7 Killer Property Investment Strategies to Hit the Ground Running In 2020

Property Investment Strategies

⏱️ 20 minute read

📅 Written on July 29th 2020

Looking to get started as a property investor?

Work your way through our 6 part property investing guide for beginners

Part 1:

 

How to create a property business plan

Part 2:

 

2020 Property Investment Strategies

Part 3:

 

Calculate Yield & ROI on Investment Property

Part 4:

 

Buying Property Through a Limited Company

Part 5:

 

Best HMO Investment Areas in the UK

Part 6:

 

How to flip a house as a property investor

Chapters

Chapter 1

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. 🤷‍♂️

Guru’s charging for expensive courses about property. 

You just want a SIMPLE explanation of property strategies.

property investment strategies

Look no further! 🤚 This is a no-fluff, no-BS guide to property investment strategies. 🏠

 

It has given me laser-focused direction on how to get started. Especially as a beginner property investor. 

I wrote a guide on how to create a property business plan and strategy here. 🔥

Plus: you’ll learn how much money you need to get started.

I’ll cover the following UK property investment strategies

Quite simply, there are two ways to build a property portfolio and get started.

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. 

Quite simply, you have two options:

It sounds quite easy and in a way… 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 – there’s 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.
🍔

Chapter 2

Buy-To-Let

Most beginner property investors start with this method. Also, if you’re new – you have the best mortgage availability with this strategy. It’s a great way to begin out of all property investment strategies.

It’’s 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 £250 – £400 profit a month after costs.

 

💚 Pros of Buy To Let

💩 Cons of Buy To Let

Chapter 3

HMOs (House of Multiple Occupancy)

Everyone has been a student at some point. 🎓

 

Do you remember sharing a house with your friends? Maybe you shared a house as a young professional. 👨‍🎓

 

An HMO is a house where multiple people live together. The property is rented out room-by-room.

 

It’s a step up from the other property investment strategies!

 

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. 

 

HMOs can get quite complicated in terms of the official definition. My key recommendation is google your council + the word HMO. 🔎

 

It can vary from each council area what denotes a HMO. It could be number of bedrooms. Floors in the house. There’s not one straightforward answer. 🙅‍♂️

 

The huge benefit of HMO investment properties is that renting out by the room, generates more rental income than a vanilla buy-to-let.

 

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.

 

As a whole, for example you might make £750 per month. However, by the room, it could rent out for £400 per room. 

This means as an HMO it would make £1600 per month! Before costs and expenses.

That’s more than DOUBLE the rental income!

Don’t fall into the shiny object trap though. HMO’s cost more to run and operate. 🤑

 

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. 

 

🛠️ Typically with more tenants, you also need to consider faster wear and tear. 

 

Management is also more hands-on. You’ll have more tenants. That means more problems cropping up. Be that things breaking. Or tenants not happy with each other. 

 

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. 

 

However, even though they have higher costs. If you do your sums right, they typically cashflow higher after all costs. Meaning greater profit. 

 

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. 🖌️

 

A lot of landlords still offer magnolia boxes, but it’s very easy to beat them in a crowded market. 

Best areas for HMO investment

I put together a huge guide on the best HMO investment areas in the UK. Check it out here

 

As they’ve grown in popularity – you’ll also need to be aware of Article 4. You can no longer operate an HMO anywhere. Some councils have implemented blanket Article 4 directions. 🗺️

 

This means that they have removed permitted development to move the use-class of the property from residential. To an HMO. 

 

Therefore you’ll need planning permission. Which means the council may reject your application. ❌

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 £250 – £400 profit a month after costs.

 

💚  Pros of HMO Property Investments

💩 Cons of HMO Property Investments

You could consider looking at renting to young professionals or students.

 

If you rent to young professionals, they’re likely to stay longer. Typically 12 to 18 months is the average tenancy length. 📅

 

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. ⚒️

Join the community on Instagram

Follow my journey & say hello! 👋

Get the latest scoop on what’s happening and say hello!

The ultimate way to get all of the latest ups and downs of property investing.

Learn from all my mistakes AND successes to help you create a property portfolio or optimise your existing one.

