The headlines, right now, in the property space are all about the prices crashing, tenants not paying rent, businesses going bust and more doom and gloom than you can shake a stick at.

For the inexperienced or the uneducated property investor, it could be perceived that property investing is risky and going downhill fast. Certainly not a time to get stuck in, much the opposite I would guess looking in from the outside.

I’m not here to say property investing isn’t risky, it’s as risky as you make it. Why do I say this? For this we need to look at some facts and break down the headlines.

Property prices are crashing. ARGH

If property prices are crashing it can mean a few things and it very much depends on where you are on your property journey.

Have a large portfolio?

Then you, assuming your are not over leveraged, should be ok to ride this out, you hopefully have tenants who are still paying their rent, your mortgage prices won’t have changed dramatically and even if you have a few non payers, I would hope you are not leveraged so badly that a few missing rent payments for a few months would cripple your business. Yes you might not be able to refinance out cash for more purchasing but you should still have a income generating portfolio.

Buying your first property?

Now is the time to get out there and find some great deals, prices will be coming down, Landlords who were accidental or coming towards the end of their journey will be looking to get out and some possibly in a rush before the perceived crash happens. Get haggling and find yourself a bargain, possibly even a tenanted BTL to get you started.

Looking for Serviced Accommodation properties?

Whilst right now it looks pretty horrific for those owning SA properties or Portfolio’s we know people will eventually get back to AirBnB and Booking.com to find holiday lets. The good news is due to the immediate issue, those jumping onto the bandwagon of Short term lets over the recent years now will be sat on multiple empty properties with bills and rents/mortgages still needing paying. Likely they will offload some to help through these times, if you do your research you could bag a decent property that has a history of SA for when things pick back up.

HMO’s?

At times like these some will be looking to lower their outgoings meaning people looking for Rooms rather than full flats, sharing bills and accommodation costs will likely look attractive to a large amount of young professionals. Buying this type of property now at the right price could bag some great longer term gains once the market starts to pick up.

So what does this all mean?

Whilst the headlines show one side, there is always another side. To quote Warren Buffett

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

― Warren Buffett

Meaning if many are selling up, vacating and running away, it could be a great time to step in and pick up some great deals for pennies compared to when things are moving up.

If the prices are crashing it means everything is soon to be cheaper, if prices are cheaper then mortgages are cheaper, and if interest rates are going down then further still mortgage payments are reducing, now the main thing here is are rents reducing at the same level….well no, no they aren’t. Will they drop, yes probably, a bit, but people still need a place to live, now more than ever, off the back of this global situation I can imagine a fair few people on the market looking for new property to rent.

Don’t compete with 100 people when times are good, money is flowing, people are overly confident and you will pay over the odds. However right now, people are fearful and likely to be hoping to offload some investments quickly, with little competition you should’t need to fight much to pick up some good deals.

Interest rates are at an all time LOW!

With interest rates at all time lows, leaving money in the bank will not likely make you feel great. £50k would likely get you £500 back at best right now, and that will likely be far from what most would get (£50 in most basic high street banks).

It wasn’t that long ago when people were seeing 15% mortgage interest rates, great for savers, terrible for home owners…

Grabbing a Below Market Value (BMV) property now could reap huge rewards in the future. Those who have studied property, will be familiar with the property cycle and will know there are bubbles and crashes but over the longer term prices rise. If we are now in a 2008 style crash then those who bought at the bottom of the crash would now be the most protected from the current situation. Don’t look back at this time and wonder why you didn’t buy and instead left the money in the bank to, in real terms, lose value (yes you read that right, money left in a bank at under 1% interest is essentially losing value), as the costs of living will be greater, meaning your money buys you less in real terms.

BEFORE YOU BUY.

Warning, buying anything right now, isn’t what I’m saying, buying SMART now and at below market value is what will help you ride the crash out and be set up to come out in a strong position.

3 things to look out for

Location, location, location.

Technically 1 thing really, said 3 times, but that’s how important it is when buying property. Buying in the wrong location can mean you end up with a dud property. Too far out of town and it will be harder to rent and hard to get higher rents compared to more central locations. Buying in the wrong area could mean coming out of the crash takes longer, typically the cities are hit hardest in % terms but also bounce back the quickest. That doesn’t mean out of city investments are no good, but research here is key.

