There are several strategies available to build a portfolio and ammas wealth from property investment. Finding which strategies or financing options are right for you can be very confusing, particularly if you are just starting out. One of the best things about using property as a means to accomplish your ambitions and desires is that you can tailor it to suit your own personal circumstances.
There is no ‘one size fits all’ approach to property investment.
The very best property strategies will depend on a number of factors, such as:
- Your own personal financial situation
- Your risk approach
- Your objectives and ambitions
- Time availability
- The Hassle
- Credit Rating
- Skills and Experience
- and whether you want short or long term gains
You may not be aware of the many strategies available to build wealth from properties in the short and long term.
Standard Single Occupancy Buy To Let Property Investment Strategies
Buy-To-Let strategies are the least creative but most tested way to increase cash flow and equity for property investors in the long term. This can be achieved by purchasing lower value houses that return good rental yields which will, in turn, generate cash flow for you. These types of properties can be found in rural areas, where most tenants choose to reside as property, and rental rates are more affordable than in major towns and cities.
Properties in less built-up areas, away from towns and city centres carry the least amount of risk. Mortgages are also more easily obtainable, and transactions are more straightforward. You can build a good-sized property portfolio in a relatively short space of time with very little cash if you purchase property out of main areas. Increasing your cashflow per property can protect your money against low-interest rates and inflation.
Unique Property Investments For Buy-To-Let OpportunitiesPurchase
Increase the value of the property by refurbishing it. Get the property revalued in its new state and then remortgage the property to get all of your own money back out of the property so you can rent it out to pay the new mortgage while still having enough capital to do the same again.
Hybrid, Refurbishment, Hold:
This is when you buy a property in an expensive area, refurbish it to a high standard, and keep it on until the value has appreciated. This is a longer-term investment that has lower yields, but you will earn more when the property sells in the future. You can find these types of properties in high earner locations, and they would most likely be targetted at higher net worth individuals.
Commercial Office Space:
Purchasing large commercial buildings and leasing office space to industry professionals on FRI (full maintenance and insurance). Separating the office space and renting desks or shared office spaces or even maintained and serviced office spaces could generate a lot of cash flow and could work out to be a great investment for your portfolio.
New Build Residential Property To Rent Or Sell On:
The process of purchasing new properties or building houses for resale or long-term holding.
Hidden Gains In Short Leasehold Flats:
Purchase your chosen property with cash, extend the lease, or obtain indemnity insurance, set up a new management company, raise the value, remortgage and rent the house.
HMO Property Investments
Hmo’s allow for landlords to rent out the individual rooms within a property instead of the property as a whole. By allowing individual rooms to be let out you increase the properties revenue, cashflow and yield. The more rooms a property has the more bang you’ll get for your buck once they are all rented out. This works great in high-value areas where professionals may not be able to afford to rent the entire house or apartment in the area they need to live in for work and as student accommodation.
Types of HMO Room Rentals You Can Achieve:
The High-End Boutique:
The ‘Boutique’ is the most lucrative room by room model. It is also the model requiring the highest initial cash outlay. This model offers high-end specialist luxury, mini-hotel room accommodation in the city centre or more affluent areas of a city or area. This model demands the highest room rent, attracts the best tenants and needs to be furnished to a high standard.
One step down from the ‘Boutique’ model in ‘price,’ but with a slightly bigger audience. These rooms usually come with a few mod cons and are well-styled but aren’t as luxurious. They are more hotel room like.
With a bigger market than the postgrad/professional locations and rooms, the blue-collar room is often located in less densely populated areas, in the suburbs but near to bus routes, undergrounds, train stations and good infrastructure. They may also be located near to shopping malls, entertainment complexes, hospitals or manufacturing areas where workers are required but are not paid huge salaries. Tenants in these areas are not so fussy about the quality of their accommodation and would rather their accommodation be cost-effective for them.
Creating rooms inside of a property to rent out to students while they are studying at Uni is a great idea. Especially if you have found yourself a good property deal, areas like Coventry and Selly Oak have reasonably priced properties which are often victorian style terraced houses that are large and tall; some even have cellars/basements, the extra space can be converted into extra rooms so once your properties rooms are all fully rented, your yield could be staggeringly higher than you could imagine.
The main issues with student lets are that repairs and maintenance costs are often higher as the younger tenants have only recently left their parents, they do however have lower tenant expectations and may leave the property empty when the summer and Christmas starts, and they travel back to their parent’s homes. With this in mind, landlords often charge higher rent for each room to make up for those losses; a lot of students are not bad at all, and student properties can be very lucrative.
