If you’re craving more financial freedom or are eager to escape a rigid nine-to-five traditional working day, property investment could be the solution.
Regardless of whether you want to enjoy more sought-after time, channel additional money towards achieving your goals, or build up funds for your retirement pot, a passive income can really help.
What is passive income?
Passive income simply refers to any earnings that are generated from a source that’s not an employer or contractor. With real estate passive income, this means you receive income from renting out a property you’ve secured with up-front investment.
For the property to be truly passive, it’s worth discussing your property investment plans with a company that provides property management services. While this will come at a cost, you won’t need to play an active role in sourcing tenants, organising repairs, and keeping track of financial records.
Five ways to make passive income from property in the UK
Unsure which property type or activity is most likely to lead to a profitable, passive income?
Below, we explore the five different property avenues that can help you to obtain a passive income stream.
From traditional buy-to-let property investments to property sourcing, there’s plenty of options to choose between.
A BTL refers to a property that has been purchased with the specific purpose of being let out. One you’re the owner, you should be able to receive a steady income from rental payments. BTL mortgages are typically provided on an interest-only basis and can be used to purchase one of these properties.
One of the key advantages of BTL properties is you can leverage them, but they do come with risks such as the tenant refusing to pay, long periods between tenants, and Government changes to rental income taxation rules. Also the mortgage rates are cheaper than HMOs and Commercial investments refurbishment cost is cheaper
HMOs (Houses of Multiple Occupation)
An HMO issimply a property that’s let out to several different households or individuals. Each household o individual will typically have their own bedroom and share facilities like the bathrooms and kitchen or communal spaces with other tenants living at the same address.
These properties are commonly sought-out by students and young professionals. You will have to furnish the properties and the rent needs to factor the utility bills
They’re also known to generate a higher rental income than standard BTLs and come with less risks because you can expect to receive at least some rent even if one individual refuses to pay or moves out. Also you can get a investment valuation of HMO which be 2-3 times more than a standard buy to let due to the higher income
However, these properties can come with higher management, refurbishment and maintenance costs and compliance and license issues as there are more tenants to manage.
Commercial properties (namely, any property that houses a business) can provide fantastic financial rewards for investors. Plus, you’ll be able to save money on building insurance, property taxes, and maintenance costs because the business you decide to lease the property to typically becomes responsible for those costs.
However, you will be liable for the safety of the building (ensuring the building abides by the latest fire precautions and health and safety regulations), so it’s worth bearing this in mind.
Boasting the ability to earn the investor a much greater rental income than standard BTL properties due to higher nightly rates, serviced accommodation involves the leasing of a property for a short-term period.
Complete with all the comforts and furnishings a tenant could want, these properties are popular with individuals searching for a hotel-style service while they look for a more permanent property.
However, you may see an increase in the cost of buildings and contents insurance given insurers are likely to view this type of property investment as higher risk.
Unlike the previous property investment types explained above, property sourcing refers to the action of identifying, researching, and negotiating favourable property deals either for yourself or on the behalf of an investor. Typically you could charge a fee of 1-3% on the purchase price from your investor on the right deal
This service is valuable for investors as it saves them time analysing risks and finding properties that match with their strategies and desires.
Contact Mistoria Group today
With our property investment services, we’ve helped countless clients take their first and next steps to achieving a passive income stream.
From expert estate agents to property investment professionals, you can rest assured you’ll be in safe hands.
We can support you with everything from HMOs and BTLs to sourcing commercial properties and student accommodation, so please don’t hesitate to reach out today. We operate throughout the North West of the UK, specialising in Bolton, Liverpool, Cheadle Hulme, Manchester, Worsley and Salford property investments.
With so many offices in the North West, you’re never far from your local Mistoria Group office. Alternatively, you can also speak directly with a friendly member of our team by giving us a call on 0800 500 3015.
If you’d rather send an exploratory email first, simply send your enquiry to firstname.lastname@example.org or submit your enquiry using our convenient online contact form. Once we’ve received your enquiry, we’ll be in touch soon to find out more about your specific property investment goals.