6 Strategies for Property Investing: The Ultimate Guide
As a property investor, you want to make the most of your time and money to be able to achieve financial freedom. To do this, it is important to understand property investing strategy so that you can choose which one works best for you. In this blog post, we will outline 6 different strategies that are designed specifically for property investors. You'll get an overview of each strategy, learn how they work and get some tips on where to find more information if needed!
Buy, Renovate, Refinance
The first property investing strategy you will want to consider is Buy Renovate Refinance. With this strategy, a property investor buys an existing home and then renovates it before selling or renting out the property. You can also use this method for commercial real estate as well!
Often times, you don't even need to spend that much money on renovations since the goal is to get a property that looks nice, but isn't perfect so that you can sell it at market value or rent it out. The trick is to buy cheap and rent high. Then when you refinance the property following the renovations you can pull out most of your money and go again!
Serviced Accommodation
Another great property investing strategy for investors is Serviced Accommodation. This involves buying an existing home and then renting out the property on sites such as Airbnb and Booking.com. This allows you to create a rental home that people can stay in when they are on holiday. You can specialise in renting homes or apartments during certain holidays or just on weekends. The longer your property is available, the more money you typically make on it.
You can also let your SA property out to contractors on a longer term let. This property investing strategy works incredibly well even at low occupancy rates as the daily rental income is so much higher than you could achieve on a typical AST.
The pitfall in this strategy is that it takes a LOT of effort to manage the property. So we have always hired specialist management agencies to take the bulk of the work off us.
HMO
HMO's or Houses of multiple occupation typically offer better returns than BTL's, however they also require much more capital to get started. This is because you need to buy a bigger property and then split it into rooms for multiple tenants.
The idea behind this strategy is that the rental income on each room will be higher than if you were renting out one big house, however combined they can still make more than your standard single unit BTL.
Again however, they are a lot of effort to manage and it is often required to have a management company in place. You can expect to pay around 12% of the monthly rent.
Flips
This is one of the simplest property investing strategies out there. With flips, you buy a property, quickly renovate it securing the maximum amount of finance and then sell it on for profit. The trick to flipping houses is to use your knowledge of the area and its market - you want to make sure that the house has more than one possible buyer and is priced competitively so that you can sell it quickly.
You should also ensure that you have multiple exits to protect you from market corrections. If the market dips during the middle of a flip, you will want to ensure that you can comfortably rent it out for cashflow so that you never lose money. This will mean that you should always qualify the rental demand of an area, even if you solely intend to flip the property.
You should also ensure that you have multiple exits to protect you from market corrections.
Social Housing
Serco are a company that support people at troubled times in their lives, be they unemployed, refugees fleeing persecution or in prison. They rent out your property on a fixed term basis and they take care of all maintenance and pay you set rent every month so you have guaranteed income with no void periods.
This is a great strategy if you want a fixed income over a long period of time. However you do have to weigh up the benefits to the inevitable lower rent you'll receive than on the open market.
Commercial to Residential
Another way that many people are profiting from property is through commercial to residential conversions. This is where you buy commercial properties, convert them into homes and then sell them on for profit.
The best types of buildings to do this with are industrial warehouse conversions because they tend to already be fully fitted out internally, so all you need to do is get the property up to the standards required for housing.
You can usually do this through permitted development rights which are a government scheme that allows you to convert certain non-residential buildings into residential dwellings. This means that all of the renovations and refurbishments are exempt from requiring planning permission, meaning they are fast and simple allowing for a quick turnaround when selling on. It is, of course, important that you check this with your local council as planning can significantly increase your costs.
Summary
There are multiple property investing strategies that you can consider depending on your risk appetite, target market, and capital. Make sure to keep it simple, consider multiple strategies, and decide on your primary exit strategy BEFORE you buy.
Regardless of your property investing strategy, a CRM for Property will help you stay organised. It's a common misconception that CRM's are only for businesses with an extensive customer base- the truth is Property Management Software can work wonders for any business, no matter how small they are!
How can Property Store help?
Property Store is a Property Management CRM Software designed by property investors for property investors. With our software and services in place to manage your leads and contacts, you'll be able to experience what it feels like to have more time on your hands. You'll also enjoy increased exposure through effective lead management as well as decreased vacancy rates because of proactive efforts. To find out more about why we're different than other companies, contact Property Store today! We look forward to hearing from you soon.
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Planning to invest in property but not sure where to start? Why not consider checking out our blog post about strategies for reducing risk in property investing to give you a head start!
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