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How to invest in property (Real Estate Investment Trust)?

Whether you want to buy to rent, or you want to buy property speculatively with the intention of selling, property is one of the most popular areas of investment.

Why should I invest in real estate?
While any investment is designed to bring profit to the investor, real estate is one of the most attractive investments.
According to real estate company JLL, property prices in the UK are set to rise by 21.5% by 2025 after years of sustained price growth. With limited supply, prices will only grow over the next few years, meaning that an investment today will almost certainly mean another sale in a few years, for a much larger amount. The real estate market will remain a relatively safe investment opportunity for the foreseeable future as real estate prices take their toll on investors.

Real Estate Investment
How to invest in real estate

What are the types of real estate investments?
1. Buy-to-let. Buy-to-let means that you buy the property and rent it out to tenants, which means that you will almost certainly get more from your investment in the long run.

  1. Real estate development. Investing in real estate development means you put money into an old property or building in the hopes of modernizing it and then selling it for more money.

  2. Buying a new building. You may purchase a new building that has just been completed and hope to sell it for a profit – perhaps renovated or redesigned in a way that you like.

  3. Real estate investment trusts. A REIT is a way to pool money for greater leverage – the fund can choose to invest directly in the property, or instead invest in a construction company, or perhaps even a property bond.

How to manage your real estate investments
Managing your investments means making sure you can afford the outlay required to buy a property and have a good idea of the level of investment risk you can afford to take.

First, consider how you will finance the purchase of the property. If you are developing a building, or wish to make some minor adjustments before selling again, then you will likely choose a short-term financial loan, such as a bridge loan, to get you through the period of renovating the property and selling it.

On the other hand, if you want to buy a property to rent, you will need a buy-to-let mortgage. These mortgages take into account your own circumstances, but also how much rent you are likely to earn from the property, rolling your rental income directly into your mortgage to ensure that your property pays for itself.

You should also be aware that while there are many reasons to invest in property and it is broadly one of the safer investments you can make, there are some additional risks associated with any investment. Assess whether you are willing to take on more risk and what kind of investment limits you need to set for yourself.

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