When entering the world of property investment, choosing the right type of property is essential to achieving your long-term goals. With a wide range of investment options available, it’s important to understand which strategies align with your financial aims and how each type of investment can contribute to your overall success.
Selecting the right investment property can help you maximise your capital, boost your return on investment (ROI), and create a steady stream of passive income.
In this article we will explore the different types of property investment that you can purchase and how to identify which one is right for you.
Buy-To-Lets
Residential buy-to-lets are the most common type of property investment. A buy-to-let property investment is a property that is specifically intended to be let out to tenants by the investor.
Key Benefits:
- Buy-to-let mortgage – this can reduce the amount of initial capital investment required, allowing you to get more value for your money.
- Strong tenant demand – With more people renting than ever before, investors are able to attract tenants more easily.
- Immediate income – Can start earning a return on the property from the moment you acquire it.
- Rent increases – Rent prices across the UK are increasing, driving higher returns.
- Capital Appreciation – Property typically accrues more value over time, increasing your return on investment if you decide to sell and means you can increase your rent.
Things to Consider:
- Property management – you will either have to manage the property yourself or hire a property management company to take care of the tenants and the property.
- Location is key – your returns could be impacted by the location of your investment, so it is important to invest in a property in an in-demand location.
- BTL mortgage interest rates – Depending on the economy, rates can fluctuate based on market conditions, which may affect your financing options.
Discover the best locations for buy-to-let property investment in the UK.
Featured Buy-to-Let Opportunities
Advantage offers these select completed properties, that may be perfect for your buy to let strategy:
- Northill
- Dockside Residencies
- Wellington Mews
- Randolph House
Off-Plan Property
Off-plan property refers to property that is not complete and is still in the construction phase.
Key Benefits:
- Below market value – Properties are often priced lower during the early stages of development.
- Flexible payment plans – can pay off the purchase of the property over the course of construction rather than in one lump sum.
- Energy-efficient builds – New properties feature modern materials and eco-friendly technologies, appealing to today’s tenants.
- Significant capital appreciation – Significant value growth can occur both during and after construction, especially in high-demand areas.
- Great addition to portfolio – A great way to grow your portfolio, especially those who are looking to scale cost-effectively.
- Popular with tenants – Once they’re complete, new builds are more appealing to tenants due to their contemporary designs and amenities.
Things to Consider:
- Long-term strategy – You’ll need to wait until construction is complete before earning income.
- Mortgage limitations – Some lenders don’t finance off-plan purchases, so cash may be required.
- Developer risk – Ensure the developer has a strong track record and a history of successful projects.
Download our guide today to find out more about the benefits of off-plan property investment.
Featured Off-Plan Properties
Advantage Investment offer these exclusive off-plan property investment opportunities in a range of high-performing areas:
Student Accommodation
Student property is a similar type of investment to buy-to-let but is exclusively let only to students. These are typically found in cities and towns with a strong university presence.
Key Benefits:
- Consistent demand – Academic cycles ensure predictable occupancy from September to June.
- Fully managed – Student properties typically come fully managed, saving investors the time needed to manage the property themselves.
- Prime locations – these properties are usually located in major property investment hotspots, strengthening their value and making them more appealing to tenants.
- Lower prices – the price of student properties are often lower priced lower due to their size.
Things to Consider:
- Struggle to secure a mortgage – it can be hard to secure a buy-to-let mortgage for a student property investment due to their classification.
- Limited capital appreciation – Student properties do not see as much capital growth compared to traditional residential properties.
- Void periods – Due to tenancy cycles matching the academic year, there will be potential void periods during the summer months, requiring the investors to plan for this.
- Harder to sell-on – The resale market for student properties can be smaller as you would have to sell to another investor if you wanted to get rid of the property.
Find out more about student property investment by downloading our guide.
Featured Student Properties
Advantage Investment offer a couple of different student property investment opportunities:
Short-term lets
Short-term lets is a broad term for any property that is let to tenants on a short-term basis. These types of investment are particularly common in cities and holiday destinations.
Key Benefits:
- High income potential – short-term rentals are priced at daily rates, which means they generate greater income overall, especially during peak seasons and in high-demand locations.
- Flexibility – short-term lets are also available for use by the landlord.
- Adaptable pricing – Investors can adjust prices based on demand, maximising income during peak periods.
- Specialist platforms – Market these through accessible platforms like Airbnb to find potential tenants.
Things to Consider:
- Marketing and visibility – How successful the short-term let is dependent on the marketing of the property.
- Void periods – It is vital to plan for the times that the property is not being rented out.
- Maintenance – Due to higher tenant turnover, maintenance of the property is essential to keep it in good condition for the next guests.
Download our short-term let guide today to find out more about what they offer investors.
Featured Short-Term Let Opportunities
Holiday lets are excellent choices for those who are looking to add a short-term let property to their portfolio. Advantage offers a range of properties with short-term let options:
HMOs
Houses of multiple occupation are properties that have multiple people living in them. This type of property investment involves purchasing a property with multiple rooms and renting out each room separately to a tenant. This is most common as a student investment but can be let out to tenants of any demographic.
Key Benefits:
- Secure returns – As multiple people are paying rent, overall returns on these properties can be higher than with other strategies.
- Flexible tenant base – You can choose for this property to be let out to working professionals or to students, giving you access to a wider rental market.
- Reduced void periods – since each room is rented out separately, the departure of one tenant does not result in the complete loss of rental income.
Things to Consider:
- Financing – It can be hard to get a buy-to-let mortgage on the property, so usually this type of investment requires cash up front.
- Rules and regulations – there are more regulations and laws around HMOs than other types of property investment.
- Management and upkeep – with many tenants in the property, it is essential to properly manage the property and ensure that it is well maintained. A property management company is a great way to handle this type of investment.
Featured HMO Opportunities
Advantage currently offers an off-market HMO opportunity, offering high returns:
What Type Of Property Investment is Right For You?
With so many types of property to invest in, it can be hard to decide which one is right. But by assessing the features and qualities of each type of property, you can correctly identify which type of property investment is best suited for you and your circumstances.
Still unsure what type of property you would like to invest in? Contact Advantage Investment today and we will provide you with a free consultation with one of our agents who will help you step on to the property ladder and make the right decision.
Listen To Our Podcast Episode ‘What Type of Property Investment is Right For Me?’
Our latest podcast episode explores this very topic, giving you advice from two property investment experts. Join our two hosts, Dan and Ryan, as they break down each property investment type, explore the key reasons why you may choose that type of property, and offer key tips to help you maximise the potential of these properties.
Whether you’re a first-time investor or you are looking to diversify your portfolio, The Wealth Blueprint provides you with actionable advice that you can apply to the world of property investment. Find out how you can thrive and take advantage of the UK’s property market!
