Top UK Property Investing Strategies in 2024
Our founder, Kelly Hopkins runs you through the top UK property investing strategies for 2024.
Investing in UK property can be exciting, but navigating the various strategies can seem daunting. Don’t worry - this guide breaks it down, considering both your needs and the current market.
Funds: Consider your total access to capital, including cash, mortgages, and/or alternative financing.
Hands-on Approach: Decide how much involvement you desire, as strategies vary in time and effort required.
Risk Tolerance: Evaluate your comfort level with risk, as each strategy carries different levels of potential reward and challenge.
Here are our top 10 UK property investing strategies in 2024 (in no particular order):
Buy to Let (BTL)
The ‘bread and butter’ of property investing. BTL involves purchasing a property and renting it out on a single let basis to generate income.
Pros: Steady cash flow, potential capital appreciation, established strategy.
Cons: Upfront investment, ongoing management, tenant issues.
Buy, Refurbish, Refinance, Rent (BRRR)
BRRR involves purchasing a property, refurbishing it to increase it’s value, refinancing it to access additional funds, and renting it out. This way you can recycle your cash, and go again.
Pros: Leverage refinancing for higher returns, faster cash flow compared to flipping.
Cons: Potential delays and cost overruns during refurbishment.
Buy, Refurbish, Resell (Flip)
Flipping involves buying undervalued properties, refurbishing them, and selling on for a quick profit.
Pros: Potentially high profits if done right.
Cons: Competitive market, risk of holding on to property longer than expected, refurbishment challenges.
Houses of Multiple Occupation (HMO)
HMOs house multiple unrelated tenants, often students or young professionals, on a room by room basis.
Pros: Higher potential rental yields, cater to specific tenant demand.
Cons: Complex regulations and licensing requirements, intensive tenant management.
Serviced Accommodation (SA)
SA involves providing furnished, short-term rentals ie. serviced apartments. This strategy caters to tourists, business travellers, or even contractors.
Pros: High potential returns, cater to diverse audiences.
Cons: Hospitality skills and marketing efforts required, fluctuating occupancy rates.
Social Housing (SH)
Looking to make a social impact while earning returns? Consider SH, providing housing to low-income or vulnerable individuals.
Pros: Stable, long-term income, societal impact, government contract protection.
Cons: Competitive application process, specific tenant demographics, rent controls.
Commercial
Commercial opportunities include purchasing office spaces, retail units, or even warehouses.
Pros: Longer tenancies, potentially higher yields than residential, diverse property types.
Cons: Higher initial investment, potentially complex lease negotiations, specialised management.
Lease Option (LO)
This creative strategy involves securing the right to buy a property at a set price in the future, while paying a monthly fee to the owner.
Pros: Lower upfront cost, market testing before purchase, potential price lock-in.
Cons: Risk of losing option fee if owner receives a better offer, limited control over property until purchase.
Title split
Splitting the freehold title of a property can be lucrative. You sell part of the land (e.g. for development) while retaining ownership of the building and generating rental income.
Pros: Unlock land value for development, retain income-generating building.
Cons: Complex legal and planning processes, shared ownership responsibilities, potential conflicts with developer.
Rent to Rent (R2R)
R2R involves renting a property from a landlord and then (legally) subletting it to individual tenants, pocketing the difference.
Pros: Lower initial investment, leverage existing property, potentially high returns.
Cons: Legal compliance and regulations, reliance on original landlord, risk of property damage by subtenants.
Remember: Each strategy has its advantages and risks. Consider your budget, risk tolerance, time commitment, and investment goals before choosing your path. Thorough research, due diligence, and professional advice are invaluable companions on your property investment journey. So, arm yourself with knowledge, explore these strategies, and find the one that aligns with your goals.
Disclaimer: This blog post is intended for informational purposes only, and is not investment advice. If you are looking for financial advice, you should contact an FCA approved financial adviser to get regulated advice with your investment decisions.
