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Investing In Property For Beginners (UK Market)

Want to make money out of your savings? Then UK property investment is the best thing you can look into starting for yourself. This is a very promising avenue to create a regular amount of cash flow from your investments. Throughout 2021 we see increasing attention towards UK Property investments where more people are looking for suitable advice to pour in their cash. Follow this blog as well as our YouTube channel with weekly released content to learn everything you need around investing in property for beginners and how to become an efficient investor in no time. Our guidance and exclusive tips will help you prepare in the right way; to attain the necessary market knowledge required and develop the skills that will drive you through the paths of clean profit.

We have created a checklist you need to make before you dive into the sea of property investments. Before getting along, let’s look at the basic details that you must look into about investing in property for beginners in the UK.

1. Partnership or sole investor?

This is a tough decision whether you want to start investing alone or you require a partner to share the risks and profits with. If you are venturing out alone, (which can be appealing) you will of course enjoy the profits all by yourself. But, not every individual is in a position to do so financially. So before you throw yourself into too deep water please assure what you can afford.

2. How Would You Finance the Investments?

Your strategy for investing in property for beginners must be included in your plan right from its foundation of planning processes. This will allow you to know exactly how you can afford the specific property and where you need to search for loans or other capital to make your investment happen. As beginners, we often forget some expenses which can be costly and make or break an investment. This list is fees to be considered and calculated into a deal before making a purchase decision:

  • Land tax & stamp duty
  • Current property’s market value (always purchase below market value)
  • Mortgage percentages
  • Insurance costs
  • Survey costs
  • Solicitor fees

3. Choosing Where to Invest

Choosing the area is one of the most important decisions. so don’t go lightly around this decision. Taking your time to research fully will pay back greatly on the bottom line. If your Strategy will be to go for a Buy-to-let property then checking for upcoming Hospitals, big companies moving their office, train stations, commuting facilities, great school areas, easy access to highways will be important factors to consider when researching an area. Crime rate and weather/natural issues in the surrounded area are also vital to check upon.
After doing the initial due diligence it’s time to research the numbers in that specific area.

Ask yourself these questions:

  • What is the Market Value in this area?
  • What is the maximum possible rent that I can ask for?
  • What is the general income for families in this area?
  • What type of tenants is crowding that area?
  • How much will I need to spend on refurbishment to match similar properties in the area?
  • How much will it cost me to keep the property a month?

Now having the answers to these questions you can easily make the math between your possible income versus your expenses and therefore make an informed decision whether continuing or moving on to another investment.

4. Choosing the Right Tenant

Investing in property as beginners can feel very overwhelming. Outsourcing will become your best friend once you understand the power of it and understand how to leverage the expertise of your team into your wealth.
If you have done your research properly and have engaged with a property manager that will find possible tenants for you, renting out your property will be an easy process. You will be presented with a list of people and now your job will be to choose the one you find right. (Do a backup check, see their paycheck, and make sure they are able to pay their rent every month)

We recommend you spend the money on a good property manager because it will save you so much time and hassle down the line, especially when scaling into more properties.

5. Opportunities to Add Value

The property investment opportunities in the UK are constantly shifting and making way for the good and the better.  An important step is, to have the end in mind before getting into a new investment. Know and precalculate, that at one point when you want to sell, you will want to make a profit strictly from the sale. With 1 property you will gain more ways to earn: through rent and through a sale.  Adding value through refurbishing the property to increase its value is the way to sell it for more than you purchased it for.

Investing in property for beginners risks

Once you are done understanding how do you go about investing, you should also keep in mind what risks investing into property in the UK can bring for you. To better understand the aspects of risks and returns, follow our online course to understand the nooks of investing in property for beginners in the UK. Before starting, do not forget to consider these risks:

  • The flow of the rental amount is not always steady.
  • Avoiding void periods is crucial, hence the recommendation to find a great property manager.
  • Even despite enormous research and planning, property prices can drop considerably.
  • Tenants can cause damage to the property that needs reparation.
  • Expensive and major house refurbishments can come your way. (water damage, moist, fungus or other issues found after purchase)

But there is risk in everything you do in life.
To look on the brighter side, the property investment opportunities in the UK are never-ending and you might settle down with some huge returns. The market is profitable and can grow your money for the longest possible time.

Pitfalls to avoid as a beginner (3 Bonus tips)

Most people are often indulged in lending loads of money before jumping into investments to then spend it all into 1 property, putting all your money into 1 bucket only. If you choose to throw in all your money in 1 property it will be difficult for your to liquidize that money to spend in future investments. We, therefore, recommend you split your own capital into smaller bites and take loans to cover up the rest of the property cost.
Most banks in the UK will be focused on understanding the future of the property prior to accepting a loan that is in your favor. Instead of lending you money based on your credibility, they lend it to you based on the property you are looking to purchase, which will act as their guarantee as well.

Knowing your strategy for the property before going into the investment is extremely crucial. You must have a clear strategy for what you are going to do with the property. Are you Flipping, creating an HMO, BTL, or doing a full renovation? We strongly advise you to have 2 exit strategies for each investment as well. For example, if your plan A is to make a flip, but you find it difficult to sell the property quickly, you can start plan B and rent it out creating a positive cash flow each month and then sell at a later point in time. If you haven’t done your due diligence well beforehand, you could have chosen an area for the flip which is not in demand for rental properties. Your plan B would flop, taking money out of your pocket rather than putting them into your pocket.

Choosing the right location is key when starting out with property investments. You could naively think that buying an apartment in the city center or in a high-end area would be the best choice, however, once you look at the numbers you will quickly find that this is not the case. Leave your feeling behind and put on your investor cap! Look cold-hearted at the numbers only together with proper research of the area.

And lastly, keep a positive attitude and keep yourself well-informed about any upcoming changes in the environment which can become a new opportunity. Property investment is fun and exciting when done right and we hope that you will take on this adventure and join the club of property investors in the UK. If you need any help or further guidance feel free to either comment or send us an email at fab@fabriziocravero.com.

 

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Fabrizio Cravero

Fabrizio Cravero

UK Property investor

Fabrizio is sharing his knowledge about investing in UK properties from overseas. He is based in Hong Kong and provides weekly guidance to his followers.

Fabrizio Cravero

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