How to Invest in Property With Little Money?
While the four strategies we’ve mentioned are likely the most popular ways to invest in property, there are some excellent solutions for those with less money.
Perhaps the two main strategies suited to property investors with a smaller budget are:
- Real Estate Investment Trusts – REITs are companies that own property on behalf of investors, who use pooled funding to buy and manage property investments. Shares in REITs can also be sold to other investors like stocks on the stock market.
- Property Investment crowdfunding – Like mutual funds, property investing crowdfunding is when investors pool cash together to invest in property. Typically, crowdfunding will occur on online investment platforms.
Which Property Investment Strategy Should You Choose?
So, which strategy should you choose?
Well, the suitability of investing in property will depend completely on your own investment goals.
You should ask yourselves the following questions:
- Do I want to see short-term or long-term returns?
- Are you investing for early retirement?
- How much capital gains do you want?
- What property funds do you have available?
By thinking of these questions, you’ll be able to determine what sort of investment you’re hoping to make.
Overall, though, investing in property with residential or student real estate is likely the best way to go.
This is because you can earn sizeable monthly rent while also enjoying long-term capital growth when your property increases in value.
How to Get Started in Property Investment in Five Steps
1. Choose Your Strategy
The first step when investing in property is choosing your ideal investment strategy.
Ideally, you’ll want to focus on more simple strategies as a beginner, with the likes of residential and student buy to let an ideal choice for getting started in property investment UK.
You should also try and choose more affordable properties like apartments, which generally attract high interest from young professionals for a long period.
By choosing more affordable properties, you can eventually buy several properties and start building a profitable portfolio.
2. Pick a Location
The second step for investing in property is narrowing down your search by picking a location to invest.
Due to large regional differences in rental markets in the UK, you’ll need to do plenty of research to find the best choice for you.
Your chosen strategy will also impact your choice, as you’ll want to focus on areas that feature your target tenant.
For example, if you choose student property, you’ll want to target cities that have large student populations like Liverpool, Manchester, and Birmingham.
The criteria you should focus on when picking a location are affordability, capital growth potential, rental yields, strong property market demand, urban regeneration, employment opportunities, and transport links.
Currently, the best places for property investment UK are:
This is thanks to affordable property prices, strong capital growth potential, and huge amounts of regeneration that is economically propelling the areas for the future.
3. Sort out Finance Option
The third step for investing in property is figuring out how much money you need and how you’ll finance your property funds.
The current average property value in the UK is around £269,945 according to official Land Registry data.
While property can be found far cheaper than this in certain places, the reality is you may struggle to afford the entire price.
For this reason, you will most likely opt for a buy to let mortgage. It’s important to note that buy to let mortgages work slightly differently than residential mortgages, as most lenders require a 25% deposit.
BTL mortgages are also interest-only, which means mortgage payments only cover the interest every month without touching the overall debt.
Once the mortgage term ends, you’ll need to cover the entire cost of the capital debt, usually by selling the property.
Be sure to get expert advice from a mortgage advisor to learn if this is the right option for you.
4. Consider Property Investment Companies UK
If you’re a beginner to the world of property investment UK, one excellent way to find a good property deal is by investing with a property investment company.
Property investment companies like RWinvest help investors find real estate opportunities and will guide you through every step of the property journey.
They will even provide solicitors for any legal paperwork.
Better yet, some companies will offer payment plans so you don’t have to pay a lump sum of cash upfront for your investment property.
5. Get a Full Structural Survey
When buying property, it’s important that you get a full structural survey of your potential investment property.
This may be unnecessary if you’re buying an off-plan or new-build property, but is still something to consider.
While this will set you back £800 on average according to CheckaTrade, it can save you thousands in the long run by detecting any issues in your investment property.
Analysis of the property will include:
- Construction materials
- Waste pipes