In years gone by, property investments in the UK would be reserved for those with huge budgets. Whether inherited or the owner of several businesses, the average Joe and Jane would have to dip their toes into other waters if they wanted to invest (less profitable waters at that!).
Today, we’re living in very different times and there are investment opportunities for people of all ages and experience levels. Just because you can’t afford to buy a second home or start an expansive portfolio, this doesn’t mean you have to sit out completely. Below, we’ve compiled a list of property investments UK for those with a smaller budget!
Rent Out a Room
Before we head into our main suggestions, we first want to suggest something that people often forget. If you have a spare room that isn’t being used, have you ever thought of renting this room out? In truth, there’s always likely to be interest in this sort of offer whether it’s a foreign national who needs a place to stay for a few months or a university student, you get a regular income for space that you weren’t using anyway.
Real Estate ETFs
Again, this might be cheating a little and you won’t get the glory that comes with owning something tangible, but we wouldn’t be doing our job if we didn’t mention Real Estate ETFs. Short for ‘exchange-traded funds’, it’s essentially a single fund containing a number of different stocks and bonds.
Why is this different from normal stocks and bonds? Because you’re still getting the diversification you desire in your portfolio. Often, your money will be invested in hotels, office buildings, and various other types of property. What’s more, you’ll find it easier to withdraw your investment whenever required. Perhaps you could treat this as a stepping stone before you move into full property investments UK?
Hotel Room Investment
Never heard of investing in a hotel room? If so, you aren’t alone but it’s an idea that’s quickly gaining traction. As the name suggests, this investment will see you become the owner of a hotel room. However, before you get visions of having to cook breakfast for your guests, you’ll be joined by a number of other investors who all contribute to a single hotel; a hotel that’s managed by an experienced and reliable hotel company.
In effect, it’s actually similar to a buy-to-let investment because you make the initial investment before the room is let on a (really!) short-term basis to those who need a place to stay. As long as you choose a reliable investment company, you’ll receive the following benefits;
- Positive NET return (potentially up to 10% for a fixed period)
- Free legal fees
- No ongoing costs
- Guaranteed buyback
- Full management
- Totally hands-free investment
Why is this gaining attention in the investment market? For one thing, it offers brilliant hands-off property investments in the UK. In most cases, the hotel companies themselves struggle to get the funding to open a new location so they open the floor to investors. As you benefit from their experience, the hotel hopefully succeeds, and you enjoy a fixed period of returns before then taking advantage of the buyback price.
Most investors can find a package that meets their budget, but most tend to come in between £50,000 and £100,000.
Sticking with the hands-off theme, peer-to-peer lending (or P2P lending) is another area gaining in popularity. For those who need to raise some funds and perhaps have already been rejected by the bank (or this isn’t an option for whatever reason), this is a platform that allows borrowers to meet lenders from around the world.
In recent years, the general theme for those people lending money has been to support startup businesses. For example, you would lend the money via the platform and they would use it to generate brand awareness and customer interest. Yet, there’s another side to P2P lending websites that seems to go under the radar; residential property.
With platforms such as Landbay, you can invest a certain amount of money before this is then lent out to those who invest in residential property. Since the theme of our guide here is investing on a budget, you might be wondering how much you need to spend. Fortunately, the minimum on many platforms is just £100. Rather than investing in a specific property, your money will be split into smaller investments and spread across various loans.
Of course, there are certain risks you’ll need to consider with P2P lending. However, all loans are secured against various properties all over the UK which means that your risk is mitigated somewhat. If one fails, you’ll only lose a small portion of the investment and the rest will remain.
Finally, we’ve got property investments UK similar to the hotel room option we provided earlier. Every year, more students are heading off to university and every single student is in need of somewhere to live (those who choose to move away from home, of course!). With a reliable investment company, you’ll be presented with a selection of student accommodation buildings all with high potential for returns and based in great locations.
Just like hotel room investments, they will also be managed by a specialist company, so you don’t have to worry about a thing. In fact, you can go about your normal life while the management company concentrates on finding tenants and managing the property. Depending on your budget, you’ll find opportunities across all price ranges but commonly between £50,000 and £100,000.
With these five options, we’ve hopefully shown that you don’t need to be a millionaire to take advantage of property investments in the UK. While renting out a room only involves small costs, P2P lending can start at £100 and real estate ETFs can also be affordable. Finally, the real money makers are found with hotel room investments and student accommodation investments. We can help you get started at Property Invest UK!