Top 5 Tips for Getting Started in UK Property Investment

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Tips for Getting Started in UK Property Investment

So, you’ve just watched The Wolf of Wall Street, and somehow you haven’t been completely put off from the idea of investing. 

However, trading on the stock market might seem a bit too complicated.

You may be thinking that property investment, on the other hand, is an easy alternative? 

Well, as any expert will tell you, investing in property is by no means ‘easy’.

But, if you’re smart and know exactly what to avoid, it could prove to be a very lucrative venture indeed. 

Now, straighten that tie (and hide that cocaine!); here are the top tips for those looking to get involved with UK property investment!

Think about Location (and Capital Growth)

‘Capital growth’ basically is a term used to describe a property’s increase in value over time. 

Property prices rise and fall over the years, and occasionally, unusual levels of growth can be observed. 

Typically, this can be traced back to regeneration efforts and increased market demand. 

Regenerative efforts are particularly desirable as they can directly impact public opinion, demand and, in turn, property prices. 

Buying in an ‘up-and-coming’ location before most other people notice also can potentially enhance profit yield massively.

Nothing makes a spot more lucrative than population growth, and, as stated, regeneration helps massively in this department. Projects that will improve local infrastructure and transport are usually an indication that a location has the potential to become an investment hotspot.

In Luton, for example, factors such as these are why the city is starting to look like it could be an attractive choice for investors. 

Since 2017, its population has seen a considerable increase – from around 215,000 to approximately 218,045 in 2019. 

According to RWInvest, a huge aspect of this growth is the exciting potential of regenerative opportunities on offer. Projects like the significant redevelopment work on London Luton Airport, improvements to The Mall Luton, and the development of new retail and housing with schemes such as LU20N all serve to enhance the quality of life in the area and provide new jobs.

Buy-to-sell vs Buy-to-let

It seems obvious that whenever starting something new, you need to know what you’re getting into. 

Property investment is no different and perhaps, considering the level of risk, makes proper preparation even more essential. 

One of the main things to wrap your head around is the difference between the two main strategies: buy-to-let and buy-to-sell. 

Buy-to-let properties are those bought with the intention of renting out to tenants, providing a monthly rental income and steady returns over a long period. 

With buy-to-sell, an investor purchases a property to sell for an increased price. They then set about refurbishing and adding various improvements to the property to, essentially, make it more eye-catching for potential buyers. 

Typically, this can provide a huge one-off cash payment, so long as an investor makes the right improvements to increase the property’s value and whether they can secure a buyer once ready to sell.

Consider the right tenant

They may not have the best reputation in wider society but, due to a growing demand for accommodation, students can provide a solid source of rental income for buy-to-let investors. 

As most students tend to be respectful (and, more importantly, scared) of their landlords, it also means that they would hopefully be more inclined to pay on time to avoid any issues. 

An alternative is opting to appeal to those seeking a ‘traditional family home’.

This could prove to be much easier to manage than a large student property with multiple individual tenancies (and could also be less of a hassle to deal with in general).

You could choose to put a management company in charge of the property (more on this in a moment). Of course, there will be a fee involved, but the amount of admin time on your end should massively decrease. 

Create a workable budget – and don’t dodge taxes!

It may come as a shock, but with property investment (and most things in life), you can’t just improvise as you go along.

It is essential to come up with an extensive budget plan before you even look at investing in a property.

After all, you can’t know what to get if you don’t have a price sorted. 

Having a budget in place beforehand means you can find the best possible property for the best possible price. 

You don’t want to pay above your means for a property that might have the same potential as a property with a lower price. 

Even if it’s your favourite film, you probably shouldn’t follow in Leo’s footsteps. 

Remember: always factor additional costs like taxes into your budget. 

Some of the costs involved with property investment include:

  • Property price
  • Income tax
  • Stamp duty tax. 
  • Deposit/monthly repayments (when using a mortgage)
  • Reservation fee. 
  • Capital Gains Tax (when the property is sold)
  • Rental Insurance

Decide what kind of investor you want to be.

A full-time landlord can own and manage rental properties as a main source of income; however, if you don’t want to give up the day job, it is possible to profit from property investment without abandoning your career. 

Once you determine what kind of investor you want to be, you can figure whether you need to hire a property management company to assist with investments. 

These companies can manage a property portfolio so that investors don’t need to worry about finding a tenant – it’s all left in their hands.  

Property management companies can also respond to tenants’ issues, removing the need for an investor to be contacted directly.

This often proves to be a relatively hassle-free approach and is perfect for those who want to take a step back from the time-consuming day-to-day duties and demands of owning a rental property.

It’s all about whatever best fits your lifestyle, so, again, spend some time figuring out what works for you!

With demand for UK property being particularly rife at the moment and with no hint of stagnation, this could be the perfect time to consider property investment. However, it’s important to remember to ensure that you’re fully aware of what you’re getting into!  Study the market, listen to the experts, and always stay up to date with property trends.