Investing in the real estate market is an excellent form of investment that has given the turn of the century more millionaires than any other business endeavour. You also get to enjoy more tax breaks than any other types of investments.
Opportunities and potential are rampant with ever growing urbanization. In fact it is predicted that there will even be a shortage of homes in the next 10 years. Now is the time to lay the foundations in real estate for cushioned profits later on.
Ask yourself the following questions when contemplating a property investment strategy
- Is the property investment strategy you’re interested in capable of generating a high demand?
- What do the risks and rewards look like?
- Do I want a long-term property investment or short term returns?
- How much more can I make from real estate compared to interest in the bank, bonds or stocks?
Types of High Cash Flow Property Investments
- Flipping Houses
- R2R – Rent to Rent
- R2SA – Rent to Serviced Apartments
- BRR – Buy, Rehab, Rent
- Guaranteed Rent
This is a house wherein many people have their own separate rooms but live all together under one roof. A top choice for any diverse property portfolio, an HMO (house of multiple occupancy) is an excellent example of top property strategies in the UK.
HMO’s are houses with many rooms that are rented out to multiple tenants who each pay rent individually for a private room, and may have shared facilities like a bathroom and kitchen.
This method gives you a chance to generate multiple sources of income from different tenants at once, which results in high rental yields. And if any one tenant stops paying rent, you’ll still have rental income from the other tenants to fall back on. Score!
If you rent to young professionals, the average tenancy length is 12-18 months and this demographic prefers to stay in a place for longer than students or contractual workers.
House flipping is when an investor purchases a property at a lower price (may be an older home) that needs refurbishment and then refinances its value and then sells it on for a profit.
Flipping Houses or Buy to Sell is usually grouped with property development, as investors will need complete makeovers to boost the value and appeal to potential buyers.
If you’re focused on making a lump sum of money rather than long-term cash flows, then property investment strategies like flipping may be better suited to your needs.
To fully understand which property investment strategy is right for you, it may be a good idea to speak to financial advisors like P&A who can provide clarity on what each investment strategy involves.
Unlike a buy to let strategy, this kind of property investment strategy relies on positive market conditions with high demand. This seems to be the case in 2021, with a report from Rightmove finding that buyer demand per property for sale is twice as high as pre-pandemic levels.
R2R – Rent to Rent
Also known as subletting or corporate letting, rent to rent is pretty straightforward. You rent an property from a landlord on a single let basis, and then turn it into an HMO by yourself. By renting out multiple rooms with a management agreement, you create all the cash flow of an HMO, and you don’t have to invest a large amounts of capital.
- No deposit needed
- No big upfront costs
- Small refurbishment costs
There are some very strong fundamentals that show rental properties in Birmingham will always be in strong demand. ONS forecasts suggest that the Birmingham population will grow by almost 20% by 2039. Official forecasts say Birmingham needs around 89,000 new homes by 2031 but space for only 51,500 has been identified within the city itself. There will always be a market for this.
R2SA – Rent to Serviced Apartment
Rent to serviced apartment investments are when an investor rents out a place and converts it into a service apartment, and generates income from daily guest stays.
Instead of having a full-time tenant like other buy to let strategies, investors will gain higher daily incomes from those travelling for holiday or business.
For UK investors, R2SA’s are a great way to make money.
P&A specializes in this method, and we give upto 10-12% ROI on this particular property investment strategy as the profits are very high. Our bookings and occupancy are always maintained at a 95% occupancy rate. This is a great hands-off strategy with no need to deal with tenants.
With the right support system and popularity and demand, it is entirely possible to make large returns from this business strategy.
BRR – Buy, Refurbish, Refinance
BRR is a popular long-term property investment strategy. Initially, the strategy entails performing the steps that constitute the acronym BRR. This model can be broken down to its 3 elements
- Buy – Buy properties Below Market Value (BMV) that are old but structurally sound. This builds in immediate profit on the day of the sale.
- Refurbish – renovate the property! Modernise with new tilings, modern wiring and appliances, bathrooms, bedrooms, converting lofts and basements, decor. All of this adds value to the property price.
- Refinance – You can remortgage the property to pull your original investment out, and allow the immediate profit built-in at the time of sale plus the added value through refurbishment, in addition to capital growth over time, to all come together! You can then recycle your original pot of money, ready for your next purchase! BOOM!
By following this method, in theory, one small pot of cash can build a portfolio over time that can give you both cash flow and capital growth, ensuring lifelong wealth through passive income. Using BRR, a successful real estate investor can truly build a real estate empire!
This is a great above market value way of making money on your property. The guaranteed rent scheme works in a way in which you give your space out to an established real estate agency who always have occupants and will look after the interiors and any minor repair work in the house. As a landlord you will sign a guaranteed rent contract for, let’s say a 5 year period and you’ll continue to get money on a stipulated date every month, for the next 5 years. It doesn’t matter if the place is vacant or occupied, your money is as the name suggests, guaranteed!
If you’re a vendor or landlord tired of finding and dealing with tenants for your property, get in touch with P&A Property Sourcing Ltd. Based in Birmingham, West Midlands, we’re the answer to all your property letting issues. By offering guaranteed rent for up to five years and a free refurbishment of your property if required, we’re able to provide a hassle-free win-win service to all our clients across the West Midlands.
We offer a guaranteed rent scheme for up to 5 years. Even if your Birmingham property is empty, you get paid every month!
Buy2SA – Buy to Serviced Apartments
Increasingly popular and with return rates up to 20% and appreciating home values, this is absolutely without a doubt, one of the best property investments you could make. Buy2SA involves purchasing a property and then turning it into a serviced apartment for daily income from multiple occupants.
These types of properties are let out on a short-term basis as they’re rented by those seeking somewhere to stay while on holiday or in town for work. These properties are listed on websites like Airbnb to showcase holiday homes.
Service apartments allow investors to make attractive rental and there are also better tax benefits in this model.
It offers two types of return on investment –
- Rental Returns
- Capital Appreciation
So now that you’ve identified your goals, understanding your strategy will get you from present day circumstances to tomorrow’s positive outcomes wherein your high monthly cash flow is assured. Choose P&A, a trustworthy authority in the market, to keep your monthly cash flows high and consistent.