As a property enthusiast or investor, you’re constantly seeking proven ways to generate income and build wealth through real estate. Investing in property has the potential to provide attractive returns, but only if you go in with a solid plan and the right mindset. This guide offers five ways to make money in property, even if you don’t have a property yet or you’re simply looking to diversify your portfolio.
5 Strategies for Making Money in Property in the UK
The following are five proven ways to make money off property. Read on to the end for 7 important reasons why buy-to-let is our recommended money-making strategy for property investors.
- Purchase a Buy-to-Let Property
- Buy a Neglected Property and Renovate
- Rent Out a Room
- Let Out Your Home While Away
- Convert Bigger Houses to Smaller Ones
1. Purchase a Buy-to-Let Property
Purchasing a buy-to-let is our recommended approach for making money in property in the UK. A buy-to-let property is a property explicitly purchased to rent out to tenants. The rental income from tenants can provide a steady stream of passive income, while capital appreciation increases your property’s worth over the long term.
When searching for a suitable buy-to-let property, consider properties near transportation hubs, universities or city centres where the demand for rentals is high. Look for property developments with multiple bedrooms and ample living space, which tend to attract long-term tenants. You can safely invest in new builds or off-plan properties in decent locations for maximum returns.
Once you’ve purchased a buy-to-let property, consider the following next steps:
- Prepare the property for tenants by ensuring the property meets all health and safety standards.
- Advertise the property for rent on property websites and with local letting agents.
- Thoroughly vet potential tenants by conducting credit checks and reference checks.
- Draw up an assured shorthold tenancy agreement to protect yourself legally as a landlord.
Managing a buy-to-let property requires ongoing work; here are some tips to consider:
- Conduct regular inspections and handle any necessary repairs or maintenance.
- Review rent prices periodically and increase rents following market trends to maximise your returns.
- Stay up-to-date with the latest landlord regulations to remain compliant.
As enticing as a buy-to-let approach sounds, searching for high-yielding properties can be demanding. That’s why smart property investors employ the service of UK property investment experts like Baron & Cabot.
We can help you with the right property to invest in, handle the paperwork, and even help you secure mortgages — especially if you’re an international investor in the UK property market. We can also connect you with a competent property management and letting agency. That way, you can relax while we handle the tedious process for you.
With the proper guidance, a buy-to-let property can generate stable cash flow and significant long-term capital gains. To start earning immediately, check our top developments or contact us for more information.
2. Buy a Neglected Property and Renovate
Buying a neglected/abandoned property is an excellent approach to making money from property when done right. Once you’ve identified a suitable property, the next step is to renovate it to maximise your return on investment.
Renovating a neglected property, often called a “fixer-upper”, allows you to purchase at a discount, improve the property through refurbishment, and then sell at a profit or achieve a higher rental yield.
Here’s a four-step guide to making money from a neglected/abandoned property:
- Find the right property.
- Outline a renovation plan.
- Manage the renovation.
- Profit from your investment.
a. Find the right property.
- Look for properties that need cosmetic upgrades or minor repairs rather than major structural work.
- Check local property listings for terms like “needs TLC”, “great potential”, or “priced to sell”.
- Visit properties in person to determine the scope of work needed.
- Target properties in desirable neighbourhoods, as this allows for higher resale values and rental demand.
b. Outline a renovation plan.
- Work with contractors to develop a budget-friendly renovation plan.
- Focus on upgrades that add the most value, e.g. kitchen and bathroom remodelling, new flooring, and interior painting.
- Compare costs for necessary repairs versus replacement — minor plumbing or electrical repairs may be cheaper than complete replacement.
- Create a timeline for completion that factors in permits, inspections, and unforeseen delays.
c. Manage the renovation.
- Oversee contractors and ensure work is progressing on schedule and within budget.
- Make design choices for cabinets, countertops, and lighting fixtures to keep costs in check while improving aesthetics.
