Part of the appeal of becoming a landlord is the opportunity that it provides to make money in two different ways. You hope that your buy to let property will increase in value and allow you to make a profitable return when you sell it, and in the meantime, you aim to get a regular monthly income from the rent that you charge to tenants. As the above example shows, the fact that your property can make money in two ways is reassuring – if house prices aren’t actually increasing then you at least hope to make a return from rent.
However, buy to let isn’t the only form of investment that can give you this combination of income and capital growth. When you invest in shares or bonds, you can receive a regular income at the same time as gaining increases in share or bond price when you sell. You can choose to balance your mix of investments to prioritise either growth or income – or you can aim to keep an even focus between the two.
It’s important to remember though, that regular income isn’t always guaranteed. When you’re a landlord, it depends on having tenants. If you’re faced with a period when your property is standing empty, you could find that you have to make mortgage payments on a buy to let mortgage at a time when you are not receiving an income from rent (as well as being potentially liable for council tax and ground rent service charges if your property is leasehold.) Similarly, if investments in the stock market don’t perform, then they won’t produce the dividend income that an investor might have expected.