Articles

How To Start A Property Business – Investing In Property For Beginners


Hello and welcome. In today’s video we’re
going to be looking at the different types of property strategies you can maybe look
at if you’re looking to grow a property portfolio, or just maybe add one or two properties to
your pension plan or as an investment. Also, as well, if you’re going to be looking at
property as a business. If you want to use it as a cash flow in business, you want to
set it up like you’re going to operate it as a business, so you can consider it long-term
and it’s not just going to be one or two properties if you’re maybe looking to scale them. But
there are different strategies you can use depending upon what assets you have available.
That could be everything from how much money you have, obviously, to invest in terms of
deposits and buying properties outright, all the way through how much time you have, how
many different contacts you have with leasing agents, mortgage brokers, refurbishment teams,
property sources, a whole range of things. There’s loads of different assets that you
can bring into play that will help you scale your property portfolio and grow a property
business. But when you’re starting off, it’s important to consider some of the different
property strategies as well, and which ones are maybe going to be best suited to those
different assets that you have. In today’s video we’re going to be looking
at just a bit of an introduction in terms of just a bit of an idea as opposed to where
I started and the different strategies that I used and why as well, and also a bit of
an idea on potentially what strategies you can go and look for or use later on down the
line. I love property because it gives you a load of different options and that’s great,
but it can be quite confusing, as well, sometimes to know where to start. Now, when I first
started off, when I finished working as an estate agent and was self employed to really
become a property sourcer and build my own portfolio, I was limited to the different
strategies I used because I didn’t really have the background or knowledge on which
strategies might work best or not so, what strategies were out there.
I came from an estate’s agency background, so for me it was just a case of looking at
potentially buy-to-let properties because that’s what the rest of the investors did
when they came into the agency and I didn’t really have the funds and the backup to try
and go out there and buy properties outright, refurbish them like some of the larger investors
were doing at that point in time. When I first left the agency, I was looking potentially
at buy-to-lets. Quite slow, steady growth portfolio, really. Properties who would let
well, that would give us a good rental income and work quite well on that basis.
Now, that as a strategy works very well. But there are problems associated with it, as
well. One of those problems you’ve got is in terms of potential for growth. The reason
for that is because when you’re buying buy-to-let properties, and a lot of your available funds
will tend to get tied up in that deal, and you’re waiting for potential growth or maybe
forcing or adding value with a refurbishment. One of the ways around that, when I first
left the estate agency, one of the main criteria I used to look for my buy-to-lets, really,
was making sure I brought them with a discount. If you’re using something called below market
value, or basically the principle of buying it with a decent discount. You negotiate quite
decent discount when you’re looking to give an offer and when you’re looking to buy the
property, and that’s great. That works well to making sure you’ve got
some equity tied up in the deal, but the problem or the downside to that is sometimes, especially
when you’re starting out, you can get a little bit obsessed about the level of discount that
a particular property might give. If that’s all that’s driving you, it that’s all that
you look at when you’re looking at the deal, then you can get stuck with some of the properties.
Just to give you a bit of context, one of the properties that I brought very early on
was a buy-to-let property. I was using this, another buy-to-let strategy, I looked at the
deal in terms of all the rest of the things I thought was potentially good with it, but
it was an area that I didn’t really know. It was out of my comfort zone in terms of
the tenant profile as well. It’s hyper property in terms of where it’s located, but what I
was going to get from the property in terms of potential growth. As I said I didn’t really
know the area too well, I didn’t really have any contacts on the ground that could say
it’s a good or bad street or good or bad postcode. At that point and time, although I’d worked
in the estate agency trying to pick an area based around some kind of key rules or fundamentals,
I didn’t really have that grasp. It was just purely local knowledge from the area’s that
I’d worked. This was a little bit further out of my comfort zone. The reason why it
appealed to me was because it on paper had a great discount.
Unfortunately, fast forward seven or eight years of being in property now, it’s my worst
performing property in my portfolio when I look back and consider how it performs on
a rental basis and costs and things like that, and profit obviously in terms of how much
that deal is particularly making. The reason for that was because I didn’t sit down and
consider all of the other elements that go into a property.
Since then, I’ve created seven golden rules that I now look at with any property deal.
You can see those on the website as well. They’re easily accessible and you’ve got an
infographic and stuff that you can look at. Hopefully it’s quite simple. It gives you
a bit of an idea in terms of what those rules are. To give you a bit of run down of them,
they include things like making sure its got the right tenant profile, making sure you’ve
considered your exit strategy, making sure you’re looking at the potential for capital
growth and a whole host of other things as well. As I said there’s about seven golden
rules that we look at there. Discount is only one of those elements and if you’re buying
purely on discount then you can come unstuck. Whether you’re doing vanilla buy-to-lets,
whether you’re doing buy-refurbish-and refinance, whether you’re flipping deals, whatever strategy
you’re tending to do, these seven golden rules can come in to play on every single deal that
you look at. It’s a great way to help compare kind of apples for apples, but you’re looking
at similar deals and not just taking them on face value because of the discount or because
you think it might have a high rental yield or it might be an area for capital growth.
You’re looking at those key elements that really make up the potential long term. Also,
the short term benefits of that deal, like considering things like your exit strategy,
considering things like how much income that property’s going to give you with rental yield
and growth and stuff as well. Those are seven key elements we run through on our training
course as well as run through on the website, but they run through every single strategy
that we do. The second strategy that I did when I finished
working the estate agency, which I kind of fell in to really, was property sourcing.
I was finding property deals for my own portfolio. I’ve come across one or two opportunities
that didn’t really fit my criteria for a whole host of reasons, area, discount, rental yield,
tenant profile, whole host of things that didn’t make it fit for me. Also, you run out
of money eventually, you don’t always have the funds to just grow portfolio, especially
when you’re starting from scratch or very little pocket funds to play with. You’re not
going to be able to just buy and grow the portfolio indefinitely without utilising other
strategies as well. I went into property sources of view to help raise cash flow really. Because
I was coming across these deals, it was pointless wasting them. That was one of the reasons
why we used that as a strategy. It’s a great strategy as well, because when
you’re starting off in property and you can sell these deals that you’re finding off to
other investors for anything from one, two, three thousand pounds or more, depending on
the property and the location, and also the type of discount and stuff that it’s got in
there, that’s great for your cash flow. Easily replaces a typical nine to five job and it
gives you a great income that you can then roll back in to other deals if you wanted
to grow your portfolio that way, or it could just simply be a property source and have
it as a great lifestyle income business. It’s a great cash flowing strategy. If you’re maybe
short on cash but got a little bit time to play with, property sourcing is great. There’s
a whole host of other different strategies as well.
This video was hopefully just to try to give you a bit of insight in terms of the seven
golden rules that we mentioned and why that’s important, because as I said on one of my
earlier deals, buying purely on discount really meant that it’s my semi worse performing property
since. It’s a case of making sure you understand those key fundamentals. Also, focus is going
to be key. When you’re starting out, don’t try and have seven different strategies, eight
different strategies that you’re going to try and dabble in and do a little bit of.
You want to try and focus on one or maybe two core strategies to use within growing
your portfolio or growing your property business. That’s what we’ll cover in the next couple
of videos. Individual insights and delve a little bit deeper in terms of those different
types of strategies as well. Hopefully you found the introduction to property, all the
different strategies that we’re going to be talking about helpful. As I said, in the next
video we’ll look at each one individually a little bit further. If you’ve got any questions
at any time, don’t hesitate to get in touch. Drop us any comments under the video or simply
email at [email protected] and I’ll be happy to help.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top