How to Make Money From Property Investment
People often think that you have to have a lot of money to get into property investment. Fortunately you don’t, but many of us do not have the financial education to know there are multiple ways to make money from property a) with very little capital and b) without ever buying a property. And yes, you can even do this in the current market if you use the right strategies and investment criteria.
Below are 5 ways to generate an income from property that I have used over the last 10 years to triple my doctor’s income and build up a portfolio of properties for myself and my family. Please note that I am not a financial advisor and am sharing this for educational purposes only. You should always consult with an appropriately qualified professional for investment matters.
Once you’ve learnt about the fundamentals of investment and different property strategies, sourcing deals to sell to other investors might be a good option if you don’t have capital to invest but are good at sourcing and appraising great projects. Sourcing fees vary from 1-3% of the purchase which could amount to several thousand pounds per month if you get good at this.
Peer to peer loans & crowdfunding
Peer to peer loans and crowdfunding has burst onto the property scene in recent years. It is now possible to invest in property projects from as little as £50-100 through peer to peer lending and crowdfunding platforms. Peer to peer lending usually involves loaning funds over an agreed period of time, for a fixed rate of interest e.g. 7% per annum. Crowdfunding can involve loaning funds as above or investing in the equity portion (i.e. the deposit part) of a property project for a projected return and sharing the risk as well as the rewards which might be up to 20% per annum.
Buy to let (BTL)
Buy to let is the most well-known and widely used property investment strategy. It involves buying a property that generates rental income through being let. There are different ways to let a property, including single-lets (letting to one person or family), multi-lets (letting to multiple tenants), holiday-lets (letting to holiday-makers), corporate-lets (letting to business travellers) and commercial-lets (letting to businesses). Multi-lets and short corporate or holiday-lets are known to produce very high cashflow as you can charge a higher rent if you are renting out a property room by room or by the night, just like hotels do. You do need to consider the extra maintenance and expenses though.
Rent to rent (R2R)
Another strategy that requires very little capital to get started is to rent a property with permission to sublet it. You can sublet it in all of the ways mentioned above, as long as your rental agreement permits this. For example, you might rent a 1-bedroom flat for £1200 per month and turn it into a holiday home or corporate apartment for business professionals that can be let through holiday home websites online for £120 per night, generating income that covers your expenses such as utilities and rent to the owner and produces a healthy profit.
Refurbishment & development
In order to boost the value of a property, it is common to cosmetically improve, refurbish or restructure a property. Profits are made if the post-refurb value is significantly higher than the buying and development costs which means you must confident in your post-refurb value and naturally, buy at the correct price! This strategy works if you are buying to sell or buying to keep the property and release equity by re-mortgaging or re-financing.
Curious to learn more? Why not check out upcoming book Property Investing for Doctors– a ‘go to’ resource for doctors taking their first steps into property investing or taking things to the next level. Whether it’s for a first home, investment property, GP surgery or healthcare clinic, this book provides guidanceon how to invest successfully (even in a Brexit market!), popular strategies, property tax guidance for doctors and much, much more!
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About the author
Dr Lafina Diamandis is a doctor, property investor and advocate for portfolio careers in medicine. Passionate about helping doctors to get on the property ladder, she has provided careers education and training to thousands of doctors through her education startup Eurekadoc.