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Learning how to invest in property

20/08/2022

There are four steps to learning about how to invest in property in the UK. This may sound like an oversimplified guide, but the truth is some investors forget the basics and can often run into trouble. The old saying goes ‘If everyone knew, we’d all be doing it.’ But even the ones who know can sometimes find new challenges that have not appeared before. Learning how to invest in property is exciting and demanding because of the wealth of others knowledge you will need to adopt.

Education

By reading this blog post about learning how to invest in property, you have already embarked on the first step of the journey. The internet is awash with resources for property investment strategies and tutorials, mostly at a price. There are thousands of educational resources for property in the UK alone, but every project is different. Take, our recent partnership with Suzi Carter, owner of Commercial Property Academy. Finding a way to educate yourself on structural issues, profit margins or even commercial-to-residential conversion can be a bespoke process. Nimbus has a wide range of resources from blog posts to our free on-demand webinars, all designed to help you take each step as it comes and all free.

Network

To invest in UK property, you can't rely solely on yourself, as the level of time and effort required will eat away at your profitability. Whether you have a team of contractors around you to execute the works or a decent financial advisor to help you crunch the numbers, an experienced network is an essential part of being a successful property investor. Networking with well-seasoned developers and investors is a great part of learning how to invest in property because their trials and tribulations can help flag any issues with a project you might not have anticipated. The community of developers and investors online and networking groups are ready to offer their knowledge. For a feel of this truly united industry, try one of Nimbus's webinars. Building friendships with someone with more properties under their belt than yourself will boost your learning, and opens up the possibility of joint ventures.

Finance 

A question we often get is "How can I invest in property if I have no money?" Many think it's impossible - but they would be wrong.

No one can argue that having a pot of money to invest is not a good thing but if you have the skills and take the time to learn about property investment then you offer your expertise to someone who has financial resources. Friends and family you know and trust are always a good point of call, as long as you can provide them with a good return. Learning how to invest in property is a skill that not everyone possesses, and if you have a trade background then you will have more knowledge than most of how renovating a property works.

If you are able to finance yourself then your network becomes important. You will need an experienced property financial advisor to your funds stretch, to increase profits without losing the integrity of the work. Seek recommendations from other investors or developers and build up a portfolio of good reviews to identify a good financial advisor. 

Common questions about property investment

We understand both experienced and beginner investors have questions about property investment. Below we have answered the most common questions people ask.

What's the best way to invest in property in the UK?

Investing in property can be a profitable venture, particularly when done with consideration of the current market conditions and the individual's own financial goals. In the UK, perhaps one of the best ways to begin investing in property is to choose to purchase a buy-to-let property. This type of investment involves purchasing a residence that you can rent out to tenants. Doing so will provide you with an additional source of income as well as capital growth over time as house prices increase. Furthermore, by carefully selecting your tenants and researching local markets, you may be able to maximise your return on investment. While investing in property requires careful research, planning and dedication, it can also be an excellent long-term strategy for creating wealth and financial freedom.

 

Is it better to save money or invest in property?

Before considering whether it is better to save money or invest in property, one must assess your financial goals. Saving money has near zero risk but also requires an extended timeframe to achieve financial objectives. Investment in property generally require more initial capital, but compared to saving can reap higher rewards with relative frequency. To make an informed decision, one should understand the different benefits and risks associated with each approach as well as how they would fit into their overall financial plan. Ultimately, having a balanced portfolio of both savings and investments may be the most viable route towards reaching your end goal.

 

How much money do you need to invest in a property in the UK?

Investing in a property in the UK can be an incredibly rewarding experience, with potential returns that are hard to find anywhere else. However, it is also important to consider how much money you need to invest in order to make the most out of your real estate investment. Depending on where you purchase and what type of property you are interested in buying, there may be some upfront costs such as stamp duty or a deposit. In addition, you may need to factor in ongoing expenses such as rental income, repairs and general maintenance costs. By taking all of these costs into consideration before starting your investment journey, you can ensure that you have a secure financial foundation for success.

 

What is capital gains and how does it impact property investors in the UK?

Capital gains tax (CGT) is a crucial element of owning property investments in the UK: paying it ensures that investors contribute their fair share and signals the importance of being a responsible member of the property industry. For individuals, rather than companies or trusts, CGT applies when a property is sold for more than what was paid for it, meaning if an investor can increase the value of an asset through renovating it, they'd be liable for CGT when said asset is sold on. In most cases, the rate of your personal capital gains tax will depend on how much income you make from investments per year – the higher your taxable income bracket, the more CGT you'd have to pay. Nonetheless, there are reliefs available specifically for those investing in residential properties, such as entrepreneurs’ relief and lettings relief, which offer considerable discounts on total CGT due after the sale. Plan wisely and you can enjoy good returns from your assets with minimal impact from CGT.

 

Can I invest in commercial property if I don't own a business? 

Investing in commercial property can be an excellent opportunity for those not actively involved in running a business. A number of factors, such as locating the ideal space and finding tenants who will pay rent promptly, may seem intimidating but there are options to make this process easier and financially sound. For instance, consider investing through a real estate investment trust (REIT) which can provide you with guidance on proper investments without needing to directly manage them yourself while still receiving potential returns. With research into market trends and the right team of professionals, it is possible to take advantage of property investment opportunities even if you don’t have your own business.

 

Do I need an estate agent to invest in a property in the UK?

