Professional property investors don’t approach the market like a traditional buyer: they have specific investment strategies, angles of approach and niche sets of search criteria that help them secure the best property deals. There’s nothing stopping you from using the exact same methods, but, especially if you’re a first-time buyer, it can be difficult to even know where to start.
There are a huge number of lucrative investment strategies to choose from, but sometimes, choice is more of a curse than a blessing; sometimes it leaves you paralysed by indecision. If you’re stuck between several different investment strategies, or if you need to brush up on one in particular, we can help. Our team has assembled this useful guide to the most common and potentially profitable property investment strategies in the UK market today. Whether you’re a first-time buyer or a market veteran, we’re here to give you the knowledge you need.
Click on the links to view detailed insights into each investment strategy.
Properties can be listed at auction for any number of reasons. They could be repossessions, have niche appeal, require renovation or be the property of a seller short on time (making use of the fast auction process). Whatever the reason, auction properties can present a serious bargain and are often a goldmine for discerning investors. You will, however, need to pay close attention to a myriad of legal paperwork, determine a maximum bid and arrange a mortgage beforehand. If prepared to do that legwork, though, there’s a lot of money to be made in auction properties.
Flats with a short window of time left on their lease can often be acquired at a steep discount due to lenders’ wariness around them. If you acquire a short lease flat, you can, after two years, apply to have the lease extended. Doing this will increase its market value and, in conjunction with any renovations, make it far more attractive to prospective tenants.
When homeowners continually default on their mortgage payments, their property falls into the ownership of the mortgage lender itself. To recoup their costs as fast as possible, the lender will look to sell the property as an incredibly modest price. This is great for investors. Typically, a steep discount suggests that there is an underlying issue with the property, but with repossessed properties, there is likely no issue at all and therefore little renovation work to be done.
A HMO (house in multiple occupation) is a property with two or more occupants not forming a single ‘household’ unit. This includes shared accommodations, bedsits, hostels and care homes. If there are five or more occupants (forming two or more separate ‘household’ units) in a property, that property must be licensed with the relevant authorities. Therefore, if you’re a landlord looking to buy and rent out a HMO, investing in a pre-licensed property can save you a significant amount of hassle.
Buy Refurb Leverage
This simply refers to the act of buying a property in-need of refurbishment (significant or otherwise) and reselling it at a significant profit. It’s a rather simple investment strategy, but if you’re willing to put in the appropriate amount of labour, it can be exceptionally lucrative.
Sometimes property owners are desperate to sell their homes: either they’re short on time, have struggled to attract buyer attention or are victims of a sale breakdown. When this happens, sellers often dramatically reduce the asking price of their property, meaning that you (as an eagle-eyed buyer) can swoop in and grab yourself a bargain. With some renovation, refurbishment and a solid remarketing effort, you can resell or rent out the property, achieving greater success than the original owner ever did!
Properties listed as “cash only” mean that the seller is only interested in buyers who can pay for the property upfront with no mortgage. There are a number of potential reasons for this, ranging from the innocent (the buyer wants a hassle-free sale) to the concerning (severe flaws in the property which make it ineligible for most mortgages). If you have a significant pool of cash lying around, you’ll have a major advantage in negotiations for “cash only” properties. Be warned, though, this is an inherently risky venture. It’s important to understand why the property is only open to cash offers: there could be an underlying flaw with the property that renders it a poor investment.
If you’re looking to buy a property and subject it to major renovation work (extensions, repaving, outbuilding construction and more), you’ll need to acquire planning permission. This can be a time-consuming process, taking anywhere up to 2-3 months. If you’ve got a construction team ready to go, or if you just don’t want to wait, buying a planning approved property can save you a mountain of needless hassle.
It’s one of the unfortunate realities of the property market: deals can break down. If a buyer backs out of a sale at the last minute, the seller can be left in a precarious position, desperate to sell their property as fast as possible and continue with their own subsequent property purchase. That’s why properties that return to the market following a deal breakdown can be so cheap: there’s likely nothing wrong with the property, but the owners need a sale as fast as possible. Jumping on properties like this can be great for investors that want a cheap property without the flaws such a price often entails.
Newly-built properties, flats or houses that are being sold directly from the property developer, are incredibly enticing for would-be tenants. Due to this, investors can typically charge relatively high rental rates, resulting in greater profits. Plus, as mentioned, new builds come straight from the property developer themselves, meaning that there is no chain and therefore minimal waiting associated with the sale.
No matter how you choose to approach property investment, there’s room to make a serious profit. The key to success has less to do with which strategy you use, but rather how well you research, plan and prepare. With the powerful tools offered by Property Deals Insight, you can scour the market for the best overlooked, underpriced deals and snap up those precious bargains. Plus, with our database of over 27 million UK homes, you can assess the financial outlook for almost any property with unprecedented precision.
By harnessing the power of data, we put you on a level with the industry’s top investors.