Halal Property Investing 101 Guide – IslamicFinanceGuru

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8 min read



Haider Saleem

Haider Saleem

You may not be on the property ladder yet – but there are many ways anyone can access property today regardless of how much you have to start with.

This guide covers the basics and introduces you to some of the less publicly known investment options out there.

Here, we’ll cover 4 different property investment methods:

  1. DIY
  2. A property investment company – e.g. Yielders
  3. Property funds
  4. Development project

But first, let’s talk about what you want to look for when investing in property.

What to look for

There are only two things you want when investing in property:

  1. A good yield; or
  2. Capital growth

It’s rare that you will get both.

When assessing a purchase of property or land, ask yourself – do I want a good yield or capital growth?


Yield = the money you get back per year.

  • e.g. if you buy for £100k and rental income is £10k, the yield = 10%.

What’s a good yield? Different investors give you different answers. Typically an average yield in London is around 4-5% while the best yields are in commercial and HMO properties and can be up to 15%.

Capital Growth

Capital growth = an increase in the value of an asset or investment over time.

  • e.g. the increase in the price of the house you bought.


A balanced portfolio

A balanced portfolio will have a mixture of both – yield and capital growth. This will protect you from any adverse effects of the housing market/wider economy, e.g.:

  • A reduction in incomes/job losses (reducing your yield from tenants who are not paying rent); or
  • House price going down (reducing capital growth).


1. DIY

Pros and Cons

Firstly, you’ll have the complete freedom to do as you please. However, a major downfall is the amount of work involved. There’s so much to ask yourself before you invest. Are you buying residential, commercial, mixture or land? The type of property has an effect on the yield.

Secondly, you’ll have to find the property yourself. With the right contacts, you can get access to exclusive off-the-market deals. Other methods we’ll discuss below won’t have these (but may have their own).

Thirdly, you’ll need to know what are you plan on doing with your asset. Are you going to sell, hold, sell as a back-to-back, buy-to-let? Do you know how to do any of these?

Finally, whatever way you choose, you’re going to need to finance it using a lot of upfront cash. Borrowing from a friend or the bank has legal implications. Early on you will probably need help.

Questions to ask: Are you financing 100% of it? With friends, family or a partner? If so, what rights will they have? Will you refinance your property? Are you pooling money from a number of people? Is it part of a pension fund? Do you need help from the bank?

If you do need finance from a bank, there are several halal options available, such as an Islamic mortgage. You can compare them on our Islamic mortgage comparison. You want to minimise your leverage (an ideal amount is about 20%).

Compared to the other methods discussed below:

  • You will be in complete control,
  • You will keep all of the profits,
  • You can make all the decisions.

With other methods discussed below, you can only invest in what is presented to you and you must pay fees to them.

However, the downfall of DIY is that you have to carry out your own due diligence, research and investment. You will also need to do legal work by instructing a solicitor, which can run into the £1000s. This is because you’ll need to carry out inquires, searches and checks. If you want to avoid all this – invest through a company that will do this all for you.

Consider starting small to reduce the risk. You will learn through doing it and making mistakes – better that it’s a mistake you can afford. Or you can consider investing in a REIT (Real Estate Investment Trust) or fund as discussed below.

Remember – it’s not ok to get a conventional mortgage if you can’t afford an Islamic one. Mortgages are almost always haram – read more here.

TL;DR: Need more upfront cash, but control full yield. Less diversification, lots of hard work.

2. A Property Investment Company

Almost all of the pitfalls I mentioned above regarding DIY are covered under this method (but at a cost).

A property investment company pools money from a number of people, invests in the property and then shares the yield or capital returns, depending on their strategy.

They will control the investment – taking all the work off your hands.


An example of a property investment company is Yielders. We have a full review on Yielders. I’ve listed some other relevant points for you below.

Yielders are an FCA-regulated sharia-compliant property investment company that allows hands-off property investing.

They are an online platform that allows people to come together and invest in a selection of assets that might otherwise not be available if investing individually.

Yielders will pick assets themselves using their own criteria when assessing the returns for investors. Yielders will also manage the investment and administration of the investment vehicle. This makes it as hassle-free as possible.

They have a slick investment calculator for you to play around with – giving you an idea of what you’ll get for your investment. Returns are made quarterly or monthly depending on the chosen investment. As a shareholder, you are also free to leave the investment whenever you want by re-listing your property on their platform.

You’re saved the pain of finding a property/land, figuring out what to do with it, managing it, trying to rent or sell it and more. However, you’ll be receiving a much smaller yield/capital return on the sale.