If you’re looking to buy property in the UK then it can be useful to have an estate agent by your side to provide guidance through the complex process of finding and purchasing a property. An experienced estate agent can provide advice on the best places to look for potential investments and help you assess local markets. If a potential deal doesn’t live up to expectations, they can also save you a lot of time by providing alternative options that may be better suited to your needs. Furthermore, if you're unfamiliar with legal processes related to property purchases, such as exchange contracts or mortgage agreements, an estate agent will be able to advise you on the most efficient way of moving forward. Ultimately, an estate agent can prove invaluable when making what is likely one of the biggest financial decisions of your life.

 

How do I know the best way to sell my properties?

If you want to be sure that you’re getting the maximum profit from your properties, then deciding on the type of sale is essential. Fortunately, there is a tool that can help you make a wise decision quickly and easily - Nimbus . This comprehensive property data software offers a variety of features that allow you to determine the most suitable sale type for each property. From plotting mortgage rates and estimated selling times to analysing the average market price in an area, Nimbus Maps can provide information and insight into the nuances of various sale types, helping you to analyse which one is right for each piece of property without spending valuable time on research. Choose Nimbus Maps for accurate market analysis and detailed insights into types of sales - it’s like having an expert real estate consultant at your disposal!

 

What is the best city in the UK for property investment?

When it comes to property investment, London has long been a favoured choice in the UK. It is considered one of the top financial hubs in Europe and its affluent areas have often attracted high yields. Areas such as Chelsea, Kensington and Mayfair offer some of the best returns on investment. Manchester is also making a name for itself with property investors and has seen rapid growth in recent years – particularly inner-city areas close to the universities. Other cities, such as Birmingham, Liverpool, Leeds and Sheffield, are rapidly becoming key locations for rental or development projects due to their expanding populations, providing investors with different options to consider which can help them realise their goals. Ultimately, there is no definitive best city for property investment within the UK; it largely depends on individual objectives - timescales, risk preferences and budget targets. With careful research into specific areas though, savvy investors can make an informed decision when choosing their next property project in the UK.

 

What kind of returns can you get when investing in a buy-to-let property?

Investing in a buy-to-let property can be a very lucrative business, with returns often much higher than those of traditional investments. On average, you can expect between 5-10% of the purchase price as annual rental income and potentially realise significant capital growth over time. Property is also an investment that many people feel secure investing their money into, as it has both tangible assets and the potential for long-term gains. With the right amount of research and due diligence, carefully selecting your property can result in a valuable asset that yields a steady annual return.

 

Is it better to invest in a buy-to-let or Airbnb property?

Investing in a buy-to-let or Airbnb property is a big decision and it is important to understand the pros and cons of both options in order to make an informed and financially savvy choice. A buy-to-let can provide a more stable rental income over time if managed correctly while choosing an Airbnb property could mean more short-term profit but could come with more unwelcome surprises. Both strategies require research not just about location, amenities, and market value, but also about government regulations that may affect property owners. Ultimately, only you can decide which opportunity will be most beneficial to you as an investor – so take the time to review all options available before making any financial commitments.

 

Can I invest in UK properties if I live abroad? 

Investing in properties in the UK from abroad can be a great way to diversify your portfolio and gain access to the lucrative British real-estate market. With increased international travel and virtual offices, foreign investors can benefit from researching and managing their UK property investments remotely with relative ease. Whether you're looking to purchase an apartment, studio flat or full house, the process will generally involve finding an agent who knows the local market well and opting for a trustworthy conveyance solicitor. Working closely with them will quickly build up a comprehensive picture of each property you consider investing in, helping you make informed decisions about where best to invest your money. With judgement calls based on factual research, buying and managing UK properties doesn't have to be complicated when you choose an experienced team of advisors both near and far.

 

What are the key data points you should look at before investing in a property?

Investing in real estate can be a great decision when done correctly. Being informed about the key data points of any potential property before investing is essential to secure the best outcome for your pocket and long-term gain. Firstly, you should take note of the surrounding area; understanding the market value and potential risk factors, such as nearby crime rate or new builds underway, can give you an indication of what return on investment you might anticipate. Secondly, research rental history; rental price inflation over various years is a great way to understand its current worthiness as a real estate investment. Thirdly, analyse building costs associated with the property’s age and condition; make sure to include escrow funds if required due to repair works in order to remain financially secure for foreseeable repairs or renovations. Taking all these necessary data points into consideration before deciding on whether or not to invest in a property will help to ensure success in the long term by making a sound financial decision from day one. To streamline this process, property data software such as Nimbus can offer valuable aid in structuring and analysing this information quickly and accurately.

 

Resources

Gone are the days when property development tools consisted of just a pencil, a cigarette packet and a trip to the local builders’ merchants. Nowadays, the planning of a project is a science that requires advanced resources and tools.

Half the battle of property development lies in finding the right site for your project. Fortunately, Nimbus offers a dynamic platform that streamlines the site-finding process, allowing you to save time and effort. Give Nimbus a try with our free trial to experience the convenience that not all investors have the luxury of exploring.

Another key aspect of property development is specifying the right building materials. Knowing which materials to source that won't break the bank but will still provide the desired finish is critical. Conducting thorough research on your resources can help you build a strong knowledge base for pricing up projects quickly and recognizing profitable opportunities.

With Nimbus, you can access a vast array of both commercial and domestic properties, giving you the resources you need to make informed decisions for your development projects. Trust in our expertise and platform to take your property development endeavours to the next level.

Key reads on the Nimbus blog

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https://www.nimbusmaps.co.uk/blog/everything-you-need-to-know-about-off-market-property - https://www.nimbusmaps.co.uk/blog/how-to-invest-in-property