A Beginner's Guide to Property Investment
If you’re a landlord looking to expand your portfolio, you’ve come to the right place. Property investment can bring significant benefits, including profitable rental income and long-term capital growth.
Explore our guide to learn more about how to invest in property, the pros and cons and the different types of investment.
What is an investment property?
An investment property is a property bought with the intention of producing a financial return. This can come through rental income, future resale or both. An individual, a group of investors or a corporation can purchase the property. The two main types of property investment are:
• A rental property that an investor has owned and now rents out to tenants. It can be sold later for a large capital growth return.
• A property bought for a low price and renovated to generate a significant return. It can be a new build or an existing property that needs fixing.
What are the different types of property investment?
There are different types of property investment, including the following:
• Buy-to-let – A buy-to-let property means purchasing a home to rent it out rather than living in it.
• Property development – Investing in property development means rebuilding or extensively renovating a house to sell it for a higher profit.
• New build home – A new build is a property that has never been occupied before. You buy it to sell it for a profit.
• Property investment trust – An investment trust means combining funds to invest with greater leverage.
• Property crowdfunding – Property crowdfunding means combining funds with other investors to invest in a buy-to-let.
The pros and cons of investing in property
Some of the pros and cons of property investment include:
| Pros | Cons |
| Investing in property means benefitting from a steady financial income. |
Property investment requires a significant amount of upfront capital. |
| Property investment may lead to long-term capital appreciation. |
Selling your investment property can take time, and you may not be able to access your funds immediately. |
| Property investors can enjoy tax benefits and reductions, including mortgage interest and property taxes. |
Property investment is affected by market fluctuations, which may lead to a decreased property value. |
| Investing in properties can help you diversify your portfolio. |
Being a landlord can be stressful and time-consuming. |
How to invest in property
Ready to invest in property? Here are some essential steps.
1. Choose where you want to invest
Choosing the location for your investment property is crucial as it determines the type of tenants you’ll find. If you want to rent to students, buying a property near a university campus is ideal. Families typically prefer proximity to green spaces, while young professionals may want to live near transport links.
Explore our guide to the best places to invest in the UK for more tips and advice.
2. Find your property
Once you’ve found your ideal location, try to arrange as many property viewings as possible. Look out for any issues and consider whether you’d be willing to cover the costs. This will affect the price you set for rent.
3. Arrange finances and get a mortgage
The next step is to check how much you can borrow to determine the size of your deposit. You can use our Mortgage Affordability Calculator to do this.
Once you know how much you can afford, it’s time to get a Mortgage in Principle (MIP). This usually involves a credit check to understand your financial circumstances. When you receive it, you can make an offer and apply for a mortgage.
Explore our homebuying guide for more detailed information on the process.
Things to consider before investing
Buying an investment property is a big commitment. Ask yourself these important questions:
• Am I ready to invest in property?
• How will I finance my investment?
• What type of investor do I want to be?
• Can I afford all the costs?*
• Do I have enough time to spend on my investment property?
*Investing in property involves various expenses, including Stamp Duty and Land Registry, solicitor and estate agent fees and insurance and mortgage costs.
Our new build homes across the UK are energy-efficient, stylish and suitable for all lifestyles. These include 2 bedroom and 5 bedroom homes with plenty of room for lounging, playing and dining.
Browse unique homebuying offers to help you move, like Part Exchange, Deposit Unlock and Parent Power. Call or visit our Sales Advisers at your preferred location to learn more.
Property Investment FAQs
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The deposit required for a buy-to-let mortgage varies, but it's usually at least 20% of the property's value, but can vary between 20% and 40%.
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Disadvantages of owning a second home may include additional costs such as property taxes on second homes (which vary depending on the area of the UK you live), maintenance and insurance, potential difficulty in finding reliable tenants, and the risk of property values decreasing.
