We could be entering into a golden age of property investing but you’ve got to be in it to win it!
Hi, I’m Anne Holton.
I’m one of the lead trainers at Progressive property.
I’ve been working with Progressive poverty for around five years now and I’ve trained thousands of property investors on how to get started in property and how to scale they’re existing property businesses.
Personally, I’ve been investing in property since 2001 and I’ve made a lot of mistakes but I’ve had an awful lot of success too and I’m going to share with you how you can be successful in property too.
But before we begin, let me share with you a little bit about my own property journey. When I first started investing in property, I was a dentist, married and my dream was to own my own home outright and mortgage-free.
So, what I did was basically save every penny we had to pay down our mortgage as early as possible until some friends of mine explained that they were actually going to rent out their property and that the rent from the tenants was actually going to pay more than the mortgage and in actual fact, as the landlord, you end up with a free house.
So the next thing I did was to call my independent financial adviser and remortgage my own home so that I could take out some equity to start investing in property but where I went wrong was looking at the investment properties with my heart and not my head and looking at them as if I was purchasing them for myself to live in, so they didn’t need a new kitchen or bathroom but this meant that there was no way to force the appreciation and with the older terraced houses you can’t change the rooms so there isn’t a way to add value.
Okay so they’re the types of properties that you shouldn’t be investing in, but now I’m going to share with you what sorts of properties you should be investing in.
Let’s take on of my properties as an example, number 13 John Street is a mid-victorian terraced house, because of the build the roof is in very good shape but here it’s important to note that the quality of the roof doesn’t add anything to the value of the property and what we want to be doing is looking for houses that fit the buy, refurbish, rent and refinance strategy and find properties where you can turn £1 into £3.
Now, 98% of properties in the UK have got a roof so we need to look for other ways to add value. Now because this is an older house we could add value by upgrading the boiler to a combi-boiler and with three good-sized double bedrooms the property attracts a family looking to stay there for some time.
Currently, the tenants have been in there for over 5 years and I’m charging £585 per calendar month, increasing it each year in line with inflation and when the family does move out I will be able to uplift the rent even more than that.
So this shows you that things really changed for me when I stopped buying properties with my heart and started buying them with my head. 13 John Street isn’t the nicest property in my portfolio, but it’s one of the better yielding ones and It’s a great cash machine.
Another great strategy that can help you scale your portfolio is direct to vendor deals. What do I mean by director vendor? Well, it’s essentially bypassing the estate agent and going directly to the person who wants to sell their house but it only works for those vendors that are looking to sell quickly.
Why mean is you’re bypassing the estate agent you’re going directly to the person who needs to sell their house now, director vendor marketing only works if somebody needs to sell and needs to sell quickly for example someone going through a divorce or looking to relocate and you can actually find these deals simply by leafleting your goldmine area because there are deals everywhere and to secure a direct to vendor deal you just need to keep marketing.
So when I first was buying houses, I wasn’t forcing any appreciation, I was just buying them, put in tenants and as long as the property kind of ‘washed its face’ and there was enough money coming in from the tenants to pay the mortgage, I wasn’t concerning myself with the actual cashflow from the property.
But just sitting on houses and waiting for the capital growth to appreciate wasn’t going to get me out of my day job. Now, we have still made more money through Capital Growth across the portfolio than we ever have three rental income so even those properties that I bought that didn’t really allow us to have extra income have still made us a lot of money.
However, what I now teach everybody is to always buy with cashflow in mind from day one. One of the big mistakes that new investors make is they often spend too long thinking about doing a deal and getting into property, which properties to buy and if it’s in the right area etc. but it’s important to remember to just get your first property investment because you will benefit from the Capital Growth and generate an income too.
Many people get stuck in analysis paralysis waiting for the perfect property or the perfect deal but no properties are perfect but they can all generate you capital gains and cashflow.
Okay, so what’s going to happen to the property market?
What I believe is going to happen is there’s going to potentially be a coming recession or even a depression happening in the UK and that’s going to mean a lot of people are going to be in a situation where they need to sell their houses and they potentially need to sell their houses quickly. So for property investors, this could mean that we’re close to entering into a golden age of property investing.
And the really great thing with property is that it lends itself really well to working with other people and to using other people’s money to grow your property portfolio, especially as bank interest rates and savings are at a particular low. More and more people are switching to investments in property because it is ‘as safe as houses’ so effectively their investment money is secure and this is great for potential joint-venture opportunities and the ability to recoup deposits and roll them into further investments make property one of the greatest strategies for wealth generation.