Property can be a great investment. But just how should you invest in property? There are all kinds of options when it comes to property investment from commercial buy-to-lets to running a hotel. Below are three of the most popular property investment solutions.
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Residential buy-to-let
Buying property and renting it out to tenants to live in is the most popular form of property investment. By charging enough rent each month, you can cover the mortgage and make a small return. You will need to also pay for maintenance, so it’s worth having some savings set aside for this.
When looking for properties to rent out, try to think from a tenant’s perspective. Apartments and house shares are very popular among tenants because they are typically a lot cheaper. There is a much smaller market for privately rented family homes, although it definitely is still an option. An experienced company like MGP Real Estate will be able to provide you with invaluable advice here and help you to make the best decision.
You cannot purchase a buy-to-let property with a traditional mortgage (unless you’re also planning to live in the property), so you will have to look into specialist buy-to-let mortgages. These are offered by most banks and private lenders.
Holiday rental
A holiday rental involves buying a property to rent out to hoildaymakers. The fees you charge help to cover the mortgage and utilities. You’ll also need to keep the property maintained and make sure that it’s clean for each new guest. Hiring a local property manager could be essential if you don’t live near the property.
Such investments are most profitable when buying a property in a touristy area – you’ll find it easier to secure guests when looking for property for sale in Malaga than a remote Spanish property. You may be able to rent property out to people on business trips or people visiting family in some areas, however this is a much more niche market.
If you’re buying a property locally, you may be able to use a local mortgage. When buying a property abroad, you’ll need to look into foreign mortgages. An international bank or international mortgage broker can help you with this.
Holiday rentals can be used as personal holiday homes, which of course is a big benefit. Just make sure that you’re not using your holiday rental for personal use too often – you still need enough guests staying there to cover expenses and make a return.
Property flipping
Flipping property involves buying a property, making some improvements and then selling it for a return. It often involves buying properties in disrepair (known as ‘fixer-uppers’) and getting them back into good condition. These types of properties are sometimes bought through auctions, although you can also find specialist listing sites for them.
The idea of this form of investment is to add as much value to the property while spending as little as possible on renovation work. This typically involves doing some of the renovation work oneself to save money on labour.
Many people buy these properties in cash, although there are specialist buy-to-sell mortgages that you can look into.