How I Started Investing in Property

This edition looks at how I got started in property investing and has lots of information to get you started too!

Owning property has always been a big deal in our family. We had several family businesses (including shops and outdoor markets) that generated income for buying property. It was drilled into me and my siblings from a young age that it was important and that’s why, as we grew up, we all helped each other get onto the property ladder. That was several houses between us! I don’t think that I would be where I am now if it weren’t for this attitude being instilled in me as a kid.

However, while I got off to a great start with owning property, I regret that I didn’t start investing in other properties until much later. Not until 2017, in fact.

Getting started with property investing

Like many other business owners, I was too engrossed in the day-to-day of my business to look outside it for other opportunities. But now I look back at that time between 2008 and 2016 and feel like I missed out. This is probably why I’m now so keen on encouraging other business owners to start investing in property – I don’t want them to have the same regrets as me!

What finally got me started was an extension on my property. In between some walls coming down and a new kitchen being fitted, I got chatting with the builders about Houses in Multiple Occupation (HMOs). I found out that they owned three of them!

What is a House in Multiple Occupation (HMO)?

If you haven’t heard the term ‘HMO’ before or have but aren’t fully confident what it means, it refers to a property in which:

• at least 3 tenants live there, forming more than 1 household; and
• you share toilet, bathroom, or kitchen facilities with other tenants

Or, more simply, where you let one property to multiple tenants.

What it involved

Property investing for my business model has essentially 5 steps

1. Find a suitable property.
2. Finance it.
3. Refurbish it.
4. Rent it.
5. Refinance to release capital to repeat the process.

It all sounds relatively simple, but each step has potential pitfalls. The location of the property is vital, and financing can be complex because it involves working with mortgage brokers, banks and private funders. You also need a great design and build team that will add value to the property during the refurbishment stage.

Additionally, tenanting a property has many rules and regulations that must be complied with. And at the end, you hope for a strong valuation that confirms you’ve transformed and added value to your project.

This is where years of experience in doing the above comes in handy when you’re helping others to become successful property investors.

Next steps with property investing

With all that I’d learnt about building work during my extension (e.g., planning permission, building regs, and managing relationships with trades etc.) and chatting to the builders, I went for it! Those builders then worked on two properties with me: one of them was completed during the pandemic.

There were plenty of mistakes in the early days and I’ve learnt so much by from them. My experiences taught me that two things were particularly helpful:

• Networking groups specifically for property professionals.
• Reliable training courses with experienced mentors and coaches.

This is what led me to start co-hosting Partners in Property Birmingham and to create trustworthy and practical training courses. We make sure that all trainees get a chance to visit one of our developments while it’s underway so they can get some first-hand experience.

Why is property investment an excellent option for you?

Property investment, especially when done alongside your other business(es), provides a number of really important benefits. For me, the key ones are:

• Building a portfolio as my legacy to my children – as they grow up, they can work with me on this (if they want!) and then, later, they can take it over. If they build on my work for their children, it becomes a family tradition that future generations can be a part of.
• Multiple streams of income offer huge peace of mind – the more sources of income that you can create, the less dependent you will be on one. If something happens to disrupt one income stream, there is less of an overall impact on my finances. I think this is something that, after the last few years, we’ve all seen the importance of.
• Business and property investment work well together – when networking for one, the chances are that I’ll meet someone interested in the other too. It means that I haven’t had to double my workload to build my property investment portfolio, which is a relief.

If you’re thinking of getting involved in property investing, now is a great time. Difficult times create great opportunity!

Get in touch with me if you have any questions, and I’ll be happy to help.

 Want to chat about property investment? Drop me a line!