Finance for property investment is available for one of two reasons.
Either to assist you with the acquisition of an investment property or alternatively, if you already own the investment, to help you raise funds against it.
Should this be the case, then the funds being raised are usually to refinance an existing loan, perhaps for a better rate or a longer term. Alternatively, funds are often raised against an existing property as a way of releasing capital to assist with the acquisition of another investment property.
The advantage of owning an investment property is that it provides a steady income stream in the form of rent, whilst also offering an opportunity for capital appreciation.
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What are the different types of investment property that we help fund?
Investment properties come in all shapes and sizes and include:
- Residential investment properties – perhaps better known as buy-to-let. This way of investing in property has ‘mushroomed’ over the past two decades. However, recent changes to government legislation has made the buy-to-let sector a less attractive investment for some. However, for many investors, it remains a great way of preparing for the future, with buy-to-let proving to be a popular alternative to a pension arrangement. Buy-to-let includes houses and flats. The tenant paying rent occupies the property on an assured short hold tenancy agreement, normally for a period of 6 or 12 months, although many tenants simply ‘hold over’ on the tenancy agreement, continuing to occupy what is their home on a long-term basis.
- Houses in multiple occupation – known as HMOs. These are usually larger houses with typically 5+ bedrooms. Each bedroom is occupied by an individual tenant, with all the tenants sharing the use of kitchen and bathroom facilities. These properties are occupied by each of the individual tenants on an assured short hold tenancy basis.
- Student lets. These are usually houses or larger properties that are arranged in the same way as HMOs – bedrooms for each student and shared kitchen and bathroom facilities. There are also new blocks of apartments being built in increasing numbers, which are aimed specifically at the student market. They tend to be purpose built with each bedroom having its own bathroom or shower room with kitchen facilities usually shared. Obviously, student letting is common in towns and cities with universities and colleges, with the students occupying on an assured short hold tenancy basis for typically a 12-month period.
- Semi-commercial properties. Sometimes known as mixed-use, these properties tend to be in high street locations and are typically retail units, restaurants or offices on the ground floor, with a self-contained flat or flats above. The commercial unit on the ground floor will typically be let on a lease for a period of anywhere between 3 years and 10 years, whilst the residential flat(s) will be let out on an assured short hold tenancy agreement.
- Commercial investment property. These are properties which are totally commercial and have no residential element whatsoever. They commonly include properties such as offices, retail units, industrial buildings, warehouses, shopping centres and business and retail parks. They are typically let to tenants on long-term leases for between 10 years and 25 years.
You may be a full-time property investor, or perhaps property investing is a side-line to your main business.
Regardless, we have some great options when it comes to finance for investment property, so give one of our team a call and find out how we can help you further with investment property finance. For other options, learn more about bridging loans and property development finance.
