Updated 03 December 2020
Real estate is one of the most tangible investments you can make, and there are many ways to invest and generate a good return. The property investment that suits you will depend on various factors, including the capital you have available up front and the level of risk you are comfortable with.
Here are some of the different ways to invest in property and some things to consider before taking the plunge.
One of the simplest ways to invest in property is to buy a property that needs renovation, perform the necessary work and then sell it on at a higher price – ideally covering your costs and also making a healthy profit. You may be able to live in the property while fixing it up, but if it is a secondary property you’ll have to pay higher stamp duty.
The main risk of this approach is that it only works well in a rising housing market. If the market falls, you could lose money or only just cover your costs.
Buying a place and letting it out is an age-old way to make money from property. Find out here about becoming a landlord.
You can invest in property without making the huge outlay required to buy a whole house or flat. Property investment funds are a type of collective investment which allows investors to pool their money with other investors to invest in property or shares in property companies. Although you will pay a fee to a fund manager or investment company for this service, it does mean your investment is managed by experts and diversified across properties or assets. It can also be easier to withdraw your funds if you need to.
Property crowdfunding is a relatively new way to own a slice of the property market. 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.