Investing in property is THE best investment you can make and increasing numbers of people are doing it. But starting out in property investing is difficult. There are over 200 different and individual strategies to invest in property, and this can make potential investors confused and put off investing for years!
Of all of the strategies, there are five main strategies that are used and that are most likely to succeed and provide a strong Return on Investment (ROI). Each strategy suits different people, with different circumstances, money and time. Plus each strategy meets different investors goals.
It’s so important to choose the right strategy before getting started — you don’t want to delay starting, but you need to take the time to recognise which strategy is best for you. Failing to do this means your investment will fail in the months or years after you start.
The six main strategies are : Family Let, Holiday Let/Serviced Apartments, House of Multiple Occupation, Rent to Rent and Joint Venture.
I’m going to cover each of these so you can see which strategy is best for YOU!
Family Let
Family Let’s involve buying investment properties to rent out specifically to families with children. The advantage of that is families like stability which means they’ll stay in the same property for years and paying you rent for years!
Cash Needed
Thanks to Buy To Let mortgages, you can invest in this strategy with only 25% of the house price at a minimum of £40,000.
Time Needed
Little time is needed to invest with this strategy if you outsource the sourcing of the investment property. Managing the tenats won’t take long because they will be long term, so no need to have to find new tenants often. Alternatively, just pay an agency to look after the tenancy for you.
Experience Needed
Minimal experience is needed to do this strategy, and a lot of it can be outsourced freeing you up to enjoy the great returns.
Investor or Job
This strategy is for those who want to be an investor — not have a property job. That is because it requires very little time (an hour a week max).
Things you enjoy
This strategy is for you if you prefer safe and secure investments, with more certainty and risk avoidance. It’s a strategy I myself have used in my 200+ investments, and is one I do for my clients too.
Holiday Let/Serviced Apartments
This strategy involves investing in larger houses or a group of apartments to let out on short terms — usually a week or two. This targets people looking for somewhere to stay on holiday, or that need somewhere to stay when away for work/training etc.
Cash Needed
Because this strategy requires larger investment properties, it costs more. Usually £100,000+ per property.
Time Needed
The combination of visitors coming and going weekly, and the need to keep the holiday let/apartment tidy, well stocked etc — this strategy requires a lot of time.
Experience Needed
This strategy also requires a lot of experience — it’s not something that you can invest in and leave to make you money — you got to keep things running. Alternatively, you can outsource a lot of it if you prefer.
Investor or Job
This strategy is very much for those looking for a propery job and can easily take 5+ hours a week, per property.
Things you enjoy
For those who enjoy providing great service, making a difference and interacting with people — this strategy perfect!
House of Multiple Occupation (HMO)
This strategy involves investing in property that is rented out to individuals that share the house. This is usually used for students/medical students, friends/family who want to share and people who travel to work in the same business.
Cash Needed
HMO’s require houses that are bigger than those used for Family Let’s, so the cost will be higher at about £60,000 with a 75% buy to let mortgage.
Time Needed
Because you’re managing multiple individual tenants, it will take on average 5 hours a week to manage each HMO.
Experience Needed
Some experience is needed with this strategy, because there are many different scenarios that could crop up involving multiple individual tenants that could mean less rent is paid or maintenance costs increase.
Investor or Job
Because of the time and experience needed to run the HMO strategy, it is best suited for somebody looking for a property job and not a hands free investment.
Things you enjoy
HMO’s are great for those that love solving problems, working with people and managing tenants.
Rent to Rent
This strategy as the name suggests, involves renting properties with the purpose of re-renting it out.
Cash Needed
As you’re renting and not buying, the money needed is a lot less — budget for £5,000.
Time Needed
Depending on who you’re renting to, the time you need to spend per week can vary. If renting to a family, 1 hour a week is realistic. If multiple tenants like the HMO strategy, you’ll need about 5 hours a week.
Experience Needed
As with time, experience needed is also linked to the occupants of the property. If a family, you’ll need less experience to manage compared to multiple single tenants.
Investor or Job
Rent to Rent requires varying time and experience depending on who you choose to occupy the property. If it’s a family, this strategy is better for those looking for a hands free investment.
Things you enjoy
Rent to Rent is great for those that love solving problems, working with people and managing tenants.
Joint Venture
The fifth main strategy is Joint Venture, which refers to joining with one or more investors. This is a great strategy for those that lack one or more of the three main assets needed to invest: Time, Money & Experience (stay tuned for a future post where I discuss these in further detail).
The idea is that if you, for example, want to invest in property and you have the money but not time or experience, you can team up with someone that does and split the profits!
When I first invested, I teamed up with my neighbour and good friend Mark. Mark had the money, but not the time or experience. So I gave my time, learnt everything I could and put his money to work. We then split the costs. To this day, we share a portfolio of over 100 properties, as well as having many more of our own.
Cash Needed
As money is one of the three things you may or may not have, you may or may not need any money to invest.
Time Needed
Again, you may not need to give any time if your joint venture partner(s) have the time instead.
Experience Needed
Yep, you guessed it! Experience is also something you may or may not need.
But as a minimum, you need either money, time and experience.
Investor or Job
If you’re giving your time, this strategy is more for those looking for a property job. If you want to be a hands free investor, find someone who has the time to do the investing.
Things you enjoy
If you’re going to be hands on and give your time as part of the Joint Venture, you need to enjoy things like negotiation, persuasion, building relationships, learning etc.
I hope this has been useful if you’re wanting to invest in property but are unsure of what strategy to do. Stay tuned for my next post where I’m going to be talking about WHO you need in your team when investing in property.
Author: Aran Curry