Get inspiration on slick interior design, all while mingling with like-minded investors.

See you on the other side.

Chapter 4

Serviced Accommodation (Holiday Lets)

Ever gone away to Cornwall for the weekend and spent £1000 for a week in a cottage? 🏖️

 

Maybe you’ve stayed in an apartment in Manchester for a weekend break costing £150 a night. 🏙️

 

With the growth of Airbnb there has been a huge explosion of serviced accommodation. Some people love staying in hotels while travelling. 🧳

 

Others might not want what a hotel offers. 

 

For example, business people or contractors might want somewhere a bit more homely. 

 

A group of friends might want multiple rooms linking to the same shared area. 

 

Serviced Accommodation is renting out a property you own to holidaymakers or business people as a short term let. Often charged by the day. 📅

 

Determining the type of customer you’re targeting will determine what type of property you buy. 

 

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. 

 

Serviced Accommodation can be incredibly profitable if you achieve a strong occupancy rate. You should consider seasonal impacts as well. ☃️

 

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!

 

The prices also tend to fluctuate, you can charge more in summer, and less in winter.

 

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.

Do not be fooled by even more money on holiday lets though. They are HARD WORK!

Every change of guests requires a full clean of the flat. You need new linen. Key management is crucial. Trusted cleaners. 🧽

 

It’s so easy for something to go wrong. What if your cleaner doesn’t show up?

 

🔑 What if the keys go missing. 

 

This is definitely one of the more time-consuming property investment strategies.

 

Despite the challenges, increased risk and effort. They can be hugely rewarding. At £150 a night in a good location. Booked for 25 days of the month. You could be looking at up to £3750 rental income before expenses. 

 

Not bad for a 1 bed flat in Sheffield city centre!

💚  Pros of serviced accommodation

💩 Cons of services accommodation

Goal Setting Guide

Free Goal Setting Guide

Are you struggling to find focus in your property business? Do you have a clear, tangible and measurable plan of action? Download this free handy goal setting guide that explores wherey you are today, your financial literal and north star lateral goals – and what you need to do to bridge that gap to meet your goals. 

Chapter 5

Flipping Houses

Buying a house to sell at the end is known as flipping a house. It’s very popular in the UK. 🇬🇧 It’s very popular amongst all property investment strategies.

 

In fact, you may know of a famous TV show called ‘Homes Under The Hammer’ on BBC. It has been running for years. And has hundreds of shows! 📺

 

But please don’t be like people on the show! They often don’t run the numbers. Don’t understand investment areas. 

 

This means they bid higher than when they should. Dive into properties without understanding refurbishment costs. 

 

This can be risky if you’re trying to make it a serious business. 💼

 

If you get it wrong you might tie up all your cash in one property. How long would it take you to save again?

This strategy is a more steady, slower-moving method.

The pure aim of this strategy is to make a profit by purchasing at a low price and selling higher. 📈

 

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. 💷

 

When looking at listings on Rightmove or Zoopla, you might see a house listed for £120,000. 

 

However, it might only be worth £100,000 when looking at comparables sold in the past 2 years. 

 

Therefor an offer of £100,000 is not below market value. In fact – it’s at market value. You’re just offering below the asking price. 

 

Getting a property below market value means if properties in the area sell for £100,000. That you are able to get it for say, £80,000. 

 

This means you’ve got £20,000 equity in the property after buying it at that price. 

 

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. 

 

Maybe it’s got an avocado bath 🥑 or floral carpets. You know the kind… 😏

 

In a few months after a refurb, you could add £20,000 to £30,000 on a house’s value. That’s the same as an average UK salary in the UK.

💚  Pros of house flipping

💩 Cons of house flipping

Chapter 6

Commercial Property

This is one property strategy not as many investors are doing. 🤫

 

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. 🤝

 

One of the huge benefits is that commercial property is often agreed on long leases, sometimes lasting up to 25 years. 🗓️

 

A commercial lease typically means the tenant manages the maintenance as well. This is known as ‘fully repairing and insuring. ⚒️

 

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. 

