Investing in property can be a rewarding way to build wealth over time. Whether you’re just starting out or have experience as a landlord, there are several ways to make money from property. The key is to understand your options, so you can make the most of your investments.
Here’s a breakdown of the main methods you can use to earn income from property.
Related: How to calculate rental yield and maximise ROI
Positive cash flow
One of the most straightforward ways to make money from property is through rental income. This is the money you earn by renting out your property. Ideally, your rental income should exceed the costs of owning the property, such as your mortgage, maintenance, insurance, and property taxes.
Positive cash flow means your property is generating more income than it costs to maintain, giving you a steady stream of passive income. A rental property cash flow calculator can help you evaluate the potential of a property before you invest, so you can be sure you’re making a sound decision.
Equity growth through mortgage pay-down
Another way to build wealth through property is by paying down your mortgage. As you reduce the amount you owe on the property, you build equity. Over time, this can be a great way to grow your investment.
The beauty of equity growth is that it requires less active involvement. While you focus on paying off your mortgage, your equity grows. Eventually, this can lead to a profitable sale or provide you with financial flexibility if you decide to refinance or take out a second mortgage.
Related: Changing your mortgage to a buy to let
Forced appreciation
If you’re looking to increase your property’s value, forced appreciation is one way to do it. This involves making improvements or renovations to a property that directly increase its value. For example, a kitchen upgrade, adding more rooms, or even renovating outdated features can make your property more desirable to tenants and also boost its resale value.
Related: How modernising your home can attract buyers
Immediate appreciation
Sometimes, property can appreciate quickly after purchase, particularly in areas experiencing rapid growth. This is known as immediate appreciation. You may find a property that’s priced below market value, or perhaps a neighbourhood is beginning to see new development and infrastructure improvements.
The right property at the right time can see its value rise rapidly, giving you a strong return on investment. Keep an eye on emerging areas and trends to spot properties that are likely to appreciate soon after purchase.
Market appreciation
While forced and immediate appreciation rely on your actions, market appreciation happens naturally over time as the property market in your area improves. When demand increases and supply stays limited, property prices generally rise. This could be due to factors like lower interest rates, a strong economy, or increased demand for housing.
Investing in areas with strong potential for market appreciation means your property could see steady value growth over time. However, this form of appreciation requires patience, as it can take years for the market to work in your favour.
Tax benefits
Owning property also comes with valuable tax benefits. As a landlord, you can deduct various expenses such as mortgage interest, property taxes, insurance, and maintenance costs. Depreciation, for example, allows you to write off a portion of the property’s value each year, which can reduce your taxable income.
These tax advantages can make property investment even more lucrative, so be sure to work with a tax advisor who understands property investment to ensure you’re taking full advantage of the available benefits.
Related: Tax laws: Allowable expenses vs. Capital expenditure
How to calculate cash on cash return
Before you start investing in property, it’s essential to understand the numbers. Fundamental calculations and risk assessments will help understand your return on investment. It compares the annual cash income generated by your property to the total amount of cash you’ve invested in it.
It’s also important to evaluate risks. Property investments can involve market fluctuations, maintenance costs, and tenant issues. By carefully assessing these risks and having strategies in place to mitigate them, you can protect your investment and make smarter decisions.
Related: The impact of inflation on UK rental prices in 2025
Find your path
There are many ways to make money from property, from earning rental income and building equity to taking advantage of tax benefits and appreciating property values.
Each offers its own benefits, and the best approach depends on your goals and the market conditions. Whether you’re buying property for investment or looking to optimise your rental income, get in touch with your local Martin & Co branch to learn more about how we can support you.
