HOW TO INVEST £20K IN PROPERTY FOR BEGINNERS
David Barr
July 2nd, 2021
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You’ve got £20,000 in your bank, but what do you do with it, how do you turn that £20k into £40k, £80k, £160k, and so on? Well firstly, congratulations for getting that amount in the bank, that’s quite an achievement, but what do you do with it to start increasing your balance?
There are quite a few options, you could put it in a pension, get some stock and shares, have it sit in an ISA or put it all on black, although we wouldn’t suggest that! Actually, what we would suggest is putting that money into property.
Yes – £20k used wisely, can be enough to get you started in property investing. It’s not a significant amount of money when it comes to property though, as you might imagine, so to really maximise your £20k then you need to be flexible when it comes to location, type of property and the type of investor you want to be, as you might imagine your £20k won’t go far in London for example.
Here are the main things that you need to do and consider when you’re looking to get into a property with £20,0000.
Step 1: Take off £2k for expenses
What to consider is your £20k isn’t actually £20k, it’s more like £18k after you take off all your expenses and the fact you want to have some in the bank as backup, in case there is an issue in the property.
Step 2: Choose your investment opportunity wisely
This is arguably the biggest thing, you need to choose an investment that is going to build your investment pot quickly and allow you to maximise your cash flow. This is exactly what we can help you with as we have fantastic below market value deals to suit all kinds of investors, and we can make your £20k work as hard as possible which is vital at this stage to your success in property.
Step 3: Build investment pot
This is the most important, as we mentioned £20k isn’t a huge amount to get started, so the most important thing initially is to build up this investment pot. We’ll go into various different strategies and types of investments you could go for, but you need to choose options that are going to quickly build your investment pot up, for a while you shouldn’t focus on cash flow and simply save what profit you are making for re-investing.
You’re £20k for instance might be getting you £200-300 profit a month, but that’s never going to lead you to financial freedom, so we would recommend saving this until you can improve the monthly returns.
Step 4: Build your cash flow
Only after you’ve chosen the right investment, built up a strong investment pot and bought multiple properties, it’s finally time to sit back and relax and start reaping the benefits of the cash flow that you’ve built up.
It takes a long time until you get to this stage, as you need to turn your £20k (£200-300 a month) into making 10-20x that.
As the UK’s leading property sourcing company, we can help you find investment properties across England and Wales. Join us today!
With your budget, there are a few different investment strategies that we would recommend considering, but a lot of which depends on your personal preference. We’ve listed some of the options that we would recommend:
High yield BTL
You’ll have to go for an area with cheap property and get a repayment based mortgage, a property for £60-80k would be ideal so you can pay off the mortgage and still have an additional surplus income. If you have a high yield, then you might be able to save enough or make annual overpayments to ensure that in a few years’ time you are able to purchase another property for a similar amount and do it all over again.
It’s a steady long term investment strategy that is low risk and should mean after a while you have several mortgage-free properties to either benefit from the cash flow, or from selling them.
Rent To Rent Business
Another option is rent to rent, which is when you rent the property from a landlord on a single let basis and then rent it out to several tenants individually to earn a profit which would usually be for an HMO style property.
We’ve written a guide around rent to rent explaining exactly what it is, who it’s beneficial for and how you can utilise it, here is our “what is rent to rent guide”.
Flip a house
The other option you have is house flipping when you buy a house that is a little run down and in need of renovation. This is tricky though, especially within your budget, as you will need a mortgage or bridging loan, and have to ensure you are able to refurbish the house within your budget and most importantly, quickly.
Flipping a house is tricky, and sticking to your budget is even harder as often things crop up that you may not expect, so always have a buffer. You need to ensure at the end that you make a decent profit, so planning is the key to this, the property has to be perfect!
HMO Property (Renting by room)
An ideal option is a BTL on an HMO property (House of Multiple Occupation), you can stretch your budget a bit further using your money as a deposit on a BTL repayment mortgage. The reason you can spend that bit more on an HMO property is that you should ideally get a lot more back on the rental, the idea is that you rent out individual rooms which will increase your earnings from the property compared to if you were to rent it out to a single tenant.
So hopefully you have an idea of what kind of investment you want, now to talk through exactly how you might be able to find the perfect property that fits the bill within your budget. There are a few things that you need to consider in order to maximise your money:
Choosing the right location
This is integral. You need to pick an area that has low property prices but good yields, which can be tricky and hard to find. Although if you are planning on being a landlord, it doesn’t matter where you are based, if this is your first investment then we would say stick within 100 miles if you can as it just generally makes everything easier.
