Meet Your 2025 Property Goals With Low Investment

• by Chris Andrews
• November 5, 2024

Striding through Q4 of 2024 seems the right time to start thinking about property plans for 2025 and what your outgoings may be. Anyone who has undertaken property investment training is more than likely to have heard about creative finance or “no money down” property investing.

Key Takeaways

• Property investing has many strategies that can work well in different areas
• Creative methods exist to start investing without large cash reserves
• Focusing on income generation rather than ownership can be a smart approach

Property investing can be an exciting way to build wealth, but it’s not always easy to get started. You might wonder which strategy is best or how to acquire properties without a large sum of cash. The good news is that there are many ways to invest in property, even if you don’t have much money saved up.

Many people think about property investing as buying a house and renting it out. But that’s just one option. There are many creative ways to get involved in property that don’t require a big deposit or mortgage. For example, you could rent a property from a landlord and then sublet it to others. This approach lets you start earning income from property without buying anything.

A great source of knowledge is Kevin McDonnell, whose video inspired this post

Property Investment Strategies: What Works Best?

You might wonder which property investment strategy is the top choice right now. The truth is, there’s no single “best” approach. Different tactics work well in different areas. The good news? Many strategies have been effective for decades and will likely stay that way.

The real challenge often isn’t picking a strategy. It’s getting your hands on a property to use it. You might know how to manage an HMO or run a serviced flat, but without a property, that knowledge can’t be put to use.

This is where “no money down” techniques come in handy. These methods help you get keys to a property without huge upfront costs. Don’t dismiss this idea too quickly! It’s not about doing property deals with zero money. Instead, it’s about being creative and growing your portfolio without relying on a regular job for cash.

There are other creative approaches too:

• Lease options
• Exchange with delayed completion
• Vendor finance
• Joint venture finance
• Private investor finance

These methods can help you start making income from properties without huge upfront costs. You could even combine techniques. For example, you might rent-to-rent a property, make some money, then use a lease option to buy it later.

It’s a different mindset from the usual “save up, buy property, repeat” approach. Instead of using job income to save for deposits, you’re using property income to build your portfolio.

Remember, there’s good debt and bad debt. When you buy a property with a 75% mortgage, you’re really buying a debt. Why not talk to property owners about taking over their existing mortgages instead? This can be a win-win, especially in a falling market where owners might struggle to sell.

These strategies need careful planning and the right legal advice. But they can open up new ways to grow your property business without relying on traditional financing methods.

Getting Property Without the Big Deposit

Clever Ways to Invest in Property

You might think you need loads of cash to start investing in property. But there are smart ways to get started without a big deposit. These methods have worked for years and still do today.

The real challenge isn’t knowing how to manage a property. It’s getting the keys in the first place. Let’s look at some clever tricks to make that happen.

Renting to Make Money

One way to start is by renting a property from a landlord and then renting it out to others. This is called rent-to-rent. You don’t own the property, but you can still make money from it.

Some people think they must own properties to be real investors. But that’s not true. Many business owners rent the buildings they use. In property, you can do the same.

When you rent to rent, you don’t need a big deposit or to pay stamp duty. You can start making money right away. It’s a great way to learn the ropes without taking on a huge mortgage.

Here are some benefits of rent-to-rent:

• No large deposit needed
• Avoid stamp duty costs
• Start earning quickly
• Learn property management

Remember, the goal is to make money from property, not just to own it. Renting to rent can help you do that faster than saving up for years to buy.

Telling Apart Property Investing and Property Business Ownership

The Real Picture for Most Property Investors

You might think that owning property means you’re a business owner. But that’s not always true. In the UK, there are about 2.2 million property investors. Most of them only own one or two houses. The average is about 1.2 or 1.3 properties per person.

Many of these investors have jobs and use their properties as pension plans or extra income. They’re not really business owners. They’ve just bought themselves a job.

Real business owners often don’t own the buildings they work in. They rent them. But in property, we often think we need to buy to let. This can be a problem. You need a big deposit and have to pay stamp duty. Plus, you’re really buying a debt – a mortgage.

Instead of buying, you could rent a property and then let it out to others. This way, you don’t need a big deposit or to pay stamp duty. The rental part – finding tenants and managing the property – stays the same. The big change is how you get the property in the first place.

Clever Property Investment Approaches

Purchasing with Delayed Payment

Another smart tactic is to agree to buy a property now but pay for it later. You can:

1. Sign a contract to buy at today’s price
2. Pay a small deposit
3. Move in tenants right away
4. Use the rent to save up for the full purchase

This gives you time to build up funds while already making money from the property.

Creative Financing Options

There are many ways to fund property deals without traditional mortgages:

• Ask the seller to lend you money to buy their property
• Team up with investors who have cash
• Take over the seller’s existing mortgage payments

These methods can help you acquire properties faster than saving up large deposits.

Remember, the key is finding ways to control properties and earn rent, even if you don’t fully own them yet. Be creative and look for win-win deals with property owners.

Getting Properties Without Cash Upfront

Using Loans for Property Investing

Another way to get properties without spending much cash at first is to use loans cleverly. Instead of saving up for years to buy a house, you could look at taking over someone else’s loan. This is different from getting a new mortgage.

Here’s how it might work:

1. Find a property owner who wants to sell
2. Check if they have a loan on the property
3. Offer to take over their loan instead of getting a new one

This can be good for both sides. The seller might avoid losing money, and you don’t need a big deposit.

Remember, this isn’t as simple as just calling the bank. You’ll need:

• The right paperwork
• A good solicitor
• To follow the proper steps

It’s a bit like renting to own, but with the loan. You’re paying off someone else’s debt, but you get to use the property.

This method can help you start investing sooner. You don’t have to wait until you’ve saved up a huge deposit. It’s about being clever with money, not just having loads of it.

Comparing Loan-Based Purchase to Standard Mortgages

So how would this idea work financially?

1. Traditional approach:
   • Save £25,000 for a deposit
   • Buy a £100,000 house
   • Get a £75,000 mortgage
2. Debt-purchase approach:
   • Find a seller with an existing mortgage
   • Take over their debt
   • Pay a small fee to the seller

With the traditional method, you’re really buying a 75% debt. You’ll pay the bank every month, hoping to make a profit from rent.

The debt-purchase method can be smarter. You might find a seller who owes £99,000 on a £100,000 house. Instead of giving them £25,000 for a deposit, you could offer £1,000 to take over their mortgage.

This approach has perks:

• Less upfront cash needed
• No stamp duty
• You still get rental income

Remember, the richest people often have lots of debt – but it’s good debt that makes them money. By thinking differently about property investment, you could grow your portfolio faster and smarter.

Which property investment strategy is the best? The real challenge isn’t picking a strategy but is using the right one for the right people.