Investing in property can be a rewarding venture, offering both long-term wealth building and steady income streams. However, entering the property investment market requires careful planning and an understanding of various investment types, funding methods, and networking opportunities. Read on to learn how to get into property investment!
Decide which way you’d like to go
There are various ways to invest in property, each coming with its own benefits and risks. Some of the most common types of property investment are:
Buy-to-Let
Residential: Ideal for building a portfolio and having assets that will gain value to sell later in life.
Commercial: Offers long-term stability but can depend on the success of the business leasing the property.
House in Multiple Occupation (HMO)
Multiple Tenants: A single property rented out to multiple tenants can offer diversified income and reduce the risk of total vacancy.
Holiday Lets and Serviced Accommodation
Properties in popular tourist destinations or near venues/events can charge a much higher rate per night than long term accommodation. However, while potentially more lucrative, the income can be seasonal and requires increased management effort.
Property Development
Buying land to build on, developing property or converting commercial properties into residential units. This involves higher risk but offers potential for higher returns.
Flipping
Buying properties in need of renovation, improving them, and then selling for a profit. Flipping can generate significant profits in a relatively short time, but requires market knowledge and renovation skills.
Each type of property investment has its own set of advantages and considerations. Investors should assess their risk tolerance, investment goals, and market conditions when choosing their avenue of property investment.
Raise the funds
Raising funds for property investing can be achieved through various strategies, each with its own set of advantages and challenges. Here are some common methods:
Personal Savings
Using your own personal savings can give you more control over your investment with no interest payments or external obligations, but you will be limited by personal financial capacity.
Mortgage Loans
Mortgages offer lower interest rates compared to other loans, but have a longer approval process and restrictions on quick sales. This can make them unsuitable for flipping.
Private Lenders
Private lenders offer faster approval and more flexible terms, but with this comes higher interest rates and potentially stringent repayment terms.
Home Equity Loans
Borrowing money against the equity of your home can offer lower interest rates and tax-deductible interest, but there is also the risk of foreclosure if unable to repay.
Partnerships
Partnering with someone can provide access to larger projects and reduce individual risk through shared responsibility. However, it is important to consider the need for profit-sharing and the potential for conflicts.
Angel Investors
Angel investors can give you access to large sums of money and business expertise, but you will be giving up a portion of ownership and profits.
Business Loans
Companies specifically set up for real estate investment can secure business loans, which can offer large amounts of money with competitive interest rates and tax benefits. To secure a business loan, you will require a solid business plan and credit history.
When choosing a method to raise funds, consider factors such as the cost of borrowing, your risk tolerance, the type of property, and the investment timeline. A diversified approach, combining several funding sources, can also be beneficial to lower risks and increase funds.
Attend networking events
Networking is crucial in the property industry. Attending networking events allows you to connect with experienced investors, property professionals, and potential partners who can share knowledge and opportunities. Many events are free to attend and provide valuable insights from industry professionals. Our property masterclass events feature three expert speakers from different areas of the property industry, discussing topics like property finance, development, and buy-to-let investing. (Our next event takes place on 14th August, and it’s free! Click here to secure your place.)
By attending these events, you can gain valuable knowledge, find mentors, and discover new investment opportunities. If you have the resources, hiring a coach or property mentor can also provide personalised guidance and accelerate your investment journey.
Entering the world of property investment requires careful planning, a solid understanding of various investment types, securing the necessary funds, and leveraging networking opportunities. By following these steps, you can set a strong foundation for a successful property investment career!