 

You’re also at the mercy of the 📉 economy. Take the global pandemic for example. The high street 🛍️ likely won’t be the same again. 

 

Lots of retail shops are going insolvent. We’re 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. 

 

Commercial property can be tax advantageous. Speak to an accountant or registered tax professional 👩‍💼 to understand this in more detail. 

 

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.

💚  Pros of commercial property

💩 Cons of commercial property

Other Types Of Property Strategies

There are two other types of strategies. They are not strictly ‘investment’ however are used by property investors. 

Check them out below

rent to rent

Chapter 7

What Is Rent-To-Rent?

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 🏢 to tenants. 

 

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 🏙️ to provide to their workers. 

 

In the residential world, this can often be confused as ‘subletting’. This is when you have an AST (assured shorthold tenancy) agreement and then let the property to someone else without the landlord knowing.

 

However, if your paperwork is correct 👍 and with the permission of the property owner/freeholder/landlord. You can use the rent-to-rent strategy. 

 

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 £750 a month. But then with the right legislation followed, rent out the rooms. This could bring in £400 a room 🤯 for a 4 bedroom house.

 

This means you don’t need a huge upfront deposit to buy the house.

 

But for a guaranteed rent to the landlord for £750 a month. You make £1600 before costs and keep the difference.

 

Often landlords like the idea of guaranteed rent at a discounted rate as it removes all the hassle ✅ and stresses a property may bring. 

 

For the landlord this means no voids, you take care of maintenance and take away all their hassle. 

 

Make sure you always discuss with the landlord your intention. Ensure your solicitors ⚖️ put together the correct paperwork for this agreement. It’s not a standard AST contract between you and the landlord.

💚  Pros of rent-to-rent

💩 Cons of rent-to-rent

Chapter 8

Lease Option Agreement

A lease option is thrown around by a lot of property trainers as a ‘no money down’ strategy. Don’t fall 🙅‍♀️ into this rabbit hole.

 

Again, this is quite common in the commercial world and for savvy investors. Is making its way into the residential world. 

 

Lease options mean you take control of a property and have the option to buy it in X number 📅 of years.

 

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

 

You take over their mortgage payments 💷, and a bit on top for them to benefit from. 

 

You can put tenants into the property and cover your costs. 

 

Then in 5 years time (or however long you agree). You then purchase the property at the original price you agreed.

 

For example, if a property is worth £100,000 today and that’s your purchase price option. You draw up the paperwork with a solicitor. In 5 years prices go up 25%. 

 

The property is now worth £125,000 and you buy it for £100,000. Meaning you have £25k 💸 in equity.

 

You need to ensure you have solicitors representing both you 🏛️ and the seller so they fully understand. It’s 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.

 

Legally they have to. That’s why it’s crucial you ensure they have independent legal advice. So that they don’t try to take the property off you when it’s time to sell. To benefit from the equity increase.

 

Their solicitor should explain this to them before they sign the paperwork.

💚  Pros of lease option agreements

💩 Cons of lease option agreements

Chapter 9

Summary: Property Investment Strategies

Every investor is different. We all have different risk appetites. Do your homework 📑 on every strategy and understand which one is best for you. 

 

I wrote a guide on how to create a property business plan and strategy here.

 

You should look at this to understand what you want from property. Is it cashflow? Is it long term 📊 capital wealth?

 

Every strategy has pros and cons. Different levels of effort. Money required. You should assess your goals and determine what’s best for you. There’s no right or wrong answer. 

 

Speak to your professional advisors. Your accountant, tax advisor, solicitor, mortgage broker before making any decisions.

A property newsletter you'll actually enjoy recieving

Follow my journey - packed with powerful learnings & free resources

📮  No spam, ever.   📅  1 email a week.   👋  Unsubscribe anytime.

Property Investing Newsletter

Goal Setting Guide

Goal Setting Guide

Hey! Download Your FREE Property Goal Setting Guide

Pop in your email and I’ll send you the free guide!

Get Your Free Property Viewing Checklist

Join The Newsletter & Community

Be a part of a supportive, wholesome group of like-minded people.

1.7kFollowers
20.8kSubscribers