What Type of Property Should You Invest in Coventry?

Choosing what sort of property to take on as you begin or continue to build your property portfolio is an important decision, with your individual goals, and what you wish to achieve with the investment, determining what property would accommodate those aims. Considering the many commitments and some of the legalities surrounding each avenue, evaluating the investment strategy that fits most in line with your means and circumstances is an important step to ensure you don’t regret your decision. To assist in this, we’ve compiled a comprehensive list of the common investment strategies for you to consider when making your investment choice in this Midlands city.

Buy-To-Let

This is likely the most common property investment type, and more so in Coventry, as of recent. Buy-to-let consists of buying a property, which you intend to be rented out to tenants acquired by yourself or an agent. The rent paid by tenants is arranged to be at an amount that covers the mortgage and any other potential costs to the landlord.

As straightforward as this avenue is on the whole, there is much to consider, beginning with letting it out privately or with an agent, as working with an agent can accrue a management fee but means everything can be sorted for you, whereas managing it wholly by yourself, means you must deal with all the legalities and proceedings individually, but have total control over your property. In addition to this, maintenance and stamp duty costs are to be factored into your decision, but as long as you choose the right property and tenants for you, these details will work themselves out.

HMO

A House in Multiple Occupation (HMO) is a property with 3 or more tenants forming 2 or more households, with a shared facility- whether that be a toilet, bathroom, or kitchen. This kind of investment property legally requires a licence to operate, making it super important to ensure that this is in place before you start moving multiple unrelated tenants in.

You may need to check and confirm with Coventry City Council if you have a smaller HMO, as this could fall under alternative or additional schemes, and you may need to be aware of other important information. This increasingly popular choice in property, particularly among first time buyers, can be a lucrative investment with the right management, but will initially accrue more costs to the landlord and will need more attention than some other investment properties.

Holiday Let/AirBnB

Short-term rental properties have the potential to make you a lot of money when done well. With the traditionally higher weekly charges than in your regular buy-to-let, this investment is expected to provide you with higher returns in a much shorter period of time. It’s important to note that to qualify as a holiday let, the property must be commercially rented for at least 105 days a year, and available for 210 days a year.

Picking a property in a location that is sure to bring you regular customers and, thus, regular income, is by far, the most important factor, so you will need to assess the area, and its attraction when making your choice. With Coventry Building Society Arena bringing in people from all parts of the country, and a plethora of amenities that Coventry has to offer, this makes it a perfect choice to set up a furnished holiday let. Due to the high turnaround of customers compared to other types of property, there will be significantly more maintenance for this and actually executing the running of what will be classed as a business, could be time consuming, or costly if you decide to hire cleaners and other maintenance staff.

Commercial Let

These properties are rented out to people running a business and can be used as a variety of things, such as an office, retail space, food premises etc. Like traditional rental, you can have long term tenants, who provide the regular rental income, which is often higher than residential, and with tenants usually being responsible for maintaining the property, your ongoing costs are fewer. Moreover, you are more likely to have stability with a commercial property due to tenant reluctancy to relocate their business.

However, recognising that economic factors can reduce the demand for some commercial properties is something to keep at the forefront of your mind as you decide on what property to take on, e.g., remote working has minimised the need for office spaces, not only here, in Coventry, but globally. As commercial spaces tend to be larger, there are more additional costs, and this makes them much more expensive than a residential property. The aforementioned reasons mean it can also be harder to sell commercial properties.

Buy-to-Sell

House flipping has become another common form of property investment and is the practise of buying a property requiring some renovation, at a low price, to develop and then sell on the market at a higher price. More experienced real estate investors are known for going down this route as it requires knowledge of what to implement to add to the value of the property.

As there is no monthly rental income, like a Buy-to-Let, you will only receive returns through capital appreciation, which in combination with the cost of potential renovations, means this can be a risky route.

Deciding what kind of property investment suits your situation is not something to be rushed, and with the right knowledge and resources, you’ll make the choice most accommodating of your goals. Prioritise calculating the potential capital gain and rental yield from the properties you consider investing in and compare them against each other, to be sure that you can acquire the highest return on your investment and become a successful landlord.

Maya