How to Invest in Rental Property as a Beginner (10 Tips for 2025)

Now that you know your goals and whether you’re looking at a short-term or long-term investment, it’s time to consider what rental property investment strategy is best for you.

Wondering how to start investing in rental properties? There are different types of investment property that you should explore.

Below, you can find five of the most popular investment strategies for UK property investors.

They are:

• Residential Rental Property –  The most simple form of rental income. Here, investors will buy a home to rent to a tenant. This can be a house or a flat.
• Student Accommodation – Purchasing purpose-built student accommodation to rent specifically to student tenants. Usually these are flats, but can be houses as well.
• Commercial Property/Business Property – Buying a property to rent to businesses or corporations. Office space, shops and other business spaces are all commercial property.
• Buy-to-Sell/House Flipping – Purchasing a home, increasing its value and then selling it for a profit. Usually involves making repairs and adding furnishings.
• Holiday Lets/Vacation Rentals – Investing in a vacation home and renting it out on a short-term basis to holiday goers. You can buy vacation rentals both domestically and abroad.

Each of these strategies comes with its own pros and cons and will be differently suited depending on your goals.

You can learn all about the pros and cons of each strategy and how to start investing in rental properties by checking out our property investment strategies  guide.

If you’re interested specifically in student property, you can also read our dedicated guide.

Another critical tip you should know if you want to learn how to invest in rental property as a beginner is to understand the costs involved.

Aside from the upfront purchase price of investment properties – the current UK average property price is £291,828 according to the Land Registry’s House Price Index – there are several other costs you’ll need to be prepared to pay.

These can include property taxes or ongoing expenses/monthly expenses like:

• Stamp Duty Land Tax
• Legal fees
• Land Registry fees
• Extra cash to deal with any unexpected costs
• Property management costs
• Capital Gains Tax on the sale of property
• Landlord insurance

If you’re asking how much money do you need to start owning rental property, you’ll likely need around £30k at a minimum for your initial investment. This includes a 25% mortgage deposit, stamp duty fees on a £100k property, a cash buffer, and legal fees.

While there are ways to reduce these operating expenses, like buying off-plan property or using the payment plans from a property investment company, the bottom line is real estate investing can be pricey. The required deposit for an off-plan property purchase can often be as little as 15% – 20%, so this is why investing in off-plan rental property can be a better value option.

You should also be sure to pay off any outstanding debt before investing, including paying off a credit card or other fees. High-interest debt can affect your credit score and make it harder to borrow a buy-to-let mortgage.

You can learn more about a breakdown of all the costs involved with UK property and the latest property taxes by reading our in-depth guide to “how much money do you need to invest in property?”

• Buy to let mortgage payments
• Down payment on a mortgage

With the average UK property value now surpassing £290,000, many real estate investors have been priced out of the market.

For this reason, you may need a buy-to-let mortgage to secure your first investment property.

If you intend on renting out a property and earning monthly income, normal real estate mortgages won’t be appropriate. Instead, you’ll need a specialist buy-to-let mortgage.

These mortgages work slightly differently from traditional mortgages. The majority are interest-only, which means you will only pay the interest each month without covering the overall debt.

Come to the end of your mortgage term; you will need to pay off the total debt by either selling the real estate investment property or re-mortgaging.

The main differences between buy-to-let mortgages and ordinary real estate mortgages are:

• Higher down payments and fees tend to be much higher.
• The minimum down payment/deposit for a buy-to-let mortgage is usually 25% of the property’s value.
• Mortgage loan interest rates are higher.
• You will need to earn £25,000 per year.

If you decide to opt for a buy-to-let mortgage, be sure to speak to a financial advisor to help you with your financial decisions, wealth management, and personal finance.

You can learn all about buy-to-let mortgages in our complete guide.

When evaluating the investment potential of real estate, it’s essential to focus on rental yields and capital appreciation.

Rental yields are a percentage figure that shows the return on investment you’ll earn through rent.

It is calculated by dividing the annual rental income by the original property purchase price and multiplying it by 100.

This is to calculate gross rental income (rental yields without factoring in expenses). Calculating NET rental yield is more difficult as you will need to know the costs.

If you’re buying with a property investment company, many companies will tell you exactly what NET yields you will earn, whereas if you’re buying through a property portal or auction it will be a lot harder to find out.

Generally speaking, the higher the NET yields the more you are likely to make from your rental income, as it is a higher percentage of your investment returning to you each year.

On the other hand, capital appreciation is the growth in a property’s price over time. You can look at predictions for future price growth in an area or look at past house prices for a specific property to inform how future growth will occur.

By focusing on these two factors, you can ensure you find a good rental property offering a positive cash flow.

With dreams of financial freedom, you may feel eager to climb the property ladder and rush into buying rental property and building a successful property portfolio.

And while real estate investment is undoubtedly a great idea in 2025, caution is key for long-term success. Beginners in real estate investing sometimes tend to jump the gun and bite off more than they can chew, which can end badly.

By starting off small and buying a single property in a property hotspot like Liverpool, you can familiarise yourself with the UK property market and learn what it takes to make a successful real estate venture.

While your cash flow will be less at the start, you’ll quickly learn how to maximise cash flow safely and efficiently.  Going slow is generally a good idea when investing in real estate as a beginner.

After this, you can re-invest your earnings and add more properties to your portfolio. For instance, you could buy one rental property per year in different UK investment hotspots and safely build up your property portfolio.

The final tip for those asking how to invest in rental property as a beginner is to do so with an investment company.

While the answer to the questions “Should I invest in a rental property as a beginner?” and “can I invest in rental property as a beginner?” is yes, the process can be tricky.

Not only do you need to ensure your rental property is a good investment, but you’ll also need to complete a bunch of legal paperwork which can be off-putting for a beginner property investor.

Thankfully, you can instead use the services of a property investment company like RWinvest. Not only will investment companies find you an ideal investment property for your goals and budget, but the majority of the paperwork will be handled for you.

You can learn more about property investment companies and the benefits of investing by clicking the link and reading the free guide.