The Complete Guide to Property Investment

247 Pages·00.939 MB·English

by  Rob Dix

The Complete Guide to Property
Investment
How to survive and thrive in the new world
of buy-to-let
Rob Dix
Published by Team Incredible Publishing Copyright © Team Incredible Ltd.
2016
All rights reserved. This book is sold subject to the condition that it shall not, by
way of trade or otherwise, be lent, re-sold, hired out or otherwise circulated in
any form of binding or cover other than that in which it is published and without
a similar condition including this condition being imposed on the subsequent
purchaser.
GET THE EXTRAS!
I’ve put together some totally free extras to cover important concepts that don’t
quite lend themselves to “book” form.
All you need to do is register (for free), and you’ll get access to videos showing:
My step-by-step process for assessing a potential investment area
How to determine the value of a property
How to calculate the maximum price you can afford to pay for a property
you’re planning to refurbish and sell
My method for setting goals, and the spreadsheet I use to do it
It’s all totally free with no strings attached – so for instant access, just sign up at
propertygeek.net/extra.
INTRODUCTION
Getting a UK-centric audience excited about property investment is about as
challenging as getting YouTube views with a cute cat video. There are over a
million private landlords in the UK, and millions more who’ve thought about it.
A quick glance at any day’s newspaper headlines, meanwhile, will show that
everyone else has a very strong opinion about it.
Technically, all that’s needed to call yourself a “property investor” is to buy one
house or flat and rent it out – and if you do that well, you’ll have an asset that
will bring in money each month and grow in value over time. That’s pretty good,
and it will put you ahead of the 80% of the population who just work all their
lives and retire without any real assets to show for it.
But the game is changing. As political pressure against landlords mounts and the
tax regime changes, it’s becoming impossible to be a casual buy-any-old-house-
and-watch-it-go-up-in-value investor. Strange as it may seem though, I think the
coming years will be better than ever – for educated and committed investors, at
least. Amateurs will get squeezed out of the market, leaving opportunities wide
open for those of us who are switched-on, strategic, and in it for the long haul.
Even if changes weren’t afoot, I still think we can – indeed should – aim higher
than just buying the odd property when we can. After all, for most of us the
ultimate dream isn’t an extra couple of hundred pounds in our pocket each
month or bragging rights at dinner parties. There’s some kind of goal we’re
aiming for, like securing a comfortable retirement or being able to support our
family without leaving for the office at 7am every day. Property can be the
means to that end… but unless we’re clear on what the objective actually is, it
can easily just be a source of hassle and disappointment.
Over the last few years I’ve spoken to hundreds of aspiring and established
investors. Often, they’ll ask for my advice because they’re not sure where to
start – or they’ll be disappointed because they’ve got going and bought a
property, but still don’t feel much closer to where they want to be. In almost
every case, the problem would be solved if they just had a meaningful goal
paired with a clear strategy designed to help them reach it.
But I’m rarely asked about that – instead the questions are about what mortgage
to use, how much to pay for a specific property, whether or not to self-manage,
what research to do before buying at auction, and a million other things about
the “procedural” aspect of property investment. These are all perfectly good and
valid questions… but they’re all secondary concerns until a goal has been set
and a strategy sketched out.
In this book, I’m going to cover it all: the strategic overview, the nitty-gritty
procedural details, and everything you need to know to adapt and thrive over
time – whatever the economy and the politicians throw your way.
By calling this the “complete guide”, I know I’m leaving myself wide open for
people to go through looking for flaws, errors and omissions. If you go in search
of things to disagree with, you’ll find plenty: as this is a book written by one
person, there will be some parts that you don’t think are explained fully enough
and others where you don’t agree with my reasoning.
When it comes to the word “complete” itself, I don’t mean that it will cover
every situation that you could possibly encounter over a lifetime of investing in
property – clearly, that’s not possible. What I mean is that it takes you through
the entire process of becoming a successful investor. Most books focus on how
to research and buy a single property, but this one starts way before the first
purchase and doesn’t stop until you’ve built a long-term portfolio.
In Part 1, I get you thinking about your goals by showing you five different
investment strategies that you could follow – each suitable for different
objectives, financial positions and levels of involvement. The aim is to give you
