Most people know that investing in property is lucrative. So, understandably they want to get involved. Every year, tens of thousands of people buy their first property and get started on building up their portfolio.
But, what about those people who do not have a lot of money to invest or cannot get a mortgage? Can they still make money from property? The answer is yes. Here are a few approaches they could take.
Lend money to property developers
There is a growing demand for asset-backed property finance. Developers everywhere need to borrow to be able to build or renovate. In the past, traditional bank loans, mortgages and bridging loans were the only viable way for them to secure finance.
Today, there are other options emerging. One of which is asset-based borrowing. Forward-thinking lenders are now prepared to lend money based on a percentage of asset value.
The loan is secured against the asset, that is to say, the property or land the firm owns. In the past, lending decisions were mainly based on income levels and cash held. Asset-based lending makes it far easier for property developers to borrow more.
Up until fairly recently, it was not possible for ordinary members of the public to get involved in this lucrative market. Today, they can. There are now asset-based lenders who will take as little as £1000 from private individuals as an investment. They lend that money to one of their property developer clients. Once the cash has been paid back, part of the profit from the deal goes to the private investor. So, it is a way for small scale investors to start making money from the property market.
Buy a cheap property
Another way to get involved in the market is to buy a sub £25,000 property. Admittedly, there are not many available at this price point. But, recently a reporter from a national UK newspaper uncovered 20 properties that were priced at under £20,000. So, it is possible to invest in this way. Importantly, they were not all studio flats or wrecks.
Invest with others
If you cannot find properties that are cheap enough to buy, it is always worth considering investing with others. There are many ways to do this. Your options include clubbing together with friends and family or becoming part of a real estate investment club.
Convert your garage
In some places, getting permission to convert a garage or other out-building into a room or rooms you can rent out is a viable proposition. In high rent areas, you can quickly cover the cost of your initial investment. Typically, garage conversions cost from £14,000 to £18,000. But, be aware that you are highly unlikely to be able to sell it. Most UK councils will not allow a garage to be sold as a standalone property.
Do your research carefully
Each of the above is a viable way for someone with a relatively small sum of money to get involved in the property market. Each option has its pros and cons. So, you need to do your research before investing.