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Insight & Opinion

Real estate investing for beginners

Author: Gemma





The UK is an attractive location for property investors. The strength of its property ownership laws, its recovering economy and the strong performance of the property market have ignited interest from international and domicile investors.

Here is our useful guide to real estate investing for beginners…

1) Off plan property investment

Off plan property investment can provide first-time investors with a low entry level option onto the property ladder. Typically investors can secure a discount when they buy off plan property and enter a fixed price agreement.

This may mean that there is stronger scope for capital growth as property values may increase throughout the build stage.

Investors should establish whether or not they will receive interest on their deposited funds and ensure that their funds are held in a secure account before investing.

Ensure that you use a solicitor who specialises in off-plan contracts and look into any warranties which may come with a new-build property. Taking these few simple steps will help reduce risk.

Generally, this type of investment is popular for cash buyers as the properties can be purchased with stage payments however, some opportunities can be purchased with a mortgage.

Those investing with a mortgage should consider what will happen if their property decreases in value. Ensure that your lender advises you on what will happen if this situation occurs.

2) Do your research

Before you invest, look at the local market and evaluate the performance of the sector you wish to invest in. Consider current vacancy rates, is there a demand for the type of property you are investing in?

Access to good transport links, good schools or universities and local amenities should be considered.

If you are investing in commercial property, look to see if there is a demand for this type of space in the area.

3) Understand your financial commitment

Real estate investing for beginners can be risky if the investor does not understand the financial commitment they are taking on. Understanding your financial obligations will play a key part in your success.

Breaking down your monthly costs, maintenance fees, management fees and any applicable taxes will help you have a clear idea how much money you will earn from your investment.

Consider what you will do if there is rental void or if you have issues with your tenant. Having a back-up plan will help ensure that there are no surprises.

Consider your exit strategy. How long do you wish to have your money tied up for? If you need to sell up, how would you go about doing so? Having a business plan will help you get the most out of your first investment property.

4) Appoint a management company

Appointing a well-established management company is a great idea for those who wish to take a passive approach to their investment.

A management company will ensure that your tenants are properly screened, that deposits can be safely secured in the deposit protection scheme and will ensure that your rights as a landlord are represented by a second party.

A local agent with a good knowledge of the local market will help ensure that you get the most out of your property.

5) Enjoy the benefits

You’ve done the hard work; you’ve invested your money so enjoy the rewards that come from being a landlord. Ensure that you keep hold of any important documentation like receipts and seek professional advice to ensure that you are paying the correct taxes.

Real estate investing for beginners can seem like a daunting task to begin with however help is available. Investors should consider their options before entering an investment and seek professional advice if they have any queries.

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