The Best Way to Invest 50k in Property

So, you have £50,000 at the ready and, having considered all the options available to you, you’re thinking that investing in property is the way to go. Good choice.

An investment in property offers a multitude of benefits, not least the opportunity to build a diversified portfolio and the obvious advantage of an expected regular return seeing immediately along with ongoing capital growth.

Having 50k to invest in property is a great position to be in, but if you’re going to make the most of your investment, you’ll need to follow these steps.

1. What Does a 50k Investment Look Like? 

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 First, let’s talk about how exactly you can invest 50k in property.

To be considered for a buy to let mortgage, the deposit necessary can be up to 40% of the property’s value. So, if you’re looking to invest 50k in one property, you could see yourself buying a property for anywhere between £500,000 and £125,000. The higher the deposit, the lower the interest rates you pay and the better finance deal you can obtain.

Obviously, mortgage rates vary from case to case and your personal circumstances will play a large part in how far your investment can go.

Remember that your income will be taken into account when applying for a mortgage, so for a 10% deposit on a £500,000 property, you could need earnings of over £100,000 a year.

Of course, there is nothing to say you have to invest your 50k in a single property. If you want to build your portfolio and spread the risk, investing in multiple properties may be the smart choice.

Now we understand what you can do with your investment, let’s talk about what you should do.

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2. Don’t Invest Your Life Savings

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First and foremost, it’s important to take a deep breath and think about what that 50k means to you. Investing in property is a great way to see more return from your savings, and when compared with other investment types, provides less volatility, but it’s not a guarantee of returns. As with any investment, it comes with an element of risk.

If 50k is the budget that you’ve set yourself and you know you can safely afford to stake that amount, then you’re in a great situation. However, if 50k represents your entire savings, it’s worth considering if an investment of that size is right for you.

Despite the benefits of investing in property, before you invest any amount of money in whatever market you choose, you should always ask yourself if this is an amount you can afford to lose.

That said, there are many ways you can work to protect yourself against the risks of property investment. One of the main ways you can guard your investment against volatility is to diversify your property investments. Here’s how...

3. Spread Risk Across Multiple Areas 

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“Don’t put all your eggs in one basket”. It might be an oldie but it’s certainly a goldie.

While it might seem that investing in one property makes for an easier investment, it’s solid advice to use your 50k to begin to build up a diverse portfolio of properties.

One way to do this is to spread your investment across different types of area, such as having one property in a city and one in a supporting town. A city property can offer quick capital appreciation in locations like Preston while towns like Chorley offer the opportunity of lower purchase prices and traditionally higher yields.

By investing in both areas, you reduce risk. If one property does not immediately begin to show the return you expect, you have the second to fall back on.

The pairing of Preston and Chorley one of the best opportunities for this in the UK. With the areas seeing a huge public and private investment over the next few years, there is a great opportunity to see your investments flourish.

4. Don’t Just Look at Capital Growth

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When looking to invest your money in property, the first figure you’ll probably look at is capital growth. While this is obviously an important factor when it comes to determining a great investment opportunity, it should be considered alongside other, invaluable financial factors.

By looking at capital growth, you might be more inclined to choose a property at the higher end of your budget, eating up most of your 50k. Alongside capital growth though, you want your investment to be producing a healthy monthly income. That means you need to be looking at rental yield.

Rental yield can help you determine what properties, at the lower end of your budget, will help you see a healthy regular return on your investment. By basing your investment on rental yield, as well as a number of other important factors, you are able to spread your investment across multiple properties that all see you receiving a regular return.

If you’re worried about investing in a property that might have a high rental yield but you’re uncertain about gaining regular occupancy at the early stages of your investment, take a look at a developer who offers assured rental yields.

5. Choose a Trusted, Local Developer

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One great way to ensure your investment goes as far as possible is to invest with a local developer to see you through the process of finding a suitable property for you.

Local property developers will have unparalleled knowledge the best areas in which to invest as well as what types of properties worth taking a look at. Along with this, the best developers will also have access to exclusive developments that they’ll be able to offer at unprecedented prices.

As well as understanding the subtleties of the local property market and having the expertise needed to identify the best investment opportunity for you, a local developer will have access to the best contacts in the local area to help make your investment as easy as possible.

Through services like The Heaton Group’s HG Premier Lettings 360 property management service, the best developers have all the tools needed to make your investment returns-focused and as hands-free as possible.

6. Diversify Your Property Types 

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We’ve spoken about spreading your investment across multiple locations in order to spread risk, but the same tactic can be used with property type.

One of the benefits of investing in property is that there are a variety of different types to get involved with, each one targeted at a different demographic. Apartments and houses will all suit a different market and rise and fall in demand at different rates.

Having a hand in each can help you ensure your entire portfolio isn’t at risk of falling foul to a single change in the market. After all, there are often peaks and troughs with every type of rental property but they don’t all oscillate in unison.

For example, while city centre apartments might start to see a rise in demand, due to an increased number of young professionals living and working in urban areas, we might see a fall in the demand for suburban houses. A year on and this might change again, so it's important that you vary the types of property you’re investing in to guard against these fluctuations.

The same can be said for different demographics in your chosen area. You might decide on a property, say in the Preston area that specifically targets retirees looking to downsize. But what happens when the student population in Preston begins to rise because of an increased investment and expansion of the local university?

A local developer will be able to help you identify the optimum types of properties in your chosen area and highlight any upcoming trends in the market. 

It’s important to remember that, in order to mitigate risk as much as possible, property is an investment that should be considered part of a diverse portfolio of investments spread across various markets.

The benefits of investing in property are clear for all to see. If you take the time to seek out the perfect property for you with a developer that has a track record of delivering returns, you put yourself in the best position to see your 50k go as far as possible.

If you want to learn more about how to turn your 50k into a brilliant property investment, make sure you read our FREE eBook: How to Invest in Property the Easy Way: Strategies for Success and What to Avoid.

Download your free eBook - How to invest in property the hard way


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