3 Things You Need to Know Before Investing in U.K. Property
Buying property in the UK can be confusing. Here’s what you need to know to get started.
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Money-Smart Solopreneur
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June 25, 2021 5 minutes to read
The opinions of entrepreneurs’ contributors are their own.
Investing in UK property is very profitable and, if you know how to do it, pretty easy. But there are certainly a number of things that you need to know before you start. If you don’t plan, you plan to fail, and real estate certainly does.
As a multimillionaire real estate investor and founder of one of the largest real estate education companies, I know that people starting out in the UK real estate market often need to ask or know. Whether you are a foreign investor looking to get into the UK market or a UK national starting out with real estate for the first time, this article will help you begin the process of buying your first UK investment property
1. Double price does not mean double rent
Sometimes people will come up to me and say that it is impossible to get high returns from renting rooms in an HMO (apartment building), for example. Sometimes these people are even landlords themselves who own properties in upscale and upscale areas. What people don’t know is that just because a house is in a more expensive area doesn’t mean it will cost that much higher rents per room.
A simple exercise is to look up property prices in an area through a property portal such as Rightmove or Zoopla and find out what price suitable homes are being sold for. Then go to a website that has rooms for rent, such as: B. SpareRoom and look at the Rooms Wanted indicators to see demand and the prices people are willing to pay. Do this for an expensive city in the UK and then a cheaper city. You will soon see that investing in the more upscale areas can seriously hurt your potential returns.
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2. The north and south divisions
While there are great areas to invest across the UK, as a general rule of thumb it often makes sense to look north and the Midlands, which have cheaper properties with higher rental returns. A lot of people like to invest in London for capital appreciation, but I think it never makes sense to rely on it. I prefer to invest for cash flow; That way, if the market turns against me, I can happily hold onto the property while it makes a profit.
However, while capital appreciation is your primary concern, it is better to buy in places that have bottomed and are trending up than places that have already boomed and will eventually return the other way. Find the hidden gems that new employers are opening up or that are being regenerated. So you can benefit from both cash flow and rising prices.
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3. You don’t have to live where you invest
It makes sense to find a “patch”, an area in which you can get to know and understand the real estate market. But it doesn’t have to be where you live. The area you live in may not have the high yielding properties you are looking for, or it may be otherwise unsuitable. All you have to do is find a place nearby to drive to and spend some time there to get to know the place. If you are a overseas investor, it makes sense to start a joint venture with someone who knows the local market, especially if you cannot come to the UK to do the initial research yourself.
Your goal shouldn’t be to manage everything yourself, so it is actually better to invest outside of your home. This removes the temptation to solve problems yourself rather than building a power team and systemizing the business. I always say: “Buy cheap, rent high – with a property manager nearby.” If you have good local contacts (property managers, cleaners, builders, real estate agents) the time you need on site should be minimal.
When you buy in the right areas and employ the right team, UK property investments can be extremely profitable. All of these of course take time to learn, and it is important to find quality training providers who can teach you more about the concepts outlined here before you begin. Once you have the appropriate training, you can begin building your UK real estate empire.
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