Get Started in Property Investing with £50k
Getting started in property can be really hard, but I created a 3-part plan to give me laser focus and a solid strategy to build up my property portfolio starting with just £50,000 and in this post I explain what my strategy is and how I’m following the plan to build up a thriving and sustainable property development group. If you’re struggling on how to get started then this video will help give you clarity and lift that foggy confusion.
I get it, it’s really hard to start a business, and especially in the world of property investing there’s a lot of strategies out there, ways to get started and lots of bad advice out there.
By day I used to work in banking in London creating large strategies and direction for my product area. Now this was predominantly in building software with engineering teams for the bank, but by setting a vision and working out how you’ll build exactly what you want while simplifying what can be quite complex at times – is a very transferable skill into the world of property investing.
I also used to work in commercial lending and understand what it’s like for businesses and property developers looking to get tier 1 lending from banks so I have a perspective on what banks look for in businesses to consider large lending on projects.
So – lets say you’ve got £50,000 to get started. Now this is a really good number to start with, there’s a lot out there talking about no money down deals which if you’ve ever done any kind of business deal, contract or purchased a property – is impossible as there’s always money required to work with solicitors, pay for lending, deposits and all sorts of stuff but that’s for another video.
For me to get crystal clear clarity on how to build my business I created my 3 phase plan as the business grows.
Phase 1 - Building Solid Foundations 💪
So lets focus on phase 1 first, building the solid foundations with a buy to let refurb. Now for me it was incredibly important to do this for 3 reasons.
Firstly – this was to gain crucial experience, it’s great learning online, listening to podcasts, reading magazines and watching YouTube channels but until you actually get out there and start to practice what you learn, it’s hard to really understand how to problem solve property issues.
And just by simply going through the conveyancing and purchase process once I learned so many things that you’d never learn going through a residential purchase so lots of firsts purchasing through a limited company.
Secondly was to be able to self manage the refurbishment, this would mean I’m a lot closer to how trades work (and don’t work) together and in what order. By being there day to day on the first project, I’m able to really appreciate and understand how much work goes into certain parts of first and second fixes but also being able to problem solve when trades get things a bit wrong – which always happens.
So for me, going through the refurbishment process and managing the whole thing means that as things grow, projects get bigger and I have another project manager in place or main contractor, I will be able to appreciate, understand and know what’s going on during the process and how to manage them better as a result of it.
Thirdly was for building the solid foundations. If you want to get an HMO and build up cashflow, typically you need 12 months experience as a landlord to get the best rates.
It’s not impossible to get an HMO as a first timer but it will seriously limit your lender availability.
And in my case I’m using a holding company structure which means that some lenders don’t want to work with holding companies and instead they want to make sure the SPV, or the company used to purchase the property is owned by an individual, rather than another company so the more complex or unique your scenario, means by ticking the landlord experience box, that’s one less complexity to worry about.
Likewise for development finance, you need to be able to demonstrate that you have a good build team and experience, so for me by managing a £17k refurb project successfully I can show to lenders that I can be trusted, and have a team to support a bigger project.
So my phase 1 in a nutshell is building up experience and respect from lenders to open myself up to larger projects.
Phase 2 - Building Sustainable Cashflow & Capital 💷
The whole purpose of this phase which is what I’ll be moving into next year, this is starting to build up those steps on the ladder and grow the company in a sustainable way with bigger projects, taking on more risk which is still safely mitigated and ultimately building up cashflow and capital.
So in phase 1 the plan was to buy a vanilla buy to let and refurbish it, ticking 2 boxes here on both the development of the property and being a landlord. For phase 2, this is shifting strategy to look at HMO’s.
I’m lucky to be from Sheffield and know that it’s a great city, 2 strong universities and loads of students and this is the same for a lot of the big cities both in London and out of London so by creating design led HMO’s the plan here is to look at a commercial building or something that can be converted, a project which requires greater capital or private investment or bigger lending.
This will start to tick 2 more boxes for me, firstly is becoming experienced in HMO’s to generate cashflow into the business. A solid HMO of 4+ bedroom’s in Sheffield can make £800 rental profit per month, with more bedrooms that can go way above £1000 a month profit which is great for the business. Secondly it will mean I’m able to display my experience of working on larger projects with a good build team and main contractor to really open up the big stuff.
Phase 3 - Growth, Size & Scale 🚀
Phase 3 is a point in the business, a few years away from now where I’ve managed to build up capital and equity in the business through multiple projects.
I’ve been able to experience small to medium size refurbishment and construction through refurbishing properties to converting from commercial to either mixed use or residential properties.
Having really ticked some more of the criteria and being more attractive as a business to work with from a lender and private investor perspective this is where I can begin to coming the capital, my ability to raise finance and experience to work on larger projects.
Ultimately here I would love to start working on new build projects, taking on empty land, going through the planning process, adding value to the land and then building luxury gated private homes where you can really get creative on creating an amazing product.
This is the kind of project that can net millions in profits depending on the amount of units.
So, by breaking up the whole process into phases, it really helps give some clarity as to how to build a great business.
At the moment I’m not an expert and don’t know much about how to build a business where I can create luxury new build gated communities but I don’t have to. Right now it’s about learning the basics.
It’s about calling up the local plumber to get him in to change some pipes. Working with a plasterer to get a few ceilings and walls skimmed because all of what I’m doing now, really helps for the business later down the line.
If you don’t have £50k to get started then the main thing for you to do is keep saving money, invest it into a stocks and shares ISA and begin building up that pot of money because if you want to build a sustainable business that can one day support your income full time, in the world of property investing, you need money to be able to invest in the first place, otherwise it wouldn’t be called investing.
If you’re ready to go – property can be an amazing vehicle to create generational wealth and build a business that can help you escape from the 9-5. Start slow and build up your company over a period of time and enjoy that compounding growth and leveraged finance!
Free Goal Setting Guide
Are you struggling to find focus in your property business? Do you have a clear, tangible and measurable plan of action? Download this free handy goal setting guide that explores wherey you are today, your financial literal and north star lateral goals – and what you need to do to bridge that gap to meet your goals.