The main thing when choosing an area to purchase a property is to look at the people in that area, is it an area that people aspire to live in? Is it up and coming with new plans and renovations underway? Not only do you have to look at yields, but you also want to consider if the house price will increase when you do eventually come to sell.
BMV property
You’ve got to make your £20k work really hard, and go really far, in order to start increasing your capital quickly. In order to do this, you want a head start right from the off, you want a property that is a decent percentage below market value. This will help you maximise the rental yield, and also make a profit when you eventually come to sell it.
If you flip, create more space
If you have decided to choose to flip a house, the key to making good money on it is to create more space. What we mean by that is adding a large extension, changing a two-bedroom into a three, anything that will make the property appeal to a different set of buyers and really increase the properties overall value.
Property Sourcing
Another key to finding the perfect property to meet your requirements and make you profit is to use a property sourcing company such as ourselves! We get access to a whole host of below market value deals thanks to being a part of a group of companies that includes a cash buyer – we’re also property experts with several years’ experience, so we know a good deal when we see it.
A property sourcing company can be majorly beneficial to finding a great deal, especially for your first few properties, before you know exactly what you should be looking for. Using our vast property knowledge we can help you maximise your profit, and we want to ensure we do so because we want you to come back to us when it’s time to expand your portfolio.
Well, the plan is to keep increasing that £20k and turning it into a steady cash flow so you can have financial freedom, right? There are a couple of important things that you need to do after you’ve found the property, and you’re starting to generate money:
Build your network and contacts
This is integral to future success in property, building a network of contacts that you know can help you on your journey. Contacts are so important because they can help you unlock deals and opportunities when it comes to new properties to add to your portfolio or even financing options to maximise your returns.
Build a solid cashflow
The next task is obviously to build a steady, consistent and good cash flow across several different properties. This allows you to spread the risk, and increase your profits!
Start your property portfolio today!
You’ve got £20,000 in your bank, but what do you do with it, how do you turn that £20k into £40k, £80k, £160k, and so on? Well firstly, congratulations for getting that amount in the bank, that’s quite an achievement, but what do you do with it to start increasing your balance?
There are quite a few options, you could put it in a pension, get some stock and shares, have it sit in an ISA or put it all on black, although we wouldn’t suggest that! Actually, what we would suggest is putting that money into property.
Yes – £20k used wisely, can be enough to get you started in property investing. It’s not a significant amount of money when it comes to property though, as you might imagine, so to really maximise your £20k then you need to be flexible when it comes to location, type of property and the type of investor you want to be, as you might imagine your £20k won’t go far in London for example.
Here are the main things that you need to do and consider when you’re looking to get into a property with £20,0000.
Step 1: Take off £2k for expenses
What to consider is your £20k isn’t actually £20k, it’s more like £18k after you take off all your expenses and the fact you want to have some in the bank as backup, in case there is an issue in the property.
Step 2: Choose your investment opportunity wisely
This is arguably the biggest thing, you need to choose an investment that is going to build your investment pot quickly and allow you to maximise your cash flow. This is exactly what we can help you with as we have fantastic below market value deals to suit all kinds of investors, and we can make your £20k work as hard as possible which is vital at this stage to your success in property.
Step 3: Build investment pot
This is the most important, as we mentioned £20k isn’t a huge amount to get started, so the most important thing initially is to build up this investment pot. We’ll go into various different strategies and types of investments you could go for, but you need to choose options that are going to quickly build your investment pot up, for a while you shouldn’t focus on cash flow and simply save what profit you are making for re-investing.
You’re £20k for instance might be getting you £200-300 profit a month, but that’s never going to lead you to financial freedom, so we would recommend saving this until you can improve the monthly returns.
Step 4: Build your cash flow
Only after you’ve chosen the right investment, built up a strong investment pot and bought multiple properties, it’s finally time to sit back and relax and start reaping the benefits of the cash flow that you’ve built up.
It takes a long time until you get to this stage, as you need to turn your £20k (£200-300 a month) into making 10-20x that.
As the UK’s leading property sourcing company, we can help you find investment properties across England and Wales. Join us today!
With your budget, there are a few different investment strategies that we would recommend considering, but a lot of which depends on your personal preference. We’ve listed some of the options that we would recommend:
High yield BTL
You’ll have to go for an area with cheap property and get a repayment based mortgage, a property for £60-80k would be ideal so you can pay off the mortgage and still have an additional surplus income. If you have a high yield, then you might be able to save enough or make annual overpayments to ensure that in a few years’ time you are able to purchase another property for a similar amount and do it all over again.
