Question:
“I was wondering what is the best
place to start for an absolute beginner to start learning about the ins and
outs of property investing as a business model, particularly any advice about
how to achieve purchase of a property without having to save up your own money
for a deposit. Thanks”
Answer:
We hear so much about property investment\acquisitions all
the time that we are very much lead into it as the only option for success and
it can cost allot (relative to a person’s financial position) of capital to get
into. Conversely property investment is an asset and it has a great tendency to
give passive income which is one of the best income sources.
To start with, you are introduced to many strategies of which some are: Rent2Rent or Houses of Multiple Occupation or Multi-Lets, Property Sourcing or Packaging, Rundown Auctions, BMV (Below Market Value) or No Money Down, Property Flipping, Assisted Sales, Delayed Completions, Option Agreements, Title splitting or BOGOFs(BuyOneGetOneFree), …
The challenges with property acquisitions and more so in London are the high entry cost barrier and the finding or sourcing of good deals because of the competition in the area.
The not so obvious challenges are the skills associated with “Learning to Earn” (which is a huge barrier to any business) and the personal and financial “conditioning”, “Leadership” and “Team” needed to succeed on an appropriate time line to avoid running out of time. Secondly the other not so obvious challenge is the motive behind why or how a strategy is being promoted by a Guru or Company. Unfortunately I see time and time again strategies being promoted purely for the purpose of leveraging other peoples time and helping to “spend” a person’s savings.
So in essence each “Property Investor” is challenged with all four areas simultaneously and needs to work out which strategy is best for them based on their financial position, their skills and ability and lastly and hopefully taking into account their “realised” personal and financial “conditioning” and testing the strategy provider and their motive.
One of the major confusions I
come across all the time is the needed deeper understanding of the difference
between what is investing and what is a business because the understanding
between the two hugely helps a person decide on how much they should commit to
or how much they should put on their plate in any one time period.
Let’s start with a business; we
all know what a business is but there is a huge difference between a business “IN”
which we work and “ON” which we work.
This difference is revealed if the owner were to go on holiday for three
to six months and when he has returned the business has either stalled, lost
money or failed OR the business has grown.
I call this process the promotion of the business to asset status and
this is important because once this has happened the business has then become
an asset and is generating Passive Income just like a property. The key here is the way in which the business
has been started and what the business is doing and the intended purpose of the
business.
Investing on the other hand is
the acquisition of an asset which should for our purposes be producing a good
passive income. The point here is that
there is a very big difference between investing and starting a business and
starting the business in the best way.
It’s obvious that when
implementing your future financial freedom just jumping in or “Just doing It”
is not intelligent or just plain stupid when you consider it is your financial
future and it would be far wiser if you were to plan your success. But is
it really obvious? Many people have a
huge personal challenge of motivation and taking action and very often the
response is to “Just do It” from the individual or others looking to help or
motivate. The better solution and answer
to this very real challenge is to implement “Think and Grow Rich” by Napoleon
Hill and in doing so you will need to read the book at least three times with a
few months of time in between each read.
The solution to working through
the complexities and deciding on the best course of action is to have coaches
and mentors. I have purposefully
mentioned having more than one of each because no matter who we are talking
about, they only know what they know and they too do not know what they don’t know. There is a real and definite degree of experience,
and knowledge difference between these professionals. This difference is what I would call moving
up into a new league. If you don’t have
a mentor, get one, they are far cheaper than going down the wrong road (or
right road at the wrong time) and they will save you a large amount of time
which is the one resource we are not able to get back.
Quite often we hear about “No
Money Down” property investment strategies, and these strategies rely on the
concept of finding a “Below Market Value” opportunity or deal. Many people say that doing this is impossible
but there are clever ways of achieving this and to find out the complexities
(because none of the methods I have been introduced to are simple) you would
need to promote yourself into a network which supports you with a “higher league”
of broker and lawyer. Alternatively start building
your Crowdfunding “Crowd”, I mention the term crowd because you need to build
up a following of investors who trust your investments. Or what you can do is to attract a Joint
venture partner. The last and best
suggestion I have is to form an Investors Mastermind, I would call this a Joint
Venture partnership on steroids which we can help with!
I wish you wonderful and fast
success!
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