You can invest in UK real estate in a number of ways, which primarily include, residential property and commercial property. However, you should have necessary finances in place before taking the leap into real estate investment UK.
Real Estate Investment Trusts (REITs)
In case you prefer not to use cash for your real estate investment UK, then you can access the Real Estate Investment Trusts or REITs, which are investment funds that solely invest in property. They are pooled funds in which the money of a number of investors is used to buy property that the fund then owns. Under this type of real estate investment, the investor is paid returns based on the performance of the fund and the level of rental income generated by the properties held by the trust.
Buy to let real estate investment UK
Buy to let real estate investment UK are residential property investments, in which the investor buys a property and then lets it out to tenants for a certain duration in return for a monthly rental income. This real estate investment UK option is viable at places where the demand for residential accommodation is high. At such places, investors may earn a sustained inflow of rental income over the long-term, which may act as a secondary source of income.
Property development real estate investment UK
Investing in property development is another option for real estate investment UK. However, as the rewards out of property development are high, it also involves high levels of risks. You should be aware of the risks associated with this type of real estate investment UK before committing to the investment.
Buying a new build to sell for your real estate investment UK
Buying a new build off hand may involve risks as you do not know how it will end up or the developer may even go bust. In case the property does not come up as you have expected it to be, then you may struggle to sell it once it is finished. This means you may struggle to repay the mortgage. However, they are cheaper to invest in, and, if the deal goes right, you may end up with considerable profits from this type of real estate investment UK. Moreover, you can raise the value of the property by adding value to the property by decorating or furnishing it.
Expenses associated with real estate investment UK
Real estate investment UK involves a wide range of costs such as solicitor fees, estate agency fees, Land Registry fees, surveys, mortgage fees, Stamp Duty and setting up insurance.
Work out income and expenditure before committing to real estate investment UK
Real estate investment UK can be expensive and you should make sure that you do not overstretch yourself. Although real estate is a highly lucrative investment option, it also comes with equally high levels of risks. Property can drain money as easily as it can give returns. Therefore, you should make sure that you have enough financial backup to support your real estate investment UK if anything goes wrong with the property or its finances. Moreover, you should remember that real estate investment tends to be a long-term investment in order to provide considerable returns on investment.
This is especially so in case of rental property investment, which tends to provide a monthly rental income, in return for your real estate investment UK. You can expect a decent return on your rental real estate investment UK over the long-term. So, do not expect to be able to get your profit out of this type of real estate investment UK any sooner.
Capital for real estate investment UK
Look at the money available with you for your real estate investment UK. This will include all savings accounts, ISAs, premium bonds and investments like shares, bonds and unit trusts. You should also look at the returns they are paying and if there are any restrictions on when you can withdraw funds. If you plan to take on a mortgage to fund your real estate investment UK, figure out how much you will be able to put down as a deposit. Figures vary from one lender to another, ranging from 15 per cent to 25 per cent of the value of the property.
Once you have found out how much you have for a deposit, find out mortgage companies which will be prepared to lend you. Compare your mortgage repayments with the amount of rental income you expect from the property. You should be realistic in terms of the rental income you expect to generate from the property as only a realistic rental value will determine the amount of profit that you will be able to generate out of your real estate investment UK. Speak to the real estate agents in the local market to find out the current rental values in the area.
Choosing the right property for your real estate investment UK
Before investing in real estate investment UK for rental purposes, you should be aware of your investment goals such as the area, the property type and the target tenant category. The type of tenant you are likely to find may depend on the type of property and its location. If you plan to invest in residential buy-to-let, be sure on the kind of tenant you are looking for. In case you plan to rent the property out to students, a property near college or university is a good choice. Properties with good transport links are suitable if you are looking for professionals as your target tenant population.
Apart from these requirements unique to each tenant type, location near large employers, commercial centres and other amenities, add value to a property.
Finalising your real estate investment UK property
After shortlisting a few properties which meet the requirements for your real estate investment UK, arrange a viewing of the property. When you are down to two or three properties, make sure to arrange further viewings before you finally put down the deposit.
Complete the real estate investment UK process
This involves signing the contract, transferring the funds to the seller’s solicitors and arranging building insurance.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.