How to Start Investing in Property
Last updated 14th February 2021 • Ethan Mathews • JaeVee
Generally speaking, anyone can begin with buy-to-let and house flipping property investment strategies.
But usually, only those who have had a knee deep in the property game will be able to leverage their experience and diversified assets to form partnerships, release equity, source deals, develop new-builds and lead or support large-scale developments for additional streams of income.
Property Investment Guide
- Best Property Investment Strategies
- How to Become a Property Investor
- Digestible: Property Market Overview
- Property Investment Finance Options
- Advanced Assets
How does property investment work?
To summarise; A property investment works by generating a higher return, in the form of a lump sum or a monthly income, as a result of the time and equity you have put in to complete and exit from a feasible project.
In the common case of requiring time and equity from others, the project must generate enough revenue to cover the costs of labour and interest, accumulated within the set terms (typically 18 - 60 months) to ensure you still turn a profit.
To build up a profitable property investment portfolio as fast as possible, you will need to diversify your assets and exit strategies.
Diversification reduces the overall risk from the slumps of the property market, that diverges from being in more or less benefit of your assets periodically. That is to say, the more diverse they are, the more partial and durable a slump will be to your portfolio.
The property market is on a gradual upward trend, so long as you can hold on to your assets, you will have opportunities to exit on select assets at the best time to achieve the maximum profit or to at least make way for greater assets.
How to become a property investor
- Benefits of investing in property
- Property investment for beginners
- How to invest in property with no money
- How expats can invest in property
- Wise way to invest pensions in property
- Investing without being a landlord
- Become a professional property investor
- Become a full time property investor
- Strategies for high-net-worth investors
The best property investment strategies
Buy to let
Buy to let or 'vanilla buy to let' is the most popular and traditional property investment strategy.
This is where one would buy a property with the aim of letting it out to tenants, hence reaping the benefits of investing in rental properties by generating an income over a long term period.
This is one of the best property investment strategies for those who are just starting out, and most of all those that have the funds to put down a deposit or can buy outright.
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Buy to sell (House flipping)
Similar to buy to let, you buy a property, add value to it and then sell it on for a profit.
This is one of the most profitable property investment strategies when done properly, although it is reliant on the property market.
A broad knowledge of selling properties will teach you the general best time to sell.
This is an essential skill which you will pick up over time as a property developer, but in the mean time - to avoid costly mistakes - always seek advice before making any irrational moves.
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Partnership investments and joint ventures
You may possess the skills but not the funds to leap into the world of property development.
A partnership investment is where two or more parties come together on a property investment.
The risk is shared, and you normally go in with each party bringing something different to the partnership which makes it one of the best property investment strategies.
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Recycling your original deposit by releasing equity
One of the best property investment strategies is where you take your original deposit and then reinvest it again so it can be used for multiple properties.
To do this, you buy the property, refurbish it, increase the value and then re mortgage it.
You then take the value of the original deposit and refurbishment costs out and reinvest.
This strategy is not for a first timer as it does need a lot of experience and managing costs and finance knowledge.
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HMO - houses with multiple occupancy
This is rapidly becoming one of the more popular property investment strategies and has the potential to generate multiple healthy rental yields which are comparably higher than a normal buy to let.
There are slightly different rules and more costs involved, such as shared facilities and utilities to factor in, but the potential income on offer makes it a very worthwhile investment to get involved with.
Social and affordable housing
With spiking homelessness and the UK’s new social and affordable housing regulations and homeless Reduction bill this is quickly becoming one of the best property investment strategies.
It will involve working with social services, third party agencies and those on a low income and universal credit. It is a hands on strategy with deep involvement for the landlord but it is profitable and adds social value to investments.
Whatever strategy you go for, we advise you to do your research and cater for all eventualities.
Trading leads / property sourcing
There are ways to get into the investment sector without putting large amounts of money down.
A great way to build your income is to trade leads with other investors. For this you would need to know a good property deal when you see it, and be in frequent touch with the market sellers who would notify you.
You would then sell on the ‘lead’ to an interested investor. The more work on the lead, the more money you can charge for it.
This is fairly risk free which makes it one of the best ways to earn a quick buck in the property development game, however, you would need a fair amount of experience and time to dedicate to this strategy.
*Please note this blog post is not to be considered as investment advice. We recommend you seek independent financial advice and conduct your own due diligence before making any investment.