Property can be an attractive investment. Whether you’re an experienced investor looking to diversify your portfolio, or taking your first steps into investment with something that provides a steady source of income, property can be a great choice when supported by the right information.

This guide serves as a useful stepping stone in property investment for beginners.

Here, we some of the most important questions on how to invest in property and where to begin.

Property investment for beginners

Property investment can feel relatively ‘safe’ for many who enter into it. Tenants in your property can mean that your investment begins providing a return quickly. Property is also a tangible asset that holds its value reliably, unlike more volatile frontiers like cryptocurrency.

However, this doesn’t make property investment completely risk-free. Maintenance costs and prolonged vacancies can end up with a piece of property costing more money than it generates. The tenants that move in to your property may cause problems, mistreating the property or creating disputes over payments. These issues might cause more headaches than they’re worth.

Some beginner property investors may be experienced with other avenues of investing and are exploring property as another string to their bow. They may be looking to diversify their portfolio, meaning that they are making an investment that is different to their existing ones and reducing their overall risk.

For investors who are starting out with more financial means than time to actually manage and oversee their purchase, armchair investment may be an attractive option to take the stress of management out.

What property types can you invest in?

All kinds of property can be invested in, from one-person bedsits to large houses with multiple occupants, to high street stores. There are different types of property investment to reflect the different conditions and property entities that investors can put their money into.


This investment is the traditional type wherein a property is bought and tenants move in to pay rent. Buy-to-let investments can be helped with mortgages of the same name, which typically demand deposits of at least 25% of the property value up front.

Ideally, buy-to-let investments should recoup at least most of the costs incurred. The property can also ideally be sold for profit in future, either because the investor has got what they need from the investment itself or to help pay off the capital debt from a buy-to-let mortgage.

Buy-to-let investments do demand certain responsibilities when dealing with tenants, so there may be other costs to consider such as paying for property management or for necessary renovations and maintenance. In the latter cases, a joint venture investment may be ideal.


Houses in multiple occupation (HMOs) are properties that house multiple tenants not from the same household, i.e. family or legal partners. Commonly seen as shared student accommodation, HMOs typically have shared facilities like communal kitchens and bathrooms while having upwards of three bedrooms.

An HMO falls into the category of ‘large’ if:

  • It houses at least five people not from the same household
  • Some or all of the tenants in the property share facilities (e.g. bathroom or kitchen)
  • At least one of the tenants pays rent to stay there

Large HMOs in England and Wales require licences by law, but smaller arrangements may not need licences depending upon their local authority.

HMOs are popular for their ability to make large gains for investors, but they come with a lot of responsibility and can require more management than a standard buy-to-let arrangement.


Build-to-rent properties are an answer to the problems faced by many renters. They are apartment blocks built specifically for the purpose of renting and must include at least 50 homes.

Build-to-rents are mostly concentrated within London for the time being, but their presence across the UK is steadily growing. They often include on-site management and facilities to enhance quality of living, encompassing green spaces, gyms, and more.

These amenities mean that build-to-rent rates are higher than the average rental property, meaning good annual yields. For individual investors with the available capital, they can be a worthwhile investment.


Off-plan properties are those that are invested in before construction has finished. This often allows investors to be choosier over which plot they take and how the finalised property might look.

Since the value of a property will likely increase upon completion, this kind of investment can mean a safe bet for buyers who get in early, and some developers even offer discounts for early purchase to incentivise these investments.

Freehold or leasehold

Freeholders are people who own a property and the land it’s built on, making them solely responsible for the maintenance and associated costs of both. Most houses in the UK are freehold.

Leasehold means that the property itself is owned for the duration laid out in its terms, as part of an agreement with the freeholder. This doesn’t extend to the land, and if the property is a flat, the leasehold applies to that flat and not the building in which it is situated.

At the end of a leasehold, the property is returned to the freeholder. The lease can be extended by right of the qualifying tenant, depending on how long they’ve lived in the property.

