The 6 Best Ways to Invest £50K in Property: 2024 Guide
  • November 16th, 2023

The 6 Best Ways to Invest £50K in Property: 2024 Guide

Do you have £50,000 in cash and are unsure of whether to invest it to generate returns? With the Bank of England refusing to raise interest rates on savings in 2023 and inflation threatening the value of money left in the bank, investing in property is an attractive option. This guide provides an overview of the 6 best ways to invest £50K in property and get the most from your money based on your timeline, risk tolerance, and desired returns.

How to Build a Property Portfolio With £50K (6 Ways)

Whether you want to invest in residential or commercial property, take an active or passive approach, maximise cash flow or aim for high capital gains, there are opportunities to match your investment goals.

Here’s a summary of how to invest £50K in property via 6 methods:

  1. Investing in Buy-to-Let Property With £50K
  2. Investing in a Real Estate Investment Trust
  3. Putting £50K Into a Property Crowdfunding Platform
  4. Using £50K as a House-Flipping Budget
  5. Purchasing a Vacation Rental Property
  6. Investing in Commercial Real Estate

Continue reading to properly understand how you can get the best out of these strategies.

1. Investing in Buy-to-Let Property With £50K

One of the best ways to invest £50K in the UK is through the purchase of buy-to-let property developments. These are properties with a high-profit turnover, given the potential for recurring revenue and capital gains.

To invest £50K in a buy-to-let property, consider purchasing a rental flat or apartment. They often have high rental yields, and at Baron & Cabot, our team of property development experts can guide you through finding a suitable investment property based on your financial goals.

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With a £50K budget, you have these options:

  • Use the full amount as a deposit on a buy-to-let mortgage to purchase a rental property worth around £200K–£250K. The rental income can then cover the mortgage repayments, with the potential for strong capital gains over time.
  • Use £30K as a deposit for a £150K property and keep the other £20K in reserve. This provides more security but lower potential returns.

Baron & Cabot property consultants have a proven track record of helping investors maximise returns. We conduct thorough due diligence on all properties to ensure the best opportunities. Our experts can determine the optimal investment strategy based on your financial goals and risk tolerance. Book a call with one of our property investment strategists today to get started.

2. Investing in a Real Estate Investment Trust With £50K

A Real Estate Investment Trust (REIT) is a company that owns and operates income-producing real estate or real estate-related assets. REITs allow individual investors to earn a share of the income produced through commercial real estate ownership without actually having to purchase individual commercial property. And with a £50K investment, your REIT options are endless.

2 Types of REITs

The two main types of REITs are equity REITs and mortgage REITs.

Equity REITs own and operate real estate, generating income through the collection of rent. Mortgage REITs invest in mortgages and mortgage-backed securities, generating income through interest payments and the sale of the underlying assets.

Pros of REITs

REITs offer several benefits to investors, including:

  • Professional Management: REITs are managed by real estate professionals with expertise in property acquisition, development, leasing, and management.
  • Diversification: REITs invest in a variety of property types, locations, and sectors — from residential and commercial to retail, hospitality, and healthcare. This diversification helps reduce risk.
  • Dividend Income: REITs are required to pay out at least 90% of their taxable income to shareholders annually in the form of dividends. This is a great way to generate steady passive income in the long term.
  • Liquidity: REIT shares are publicly traded, allowing you to easily buy and sell them on major stock exchanges. This provides more flexibility and control over your investment.
  • Inflation Hedge: Commercial real estate rents and values tend to increase with inflation, so REITs can help hedge your portfolio against inflation over the long run.

Cons of REITs

REITs have some disadvantages that you must be aware of, too.

  • Firstly, you don’t get to earn as much as owning and leasing out your own property.
  • Also, the capital gain benefits that accrue to investors who purchase a buy-to-let property don’t apply in REITS. This is because you don’t own or control the properties.

3. Putting £50K Into a Property Crowdfunding Platform

You should consider property crowdfunding if you’re curious about how to invest £50,000. Property crowdfunding platforms allow investors to put money into property deals without having to buy an entire property. With £50K, you could invest in a variety of residential or commercial property deals on platforms like Property Partner, CrowdProperty or Crowd2Fund.

