Property is always a popular choice for investment, as it can provide the potential for two income streams in the form of rental income and capital growth. In order to take your first steps on the road to property investment, you need to have the right property investment strategies for the UK in place. Making the right strategic choice is one the most, if not the single most, important things to consider. At the most base level, you need to have a clear plan of what you want and how you are going to achieve that, but if you are really looking for success, you need to look deeper.
Property investment strategies:
- Deal packaging/deal sourcing
Deal sourcing is the name given to the technique of finding a property investment deal and selling it off to an investor for a fee. This is commonly known as a “finders fee”, so basically they’re paying you a fee for the hassle you went to find the deal. This goes both ways, as an investor, you can buy a deal from a deal sourcer as well. Deal packagers need to be compliant before they can sell deals and they can source all kinds of deals but usually specialise in particular types such as BTL, BRR, R2R, HMO, Land, etc.
- Joint Ventures
In a joint venture, you partner up with an investor to finance your deals for a 50/50 split of the profit. It’s a mutual partnership where one partner puts in the leg work to find the deal and the other partner finances it.
- Vendor finance
Vendor financing is where a seller helps to finance the purchase of the property by the buyer. This sector is full of creative investment strategies that require little money or in some cases even none of your own money.
- REIT
This is could be one of the most secure property investment strategies in the UK; a REIT is a company that owns income different kinds of producing assets. These trusts have been introduced into the UK in 2007.
- Property crowdfunding
In property crowdfunding, a group of people comes together to buy a property usually through a crowdfunding platform. The main benefit of property crowdfunding is that you don’t have to invest the typically large sums you would normally have to when buying a property. If you were to buy a property on your own you’d have to put in around £20,000 for the deposit and that’s on the lower end of the market, but with property crowdfunding you can invest as little as £100, depending on the platform.
- Buy-To-Let
Buy a property and then simply letting it out to a tenant is one of the most common methods of property investment. This strategy is also sometimes known as single lets because you’re letting it out to a single tenant as opposed to an HMO in which you would let each room to several tenants.
- Buy-To-Sell
This includes buying a property with the intention to sell for a higher price. Usually, these properties are bought below market value or are sometimes distressed properties that need repairs and you add value to it then sell it off for a higher price. Usually, property investors prefer to hold onto their acquisitions for a while as the property will increase in value over time anyway instead of making a quick sale. You can combine a BRR strategy with B2S or BTL, since BRR is an acquisition strategy.
- Buy Refurbish Refinance (BRR)
This is the term given to purchasing arun-down property or a property that is in need of refurbishment, renovating it, and then refinancing it after the value has now risen. This is a great strategy as you typically pull at least part of your money from the deal, so you can basically recycle the same deposit again and again to buy properties.
- HMOs
A House of multiple occupancy, or a house of multiple occupation, is a property that is let out per room in which the tenants share a common space such as a living room, bathrooms, orkitchen. Generally speaking, they bring in higher rental yields than single lets due to that reason.
- Serviced Accommodation (SA)
Serviced Accommodation is also known as holiday lets or short term lets. This strategy can be combined with R2R (Making it a R2SA) or any other acquisition strategy such as BRR. With Serviced Accommodation, you can get bookings from contractors, i.e. people coming to work in the area, during the week while holiday renters usually fill up your booking calendar in holiday periods and weekends. The duration of the tenancies tends to correlate to the type of renter, with professionals staying for months at a time in some insttances. Ideally, at some point, and depending on where your property is, you would want to rely on your own direct bookings.
- Lease Options (LO)
Under lease options, you take control of the property for 1GBP with an option to buy in a few years. Why would anyone want to give you their house for free? Well, a seller would usually accept a lease option if they’re struggling with making the mortgage payments.
- Delayed Exchange/Delayed Completion (EDC)
This is pretty much the same as LO with the difference that you are obligated to buy. In fact, you practically own it but get to pay for the property in installments. Of course, this falls under the no money down investing strategies and the seller would have to be motivated to accept such a deal.
- Assisted Sales
In the case of assisted sales, you basically partner up with the owner to pay for the refurbishment of a property and then sell it. An owner would do this after the property has been on the market for a while with no interest. You have to bear in mind that most home buyers are looking for something that is ready to live in, so most people won’t buy a property that needs renovation. Often in this instance, you would offer to pay for the renovations, the owner gets the amount they wanted to sell the property for and you get the extra profit from the added value the renovations created.
- Commercial property
This involves investing in commercial property such as office space, retail units, shops, etc. There are commercial estate agents who specialize in these kinds of properties. With a lot of retailers moving online and a lot of commercial buildings being converted into residential buildings, there may be unrealised potential.