Let’s dive into the basics of property investing for beginners in the UK. I’ll be upfront about my own experience, admitting that when I started investing, I was pretty clueless. Back then, I stumbled upon what I thought was just a house in an area I thought would do well in Derby. What it actually turned out to be was a mixed-use working mens club and residential house combined. In simpler terms, it was going to cost me a lot more to refurbish the property than I had anticipated. I didn’t have that kind of money, and having just left my corporate job to pursue this ‘entrepreneur’ thing, I actually had more debt than money! Luckily, a friend agreed with me that the deal still had massive potential and she partnered with me, loaned me the needed funds, and after paying her back, I took my first step onto the property ladder.
So there you go, the first lesson I learnt was that if the deal looks good, there are people out there with money who are willing to invest in you – even if you have ZERO experience.
So, if you are eyeing up property investing in the UK, let me break down the essential basics for you.
1. Buying in a Company Structure
Investment properties differ from the homes you live in. While residential mortgages cover your home, investment properties require a special type, such as a buy-to-let mortgage or a commercial mortgage – depending on the strategy you are following. With the type of property that we buy, our valuations, and what the lender will lend on, tend to be based on the rental income it produces rather than the actual cost of the property. If you are going for simply a Buy To Let mortgage, there are lenders who will lend without you having any experience. This is less likely, although not impossible, for commercial mortgages. So if you don’t have any property experience, you may want to partner for your first couple of deals with someone who does have property experience – ideally commercial property experience.
When you buy these investment properties, you shouldn’t buy in your own name, you should opt for a company structure as it is often more advantageous for property investors. You should seek independent financial advice tailored to your situation, but generally, buying in a company is a the better choice. You can set up a new company, secure a mortgage for it, and put in the required deposit. And here’s a key point – the deposit doesn’t necessarily have to be your own money. You can explore options like releasing equity from another property, using inheritance money, or find funds from other sources such as private investors.
2. Finding and Financing Deals
The main value you can bring at the start of your journey in property is having the ability to find great deals. If you have this skill, there’s always someone willing to invest in you so that they can make a great return on their money without having to lift a finger. This is the approach that we primarily use. Although we do always use some of our own money for each deal we work on, we will always open to the door to existing or even new investors who want the opportunity to make their money work harder for them. We work with people who have £10,000 or more available and we secure their money with a loan agreement which promises to pay back their money after a 12-36 month period, depending on what was agreed, plus we pay them a hefty interest payment back on top.
Why would people invest in your deals, I hear you ask! That was my thought too. But there are individuals out there with money who lack the time or knowledge to unearth these opportunities. You provide the knowledge, the deal and do the legwork, and they put in the money. It’s a perfect partnership for both parties.
In terms of working with investors, you can consider joint ventures, where you bring the deal, and they contribute the funds, sharing in both cash flow and profits, or you can consider private loans from family or friends who have idle money in the bank. Borrowing this money can help you enter the property market, and as property values increase, you can refinance and repay your lenders.
3. Managing Tenants and Landlord Duties
Understanding property management is crucial if you invest to retain property – if you invest in a company like us, you don’t need to worry about any of this, in fact, you can skip this section. But if you are wanting to retain your property assets, you have to have a big focus on ensuring you prioritise tenant safety. A big piece of advice I would give is that you join the National Residential Landlord Association (NRLA) as they provide a lot of truly valuable resources.
4. Get yourself around the right people
If there’s one thing that truly accelerated by property growth, it was networking. Networking is essential if you plan to invest in property. Not only will you meet other investors, but you will get connected with the best power team contacts, such as brokers, solicitors, architects, build teams etc. It’s also advantageous to attend property network events if you are trying to level up your property investment knowledge as you will learn from experienced people in the industry. The best network events I have attended to date are those put on by Danny Inman at Prosperity Network. Mostly these are held in Warrington, but the members in the network are UK wide, and even as far as Dubai. At Foxstone Property, we allow our investors to take part in what we call an ‘Earn & Learn’ scheme. This basically means that when someone invests with us, they are given the option to receive updates and knowledge about the projects we are working on, which means they not only get to learn about property investment, but they get paid handsomely to do so.
So if you’re thinking about getting into property investing, make sure you educate yourself from reputable sources with real-world experience. Take action, attend property network meetings, and invest with knowledge and skill – and if all of that sounds like a lot of hassle, and you’d rather make money without having to lift a finger, then you can always invest with Foxstone Property.
Just go to www.foxstoneproperty.com and click the CONTACT button.
