If you are looking to launch yourself into a new type of business or are already in the business of property investment or real estate, you may be looking for some of the best investment outlets.
This will leave you to have the question “What is the best way to invest £100K in property?”
Choosing to invest in property can be a great way to generate some extra income for yourself. This can be done from both an active and passive stance. Active investors handle all aspects of purchasing and maintaining properties, while passive investors purchase properties but then bring in someone else to manage properties and any other day-to-day operation set.
Like all markets, it has its ups and downs, but real estate can end up bringing in some of the highest returns when comparing them against stocks, bonds, and some other investment options.
Aside from the rate of return, you can achieve, the leverage and tax breaks that come with investing in property can both be great benefits for an investor as well.
As with all investing, you must be careful of your strategy and risk you choose to attach your portfolio to, but with the right technique, you will be able to yield some great returns.
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In the U.K. there are some exemptions on stamp duty tax. Back in 2017, the U.K. government did away with some of the taxes.
For anyone owning a property that is valued up to £300,000 does not have to pay the stamp duty property tax. For any property that is valued up to £500,000, it is exempt from paying the stamp duty tax for the first £300,000 of its projected value.
This has meant less revenue coming in for the government but has made home buyers save roughly £5,000 that would not have been saved prior to 2017. Tax laws may change year to year depending on the needs of the government and other factors as well.
Second properties bought also have a different tax rate and value cap than a first property as well.
Non-residents also have to pay a little extra tax percentage. This means if you live in Northern Ireland and want to buy property in Wales, you will likely pay an extra 2% on the stamp duty tax.
There are multiple ways to find the best way to invest £100k in properties. Here is a quick list of different property types that are often invested in. These can be done by choosing one property type of making a spread across multiple property types.
Wholesaling is an investment technique that as the investor, you would act as a middle man to make gains. This means you would find properties that are undervalued or in a rush to sell and then find another investor or contractor to buy the property at a fixed price and get profit by taking a wholesale fee.
A fix and flip can be a real hit or miss and can pose a great challenge for investors. A property can quickly end up costing more than projected or worth, but can just as easily end up being a hidden gem and worth a great deal. The goal here is to buy, fix, and resell to another investor and move onto the next. There is always the option of after fixing it up, the property may be kept and then rented out.
Single-family properties are your typical property that is bought and ready to go. These often need little to no updates and are able to house one family unit within them. These properties can have a bit of a challenge as at times it can be difficult to determine what to charge for rent. But all in all, these can be pretty good options.
Multi-family properties are designed to fit two, three, or four families respectively. These properties are all set and ready to house multiple different tenants and are often highly attractive to property investors because it is two birds with one stone type of situation. You would buy one property and would then be able to rent out to numerous families.
Turnkey investment options are property types that often allow you to have some sort of guarantee as you head into it. This is because a turnkey rental property is all set to go and just waiting for a new tenant or already has a tenant ready and waiting.
This is a property investment technique that has multiple people going in together on investment, but likely all you will be doing is putting your money in on the project and getting reporting back until you yield returns. As you put money forward, there will be other people handling any day-to-day operations.
This type of property investing is exactly that, a property funded by a “crowd.” This is when a group of investors goes in on a property together and then split the investment’s return by a certain percentage either based on people or who invested what portions towards the total needed amount.
This real estate option is a very liquid way to invest in property. These real estate investment trusts can be a variety of different property types. There may be private, public, commercial, or any other type of property either as stand-alone or even under brand ownership.
So looking at our quick list, that leaves just one last question.
What is the absolute best way to invest £100k in property?
The best way to invest £100k in property is ultimately up to you as the investor. Investing in property allows you to invest in numerous property types and gather up a portfolio built up in any way that you want.
Maybe you find a great single property to invest your money in and maybe you can spread the funds out over up to five different properties. Either way the choice is fully yours and how you want to build your property portfolio and the amount of risk you would like to take on.
Lydia is Pearl Lemon’s Head of Internal Growth. Outside of Pearl Lemon, you can finder her running, lifting, and hiking.