Idiot’s Guide to Property 2020 | UK

Idiot’s guide to property 2020|UK is a short simple guide for UK property beginners or newbies by property lawyer, coach and author Dalton Barrett .

This post was originally posted on the 06/02/2019 and updated on the 20/12/2019

Can anyone make a success of buying, holding and selling property? Do you need to have special skills or knowledge – or can any “idiot” do it?

This blog shines a light on three huge topics for property newcomers or anyone wanting to reset their real estate journey in 2020.

>>>> 1: Idiot’s guide to property – Knowledge, skills or tools you need to successfully get into property in 2020

>>>> 2: Idiot’s guide to property – Practical steps you should take to adequately prepare yourself for your property journey

>>>> 3: Idiot’s guide to property – What the UK property landscape is likely to look like in 2020 and beyond

Don’t you just hate it when you meet or hear about someone who has made millions in property?  Someone who does not seem especially smart –  with few talents, no qualifications and no silver spoon in their mouth from birth?

Putting it politely, someone who seems kinda dumb.

No doubt you have seen many of them on YouTube and elsewhere on social media – talking about their “large property portfolios”, their “seven figure income” and how they have achieved “financial independence”.

You scratch your head, “How on earth did such a blooming idiot achieve such success?”

You speculate, “They must have done some serious jail-dodging stuff to get so far!”

Of course you shouldn’t be hating; you should be appreciating…and working out how exactly they got to be so successful…while you need to call on the loose change when you pop round to the local corner shop for a few bits.

The good news is that you too can earn big money in property without any exceptional knowledge, experience or skill. Nor does it require a ton of money...

BOX 17 NEXT LEVEL

>>>> 1: Idiot’s guide to property – Knowledge, skills or tools you need to successfully get into property in 2020

The great thing about property as a form of investing is that you do not require any special knowledge, skills or ability to get involved.

The “asset class” – property, land and buildings – is well understood by almost everyone.  You acquire a property, it goes up in value, you make a profit. That is it in a nutshell.

Do you need any special qualifications or training?

Property is one of the few remaining areas where you can earn good money and acquire substantial wealth without needing to acquire an expensive college degree.

Of course having qualifications in areas like property law, building and finance can only help.

However if you left school without any qualifications there is no need to worry.

Although you don’t need any particular qualifications to succeed in the world of real estate, it is highly recommended that you get as much knowledge and education on the topic as possible.

There is no need to spend huge sums on expensive training courses – although some people do find such courses give them the necessary push to get involved.

You can acquire property knowledge and training relatively inexpensively by:

  • Attending property meetings
  • Attending property conferences, exhibitions and workshops
  • Reading books, blogs and magazines
  • Listening to podcasts
  • Watching YouTube and other videos.

Can you do it without help from anyone?

Many people have succeeded in property by working on their own. However, it is not the best approach – especially if you are new to the property game and lack knowledge, experience of expertise.

Best practice is to:

  • Hire a property coach or mentor
  • Seek advice or assistance from someone you know or property professionals
  • Joint venture with someone who is experienced in the property strategy you want to get into
  • Appoint a business accountability partner who can help you keep on the straight and narrow and achieve your property goals without falling by the wayside.

It may seem the cheapest way to try and do everything on your own. In the long term, however, it could prove the most expensive route. By seeking out help, you can avoid costly mistakes which can seriously delay or even derail your property success.

new10note-

Do you need a lot of money?

Having money will of course be an advantage to anyone hoping to invest in property. However, it is wrong to over-emphasise the importance of money.

It is commonly said that you can succeed in property with one of three resources:

  • Money
  • Knowledge
  • Time.

If you don’t have a lot of money but you have or can acquire at least one of the other resources you will have nothing to worry about.

Further, there are many “no money”, “little money” or “low money” ways to successfully invest in property.

With several property strategies, you can legitimately use other people’s money. Such strategies include:

  • Property flipping
  • Buy refurbish refinance/sell
  • Assisted sales
  • Joint venture deals or projects.

To find out how to lawfully and ethically use other people’s money to fund your property success, hire a suitably experienced property coach, mentor or adviser.

In addition, seek out suitable affordable, cost-effective property training.

Do you need special connections to people in the property world?

It certainly helps if you can form great working relationships with property professionals such as:

  • Estate, letting and managing agents
  • Property lawyers or conveyancers
  • Surveyors, planning consultants and architects
  • Mortgage brokers and lenders
  • Builders and developers.

However, when you start up, you don’t need any special connections or contacts. But you should ensure that you engage all the expert advice and assistance you need.

As you progress on your property journey, you should build up your “property power team”. A property power team is a group of property professionals you form close ties with – and can confidently rely on when needed.

