How to Make Money from Property with Buy to Let Investment

Investment is one of the best and most effective methods when it comes to how to make money in property, but what are the most common strategies used? If you’re interested in finding out how to make money investing in property, here are the most popular investment methods to consider.

Property renovation, also referred to as ‘buy to sell’, is another of the most common investment strategies. Unlike buy-to-let, this kind of investment involves you purchasing a property for a low price and refurbishing it until the value of the property has increased. The key in how to make money from a property renovation lies with knowledge. You need to be knowledgeable about the property market in the area you’re interested in, identifying certain areas where property prices are set to grow through capital appreciation. You also need to know tips and tricks on how to add value to a home, which could mean having a good eye for interior design or property trends. If the property you invest in requires a much more intensive renovation, you may even need to get advice from a property developer.  Because of this, property renovation projects are usually taken on by property experts rather than those just getting started in property investment.

Property renovation projects can be successful if you do your research and properly plan out your investment. Past investors have had a lot of success with these types of investments, and they’re a good option if you want to generate returns in the form of a lump sum. Buy-to-let is often favoured over property renovation projects, however, as this allows you to make regular rental returns on top of returns through the sale of the property.

Pros

• You can generate a large return on investment if you purchase a property in a high-growth area and make the right kind of renovations.
• The process of buy-to-sell can be quite quick depending on how long your renovations take and how long the property takes to sell, which makes it a good option for those who want short-term returns in a lump sum.

Cons

• If you don’t have the right industry knowledge, the investment could suffer, and you could waste money on unnecessary renovations.
• Property renovation requires a lot of dedication and hard work, making it a tricky investment if you don’t have a lot of free time and are looking for something more hassle-free.

So out of those different property investment strategies, is buy to let the best answer in how to make money from your property? When you look at the benefits that come with buy to let, it’s easy to see why so many people consider this the best property investment strategy.

Here are some of the main benefits of choosing buy to let for your property investment strategy.

With certain types of property investing strategies, such as flipping a property, the process can be very slow. Flipping property involves buying bargain property which is usually run-down and in need of a refresh, making some major improvements such as redecorating and fitting a new kitchen and bathroom, and then selling it for a higher price. While this is a good investment option for some, it can take a long time before you see any return on your investment.

For those who aren’t interested in finding out how to make money from property renovation, there’s buy-to-let. And for those wondering how to make money from buy to let, rental yields are your answer. When you invest in a buy-to-let property, you’ll receive rental returns on a regular basis, often guaranteed if you purchase the property with an investment company.

At RWinvest, for instance, some of our property deals come with guaranteed yields for a period of one or two years, giving you peace of mind that you’ll see an instant return from your investment. This is a particularly good method of making money from property for beginners who are concerned about the risk of losing profit that can come from property investing.

So now that you know why buy-to-let is one of the best and most effective methods of making money through property, what steps can you take to ensure you’re getting the most out of your buy-to-let venture? Here are seven top tips to keep in mind if you want to make money from property.

1. Look for Rental Demand

High rental demand is one of the number one qualities that you should look for when seeking a buy-to-let opportunity. Without demand for your property, you can’t make money from property investment as there will be no one to earn rental income from. During your initial research process, look for buy-to-let opportunities in areas with large populations of students and young professionals. These two tenant groups are more likely to be seeking a rental property, particularly an apartment in the city centre or other popular locations.

2. Find High Rental Yields

Rental yields represent the amount of money an investor is able to make through their buy-to-let venture, and without a high enough yield, making money in property is more difficult. As a rule of thumb, you should look for a rental yield of at least 5%, as any lower and you’re limiting your potential earnings. When looking at investment opportunities in buy-to-let hotspot areas like Liverpool, it can be easier to find high yields. Liverpool boasts some of the most profitable rental returns in the UK in 2023, with the L1 postcode offering an impressive gross yield of almost 12%. By identifying the areas and opportunities with the best possible yields, you can increase your chances of making money from property.

3. Consider Capital Growth

Alongside rental returns, capital growth returns are another of the most popular ways that investors make money from property investment. When researching buy-to-let properties, think about whether or not the area you’re interested in has a good track record for capital growth and strong future growth predictions. Investors who choose to buy property in the North West region, for instance, benefit from expected growth of 11.7% by 2027. The better an area’s predictions for capital appreciation, the more likely it will be that investors can expect their investment to increase in value over time, offering the chance to make some attractive returns.

4. Seek Off-Plan Discounts

The less you spend on your venture, the more chance you have of making money from property investment if the value of your property rises over time. One way to ensure you’re spending the lowest possible amount is by purchasing off-plan property, which is a property that hasn’t yet been completed and is still in the construction stage. Off-plan investment comes with a number of benefits, one of which is the fact that developers tend to offer discounted below-market prices for off-plan properties. Choosing to purchase off-plan buy-to-let is one of the smartest ways to ensure you’ll make money from property investment.

5. Keep Tenants Happy

Once you’ve found a buy-to-let property that you love, and secured some reliable tenants, one of the best things to do to continue making money in property investment is to keep your tenants happy. The longer tenants stay in your property, the longer you will be generating a consistent income and avoiding any void periods. Of course, if you’re a hands-off investor, it’s a little more difficult to have control over whether or not your tenant is pleased with both the property and management. That’s why it’s important to find the best property management company possible to manage your property on your behalf. This way, you can rest assured that both your property and your tenants are in good hands.

6. Build a Portfolio

If you’re just starting out in property investment, the best way to make money from property is by owning your first buy-to-let apartment or house. After this, you can continue to earn more and more income by building a wider property portfolio. Once you own a number of buy-to-let properties in top UK areas, making money from property happens more easily, and you’ll be able to build an attractive income in no time.

7. Plan your Exit Strategy

One of the key things to think about when getting started with property investment is to plan your exit strategy. An exit strategy helps buyers get a better idea of how and when they plan to leave their investment and allows them to take advantage of the best deals and get the most out of making money from property. For example, if you want to sell your property at a time when the market is at its highest, you should plan to monitor property prices and keep an eye on capital growth.