Investing into property is one of the best ways to start planning for your future.
Whether you’re looking to buy to let, or to buy property speculatively with the intention of selling it on, property is one of the most popular sectors for investment.
Why invest in property?
While any investment is designed to return profits to the investor, property is one of the most attractive investments to make.
According to real estate firm, JLL, UK property prices are set to rise by 21.5 per cent by 2025, following from many successive years of price growth.
Exacerbated by limited supply, prices are only set to grow in the coming years, meaning that investing today almost certainly means selling on again in a few years’ time for a larger amount.
If you’re buying to let, you could be earning passive income over a long period that far exceeds your initial outlay, equally making this an attractive option.
With property prices on the side of investors, for the foreseeable future, the property market will remain a safer investment opportunity.
What kinds of property investments are there?
When it comes to the property market, there are a few different options open to you:
A buy-to-let means you purchase a property and then rent it out to a tenant, meaning that over the long-term, you will almost certainly earn more on your investment
Investing in property development means that you put your money into an old property or building with the ambition of modernising it and then selling it on for more money
Buying a new build
You could buy a new build fresh from completion and look to sell that on for profit – potentially having redecorated or redesigned it in a way you would prefer
A property investment trust
A property trust is a way of pooling funds to invest with greater leverage - a fund may choose to invest in property directly, or instead in construction companies or potentially even property bonds
Property crowdfunding platforms allow you to pool your funds with other investors to invest in a buy-to-let property. The fees can be high, and your funds can be locked up for a long time, so seek expert financial advice before exploring this route.
Investing in property can be an easy, seamless and often profitable decision to make, with all of the options listed above opening up different avenues for you.
If you’re looking to take on a more intensive project, consider buying a property in the early stage of its construction or refurbishing a project from scratch.
These are good opportunities to add value to a property. For example, you could choose to add new, modern features that boost a property’s value.
Alternatively, investing in a fund or owning a buy-to-let will allow you to take more of a backseat, with much of your money either being managed by someone else or otherwise ticking over.
Your property investments don’t need to just be homes either.
You could invest in industrial properties, such as warehouses, commercial properties, such as offices, or any other kinds of buildings.
While you will be likely limited by your budget, a property investment can be anything from an office building to a residential home.
How to manage your property investment
Managing an investment means making sure that you can afford the expenditures needed to buy a property and having a good idea of what level of investment risk you are comfortable taking on.
First, consider how you will finance the purchase of your property.
If you are developing a building or hoping to make small adjustment before selling it on again, you would likely be better off with a short-term financial loan, such as a bridge loan, that sees you through the period of renovating a property and selling it on.
If you’re looking to buy-to-let, on the other hand, you will need a buy-to-let mortgage.
These mortgages take into account your own circumstances but also how much rent you could potentially earn from the property, directly rolling over your rental income into your mortgage and ensuring your property pays for itself.
You should also be aware that while there are many reasons to invest in property, and it is broadly one of the safer investments you can make, no investment comes without some additional risks.
Assess whether you are comfortable taking on more risk and what investment limits you need to set yourself.
How to spot a property money pit
Renovating a property can be a great way to earn a return for your investment, but it can also come with complications.
Hidden costs can cost hundreds, even thousands, of pounds if not detected early.
On top of this, late or important structural work will need extra manpower and potentially specialist equipment, meaning that your costs can very quickly snowball you into a difficult situation.
If you’re surveying a property, make sure you pay close attention to:
signs of damp
any structural work needed
Investing into property can help you start planning for your financial future and independence.
Whether you’re looking to buy-to-let or invest in a property to sell on, having the right financial advice is crucial when it comes to making the right decision.
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