How to make money from the property market

Here are some great ideas to help you make money from investing in the property market:

Use Local Knowledge

If you’re looking to invest in property, it’s hard to know what will be good value and what will bring you the best return when you’re miles away from the place you want to invest in.

Try and look for bargains in your area so that you have all the important information you need about transport, schools, local amenities, etc. at your fingertips. If you do want to invest in another area, make sure you speak to a local expert who can advise you on the best properties for your money.

Choose Flats

Flats and apartments actually tend to generate a better return on investment than houses do. This is because students and young professionals are more likely to rent in the city centre and desire furnished, compact accommodation.

Try and invest in flats that have two bathrooms and two bedrooms, as they will offer more flexible accommodation options to anyone who wants to do a flat share with someone they don’t know or simply live with a friend while retaining their own space.

Be Tax Efficient

It can be hard to manage taxes, especially when you have more than one property. There are, however, some different ways in which you can keep your tax bills down and really capitalise on your investments.

Try and save as much money as possible on any tax-deductible items, such as property furnishings, and if you are married, consider splitting the rental income with your partner, so that you pay tax in the most efficient way possible.

Spread Your Investment

Don’t get too excited and put all of your eggs in one basket, try and spread out any investment money you have to cover your back at all times. Having a range of properties in your portfolio is more likely to help you financially than just depending on one individual property.

There is nothing to stop you investing in a villa in the south of Spain, but think about also investing in a nice little student property in Manchester that you know will always prove easy to rent out.

Home Sweet Home

If you’re trying to decide how you can make some money from the comfort of your own home, then consider the house you live in first. If you are thinking of selling up, then try and offer buyers as much added value as possible. Look at getting a loft conversion or extension, as this could add up to 20% to the overall value of your property.

If you live in a large house and your children have all flown the nest, you could be thinking that your house is too big and you need to downsize. There is an alternative. Consider dividing your house into a few different flats, this way you can keep one for yourself and rent the others out.

How to spot the next up and coming area

Buy a property in a truly up and coming area, and you could be a hundred thousand pounds richer in just a couple years. Yet, in some areas described as “up-and-coming”, it will take decades for property prices to rise significantly. So how do you tell the diamonds from the duds, and spot a really profitable area for investment?

1. London

Gentrification, or the process of going from backwater to boom town, happens more quickly in London than anywhere else in the UK. London’s up and coming areas aren’t exactly secret – prices in Hackney and Dalston famously rose by 17% in just one year in 2013. Walthamstow is the new word on the lips of investors as young families and media professionals escape to E17.

Our top tips for a wise investment in London are Clapton and Lower Clapton – while still more affordable than Hackney Central and Dalston, these areas are now teeming with posh eateries – read on to find out more about that.

2. Posh Eateries  - the Chipboard Index

Independent coffee shops and delis with chipboard tell you that people with higher levels of disposable income are starting to move into an area. The key is to look for these eateries starting to emerge in a locale that previously only had chicken shops and greasy spoon type cafes.

The Chipboard Index is closely related to the Cupcake Index – look out for artisan bakeries and patisseries, and of course, anywhere serving stone baked pizza or craft ales.

  BUT avoid chain coffee shops

If an area already has a Starbucks or Costa, it’s probably sold out to some extent and will be expensive, without the dramatic growth potential you’d see in a truly up and coming area.

The exception here is central London, where we’re seeing pronounced price rises regardless of gentrification – at least for the time being.

3. Does it Have the Basics?

Though chipboard coffee shops are nice to have, ultimately the well-off families that move into an area and spur price increases are going to be looking for a place with good access to amenities. Look for areas that have nearby supermarkets, schools, train stations, and motorway junctions.

Even better, are such amenities planned for this location in the next two years?  If the area currently has limited transport links, but plans are in place to add a tube/train station or better road access, then this could be a prime area to buy property as an investment.

4. Up and Coming by Association

We’re all familiar with the phenomenon of those who live in one area and claim it’s actually part of a more desirable area. For example, those living in Camberwell might prefer to call it East Dulwich, and Finsbury Parkers may say they live in Islington.

But does this make any difference to house prices? Well, if your target area is within easy reach of a desirable area, say within walking distance or one stop on the train, it’s likely to be “up and coming” by association, and could represent a wise investment.

5. The Estate Agent Index

It’s easy to have a quick Google and figure out how many estate agents an area has in comparison to its neighbours. Again, it’s worth noticing when these start to pop up in areas that were previously not so hot. Estate agents research their locations and open in areas that seem as though they will become very desirable within a couple of years.

Obviously, expensive, established areas will have lots of estate agents too, but combined with the other tips in this article, the estate agent index is a good sign that you’ve spotted a truly up-and-coming area.