Investors can make money quickly with property investments, but there are many things to consider before getting started. As with anything with a high potential to turn a profit, there are also many risks to deal with. Researching these risks ahead of time will help mitigate them while preparing investors for any other concerns that might arise.
On the whole, investing in property is more stable than investing in other financial alternatives, though this does vary depending on the area. This is part of why research is such an essential element of the process. Read below to learn more about investing in property within the UK.
Residential Property Types
Before diving into the real estate market, it is critical to understand the different types of residential properties. There are three main types to work with: buy-to-let, property development, and new builds.
Buy-to-let is arguably the most popular residential property investment type at the moment. It allows investors to rent out rooms, flats, or houses. Then there’s property development, a shorter-term investment allowing investors to step in and rehab property for a better price. Finally, there are new builds. Here investors buy property, build upon it, and sell it for a profit.
Purchase Price vs Rent Prices
The second thing one must remember is that the property’s purchase price does not automatically signify the price of rent. In other words, an expensive property purchase doesn’t necessarily mean that it will earn a high rent value.
Look at the average rent prices in the area before investing in a property. This will help gauge expectations for what that property could bring in. And remember, while some upgrades can have a positive impact on cost, not everything will.
Speaking of rent – now would be an excellent time to research generation rent. Understanding generation rent requires investors to know their target market – what generation they’re the most likely to attract based on the real estate property and location.
North vs South
Those looking to invest specifically in UK real estate need to understand the difference between North and South. The North offers lower property prices, more space, and a better return on investment (through rent prices). Meanwhile, the South provides amenities such as proximity to the city and a higher rate of capital appreciation. Both instances have pros and cons that need to be considered before deciding.
Where to Live
Many first-time real estate investors make the mistake of thinking that they need to live near their properties. This isn’t true – especially for those willing to hire a property manager. Property managers allow investors to live as far as they please from potential investments.
Conversely, one could still opt to live a distance from their investments even without the use of property managers. The key here is to consider properties within a comfortable drive (or communing alternative). This ensures that the investor can stop in for maintenance and other concerns.