We have a challenge. To make £100,000 from property. Is it easy? Not if you are just starting out. It can be simple if you follow a proven system that has succeeded before you. Will it require some work? Of course. Will you make some mistakes along the way? Possibly. Yet with a little dedication and armed with the right knowledge it is very possible to generate income from your property portfolio. So here are our TOP 5 strategies to make money from property.
Top 5 Strategies to make money from property
Strategy 1: Buy Refurb Flip
This is a low risk, time proven strategy that allows you to force the appreciation of the property through refurbishment and realise the profit by flipping the property (buying and selling – the most basic for of property transaction) on for a profit. You’ll need to find a property that’s run down and needs work, with available ‘uplift spread’ on the street, and the bigger the discount, the more the profit.
You might not want to sell a high yielding, cash flowing property, so find a deal that you can buy UMV (Under Market Value) that you may have passed on before. The Progressive Property co-founders bought a property for £92,500 with comps (similar 3-bedders) on the market in excess of £145,000. Even if you don’t achieve that figure, which doesn’t usually happen, there’s still room for profit. After all buying costs, selling costs and refurb fees, they walked away with a nice net profit after selling the property for £135,000.
Timescale, just 4 months. Net Profit – £24,005.93. Geoff Whittaker, one of the Progressive Property VIP Millionaires Club Members, is up at almost £60,000 cash from his first 3 deals, in less than 9 months.
Strategy 2: Make money from property with Assisted Sale (AS)
This strategy is smart. You buy or take control of a property (exchange on it with an ‘assignable’ contract or take an ‘option’ to buy it). Then pass it on to the investor/your customer and take your profit from the equity, not fees.
Let’s say you source at 30% UMV, you can pass this on to another investor or, more easily, a FTB (First Time Buyer) at 10% UMV. They will jump all over that because they do not expect professional discounts like you will be able to get. You can make a larger profit: 20% of £100K. Timescale of 1-2months: Net Profit – £16,0000.
Total at this stage: £40,005.93
Strategy 3: Options to Purchase
Using an option to purchase instead of buying allows you flexibility, much lower costs than a buy and sell and avoids you having to wait 6 months to remortgage.
The seller is pretty distressed and owes £70k on his mortgage and in the current run down condition his property is probably worth about £130,000. The seller is 10 days away from being repossessed and wants’ a quick sale of £75k. Similar properties in good condition could sell for £150k.
You will get the seller to sign an option which includes a lockout agreement giving us the right to purchase the property for £70k. This locks other buyers out for a pre-determined timeframe. You will probably spend around £9,000 adding value to bring the property up to scratch to other comparable properties. Then you’ll accept an offer of £143,000 for a quick sale.
In the meantime, you will liaise with the lender and pay a holding sum to your solicitors to show the lenders you are serious. This will also prove you have the funds to pay off their £4,000 arrears, which holds off repossession. Because this is a great deal, you will give a further £10,000 back to the seller as an equity share and everyone will be happy with the outcome. Of course it is a great feeling helping someone in a less fortunate position.
Remember it’s not all about making ‘a wad of cash’ but being ethical and stabilising what is a bad situation for the seller. Timescale: 1-2 months. Net profit of £41,000.
Strategy 4: Positioning yourself as a Letting Agent
This strategy is a variation of similar option style strategies where you are not purchasing a property now but making real profit in terms of cashflow by controlling a portfolio. Maybe a landlord is fed up of managing their 15 property portfolio, has out of date tenancy agreements, lets the odd rent slip through the net, doesn’t like dealing with repairs or tenant issues and just wants out from the day-to-day hassle.
The landlord may be earning about £120,000 per annum from their portfolio, but with your management you could increase the rents to about £130,000, as well as other fees for your service for bringing the tenancies to boost your income.
You agree to take a fixed management fee of about 13%for their entire portfolio. Of course you could also have an option to purchase the entire portfolio at a discount in the future. This is depending on your negotiation skills. This is a very real strategy that has worked for many in the past. The best thing about it is you don’t need much, if any, up-front cash. Timescale: 2-3months. Net Profit: £15,600 per annum/£1300 per month.
Running total: £96,000
In between the time of purchase and flipping in strategy 1, use one or more of our 32 lead generating strategies to monetise leads or deals that you don’t want to keep yourself:
Strategy 5: Buy-to-sell
Using a combination of the following you can make a substantial return:
- Buy to sell: £10-50k profit
- Qualified Leads (also known as QL): £75-£250 profit
- Unqualified Leads (also known as UQL): £20-£50 profit
- Ready made deals (also known as RMD’s): £3k profit
- Pre-packaged Deal (PPD): £4-£7k profit
- Portfolio Building (PB): £20k per property profit
- Lease Options/Straight Option (LO/SO): £3k-£10k profit
Final thoughts on making money from property
What you have read is just the beginning on what is possible to earn £100,000 per year from property. Strategies 2 and 3 are being used right now by the Progressive Property co-founders in the new investing landscape.
The key to making money from property is being able to source below market value deals (as many as possible). If you can find the deals you will be able to find funding.
Have a question or wish to find out more? Simply get in touch with us today and a member of the team will be on hand to help.