Both long-term and short-term strategies have pros and cons – and both could work for you.
Property has always been considered an excellent opportunity to bolster your finances, a chance to make stacks of cash. That still rings true today, but it’s important to remember that there’s more than one way to skin a cat – so which property investment strategies might be best for you? The right property investment strategy is undoubtedly out there for you, so let’s run through the various strategies you might employ – and why to choose them. All the information you need on property investment strategies for beginners is just below.
What Are You Trying to Achieve Through Property Investment?
Before we start tearing through the property investment strategies that might suit you, it’s crucial that you know exactly what you’re looking to achieve from this investment. Now, you’re probably thinking, “duh! I’m here to make some money!”, but you need to consider things a little more deeply than that.
● How much money are you willing to invest?
● Are you looking to make a quick buck, or are you happy to wait longer?
● Do you need a steady cash flow or a bigger final payout?
These considerations are influential on the type of property investment strategy you end up choosing – and your success with it. You’re only going to get the right outcome if you pick the right strategy, which makes this stage really, really (really!) important. Only you can answer these questions, but with a bit of introspection, the right strategy will become evident to you.
Understanding Property Investment Strategies
Right. You’ve thought about the different motivations and restrictions that will shape your property investment strategy, but what’s the next step? What exactly are the investment choices out there? Let’s start simple.
Short Term and Long Term Strategies
You can broadly split property investment strategies into two categories – long term and short term. As you can probably guess, the critical difference between these two brands of investment strategy is how much time they require to reach their conclusion.
● Long-term: buy to let, buy and hold.
These approaches last for years, offer substantial returns, and are less likely to be affected by inflation. Of course, they’re not the quickest way to make big money.
● Short term: buy to sell.
A short-term property investment strategy offers quicker returns, and you have more control over the situation – you’re not at the whim of the economy or property market (as much, anyway!). The most significant disadvantage of a short-term strategy is that they’re more fraught with risk. Longer-term strategies, although not risk-free, tend to be more secure.
So, which of these might be best for you?
Property Investment for Beginners
There are many different approaches to property investment, and as a beginner, it might be hard to know which is right for you. Let’s start with the long-term property investment tactics that have worked so well in the past.
Buy and Hold
This strategy is where you purchase a property and keep hold of it as it appreciates in value – eventually selling it later down the line. If you’re not aware, property prices have, on average, increased by 80% since 2000. Theoretically, you could purchase real estate and watch the value jump without really doing anything. Easy money! Of course, the property market doesn’t guarantee that prices will continue to go up, which is why you might want to consider the next option.
Buy to Let
This has to be up there with the most popular property investment strategies. Here, you purchase a property with the intention of renting it out. This will give you a steady stream of income, and you’ll still have the possibility of selling off the property at a later date (double profit!). Many people who initially bought property to hold and sell at a later date actually end up renting it out. Obviously, if you go down the rental route, you’ll have to bear the mortgage and any tax implications in mind. With buy to let strategies, you can do one of the following:
● Long term rentals
This is a low-effort, high-effectiveness approach that gives you a proper channel of income. A tenant might end up staying in your property for years without any issue, and the day-to-day management can be delegated to a paid management service. It’s important to remember that you’ll need to market your property to specific demographics. Are you looking to let your property to students? Professionals? Families? Making a choice will help you get your property into a state that resonates with your target tenants.
● Short term rentals
This alternative is where you rent out your property for shorter periods, sometimes even just one night. Services such as Airbnb and Booking.com allow guests to rent out accommodation for quick visits.
Rates tend to be much higher than longer-term rentals, so there’s potential for big profit, but the flipside is that it’s sometimes hard to keep the property booked consistently – and running costs are higher. That rounds out the long-term strategies, but what about shorter-term thinking?
Buy to Sell
Now, here’s a classic. Super straightforward. You purchase a property, renovate it quickly, and sell it for a decent profit. This is a popular property investment strategy because results are so quick – you can make a pretty tasty amount in just a few short months – but there are downsides as well. For one, there’s no passive income associated with this strategy, so you’re only making money when you’re working. A misjudgment of property price or location can also result in a painful loss if you’re not careful.
Picking the Right Strategy
Building a robust property investment portfolio is a vehicle towards tidy profits, and with these property investment tips and explanations, you’re better placed to find the right strategy for you. Both long-term and short-term strategies have pros and cons – and both could work for you. To get your desired outcome, carefully examine your circumstances and press ahead with confidence. Profit awaits!