10 ways to make money
24th January 2018 posted in Sellers Buyers
1. Earn money from renting out part of your home
If you only need money in the short term or just need to earn a little extra cash each month or now and then, thanks to the internet it is now possible to rent out parts of your home you may not need and are not using.
For example there are sites which allow you to rent out your driveway as a parking space. This can be particularly handy if you live near a sports stadium where it is difficult to park on match days or near a station where the only parking is expensive.
There are even some sites which allow you to let out your loft space.
Before you add your property to one of these sites:
1. Check if this compromises your terms and conditions with your lender and/or insurance company
2. Find out how the potential renters are vetted; how do you know if they are legitimate?
3. What is the payment process?
4. How much will you have to compensate the website for introducing someone to you?
5. What happens if there is a dispute with the person renting the additional space?
Don’t forget you will need to declare any income you earn from letting out part of your home on your tax return and it may mean you end up being moved into a higher tax bracket or lose some benefits, so do take tax advice prior to entering into an agreement with anyone.
There are many sites available to help you make money from your property. While we cannot endorse any of them, you may wish to check out the following:
Rent out your driveway: justpark.com
Rent out your loft, garage, spare room or shed for storage: storemates.co.uk
Driveway, garage, spare room, land and storage: spareground.co.uk
2. Rent out a room within your home
Renting out a room in your own home has just become a lot more profitable – depending on where you live.
Renting a room in a property is normally done inclusive of all bills, including TV licence and utilities. Depending on the area you live in, renting a room can range from £50 to over £150 per week, which per year would work out to be over £2,500 or £7,800.
This could be enough money just to help with everyday bills, fund a holiday a year or help pay off your mortgage early, giving you financial freedom.
Unlike many other ways of making money out of property, since April 2016, you have been able to earn up to £7,500 a year renting out a room without paying any tax at all, making it a very lucrative way of securing money from your home versus even investments such as buy-to-let.
Of course, you have to give up your property to some extent, but this might be done from just Monday to Friday if someone is working away from home and doesn’t need the property over the weekend.
Tenancies can be provided on a short or long term basis, typically via a licence agreement.
It is advisable to seek professional advice to ensure you have the right contract and secure monies via a deposit which are then returned in a timely and fair manner at the end of the tenancy.
Despite earning money which is tax free up to £7,500 you still have to declare the income which HMRC should deduct from your tax bill.
3. Rent your home out for the day
This is something that may only work for certain homes in particular areas but it can help generate some income, albeit sporadic.
If you have a particularly beautiful period or ultra-modern home, if your home has a particularly great view – or fits a certain cultural style – then magazines and even film companies may pay you to borrow your home for a day or more.
It may just be for a photo shoot or they may wish to borrow your home for a TV series, although that’s quite rare. Other uses for a home for a day or so would be music videos or even commercial shoots.
You can get your property noticed by contacting location companies such as Sarah Eastel at https://jjmedia.com/.
The money can be good, from a few hundred pounds through to several thousand. However, the film and photoshoot industry isn’t known for giving good notice to use your property, it may just be 24 hours or less and you could have people you don’t know traipsing through your home.
So if you like to retain control, this is probably not something for you.
They will, however, pay to put your property back the way they found it.
And the good news is you shouldn’t have to pay to register your property, you just fill in a registration form and wait for the company to get back to you.
If you are offered a contract, it is good practice to have this checked out by your own legal company.
4. Rent out your home for a holiday or special event
As with renting out your home to a location company on a short-term basis, it is possible to rent your property out if you are in a particularly nice area for holidays.
For example, you might be in walking distance of a beach, open countryside or even a park such as Alton Towers. In the meantime you could stay with family or friends or even go on a holiday.
Alternatively if it is easy to park at your home and access an annual or regular special event such as Wimbledon for the tennis, major events at Twickenham or the racing in York, then it might be possible to let your property for a short time such as a weekend several times a year.
Other events which are increasing are the number of music or even food festivals which are now held around the country; not everyone wants to sleep in a tent!
Holiday or event sites may allow you to advertise your property for free, but make their money when you let the property, taking a percentage of the money you receive. They may or may not charge VAT on this amount, which at 20% can soon add up.
As with any ways of making money from your home, you should secure permission from your lender and insurance company and may well owe tax. In some areas, the local authority may ban some short lets, so make sure you understand if any local rules and regulations apply.
Although not necessarily a legal requirement, it is worth making sure your property is let safely and has an up-to-date gas and electrical safety certificate and carbon monoxide alarm. If you don’t have these certificates already, it is worth getting them to ensure you and your own family’s safety as well as that of your tenants.
The amount you can earn can vary dramatically, so talk to local tourist offices if letting your home or checkout sites which advertise properties for holiday and special event lettings.
5. Extend your home
It is often assumed that if you add additional space to your home that you will also add value. However, in our experience, this isn’t always the case. Sometimes you are better off selling up and buying to secure more space, in other cases it may well be better to stay put and extend the home if you are able.
