10 Things I’ve Learnt (Part 3)
A lack of money should not hold you back from getting started in property
Over the past few weeks I’ve been thinking about 10 things that I’ve learned over the last two decades of investing in property for myself, and the third on the list is this: A lack of money should not hold you back from getting started in property.
Those that are new to investing often assume that in order to get started, they need a lot of money. After all, even a relatively cheap property is quite expensive in absolute terms.
However, the truth of the matter is that you don’t need money to get started – or rather, you don’t need to have your own money to get started in property.
With the market as it is today, you might find a cheap property up in the north of England; well, cheap in relative terms as you would still be looking at about £40,000 – £50,000 minimum. Therefore, it’s not unsurprising that many think that they need to have a lot of spare cash to get started. Whilst I don’t disagree that can be difficult to do property deals without any money at all, the key thing is that it doesn’t have to be your money.
I’m going to use myself as an example. When I started out I had no money of my own so I chose to
remortgage my home, take out the equity and use it as seed capital for my business. I didn’t spend years saving to get started, but instead used this equity to buy 8 properties in my first year.
Whilst you may think that you need to spend years saving so that you can get into property, you don’t – and it needn’t be a slow process because money shouldn’t hold you back.
What’s more, things have changed somewhat since I began too, and now there are many other ways to get the money needed to start you off.
Joint venture partnerships, for example. Over the past few years the idea of using JV partnership funds has become pretty mainstream. Essentially, you go into a deal with a business partner on perhaps a 50/50 basis, or find somebody who will lend you the cash in exchange for a decent return on their investment.
You could also use the No Money Down technique – so long as it’s above board and legal – or could use options; instalment contracts, delayed completion, rent to rents… or a number of other strategies.
Nowadays, there are numerous ways that we can do property with no money or with very little of our own money, and if we really want to get into property, then it can be done regardless of our personal financial situations.
An alternative might be starting out by sourcing deals for other investors. Then again, if you can source deals, you can probably source JV partners who would finance deals for you – and this might mean that you can even keep a stake of the property.
To summarise, don’t let money hold you back from getting into property, because there are ways and means if you have no money or if funds are limited.
Peter Jones B.Sc FRICS
By the way, I’ve rewritten and updated my best selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to ThePropertyTeacher.co.uk