Property remains a popular investment option – but contrary to some popular belief, you don’t need to have hundreds of thousands of pounds of disposable income to make a foray into this market. In addition to buying property – either outright or with a mortgage – there are various other ways to start investing in the property sector. Here are some of your options.
Purchasing physical property
Any property you purchase and live in will be an investment – it has the potential to increase in value over time. Others choose the buy-to-let route, giving them the chance to make money through both increases in the property’s value, and any rental income that it brings in. With long-term tenants, this can provide a stable income source – however, the large deposits needed, mortgage terms and stamp duty considerations may not make it appropriate for some.
Real Estate Investment Trusts (REITs)
Introduced in 2007, REITs were originally launched to make it easier for people to invest in property. REITs are generally based around commercial property, with some focusing on specific property sectors. REITs have the potential for strong annual dividends and are easy to buy and sell – however, capital appreciation can be low.
Alternative property investments
REITs are not the only option when it comes to property-based investments. There are various other indirect property investment types, including:
- Offshore property companies
- Land banking schemes
- Property ISAs
- Property company shares
- Property unit trusts
Part-ownership of buy-to-let properties
There may be another new way to invest in buy-to-let property on the horizon. New app, Portfolio, is a fractional property investment app, that is structured as a REIT. Investors can buy Portfolio shares, earning them rental profits which increase if the property values increase.
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