These online platforms source property deals from developers and then allow investors to contribute money in exchange for a share of the rental income and capital growth. Usually, the minimum investment is quite low, often just £500, so with £50K, you could spread your money across multiple properties to diversify risk.

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Pros of Property Crowdfunding

The advantages of property crowdfunding are that you get exposure to professional property deals without the hassle of managing the properties yourself. The platforms handle everything from sourcing and evaluating the deals to sorting finance and insurance, managing tenants, and maintenance. As an investor, you simply browse the available deals, choose what you want to invest in and then start earning monthly returns straight away.

Cons of Property Crowdfunding

Property crowdfunding also has certain downsides. For example, there’s a chance that rental income could fall, tenants may default, or property values may go down, which could impact your returns or even capital. The platforms also charge fees, typically 1-2% a year of the amount invested, which eats into your returns.

When you partake in property crowdfunding, you don’t own the property like when you purchase a buy-to-let property development, depriving you of certain benefits. Historically, property prices appreciate over time regardless of the market condition. Investors who choose to purchase a buy-to-let have the benefits of capital gains. On the other hand, dividends obtained from a property crowdfunding platform are subject to market conditions, which can result in the loss of investment.

Should You Invest in a Property Crowdfunding Platform?

It all comes down to your investment goals. If you do invest, make sure to do thorough due diligence on the platforms and specific deals. Examine the platform’s track record, paying attention to how long they’ve been operating and reviews from other investors. Also, only invest money that you can afford to have tied up for several years in case it takes time to find new tenants or sell the properties. At the end, you’re better off putting your £50K into a new-build property investment than in a crowdfunding platform — contact Baron & Cabot to get started!

4. Using £50K as a House-Flipping Budget

One of the riskiest but potentially highest reward strategies when considering how to invest £50K in the UK is house flipping. This property investment strategy involves purchasing a property, renovating and improving it, and then selling it quickly for a profit.

With £50,000 as your budget, here are 5 steps you can take to get started with house flipping:

  • Find the right property: Look for properties that are structurally sound but need cosmetic renovations. Run the numbers to make sure the potential profit margin after renovations will be worth your time and investment. Consider properties in up-and-coming UK property areas, as this can often mean higher returns.
  • Secure financing: You’ll need additional funds for renovations, so you may want to consider taking out a short-term loan or line of credit. Interest rates on these are often higher, so aim to sell the property as quickly as possible after renovations to minimise interest charges. You can also look into hard money lenders, who provide short-term financing for house flippers.
  • Create a renovation plan: Focus on aesthetic changes that add the most value, e.g., kitchen and bathroom upgrades, new flooring, painting, and landscaping. Get multiple quotes from contractors to find a competitive price and stick to a tight schedule to avoid delays.
  • Market and sell the property: Once renovations are complete, list the property for sale to attract offers from interested buyers. Consider using a real estate agent who has experience selling newly renovated properties. They can help determine the best asking price and market the property to potential investors or home buyers.
  • Pay back your financing and keep profits: After the sale closes, pay back any short-term loans or lines of credit you took out. What’s left is your profit – consider reinvesting some of this into your next flip to build momentum or buy-to-let property purchase.

With the right property choice, financing, renovation plan, and marketing strategy, house flipping can be a lucrative way to invest £50,000 in property. But your goal should be making enough profits that afford you your own buy-to-let property eventually. Owning your property is always more profitable in the long run, and you can either begin with an outright purchase now (starting with a 20% down payment) or utilise the buy-to-flip route.

5. Purchasing a Vacation Rental Property With £50K

Purchasing a vacation rental property is one of the best investments with £50K for generating income from short-term lets. Vacation rentals, such as holiday homes, cottages, and apartments, are in high demand in popular tourist destinations.

With £50K, you can purchase a property with a mortgage and rent it out to generate an income from rental fees and thereafter, capital gain when you sell the property. The key is to find a property in an area where tourism is steady or growing, such as coastal resort towns, the countryside, or major cities. Look for a property in the best UK areas for Airbnb that appeals to different types of visitors, from families to couples to corporate clients; a multi-purpose property with flexible space is ideal.