There are lots of different ways of adding space to your home and as a rule of thumb, this is the order in terms of cost and hassle it takes to extend your property:
Convert your garage or an outbuilding
If you just need some extra space for a new lounge or office, converting your garage is often by far the cheapest way to add additional space to your home.
However, if you want people to be able to sleep in the space or add a bathroom or kitchen, then this will add to the cost as you will need to build and renovate to a higher specification and ensure the property passes different sets of building regulations.
Add an outbuilding
As the cost of buying a property with more bedrooms or space for a new office has risen, for some who are lucky enough to have a decent sized garden, it is possible to add either a bespoke outbuilding or convert an existing one.
As with converting the garage, this is a fairly straightforward way to add space to your home.
If you are considering extending your home, before you spend any money or secure any quotes, check two things:
1. Do you need planning permission? This depends on the area you are in and the size of the extension. Visit planningportal.co.uk for more free information.
2. Whether the area you intend to build over has any water supply pipes underneath as you will have to seek their permission before you build.
Another tip is to secure a survey on your home before you add any additional space via a builder so they can verify the condition of the property prior to work being carried out. This way, if you think the builder has caused problems during or after the build to the rest of your home, then you have an independent professional witness to support any claims you may need to make.
A double-storey extension is often more expensive per square metre than a single storey as it will require substantial amounts of scaffolding and also require stronger foundations.
It is more likely, but not necessary, that you will need to go to the expense and time it takes to secure planning permission, which also increases the costs.
It is possible to do a fairly cheap loft conversion, but only if no-one is sleeping in the space. The main issue is whether you have enough space for stairs so the area becomes part of the property or if a loft ladder is still required.
This is significant not just from a cost perspective, but also when considering how much value it will add to your property. If you are just adding space for a hobby room, then that can be done quite cheaply, but it is also unlikely to add much value to your property. However, if you can create a new third floor which will add bedrooms and an extra bathroom to your home, all integrated with a second flight of stairs, this will increase your home’s value.
Seek advice from your local property expert
Before you do consider adding value to a property by creating more space, do talk to your local property expert, such as Hunters. We will be able to help you understand the value of the property once the work had been done.
For example, is there an increasing demand for three-bedroomed homes and a falling demand for five-bedroomed homes? Do people pay more for a wreck than they do for a home in exceptional condition?
”We’re not just here to help you buy and sell a home; we can advise on many different aspects of property, too. Using our extensive local knowledge, we can help you work out if extending your home will add the value you expect or price your property out of the market.”
6. Build property on your land
If you have a big enough plot and additional access can be secured from the back, front or side of the property, then it may be possible to make money from your home by building another property.
Another consideration is “is their gold in your garden” meaning is the area big enough to build another property on it? Could you sell that area to a developer? To answer these questions you need to contact a specialist, call one of our branches and they may be able to advise you or point you in the right direction.
You may be able to turn your current detached home into a semi-detached property or retain two detached properties on the plot.
To determine whether this will add value or be a waste of time and money, it is worth securing three valuations:
1. The current value of the property as it is;
2. The value of the property if you managed to secure planning permission to extend;
3. What two smaller properties on smaller plots would be worth if you sold one or both separately.
Before you engage an architect, it would be worthwhile having a meeting with your local planners to gauge their view on your ideas – would they object or be happy to see another new property on the plot?
If the planners are willing to consider building another property on your plot, you can secure an idea of what property type they would be happy to see and then what this would cost to build.
Once you know how much it will be to build another property, don’t forget costs such as planning permission and building control as well as architect fees.
This will enable you to understand if the value of a second property would cover the costs and would add enough value from the two properties to compensate the loss of value on your existing home through a reduced garden area.
“The expert teams at your Hunters branch know property – and your local property market – inside out. This means they are well placed to advise you if you are considering building on your land, and can help you work out if it will be financially viable.”
7. Renovate a property for profit
This way of making money from property was made so popular via Sarah Beeny’s TV show, Property Ladder, and subsequent programmes that demand for properties far outstrips supply of wrecks which require renovating, meaning it can be very difficult to make money in this way.
In the past, it was possible to buy a property at a discount, update the bathroom and kitchen, freshen up the decoration and tidy up the garden in a matter of months, before putting it back on the market and making money.
However, part of the reason for making the money in the first place was because property prices were rising naturally. So renovators made money by adding value and also through natural property price growth.
To make money from renovation, you typically need to find a property which you can sell for 20% more than you pay out, including purchase price, and the costs of owning and renovating the property.
Buy a property for: £150,000
Costs to purchase: £ 7,500 (includes 3% stamp duty)
Costs to own and renovate: £ 35,000
Total costs: £42,500
Total investment: £192,500
Plus 20% profit: £231,000 sale price required
If you are considering purchasing a property for renovation, do talk to one of our Hunters property specialists as they can help you source a renovation project through their sales department but also via the auctions we run.