Since ownership of the land does not apply to the leaseholder, nor do maintenance or any upkeep costs.

What are the risks of investing in property?

No investment is ever completely risk-free, and property is no exception.

Fluctuations in the housing market can affect a property at any point. Investors can be put into negative equity if the value of a property falls to below the mortgage that was taken out against it. Some properties are also limited by their locations and suitability for living arrangements, meaning there will always be a limit to how much value they could ever hold.

Buy-to-let and HMO properties can also suffer a lack of tenants or problematic tenants that impact previously reliable income streams. This can render these investments practically worthless for the time where they sit empty and waiting – not to mention ongoing mortgage and maintenance costs that the property might still incur despite lack of tenant.

Property investment presents a certain level of risk in that, like all investments, it ties up capital that might be needed in future. Investors with varied portfolios mitigate this risk somewhat, but those who lean mostly or entirely on a property investment are more at the mercy of the housing market.

Ultimately, for property investments aided by a mortgage, landlords risk repossession if they cannot keep up with the necessary payments. This is why different types of investment such as merchant investment should always be explored as possible avenues.

What mistakes should you avoid?

One of the biggest mistakes you can make with a property investment – like any investment – is believing that you can drop a load of money into it and duly receive a big return. Property investment needs a good working knowledge to manage and oversee to success, either from the investor themselves or the help that they’ve sought in the process.

When considering property investment, sound knowledge of the risks involved and the ways that money can first disappear before flowing back to the investor is essential. Successful investors can often shout about the victories they achieve in just a few years, and this level of hype could potentially mislead people into thinking that investments are easy money.

House prices can fall; maintenance work can end up being more extensive – and expensive – than originally thought; tenants can move out and leave a property vacant for some time while you spend time and money trying to find replacements.

Conversely, attempting to spend no money and manage your investment with as little actual investment as possible can backfire. Repairs that would have been small fixes could become worse while you wait them out, and unhappy tenants have routes they can take against landlords who are too frugal to meet their obligations.

It’s a good idea to plan your spending and understand likely numbers. This not only helps you to manage your own capital better, but it also helps you to gauge numbers from craftsmen, solicitors, and estate agents so that you can be sure you’re getting competitive and reasonable quotes for their work. Knowing your budget will help you prioritise spending and keep it sensible.

Investing in the wrong property or the wrong place is also something that can end up ruining an investor’s prospects. Some properties can struggle to return due to being in locations that are themselves lacking in investment. If you dream of a well-off family of four occupying your investment, that may not happen in an area with poor schools, high crime, and a lack of amenities.

There are many small mistakes that can be made when investing in property, but most if not all of these errors can be avoided by doing your homework. Building your own working knowledge of property investment, backed up by a trustworthy source of advice and expertise, will arm you better against accidents than any insurance policy.

How much capital do you need?

The amount of capital needed for property investment will depend on the type of property, the method of investing in it, and whether you’re seeking to use a mortgage option to help finance it. Shifts in interest rates can change the context of how comfortably an investor can afford their repayments.

Typically, buy-to-let investments will at least semi-fund themselves through rent payments from tenants, but there still needs to be some flexibility in finances in case these payments become insufficient or cease to exist for a while.

In July 2021, the average price of property in the UK sat around £255,535, according to the HM Land Registry.

This can vary wildly depending on the kind of property you’re looking to invest in and its location, so average numbers for your respective investment may not follow those of another.

You will need at least 25% of the property value if undertaking a buy-to-let mortgage, with additional money for stamp duty, legal fees, and other costs. Extra cash, commonly referred to as a buffer, is also a good idea to have in case of unforeseen costs. This should ideally be a few thousand pounds or thereabouts.

Property investment with Mistoria Group

At Mistoria Group, we can give you all the help and guidance you need in how to invest in property.

We offer different investment options to take the stress and uncertainty out of your investment and ensure you have a thorough understanding as we advance together.

To learn more about our property investment options, please contact us today.