Have you decided on a property investment strategy yet to start your journey to freedom?
Here are some of the strategies that you could go for:
- Buy to let – you find the right property and rent it out to a single tenant (family etc)
- House in multiple occupation (HMO) – you find a property and convert it into multiple lets
- Flips – find a property, renovate it and then sell for a profit
- Rent to rent – an interesting idea that is becoming very popular
- Serviced accommodation – think about the Airbnb model here
- Property development – building new houses
- Commercial property conversion – converting old offices to flats
These are just a few of the more popular property investment strategies. There are others. Why am I telling you this? Because I recommend you choose one to begin with and stick to it!
Don’t be a Dabbler
A lot of property investment newbie’s start dabbling in a number of different strategies. You know a little bit of this and a little bit of that. They will get involved in HMO’s and then want to start flipping for example.
To be honest with you I did this when I first started out in property. It took me quite a while to realise that it was all getting me nowhere. In the beginning I did a lot of flips, and although they all made money, this strategy was not getting me to where I ultimately want to be, and that was to own a portfolio of profitable assets. I don’t want you to fall into the same trap. You may think that you have what it takes to follow different strategies in the beginning and be successful with all of them but the truth is that you won’t.
Why is this?
Well different property strategies require you to develop different relationships to succeed. When you have these essential relationships in place, together with the right systems and people, only then should you consider another strategy.
Focus on One Strategy first
Let’s say that you want to follow the buy to let or HMO strategy. In order to be successful with this you need build relationships with the right people (such as agents), develop your expertise in the market and build rapport with customers etc.
In practice it can take you 2-3 years to achieve the right level of expertise to be successful with your chosen strategy. Don’t be fooled by the “gurus” who tell you that it is just a matter of finding the right property at the right price. The theory is easy to grasp but making it happen is far from easy.
Here is a reality check for you. Agents already have a number of investors in their “inner circle” that they will offer the right property at the right price to before they come on to the market.
They have deals going on with other developers all of the time and you have to become a member of an agent’s inner circle. The more inner circle’s you are in the better. But this takes time unfortunately.
Here is a second reality check for you. There are no really good deals sitting on an agent’s desk waiting for a property investment newbie to come and snap up. It just doesn’t work like that. If you are not in that agent’s inner circle then you will never know about the deals that they have.
So what is the moral of this story? Well if you focus on one strategy and get yourself into those precious inner circles then you will have a much greater chance of success than trying to have your fingers in several different pies.
Here is Proof that Focusing on One Strategy works
In my property investment business right now I only focus on HMO’s and sourcing land and the land sourcing is a fairly recent addition to my business. I can do both of these things really well, because I have put the time in, built the relationships, created the systems and have a great team around me.
Before I got involved with land sourcing I decided to focus solely on the HMO strategy. I knew that to be successful I would have to develop the necessary experience, get myself into the right inner circles and put the systems in place to operate and source HMO properties.
In the region that I operate in, we may only get two or three good HMO opportunities a year. So, I have to make the best of the opportunities that come my way. Some other regions will have more opportunities but that is just how it is. I want my properties fairly close to where I live and so I have to stay focused and not be tempted by other potential “goldmine areas”.
So that is what I do and it works out really well. Without all of this being in place first I would never have taken on the second strategy of land sourcing. I learned the hard way at the beginning that dabbling in different strategies just gets you nowhere.
Once you have decided on the best property strategy for you then stick with it and focus on it. When people know that you are in the property investment business you may find that they offer you all kinds of other opportunities that are outside of your chosen strategy. My advice is to politely turn these down.
Let’s say you go for the flip strategy and then someone offers you the chance of a supposedly lucrative commercial property conversion. You have no experience of commercial property conversions so how are you going to know if the deal is sound or not?
You may get lucky. But the chances are you won’t. Unfortunately there are people out there on the lookout for gullible property investors that they can hand off a “dead” property to. When you stick with one strategy and get really good at it you will be able to smell these dead deals a mile away.
The Power of Focus
If you know anything about the science of neuro linguistic programming (NLP) you may be aware that one of the core strategies is around the power of focus. You may have heard that “when you focus on something it will grow” and other similar statements.
I am a firm believer in this and I found out the hard way that dabbling doesn’t work. I lost money and valuable time dabbling and I don’t want you to do the same. So, commit to focusing on one property strategy and become the best that you can be in it before you even think about getting involved in another.