We can also help with valuations and renovation advice through our surveying service.
Know what tax you will have to pay
Don’t forget that you are likely to be taxed on the capital gains you make and that this is now higher for property than it is for financial gains.
As such it is advisable to check what money you invest will deliver via a property renovation project and during what timescale, compared with investing in financial assets.
8. Buy a property to let out
If you are considering buying a property to let, please read our three Buy to Let investment eBooks we have created which explain in detail how to buy, let and solve any problems.
As a summary though, buy-to-let is typically an investment which you need to make for a minimum of 10 years and ideally 15-20 years.
The reason for needing to invest for this amount of time is that the costs of buying a property to let and sell it are quite high versus other financial investments so you need to allow enough time for capital growth to outstrip other returns.
When considering buy-to-let investment, because you have to invest your money for such a long time, it is advisable to check what income and capital growth you would earn from property investment versus financial products and services, particularly if you are hoping to secure an income.
It is also essential to have the effect of adding an additional property to your personal wealth checked as this can impact adversely on your property tax. Adding rental income may mean you end up being a higher tax rate payer or you could lose child benefit support if it pushes your earnings over the required threshold.
Buy-to-let can make money over time, but it requires a lot of research and expert help at a local level to secure insight about the tenant market, rental income and potential capital growth.
Part of the success of those who have invested in buy-to-let is investing in property via a mortgage, which allows you to purchase an asset for more cash than you have, with the rental income hopefully covering your costs or earning you additional income.
So it is worth comparing investing in a buy-to-let property with or without a mortgage to understand how gearing can boost your returns.
9. Buy a property for cash
Properties which do not meet the criteria of banks and building societies and cannot be mortgaged need to be bought with cash, which can significantly reduce their value.
Examples of these types of properties include flats which have a short lease (usually below 80 years) and properties which are suffering from subsidence or have been built from non-standard construction.
To make money from these property types, you need to have the knowledge and contacts to make them mortgageable so they can be sold on the open market.
For example, if you buy a flat with a short lease, you need the knowledge and expertise to ensure that the property can be bought with cash at a discount. Then you need to be sure the lease can be extended quickly and at a price which means you can sell it on the open market at a profit.
The longer it takes to secure the new lease length, the more it will cost you to own the property, which may not be bringing in any income unless you are able to rent it in the meantime.
Auctions are normally places where properties such as this are sold, so you need to spend money on the legal pack and a survey to be sure you don’t offer too much on the day.
If you are keen to make money from buying properties with cash, do talk to one of our Hunters experts first as they will be able to help you identify what is available and coming onto the market and where to source the property deals.
Any money you earn from selling the property at a higher price is likely to incur capital gains tax which is higher for property than it is for financial investments. Therefore, do consult an independent financial advisor prior to investing tens of thousands of pounds in a property deal.
10. Build a property from scratch
Many people tend to turn to renovation projects to make money rather than thinking about buying a plot of land and building either your own home or a property to let or sell.
Abroad, many more people build a home themselves, whereas in the UK the numbers are low, with approximately 15-20,000 new build and major renovation projects carried out every year.
In some areas, plots of land are like gold dust, so it isn’t always possible to secure a plot at a low enough price, especially when you add the cost of materials and building.
However, in some areas such as the Midlands, there are quite a few plots available and it is possible to buy land, build and make a profit.
If you are considering buying land and building then do talk to our property professionals or, if you are able to, pay a visit to the UK’s only National Self Build and Renovation Centre in Swindon, which is open most days of the week. During the year they have some shows which you can attend for free and self-build and renovation courses should you wish to find out more about how to run a major building project.
When building for profit, timing is important as the longer it takes, the less money you will make.
The key to building for profit includes:
1. Buying a plot of land with at least outline planning permission;
2. Budgeting carefully. Typically the cost of land, materials and build will be approximately a third each. Include the costs of planning, building regulations and specialist services;
3. Investigating a self-build accelerator mortgage where you finance the build as your borrowing requirement increases;
4. Ensuring you build what local people are looking for, balancing the outdoor space, the upstairs and downstairs. For example you don’t want to build a family home with little garden space;
5. Making sure you employ quality tradespeople that offer guarantees and warrantees for the work they carry out.
Building your own property from scratch can mean you sell the property once mortgaged and secure a 30% increase in the capital value of the property, so if you spend £150,000 the property should be worth £195,000.
Take expert advice before proceeding
Making money from property depends on many factors, including the type of property you already own, your income, circumstances and the time frame to which you are working.
But hopefully this guide will have shown you that there are plenty of options available to you, whether you have simply have a spare room – or even a shed – you can rent out, or are in a position to tackle a major project such as building a home from scratch.
Whatever options you are considering, before you begin, always take advice from the relevant experts. If you require a mortgage, a specialist lender is essential, and quality legals and insurance are always recommended when undertaking a property project.
A good starting point is to talk to your local Hunters team, who will be happy to advise you, or point you in the right direction.