There are a lot of new factors which are merging together so that buy-to-let investors can profit from property in completely new ways. The housing market is becoming extremely popular in Britain, alternative finance is seeing new developments and growth, and of course the Internet is always becoming more and more prestigious and easy-to-use.
There are a couple of primary, alternative ways people have been investing in property which are drawing a lot of attention. These two ways are crowdfunding and off-plan auctions.
Off-Plan Buy-to-Let Property Auctions
Ebay is the main leading auction site and that is where most people look for online deals, but that is just the tip of the iceberg. There are, in fact, quite a few auction-style sites and they are increasing.
They all present the chance for you to get in on a property bargain. In fact, a great number of these websites even cater specifically to off-plan properties which have not yet been finished.
Allsop works a lot like Ebay but it is designed for the sole purpose of bidding on new-build properties.
Another difference between the two sites is that Allsot has taken measures so that a competing bidder cannot make a bid at the last second before another has the chance to take notice or respond. This is called sniping.
The way Allsop stops this is by having a clock which will reset for another 60 seconds when a new bidder comes in at the last moment, thus others have the chance to react.
Although bidders on Allsot must pay a fee of £5,000, this money will be refunded should they lose the bid and if they win it will count as part of the deposit.
These auctions tend to last just a little longer than a day (24 hours). It is also important to note that a winner must pay a fee of £1000, plus VAT, and 10% of the purchase price.
A winner will have a few months to complete the transaction, but it is suggested that the bidder have finance already lined up before making the bid.
Crowdfunding Buy-to-Let Property
The idea and method behind crowdfunding has been used by many small businesses. These small businesses utilize websites, such as Kickstarter, to attract funds.
Investors also use crowdfunding, however, as it allows them to band together in order to make property investments, thus they don’t have to pay as much money as they would through other methods.
Housecrowd and Property Partner and a few other sites let investors use this method of property investment, allowing people to pick a piece of property and then pay part of the amount along with other investors.
Of course the amount an individual must invest is different depending on the platform. Generally this amount ranges from a minimum of £1000, although in some cases it is only £500.
After the entire purchase price has been raised the property is then bought. It might be bought by the investor with the highest amount of money involved, or by the company which is actually operating the investment platform.
Returns are then given to investors proportional to the amount each individual invested. Through an affordable investment individuals can still have access to the property market.
After a certain period of time, generally years, the property will be sold and investors given their share of the revenue.
In some cases an individual may be able to sell their interest in the property before this time.