Buy-to-Let Strategies: Options to Make Money in Properties

Important to know

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

If you want to add properties to your investment portfolio, you should know the available options. Knowing the best buy-to-let strategies to make money in properties may be the difference between making a profit and losing money. 

This article is a comprehensive guide on the options to explore in investing in buy-to-let properties, their pros and cons, and many more. Read on. 

Different Ways of Investing in Buy-to-let Properties

Here are the different buy-to-let strategies to make money in properties. Bear in mind that the choice you make is dependent on your peculiar circumstances. It is also ideal to decide after consulting with an experienced mortgage broker. They can provide valuable insights and help you navigate the complex world of property investment. 

#1. Rent-to-rent Investing

Many landlords are seeking ways to bypass property maintenance and the hassles involved in getting tenants. Such landlords, therefore, relinquish the running of their properties to others who, in turn, rent it out at an added profit margin. This is known as rent-to-rent investing. 

You may wonder how this works. Rent-to-rent investing entails paying a stipulated monthly rent to the original landlord. You then sublet the property to other tenants at a higher rental amount to make a profit. 

Let’s take a look at a real-life example of how rent-to-rent investing plays out. 

  • First, you need to find a rental property. Once you’ve found one, you can make an offer to the landlord on the monthly rent. This amount is usually below the market rent, and it will cover the cost of maintaining the building and finding tenants.
  • If you pay £600 to the landlord, you can find tenants to let the property at £1000 monthly.
  • Alternatively, you can rent the property as a short-term rental and earn as much as £1,500 monthly. 
  • If you do this with six properties, you can earn a monthly income between £2,400 – £5,400.


  • The rent-to-rent model does not require buying a property, making it an easy way to invest in properties. 
  • You will bypass stamp duty as well as having to take out a mortgage. 
  • You can easily manage multiple properties using this model. 


  • It may be challenging to find landlords willing to accept this arrangement. 
  • You may find it difficult to get suitable tenants. 
  • The landlord transfers the property management to you which may lead to an increment of additional cost. 
  • Not being the owner cuts you off from the benefits of any property value appreciation.
  • If you decide to convert to an HMO, you will need to get licenses and certain legal documentation, which can result in additional costs. 

Notwithstanding the cons of rent-to-rent investing, additional risks are associated with including.

  • Being liable for any damage on the property caused by the tenants.
  • If tenants are unable to pay their rent, you will still be required to make the agreed monthly payment to the landlord. 

#2. Single Buy-to-let Investments

The property business is a viable and attractive investment option for most individuals. Many investors buy a single house or flat and rent it out. They make the purchase with cash or a mortgage loan, hoping that the property’s value will increase with time. 

Buy-to-let investing has been popular among individuals seeking higher returns on savings. However, managing a BTL is time-consuming and stressful. The government has also initiated many changes to the tax rules, making BTL less lucrative by the day. 

It’s important to consider these factors when deciding if buy-to-let investing is right for you. Over time, the tax relief on mortgage interest has been phased out. Taxes are now paid on full rental income before mortgage interest deduction. 

Although the new tax rule introduced a 20% tax credit, this only benefits people in the basic-rate tax category. Additionally, a 3% stamp duty surcharge has been introduced on second homes and BTL.


  • By buying property, you can be sure of a steady income trickling in as rents. 
  • It provides an opportunity for investors to have tangible assets. 
  • The property value can increase with time and be sold at a profit. 
  • You can get insurance coverage for damages to property.


  • It requires time and effort to manage.
  • Due to recent tax changes, buy-to-let properties are less profitable than they used to be.
  • It takes time to liquidate, so your money can be tied down for a while.
  • You cannot hold a single buy-to-let property in a pension or tax-free ISA.

There are risks associated with single buy-to-let investment, including

  • Government regulations can devalue your property
  • The price of property may nose dive, leading to losses.
  • Tenants may fail to pay rent; eviction takes months, leading to rental income loss.
  • If a tenant damages the property, you may need to pay for the repairs out of pocket.

How to Calculate Your Rental Yield

The rental yield is the expected return on investment on a property. It is a major factor investors consider while buying a property. 

It shows how much income a landlord can generate from their property compared to the cost. In simpler terms, it’s a measure of how much money you can make from your property investment. 

Here is how to calculate rental yield:

Annual rental income ÷ cost of purchase x 100

#3. Student Property Investment

Investing in properties targeted at accommodating only students is a smart move. This type of investment, known as student property investment, includes housing blocks, flats, and even private houses for students. 

