Can you really get started in property with £10k?
Getting started in the crazy world of property investing can be confusing, daunting and feel a little bit hard to reach at times. In this post I’ll show you at the end exactly what you should be doing if you only have £10,000 saved.
How do you make those first moves to own assets that gain in phenomenal value over a lifetime?
As someone who is getting started in the industry and learning the ropes, I can tell you it does take hard work, dedication and a bit of luck. And yes…. you do need money to invest. Property is an asset you invest money into… therefor you need money… to invest.
Luckily for me, I’ve managed to save up a decent pot of cash to get started and have around £55,000 to play with. But the big question is… can you get started in property with as little as £10,000.
The answer – not really. Yes, it’s possible if you have a bit of luck and knowledge on your side but typically when purchasing a property, things like stamp duty and legal fees can wipe out a good £5000 before you’ve even got the keys.
Instead, you should be building a framework and your own personal strategy on how you want to make your first moves, when the time is right.
If you’re young and/or new to the property world we can do this by focusing and improving in 3 areas:
In the first part we’ll talk about – Saving More Money
In the second part we’ll talk about – Your Business Strategy & Plan
In the third part we’ll talk about – Knowledge & Education – this one is really important and I’ll explain why later in the video
But before we do – my top advice on getting started in property is to focus on buying your own house first. If you don’t own your own home, forget about buy to let, HMO‘s, serviced accommodation, whatever it is you want to do.
Just buy your own home on a residential mortgage, buy something that’s unloved and needs work doing to it, typically these kind of properties are somewhat below market value which means once done up, they’re usually worth more than the cost of the refurbishment.
For example if you bought a property for £75,000, you’d need a deposit of £7500 at 90% LTV and you’d have a bit spare for legal fees and other costs.
Then if you could rent out a spare room – continue to save that money and slowly do up the house with a new kitchen, new bathroom and before you know it the value of the house will be worth more naturally over time AND due to the cosmetic improvements you make.
Ok so, back to the 3 areas –
Lets go into of these in more details:
Number 1: Saving More Money
In all honesty £10,000 isn’t a lot of money in 2021 to get started in property. Fees and costs along will wipe out more than half of that and it leaves no room for unexpected costs, things breaking, compliance, additional surveys… the list goes on.
However it’s great that you’ve managed to save £10,000 so far. My advice to you is just keep on going, cut back on your expenses to try and save additional money each money. Put that money into a stocks and shares ISA to help it grow at a higher interest rate.
Alternatively you could also look at starting a side hustle, this is something I’ve done since the age of 16 and completed tonnes of freelance work that has paid about £30k-£40k over the past 10 years. That might not sound like a lot over 10 years but that’s an extra £40k I wouldn’t have otherwise had in my pocket over that time.
You could sell your skills on websites like Fiverr.com, you could start a craft business on Etsy.com or even try and buy cheap items and re-sell them on ebay. These are all legitimate business ideas where people can and do make some kind of money. Nothing crazy… but enough to save a nice amount every month.
Number 2: Your Strategy & Business Plan
If you haven’t already – I recommend checking out my property business plan post that will give you some food for thought on what you should be thinking about and how to craft your own property business plan.
With this one – you should think about what it is your saving your money for. So let’s say you now own your own home first and you’ve ticked off that box. Now if you’re saving again for the next property – is it a buy to let that you’re interested in?
Maybe you’re looking for a simple flip project because you don’t like the idea of dealing with demanding tenants?
By understanding and thinking about this you can plan your savings if you need to budget a refurbishment for a flip, versus just having enough for a 25% LTV mortgage on a vanilla buy to let that doesn’t need much work doing to it.
But also you need to be thinking about how you move onto the next property and keep that momentum going. If it’s going to take you 5 years to save up enough money, and you spend it all on the first property, is it going to take you another 5 years to save up again?
For example for me – I have a few side hustles and freelance jobs that help bring in extra money and I also rent out my spare room in London so this really helps me save around £1000 to £2000 a month to replenish my property funds quickly, this also goes through a holding company structure so it’s more tax efficient as I don’t actively need the cash to live – instead I can save it and invest it straight into property.
I know that I want to gain initial experience with a simple flip project – if the figures are strong enough I’ll refinance it onto a buy to let and keep it because I know I’ll be able to replenish the funds left in within a few months. Or if I overspend and don’t make that much on the first project – I’ll just sell it, try and get a little bit of profit and move onto the second property and learn from any mistakes.
Number 3: Your Property Education, Training & Knowledge (For Free!)
You don’t need to go and pay for expensive educational courses though – taking a course won’t make you successful. We live in an age where there is tonnes of information for free online. I’m putting out 1 to 2 videos a week all about property investing as a beginner and I’m sure as I become more experienced that will change as well but for the moment you can watch the abundance of property YouTubers.
Listen to podcasts, I highly recommend Inside Property Investing by Mike Stenhouse or Property Hub by the two Rob’s.
Just by immersing yourself in interviews, podcasts and Youtube videos, you can begin to get used to the lingo, get a feel for how investors cost up their property deals and get stuck into the world of property investing before you’ve even bought your first project!
Before the virus – I was attending local property networking meetings and meeting people, I set up a property website, this youtube channel and an instagram page to reach out to, and connect with likeminded people and I’ve learnt tonnes from doing that.
So much so that as I’m preparing for my first deal I can literally get live feedback on my instagram stories on people’s thoughts on property deals, get their opinions on how hot the property market is and also meet key contacts like solicitors, brokers, agents, builders and deal sourcers which is amazing that you can build a power team with people you’ve met through Instagram – what a way to build a business in 2021.
So – to bring all this together, if you have £10,000 – that’s a great start, focus on buying your own residential property first as you’ll be able to get a mortgage with a smaller amount of cash compared to buy to let, any profit is tax free if it’s your own property and in the meantime, sit down, create a plan, think about what property strategy is best for you and keep on saving money to build a bigger pot of money!