Nikki is running one of her fantastic seminars this Saturday in London.
How to Buy £1.5 Million Property for NO MONEY DOWN!
Saturday, January 18, 2014 from 9:30 AM to 4:30 PM
So you can hear right from the horses mouth! Click here to register.
In the meantime enjoy the first of the seven massive mistakes.
Weve all heard about location, location, location when it comes to buying property but what about strategy, strategy, strategy? Property is an excellent way of generating real wealth – but it is a big slow boat and expensive to turn around. Get it right & the numbers are big. The prospects for property profits are excellent. Get it wrong and the numbers are big and in a stagnating or falling housing market it can be very difficult to move on from your mistakes!
Think about the fixed costs of dealing with property, costs associated with finding the property, marketing, acquiring it, finance fees, stamp duty, legal fees, estate agents, brokers, repairs and maintenance etc – these can all add up very quickly and therefore you have to buy in a way that ensures you get to where you really want to be! Ive seen investors buy in the perfect location for houses of multiple occupation (HMOs or multi-lets). On paper these properties have generated great cash returns but the investor has become overburdened with managing the property – creating a nightmare for them, and an opportunity for Me? For You? Remember, its horses for courses and what is great for one person – may not be great for another. Before subscribing to anyone elses ideas – really try and work out why you are interested in property and what you want out of it?
HMOs or Multi-lets
HMOs can create great returns on your cash but they can be heavy on your time. Also – one rotten tenant and the whole house can turn from a cash cow into an alligator over a weekend! So make sure you are tooled up to do the job. You have to know the proper way of managing tenancies, getting rid of troublemakers, keeping the place a magnet for good tenants instead of bad ones. I have quite a few HMOs within 10 minutes from where I live. These generally work very well because I can keep an eye on them and even where I dont want to be personally involved, just by driving by I can check on whether the people working for me are doing a good job! The HMOs I have that are more than 20 minutes away somehow dont work as well even though its the same management allegedly doing the same job. Interesting that!
You may want less work, less income but a good pension plan. In that case single let units are generally far easier to manage. Whilst they generally return less income on your investment – you may take the view that in the long run you make most money by controlling the most assets with the least effort and income is not so important for you. So for example with just 4 tenants in London I am controlling over £1 million pounds worth of property. They all work long hours and Londoners tend to socialise and often eat in town so the flats rarely even need new furniture. The income is OK (and London rents have steadily increased over the last 14 years whereas Manchester rents in general have not though there are ways you can increase rents if you know how!). However, over time the combination of income and capital growth is fantastic. I take the view that when Im in my 80s I probably wont fancy managing HMOs in Manchester or trying to manage lettings agents to manage my HMOs but I will be perfectly happy to deal with a few single let flats or get a lettings agent to do so.
Cash Rich or Cash Poor?
Do you have lots of cash? Buying at auction & refurbing or even just passing on to other purchasers is still a great way to earn fantastic returns?
Do you have a genuine interest and passion for property but not much cash? In that case the keenest students will get the highest rewards. If you really invest in your own property education and learn enough to become an expert – and I would suggest you develop a general level of property education before deciding on a niche to specialise in – then you can earn a fortune offering your services to cash rich people with neither the time nor the expertise to become fully involved alone. Lets face it the banks are not paying savers much interest on their money so there are a lot of people wanting to earn greater returns on their money you can help a lot of people on your journey to become wealthy in property.
When I started buying property I always bought with a view to keeping the property for at least 10 years. This was to benefit from reduced capital gains tax and taper relief. Although this no longer applies I have continued to use the 10-year principle for myself when buying. It helps me reject fantastic BMV deals that in reality would encroach too much on my time or my headspace! I only want stuff in my portfolio that will fit in comfortably with my plans! Other investors I know have different criteria. Glenn Armstrong wont buy anything that appears to make less than £200 income profit per month. That works very well for him.
Some investors do make a lot of money buying BMV all over the place. It can really work if you use the right systems – but if you follow the wrong approach you could spend more money on car fuel than stays in your bank account!
One of the greatest opportunities in property is that there are so many ways to make it work but what works for you, and what you really want (money, lifestyle, choice, freedom of time, freedom of location etc etc) will all help you decide which strategy to use.
Remember lack of clarity creates resistance. To find out more please join me on Saturday the 18th of January in London.