How to invest 100k in property. If you’re currently asking yourself this question, then congratulations, you’ve saved up or obtained a solid amount of money and are now ready to maximise your income through the power of property!
Having the funds needed to invest is all well and good, but what happens when you’re ready to start investing and don’t know where to begin? If you’re wondering how to invest 100k in property and need some honest and straightforward advice, you’re in the right place. Here we’ve outlined some essential steps you should take to help you learn how to invest 100k wisely for the best return on investment.
Contents
- Why Invest in Property?
- Research Types of Investments in Property
- Research Different Locations to Invest in
- Diversify Your Investment Portfolio
- Explore Your Financial Options
Why Is Property the Best Way to Invest 100k?
There are a lot of different asset classes out there that suit 100k investment budgets, but property is, without a doubt, one of the strongest. This is because, compared to other types of investments like stocks and shares or ISAs, property investment is capable of offering returns in two ways:
Rental income – Those who invest in buy to let property will generate regular returns in the form of rental income paid by their tenant.
Capital appreciation – As a property’s value grows over time, those that exit their property investment at the right time can sell it for a higher price. This is also referred to as capital growth returns.
The stock market is also more high-risk than the real estate market. That’s why those seeking information on how to invest 100k or less will often settle on a more physical asset like property and avoid higher-risk strategies.
During uncertain times, in particular, the property market stays resilient and offers a better sense of stability. Throughout the Covid-19 pandemic, many investors exited their stocks and shares investments and purchased property instead.
As a result of the increased demand seen throughout 2020, property prices reached record highs at the end of the year and are predicted to continue growing. By 2024, UK house prices are set to have increased by 20.4%, even more so in specific regions.
Keep These 5 Tips in Mind Before Investing 100k in Property
1. Research Different Real Estate Investment Strategies
So you’re set on the real estate market and wondering how to invest 100k in property for the best return on investment? A good place to start is by learning about the different types of investment available. Each of these investment strategies is achievable with a 100k budget and capable of bringing in some attractive returns. Read below so for tips on how to invest in property with £100,000.
Residential Buy to Let Property
If you’ve been researching how to invest 100k in property, it’s likely that you’re already familiar with residential buy to let. This type of investment strategy involves buying an apartment or house and letting it out to tenants for rental income.
As mentioned earlier, this is one of the best strategies as it brings investors two types of returns. It’s also one of the more low-risk asset classes out there, which is ideal for those with less generous investment funds.
How to Invest 100k in Residential Buy to Let
- Look for residential buy to let properties that are off-plan. Off-plan investment properties offer below-market prices as a way to entice investors.
- Scour the market for the best deals. Developers have been offering some great deals as of late, such as assured rental yields for a set period of time.
Student Buy to Let Property
Like residential buy to let, student buy to let investment offers two lucrative returns in the form of rental yields and capital growth. The main difference between the two is the fact that student buy to let properties are only available to student tenants.
These types of properties are also popular with investors who don’t have large sums of money available to invest, as prices are often lower for student properties. This is because purpose-built student properties are commonly offered in the form of studio flats. Due to low property prices and high demand, student buy to let investments often bring in higher returns.
How to Invest 100k in Student Buy to Let
- Make sure you look to buy a student property that’s well located. Student accommodation near university campuses, transport links and city centre attractions tend to see the most tenant demand.
- Student properties are great for those who want to know how to invest 100k wisely, as they’re already so affordable. Still, you can also find a student property with an even lower price by seeking out off-plan student accommodation.
Buy to Sell/Property Flipping
While buy to let investment will often involve purchasing a residential or student property in a new build development, another strategy, buy to sell, focuses on buying properties that need refurbishment.
Many investors will purchase properties at a low price via auctions and then spend the rest of their budget restoring the property. By the time the property is ready, the aim is to have added a significant amount of value onto the property so that it can be sold for more money.
Unlike buy to let, investors are restricted to just one return with this strategy. This type of property investment can definitely be lucrative but requires additional knowledge, planning, and experience to pay off.
How to Invest 100k in Buy to Sell Property
- Make sure you plan every last detail. Buy to sell strategies can go wrong without the right planning, so ensure you’re utilising your budget and not wasting any money.
- Don’t just buy a property because it’s cheap. Think about whether the property is salvageable with a 100k budget, and make sure it’s located in a high-growth area.
2. Assess Different Locations
One of the most crucial steps that every property investor must take is to think about the area they want to focus on for their investment. You want your property to be affordable so that it fits your 100k budget, but you also want to make sure your property is based in the best investment location.
Certain parts of the UK are stronger than others when it comes to the property market. Before rushing to pay a down payment or deposit on a property that costs 100k or less, assess different locations by looking at the past performance of their property market in terms of rental yields, tenant demand, and house price growth. Be sure to also keep in mind future market predictions.
