Beginners in property business usually think that it is only for those who have loads of money for investment. Mark created this guide, especially for newbies, so you can discover the 3 ways to start investing in property with little to no money, start getting involved and really going out there in the playing field. He discusses the following:
00:49 – Dispelling the Myths
03:10 – Method 1 – Joint Venturing
05:01 – Method 2 – Deal Packaging/Property Trading
06:49 – Method 3 – Rent-to-Rent
08:10 – Importance of Negotiation Skills
09:27 – Summary
“I haven’t got any savings.” “I haven’t got any property experience.” “I’ve never owned a property before in my life.” “I haven’t got the credit background to enable me to get a mortgage.” Now, are any of these ‘excuses’, we shall call them, resonating with you and stopping you from getting involved in the property investment market? I’m sure there are a lot of you watching this video who would love to find out how they get involved with property but they just feel it’s beyond their reach, beyond their current situation. Well, hopefully, by the end of this video I’m going to have dispelled all of those myths and I’m going to get you excited about getting involved in the property world.
Historically, the property investment world has been reserved for those rich landlords who have massive deposits, huge salaries and have got the ability to go and buy that second house. They own their own home, usually a mansion in some London suburb somewhere and they’ve got all this free cash that they just go out and buy houses willy nilly, or they’ve bought them all in a time where you could get 100 percent mortgages and you could tell people were just throwing houses at these rich people. Well, the reality is – that is a complete myth. It’s a complete joke and that is not how the property world is in reality but most of us who are new to the industry think that. You believe that. You think that the property investment was for the rich people.
What if I were to let you in on a little secret? Interested? You can get involved in property investment, you can have control of property assets, you can make money in property with no money of your own. Really, really simply put – you do not need money, you do not need savings, you don’t need experience, you don’t need a squeaky clean credit reference, credit check, credit background. You can get involved in property without having to tick all the boxes that you might once have perceived to be true in this mythical world of becoming a property investor.
What I want to do is, I want to run through three different ways in which you can get involved in property today. I want you to bear with me because there are three different ways and out of three of them you might not resonate with one, or the other, or the other but hopefully one of the three will resonate with you, will spark an excitement. It will maybe ping a light bulb on and you will take action and start researching and getting involved in something that you might have thought was beyond you.
The best way to run through the first two is that we can leverage other people’s money on the trade and that we leverage our time. So we are time rich but cash poor. The investor is cash rich but time poor. The first two methods are going to address those factors and look at that relationship as to how you can work together. The first way actually enables you to own an asset, actually have ownership of a property to get involved in investment.
The first method is joint venturing, working together with investors who are time poor, who put the money into the deal and what you give to them is something called sweat equity. So rather than you putting in money, what you’re doing is putting in your time. Remember, they haven’t got time but you do. You haven’t got money but they do. We’re pairing the two together and that is going to be a marriage made in heaven.
Don’t get me wrong, there is a lot more to it than that, way beyond the realms of this specific intro video. This is really just designed to spark that interest and get your mind ticking over. And you’ve got to build the right relationships.
Remember, property is a massive commitment. You don’t want to just do it with anyone you need to make sure that you work well together, that there’s a future together. It’s like getting married really, if you’re going to go into a joint venture with a property and probably as difficult to get out of it as well!
But the other thing is that when joint venturing, it means you can do all sorts of things, whether it’s buying them or whether it’s getting on creative deals. What it allows you to do is, if you haven’t got the ability to get a mortgage they can get the mortgage and you can just take a share in the property ownership rights to the property. It really is an exciting way of getting involved in the property investment market.
The second way is very similar in terms of the trading time for money. The difference is that rather than going into a joint venture deal with that property investor where sometimes investors might be thinking “Well why would I joint venture with someone with no money? I’ll just take that deal for myself” – you are deal packaging or property trading.
In property trading, that property that you have found that’s perfect for all the investment categories, ticks all the boxes that you’ve worked out for your good-perfect deal, but of course you haven’t got the funds to buy that deal, what you can do is you can actually trade that deal for a fee. So you can charge a fee to an investor for that property deal that you have packaged up. You’ve analyzed it, you’ve secured that deal, you’ve made your offer that’s been accepted and now you’ve got the investors to come along and buy it.
You can actually charge quite a substantial fee in some cases for that property deal. That fee could be anywhere from £1000, right up to £5000/£10,000, depending on the size of the deal, how much work you do. Now again there are a lot of other implications to setting up a property business like a deal packaging business. There are all sorts of legislative requirements that you need to comply with. And again that’s outside of the realms of this particular video but we have got several resources on that, in terms of podcast and information on our website too. But this is really to open your eyes up to the different methods available to get involved in property with no money of your own. So the first two really are almost service based or partnership deal based.
The third method and the last method for this video is actually strategy based. So the strategy is called rent to rent. And very simply put, rent to rent is the process whereby you take a property off a property owner and you give them a guaranteed payment per month for X number of years, however long you might wish to agree that. You will then take that property and you will uplift the rent. So you will rent it out for more than you are paying the property owner per month. And that net profit that you get after you take out any cost, maintenance, bills, whatever you agree on the terms, is your monthly net cash flow, which of course is your capital that you’re earning on that property investment, on that rent to rent deal.
Now a lot of the time there is going to be an element of upfront cost – you might need to refurbish the property to increase the rental value, you may have a deposit to pay to the landlord potentially you may have other checks to pay for upfront, so you may have up front rent to pay.
But by working on your negotiation skills, by being confident in the way that you approach prospects/landlords with this sort of deal, you can actually negotiate a deal that involves little to zero upfront costs. You can negotiate a rent free period so you don’t have to pay anything upfront. You can start finding tenants to move in before the first day you have to pay that landlord. You can find a property that doesn’t need any work doing to it whatsoever, so there’s no upfront refurb costs and you can agree to pay the landlord in arrears so that you’re paying a month in arrears rather than a month in advance.
That is a difficult deal to find but they exist and the point is that by going out and carrying out this activity and finding these deals, you are going to find those deals and if you are not taking them for yourself (because they might need a little bit of upfront capital) you can trade the deal. You can charge a fee for that deal to another investor.
If it needs a bit of capital putting in and you’ve got a friend or a family member or an investor, contacts through your networking you could maybe think about the whole joint venture with an investor on this particular deal, which is great because all I need is £5000 for a refurbishment. Let’s go ahead and work on that together. If not and the deal is the perfect one that needs no upfront capital, you could actually take that deal on yourself, having spent no money whatsoever and you’ve got cash flowing, assets within potentially a few week’s time.
So hopefully that’s opened your eyes up. The purpose of this video is to open your eyes up to the various different strategies that are available that will need little to no money of your own. Remember, some of it will need a bit of capital. Deal packaging for example, you might need to do a bit of marketing, you might need to spend a bit of money on fuel to go around viewings but the point is it’s minimal compared to the cash flow and the fees and the opportunities that you may well open yourself up to by approaching things in this method.
Hopefully, that’s got that grey matter working and starting to think outside of the box when it comes to maybe your stereotyped and perceived myths about the property investment world. Hopefully, you are excited to get involved with the property investment world. And as always take care of yourselves and happy sourcing!