1. Residential Rental Property
Looking for the top investments that pay monthly income, UK or otherwise?
Perhaps one of the best investments for monthly income is residential rental property.
A must-have for any serious investment portfolio, residential rental property investment has exploded in popularity over the last year and is a top contender for those looking at investing for income. UK property, in particular, is a hot item – thanks to its massive growth in income potential.
With residential real estate, investors will buy a property and rent it out to a tenant. This means that residential real estate delivers two forms of income.
- Rental income – A regular monthly income stream that reached a record-high in the UK rental market in 2021, hitting £1,061 per month in September 2021, according to HomeLet.
- Capital growth – Otherwise known as capital gains or capital appreciation, capital growth is the increase in a property’s value over time. UK property prices increased at their highest rate in 2021 since 2004, reaching an average of £250k for the first time ever.
This makes property an effective solution for those thinking ahead to retirement, as investors can earn regular rental income and secure a huge profit when they sell their assets later down the line.
While this asset class can deliver an effective monthly income stream, you need to know that there are ongoing costs with real estate, including property management fees and interest payments if you use a buy to let mortgage.
Overall, we estimate that you’ll likely need a minimum initial investment of around £30k, including; property taxes, a BTL mortgage initial deposit, and a down payment of 25% if you want to secure an effective residential property.
You can learn more about property investment by reading our ultimate guide for 2022. You can also see if now is a good time to invest in property by reading our brand-new property guide.