Property investment niches – What are my options for investing?

There are lots of ways to invest in the property market and some of them involve very little initial outlay, for example, you could buy bonds from or shares in a property-related company such as a home builder.

Even if you narrow down property investment to activities which involve you buying a property and then monetizing it in some way, there are still plenty of options from which to choose. Here is a very brief guide to the main ones.

Property development (also known as buy-to-sell or property flipping)

Although this is the area of property investment which tends to get the most “reality” TV coverage, it is actually a very specialist niche and the people who make a sustainable living out of it (as opposed to just getting lucky with one property) tend to work very hard and have a lot of skills, knowledge and trade connections as well as substantial cash savings (or other financing) which they need to use (and hence put at risk) during developments with no guarantee of achieving any profit upon the sale.

In short, if you’ve really set your heart on this area of property investment, then you’ll be pleased to hear that it is still possible to make a very respectable living from it, but it is definitely not “easy money”.

Buy-to-let

Even though the media tends to use the term “buy-to-let investment” as a synonym for “long-term, private residential property investment”, buy-to-let investors actually have numerous other options available to them.



Commercial property

Commercial property can basically be divided into two kinds. One kind is genuinely used mainly by companies (e.g. office buildings) and the other kind is essentially residential property in disguise (e.g. purpose-built student accommodation). Both sorts can be profitable and both are perfectly accessible even to smaller investors.

Houses in multiple occupation

HMOs are particularly highly regulated, which is saying something, but they can also be very profitable. The simple fact of the matter is that for many people, especially young adults, “home” is basically a place to store their stuff and take care of everyday necessities such as sleeping, washing and eating. The rest of the time, they’re out and about, studying, working and or socializing. HMOs are a great option for these people, hence the fact that places in them are generally in high demand.

Short-term lets/holiday lets

The short-term letting (or “Airbnb”) market has become a very contentious issue in some UK cities, however in more rural areas it tends to be not just accepted, but actively encouraged as a means to reduce the supply of unused houses and increase the revenue for the local authorities and local people.

“Holiday cottages” in rural areas tend to generate most, if not all, of their income between late spring and early autumn, however this fact can be offset by the fact that they tend to be much more affordable than properties in cities and hence can generate much better yields. There are also some areas where the local authorities put on events outside the main tourist season precisely to encourage visitors at what would otherwise have been off-peak times.