Be it London, Manchester, or any other part of the country, real estate investment ideas almost always remain popular.
Real estate investment has always seen great hype. If you Google the term “investment ideas,” you will find real estate among the many other fantastic investment ideas. And why not? It always pays off in the long run. In contrast, other investment products like stocks move up and down and are not as reliable.
It is not that real estate will never bear a downfall. There are times when real estate will witness a slump. For instance, recall the beginning of the COVID-19 pandemic. Real estate values went down sharply with everything. But it was just for a period of time. The market reverted with a sheer jerk and started growing with full potential.
When you plan to invest in real estate, you can choose from several profitable real estate ventures. You can invest in real estate stocks, vocational homes, rental homes, or flip a property.
And all will help to increase your investment if you keep on top of the real estate market.
In this post, we share nine awesome real estate ideas for Londoners. As a Londoner, you will surely love these ideas and choose at least one to uplift your fortune, because London is one of the hottest real estate markets in the world with some of the best high streets for shopping and leisure activities on offer.
9 Real Estate Investment Ideas for Londoners
London, we all know, is the capital of England and the United Kingdom. It is one of the most expensive cities not only in the country but in the entire world. It is also a business hub of the country as well as a popular tourist destination. So, you may imagine how valuable it could be if you invest in real estate there as many national and international investors do.
1. House Hacking to Pay Your Mortgage
Let’s start with small real estate investment ideas.
House hacking is a hybrid model where you rent out a portion of your primary house. Usually, you do it when you have multiple subunits in the primary unit, such as duplexes, triplexes, or any property with divisible units. Renting out a room(s) also comes under this term.
Let’s say you buy a 4-bed semi-detached bungalow for £750,000. Your average monthly mortgage, including taxes and insurance, is £2,500. You rent out two bedrooms for £3,000 and occupy the rest of the two. The rental amount is paying your debt and generating you an income of £500 a month. Quite a good deal, isn’t it?
2. Become an Airbnb Host
Becoming an Airbnb host is almost similar to house hacking, but for a shorter period.
Rental properties/rooms on Airbnb are usually for shorter periods, ranging from a day to several weeks. It is infrequent for anyone to acquire a home or room for months or years via this platform.
If you do not like the idea of renting out a room or portion of your primary house to a stranger for months, you can always list available units or rooms on Airbnb, rent those out for a few days, and generate some easy money. Of course, there will be a commission the company will charge. There will also be some small investments you have to keep making while renting out the space for shorter periods. So make sure you set an optimal price that covers your expenses and is easy to afford for renters.
3. Go for House Flipping
It is now time to increase your investment and buy an investment property.
House flipping or property flipping is an investment plan where you buy a house that requires renovation for a low price, fix it, and then sell it for a profit.
Thanks to many TV shows and experts such as “Homes under the Hammer”, we can now fix and flip a property and then roll it out for profit selling. However, the whole process of remodeling a house is not as simple as it may sound. Even when you do not do it yourself, you still must know about the ins and outs of house flipping. Then you also need to know when the right time is to acquire a property and when to sell it.
4. Buy and Sell Properties
You need considerable investments to buy an investment property. An investment property usually comes after purchasing your primary house. That means you must have enough cash to finance a second house.
When buying and selling, make sure you follow the ‘buy low, sell high’ concept. Some realtors in Canada helped investors make big money in a short time according to local news. Following the ‘buy low, sell high’ business idea, they help investors find bungalows for sale in Milton. A few months later, they helped those investors sell their homes, making huge profits.
That said, making considerable profits in shorter times does not always work. Sometimes, you must wait for more than a year to earn a reasonable profit. The one thing that you need is either an excellent real estate consultant or expert knowledge to convert this business plan into reality.
5. Buy a Rental Property
The previous two real estate investment ideas were to buy at a low price and sell at a higher price. Purchasing a rental property is different from the former ones. While the buying process remains the same, their purpose varies.
A rental property aims to generate a regular income source for more extended periods. Interestingly, you can sell this property after some time (several years) and withdraw your investment.
Let’s explain how you can make money with this process.
Say you buy a £500,000 house in London. You rent it out for £3,000 a month as per the tenancy agreement. The net income (after taxes and insurance) is around £2,000. You plan to keep the house for a year before selling it at the market value. The estimated annual home price growth in London is 2.5%, which means you can expect to sell your house for £512,500. So, in total, you could expect to make a profit of:
- Incremental home price: £512,500 (selling price) – £500,000 (buying price) = £12,500
- Annual rental income (net): £2,000 x 12 = £24,000
- Total profit: £36,500 (£24,000 + £12,500)
The longer you keep the house, the more profit you can expect.
6. Buy a Vacation Home
Buying a vacation home is different from buying a rental property. A rental property is rented out for a long term, whereas you rent out a vacation home for a short period. A vacation home can have a higher rental amount compared to a rental home. It is because a vacation home is usually a full-furnished home. It will have all the necessities travelers may require.
A vacation home may have a lower mortgage if it meets your lender’s definition of a second home. Another benefit of a vacation home is that you may occupy it when vacant.
Before buying a vacation home, make sure you can manage it yourself, as hiring a manager would reduce your benefits. Also, make sure you buy a vacation home in a tourist destination, which could be outside your hometown.
7. Invest in REITs
Real estate investment trusts or REITs are companies that own, operate or finance income-generating properties. REITs are like mutual funds, i.e., you can trade those like stocks. So the returns you get are in dividend form. These financial assets offer a continuous income source.
8. Invest in REIGs
Real estate investment groups or REIGs are pretty different from REITs. These companies buy, renovate, sell, or finance properties and sell those to investors but keep the management in their control.
9. Invest in RELPs
Real estate limited partnerships (RELPs) are investor groups operating on a limited partnership basis. Group members pool their investment to buy, develop, or lease properties. This real estate investment product generally offers high returns.
What is Your Ideal Real Estate Investment Proposal?
If you are a new investor, start with baby steps – invest in low-risk businesses and gradually expand your exposure. On the other hand, if you are a pro, try combining a few investment plans. But never leave everything on the company you plan to invest in. Equip yourself with accurate knowledge and always stay updated.
Author Bio – Muhammad Bilal
Muhammad is a passionate real estate content writer. He has written several blogs, website content, and social media posts for several real estate businesses. Besides writing for real estate, Muhamad also works with a tech-based news blog. He is also working on a financial blog to guide readers about ways to manage their finances smartly.
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- Always on the chase after hot and trending London and UK lifestyle news that disrupt, inform and inspire.
