Property Investment – The Basics

by - Wednesday, December 19, 2018


Whether you’ve carefully saved for years, you’ve recently come into a chunk of money or you’ve inherited a certain amount of money, property investment could be a great way for you to make your money grow. Investing in property can be a simple and rewarding process. Everyone needs somewhere to live and the increasing UK trend towards renting means that there is a rising demand for rental property. No longer just for the very wealthy, there are a number of property investment strategies that can help make even a humble amount grow. Property investment specialists like RW Invest have a range of affordable investment properties which can allow you to grow your money. 

Buy to Let Property
Buy to let property is simply property that you buy but don’t live in, someone else will rent the property from you. There are two key ways that a property investment can make your money grow. In the industry they are called rental yields and capital appreciation. Rental yield is the money you are making from the rent paid to you for your property. It comes in a percentage form, which tells you how much of the whole value of your property you will receive. So, for example, if you bought a property for £80,000 and the rental income a year was £4000, your rental yield would be 5%. That would be your gross rental yield, to work out the net rental yield, you need to consider the costs of the property such as mortgage payments or ground rent. 

Capital Appreciation
The second way a property investment can help your money grow is through capital appreciation. Capital appreciation is the amount that your property increases in value. This is worked out by taking the amount you can sell your property for compared to the amount you bought it for. For example, if you bought a property for £100,000 and sold it for £120,000 your capital appreciation would be £20,000. Depending on how involved you want to be with your property investment, you can either hold on to properties and receive rental income or sell them on as soon as they have reached the capital appreciation you are looking for. Some people choose to buy cheap properties, do them up and sell them on for a profit. This is one way of investing in property and it can be lucrative but it also requires a considerable amount of work.

Hands- Off Investing
If you’d prefer to be more hands off in your investment, then going with a property investment specialist is a great option. Many property investment companies like RW Invest can find you lucrative properties where you already know the yield before you buy, like rental return of 7% for 2 years. There are certain factors that pay a vital role in property investment. Area is incredibly important, some areas are experiencing excellent growth in house prices, making them perfect for capital appreciation. Some areas are experiencing a huge demand for rental property, meaning rental rates are higher, therefore better for rental yields. Ideally you will look for a property in an area that has both. Think about what your tenants might be like and what they want from an area. 

Overall, property investment is an excellent choice for those looking to grow their money and expand their financial assets. Though it is worth ensuring you can afford it, making a budget and being smart about what property you choose, it can be a worthwhile and valuable strategy for the future.

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