Make ยฃ100,000s from property | Zero to Property Hero – 
Explore The Course
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Make ยฃ100,000s from property | Zero to Property Hero – Explore The Course
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โฑ๏ธ 20 minute read
๐ Written on July 29th 2020
Last Updated: 20th May 2022 @ 11:48am
Looking to get started as a property investor?
Work your way through our 6 part property investing guide for beginners
Part 1:
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How to create a property business plan
Part 2:
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2022 Property Investment Strategies
Part 3:
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Calculate Yield & ROI on Investment Property
Part 5:
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Best HMO Investment Areas in the UK
Part 6:
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How to flip a house as a property investor
In this guide, I’m going to show you the main property investment strategies in the UK.
And which one may be best suited to you. The pros and cons.
In fact, knowing these has helped me create my property business plan.
It can be confusing knowing where to start.ย 
Guruโs charging for expensive courses about property.ย
You just want a SIMPLE explanation of property strategies.
Look no further! 
This is a no-fluff, no-BS guide to property investment strategies. 
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It has given me laser-focused direction on how to get started. Especially as a beginner property investor.ย
I wrote a guide on how to create a property business plan and strategy here. 
Plus: youโll learn how much money you need to get started.
Iโll cover the following UK property investment strategies
This depends on your property business plan. Do you want to build cashflow? 
Are you looking for capital appreciation? I recommend you read this guide, then work on your property strategy after. I promise it will give you clarity.ย
Quite simply, you have two options:
It sounds quite easy and in a wayโฆ it is.
But there are many ways to buy a property and many different types.
These are known as property investment strategies. In the UK – thereโs plenty! Each strategy has pros and cons.
They have different levels of effort required. 
They need different amounts of cash to get started. It also depends on your risk appetite. 
Most beginner property investors start with this method. Also, if youโre new – you have the best mortgage availability with this strategy. It’s a great way to begin out of all property investment strategies.
Itโโs great for a beginner and with a bit of planning and preparation easy to get started. 
You can make money from two different angles with buy-to-let properties!
This method is very simply, buying a property. Ensuring its a safe and comfortable home. Then rent it out to a professional or family.
Make sure you know how to evaluate a property deal. Get your numbers right. And you can typically make ยฃ250 – ยฃ400 profit a month after costs.
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Pros of Buy To Let
๐ฉ Cons of Buy To Let
Everyone has been a student at some point. ๐
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Do you remember sharing a house with your friends? Maybe you shared a house as a young professional. ๐จโ๐
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An HMO is a house where multiple people live together. The property is rented out room-by-room.
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It’s a step up from the other property investment strategies!
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Whilst sharing areas like the lounge, kitchen and bathrooms. The tenants are unrelated, but often at similar stages of life. For example students or young professionals.ย
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HMOs can get quite complicated in terms of the official definition. My key recommendation is google your council + the word HMO. ๐
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It can vary from each council area what denotes a HMO. It could be number of bedrooms. Floors in the house. Thereโs not one straightforward answer. ๐ โโ๏ธ
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The huge benefit of HMO investment properties is that renting out by the room, generates more rental income than a vanilla buy-to-let.
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If you had a 3 bedroom house for example. And it has 2 reception rooms. You could turn one of those reception rooms into a bedroom.
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As a whole, for example you might make ยฃ750 per month. However, by the room, it could rent out for ยฃ400 per room.ย
This means as an HMO it would make ยฃ1600 per month! Before costs and expenses.
Donโt fall into the shiny object trap though. HMOโs cost more to run and operate. ๐ค
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HMOs should be furnished. Bills are included. And MUST follow health & safety and fire safety regulations. These are listed by each council on exact requirements.ย
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๐ ๏ธ Typically with more tenants, you also need to consider faster wear and tear.ย
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Management is also more hands-on. Youโll have more tenants. That means more problems cropping up. Be that things breaking. Or tenants not happy with each other.ย
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You can hand off to a letting agent, very similar to a buy-to-let. Costs often are around 15% so higher than your standard buy-to-let agent.ย
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However, even though they have higher costs. If you do your sums right, they typically cashflow higher after all costs. Meaning greater profit.ย
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HMOs are hugely popular, and the market has become very competitive. It used to be all magnolia, slightly sad looking houses. Now landlords and property investors are really making BEAUTIFUL design-led houses. ๐๏ธ
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A lot of landlords still offer magnolia boxes, but itโs very easy to beat them in a crowded market.ย
I put together a huge guide on the best HMO investment areas in the UK. Check it out here
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As theyโve grown in popularity – youโll also need to be aware of Article 4. You can no longer operate an HMO anywhere. Some councils have implemented blanket Article 4 directions. ๐บ๏ธ
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This means that they have removed permitted development to move the use-class of the property from residential. To an HMO.ย
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Therefore youโll need planning permission. Which means the council may reject your application. โ
This method is very simply, buying a property. Ensuring its a safe and comfortable home. Then rent it out to a professional or family.
