I wanted to tell you about a property investment strategy that I’ve just set out for a client. It’s Property Investment 101 and it’s the most basic property investment strategy I could give somebody.
If you’re somebody that wants to get into property investment then this will hopefully be really interesting for you as It’s such an easy strategy to take into account.
I’ve known my client a little while now – he’s got 6 properties. The total worth of these is approximately £1.2m. It’s great – he’s already in a fantastic position generating just over £50k per year in profit. He owns the properties outright too so that £50k is pure profit. He doesn’t have to work – he does – but he doesn’t have to and he lives a nice comfortable life.
So I analysed each of the properties; looking at the property value, the rental income and I valued them in 3 different ways.
- An Estate Agent Valuation
- A Chartered Surveyor Valuation
I’ll go into each of these a little more another time, but for the time being – I went through each of the properties and I’ve calculated that I can turn these 6 properties into 20 properties.
How would I do it?
I’d mortgage those six properties and reinvest a further £800k across another 14 properties. I’m keeping the £1.2m equity but using it to expand out on the portfolio.
I’d based my workings out of safe tenancies – houses with safe tenant demand and safe tenant appeal.
So he’s not losing any equity and he’s growing his portfolio and do you want to know the best bit? His net profit per year will go up to around £120k per year.
Now, obviously there’s a bit more to it and I’ll happily show you how it works. Just send me an email.
But how incredible is that? I reckon the whole thing would take only 2 years. 2 years and he would have increased his annual profit by £70k. Incredible. And it’s costing him nothing.