- Monitor the renovation budget regularly and adjust as needed to avoid cost overruns.
- Once complete, have the property re-appraised to determine the new market value for resale or optimal rental price.
d. Profit from your investment.
- For resale, list the property with an estate agent to sell at a profit.
- For rentals, work with a property manager to find suitable long-term tenants.
The increased property value and rental income generated from your renovation will provide a return on your investment and capital for future property deals. With experience, you can take on more ambitious renovation projects and continue growing your portfolio.
3. Rent Out a Room
If you have a spare room in your house and you’re wondering how to make money in property, renting it out is an easy way. By renting to a lodger or through Airbnb, you can make more than £6,000 yearly. Even if you don’t own the property, it is legal to rent out a spare room in the UK, provided you inform your landlord before making the decision.
Here’s a three-step guide on renting out a room:
- Prepare the space for tenants.
- Advertise the room for rent.
- Conduct house viewing and finalise rental agreements.
a. Prepare the room for tenants.
- Start by ensuring the room is clean and furnished appropriately.
- Furnish the room with basics like a bed, storage space for belongings and task lighting.
- Providing linens, towels, a TV, and Wi-Fi access can allow you to charge a premium.
b. Advertise the room for rent.
- Market your room through local listings on sites like Gumtree, Facebook Marketplace, Craigslist, and Airbnb.
- Be sure to include room size, features, cost and location details.
- You can often charge more for en-suite rooms or those in desirable areas near local amenities.
c. Conduct house viewing and finalise rental agreements.
- When showing the room, ask potential tenants for references and a deposit equal to one month’s rent.
- Check references and credit scores to verify the tenant’s suitability and ability to pay rent on time.
- Have the approved tenant(s) sign a comprehensive lease or rental agreement to outline rules and responsibilities.
- Collect rent via direct bank transfer monthly.
As a landlord, you’re responsible for the upkeep and maintenance of the property. Conduct regular inspections to ensure the tenants keep the room and shared areas in reasonable condition. A spare room can provide reliable passive income for many years with the right tenants and fair rent.
4. Let Out Your Home While Away
If you’re seeking how to get rich from property, one of the most popular options is to let out your home while you’re away. This allows you to earn money from an asset you already own. Many investors can cover a significant portion, if not all, of their mortgage payments through short-term rentals.
To maximise your returns, consider using a property manager or short-term rental agency to handle the day-to-day management of your rental. They can market your property, screen tenants, handle check-ins/outs, cleaning, and maintenance. This allows you to earn income passively without the hassle. They typically charge 10% of the rental income.
You have two options for short-term rentals:
- Rent by the week or month to business travellers, students, or those between homes: This typically generates the highest returns but requires more frequent turnover.
- Rent nightly to tourists and vacationers: This may generate slightly lower returns but has the benefit of higher occupancy during peak seasons. Popular sites like Airbnb and Vrbo make it easy to list your property.
Consider the following five tips for maximising your rental income:
- Capture great photos that showcase any amenities.
- Price competitively based on comparable local rentals; you can often achieve up to 30% higher rates for short-term vs. long-term rentals.
- Provide a high-quality experience with comfortable furnishings, linens, WiFi, and extras like a welcome basket.
- Maintain a high rating and good reviews to keep occupancy and rates increased.
- Consider seasonal pricing adjustments to capitalise on peak demand.
Short-term rentals are a simple, hands-off way to make money in property. By following the aforementioned best practices, you can generate significant income from your rental property and build equity in the asset over time through mortgage paydown and potential appreciation.
5. Convert Bigger Houses to Smaller Ones
If a large property is not maximising its potential, consider converting it into smaller flats or units to cater to lower-income tenants or buyers. This strategy works well in up-and-coming property areas with a high demand for affordable housing.
Consider the following tips to maximise your return on investment:
- Evaluate the layout and structure of the existing building to determine how many separate living spaces can be created.
- Look for ways to split the property into flats or apartments of various sizes to appeal to singles, couples, and small families.
