Cornerstone Asset Advisors Ltd founder Emile Salame is a real estate portfolio manager with a broad experience of the London property market. This article will look at different property investment strategies and the various different paths investors can take to help them make money and build wealth through property ownership.
From a long-term approach with buy-to-let investments to the short-term trading strategy of flipping homes, there is no one-size-fits-all approach to UK property investment. Rather, the most appropriate route depends very much on the individual investor and their starting position and long-term goals.
It is important to note that some property investment strategies work better in different parts of the country. For instance, an investment strategy that works well in fast-growing areas like Birmingham or Manchester may not be as effective in an expensive locale like London or a rural region such as Norfolk or Dorset.
The UK real estate market is currently categorised by high yields combined with recent mortgage interest rate highs. This scenario presents prospective real estate investors with both opportunities and challenges. Cash purchasers are able to move fast, enabling them to secure some attractive off-market properties suitable for a range of investment strategies. Investors purchasing at low value can maximise their yield through development or modern rental strategies.
With experts predicting a continued increase in both inflation and wage growth, there remain many opportunities for real estate investors, even those who rely on a mortgage, provided they have a long-term plan. Experts anticipate that property prices will continue to rise in many areas, offering an enticing return on investment with capital growth. For investors buying to rent, current yield highs offer attractive returns, enabling investors to create a steady income stream without solely relying on capital growth and equity increases.
Many people assume that investing in UK real estate requires a large amount of collateral. In reality, starting a property portfolio with as little as £20,000 to £50,000 is not only possible but an increasingly common strategy among many UK real estate investors today. Property investors with a modest amount of capital often focus on leasehold properties and northeastern city investments such as real estate in Liverpool, Preston or Newcastle. Starting capital of £50,000 plus opens up options for the ‘two plus one strategy’, where the investor retains some real estate in their portfolio while selling other properties, i.e. flipping houses, using cashflow to grow their portfolio. Available capital of £100,000 plus broadens the investor’s opportunities further still, positioning them for greater diversification and enabling them to adopt multiple rental strategies, paving the way for faster portfolio growth.
Experience buying, selling and managing property is an important factor. The investor may be a complete beginner or have a little experience, having owned their own a home or let property to a tenant previously. Experienced investors are already familiar with the property transaction process and will have acquired a better understanding of the market and tenant regulations, such as the Housing Act.
Risk appetite is a crucial consideration for any real estate investor. While some adopt a conservative approach, others are more progressive and willing to explore multiple investment strategies simultaneously in order to achieve faster growth. Another factor investors need to consider in identifying the right real estate investment strategy for them is the amount of time they realistically want to spend managing their business plan and building their portfolio. It is vital for investors to be honest and realistic with themselves in terms of their capabilities, timeline and objectives, setting long- and short-term goals and focusing on core strategies to grow their real estate business steadily over time.