Think like a Property Investment Professional.
There are lots of places where you can get UK property investment advice.
Some places are good, and some are bad.
And the issue is that you get confused as to what sort of property investment you should be making…and where? Because the real problem is that you don’t know who to trust, do you?
What you need is a breakdown, an ultimate guide.
In this post, this impressive, step by step guide, we will be sharing the nuts and bolts of UK property investment so that you can have the confidence of the thousands of other investors I have worked with.
You’ll learn more than most other investors, you’ll understand the secret to sourcing property, and buying the right thing.
You will have the power to ask the right questions, and importantly finally get your first investment and start earning easier money than you have ever before.
Let’s dive in.
GET PICKING YOUR CITY
Forget what you like. Your investing now. You need to invest for your customer, who is your customer – your tenant.
We are buying for them, and we are buying to make the most money out of them, and whoever buys this investment off us.
Even if are not planning to sell you want to be able to re-mortgage and release cash. For that we want the place to grow in value, our neighbours selling off at huge profits and our bank valuer being sufficiently impressed to allow us to release money for the next equally savvy investment.
So look at what your market is doing.
Easy… The worldwide web is not just a fantastic place to see what is coming up for sale, but also what has been sold.
With some basic excel skills and a download of the UK sold price data you can look at which post code area’s are growing in value the most, what the average sales prices are (can we afford them) and the volume of transactions.
Then – wham… we are in, and have a top 10 fastest growing postcodes.
This data is a dream for any UK property investment, and it’s completely free.
START FOCUSSING AROUND TRANSPORT
If you are not looking at future tram lines, train stations and infrastructure in cities you need to start now.
You have your top 10 property postcodes, now look at which are going to have a big ol’ tram station built nearby.
These make a difference to your property value and so long as the tram isn’t going through your garden the difference is for the better.
If you are ever horrifically bored have a read of the reports by Lloyds on new tram lines being built nearby, 10-25% uplift in property value is an easy win.
Just pick a city and then type ‘Tram extension’ next to the city name and see what’s going on, get a route map and get something as close to the new station as possible.
CHOO CHOO, GET ON THE HS2
If you are not attempting to take full advantage of the biggest investment ever in the UK I’d suggest you look at this strategy.
The bullet train in Japan added 40% onto some property values on its line – 40% in 2 years. Can you image, even half of that would pay off your invested amount.
And yes the HS2 is contentious and yes it will be delayed, but it’s the biggest property investment opportunity we have ever had in our lifetime!
The stations are well publicised, and you have already missed the boat in some areas as the growth has already got well under way.
If you are priced out within walking distance of a station, look for the tram lines that are linking with the HS2, and as per above point buy on one of them.
Want to triple your returns in one easy step? Use a third of your money and get the bank to lend you the rest.
If you put 33% of the money in and your property grows 5% this year, that’s 15% to your money.
So its simple really, get the tenant paying off your mortgage while a property grows in value. How great is that!
The vast majority of UK property Investments still offer positive rent to mortgage ratios, meaning you don’t even have to ‘top up’ the mortgage in year 1. If you have ever invested in Australia or Germany you will realise this give property investors in the UK a better investment.
We have some of the best rates and opportunities for lending we have ever had in UK property, you really have no reason not to take advantage of them.
*I have to caviat that you should make sure you don’t over expose yourself with debt. Be sensible etc.
STOP CHASING THE HIGHEST YIELDS
Yield is a direct reflection of risk. If you have a really high yield your either buying a risky property or it’s a mistake (lie) by some dopey broker.
Our markets are free and wonderful, and they know what properties should be sold for.
Yes, there are bargains, someone will have to sell below value due to having a financial burden.
No, that off-plan new property in Bradford isn’t the bargain you think it is.
And also no, it’s not a guaranteed yield. What they are suggesting is guaranteed should be investigated in more detail.
If you are chasing only yields, and not overall profit of a property you are likely missing the biggest opportunity in the market, and the one which makes property investors rich…growth.
Yes, you are right, capital growth is future assumptions, but…. So is rent.
Go back to point 1 and look at what the market has been doing in that area for the last 5,10,15 or 30 years and take a low and medium average. Just use that and you’ll be about right with your growth.
Then, check point 2 and 3 and you will no doubt grow ahead of the trend resulting in you, beating the market and feeling very pleased for yorusfl indeed.
Work a good but safe rental yield and a good growth potential. Then look at your 5 and 10 year returns.
Do this enough times and you’ll have a portfolio which will not only pay off its own debts, also pay you a nice monthly income, while growing in value creating more capital, so that it can afford to buy another property for itself.
The cycle gets faster and faster, but start sensible and give it time.
ONLY WORK WITH THE BEST
Life is too short.
Mistakes are made by cutting corners, and this is an important investment for you.
We could throw a dart at a map of the UK 5 years ago, bought the property investment it landed on and likely made money.
But we can do even better by working with the best.
Work with a good property investment company who knows what they are doing, who are recognised in their field.
Honestly, they don’t cost you anything so work with the best.
Have the best solicitors, and mortgage brokers and they will get you the best deals and advice.
Go to the developer direct if you want, but you won’t save any money. In fact, often developers are not allowed to sell with discounts so they don’t upset the property investment company networks.