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Make sure you know how to evaluate a property deal. Get your numbers right. And you can typically make ยฃ250 – ยฃ400 profit a month after costs.
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๐ย Pros of HMO Property Investments
๐ฉ Cons of HMO Property Investments
You could consider looking at renting to young professionals or students.
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If you rent to young professionals, theyโre likely to stay longer. Typically 12 to 18 months is the average tenancy length. ๐
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Or you could rent to students, who stay for a fixed amount of time. Student HMOs allow the quieter summer period to revamp the property. โ๏ธ
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Ever gone away to Cornwall for the weekend and spent ยฃ1000 for a week in a cottage? ๐๏ธ
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Maybe youโve stayed in an apartment in Manchester for a weekend break costing ยฃ150 a night. ๐๏ธ
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With the growth of Airbnb there has been a huge explosion of serviced accommodation. Some people love staying in hotels while travelling. ๐งณ
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Others might not want what a hotel offers.ย
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For example, business people or contractors might want somewhere a bit more homely.ย
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A group of friends might want multiple rooms linking to the same shared area.ย
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Serviced Accommodation is renting out a property you own to holidaymakers or business people as a short term let. Often charged by the day.ย ๐
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Determining the type of customer you’re targeting will determine what type of property you buy.ย
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A cottage in the middle of the countryside won’t be great for a city worker on business. Similarly, a family with 2 kids won’t want a 1-bed apartment in Canary Wharf.ย
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Serviced Accommodation can be incredibly profitable if you achieve a strong occupancy rate. You should consider seasonal impacts as well.ย โ๏ธ
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If you have a beautiful sea-view cottage in Cornwall, it’s quite likely you’ll be sold out in the summer months. But during the winter it could be empty a lot!
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The prices also tend to fluctuate, you can charge more in summer, and less in winter.
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Or if you had an apartment near Manchester Arena or Old Trafford. Your prices could go up when big concerts of football matches are on. It’s all about demand.
Every change of guests requires a full clean of the flat. You need new linen. Key management is crucial. Trusted cleaners. ๐งฝ
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Itโs so easy for something to go wrong. What if your cleaner doesnโt show up?
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๐ What if the keys go missing.ย
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This is definitely one of the more time-consuming property investment strategies.
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Despite the challenges, increased risk and effort. They can be hugely rewarding. At ยฃ150 a night in a good location. Booked for 25 days of the month. You could be looking at up to ยฃ3750 rental income before expenses.ย
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Not bad for a 1 bed flat in Sheffield city centre!
๐ย Pros of serviced accommodation
๐ฉ Cons of services accommodation
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Buying a house to sell at the end is known as flipping a house. Itโs very popular in the UK. ๐ฌ๐ง It’s very popular amongst all property investment strategies.
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In fact, you may know of a famous TV show called โHomes Under The Hammerโ on BBC. It has been running for years. And has hundreds of shows! ๐บ
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But please donโt be like people on the show! They often donโt run the numbers. Donโt understand investment areas.ย
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This means they bid higher than when they should. Dive into properties without understanding refurbishment costs.ย
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This can be risky if youโre trying to make it a serious business. ๐ผ
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If you get it wrong you might tie up all your cash in one property. How long would it take you to save again?
The pure aim of this strategy is to make a profit by purchasing at a low price and selling higher. ๐
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To improve the value you might refurb an unloved property. This is known as buying below market value. Remember this is DIFFERENT to below asking price. ๐ท
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When looking at listings on Rightmove or Zoopla, you might see a house listed for ยฃ120,000.ย
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However, it might only be worth ยฃ100,000 when looking at comparables sold in the past 2 years.ย
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Therefor an offer of ยฃ100,000 is not below market value. In fact – itโs at market value. Youโre just offering below the asking price.ย
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Getting a property below market value means if properties in the area sell for ยฃ100,000. That you are able to get it for say, ยฃ80,000.ย
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This means youโve got ยฃ20,000 equity in the property after buying it at that price.ย
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Typically to get a property BMV (below market value), you can get an unloved, old property that needs updating. Maybe it needs a new kitchen or bathroom.ย
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Maybe itโs got an avocado bath ๐ฅ or floral carpets. You know the kindโฆ ๐
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In a few months after a refurb, you could add ยฃ20,000 to ยฃ30,000 on a houseโs value. Thatโs the same as an average UK salary in the UK.
