If you’re just starting out in property then the best way to achieve success is to keep your strategy simple.
Hearing about different types of property strategies – some of which can prove complex initially – can be overwhelming when you’re first starting out in the property business. To the extent that for some people, it can cause mental paralysis. They have ‘bits’ of various strategies, over-analyse everything, become confused and unsure of where to go next. They then decide that property investing isn’t for them. That’s a shame, because property investing doesn’t have to be complicated – especially not when you’ve never done this before.
In other words, you don’t have to get involved in big property deals such as developments to make a success of property investing. Most people can’t go down this road anyway, because they don’t have a lot of capital or experience when they first start out. So, it makes sense to keep it simple.
Stack up smaller deals to make a big profit
If you have a goal of making £100,000 a year for instance, this can be achieved by buying four Below Market Value (BMV) properties, doing a refurb on each and selling at the right time – perhaps a couple of years down the line. If you make £25,000 profit on each then you’ve reached that £100,000 target. An even easier option is to trade deals to investors in exchange for a sourcing fee. You can expect to earn £2,000 – £10,000 per property, which will build you a pot in no time. It’s much more achievable when you’re first starting out.
With the flip or BMV strategy it’s important to focus on two areas:
- Identify the area you want to invest in
- Find the property
Build a ‘power team’
The way to achieve both is to talk to people ‘in the know.’ Speak to estate agents, surveyors, architects, builders, the council’s Empty Homes Officer etc to find out if the area really does make sense to invest in. Let them know you’re genuinely interested in investing there and ask them to contact you if they spot anything suitable. Often estate agents you have a good relationship with can notify you of properties that aren’t even on the market yet. But they will only do that if they know you and what you need. And that means getting out there and chatting – and continuing to chat with the same people.
Solicitors too are definitely worth getting to know if they operate in the area you want to invest in. That’s because they don’t just do conveyancing but also divorce and probate for clients – and very often this involves a quick house sale. Other sourcers are worth cultivating too, especially when it comes to teaming up as a Joint Venture partnership.
Making sure property sells for a profit
Once you’ve found what you think is a good property, check out sold comparables in the area, ask a surveyor and estate agent what they think the house or apartment is worth. Once you have that figure look at the purchase price (including Stamp Duty, conveyancing etc). Next, how much will it cost to refurb (get builder’s quote) and, finally, get your gross development value (how much it’ll be worth at the end).
It’s that simple. And you don’t need to ‘progress’ to something more complicated after that, because you feel you should. Flipping is a successful strategy in itself when you get enough properties to make that profit add up.
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If you’re interested in learning more about simple property strategies then consider signing up for a Sourced franchise today. Download the Prospectus to find out more.