The ‘no-buy’ ways to get involved in property
Who says you have to buy an investment property to be a property investor? Viewber looks at alternative ways to become a landlord or earn from property investment.
Rent to Rent
Rent to Rent is a way of becoming a property investor without actually owning a property. It’s a great way for people who have the time, knowledge and energy to run a buy-to-let but who lack the funds to purchase an investment property themselves. So how does it work?
The premise is property entrepreneurs find willing landlords to partner with. The entrepreneur becomes the property’s tenant, paying the deposit and agreeing a monthly rent. Instead of living in the property, however, the entrepreneur sub lets the property, with permission, hoping to achieve a higher rent.
Although the entrepreneur doesn’t need to buy a property to get started, they will need money to maintain the property and a good degree of lettings knowhow to run a legally compliant let. Success lies in securing rent that surpasses what they’ve agreed to pay the original landlord, or there’s no profit. This can be achieved by striking a bargain with the property owner, offering additional services, such as cleaning and laundry, or following the serviced apartment route.
Rent to Rent appeals to landlords who don’t want the hassle of finding tenants and managing tenancies, but who like the idea of guaranteed rent every month. It’s an alternative to using a letting agent and there are now companies that can help facilitate Rent to Rent, such as Rent2RentSuccess.
Residential investment trusts (REITs)
There are others way to invest in property without actually buying a house or flat. Putting money into a real estate investment trust (REIT) offers a lower cost way of joining the buy-to-let party. Instead of having to find a purchasing deposit - typically around 25% of a buy-to-let’s value - a smaller financial contribution goes into a bigger pot that, collectively, is used to buy rental properties. Although investors don’t receive the rental income directly, they share in any profits made and benefit from a portfolio of buy-to-lets instead of just one.
Bonds & equity investments
Similar to REITs, bonds and equity investments involve investing smaller amounts of money in house builders and developers. The money helps to buy land, develop plans and actually construct properties, with the house builder or developer’s profits paying out fixed returns over a set number of years.
Crowdfunding is a modern version of equity investment and can offer the quickest and lowest cost route to property investment – sometimes with a contribution as little as £100 that’s easily donated online. How the money is spent and what properties are bought becomes responsibility of a professional organisation, which will form a Special Purpose Vehicle (SPV) to make purchases. The ‘crowd’ element relates to the requirement for a number of people to chip in to fund an investment.
Investors can buy a share of a single buy-to-let property or contribute their money towards an entire development, such as a block of flats. Those using crowdfunding platforms should be aware that shares and profits [or losses] are always in proportion to the amount that is invested.
Rent to Buy
With a buoyant rental market, letting out your current residence instead of selling it can be a good strategy – not only to move up or down the property ladder but to also start earning an income from bricks and mortar. The advantage lies in someone already owning a home, therefore not having to specifically find and buy an investment property.
This strategy does involve working closely with mortgage lenders in order to ensure any mortgage on the property to rent out is compatible with buy-to-let, and that the home mover has the funds to buy an onwards property. The mover may also be liable for the increased second home stamp duty tier. At the end, however, the mover will own two properties and there is nothing stopping them repeating the exercise to build up a buy-to-let portfolio.
Viewber: an indispensable partner for landlords & investors
If you are starting a property investment journey – and bear in mind it isn’t a risk-free venture and profit is not always guaranteed – Viewber can become an integral part of your process. Our property visit, accompanied viewing and digital marketing services can be used for:
- Drive/walk-by appointments for scoping out new locations and properties
- Visiting properties for sale, listed with either estate agents or auction houses
- Property inspection reports at the start and end of a tenancy
- Letting trades in, locking up and receiving deliveries
- Key holding services
- Accompanied viewings to show prospective tenants around
- Open house events
- Creation of a digital marketing pack, comprising: photographs, 360-degree virtual tour, video footage and a floorplan
- Live video viewings from any property in the UK
Please get in touch to learn more about our Viewbers and how we provide on-demand UK-wide coverage, 7 days a week.