How To Generate An Income Through Property Investment
Last updated 26/07/2018
It's a common notion among investors that one of the safest ways to invest your money is to put it into ‘bricks and mortar’.
Below we will take a look at the main ways of how you generate an income through property investment.
Buy To Let
The most common and popular way you generate an income through property investment is to buy a property and then rent it out and generate an income through the rental yields. The rental yield is the annual rental income expressed as a percentage of the original property price you pay.
Buy to let is a long term investment although you would receive an income each month from the tenants you have occupying the property. Over time, you would pay down the mortgage or finance you have taken out for your buy-to-let project and then you can leave yourself with a regular cash flow.
You can rent a property out as a single occupancy or you may be able to generate a higher income buy buying property near a university or school where the demand for regular short term leases is high.
HMO's & Commercial
Buying a large property and turning it into a HMO (House with multiple Occupancy) will maximise rental yields available from each tenant.
You can also buy and rent commercial property to businesses where the rent is higher than residential properties.
Get a Good Deal
Another way to generate income through property investment is to buy a property at a good price, refurbish it and add value and then sell it on at a higher price.
You would then get a lump sum of the capital gains (profit).
This is a short term, investment and depending on the market a quick way to generate a high lump sum income to then reinvest in other properties with.
Increase Your Equity
If you take out a mortgage to finance your property investment which many will, you will increase your equity with each mortgage repayment.
If you buy the property with the intention to rent it out, you can use the rental income to pay down the mortgage. Increasing your equity is a great way to generate an income via a property investment.
You are able to invest in the property market and generate an income without buying a single property. You can invest in an fund that will invest in the property market for you.
There are a number of different funds that you can invest in such as Real Estate Investment Trusts, Property Authorised Investment Funds (PAIFS).
Ensure they are regulated by the Financial Conduct Authority before you invest but this is another way you can generate an income through investing in property which tends to be a little less hands on.
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We would advise you to seek independent financial advice before investing. Capital at risk when investing in property.