When starting out as a property investor, you’re often told that the best way to start is by building a deposit, building up the capital, and then investing for yourself. Perhaps you’ve been told to do this with rent to rent and rent to service accommodation strategies or even deal packaging.
Now, let’s just think about this for a second.
If you have a deposit of £25,000 to invest in a property that’s potentially sub £100K, that’s just going to be a deposit. That doesn’t include stamp duty or refurbishment costs, so the reality is that £25K is probably quite a low amount.
Now, an average rent to rent property generates you, let’s say, a hopeful £1,000 a month cash flow. Every year, that’s £12,000 that you create; that’s £12,000 of cash flow based on 100% occupancy, no maintenance needed, and no extra surprise costs; nothing coming out of the blue.
Then you’ll need to generate more revenue, perhaps by adding more rent to rent properties, to save up for that deposit or manage the headaches associated with those properties, which are fine if you’re ready for it.
Maybe you were told to follow the rent-to-rent strategy, but the strategy you were really interested in was flipping, which is not having tenants to manage at all? So why are you doing rent to rent?
Deal packaging is another example of a tactic that is promoted to build up a deposit pot to start buying properties for yourself. It can generate more money and more revenue in fee income. But you also have to keep a consistent pipeline of leads coming through, leads that convert into deals which actually make it through and don’t fall out of bed at the last minute.
And then you have to do that consistently, month after month, to build a deposit pot again that will be enough for you to start investing in property yourself. But meanwhile, having to deal with investors who might be very demanding and property owners, agents, lead flow, ebbs and flows.
And, of course, the cost of running your business compliantly.
So, what’s the alternative?
Well, actually, it’s quite simple, and it’s probably how a lot of serious investors operate; it’s about leveraging other people’s money.
Now, leveraging other people’s money means you’ve got to offer something in return, something where the investor will feel confident that their money is in safe hands.
So how can you make the investor feel confident? Again, the specialism in your strategy, the knowledge of your area, and you being the go-to authority for everything you do will stand you in a great place. So you can go out there, look for that investment, show them how you are the go-to authority and the investor will feel completely confident that their money is safe with You.
Well, guess what? It happens. It happens every day, and it can happen for you as long as you approach it in the right way.
It’s all about your money mindset.
It’s all about not feeling scarcity, not feeling like because you’ve got no money, you’re in some sort of poorer position where you’ve got to scrabble around at the coalface to try and make the business work so that you can get more money and then go and buy for yourself.
Let’s just shortcut all of that, get straight to where you want to be, do the things you enjoy doing, and focus on the strategy you want to focus on.
Meanwhile, building that authority around yourself, going out and reaching out to people who have money to invest, giving them confidence that their money is safe with you, and then going and doing those projects.
When you first start borrowing money, you might have to give away a little bit more in terms of interest. But, as you get better at this and get more projects under your belt, more case studies, and more investment, you can start dictating the interest rate that you pay a little bit more than you do initially.
It’s all about flexibility, understanding, being the authority and giving your time, your energy, commitment, knowledge, and desire to learn that process in return for that investor capital so they make more money than they would make anywhere else, in safe as houses, investment bricks and mortar.
And that’s going to get you going on the journey you want to go on, not what someone told you you need to go on. So bypass that detour and get straight to the destination you want by changing that attitude, changing that mindset, changing the way you approach things, and going straight for what you want to do.
And trust me, the journey will be a much more enjoyable one.