PLAN YOUR EXIT BEFORE YOUR ENTRY
There is only one way to maximise our profits and that is to sell and re-invest.
We want to wait until the growth has slowed down, sell off and buy in markets that are growing rapidly, today its Birmingham, tomorrow it Manchester and then Leeds or where ever else.
Maybe we follow the HS2 with our purchases.
But we want to know how we get out of the investment.
Ideally, we want to sell to other people with a mortgage. Ideally, we don’t want to sell to another investor.
This means normal residential properties.
1 or 2 bed apartments, small houses etc. These sell, these rent, these are your bread and butter investments.
Know what you want to buy, the type, the price the yield and when it comes up buy it quickly.
The number of investors I have seen over the years dither so long that the market grows 12% before they even get a reservation down.
You worked all your life for that money.
Keeping it in your bank is an investment in itself. You are choosing to keep it there and take whatever interest rate you are getting.
I’m not saying jump in and buy anything that comes up, I’m saying plan, know what you want and when something comes up that matches buy it.
Stop waiting to see if the next one along will be better every time. The market is moving and you either jump on or miss the train.
Investing is like jumping off a diving board as a child.
You see everyone do it and it seems simple.
Until you get onto the board.
And it feels higher than it looked before.
And the water seemed shallower.
And now that you are here it feels – well, dangerous.
And you either jump, or you retreat.
And hopefully you do jump, because you soon realise that there really was nothing to worry about, and the experience was something you enjoyed.
SO WHERE IS EVERYONE INVESTING?
LOWER PRICE HIGHER YIELDS
Liverpool, the home of the famous 5, and a favourite for tourists is seeing a huge resurgence in property investment.
The Liverpool Waterfront is getting a facelift to become a ‘little Amsterdam’ (looks wise).
This is likely the last couple of years of buying under £150,000 for 1 beds in the heart of the city centre or waterfront, it is likely that these key spots in the city centre will grow dramatically.
Try and think of another major waterfront city in Europe that is at these prices. For many it is a bargain, and eventually will be linked with the HS2.
The rents are growing and 7% plus yields can be found in some superb central properties. Having a lease allowing AirBnb can also be a massive plus here, especially if you are in walking distance of the Cavern Club or Beates museum.
As Karl Jung said, “Liverpool is the pool of life, it makes to live”
LOWER PRICE HIGH GROWTH
These have to be focussed around Birmingham. The heartbeat of the country.
Look for outside of the main postcodes, 10-15 minutes from the centre of the city. Look for those new tram lines, buy-in and around those stops.
Check the growth and if they match them look to buy asap.
Trams here are due to be completed in 2022 for the Commonwealth games so get them while they are hot!
Sheldon, Digbeth, Marston Green, Curzon Green, Solihull all-seeing remarkable opportunities.
With Sheldon and Marston Green areas having tram lines and being next to the HS2 stop, and still priced well I would look here.
1 Beds for under £130,000 and 6% yields look great value.
MEDIUM PRICE AND GROWTH
Central Birmingham and central Manchester still looking superb. With the average property being around 6.5 times the average salary in both these cities there is still plenty of growth, but we are likely in the last 10 years before it slows.
Yes, they are expensive
Yes, I remember when you used to be able to buy in that part of town for £130k and now they are £200k.
The point is, these central areas within the 2nd and 3rd cities of the UK have micro-economies. People want to live there, there is no more space to build so prices grow incredibly quickly.
Anything within the inner ring road of both will be over £500 per square foot in the coming years.
The best time to buy here was 10 years ago. The second best time is now.
Will you look back in 10 years and wish you bought one?
MANCHESTER/ BIRMINGHAM ALTERNATIVE
Leeds has had a massive resurgence.
Many believe it should be classed in the similar breath as Manchester or Birmingham.
And it is seeing one of the biggest UK infrastructure investments.
Another city poised for the HS2 super fast train screeching in is Leeds. A city with a balance of yield and growth for the UK property investor. A place where it is incredibly hard to find good opportunities due to a massive undersupply.
Buying in Leeds can offer great value within walking distance of the train station and the universities.
If you want a strong growth, proven large UK city, with a little more value than its Manchester or Birmingham rival, a property investment here may be perfect for you.
London. I love the capital, and have been waiting a couple of years to be able to invest again, and this and next year look good for some opportunity.
Its not going to deliver the returns of Birmingham, Leeds or Manchester, or the rent of Liverpool or London commuter zones.
But if you want to be in the capital, or want a market that will always have huge demand for rent it really is a wonderful investment spot.
YOU ARE DOING GREAT
You’ve made it to the end. You probably know more than some people who have already invested.
You know the answers.
Don’t be greedy
Stop chasing fake yields and offers that seem too good to be true. Focus on the real stuff, the good quality, the safer investments.
Work with a great property investment company and you will become a great property investor.
But stop dwelling
Or you’ll miss all the good opportunities and spend your days talking about “how you knew that place was going to make money” while losing out on £50k growth.
Have fun with the process, there will always have been a better investment than the one you chose, but so long as it makes money you are doing well. Not making a decision is the only failure you can have.