How To Invest In Property As a Complete Beginner
Would you invest in property? Becoming a landlord is still one of the best ways you can make extra income and gain long-term wealth in the UK.
Yet, while investing in property appeals to be an exciting and lucrative opportunity, most aspiring investors are unsure about how to approach the market.
Buying a property as a homeowner is difficult enough! Especially when it comes to saving money for a deposit. So buying multiple properties can feel like an impossible task.
The number one challenge new investors face is saving enough money for a deposit and a new mortgage, especially if they are already homeowners with existing mortgages to pay.
This obstacle can seem daunting, but with careful planning and consideration of alternative financing solutions, it is possible to overcome this hurdle and enter the property market successfully.
Remortgaging your existing property (or properties)
Perhaps the most commonly used and considered financing solution that homeowners can explore is remortgaging their property.
There are many advantages to going down the remortgage route. Firstly, because this can help you secure a better rate on your existing mortgage, which means you end up paying less even if you don’t want to invest in expanding your investment portfolio.
Remortgaging involves replacing your current mortgage with a new one, often with better terms or a higher loan amount. Essentially, homeowners can release equity from their property, which can then be used as a deposit for an investment property.
This approach allows investors to leverage the value of their existing home to finance their property investment portfolio without having to save up a large sum of money upfront.
Bear in mind that you cannot finance the mortgage of a second property through remortgaging your home. But it can help with the deposit.
Buying through an auction
Another option to consider is purchasing investment properties through property auctions. Property auctions offer a unique opportunity to acquire property at potentially discounted prices.
Unlike traditional property purchases, auctions typically require a smaller deposit upfront, making them more accessible to investors who may not have significant savings readily available.
Additionally, properties sold at auction often come with the potential for high returns, as sellers are typically motivated to sell quickly.
However, it’s crucial to conduct thorough due diligence before participating in property auctions, as properties may require renovations or have hidden issues that could impact their profitability.
Crowdfunding
You are probably familiar with crowdfunding for business projects or personal expenses. Property crowdfunding is another innovative financing solution that investors can explore.
Crowdfunding platforms allow individuals to pool their resources with other investors to finance property projects collectively. This approach enables investors to diversify their investment portfolios without the need for substantial capital upfront.
Additionally, this type of crowdfunding offers access to a wider range of investment opportunities, including commercial properties, residential developments, and more.
However, it’s important to research crowdfunding platforms carefully and understand the associated fees and risks before committing to any investment.
In conclusion, you do not have to approach buying an investment property in the same way you bought your home. There are alternative financing solutions available.
There are options to suit various financial situations and investment goals. So why not take the first steps towards building a successful property investment portfolio?
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