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5 different ways to invest in property

5 different ways to invest in property
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Want to learn how to invest in property? We’ve got you covered. Here’s the lowdown on the five main ways to become a property investor in the UK. 

Is property investment for me?

First, let’s be clear on one thing: property investment isn’t for everyone. So how do you know if it’s right for you? Let’s briefly look at some of the pros and cons. 

The pros:

  • Properties are usually more stable investments than, say, market stocks.
  • It’s fairly easy to get started.
  • Well-chosen property investments go up in value over time, so you can boost your income in the long term.

The cons:

  • Market fluctuations mean your property might depreciate in value rather than increase.
  • If your tenants don’t pay rent, you could face cash flow problems
  • It usually takes time to make money from property investment. In other words, don’t expect to see returns right away. 

Essentially, if you’re ready to make a long-term investment, then property investment could be for you. 

How much money do I need?

the amount of money you actually need to invest in property depends on a few factors.

  • If you plan on buying a property to rent it out, you’ll need money upfront. This may include taking out a mortgage on the property, which can be expensive.
  • To invest in property without much money, it’s usually much cheaper to enter a property investment trust, because you’re buying shares rather than a whole property. 
  • You could require at least £5,000 to buy property bonds and notes. 

In other words, there’s no set amount of cash you’ll need to get started. One thing, however, is clear: you should always weigh up your existing income and expenditure and make sure you can afford a property investment. Don’t invest in a property you can’t afford. 

How to invest in property 

Essentially, there are five ways to become a property investor in the UK. You can:

  • Become a landlord
  • Invest in what’s known as a property investment trust
  • Invest in property bonds or notes
  • Buy and sell houses (“flip” them)
  • Purchase a holiday home

Let’s check out these options, starting with the most common entry point for new investors – the buy-to-let.

1. Become a landlord

Becoming a landlord simply means that you rent out a property to tenants. So, you buy the property and then you let other people live in it (hence why it’s called a buy-to-let). There are over two million landlords (yes, really) in the UK, and it’s easy to get started. All you need to do is:

Remember, though, that it’s on you to manage the property – and to chase the rent if tenants stop paying. 

2. Join a property investment trust

A property investment trust, or real estate investment trust, is less complicated than it sounds. Essentially:

  • You invest in a property investment company
  • They issue shares in exchange for the money you’ve invested
  • They use the money to make investments 

These trusts are great for diversifying your portfolio, but they can be adversely affected by market fluctuations.  

3. Invest in property bonds

Property bonds, or notes, allow developers to raise money for their projects.

Investors help to fund the project in the form of a loan. In return, they get security over the property itself. So, if the developer defaults on payments, you can make a claim against the actual property.

The main concern? Developer insolvency. If the developer fails, you could lose any capital you’ve invested. 

This type of property investment is best for experienced investors.

4. Flip houses

Flipping houses means buying a property, renovating it, and selling it on for a profit. It’s the quickest way to make money as a property investor, but it’s not without its downsides. 

  • If you underestimate the renovation costs, you could lose money.
  • It might take longer to sell the property than you anticipated, which disrupts your cash flow.
  • Market fluctuations can affect resale values.

Want to make money flipping houses? Thoroughly research the property and area in advance so you know what you’re getting into. 

5. Buy a holiday home

Don’t fancy becoming a year-round landlord? Buy a holiday home instead. A huge benefit is that you can apply for tax reliefs that typical landlords can’t get, because HMRC classes holiday rental properties as businesses, not investments.

The downside? You need to let the property for at least 105 days each year to qualify for these tax reliefs, and you’ll probably experience seasonal fluctuations that affect cash flow. 


When it comes to learning about how to invest in property, there’s one thing you always need to do: research. Don’t rush into property investment, and always stay on top of the latest investment developments

Still unsure of where to start? Ask an investment specialist for advice.

Compare stocks and shares ISAs

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Click here to see out top stocks and shares ISAs for September 2020.

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