How to Start a Buy to Let Property Business
I work with a lot of new investors, a lot of new property investors, and I get a lot of questions about, "How can I start a buy to let property business".
I’m going to give you some considerations in getting started, things you should think about, which will help you in your new property business. Typically, the investors that I work with want one of two things. Either, they want to increase their monthly cash flow and upgrade their lifestyle, or they want a nest egg for the future or both!
Consideration 1 – Know your starting position
If we just look at the first one, increasing in their monthly cash flow. This is normally to cover their outgoings so they can have a better standard of life. Initially, you must consider your financial starting points. You've got to consider where you are at now and you would be really, really surprised, the amount people that don't really know what their outgoings are. They have standing orders and direct debits that they didn't even know that they had.
So, firstly go on your bank website online and download three months bank statements and look through that and calculate all of your outgoings including direct debits and standing orders.
So - if you want to improve your lifestyle, obviously you want to try and cover more and more of your bills, and once you have that figure in mind, you know how much you need to be making from property to cover them and improve your lifestyle.
From here, what I would do, because I'm quite a visual person is I would make some sort of visual chart or graph with the outgoings of the top and zero at the bottom. Then every time I made some money from property or outside of my main income, I would then put some sort of visual representation, shade a block in, put an arrow, put a line, whatever, to show me getting closer to that point of covering my outgoings, and that visually for me is really, really useful.
So - you might do that on a whiteboard, for example. Put your outgoing figure at the top, zero at bottom, and then just make notes when you're getting closer and closer to that to the outgoings figure. This makes it a lot more real because sometimes when you get in additional income, you would just go and spend it because you live to your means. Therefore, this visual representation can be really, really powerful.
Consideration 2 – Have a foundational understanding of property investment
My second consideration is you need to have a foundational understanding of property. You need to have a basic level of education. People ask me, where would I start, there is so much out there? Well, typically, I advise start with the free stuff. There's so many fantastic books out there that so many great podcasts, some of which I've been on (wink).
There's some great YouTube channels as well that really help you just to get a foundational understanding of property so you can then ask the right questions moving forwards. I would start with the free stuff.
Obviously, you can go on paid courses, but typically the people that I work with who want to get involved in property don't want another full-time job; therefore they don't need to know everything in crazy depth. That's what I'm there for, to help them. However, it is advisable for them to have a foundational understanding of what we're talking about so we can have a conversation.
Consideration 3 – Decide your model of investment
Consideration number three is you want to decide and be absolutely laser focused on the property model that you want to adopt. There are lots of different avenues you can go down, whether that be typical buy to let's for families, HMO's, which are houses are multiple occupancy, you've got serviced accommodation, commercial, land, developments, there's lots and lots of different things.
My advice as a new investor would be to start small, learn and the scale when the time is right for the right reasons. I love family let's. I love single let's. The reason for that is there's people that need to rent and there's poor rental accommodation everywhere and we're really serving a need in the community. There's a housing shortage. Therefore, it's in high demand and it's going to be less subject to legislature changes moving forward. That's where I would start. But you got to decide what YOU want to do. Be laser focused on that because what happens is people maybe do a little bit of learning, a bit of training, and then they see all these different shiny pennies and adopt a scatter gun approach and they do a bit of everything. So - they never master one thing. Pick one thing, be laser focused on it.
Consideration 4 – Confirm your Location
The next thing is you need to decide on the location, where you want to invest? I've done previous content on location, whether you should invest locally to you or at a distance.
My opinion is it doesn't matter where you invest. The key thing is, you find somebody who you trust implicitly who is on the ground. As I said, the majority of people that I work with want to be hands-free, they don't want to be involved. They've got busy lifestyles, busy jobs, busy family lives.
So, if it's going to be hands free and managed for them, the property could be on the moon for all they care! It's just really important that you find somebody who you trust on the ground who's going to deal with challenges if and when they arise. The last thing you want to do is be getting in the car and have to sort them yourself.
Choose your location, be laser focused on that location. And again, don't adopt a scatter good approach and have a property in Liverpool, one in London, one in Bournemouth and one in Newcastle. Be focused on one area.
Consideration 5 – Build your team
The next thing is you need to build that team around you. One of the most important people in that team is the finance broker. Now, it's important that early on when you start investing in property, you have a conversation with one, two, maybe three finance brokers so they can understand your position, understand your outgoings, your income, and look at what levels of finance are available to you. What different types of finance may suit, which investment model you're trying to implement.
But also, they will discuss with you the rates that are available. More than anything, you start to build that relationship, they're starting to get a picture of what you're looking to achieve. The more they know, the better they can advise you on the most appropriate financial products for you. They can set up that file for you, so when the time is right, you can pull the trigger on your first property investment!
Consideration 6 – How to find good deals
The next thing is people ask me is
"How do I find these good deals?"
My answer is, what's the definition of a good deal? My definition of a good deal may be very, very different to your definition of a good deal. I think it's all relative to your upbringing, your belief system, your experiences, your current position, if you currently invest or not. There's lots of different variables that all come together to define what that good deal is for you. Regardless of your definition you need to know how to find good properties. That's where your team comes into place. It's about building genuine relationships, with estate agents, with property deal packagers, property investment packager, who can help you understand the market and he possibilities.
Property Investment packagers (like me) have access to stock that you wouldn't normally see as it may be off market. Its so important to start of building the team, building genuine relationships, having conversations with these people and start to build that team around you.
Consideration 7 - Take Action
My last consideration about starting a buy to let property business is probably the most important thing you're going to read today…..
Just go and do something!!
Just go and do something, do anything. Go on some viewings. Go and meet some people, start to build relationships. I speak to a lot of newer investors and they have been thinking about doing something for six months, a year, 18 months, two years, some even longer than that. My advice is go and do something. Start going on property viewing and start meeting people, start understanding what a good deal is for you. Stop waiting for the perfect investments that probably don't exist!!
Go and do something and start getting some amazing returns on your money and start improving your lifestyle (if that is your goal).
So, there you have it. My considerations when you're starting a new buy to let property investment business. I encourage you to think about these things before you start investing.
I hope that really helps. Any questions you've got. Let me know. I'm more than happy to help you get from 0 to 1. Or maybe you 1 to 2 investment properties.