LHA / DSS Properties:
The ‘lowest’ end of the market, requiring the lowest amount of outlay of capital, but commanding the lowest rent per bed, and requiring the highest time and cost control. Space can be maximised to great effect, and the market is broader than ‘Boutique’ and ‘Postgrad/Professionals,’ but they are generally handled intensively, may come with a lot of bad debt, and the property may be returned in poor condition.
Buy to Sell Property Investment
The acquisition, refurbishment and selling of residential property is known as trading, and those using this technique are referred to as ‘traders’ rather than ‘investors.’
If in the short term you are looking for larger cash’ lumps,’ larger-scale projects or you want the maximum return on time invested (when you exchange time for money) then flipping can fit your strategy and vision. Viability depends on market conditions (easier to flip in the growing market), but professionals can flip through the entire cycle.
Unique Property Investments For Buy-To-Sell Opportunities
Re-modelling Of A Property:
Find a large living room apartment and transfer the kitchen into the living room to create an open plan living space. You can make the kitchen an extra bedroom and rent it as a flat with two bedrooms.
Assisted Sale Property:
The technique, as the name implies, includes you (the investor) ‘assisting’ a seller (or a probate sales representative) in selling their property. You do a joint venture deal with the seller effectively and get paid to help them sell their property.
Cash Purchase Properties:
Selling through vendor financing: buy cash properties and then immediately re-sell them to buyers who might not be able to secure a mortgage conventionally but have a larger deposit.
Subject To Planning Permission:
To decrease the risk of larger purchases by exchanging contracts subject to planning permission to convert commercial units into flats for sale to first-time buyers, owners or investors.
What Is A Property Lease Option?
Instead of owning a property and needing a big deposit, you’re taking the option to purchase it. Using an option that eliminates any other potential buyers, you take ownership of it, granting you the right but not the duty to purchase it, so you don’t ‘pay’ for it until you’ complete,’ which may be several years down the road — a smart way for restricted funds to produce positive cash flow.
What Are Delayed Completion (EDC’s) and Instalment Contracts?
A variation on an option where you are exchanging on a property, thus negating the risk of losing refurbishment costs. Once you exchange, you basically own it, but you can then ‘delay’ completion over a period of time, often many years, or own in ‘instalments.’
What Are Commercial To Residential Conversions?
A particular niche opportunity has opened up with new relaxed planning legislation. Commercial (B1) property (offices) in residential (C3) flats are now much easier to convert. Previous design preparation, section 106 contributions (taxes), affordable housing, and other constraints meant that only experienced developers could make any profit out of this niche.
Profits are available in the ‘change of usage,’ either holding the rental income flats or sell/flip them on for a more immediate benefit.
What Are Joint Ventures/JV Syndication?
Any plan to buy property is no cash down is when a JV partner bears all the costs. A huge advantage of partnering with a JV partner is that you can still buy a property with your partner’s resources using more conventional buying methods, and you have a partner who offers other advantages including expertise, experience and connexions that you wouldn’t have when working alone.
Investing Ideas For Joint Ventures/JV Syndication
Crowdfunding / Peer to Peer loans:
An easy way to collect finance by asking for a small sum of money from a large number of people.
These are loans not provided by banks or larger institutions, but from private entities where it is possible to obtain favourable rates and conditions.
These are short-term lending methods used to rapidly buy a house, or where it can not be acquired by conventional finance, and where rates can be rolled up or charged monthly.
Allows you to buy a property without the hassle and cost of going through a bank or other lending institutions. This is a smart way to purchase larger buildings so that the developer can get a big profit and interest without having to deal with the tenants.
What Does Deal Packaging Property Entail?
For someone else to buy, a bundled deal is a product you sell for a price. This is also known as wholesale or facing property where you use assignable contracts, sub-sales & option agreements to sell the lead. Client facing is where clients pay you extra to handle the process (purchase, legal, refurbishment) and help them develop their portfolios.
Deal Packaging Idea
This is where you buy, renovate and sell properties to investors overseas looking for a great place to park their capital. You will handle the management that will make the investment completely passive for the investor who buys. Upside: Higher fees can be charged.
These really are some of the very best property investment ideas and strategies that are used by property investors worldwide to build their portfolio and to generate and income and make profits from the sale and rental of property. Keep it as a guide for your future property investments so you can cross-check ideas and ensure you get off on the best footing.