Property investments aren’t just for big spenders. For every Fergus Wilson (the prolific investor who, until a couple of years ago, owned over 1,000 properties) there’s a novice with a little bit of spare cash and an interest in finding a profitable home for it. So how much do you actually need to get involved in property investment? Let’s be honest from the outset, the more cash you have the more opportunities there are available to you. However, that’s not to say there aren’t opportunities for those people with smaller amounts to spend. Let’s take a look at some options.
Property investments for under £10,000
If you have less than £10,000 to spend you may think property is off the table for you, but that’s not true. One option is “rent to rent”. The strategy is simple. You find somebody who owns a property, is perhaps having trouble letting it off or is fed up of the hassle and wants a hands off solution and guaranteed income. You persuade them to let you take the management of the property of their hands, give them a guaranteed income and then rent it out for more, perhaps by turning it into a House of Multiple Occupation (HMO) and renting out each room.
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It’s worth noting however that as you don’t own the property you will miss out on the capital growth benefits – one of the big pros of owning property – and be aware managing and marketing the property can be work intensive.
Another possible option is crowd investing. A concept that’s growing in popularity across a wide range of fields the idea is to group together people who aren’t necessarily in a position to invest in property on their own, pool your resources to buy, so you each own a share of the property, and then split the profit and, when sold, the capital appreciation. Of course. the crowd investing platform managing this will take a cut and you will be limited to the investment opportunities the platform sources. Saying that, it’s a great way to get some exposure to property if you can’t afford to go it alone.
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The third option at this level is, of course, to continue to save. Yes, it’s not the most exciting choice but having a bit more money does mean a lot more options open up to you.
Property investments for £10,000 – £25,000
Once you’re in the £10,000 to £25,000 bracket you’re in a position to buy a “real” buy to let, albeit a cheap one. There’s absolutely nothing wrong with buying property at the lower end of the market – say for around the £50,000 mark (which is certainly possible, particularly in northern England.) Indeed this type of property should give you a nice return. It is unlikely, however, to have much capital growth.
The point at which a lot more options open up to you around the £25,000 to £30,000 mark. Here, you’re in a position to put £25,000 down as a 25 per cent deposit, buy a property at £100,000, particularly in areas such as Liverpool, Manchester and Leeds, which should rent nicely and have a good chance of capital appreciation and leave you £5,000 for refurb and fees.
Property investments for more than £50,000
If you’ve got £50,000 or more available to you you can pretty much choose any option you like. You can carry on and build a portfolio of standard buy to let properties, as above, but you’re also now in a position to invest in the South East. The London market may be hot right now and therefore not always the best option but it’s always worth having some exposure in the South East in a property portfolio.
You’re also able to look at full refurbishments. You can purchase a shell of a property, spend on refurbing it and let it out or sell it on for a considerable profit. You can even look at full on development opportunities – knocking down an existing property and building something else.