Investing in the property market in the UK in 2023 is probably one of the best ways to secure your investment while ensuring a good return on investment. Currently, a decent return on investment in the UK is around 5 per cent to 7 per cent. Of course, this depends on various factors such as the location, the neighbourhood, the size of the property, the size of the plot, the number of bedrooms and bathrooms, the condition of the property and so on. While there are certainly some risks when it comes to investing in property, as long as you do your research carefully and understand the market as well as the price trends before investing in any property, you will probably enjoy a good return on investment. So, how can an investor maximise their ROI in UK’s thriving real estate market?
First, let’s talk about how to calculate the return on investment. As a simple rule of thumb, your profit minus your investment is the average return on investment. Keep in mind, you need to calculate your profit after subtracting maintenance costs, mortgage costs, interest rates and any other additional costs. If a 5 per cent ROI is considered decent in the UK, that means that an investor will earn £1.05 on every £1 that he or she invested. So, for instance, if a buyer purchases a property worth £125,000 in Doncaster and the estate agents in Doncaster guarantee an average rental income of approximately £9600 per annum, then the buyer will get a whopping 11 per cent return on investment. This brings us to the question at hand; maximising return on investment.
Invest in the right location
Invest in upcoming cities such as Leeds, Manchester, Birmingham, Liverpool, Newcastle, Derby and Sheffield. With an influx of potential buyers and tenants, an increase in job opportunities and new developmental projects in the pipeline, these cities are going to be some of the most sought-after areas in the UK. Experts predict that the average price of property in Birmingham will increase by a whopping 24 per cent in 2026 whereas the average price of property in Leeds will increase by 21 per cent during the same time. To maximise your ROI in the short term or the long term, you need to invest in upcoming locations.
Choose the right property
To earn a decent return on investment, you first need to invest in the right property in the right location. Let’s say you are looking to invest in a property in a good school district. The highest tenant demand will come from families who are looking to move to a good school district, which means they will probably be interested in a spacious house with a garden or a backyard. Now, if you are thinking of investing in the city, you might want to invest in a flat or a penthouse, as your potential tenants will probably be young professionals.
Add value to increase your ROI
According to the experts, properties with gardens, outdoor spaces and garages have become very popular among potential buyers and tenants. If you want to add to your return on investment, you need to add value to your property. Consider creating an outdoor patio or maybe adding another bedroom. You could even create a garage that could be used for parking or could also be converted into a home office. Investing in smart thermostats and buying energy-efficient appliances could also add value to your home, which in turn will add to your return on investment. You can even consider a loft conversion: a typical loft conversion can cost anywhere between £500 to £600 per square metre, but it can add a whopping £23,750 to the value of your property.
Use social media to your advantage
To maximise your return on investment, you need to earn rental income. Unless your property is occupied by tenants, you are missing out on your monthly income, which is essentially your profit. This is where social media and targeted advertising come into play. Use advertising tools on social media to market your property to potential tenants. You can even use email marketing campaigns and customised Google advertisements to showcase your property to interested tenants.