Do you want to increase your portfolio by investing in property but don’t have the money to do so?
Investing in property with no money can seem like a daunting or even impossible task, however, it can be done! There are multiple options to acquire the capital needed to get started in property.
From finding deals for others to using other peoples’ money to invest or profiting from properties you do not own there are multiple ways to make money without already having a large amount of liquid cash at your disposal.
Read on for insightful advice about how you can access the finances needed to build your own lucrative property portfolio.
How do I raise capital for property investment?
Deal sourcing
One way to quickly build investment funds, whilst honing your skills in finding the best property deals is Deal Sourcing.
This involves:
- Finding a property.
- Viewing it in person.
- Doing numbers and undertaking the necessary due diligence.
- Negotiating with the vendor.
- Selling the deal as a package to an investor for a fee of between £3-10,000 (depending on the nature of the deal).
Why do people pay for it?
One reason to rely on deal sourcing is the benefit of local expertise. Over 250,000 UK properties were purchased by foreign investors over the last decade and astute UK investors are also expanding their property investment search out of their local area in order to find the highest possible ROI (return on investment). Having somebody with knowledge of the area, that has viewed the property is extremely beneficial for the investor as it can prevent costly mistakes.
Time can be a highly profitable commodity. Wealthy but time-poor investors also use deal sourcers to expand their portfolios with the security of knowing that all of the due diligence has been completed and high yields are all but guaranteed.
What’s the catch?
Effective deal sourcing involves a developed understanding about what actually makes a good deal. High levels of compliance are also vital to prevent costly fines and differentiate yourself from ‘cowboy’ deal sourcers that have built an unpleasant reputation for this useful service. Educating yourself before you start is essential to successful deal sourcing and maximising your profits.
Rent To Rent
If you’re an entrepreneurial thinker looking for consistent cash flow from property rental but with little money to get started, then rent to rent might be the business model for you.
Rent to rent is a simple concept that can generate profit quickly.
Here are the steps:
- Rent a property for 3-5 years.
- Pay the owner or letting agent a guaranteed rent, which typically includes bills.
- Rent the property to tenants for a higher rent than what you pay the owner.
- The difference between what you receive from the tenants and what you pay the owner or letting agent is your profit.
Lease Option
A further way to profit from property you don’t own is through lease options.
A lease option is a legal agreement that allows you to control a property and generate income from it, with the right (but not the obligation) to buy it later. Essentially, it’s two separate agreements bundled into one.
- Lease: You agree to pay a monthly fee to the property owner, which allows you to manage the property and rent it out to tenants for a profit.
- Option: You agree a price at which you can eventually purchase the property if you choose.
By renting out the property for a higher price than the monthly payment made to the owner or letting agent, you can make an excellent profit.
Why would a seller agree to a lease option?
You may be wondering why a seller would agree to this kind of contract. Usually, the property owners who would consider lease options are those with limited options. Most commonly, this means owners who are currently in negative equity.
How do I start a property portfolio with no money?
Joint Venture and Angel Investor Funding
While building a property business does require money, it doesn’t necessarily have to come from your own pocket. By bringing skills, knowledge, work ethic, and character to the table, partnerships can be forged.
What is joint venture funding?
Joint Ventures (JVs) are collaborations between two or more parties. Usually, both parties would contribute funds however, it is possible to have an agreement where you contribute your work and expertise, and your partner contributes the capital. In this type of agreement, both parties will have shared equity and ownership of the asset. This also means that the risk is distributed between both parties.
What is angel investor funding?
Angel investors are much more hands-off and are frequently corporate entities as opposed to individuals. They provide financial backing in exchange for a minority stake in the business.
What’s the catch?
Whilst it is possible to achieve this kind of funding, it is not easy to secure. First, you will need to attract an investor. Then it’s vital to prove your trustworthiness, expertise and the quality of your business strategy. Even once you have been offered the cash, you need to ensure that the terms are conducive to your success. To ensure success education is vitally important.
How to start property investment with nothing
There are three crucial steps to building a successful property portfolio from nothing.
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- Develop your mindset: You need to be committed to achieving your goals, open to learning and have a positive outlook.
- Build your knowledge: To be truly successful, you need to understand what you are doing. A great place to start is by joining our highly successful Wealth through Property Course.
- Take action: start putting what you have learned into practice.
Wealth Through Property is the UK’s leading 2-day property investment course. It is designed to provide you with specialist knowledge of proven investor strategies. Learn how to get started and build your property portfolio and gain real-world advice.
Alternatively, make the first steps on your property journey, claim your free Wealth Through Property e-book.
To find out more information about the property investment courses we offer call us on 01302 897131 or email office@touchstoneeducation.li.
