There are a lot of myths out there in the property industry and some are so off target, they need to be debunked. The first one is that you don’t need any money to invest in a property. You do need money to invest in property investment so you should start saving now.
As to how much money you need, that is a different question entirely. Let’s say that you’re not going to actually purchase a property, but you’re going to do some kind of rent to rent or lease on a property. If you did that, you would have to find the money to pay the first month’s rent, and pay the deposit more often than not, potentially pay some admin fees. And you would then need to furnish the property.
Now this is because most properties that you’re going to rent or lease, in order to make a return on the difference between what you’re renting it at and what you’re renting it out for, are going to be done through some kind of HMO or potentially even serviced accommodation combination. You might also have to invest some money to make it compliant with the HMO regulations. So, when people say, “Oh, you don’t need any money,” that’s just not true.
The second myth is that you have to be in this whole property investment arena full time in order to make a success of it. And again, you don’t. It is perfectly reasonable to have a full-time job or run a full-time business and build a property investment portfolio on the side, as side income. And because they’re doing that, that means that they’re able to still benefit from the job that they have and the credit that comes along with that job; in the end, the potential ability to borrow that comes along with that job.
Another myth is that it’s all about the deal. It’s not. A deal is not a deal if it’s in a location you’re not familiar with. And it’s the same thing in chasing deals. You’ve got to stop chasing the deal and focus on chasing the location. The deals will follow.
Once you have your property, a rental or purchase, you’ll need tenants. Not just any tenant, but one who’ll pay your rent. You will need to deal with these tenants or hire a management firm to do that. Either way, a happy tenant is what you want – not just a tenant. Also save for the event when a tenant doesn’t pay the rent or when you don’t have a tenant for a month or two. It’s going to happen, and you need to plan for that.
Planned well, an HMO can serve you and your investments well.