A downfall compared to DIY are fees you’ll have to pay – them doing the work does come at a cost. For example, Yields charge: 1) a 2.5% structuring fee, 2) a 10% management fee and 3) a 15% profit share on exit. There are also other fees – you can read more here.

Another disadvantage is you’ll only have the option to invest in properties that they present to you. Again, that will save you time, but it comes at a cost.

Check our interview with Zeeshan Uppal, co-founder of Yielders.

TL;DR – More diversification to your portfolio, Less upfront cash required, but you’ll lose full yield, have less control, pay high fees to the company.

3. Use a property fund

If committing to full ownership of a property is too risky for the time being, consider investing in a REIT (Real Estate Investment Trust) or fund. Such products are well structured and offer more liquidity to the holder. It also offers diversification to your portfolio.

A REIT is a company that invests in real estate by pooling the capital of numerous investors. This is another way for individual investors to earn dividends from real estate investments without the hassle of managing it themselves.

The downfall is they offer little capital application.

TL;DR: Safer than DIY, more liquid, greater diversification, high yield, low capital apparition.  

UPDATE: Cur8 Capital, our own investment platform, now offers private real estate fund investments. See here.

4. Development projects

This is a more high growth/high reward investment.

Property development investments are great because they provide the opportunity to make money at various stages of development. Whether it’s before or after planning permission is granted or before the building is rented out or sold, there are significant returns to be made.

However, they do have some issues, such as projects running behind leaving a delay in your return. Furthermore, you’re investing in something that is yet to be built, of which the profits from the sale will be recouped and passed back to you. This leaves it much more out of your hands and you’re left dependant on the market, the developer and the buyer.

Property development investments at a bigger level require deep expertise, networks in the property industry and experience. In this regard, Godwin, Yielders (they have a different arm called “Top Yielders”) and Introcrowd are great options. You can compare them on our halal investment platform.

You can invest in development projects on platforms such as Intro Crowd and Godwin.


Godwin Capital utilises its team of experts to deliver high standard projects including homes, commercial spaces, and local community facilities. They offer fixed returns of between 8 and 11% annual return. Godwin is a relatively rare fixed-return product structured in a sharia-compliant way (with full mufti certification) with a reputable mainstream developer.

It is an illiquid investment however as the product requires money to be locked in for over two years. There is also the risk of Godwin projects failing or being delayed, and as a result the offered returns are not met or worse you lose some or all of your initial capital.


Yielders allows investors to invest in high-yield property and commercial developments. They source off-market deals before the wider market is aware of the opportunity and have further due diligence carried out before deciding to go ahead.

Once confirmed, they create an SPV (special purpose vehicle) to buy the property and then offer it to the crowd. This means that when you invest in a Yielders deal you’re comfortable that the deal is secured and won’t fall away if the investment amount isn’t hit.

If you would like to sell before the scheduled sale of the property, you can contact Yielders who will offer your stake on their platform. There is no guarantee that someone will buy your portion, but historically each offer has been taken up.

Top Yielders is open to more affluent investors and gives exposure to higher risk higher reward development projects. Projects are usually 12-18 months and there is a £50,000 minimum investment, with a projected 15% annualised return.

There are exit, management, and setup fees so do have a look at our in-depth review of Yielders before deciding to invest.

We have also heard that some recent projects saw delays and issues – this is inevitable in this asset class – but just important to be aware of this.


Intro Crowd is an investment into land developments – a different genre of property investment to property rental or redevelopment. It is a nice complement to other asset classes.

Introcrowd is led by an experienced team with backgrounds in land acquisition and planning permission. The minimum investment amount into a project is £5,000, and after that, you can buy anything in £500 increments. There is a 2% set up fee and 5% exit fee.

As for returns, it depends on the project, but 50-100% returns on investment over a 5-year term are not unusual. Introcrowd provide a report from the outset which helps.

Again, to reiterate, projects can run slower than expected, planning permission may unexpectedly not be granted etc. so, while the land gives at least some security to investors, there is a risk of loss of some of the investment.

TL;DR: higher yields, higher risks.


If you want to know what we think the property market (residential and commercial) will look like in 2021 – then check this article here.

Okay, so you now know how property investments work.

Now you should check out the other three main investment categories for your portfolio:

  1. IFG’s Halal Stock Investment 101 Guide
  2. IFG’s High-risk/reward Investments 101 Guide
  3. IFG’s Fixed Income 101 Guide

Also, check out our Islamic mortgage comparison tools if you’re considering financing from a bank.

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Haider is a BBC-trained journalist, trainee solicitor and member of the IFG content team. Haider is a BBC-trained journalist, trainee solicitor and member of the IFG content team.