In today’s blog, I’m going to share with you what I would do if I were starting to invest.

Again, I will remind you about how I started, but also share with you how I would do things differently, knowing what I know now, having been investing for almost 30 years.

So, when I first started back in 1995, I knew nothing about property investing. All I knew was I wanted to get my foot onto the property ladder. I was 24 at the time. I had a load of student debt but just secured a graduate trainee job at Cadbury’s.

To make things easier for me, I rented out two of the rooms in my home to friends who were still studying at the university. The rent they paid me every month was pretty much enough to cover the mortgage and all the bills, so I kind of lived for free. I also had a second stream of income because I was running a student nightclub business, which was a great fun business at the time, very profitable.

The money I made from that gave me the deposit to buy my second property back in 1998. I retained my first one, turned that into a three-bed student HMO, and then moved into my second property with my friends who continued to rent from me, so I was still living for free.

My Main Focus 

My priority would be to get my foot on the property ladder. Now, back when I started, it was affordable to buy property. Right now, I think the starting salary at Cadbury’s is probably twice what I started on. However, the investment required to buy a property is probably seven or eight times as much. So, for many people, it’s not just the ability to get a mortgage; it’s also the deposit that is a real problem. 

Instead of tying up a whole load of money in a property, what I would do is find a landlord who was tired or retiring. I would take on a property on a lease option, ideally five or even maybe seven years. I’d give them guaranteed rent and have a management agreement so I could issue ST contracts.  

Now, I wouldn’t want more than three people because, in Birmingham, if you have an HMO (house of multiple occupations) for five or more people, you need to get a license. So, if it’s just me and three people, it wouldn’t need to be a licensed HMO, although of course, I’d want to make sure all the safety things are put in place like fire doors to ensure everyone, all the tenants and I, were safe in the property. 

“Create cash flow because that’s what gives you the financial freedom to do whatever you want in your life.”

The Next Step 

Once I’d secured somewhere for me to live, I would then start looking for other properties again on purchase lease options that could start creating cash flow for me.

How would I find these properties? 

Well, remember I started in Selly Oak, which is just next to Birmingham University, where many students live. However, with most student areas, there’s often an oversupply of accommodation. There are accommodations that maybe once were suitable for student accommodation, but it’s now a bit too far from the university because there are more properties closer to the university that those students can choose to live in.

Now, you might think, why doesn’t the landlord just repurpose the property and put different types of tenants in? Well, that’s what I would do, but most landlords are not aware of that. Many student landlords have only ever rented to students. They assume that once someone finishes university and goes to get a good job, they wouldn’t want to share; they’ll want to go live on their own in an apartment. 

But very often, particularly if someone’s come from overseas, they’ve got no connections in the city, they might want to stay in the same place, maybe bring in some friends, and sharing can be a really good way of having a nice social environment and saving some money. 

I would look for those properties where the landlord has not been able to find students. I would approach them and say, “Look, rather than have an empty property, I could help you get some tenants in here. I would rent it from you on a lease option, and then I would repurpose it for young professionals or people working in the city, and we’d get people into those properties.” 

How Do We Benefit? 

One of the big benefits of doing this is that you can often get a property at a slight discount because the landlord’s just keen to get rid of it. They don’t want the hassle of having an empty property. They’re still paying the mortgage. They might have tried to sell it, but they haven’t been able to sell it because it’s a bit too far from the university for students. 

So that’s what I would do. I would get a property, move into it myself, use some of the rooms for friends, and rent out the other rooms to help cover the cost. I’d then look for other properties on lease options, and I’d do the same thing, repurposing properties that maybe were once suitable for students but are now not because they’re a bit too far away from the university. I’d turn them into professional HMOs and start creating cash flow. 

And then, over time, I’d look to maybe purchase more properties, maybe get some buy-to-let properties. But my priority would be to create cash flow because that’s what gives you the financial freedom to do whatever you want in your life. 

I hope you found this blog useful, thank you for taking time out and reading. I look forward to seeing you on the next one and as always

Invest In Knowledge, Invest In Skill.