The student rentals business is flourishing in the UK, with over 600,000 buildings as purpose-built rentals. Many students prefer living away from their family home, increasing the demand for student rentals. 


  • There is a high demand for this kind of property. Studies show that an average of 3 three students compete for each room.
  • Because of the demand and more people paying the rent, the income from this investment is higher. 
  • There are fewer hassles with maintenance and management for most purpose-built houses.
  • The buildings are usually located near town centers making them more attractive to tenants. 
  • You will receive full rent for the property even if a tenant moves out.


  • The houses may be occupied during summer holidays leading to reduced or no income within this period. 
  • Houses are more likely to experience higher wear and tear than buildings rented out to a family because more people will be on the property. 
  • Most tenants are short-term so you may need to be looking for tenants frequently.

Student property investment is not without some risks, including:

  • Investors run the risk of investing in unregulated schemes, thereby leading to a loss of money. Investing in an unregulated scheme means you will not be able to recoup your money from  compensation paid by the Financial Service Compensation Scheme (FSCS)
  • Lowering the threshold for student loan repayment and high tuition fees has resulted in lower demand for university education. 

#4. House of Multiple Occupation (HMOs)

An HMO is an arrangement where three tenants or more from different households occupy a building and share its facilities, such as a bathroom and kitchen. This type of living arrangement is most common among students, although some individuals wanting to live in a shared house may find it appealing.


  • It is a cheaper housing arrangement for people with limited options.
  • There are many tenants, so the rental yield is considerably high. 


  • There are stricter rules guiding HMO properties than regular buy-to-let.
  • It may require more time to manage.
  • The cost of maintaining the property is usually higher. 
  • You must get licensed by the appropriate authorities before you can operate. 
  • Getting a mortgage won’t be easy, as regular BTL mortgages don’t cover HMOs. 

You may also encounter the following risks:

  • The property is more prone to damage because more people occupy it as tenants.
  • Failure to keep up with the stipulated rules can lead to fines, which typically run into thousands. 

Property Yield Illustration: HMO Vs. Standard Building

Property: A 4-bedroom house

Purchase Price: £300,000

If the property is rented out to a family or household for £1,200 per month, the calculation for the rental yield is as follows: 

Annual Rental Income:  £1,200 × 12 = £14,400

Rental yield: £14,400 ÷ £300,000 × 100 = 4.8%

If the rooms are given to individual tenants through an HMO, the rental yield will be as follows:

Monthly Rental Income per tenant: £450

Annual Rental Income: £21,600

Rental yield: £21,600 ÷ £300,000 × 100 = 7.2%

The above example shows how much rental income a landlord can generate from a property using the HMO vs. BTL scenarios. However, the calculation does not take into account management costs, agency fees, licensing, or mortgage costs. 

#5. Buy-to-sell Property Investments

A buy-to-sell property investment involves buying a run-down property, renovating it to increase its market value, and then selling it at a higher price. This process is known as “flipping.” This type of property investment requires in-depth knowledge of the local market to know what kind of property is in high demand. 


  • You can quickly profit from this type of property investing, as it involves securing the property at a lower price and selling it as its value increases.  
  • It requires less initial investment capital, making it easier to enter the property market and build up one’s portfolio.
  • You can learn so much and have the added satisfaction of a successful project. 


  • Refurbishing the house can be expensive and reduce the amount of profit made. 
  • If you sell the property and make a profit above £12,300, you will need to pay capital gains tax.
  • Lack of immediate income as you will need to wait to complete the renovations before selling the property. 

Buy-to-sell property investments are also prone to the following risks:

  • The expenses for refurbishing the house may be higher than expected, thereby eating deep into your profit. 
  • You may find it difficult to sell the property immediately. This means you will need to pay mortgage interest and other bills out of pocket until you can successfully sell the property. 

Real Estate Investment Trust (REIT)

If you are looking to invest in properties without the hassles of direct management, then REIT could be ideal. Real Estate Investment Trust allows individuals to invest in the property market and earn income as dividends. 

There are different options when it comes to REITs, including peer-to-peer lending. You can also invest in REITs aimed at sustainable development, such as Home REIT. 

Bottom Line

The property market offers great profit potential and diverse options. Therefore, it is ideal to consult an experienced expert who can advise you and help you make an informed decision. 

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Luca Bertolino

Mortgage Expert

Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.

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