What is the Right Property Strategy for you?

One of the first decisions to make when you start buying property is which strategy you are going to use to reach your goals. This is critical because without a clear strategy, your journey in property can end up being very risky, a bit hit and miss, and with no formula for success to follow, you may never reach your goals.

So, what is the right strategy for you? 

As many will already know my main strategies are both R2SA and R2RHMO and we are just starting to explore BTL however there are many different strategies out there, different strategies suit different people’s goals. It all depends on what your desired result is. 

What is a Single Let Property?

This is something I personal have never explored however know lots and lots of people who go down this route. A single let property is where you have a house or apartment that you let out to a single tenant – whether that’s a family or an individual. 

First, find the perfect location. Second, find the ideal tenant. Third, do the maths and ensure that everything adds up. Fourth, keep the tenant happy and ensure a consistent stream of rental income.

In terms of tenants, you’ll commonly be looking at families and working professionals. This is especially true if you’re investing in a city-centre property, where workers want to be near the office and desirable amenities.

Investing in a single let property is popular because it’s one of the simplest ways to get into the property investment market. 

Tips: Location is a vital indicator of success. By finding a great location, you improve the chances of finding a happy, motivated tenant, you can ensure a great rental income and if the area is up-and-coming, positive capital growth is never far behind.

Pros:

• Easy to understand
• Simple to manage when partnered with a letting agent
• Potential for good rental yields
• Capital appreciation overtime when holding the property

Cons:

• Lower returns than other Buy-to-Let opportunities
• Risk of losing tenants
• Single let’s can have a higher turnover of tenants which can lead to void periods

What is a Rent-to-Rent Strategy?

Now moving on to my chosen strategy. Rent to rent is the process of renting a property from a landlord to rent out to a tenant. Many investors also use Airbnb to find tenants for short periods at a high level of rental income. For example, if a ‘rent to rent’ investor manages to negotiate guaranteed income for the landlord of £800pcm for the property and charges £100 a night on Airbnb, the break-even point is only 8 nights of the month. Anything above this is profit for the investor.

Quick investment tip for rent-to-rent investing: Ensure you have strong demand for the property in question.

Pros:

• Little to no upfront capital
• High profits and good cash flow
• Easily scalable
• Easy exit

Cons:

• Risk of negative cash flow if no tenant is in place
• Hands-on investment with moving parts
• Most likely more regulation around this type of investment to come

What is a Student Property? 

So, this will be the same for R2RHMO’s. A student property investment is basically a house in multiple occupation aimed solely at student tenants. As far as Buy-to-Let property investment strategies go, this is similar to a single-let or HMO but focuses on a completely different market.

Many investors choose a student property investment because it will typically have a predictable, consistent stream of rental income.

Management is generally easier as landlords know that each tenant will be signing up for a certain period of time and they’ll always be a stream of new students to take their place.

If you buy into popular stereotypes, the idea of housing several students may turn you away, but the potential for income is considerable.

Quick investment tip for student property investment: Invest in student hotspots. Ensure you have long-term demand as voids on student property can hurt your bank balance.

Pros:

• Increased rental income
• Predictable cycle of tenants
• Consistent stream of tenants looking for accommodation

Cons:

• Potential for more wear and tear
• Challenging market with purpose-built accommodation

What is a Buy-to-Sell Strategy? 

So, this strategy is my partners favourite and what he is most looking forward to getting his teeth stuck in to. Flipping a property is simply buying a house or apartment, renovating it quickly and selling it for a profit. In terms of property investment strategies, this is completely different to Buy-to-Let. Here investors will not rely on rental yields or long-term growth, instead you will receive a short-term gain.

The main attraction of Buy-to-Sell is the amount of money that can be made quickly. You can buy and sell in a matter of months rather than the long-term timeframe that comes with a Buy-to-Let strategy.

However, unlike the other property strategies, this type of investment only makes money when you’re working. There’s no passive income, just the money you make on the sale.

The most important things to keep in mind when looking at Buy-to-Sell is location and budget. You need to ensure that you buy at the right price, in the right place and keep any refurbishments or maintenance within your budget.

Quick investment tip for flipping property: Run all the numbers in advance. Don’t get caught out with hidden costs with means delaying the flip.

Pros:

• Quick process that’s well suited to short-term goals
• No tenants or maintenance to deal with
• Less dependent on the long-term health of the property market

Cons:

• No passive income – You make money when you work
• Complex management and hands-on work
• Can result in a loss if done incorrectly

Building a Sound Property Investment Strategy

Building a sound property investment strategy is a decision that you should make as early as possible in your investment journey. There’s a number of different strategies beyond buy/sell and renting and it’s important that you identify one that will help you meet your goals.

I hope this has helped and always happy to answer any questions in the comments below.

Bye for now Xx