Get the right property at the right price and you are going to be well placed to pick up some displaced tenants when the market opens back up. CoronaVirus (I know I said it and I tried not too) isn’t here for ever, but it will leave a mark. Tenants will be kicked out of properties by Landlords selling up. Rents should be fairly stable as people will be looking to lock down a safe place for the short term and the rental market shouldn’t be suddenly flooded with new property for rent due to the landlords looking to sell rather than relet.

My recommendation if you have money burning a hole in your pocket will be to keep a keen eye on the popular portals like www.zoopla.co.uk and www.Rightmove.co.uk for landlords desperate to cash out before the ‘big crash of 2020’. Have open conversations with agents and see what you can bag in the ‘sales’ but most of all make smart decisions based on data, not just price.

If you would like to connect, you can find us on most social platforms, just don’t look on TikTok as my dance moves are too good to be seen.

Stay Safe, Stay at home and Stay positive.

OneFourFour Property.

Something that is often said but not often actually thought about in real terms.

“Choose your Strategy before you invest!”

But why is this important and more importantly what are the options?

Why choose a strategy?

Think of a strategy in property like choosing a car. If you have a family of 7, it’s unwise to buy a 2 seater convertible sports car as your single mode of transport…of course unless you dislike all but one of the family members.

Similarly it would be prudent to buy something fast if you wish to race it around a race track 90% of the time for fun. Choosing a 7 seater here might not be the most fun or practical.

If you do however choose a 2 seater sports car to transport a family of 7 then you may find you have a sum optimal output for your end goals.

Property is much the same. If you need income now to replace a job then choosing a capital appreciation strategy with low immediate yields will be less than helpful in most cases except if you have an abundance of cash right now and low expectations of immediate high returns.

Which Strategy is the best?

Best is subjective of course, best for you will be determined by a few key questions which you will need to honestly ask your self.

What outcome am I looking for by investing in Property?

What does good look like in 1, 3, 5 ,10, 20 years?

How much time have I got to invest into this?

How much money have I got to invest into this?

What happens if I don’t achieve my outcome?

It’s important to really take the time to thing about the questions posed above, because without them you could take yourself on a path that will never reach your goal.

Let’s take a few examples much like the car one above.

Answering the questions above:

I want to quit my job in 1 year and spend all my time on a beach whilst earning £5k per month with no hassle.

1 year – Job quit

2 year – Beach every day £5k per month

2-20 years as above.

I have no time to invest

I have £20k to invest

If I don’t achieve my outcome I’ll hate my life as I’ll have to continue to work in a job I hate, for a Boss I hate.

Let’s say the above was the answers to the questions that you gave. Let’s also say you heard someone was doing amazingly well from investing in Buy to Let strategy in London. Let’s also say you think this is a great idea.

So you start looking for property in London to buy, with £20k, that will produce an income of £5k inside 1 year, with little work and no hassel.

Sure you can buy property in London

Sure London properties can produce a £5k a month income

Sure London property can be little work and no hassel.

But it’s highly unlikely all of these things are achievable together.

The typical property to purchase in London on a buy to let basis for your £20k deposit will likely be small, in an area not close to town and possibly not desirable, and likely need a LOT of work.

So with the above in mind, what options and strategies can I look towards???

What Strategies are out there?

There are many strategies and combination of strategies, but here are a few to think about

Buy to Let – Some say the Vanilla Sponge of Investing – BTL

Buy to Let says it all in the title, you purchase a property with the intention to let it out under typically an AST. Most Property investors start here, why? Because it’s probably the easiest and historically the most traditional way of entering into property either intentionally or accidentally (you keep an existing property and rent it whilst you buy somewhere new)

Typically although not always this is done for longer term Capital Gains (appreciation of the property price of many years) with some rental income ongoing from purchase.

Typically it can be lower maintenance, lower input and fewer issues, although not always.

Houses of Multiple Occupation – HMO

HMO is similar to BTL in that you buy a property with the aim of renting it out however rather than renting the whole property to a person or a family, you split the property into rentable rooms and then have people share communal space.

Typically this is done for shorter term higher rental income as you can rent the same space but for more money.

Example:

4 bed house –

Rental income as a BTL – £1000 pcm

Bills including insurances – Minimal, typically insurance, rental management, certificates for boilers etc – £100pcm Plus of course finance costs, which I wont estimate here as they will vary widely.