Liverpool
Liverpool is, without a doubt, one of the UK’s best investment areas. The city has gained a reputation as a buy to let hotspot thanks to affordable property prices, consistent capital growth levels, and plenty of demand from young professionals and student renters.
Six of the postcodes in Totally Money’s rental yield map are based in Liverpool, including the L1 postcode, which boasts impressive 10% yields. Over the last five years, Zoopla data estimates that average house prices in the city have grown by over 20%. Savills predicts that by 2024, property prices in the North West will have grown by a huge 27.3%, which is the highest in the country!
Manchester
Another North West city, Manchester is also considered one of the best areas to invest in. While prices are slightly higher on average than those in Liverpool, there are still some great affordable deals to be found in the Northern Powerhouse.
Rental yields are also high in Manchester, hitting over 5% on average, and the cities thriving student market and high population of graduates and young professionals mean that rental properties are always in demand. If you want to know how to invest 100k in UK property, act fast to secure the best Manchester deals before prices rise by 27.3% on average in the coming years.
Birmingham
Birmingham is considered another top UK city for property investment. The city is close to London but boasts prices that are a lot more affordable than those found in the capital. Zoopla data reveals that Birmingham house prices have grown by around 19.96% over the last five years and are estimated to grow by 21.7% according to Savills regional predictions.
The best areas to invest in Birmingham are mainly the city centre and up and coming spots like Digbeth. These areas tend to attract the most demand from young professional and student tenants, resulting in higher returns through rental yields.
3. Remember Diversification Is Key
Many people who start out with a 100k budget when investing will do so with a plan to build a wider investment portfolio. With the right financial planning, research, and deals, it’s also possible to build a portfolio of multiple properties with just 100k. If you’re a more ambitious investor who wants to know how to invest 100k to make 1 million further down the line, you’ll want to think about building a property portfolio.
One of the most important things to keep in mind if you plan on building up a property portfolio is diversification. A diversified portfolio is when an investor buys different types of properties or assets as a way to spread their risk.
An example of diversification with a 100k budget could mean buying a residential buy to let property for £90,000 with the help of a buy to let mortgage and purchasing a student property worth £50,000. These properties would be based in different cities, for example, the student property may be in Liverpool while the residential property is based in Manchester.
Keeping diversification in mind is an excellent tip for those wondering how best to invest 100k to maximise their income, spread risk, and gain more experience in the real estate field by investing in different property types.
4. Explore Finance Options
While it is possible to pay for a property with a lump sum of cash if you have 100k available, some properties may be slightly pricier, which will require you to explore finance options. The different finance options available to help you pay for property investments include payment plans and buy to let mortgages. Here’s some information to help you learn more about these options.
How to Invest 100k in Property With a Payment Plan
100k is a lot of money, but sometimes it may not be enough to cover the property’s price and any fees and extra costs involved. This is why a lot of investors take advantage of payment plans when buying off-plan properties.
With a payment plan, you can split the cost of the property into multiple chunks. This could mean paying a portion of the property price upon reservation, the rest halfway through the property’s construction, and the final amount upon completion. This gives those with a 100k budget more time to save the remaining funds and secure the property of their choice without spending their entire sum of money.
How to Invest 100k in Property With a Buy to Let Mortgage
Buy to let mortgages are similar to residential mortgages, with some key differences between the two. The minimum deposit needed for a buy to let mortgage is between 20-40%, which is higher than the typical 10-15% required with residential mortgages.
Those applying for a buy to let mortgage with mortgage lenders also need to meet certain criteria, such as having a yearly salary of £25,000 or over, and already owning a home of their own.
Using a buy to let mortgage is a great way to invest in property with 100k, as you can put down a fraction of your funds as a deposit and save the rest to use towards taxes, fees, and mortgage repayments. Some property types, however, such as off-plan properties, can be trickier to secure a buy to let mortgage for, in which case using a payment plan or paying the full lump sum amount would be preferable.
We hope that this information on how to invest 100k in property has been useful, and that you now feel more ready to take control of your personal finances and grow your income through property investment.
We currently have some great investment opportunities available, many of which are priced under £100,000! To find out about our latest low-risk investments offering high rental returns and strong capital growth potential, contact us today at Investment Property Agent for more information.
Disclaimer: Seek Out A Financial Advisor for More Information
While the information provided in our article offers guidance on some of the more essential aspects of investing 100k of your money, you may also wish to speak to a financial advisor. Getting first-hand financial advice ensures you don’t rush into any investments that you can’t afford and can help you feel happier and more confident in your future purchases.