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How to Make Money from Property

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Knowing how to make money from property can be tough, and while it’s certainly possible, it’s not easy. If you’re considering this, you need to have your eyes wide open; it’s not quite as straightforward as buying a property and renting it out. There are many approaches you can take, each with their pros and cons. Let’s take a look.

Making money from property

  1. Rental income
  2. Buying & selling a renovation project 
  3. Buy-refurbish-rent
  4. Commercial property income
  5. Holiday homes
  6. Lease your land
  7. Lodgers

Do your research

First things first, it’s important to be aware that while all of these are options, they’re not for everyone. When it comes to buying a second home, it’s essential to do thorough research so you can ensure you make the right decision for you.

How to make money in property (UK)

Let’s dig deeper into some of the main ways people make money from property, including the pros and cons. 

#1 – Rental income 

Perhaps the most common way is rental income; investing in a property to then rent it out. This requires a specific buy-to-let mortgage

How it works is that tenants pay a fixed fee every calendar month, and landlords can account for the costs of managing the property, claiming what’s left as rental income. 

These costs include things like mortgage repayments, letting agent fees, maintenance costs, buildings insurance and any service charges (say for communal areas in a block of flats).


  • Can be lucrative, particularly for those in a desirable location
  • Over time, your investment may well increase in value, so you could make a profit when you come to sell
  • Monthly rental income can be a good top-up on other income
    • For some investors, it’s their main source of income
  • Returns on buy-to-let investments can be higher than some fixed-rate savings accounts


  • Purchasing an investment property requires a large financial outlay
    • You’ll generally need to have saved a higher deposit than for standard mortgages (e.g. 40%)
    • Securing a mortgage can be hard unless you’re earning over a certain amount – which differs lender to lender
    • You’ll need to prepare and furnish the rental property
  • Rental income can be unstable e.g. void periods
  • You will need to pay capital gains tax when you come to sell
  • Second-home purchases require you to pay an extra 3% stamp duty – use a stamp duty calculator to work out roughly how much this might be 
Stamp Duty Calculator


Ensure you’re prepared for any times where rental income is unstable, such as void periods between tenancies. There are no guarantees your property will always generate interest, which is why many don’t rely on it as their main source of income. 

You need to ensure you can keep up with mortgage repayments if you ever don’t have tenants in the property. Your lender will want this too, which is why buy-to-let mortgages can be harder to come by. Find a good mortgage adviser to talk through your options and find the best deal for you. Get a mortgage quote below.

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#2 – Buying & selling a renovation project

This is also known as ‘flipping’, which involves buying a property and renovating it to increase its value. The goal is to (hopefully) sell it for a higher price than it was bought for, so you make a profit at the end.

There are many ways to add value to a property, from building an extension to adding more bathrooms. Of course, there are bigger more complex projects, including changing a building’s use by turning a large house into multiple flats, or vice versa.

Alternatively, even a simpler refurbishment or rewiring job can go a long way. ‘Flipping’ is a common way of making money in the industry, but it’s not for everyone. 


  • Many people love a renovation project 
  • Depending on the size and scale of the project (plus individual factors like location) profits can be huge 
  • If a property needs a lot of work doing to it, it can often be bought below market value
  • If the property market is ‘hot’ and house prices high, you can potentially make a lot of money if your timing is right


  • House flipping is challenging; many projects run way over time and budget
  • The property market isn’t always hot, so you’re not guaranteed to turn a profit
  • Some things can affect property value that are out of your control, such as changes in or to the surrounding area 
  • There are many costs involved, such as builders during the renovation, and estate agent fees afterward
    • Some people have ended up not making a profit at all
    • Different types of property will involve different costs


With ‘flipping’, the goal is for the project to be short term; making changes and a profit fairly quickly. However, planning a major home renovation is no small undertaking. You need to have carefully set a budget, property investment isn’t guaranteed to make you money. When calculating ROI, consider purchase price, renovation costs, other costs and sale price.

Find architectural services you can trust to get the job done well. Connect with trusted professionals below.

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#3 – Buy-refurbish-rent

This works in much the same way as buying a property to then rent it out, but with a step in the middle. This is where you refurbish the property to add value to it, to (hopefully) justify  a higher rental amount each month. 

#4 – Commercial property income

As with residential property, you can rent out commercial buildings (say a shop or office space) as a source of income also. How much you can charge depends on factors such as size and location. It will require a business lease, which is a legally binding contract between the owner of the commercial property (the landlord) and the occupier (tenant).

#5 – Holiday homes

While the income might not be all-year round, a holiday home can be a good investment and a ‘top-up’ money-wise. Particularly in the UK’s expanding market, and with COVID-19 increasing the popularity of ‘staycations’, there’s likely to be a good demand for holidays. To qualify as a furnished holiday let, it must be available for 210 days a year, and be let for at least 105.

A very rough rule of thumb might be that you can charge the same for a week’s holiday let (in-season) as you can for a month’s long-term let. Though, of course, the money isn’t guaranteed all year round. Holiday let properties sometimes qualify for tax advantages, but it’s vital you check. Of course, there are other costs involved, as the property must be maintained to a high standard.

Airbnb is another option if you don’t have the money for a bigger investment, for example for first-time buyers. 

#6 – Lease your land

When we talk about making money from property, it doesn’t just have to be bricks and mortar. A ground lease involves granting a long-term lease on a plot of land. This makes it easier for private homebuilders to secure land. In return, the landowner receives ground rent. The goal is that this ground rent would provide a steady, long-term flow of income, but of course things aren’t always that simple. Do thorough research before going ahead, as the ins and outs will be specific to where you live.

This isn’t the only option! Those that live in rural areas can lease their land to farmers, or to graze horses. This can be a nice, regular source of income. 

#7 – Lodgers 

Can you rent out your house? A lodger is someone who lives in your property with you, sharing living space. You might need your mortgage lender’s permission to take someone in. If you’re renting, it’s vital you check what type of tenancy you have to see if you have the right to also.

If you rent out a room in your home, you can earn up to £7,500 a year in tax-free income, due to the Rent a Room Scheme.

Bear in mind that if you currently live alone, you’ll lose the 25% single person discount on your council tax. Your property will also have to comply with certain safety standards, including getting gas appliances checked every year by an engineer who is registered with Gas Safe. 

Need a solicitor?

Clearly, when it comes to making money from property, there are a number of options open to you. If buying an investment property, you’ll need a good, proactive solicitor on board to help you navigate the various legal processes. We can connect you with one. Get a conveyancing quote below.

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Last Updated: August 22nd, 2023