Rental income as a 6 bed HMO (typically a reception room is split or converted into another bedroom giving more rentable rooms – £2500pcm

Bills – higher as you would need to pay council tax (unless it’s solely for students) and all utilities as well as communal cleaning etc – £1000

As you see here the income difference can be large, however the work involved is typically much higher as well. Having 6 tenants is already 6x having 1 but put them all under one roof and the work gets larger still dealing with disputes and wear and tear.

Serviced Apartments – SA

You can take just about any property and let it out on a Serviced Apartment basis, typically holiday lets or to companies looking for longer term but still short for AST durations.

Here, much like HMO the income would be higher as you can rent it on a nightly basis.

A 1 bed apartment that rents for £900 per month on a AST can easily be let for £150 per night on the weekend and £100 on a week day, so 1 weeks rental income can easily be £800.

Costs are higher, you need to clean after every tenant, potentially daily, at £25-£35 per clean this can add up.

Some people will also do a Rent to Rent deal here, so they would pay a landlord the £900 above to then rent it out nightly to profit on the difference.

Income levels are high, capital costs can be very low on a Rent to Rent deal as you do not need to find the deposit to buy the place, however the work load is very high in comparison.

Buy Refurbish Refinance Rent – BRRR

The best way to keep your money moving and earning is to buy low, add value in a refurb and then, if you do well, take some or all of your original investment back out.

Adding value typically is more than just painting the place and taking some professional photos.

Can you extend? Convert a garage or loft? Convert to HMO or split into flats? the possibilities are endless, but so is the work involved.

If you do well though, you can move your money from one deal to another and another, meaning you only need capital to get going, then it funds itself after that and you end up with properties to keep earning from forever.

Buy Renovate Sell or Buy to sell – B2S

Like above but with the intention of selling rather than keeping. This way you free up all capital each time and you keep any profits as either income or for the next project.

Again rewards can be high and fairly short in terms of turnaround. The work is high though.

Commercial to Residential

As it says, find a good commercial building and with the relevant approvals, you can turn office blocks in to flats, pubs into HMO’s etc

With commercial buildings typically costing less these can be profitable deals and with your average investor looking at Residential, often the competition is less.

Work wise, these are typically larger projects involving longer turnarounds and higher amounts of working capital needed.

Lease Options

Lease Option agreements or LOA’s are a great way to secure a property at a pre agreed price (hopefully Below Market Value – BMV) but with the purchase happening some point in the future, 1 year, 5 years 10 years or more.

Why?

Well if you can secure a property today valued at say £100k but not need to buy it until 10 years from now, you would hope that the property cycle has been good to you and it has appreciated, how much is the gamble but it wouldn’t be unreasonable to think 10-20%. Meaning in 10 years you should be buying a £120k property for £100k. The added bonus is in the 10 years prior you will be leasing this property from the owner making some money each month to either fund your income or pay towards the deposit needed when you do come to sell!

Joint Ventures

Don’t have the money to invest but do have the knowledge?

Why not find someone with money looking to invest and you provide you knowledge as your portion of the deal. Maybe 50/50 maybe 60/40 maybe 40//60. You negotiate the deal that works for you and your investor but it means you can, with the right knowledge get started in property with little or no money of your own in the deal. Now I would say if you are reading this, you shouldn’t likely start here, as if it goes wrong you will lose your investors money and any chance of a future deal with them.

Build you knowledge and then the opportunities will come.

Sourcing

Can you find good deals? Don’t want to actually own property? Why not sell good deals to willing investors.

Property Sourcing companies have come under the spot light recently as anyone with a laptop and a facebook account can call them self a deal sourcer but doing it properly means being compliant and understanding the rules.

Do this and find good deals and you will have people willing to pay thousands of pounds for you to find them the right deal. £3k per deal 2 a month and suddenly you are earning £72k per year!

Conclusion

As you can see there is many options and you can even combine them, having a single strategy might not be right either.

But if you want to live on a beach 5000 miles away, buying a self managed SA apartment or HMO isn’t going to work to get the same returns as if you want to be hands on.

Want a Property job? Want a hands off income? Want to be rich in 1 year, or Rich in 10 years? These are all possible and rely heavily on your property investment approach and strategy.

Take the time to work out what works for you, then build your strategy around this, review how much money and time you will need to invest, then work out how to make this work.

Anything is possible, you just need to make sure you are focused on your outcome and not get distracted by shiny pennies…