Various Types Of Property, Which Can Be Beneficial For The UK Investors
More people in the UK get interested in real estate investment due to the high chances to earn great money. There exist various types of property to invest in, which is why it’s sometimes difficult to decide, which one is worth your time and cash. In our article, we’ll tell you about different kinds of property investments and give useful tips concerning varieties of property investment and their benefits to help you make the right decision.
Real estate investments
Real estate investment (REI) is a competitive business, which can bring an impressive profit. However, it’s necessary to understand that in order to succeed, considerable money is required upfront because the ongoing prices in this market are high and keep growing.
All the existing property investments are divided into 2 categories:
- Physical REI
- Other types of investment.
The first group includes land, residential real estate, and commercial properties. The second group refers to the property, which doesn’t obligatory require having any physical property. Such property investments include crowdfunding and other platforms.
When we speak about the physical REI, it requires great money. The second type of investment is much easier to start. It allows investing in several types of property, while the total price will be much less compared to the investment in just one physical property. Besides, there’s no need to search for enormous sums of money or to sell your own house to gain initial capital.
When looking for a suitable property to invest in (independently of the selected type of real estate), it’s vital to consider a few essential things:
- Type of real estate
- Additional amenities.
Various property investment types
There’re multiple kinds of real estate to make investments. Each of them has its own peculiarities, which every investor should know and take into consideration. Let’s look at the existing types of REI:
- Buy-to-let. This is a traditional way to invest in real estate. First, an investor buys a certain property with the purpose to find renters to live in it. An investor should think about the revenue, which should cover mortgage borrowing and other costs. The earnings are obtained from the rental income. In addition, you can sell your property in the future and obtain more money. Such a strategy is considered to be long-term. When you deal with this sort of REI, it’s additionally required to think about extra expenses, for example, stamp duty costs, running costs, and management fees (in the case you don’t want to manage your real estate communicate with renters personally). Almost all residential properties might be used for such type of investment. However, it’s important to make sure the property meets all the required standards.
- Houses in multiple occupations (HMO). It refers to the properties, which presuppose 2 or more renters (more than one household under one roof or in one property object). Such renters being members of different families might share some conveniences, such as a toilet, kitchen, bathroom, etc., or have their own if a property is physically separated. There’re big properties of such a type, which can include many families. Remember: if you consider property types UK, this kind of REI will require mandatory licensing. It’s recommended to consult the local authorities beforehand. HMO is a popular choice for investments due to the higher annual earnings and income diversification. At the same time, more money is required at the start & more management is necessary as well.
- Freehold/leasehold. When we speak about the property types UK, it’s important to know that many houses are freehold. It means that an owner has not only the house itself but also the land nearby. An owner is only accountable for property maintenance. It’s a frequent case when several renters share one property and decide to buy it together to take full control over it. At the same time, many purchasers still decide to buy a house on leasehold to have control over the property during the period indicated in a lease agreement. When it’s over, the property returns to a freeholder. It’s vital to take the indicated time period under consideration. Thus, if it’s less than 70 years, it might be difficult to get a mortgage. In addition, selling real estate with a lease of a smaller period than 80 years will be quite hard.
- Build-to-rent. This property type UK is built especially for renters (not purchasers). Such type of REI has a special emphasis on various services (for example, on-site management, shared spaces of fitness centers/work zones /kindergartens, and various amenities). This is a nice type of REI, which is suitable for both individual and institutional investors. It can bring a pleasant annual income and be managed by a management firm.
- Off-plan. It presupposes the investment in a property before it’s actually built. It is suitable for various kinds of investors and guarantees great earnings in the long run. The price of such property will greatly increase compared to the sum paid at the starting point. For early investors, there might be discounts, which make an investment even more advantageous. What’s more, many developers offer investors to make a property more personalized with the furniture and amenities. As a result, by the end, the property will be completely ready for sale.
- Furnished holiday lets (FHL). It’s a wonderful alternative for those, who aren’t ready to wait for the returns from long-term investments. With this REI, it’s possible to get higher earnings for a week or even the weekend. The key thing here is to choose the right location. Besides, it’s advisable to target not just the UK residents but also potential customers from various parts of the world. The main idea is that the daily/weekly charges are quite high. Besides, this type of property gives extra tax advantages, which you can claim for your business. To be qualified as FHL, the property is to be available 210 days a year (or more) and be commercially rented for at least 105 days a year.
These are key types of REI, which are accessible for modern investments. Each of them has its own benefits and drawbacks, which should be taken into account.
The best types of property to invest in the UK
With diverse types of property, which can be found in the modern real estate market, it’s difficult to choose the right one. We offer several kinds of property, which are worth investing in the UK:
1. Residential. People are always looking for a place to live. And the costs keep growing every year. Investors can put their money in this kind of property and then decide what to do. For instance, it’s possible to choose a single-family house, duplex, multifamily/shared house, vacation home for the FHL investment, or an apartment. Another positive moment about this type of property is that certain tax benefits are provided.
2. Commercial (CRE). It’s developed for business-related aims. You can offer it to potential customers as an office, warehouse, hotel, healthcare facility, industrial, or any other building. Due to the higher prices, the rents are also greater. In addition, it’s less competitive compared to residential real estate. It means that this kind of property is a good choice to invest in.
3. Land. It’s a good choice for the development of commercial/residential property. It’s a perfect choice if an investor has lots of money. However, it’s recommended to make profound research. Note that deep knowledge is required to deal with such a type of property.
4. REITs (trusts). There’re trusts owning commercial property. Using a stock exchange, you can invest in any of their real estate offers. The risks here are very low, and in most cases, the returns to shareholders are at least 90% of their taxable profit annually.
5. Crowdfunding platforms. These are special resources offering various properties with high returns to investors. Be careful with such platforms as they can be created for individual investors. In addition, many platforms provide a short-term record, while the potential of the offers greatly depends on the economic situation.
Property investment can become a profitable business. However, it’s important to pay attention to many factors including the type of real estate (depending on your preferences, aims, and available budget), neighborhood, schools/kindergartens (if you invest in residential property), criminal background in the neighborhood, average rents (note that your rent should cover a mortgage payment, taxes, and other possible expenses), natural disasters (to take care about insurance), job market, level of amenities, and perspectives for future development.
To diversify your portfolio, it’s always recommended to use different property investment types. It shall make your investments more competitive in the UK real estate market.
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $85k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.