Idiot’s guide to property 2020 UK – Some FAQS

idiots property guide no2

>>>> 2: Idiot’s guide to property – Practical steps you should take to adequately prepare yourself for your property journey

It is about starting off on tried and tested firm foundations:

  • Cultivating the right mindset which sees success as the result of hard work, not magic or luck
  • Taking the time to learn the knowledge and strategies to be a property winner
  • Taking the correct steps at every stage, relying on the help, advice and expertise of people who have done it before, got the t-shirts to prove it.

Property success can be broken down into 5 simple steps, steps even an idiot could manage without hyperventilating. Let’s call them the idiot’s guide to property success in 2020…in fact, in any year

The 5 simple steps

The 5 simple steps are:

1. Preparing properly before starting up – Step 1
2. Deciding your investment approach – Step 2
3. Choosing the property strategy or strategies most appropriate for you – Step 3
4. Drawing up a written property plan – Step 4
5. Operating professionally at all times – Step 5

prepare property.jpg

1 – Preparing properly before starting up – Step 1 

You can’t just jump into property, not any more. Full and thorough preparation is essential if you are not to fall flat on your face.

The days when anyone could buy a property and make serious money with no planning or preparation are long gone.

Yes, “idiots” can still make money in property – but not just any idiot!

Expertise and knowledge are more important than ever. “Preparing properly” is about two things:

  • Education
  • Securing expert advice and assistance.

In terms of education, you should be educating yourself generally on all property matters or strategies you are looking to deal with. Resources to use include:

  • Books
  • E-books
  • Magazines
  • Courses
  • Training
  • Workshops
  • Webinars
  • Podcasts.

Further, you can join property groups such as Your Property Network (YPN) and Property Hub. In addition, you can get involved in forums and attend property meetings, where you may be able to meet or gain access to a range of property people including:

  • Potential business partners or joint venturers
  • Advisers
  • Mentors
  • Experts
  • Workmen, builders and contractors.

In terms of securing expert advice and assistance, it is advisable to address these issues before you start on your first project. 

At the very least you should speak to a lawyer, a mortgage adviser, an accountant and at least one property professional – such as a property mentor or coach – with knowledge and experience of the strategies you intend to take up.

2 – Deciding your investment approach – Step 2

The second simple thing you have to do is to decide your financial reasons or objectives for investing in property.

At its most basic, this is deciding what you are investing for:

  • Income or
  • Capital?

Further, you should decide whether you are investing for the:

  • Long term or
  • Short term?

Of course you should know what exactly you mean by “long” and “short” in terms of number of years.

Finally you should decide whether you want your involvement to be:

  • Hands-on or
  • Hands-free?

switch-energy-supplier-with-Exchange-Utilit-3.jpg

3 – Choosing the property strategy or strategies most appropriate for you – Step 3

The third step is identifying the property strategy or strategies best for you, taking into account the second step, your investment approach.

Think of a property strategy as nothing more than the way you make money from property. The different ways or strategies will have pros and cons in terms of the key factors in your investment approach: 

  • Income/capital
  • Long-term/short-term
  • Hands-on/hands-free.    

You should select a strategy according to how much it meets your investment approach, goals or preferences. 

Below, you  will find a brief summary of some of the most common property strategies and their relevant characteristics.

Property strategy A – Buy to let

Buy to let – you buy a property and rent it out usually to a single person or family.

Buy to let is a long-term investment and can be (a) hands-on – if you manage the property yourself or (b) hands-free – if you hand over the running of the property to a managing agent.

Some locations and some property types will perform better than others in terms of income or capital growth.

Property strategy B – HMOs, houses in multiple occupation

HMOs similar to a buy to let, but with the property having multiple occupants and so securing a higher rent.

The higher rent will appeal to you if your priority is maximising your rental income. 

The higher rents will also boost the capital value of the property.

Property strategy C – Serviced accommodation

Serviced accommodation – similar to buy to let but with the addition of services (such as laundry, wi-fi, TV and cleaning). Occupiers, a bit like hotel guests, typically stay for short periods. 

Serviced apartments can attract even more lucrative rents than HMOs and are all the rage at the moment as landlords seek to super-size their rents in the face of a raft of unfavourable government policies against landlords – including the reduction of mortgage interest deductibility and the imposition of the 3% stamp duty surcharge.

If you want to gain maximum income from your property, operating it as serviced accommodation is the way to go – although it has to be said that there is a high risk of the government legislating away some of the advantages of this strategy in the not too distant future. 

Header_1337710_16.9-1024x576

Property strategy D – Buy refurbish refinance

Buy refurbish refinance (BRR) you buy a rundown property, refurbish it to add value, refinance it to take out some of the added value, and then let it out.

BRR is similar to buy to let except value is “forced upwards” after purchase – with any growth in value during the period of ownership being extra.

This is a great strategy for you if your priority is long term rental income, but you also want the chance to use some of the newly added equity to invest in your next purchase.