Here are 5 key points to consider before purchasing a vacation rental:

  • High Occupancy and Rental Rates: Analyse the local market to determine realistic occupancy and rental rates to generate a good return on your investment. Aim for 50–70% occupancy at a minimum.
  • Low Maintenance: Look for a property that’s easy to maintain between guest visits. Properties with simple, high-quality furnishings and hardwearing, durable materials are best.
  • Strong Demand: The location and type of property must appeal to a wide range of visitors to keep demand high, especially out of season. Proximity to local attractions, transport links, and amenities is important.
  • Local Support Network: Use a local property management company to help with key handling, cleaning, maintenance, and guest issues. They understand the local area and market and can save you the hassle.
  • Additional Revenue Streams: Consider offering additional services to boost your income, such as a welcome hamper for guests on arrival or concierge services to help book attractions and experiences.

With the right approach, a vacation rental property can provide an ongoing income stream and significant capital gains. Baron & Cabot can help you secure properties in high-demand areas with suitable, low maintenance that appeal to a wide range of visitors. Contact us now to get started.

6. Investing in Commercial Property With £50K

Commercial property offers attractive investment opportunities for those looking for the best way to invest £50K in property. Unlike residential property, commercial real estate is purchased or leased specifically to generate revenue from businesses.

Here are 5 great options to consider:

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  • Office space has substantial demand in city centres and business parks. Purchasing a commercial building in an up-and-coming city allows you to charge premium rents and benefit from long lease terms of 10–25 years. Look for properties with stable tenants in place to minimise risk.
  • Retail units, like shops and restaurants, can also provide strong returns, especially if located in high-footfall areas. However, the retail sector faces challenges from online shopping, so focus on destinations not easily replaced by e-commerce.
  • Industrial warehouses and distribution centres are essential for logistics and storage. Demand is high, and leases typically run 10–15 years with fixed or inflation-linked rent increases built in. Look for locations near major transport hubs for the best returns.
  • Healthcare facilities like doctors’ surgery units and clinics offer very secure investments with lengthy leases. Rent reviews are often linked to the Retail Price Index to protect returns. Specialist knowledge is needed, so work with a broker experienced in this sector.
  • Pub leases can be lucrative but risky. Look for established pubs with a proven customer base in areas not oversupplied. Lease terms of 15–25 years are common, but poor performance could lead the tenant to default.

Once you determine the optimal commercial property type for your investment goals, thoroughly vet any opportunity to make an informed purchase. Analyse location, tenant history, lease terms, building condition, and potential capital appreciation to identify high-return, low-risk investments poised to maximise your £50,000.

However, be informed that commercial properties are generally risky. Also, considering that commercial properties are more expensive than residential options, you’ll need a high-interest mortgage to complete your purchase. A safer property investment option is purchasing a buy-to-let development by partnering with property investment experts like Baron & Cabot.

6 Expert Tips For Maximising Returns From a £50K Investment

To maximise your returns when making a £50K investment in UK property, consider these 6 expert property investment tips:

  • Diversify your portfolio.
  • Choose high-yielding locations.
  • Negotiate the best deal.
  • Add value to the property.
  • Use leverage strategically.
  • Manage the property effectively.

1. Diversify your portfolio.

Don’t put all your eggs in one basket — once you have enough capital to buy more properties, spread your investment across different locations to minimise risk. You may build a diverse property portfolio by investing in a mix of buy-to-let flats and apartments across various cities. Diversification allows you to take advantage of market changes and protects your capital.

2. Choose high-yielding locations.

The best places to invest in UK property are those with higher rental yields and property price growth. Consider commercial hubs and regeneration areas. Analyse current yields, employment opportunities, infrastructure projects, and lifestyle amenities to determine potentially high-yielding locations. Some of our top picks for buy-to-let properties are Birmingham and Manchester.

3. Negotiate the best deal.

Do your due diligence to determine a property’s fair market value and make an offer below the asking price. Look for motivated sellers or properties that have been on the market for some time. Have a building survey conducted to identify any faults you can leverage to negotiate a lower price.

