Some Alternatives to Buy-to-Let Investment

decorating couple in new home

Investing in buy-to-let property is usually an attractive option for landlords, especially as their properties not only generate a monthly income from rent, but offer great returns from capital growth too. This is especially the case if you’ve developed a strong property portfolio – with some investors even able to retire on the proceeds.

However, buy-to-let isn’t the only way to make money from the property market. If you want to explore other avenues, here are a few ideas.

Property flipping

‘Flipping’ property means to buy a house or apartment, improve it, then sell it on for a profit. This is a less common form of investment nowadays, but it remains an effective way to generate solid ROI, particularly if you’ve got skills in renovating or redecorating houses.

A vital part of the flipping route is scouring the market for bargain deals, as this is the best way to maximise profits. The best flippers tend to approach this with an open mind and a little imagination. Resourceful investors have flipped boat houses, converted caravans or trailers, and even turned old train carriages purchased at auction into studio flats.

Auctions are usually good places to discover something potential – but proceed with caution, as lots can sometimes come with issues that aren’t explained clearly in the auction brochure.

Holiday lettings

Holiday lets can be very profitable, and they give you the option to use the property yourself when it’s vacant. There are a variety of options to choose from: it doesn’t have to be overseas homes that are fully managed by specialist holiday letting agents, it can even be affordable caravans in holiday parks. There is an added pressure to rent out a holiday let as frequently as possible to make good ROI – which can be tricky if it’s in a location that has its highest popularity during the summer.

Commercial premises

Investing in commercial premises (e.g. offices or a retail unit) is a popular option at present due to the strength of the market. Rental yields can be slightly higher too, and tenants tend to sign up for longer-term leases, which provides good peace of mind. The downside is that high street banks can be less willing to offer mortgages to those investing in commercial property, which can make financing the purchase more complicated than with the residential side of the market.

Pubs and bars

We’re not necessarily suggesting buying and managing a pub outright (unless you’ve got existing skills in this area, of course). But there are property investment funds that focus on having public houses on their portfolios. This hands-off approach aims to minimise hassle while offering the investor a solid profit generated from the pubs’ income streams. However, before committing to any investment fund scheme, it’s vital to get all the details – as some are far more profitable than others.

Purpose-built student accommodation.

With over 2 million students in the UK, it’s hardly surprising that an increasing number of investors are looking to invest in student accommodation. One way to invest in the student market is to buy an HMO property (House of Multiple Occupancy). Alternatively, purpose-built student blocks offer a low-risk way to invest in the student buy-to-let market, without taking on the additional responsibility of becoming a landlord yourself – though profits are likely to be smaller as a result.

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