This is a powerful way to add to your portfolio after every refurbishment, and is the fast lane to property millionaire status for many property investors.

Property strategy E – Flipping

Flippingflipping is basically BRR without the refinancing. Once the property is done up, it is sold – releasing the full equity or profit.

This is the strategy for you if you are looking to grow and recycle your capital, progressing to bigger and more lucrative projects each time.

It is a way to climb the property food chain, with bigger projects typically providing bigger gains or profits. Of course, they also present greater risks.

Flipping is a good strategy if you like the idea of property but don’t want to deal with tenants.

Find out more about property strategies:

Buy to let (buy and hold a property for income and/or capital growth)
Rent to buy (property is rented before it is bought)
Rent to rent (rent property to rent it on for a higher rent)
Option to purchase (profit from your control of a property)

The importance of seeking expert advice and assistance

A key part of choosing the right strategy for you is to seek and take expert advice in advance. If you need to pay for that, shying away at that point is unlikely to be your best ever decision.

Many would-be property millionaires who are “blooming idiots” end up looking on at others with insane jealousy simply because they fail to properly explore and use start-up funds readily available to them.

Seed capital to get your property empire off the ground could come from countless sources, including:

  • Selling, mortgaging, remortgaging or releasing equity from a property owned by you or a relative
  • Securing an early legacy if one is due to you
  • Accessing your pension or other lump sum available to you
  • Disposing of high value assets which you don’t need or use, especially if depreciating in value over time
  • Private loans.

Any capital raising should of course be taken only after taking due professional advice.

business-plan-preparation.jpg

4 – Drawing up a good property plan – Step 4

Once you have worked out the property strategy you intend to follow, the next step is to put it all down in writing in the form of a property plan, which you can refer to, review and revise over time as necessary.

A bunch of ideas and “a plan in your head” is no good – too easy for you to forget, veer off course and give up.

Being accountable to someone on your property journey (such as an adviser, coach or experienced property investor) is almost essential for your success.

“Blooming idiots” don’t usually end up with a seven figure bank account because they listened to no-one, relied on no-one and did it their way like Frank Sinatra.

Your “accountability partner” can, with your commitment, use your property plan to guide, assess and measure your progress – making it more likely that you achieve your property goals.

They can help you when the going gets tough, providing that vital second option, getting you back on the right track.

5 – Operating professionally at all times – Step 5

Perhaps the most important idiot’s guide to property success is to avoid missteps…to avoid messing things up.

Over the last few years in particular, the government has brought in a formidable number of rules and regulations which impact on anyone renting out property.

If you want to build your property wealth with the minimum of red tape, avoiding tenants completely could make things easier for you. 

But even without tenants, successful property investing requires high levels of ongoing professionalism if you are to minimise risks and stop things from going wrong.

To be successful in property investing, you need to adhere to the highest levels of professionalism in all your business activities.

You need to:

  • Know the  many rules and regulations which apply to properties and property businesses.
  • Apply those rule and regulations accurately, efficiently and effectively.
  • Have first class principles, practices, systems and procedures. 
  • Give priority to people management, budgeting, cashflow and taxation. 

That way you are unlikely to come a cropper by ending up in court or, worse still, finding yourself in an intractable financial tangle where insolvency or financial ruin is your only way out. 

>>>> 3: Idiot’s guide to property – What the UK property landscape is likely to look like in 2020 and beyond

A key thing about about the property world is that it is always changing. No idiots guide to property investing can be complete without flagging up this very important factor.

Looking a the political landscape, it is fairly clear that politicians of all colours are increasingly pro-tenant. Both major parties seem to be committed to removing no fault eviction (section 21 eviction).

These or similar changes could make it a bad idea for some landlords to rent to residential tenants. It could be best for them to rent to commercial tenants instead.

A property strategy good for this year, is not necessarily going to be good a few years from now. Therefore, you need to constantly review your property strategies – checking if they are still appropriate – still good – still profitable – bearing in mind legal or regulatory changes on the horizon.

QUICK HOUSE DEPOSIT

Is buy to let dead?

Property people have been asking whether buy to let is dead or dying since 2015. That was the year the government cut the tax deductibility of mortgage interest for non-corporate buy to let landlords.

Since then, some landlords have had to pay more tax on their rental income. As a result, many landlords have exited the market or looked at different strategies.

Is buy to let a good strategy for you to take up in 2020?  Which is the best part of the country for buy to let at the current stage in the property cycle?

Should you purchase a buy to let property in your own name or that of a limited company? Should you favour “vanilla buy to let” – where you rent to a single household – or should you split the property into several units and rent on a multi-let basis?

To answer these and similar questions, carry out thorough due diligence, research and reading. Most important of all, seek expert advice where you lack knowledge or are in any doubt.

Is  now a good time to get into serviced accommodation?