๐ย Pros of house flipping
๐ฉ Cons of house flipping
This is one property strategy not as many investors are doing. ๐คซ
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Immediately that means less competition. Most property beginners go into residential buy-to-let. This means the market can be competitive. It might take longer to find a good deal. ๐ค
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One of the huge benefits is that commercial property is often agreed on long leases, sometimes lasting up to 25 years. ๐๏ธ
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A commercial lease typically means the tenant manages the maintenance as well. This is known as โfully repairing and insuring. โ๏ธ
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However, if you lose a tenant, or the lease it up – it can take months to find a new tenant. This means large void periods.ย
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Youโre also at the mercy of the ๐ economy. Take the global pandemic for example. The high street ๐๏ธ likely wonโt be the same again.ย
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Lots of retail shops are going insolvent. Weโre still truly yet to see what the high-street of the future looks like in a post-pandemic world and with the huge surge in e-commerce.ย
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Commercial property can be tax advantageous. Speak to an accountant or registered tax professional ๐ฉโ๐ผ to understand this in more detail.ย
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You can also use your pension to invest in commercial property. This is known as a SSAS pension. Again – speak to an accredited professional to get more information on your specific circumstances.
๐ย Pros of commercial property
๐ฉ Cons of commercial property
There are two other types of strategies. They are not strictly โinvestmentโ however are used by property investors.ย
Check them out below
Rent to rent is a strategy used quite commonly in commercial property. For example, the owner of a giant warehouse may have a middle-man company to lease out ๐ข to tenants.ย
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If you owned an apartment in a city with lots of building sites. A managing agent might pay a guaranteed rent to the landlord in exchange for using the flat ๐๏ธ to provide to their workers.ย
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In the residential world, this can often be confused as โsubletting’. This is when you have an AST (assured shorthold tenancy) agreement and then let the property to someone else without the landlord knowing.
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However, if your paperwork is correct ๐ and with the permission of the property owner/freeholder/landlord. You can use the rent-to-rent strategy.ย
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It’s quite common for this ot to happen with HMO properties. With the right permissions and paperwork, you could lease a house, say for ยฃ750 a month. But then with the right legislation followed, rent out the rooms. This could bring in ยฃ400 a room ๐คฏ for a 4 bedroom house.
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This means you don’t need a huge upfront deposit to buy the house.
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But for a guaranteed rent to the landlord for ยฃ750 a month. You make ยฃ1600 before costs and keep the difference.
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Often landlords like the idea of guaranteed rent at a discounted rate as it removes all the hassle โ and stresses a property may bring.ย
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For the landlord this means no voids, you take care of maintenance and take away all their hassle.ย
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Make sure you always discuss with the landlord your intention. Ensure your solicitors โ๏ธ put together the correct paperwork for this agreement. It’s not a standard AST contract between you and the landlord.
๐ย Pros of rent-to-rent
๐ฉ Cons of rent-to-rent
A lease option is thrown around by a lot of property trainers as a โno money downโ strategy. Donโt fall ๐ โโ๏ธ into this rabbit hole. โ
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Again, this is quite common in the commercial world and for savvy investors. Is making its way into the residential world.ย
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Lease options mean you take control of a property and have the option to buy it in X number ๐ of years.
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This is great if you have a motivated seller, for example, a landlord. They have a property in negative equity but want to sell now.ย
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You take over their mortgage payments ๐ท, and a bit on top for them to benefit from.ย
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You can put tenants into the property and cover your costs.ย
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Then in 5 years time (or however long you agree). You then purchase the property at the original price you agreed.
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For example, if a property is worth ยฃ100,000 today and thatโs your purchase price option. You draw up the paperwork with a solicitor. In 5 years prices go up 25%.ย
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The property is now worth ยฃ125,000 and you buy it for ยฃ100,000. Meaning you have ยฃ25k ๐ธ in equity.
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You need to ensure you have solicitors representing both you ๐๏ธ and the seller so they fully understand. Itโs not uncommon for a seller at the end of a lease option to not want to sell. Especially when they realise it has gone up in value.
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Legally they have to. Thatโs why itโs crucial you ensure they have independent legal advice. So that they donโt try to take the property off you when itโs time to sell. To benefit from the equity increase.
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Their solicitor should explain this to them before they sign the paperwork.
๐ย Pros of lease option agreements
๐ฉ Cons of lease option agreements
Every investor is different. We all have different risk appetites. Do your homework ๐ on every strategy and understand which one is best for you.ย
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I wrote a guide on how to create a property business plan and strategy here.
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You should look at this to understand what you want from property. Is it cashflow? Is it long term ๐ capital wealth?
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Every strategy has pros and cons. Different levels of effort. Money required. You should assess your goals and determine whatโs best for you. Thereโs no right or wrong answer.ย
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Speak to your professional advisors. Your accountant, tax advisor, solicitor, mortgage broker before making any decisions.
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