If you’re young and living at home, but you want to get into property investing, this article is for you. Hello, my name is Tony Law from Your First Four Houses. I’m all about helping you achieve financial security through property. I had a great question coming from Samuel Johnson. He asked me, “Do you have any advice for someone who’s looking to move out of a parents house, but who also wants to invest in property? I’m 21 and saving for a house deposit that I can build equity in over a period of a few years.”
That is a fantastic question. I’ve given it a lot of thought and I’m going to give you nine tips that I think that will help you so.
Speak with a Competent Mortgage Broker
Your first task is to go out and speak with a competent mortgage broker. Speak to someone with access to the whole of the market. You’re going to sit down with this individual and you’re going to lay out what you’re doing and what your plans are. You’ll explain what your income is. You’re going to find out if you can actually get a mortgage. If you can’t, it is not the end of the world. There are other things that you can do to invest in property without needing to get a mortgage. You want to get this question tied down first before you proceed.
Learn How to Calculate Return on Investment
Next, you need to learn how to calculate return on investment. You need to get good at this and I would personally suggest you go and grab a few properties and calculate what the return on investment is. The sooner you get good at calculating return on investment, the sooner you’re going to be able to nail down deals. You will know that they are indeed a really good deal.
Do a Joint Venture
Tip three is to do a joint venture with family or friends. This may not be something that you’ve initially thought of, but if you are unable to get a mortgage and if you have limited or no funds to actually invest, you could connect with family, friends or parents. Maybe have a chat with them and see if they are willing to support you in starting off your property investment journey. Don’t forget, so many people have got money in the bank right now earning a pitiful return.
If you can demonstrate that you are competent, you have to put deals together and they are solid deals, you have a solid chance at getting someone to invest with you. I appreciate that, in the early days, it may be a bit challenging. If you can show someone how they can have a great return on their investment, they could take their money out of the bank and go in with you on a property. You’re doing them a favor as well as doing yourself a favor.
Go and See Ten Properties
Your next step will be to go and inspect ten properties this week. I mean walk through the doors of ten properties. I know that if you are just starting out, you may think you haven’t got the funds available. You may think you’re not in a position to use them. This may be a little bit challenging. You don’t want to wear a real estate agent down, but going out to see properties (ten in a week), gives you a really solid understanding of what these properties are worth. You may well come across a real diamond of a deal. As soon as you do find a really good deal, be assured there are people around you who’ll be willing to invest in that property. Do some kind of a joint venture deal, where you look for places where you can add real tangible value.
Provide Real Tangible Value
I always emphasize the words “real tangible value”, because I don’t really feel that just doing a light makeover, or a bit of decorating, that it’s really going to add any real tangible value. There are ways that you can add real tangible value to a property. You need to go and look for those types of properties. Look for problem properties. If you can go out of your way to find properties that have got problems (such as finding a flat with a really short lease), these are problem properties. These sellers are going to have difficulty selling these places on.
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Expand To An Extra Bedroom
When you find that type of opportunity, find a way to resolve their problem. You can add a little bit of value in the process. Get yourself a really awesome deal. Go out there and start looking for these places with problems. Can you turn a one-bedroom flat into a two-bedroom flat? If you’re just starting out, I’m imagining the money or budget is limited. You can go and buy a one-bedroom flat, but rather than doing what everybody else does (going and buying one bedroom flat), perhaps you can buy a bigger one-bedroom flat.
Rent Out Your Extra Rooms
Where there’s a big social area and you’ve got a separate kitchen, or big lounge area, you could take the kitchen out and move the kitchen into the lounge area. Then turn the kitchen space into a second bedroom. In doing that, you can instantly add extra value. Buy somewhere bigger and rent out the rooms. I’m suggesting that you buy, for example, a three or four bedroom house and you yourself move into one of the rooms (and rent the rest). I’d suggest making sure you get the best room. You can rent out the other rooms and, in this way, you give yourself a little bit of an income.
Providing Your Living For Free
The rental income that’s coming in from these properties enables you to live in this house completely for free. It’s a great way to get started and it’s the way that a lot of investors initially get their first property.
The last bit of advice I have is to document everything. What do I mean by this? I think this is really important when you do your first deal regardless of what it is or what you’re doing with it you need to go out of your way to document everything that you’re doing. I’m talking about before and after photographs and before and after floor plans. This assumes you’re changing the floor plan. Create walkthroughs of what you’re doing. You need to get on camera.
You need to do this because, at some point, you’re going to have an investor who’s going to say to you, “I’m interested but what have you done before? What can you show me? What have you done before?” In putting this content together, you’re going to be able to give them some video footage. You can provide before and after photos. You can show them the walkthroughs or challenges you’ve had. This gives them a bit of an insight into your previous home improvements. This is the thing that will convince people to do a joint-venture with you.
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I’m a property investor based in Poole with a pretty diverse property business. Whilst property investment is my core business, I also help new investors build their own property portfolio of buy to let UK based properties, by offering investment property tips here on my YouTube channel – PLUS – training, mentoring coaching and in particular, my comprehensive online property education program.