In recent years serviced accommodation has had rave reviews from many property investors. A huge property education industry has sprung up around serviced accommodation.

It is hard to go on social media without coming across a “property guru” promising to turn you into a serviced accommodation specialist.

Partly in response to the lower profitability of regular buy to let, many property investors are increasingly looking at serviced accommodation.

Serviced accommodation is very attractive because the gross income per room can be two or three time higher than regular buy to let accommodation.

So should you be piling into serviced accommodation in 2020?  Should you be using  rent to rent  or other strategies to get your hands on as many serviced accommodation units as you can – multiplying your income at a beak-neck rate?

There is no one answer for everybody.  Serviced accommodation can be very demanding in terms of time input. It can be more of a job or business than a true property investment. There is also the high expectation that the sector will face greater regulation in the future – and therefore higher running costs – which will eat into profits.

The most important thing is to establish whether serviced accommodation is appropriate for you in terms of your individual property objectives or goals. As ever, conduct thorough due diligence and seek expert advice before going ahead.

What are the best strategies for the future?

There is no easy way to identify the best property strategies for the future. However, it is possible to identify trends which may or not become important or dominant.

One trend seems very clear – the number of people renting is rising compared to the number of people buying. Home ownership has numerous benefits – but the truth is that house prices are unaffordable in many parts of the country – with little chance of a reversal.

There seems likely to be very strong demand for rental property in the future. However, if you are planning to rent to residential tenants, you need to study your target areas with care.

A lot of the future demand for rental accommodation is going to be provided by institutional build to rent investors. If there is going to be a lot of that sort of accommodation in your target area, will there be demand for the type of accommodation you will be able to provide?

image_1474905624_16265065

Is it worth offering house share accommodation to students?

It is a similar story if you hope to get into the student market – converting and/or refurbishing residential houses or flats into HMOs for students. Students are increasingly moving away from house shares and moving to large purpose built blocks which are more attractive in facilities.

Will there be sufficient demand for the type of student accommodation you are able to provide?

Should you buy new apartments to rent out?

In many parts of the country, if you are looking to buy a property to rent out, you are most likely to come across new apartments in large blocks – rather than second hand houses or period flats.

You need to carry out thorough research before buying a new apartment for long-term renting. Often they do not do nearly as well as second-hand houses or period flats. In particular you need to be alert to over-supply.

The drawbacks of buying a new build flat include:

  • New build properties often include a builder’s premium, which means that they are not the best investment purchase
  • Initial low maintenance costs can increase worryingly once the block ages and more maintenance, repairs and renewals are required
  • In very large blocks, there can be a race to the bottom in terms of rent – as some landlords cut rents to achieve quick lettings.

New build flats in prime locations have a good chance of remaining a good rental investment in the long term. However, units in secondary locations or out of town can often suffer from lack of demand, voids and other issues.

Conclusion

The clear message is that it is not especially difficult for anyone to own or invest in property.  Overall, subject to a few caveats, it is relatively simple to get involved.

“Simple” of course doesn’t necessarily mean “easy” or “inevitable”.

Idiots more than most need to be smart if they are not to be epic fails!

But if you follow the guidance set out in this blog , seeking and following expert advice and assistance at every stage, you are more likely to succeed than fail.

Pretty soon you could be that “blooming idiot” someone else is looking at enviously…wondering how on earth someone so unexceptional ended up as a property multi-millionaire!

Enjoyed this blog? Please share it with friends.

Are you someone looking to get into property but not yet done so? What is holding you back? What is stopping you from jumping in and becoming involved? Please leave your observations or comments below.

If you have not signed up to get my latest blogs sent to you weekly, please do so HERE

Dalton Barrett
Rebel Property Coach

Please follow me on Twitter @Dalton1London
You can find me on FacebookInstagram and on YouTube
Please link up with me at LinkedIn

My website is: www.rebelpropertycoach.com

 


ADVERTISEMENTS

8 comments

  1. Each blog I read makes me realise I am wasting time by not stepping on to that income generating property ladder. All I need now to start is that elusive deposit.

    1. To stop wasting your time Marilyn, could I suggest that you check out the “Finance” section of my blog where there are many blogs dealing with acquiring a deposit. Also don’t forget my book “Quick House Deposit” available on Amazon.

  2. Very interesting article! I particularly like the idea of writing the property plan as this will help people focus on it and work accordingly. In today’s climate, good planning is a must! Gone are the days where you could just embark on buying property to let regularly without worrying about anything!

  3. Great information, very nicely written. Think I will 100% follow these steps as this will help me achieve my dream to become a property millionaire.

    1. Great! Glad you liked the blog Vik. I’ll be writing several similar blogs soon please keep an eye one for them. Also, check out the “Next Level” section to help you achieve your dreams of becoming a property millionaire.

Leave a Reply

Your email address will not be published.