Are you looking to invest in property, but you’re not sure how to get started? Property investment is a popular investment option in the UK. Plus, this is only set to grow, despite the financial climate being a little uncertain.
House prices might be predicted to fall this year. But things are definitely on the up. Savills predicts house prices will rise 20% between 2025 and 2028. So now could be an ideal time to look into the benefits of making money from property.
This guide is for property investors, both old and new. We’ll show you how to begin real estate investing, what type of property to invest in, and more.
How to get started with property investment
It can be hard to take the first step towards investing. What do you need to do? How can you get the right advice? Here are a few tips that would-be property investors need to consider when getting started.
- Decide on your property investment goals – are you hoping for capital appreciation through rising house price value, or long-term yield from rental income?
- Find experienced property investment experts – get in touch with us to find out more about how to invest in property
- Choose a property type – which best matches your risk profile? We can look at your financial situation and advise.
Residential vs commercial properties
Understanding which type of property to invest in is a very important factor. So, let’s take a look at the main types of property you can invest in and how they work.
- Residential – Homes or apartments, such as single-family houses, studios and townhouses. If you decide to invest in residential property, you would usually rent the building out to other people and generate income from doing so.
- Commercial – This property isn’t primarily used as residence. This includes office and retail space. Commercial property owners might run a business out of such a space, but investors usually lease them out to other businesses.
Key considerations
- Location – Is there a high-demand rental market in the area? Is it likely to become more appealing to tenants in the future? Does it need to be close to where you live?
- Market trends – Staying up-to-date with property market trends helps you to be competitive and make better decisions about where to invest.
- Yield – One simple way to work out how much you might make is to calculate the potential yield, which shows the annual rental income as a percentage of the total value of the property.
Property investment for beginners: step by step
Want to know how to start investing in property? Don’t worry; we’ve covered all the basics. Here are some specific strategies to consider.
Specific strategies for investing in the UK property market.
- Buy-to-let investment – Buying a property to rent out to tenants. You’ll gain regular income and long-term capital growth. However, to make your investment appealing, you’ll need to keep ongoing management and maintenance in mind.
- Property flipping – This involves buying a property, renovating it, and then selling it at a higher price, to gain profit. You can gain quick returns this way through renovations, but bear in mind that if market conditions change suddenly, your profitability could be affected.
- Property investment funds – Investing in these, also known as Real Estate Investment Trusts (REIT), allows for indirect property ownership and diversification, without you needing to give hands-on management. A professional management team provides and oversees your diversified portfolio of property.
- Tax efficiency – For example, you could leverage tax relief and allowances through utilising capital gains tax, to minimise taxes if selling a property at a profit.
Tips for finding properties to invest in
Finding properties to invest in has never been easier, thanks to a wide array of options.
- Real estate investing websites – Platforms such as Zoopla and Rightmove let you search by selecting specific criteria such as location, property type and price.
- Specialised investment property websites – These sites cater specifically for investors and offer specific features such as property analysis.
- Local estate agents – Negotiate favourable deals through local market knowledge.
- Auctions – You could have the chance of securing a property below market value, but property auctions can be risky.
Property investment financing
UK house prices usually range between £200,00 and £3,000, and you’ll need a minimum deposit of at least £50,000 to £75,000.
Enhance potential returns and avoid debts and financial strain with the right financing for you.
- Financial leverage – Use the money from a loan or mortgage to supplement your own money.
- Financial gearing – This refers to the ratio of debt to equity, and helps you determine whether a property is a worthwhile investment.
- Property development financing – These are often short-term loans, used by investors to develop a new building or refurbishing an existing one.
- Commercial mortgaging – Up to 75% of the cost to purchase a property, offering terms of up to 30 years.
- Mezzanine financing – Secured against the property, rather than you or the business.
- Bridging finance – The lender takes a first charge on your property and opts to exit once the loan is repaid.
Strategies for low-cost property investment
Low-cost ways to invest
- Rent a room to a lodger and earn up to £7,500 tax-free through the government’s Rent a Room scheme.
- Property lease options involve investing as little as £1 a month, setting the length of agreement and agreeing on a potential purchase price for later on.
- With crowdfunding, investors pool their money, so everyone involved owns a small share.
- Partnerships are similar to crowdfunding, but on a smaller scale, between two or more investors.
- Peer to peer investing lets individuals lend money to individual property developers and businesses.
Property investment companies for beginners
When it comes to property investment companies for beginners, Airbnb is one of the most well-known and a great place to start.
With Airbnb, you have the chance of making more money than through traditional renting, and through an established company, but operational costs can be higher.
As we’ve already mentioned, real estate investment corporations, also known as REITs, are companies that own, operate, or finance real estate across property sectors. REITs are a popular choice as they offer liquidity and diversification.
There’s a lot to consider when you decide to join the ever-growing band of property investors. From property type, to funding, to strategies, it can feel daunting.
However, take all the considerations we’ve mentioned here into account, be prepared to keep learning, and get in touch with an expert group of advisors, and you stand to reap financial rewards for years to come.
MHG Wealth are just the company you need for sound property investment advice. Speak to us today.
