriguing opportunities for those looking to invest abroad.
China is the world’s largest property market, bigger than the entire US stock market combined. The Guardian valued its worth at being between $55tn (£47tn) and $60tn.
While you may not want to invest in property in China, you should keep an eye on how the market is performing. Given its size, any serious instability or crash would have wider effects on the global housing market due to the number of international investors.
Recent events such as mortgage strikes have caused some to worry about the condition of the market, and although it is unlikely to crash thanks to government intervention, it is a situation to keep an eye on.
The second largest housing market in the world, according to Savills, the US housing market is evaluated as being worth up to $42.1 trillion.
However, the housing market in America has been in steady decline for several years due to affordability issues and rising mortgage rates.
Regional housing markets often overvalue or undervalue properties as well, which is contributing to the decline of the market.
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Investing in property takes time and effort. There may be complications along the way, from solicitors slowing the process down with paperwork to issues with construction of the property to damage done when tenants are moved in.
It is easy to get frustrated at times and to lose faith in your investments given the long-term nature of investing in property.
Therefore it is important to remind you to stay positive throughout the process of investing.
Here are several things you can do as an investor to help maintain the right attitude towards investing:
Property is a long-term investment, especially when it comes to capital appreciation. It will take a long time to see strong returns begin to accrue on your investment.
Therefore being patient is key when it comes to having the right mindset as an investor. If you are looking to make money quickly, then this is not going to be the investment strategy for you.
Understand that it will take time before you start seeing profit on your investment, and this will help you stay positive in the long run.
Remember – it’s a marathon, not a race.
Doing your research and due diligence before, during, and after you invest in property is also a good way of keeping positive.
This way you will know of the risks that come with investing in property, as well as being aware of how it is a long-term investment.
Jumping in with both feet only adds to the risk and can lead to miscommunication and frustration if the results are not what you expected.
By researching about property investment ahead of time, you are keeping your expectations reasonable and understanding issues that may arise.
The property market is ever-shifting and changing, and so having a degree of fluidity with how you handle investing is key.
If you are dead-set on a single investment strategy you may run into trouble if the market shifts and your plan is no longer as viable.
By keeping an eye on how trends in the property market, you are able to regularly assess if your strategy is still viable and come up with alternate solutions if problems arise.
Having a willingness to change and grow is a great way of maintaining a positive attitude when investing.
There are several ways which current affairs can affect the property market. Big events or changes to the country can make people more or less likely to spend their money in property, which can have big impacts on things like house prices.
There have been several recent events which have affected the property market which we can use as examples as things to look out for.
In recent years the COVID-19 pandemic had a big impact on the property market, as due to the move to remote working many more young professionals began looking for rental properties with outdoor space and more living room.
This saw a large rise in the sale of buy-to-let properties and off-plan investments, as more investors chose to make the most of the popularity of these kind of properties.
House prices across the UK also rose sharply, as investors chose to spend their money on property rather than expenses they would normally spend on such as holidays.
The cost of living crisis the UK has undergone in the past few months has caused some shifts in the housing market.
House price growth is beginning to slow down as potential home buyers are choosing to save their money for to cover the rising energy prices rather than purchasing property.
This is causing demand for housing to gradually slow down, even though there is still not enough supply to meet it.
The recent budget announced by Chancellor Jeremy Hunt has also had an impact on the housing market.
Along with a three-month extension of the Energy Price Guarantee, it was also announced that the government would deliver 12 “investment zones” across the UK – with the intention of creating new “potential Canary Wharfs.”
Additionally, the Chancellor promised to put further investment towards UK regeneration schemes.
From 2023/24, the government will provide over £200m in funding to 16 high-quality local regeneration projects across the UK.
This is great news for investors, as regeneration is a magnet for future growth and demand.
Simply leaving your investment properties alone to generate income is certainly a reasonable method of investing. After all, one of the main selling points of investing in property is how it is able to generate a passive income for you over time.
However, the best investors will pay attention to how their properties are performing in several key areas. This is so they can see which properties are bringing in the expected amount of money or more, as well as those which are not.
You may find that you have an investment property in need of renovation, which would allow you to charge more rent and make more rental income as a result. Alternatively, a property you own might have built up enough capital appreciation for you to consider selling it for profit.
Here are several factors you should look for when assessing your investment properties:
Having a high rental yield is important to ensure you are getting a strong return on your investment.
You may find the operating costs of owning an investment property change over time, and as such unless you charge the right amount of rent you may find yourself making less rental income.
Therefore, you should aim to work out the NET rental yields of your property regularly, to keep on top of things and to ensure that you are charging the right amount of rent.
Generally, aim for a rental yield of around 6%. The national average currently sits at around 3.63%, so having a rental yield higher than this indicates you will make a solid return on your investment.
Wear and tear happens to every property over time, but seeing as you are using investment properties for income rather than to live in, it is in your best interest to make sure it is kept to the highest standard for several reasons.
For these reasons and many more, it is best to deal with any requests for repairs as soon as possible.
Thanks to capital growth, properties increase in value over time.
Therefore your property may have increased in value enough for you to consider putting it back on the market to sell for profit.
This way, you can make a considerable return on your initial investment, and either use the money to reinvest in other buy-to-let properties or as a way of saving for important events such as retirement.
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If you’re ready to begin your property investing journey and you’re eager to find the best opportunities on the UK property investment market, let us help you put these property investing tips into action.
We’ve helped thousands of investors just like you find their perfect investment property, thanks to our impressive residential and student property developments in the best UK areas.
Contact us today for a helpful chat with a member of our team who can offer information on how to build a property portfolio in the UK.
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Please note: The UK property investing tips in this guide are meant for informational purposes only and should not be taken as financial advice. We encourage you to conduct research and seek financial and legal advice before investing in property.
Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.
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