A simple beginner's guide to property investing.

Getting into property investing might seem like a big, complicated step. With all the jargon about yields, growth, and property types, it's easy to feel overwhelmed. But the truth is, investing in property is simpler than it might seem — especially if you approach it with a clear plan.

In this guide, we’ll walk you through the basics of property investing, helping you understand the key things you need to know to get started. It doesn’t matter if you're completely new or just looking for a little more guidance — we’ve got you covered!

1. Start with your goals?

Before you start buying property, it's important to figure out why you want to invest in the first place. What are your goals? Are you looking for a side income? Or maybe you’re thinking long-term and want to build a portfolio that helps you retire comfortably?

Your goals will shape how you approach property investment. For example:

• Short-term goals might mean you’re after quick profits, like buying a property, fixing it up, and selling it for a profit.

• Long-term goals could mean you’re focused on building a steady stream of rental income over time or capital growth through appreciating property values.

Clarity on your goals makes it easier to decide what type of property to invest in and which strategy will work best for you.

2. Decide: Active or passive?

There are two main ways to invest in property: being hands-on (active) or hands-off (passive).

Active property investing

If you enjoy getting involved in the nitty-gritty of property, managing renovations, or dealing with tenants directly, active investment could be for you. But bear in mind, this approach will take more time and effort.

Passive property investing

On the other hand, if you’d rather avoid the day-to-day hassle, passive investment could be a great option. With passive investing, you can still make money from property, but you don’t have to deal with tenants, repairs, or even sourcing the properties yourself. Examples include using a property sourcer (who finds and vets deals for you) or investing in property crowdfunding platforms.

3. Pick your strategy

Once you know how much time and effort you’re willing to put in, it’s time to choose your strategy. There are a few main approaches that new investors often start with:

Buy-to-let (BTL)

This is when you buy a property and rent it out for regular income. Over time, the property should increase in value, so you might also see a capital gain. This strategy is great for steady, long-term income.

Buy-to-sell (Flipping)

If you're looking for a quicker profit, flipping might be the way to go. You buy a property, fix it up, and sell it for a profit. It requires more time and expertise, but the rewards can be high.

BRR (Buy, refurbish, refinance, rent)

A popular choice for many investors, this strategy is all about buying a run-down property, doing it up, and refinancing it to unlock more cash for future investments. You then rent it out for steady income. It's a smart way to build wealth if you’re happy to put in some work at the beginning.

Property development

For those who want to get into bigger projects, property development involves buying land or older buildings, improving them, and either selling them or renting them out for a higher value. This is a more advanced strategy and requires more upfront knowledge and capital, but the returns can be significant.

4. Location, location, location

It’s a phrase you’ve probably heard a thousand times—and for good reason! The location of your investment can make all the difference. Look for areas where:

• There’s demand for rentals (think close to transport links, schools, or job centres).

• Property values are rising or have strong potential for growth.

• Local amenities are good (shops, parks, schools, etc.).

If you’re investing for rental income, check the average rent prices in the area to make sure your investment will give you the return you want. But remember, while you can improve a property, you can’t change the location.

5. Financing your property investment

You don’t need to have all the cash up front to invest in property. There are lots of ways to finance your investment, and each has its pros and cons.

Mortgages

The most common way is to get a buy-to-let mortgage. However, getting a mortgage for an investment property is a bit different than getting one for your own home. Lenders will want to know the potential rental income and how the property will perform financially.

Alternative Funding

If you don’t want to rely solely on a mortgage, you can consider other sources like crowdfunding, peer-to-peer lending, or even borrowing from friends or family.

Budgeting for Extras

Don’t forget about the extra costs, like stamp duty, legal fees, and survey costs. It’s also wise to plan for unexpected expenses like repairs or vacancies. These can all add up, so make sure to budget for them from the start.

6. Understanding property yields

If you’re looking for income from your investment, yield is a key term to understand. Simply put, it’s the return you make from renting out a property. You can calculate it like this:

Gross Yield = (Annual Rent ÷ Purchase Price) × 100

For example, if a property costs £100,000 and the annual rent is £6,000, your gross yield would be 6%.

This helps you compare different investment opportunities and assess whether a property is a good deal based on how much income it generates.

7. Get the right advice

Property investing is a big commitment, and it’s important to get advice from professionals along the way. This could include:

• Property agents who can help you find the right properties.

• Mortgage brokers who can guide you on financing.

• Letting agents who will handle the day-to-day running of rental properties.

• Accountants who will help with tax planning and financials.

• Architects who will help with any refurbishment planning.

• Build team who will help with doing all the refurbishment work (from electrical, plumbing, heating, painting, etc).

Additionally, there are loads of free resources—books, blogs, podcasts, and property meet-ups—that can give you valuable insights. Don’t be afraid to ask questions and seek advice.

8. Diversify your portfolio

Diversification is key to reducing risk and increasing your chances of success. Instead of putting all your eggs in one basket, think about:

• Investing in different types of properties (residential, commercial, etc.).

• Mixing strategies (e.g., buy-to-let and buy-to-sell).

• Spreading your investments across different locations.

Diversifying your portfolio helps ensure that if one investment doesn’t perform as expected, others will balance it out.

Final thoughts: Take it one step at a time

Property investment doesn’t have to be daunting. By starting with a clear plan, understanding your goals, and getting the right advice, you can take small, manageable steps towards building your portfolio.

Remember, property investment is a journey. You don’t need to rush it—take the time to learn, explore different strategies, and make informed decisions. The more you educate yourself and build a network of experts, the smoother your journey will be.

If you ‘re thinking of starting the invite in property, why not schedule a call with us to discuss how we can help you make smart, informed property investments.