Exploring your investment opportunities

Property investment is one of the most common types of investments. Many people feel property should be one of the first investments to consider when looking at the different ways to invest their money. When investing in property, there are two ways investors can make money through their property – by capital growth and by rental yields. If you can earn both, this provides an opportunity to earn money both in the short term and long term.

WHICH STRATEGY WILL WORK BEST FOR YOU?

THREE TYPES OF PROPERTY INVESTMENT
Historically, property has proved to be a sound investment that delivers strong returns. There are many ways to make money from property. Here are three popular strategies you might be interested in pursuing.

BUY-TO-LET
The most common type of property investment is buy-to-let, for example, buying a residential or commercial property and letting it to an appropriate tenant, who will pay rent to occupy it for long periods, typically a year or more. This is considered a relatively safe investment. Looking at recent market conditions and current trends, it’s fairly easy to forecast the rental income you’ll be able to achieve from a property and calculate what return on your investment this provides. With the number of renters in the UK consistently rising over the years, demand for rental properties looks sure to increase. However, this doesn’t guarantee you’ll find a tenant for your property, which is one of the biggest risks of buy-to-let investment. It’s crucial to understand the needs of your target tenant and buy a property that will appeal to them, in the location where they will be looking.

HOLIDAY LET
Another type of property investment is a holiday let, for example, buying a residential property and letting it for short periods, typically anything from one night to one month, to a series of different tenants. This type of investment is growing in popularity. If you buy a holiday let property in the right location, the potential rental yield is far higher than a traditional buy-to-let, as you can charge more per night. However, it may take a lot more work to ensure that the property remains occupied and, outside of peak holiday season, it may be empty for long periods.

BUILD-TO-RENT
A third type of property investment is build-to-rent, for example, buying land on which to build a property or properties with the intention of letting them to appropriate tenants. For investors who keep a close eye on trends in the rental market, there are plenty of opportunities to capitalise on. For example, there has been a shift in the features renters have been looking for since the start of the pandemic, and properties that include amenities such as shared office space or gyms can attract premium prices. Build-to-rent investors can construct with these trends in mind. Creating a community through shared spaces can encourage longer rentals, and so delivers a better return on investment for the developer. The type of property investment that suits you best depends on a variety of factors, including your strengths and skills, experience and budget.