- Consider factors like separate entrances, kitchenettes, and bathrooms — you may need to make structural changes to walls and floors to divide the space properly.
- When designing the new floor plan, aim for functional yet spacious units to command a decent rent.
- When possible, include desirable features like open-concept living areas, lots of natural light, and outdoor space.
- Remember your target demographic and choose finishes and fixtures that will meet their needs without being too extravagant.
Once you’ve divided the property into smaller units, you can rent them out long-term as residential flats or sell them individually as condos, depending on current market conditions. Converting a larger house into multiple smaller properties is an excellent method for maximising your investment in UK real estate. With some upfront costs for renovations, you can significantly boost the building’s overall value and income potential.
Note: This strategy does require in-depth knowledge of property development, building regulations, and the local housing market. It’s best pursued by experienced property investors or those working with a knowledgeable partner.
7 Reasons Why We Recommend Purchasing a Buy-to-Let
If you’re seeking the most effective and advantageous approach on how to make money from houses, we suggest purchasing a buy-to-let (BTL).
A BTL property investment is worth it for several reasons, offering several advantages over other methods, such as the following:
- Reliable Income: BTL investors can generate a steady stream of income from rental payments, which can be used to cover mortgage payments, maintenance costs, and other expenses.
- Capital Growth: Over time, property values tend to increase, providing investors with a significant capital gain when they sell their property.
- Tax Benefits: BTL investors can claim several tax reliefs, which can reduce their overall tax liability.
- Flexibility: BTL investors can choose to buy and sell properties as they see fit, which gives them more flexibility than other investment options.
- Strong Demand for Rental Properties: The UK has a shortage of rental properties, with available housing dropping by a third in the past 18 months. This means there’s a strong demand for rental accommodation; BTL investors can confidently find tenants for their properties.
- Attractive Rental Yields: Rental yields in the UK are generally higher than in other developed countries. This means that BTL investors can generate a decent return on their investment.
- Relatively Low Investment Costs: The upfront costs of buying a BTL property are relatively low compared to other investment options. This means BTLs are a more accessible investment for people with less capital. It’s even better with Baron & Cabot — with just a £5K reservation fee and 20% downpayment, you can become the owner of one of our numerous property developments across the UK.
Of course, BTL investment isn’t without risks. Investors must be aware of factors such as vacancy rates, rent arrears, and rising maintenance costs. However, when you work with UK property experts, BTL can be a very effective way to make money from property in the UK.
Frequently Asked Questions
What is the best way to make money in property?
Adopting property investment strategies like purchasing a buy-to-let or simply buying and holding can be effective for short-term and long-term income generation. At Baron & Cabot, we specialise in helping clients find properties for maximum returns. We’re confident in our ability, given that we’ve been in the property market for years.
How can I make money from property without money?
You can start a property business in the UK with no money by utilising networking, creative financing options like rent-to-rent or lease options, investing sweat equity, exploring government grants, and leveraging technology to find opportunities and streamline processes.
Can property make you a millionaire?
Yes, property investment has the potential to make you a millionaire over time. Many individuals have achieved millionaire status through smart property investments, including rental income, property appreciation, and strategic buying and selling. However, it’s important to note that success in real estate often requires careful planning, market knowledge, and patience. It’s not a guaranteed path to wealth, and risks should be considered.
Conclusion
The five proven strategies to make money in property discussed in this post are excellent means for both newbies and experienced investors looking to generate income from real estate. Whether you want to buy and hold rental property or get started with the extra spaces/rooms in your current property, there are opportunities to explore.
Conduct adequate research, start with a solid plan, partner with a team of experienced professionals to help guide you, and take that first step. While there will undoubtedly be challenges along the way, the financial and personal rewards of success in this field can be life-changing. Contact us at Baron & Cabot today to get started.
Disclaimer: Any information provided by Baron & Cabot does not constitute financial advice and is for educational purposes only.