It’s a steady long term investment strategy that is low risk and should mean after a while you have several mortgage-free properties to either benefit from the cash flow, or from selling them.
Rent To Rent Business
Another option is rent to rent, which is when you rent the property from a landlord on a single let basis and then rent it out to several tenants individually to earn a profit which would usually be for an HMO style property.
We’ve written a guide around rent to rent explaining exactly what it is, who it’s beneficial for and how you can utilise it, here is our “what is rent to rent guide”.
Flip a house
The other option you have is house flipping when you buy a house that is a little run down and in need of renovation. This is tricky though, especially within your budget, as you will need a mortgage or bridging loan, and have to ensure you are able to refurbish the house within your budget and most importantly, quickly.
Flipping a house is tricky, and sticking to your budget is even harder as often things crop up that you may not expect, so always have a buffer. You need to ensure at the end that you make a decent profit, so planning is the key to this, the property has to be perfect!
HMO Property (Renting by room)
An ideal option is a BTL on an HMO property (House of Multiple Occupation), you can stretch your budget a bit further using your money as a deposit on a BTL repayment mortgage. The reason you can spend that bit more on an HMO property is that you should ideally get a lot more back on the rental, the idea is that you rent out individual rooms which will increase your earnings from the property compared to if you were to rent it out to a single tenant.
So hopefully you have an idea of what kind of investment you want, now to talk through exactly how you might be able to find the perfect property that fits the bill within your budget. There are a few things that you need to consider in order to maximise your money:
Choosing the right location
This is integral. You need to pick an area that has low property prices but good yields, which can be tricky and hard to find. Although if you are planning on being a landlord, it doesn’t matter where you are based, if this is your first investment then we would say stick within 100 miles if you can as it just generally makes everything easier.
The main thing when choosing an area to purchase a property is to look at the people in that area, is it an area that people aspire to live in? Is it up and coming with new plans and renovations underway? Not only do you have to look at yields, but you also want to consider if the house price will increase when you do eventually come to sell.
BMV property
You’ve got to make your £20k work really hard, and go really far, in order to start increasing your capital quickly. In order to do this, you want a head start right from the off, you want a property that is a decent percentage below market value. This will help you maximise the rental yield, and also make a profit when you eventually come to sell it.
If you flip, create more space
If you have decided to choose to flip a house, the key to making good money on it is to create more space. What we mean by that is adding a large extension, changing a two-bedroom into a three, anything that will make the property appeal to a different set of buyers and really increase the properties overall value.
Property Sourcing
Another key to finding the perfect property to meet your requirements and make you profit is to use a property sourcing company such as ourselves! We get access to a whole host of below market value deals thanks to being a part of a group of companies that includes a cash buyer – we’re also property experts with several years’ experience, so we know a good deal when we see it.
A property sourcing company can be majorly beneficial to finding a great deal, especially for your first few properties, before you know exactly what you should be looking for. Using our vast property knowledge we can help you maximise your profit, and we want to ensure we do so because we want you to come back to us when it’s time to expand your portfolio.
Well, the plan is to keep increasing that £20k and turning it into a steady cash flow so you can have financial freedom, right? There are a couple of important things that you need to do after you’ve found the property, and you’re starting to generate money:
Build your network and contacts
This is integral to future success in property, building a network of contacts that you know can help you on your journey. Contacts are so important because they can help you unlock deals and opportunities when it comes to new properties to add to your portfolio or even financing options to maximise your returns.
Build a solid cashflow
The next task is obviously to build a steady, consistent and good cash flow across several different properties. This allows you to spread the risk, and increase your profits!
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Here at The Property Sourcing Company, we are led by a roster of industry experts who have over 50 years of combined experience in doing BMV property deals, as well as packaging them up for investors.
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Get in touch and we’ll establish what type of property you’re searching for, before talking you through our current investment opportunities. We’ll also keep you posted as we acquire new deals.
When you buy your investment property through us and we’ll take care of solicitors, surveys – everything – all to ensure you have a stress-free property purchase. It’s just one of the ways we make investment work for you.
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Simply put, we’ll get you the best possible deal. Our sister company, The Property Buying Company, have been in the property buying industry for years & we have access to all their stock which is at a price point that is ready for investors to buy and make a great return on.
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