Negotiating the best deal for a property requires experience and dedication to learning. If you’re not willing to go through the stress of scouting for properties, consider consulting property investment experts like Baron & Cabot — we handle everything on your behalf. This is particularly helpful for international investors looking to buy UK property but can’t take frequent trips to inspect properties in person.

4. Add value to the property.

You can increase a property’s value through renovations and improvements. Consider a loft conversion, kitchen/bathroom upgrade, or landscaping the garden. Choose updates that will attract high-quality, long-term tenants and yield the best return on your investment. Compare the cost of any work to the potential increase in rent and property value. Since your budget is £50K, you might want to consider getting a mortgage with a down payment of not more than £30K; this lets you renovate the property with the rest of your budget.

5. Use leverage strategically.

While mortgages allow you to buy an investment property with a minimal down payment, we recommend you leverage with caution. Only take on as much debt as you can comfortably service if rental income fluctuates. Moreover, interest rates may rise in the future, increasing your costs. A good rule of thumb is to borrow no more than 80% of a property’s value.

6. Manage the property effectively.

To maximise your returns, you must actively manage your investment property. Market your £50K investment to find quality tenants, conduct regular inspections, handle any maintenance issues promptly, review and increase rents when appropriate, and stay up-to-date with the latest regulations. While you can manage the property yourself to save costs, consider hiring a professional property management company, especially if you have a busy schedule.

Following these tips from industry experts will help you achieve the highest possible returns when investing £50,000 in UK property. With the right strategy and execution, you can build a profitable investment portfolio and generate substantial returns.

Frequently Asked Questions

What to do with £50K in the UK?

With £50K, you have a wide range of options for investment and personal development in the UK, including:

  1. Property Investment: It’s possible to use £50K as a down payment for a buy-to-let property in major UK areas. Real estate has always been a solid long-term investment, and Baron & Cabot can help you get started right away — book a call to get started!
  2. Stock Market: You could invest in shares of companies or exchange-traded funds (ETFs). It’s advised to diversify your portfolio to spread risk.
  3. Peer-to-Peer Lending: This involves lending your money to individuals or small businesses in return for interest payments. Some platforms facilitate this process, so do appropriate research to determine the top options.
  4. Start a Business: If you have a business idea, £50K could help you get it off the ground.
  5. Education: You could use the money to go back to school, take professional development courses, or learn a new trade.
  6. Pension: Adding to your pension pot could help secure a comfortable retirement. The tax relief on pension contributions particularly makes this investment option attractive.
  7. Savings Account: Placing the money in a high-interest savings account or fixed-term deposit can provide a guaranteed, though potentially modest, return.

Remember, each of these options has its own risks and benefits — what works best for you will depend on your personal circumstances and risk tolerance. It’s generally recommended to seek advice from property investment experts before making significant financial decisions.

Is £50K enough to invest in property?

Investing in property with a budget of 50K is possible, although it might come with certain limitations. Your budget can’t purchase a property outright, so you need a mortgage to finance the property. While mortgage interest can diminish your profit initially, focus on the long-term returns of property investment.

Where can I buy a house for £50K in the UK?

Finding where to invest £50K in the UK property market might be a bit challenging, especially in larger cities. However, there are certain areas in the country with such property prices, mostly in Wales and the northern parts of England. These can include cities like Bradford, Sunderland, and Liverpool or certain areas in Wales like Rhondda Cynon Taf.

Note that properties in this price range are likely to be auctioned properties, in need of renovation, or located in less popular areas. Therefore, it’s always crucial to do thorough research before making a purchase.

On the other hand, you can consider financing your purchase through a mortgage. This will give you a market advantage while allowing you to profit over the long run. Some of the best areas to purchase a new-build property, starting with a 20% down payment, are Manchester and London.

Conclusion

Of the 6 best ways to invest £50K in property covered in this guide, buy-to-let investment is the most likely to achieve solid returns. The key is partnering with experienced property investment specialists who can help you navigate the market and find the right opportunities. At Baron & Cabot, our team of property investment experts have helped clients build portfolios and maximise returns for several years. We can help you, too — contact us today to get started!

Disclaimer: Any information provided by Baron & Cabot does not constitute financial advice and is for educational purposes only.

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