How do you make money from property?
Real estate continues to be a preferred route for building wealth. In our latest blog, we reveal five key strategies that can help you turn properties into profit.
From passive rental income to active property flipping, we cover the spectrum to help you find the best fit for your financial goals.
1. Sourcing: The Low-Capital Start
Sourcing involves finding undervalued properties for investors, earning a finder’s fee for your efforts. It’s an excellent low-capital entry point into real estate. In the UK, with housing prices varying significantly by region, understanding local market dynamics is crucial. The average house price in the UK was £271,000 as of March 2023, according to the Office for National Statistics. This means there’s ample opportunity to find properties with potential for appreciation. We’ll explore how to develop a network, understand market values, and negotiate deals to become a successful property sourcer.
2. Flipping: The Capital Growth Method
Flipping properties requires more capital but offers potentially quick, significant returns. This strategy is about buying properties below market value, renovating them, and selling for a profit. In the UK, refurbishment costs must be carefully considered, as well as the stamp duty land tax which can affect overall profit margins. As of the first quarter of 2024, renovation projects have seen an increase in ROI due to a rise in buyer demand for ‘move-in ready’ homes. We’ll guide you through budget management, the renovation process, and market analysis for flipping success.
3. Peer-to-Peer Lending: The Collaborative Investment
Peer-to-peer lending platforms allow you to lend money to property developers or buyers. With moderate capital, you can start earning interest much like a mortgage lender. In the UK, P2P lending has been regulated by the Financial Conduct Authority (FCA) since April 2014, which adds a layer of security for lenders. We will delve into how to choose the right projects and secure your investment, while understanding the risks and rewards of this emerging market.
4. Buy-to-Let: The Classic Rental Strategy
Buy-to-let is the traditional approach to property investment. In the UK, despite tax changes, such as the phasing out of mortgage interest relief, buy-to-let remains popular. Rental demand is strong, particularly in cities with large student populations like Manchester and Leeds. The key is to find properties that yield high rent relative to the purchase price. We’ll discuss how to find the right property, manage tenants, and comply with legal requirements, even with a limited budget.
5. Joint Ventures: Pooling Resources for Greater Reach
Joint ventures involve partnering with other investors to purchase property. This is particularly useful in the UK where the cost of entry can be high. Joint ventures can significantly reduce individual capital requirements while offering a share in profits. For example, the London property market, with its high entry costs, has seen a rise in joint ventures, allowing smaller investors to partake in lucrative opportunities. Learn about partnership agreements, structuring deals, and managing joint property investments.
The property sector can be a lucrative opportunity if approached strategically. To discover how the team here at Sourced can support your journey, download our prospectus here.
Author
Chris Kirkwood
