As investors continue to place their wealth in UK property, many are wondering what is the best property investment strategy? The vast majority of clients that we deal with on a regular basis are investors looking to earn income through buy-to-let property, trying to get the best return that they can, so it’s a question we hear a lot.
It’s perhaps not surprising that we’re seeing a lot more enquiries come through both from first-time investors and longer-term, more experienced investors after the market’s impressive performance over the last years.
With both the stock market and crypto scene finding it very difficult recently, investors – especially younger investors – have seen their investment strategy shift fundamentally since the pandemic, with many other markets sinking in the wake of global events.
As you may or may not have noticed, the UK property market has had no such problems, but there are different approaches you can take, so, what is the best property investment strategy?
Secondary income investment
This is a more yield-based strategy and focuses on optimising rental income rather than faster rising property price inflation.
As described by Rightmove, property rental yields are calculated by ‘knowing the purchase price of the property, or a current market value, and the annual rental income that you expect to receive.
The annual rental income amount is divided by the property value/purchase price. To convert this figure to a percentage, you simply then need to multiply this by 100. This percentage is your rental yield.’
This is an income-based strategy and is more interested in maximising your earning potential in the long term rather than making a profit by turning the property over in a few years, for example.
Property types that fall into this category are flats and HMO properties, which are residential properties split into multiple smaller flats or dwellings, charging separate rents.
Price inflation investment
This property investment strategy involves selecting properties by their potential to grow in value over a shorter period.
This can be done by selecting properties by prime location, or by locations that are ‘up and coming’, meaning that they’re likely to benefit from an increase in demand.
Residential properties and flats in city centres and more established urban centres fall very much into that category and the UK market as a whole saw price rises of roughly 15% last month alone, year-on-year.
This tends to be a more short-term strategy or one that means that investors can use the equity in the property as security to secure further properties and build a portfolio.
What is the best property investment strategy?
It’s difficult to give a definitive answer on which of the two is better because it very much depends on what you’re looking to achieve from your property investments.
Truth be told, it makes sense to reach out to one of the experts and get some advice about what your budget and goals can achieve for you, and make a decision from there.
If you’d like to get in touch with us then why not reach out today to find the best property investment strategy for you?