a vision of what you can achieve – even if you’re starting out with no special
skills or experience.
In Part 2, we’ll go through every step of the property investment process in
order. Starting with arranging finance, we’ll advance through deciding what to
buy, assessing potential deals, getting an offer accepted, surviving the buying
process, and going all the way through to managing the property and taking care
of the paperwork. You can read it through to prepare yourself for exactly what’s
ahead, then refer back to each chapter as you progress through an actual
investment to make sure you’re confident at every step.
Then in Part 3, it’s time to look at the topics that separate the “dabblers” who
buy a property on a whim from those who are serious about building a long-term
financial future: refinancing, surviving downturns, shaping your portfolio over
time and thinking about an eventual exit strategy.
Overall, everything in this book is geared towards helping you to take action. It’s
not telling you “how I did it” and giving you one model to follow, it’s not an
inspirational story, and it’s not a boring list of first-do-this-then-do-that. It’s
designed to take you from wherever you are now to wherever you want to be, by
arming you with both the procedural knowledge and the big-picture thinking you
need to make smart decisions.
If property isn’t your obsession yet, I hope it will be by the end of this book: not
only is it one of the most profitable things you can be obsessed with, it’s also a
whole lot of fun.
ABOUT ME
While this book is intended to serve you rather than my ego, it might be helpful
to give you a bit of context so you know who I am and where I’m coming from.
Property investment is the geeky hobby that took over my life.
As soon as I started researching my first investment in 2006 as a place to stash
some spare cash, I was hooked. I’d spend all my spare time reading books and
message boards – and yes, watching a fair bit of Homes Under The Hammer –
absorbing everything I possibly could.
I was fascinated by the number of ways in which it was possible to approach
property investment, and I began to see how success involves understanding
human psychology (and understanding your own abilities and motivations) in
addition to knowing the cold, hard numbers.
As a happy side-effect, I loved the fact that – as hobbies go – it can make you
seriously wealthy.
In 2012 I started my blog, Property Geek, as a place to think out loud and make
contact with other investors so I could learn even more. Since then, even though
my “day job” is technically being a copywriter, property has almost completely
taken over…
I’ve written three best-selling property books, which have over 350 five-
star reviews on Amazon between them.
I co-present The Property Podcast, which is the most popular business
podcast in the UK and is listened to over 100,000 times per month.
I co-founded The Property Hub – a community for property investors with
over 13,000 members, which runs a network of over 35 monthly meetups
and publishes a quarterly magazine.
I’m a director of a nationwide letting agency (Yellow Lettings), and a
bridging finance company (LendSwift).
I don’t have the UK’s biggest portfolio or decades of experience, but I’ve
supplemented my own knowledge and experience with learning from hundreds
of investors who I’ve had the pleasure to meet and quiz. It means that if I haven’t
done it myself, I’ve spoken (at length) to multiple people who have.
My own strategy? Well, it’s evolved over time – and I’ve certainly had my fair
share of getting sidetracked. When I started out, all I cared about was buying as
much rental income as I could, as cheaply as possible. That approach led me to
good-quality ex-council flats in London, which nobody else wanted to buy –
especially after the mid-2000s crash – yet rented spectacularly well to young
professionals. Over time I came to think more in terms of total asset growth:
parking my savings in quality properties that make me money each month but
also have good growth potential. Additionally, I began adding to those savings
by flipping the odd property where possible. (I can’t shake my old yield-monkey
tendencies completely though, and occasionally I’ll buy properties with limited
growth potential if I can get a great return while leaving little cash in the deal.)
The ultimate plan? To be in a “work optional” situation, with a big lump sum in
the bank and a few moderately leveraged properties generating a nice income, at
a young enough age to mean I can pursue whatever seems interesting at the time
without money being a factor.
Just to be clear: I’m not a tycoon with hundreds of properties, and there are
many, many, many investors who are vastly more successful than I am. If there’s
one specific strategy or aspect of investment you want to know about, there will
be someone more qualified than me to teach you about it (and I might be able to
introduce you to them). But what I can do is give you an easy-to-understand,
comprehensive and hopefully fun overview of the whole property landscape.
So let’s get on and do exactly that.
PART 1:
STRATEGIES