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  • Property-a-holics

    Quick and easy ways to make money in property

    Although I am not sure if "quick", "easy", and "property" should be mentioned in the same sentence, I thought it would be interesting to discuss short term ways of making money. Smile

    Some people completely focus on quick transactions making small margins, while others use these short term strategies to build up a bigger deposit to do bigger scale projects.

    For the purposes of this discussion, I would suggest that "short term" in property should be defined as less than one year.

    Here are my suggestions for a (relatively) quick and easy result within 12 months:

    1. Buy a property for a significant discount and sell it in an auction.

    When the auction rooms and property market are hot, it's possible to reverse the "buy trade, sell retail" paradigm and sell a property bought at retail in an auction, at a profit. The margins may be fairly small £10K to £30K, but it's fast and furious and multiple transactions can make the numbers look attractive.

    See - Paul Ribbons trading strategy

    2. Buy a property at an auction for a deep discount, do a cosmetic refurb, and sell it into the retail market.

    Otherwise known as "tart and turn"!

    These kind of projects can be turned around in one to two months.

    See - Tips for buying at auction with David Sandeman

    You can also find repossessed or refurbishment property from the comfort of your armchair with Property Tribes RepoList, the U.K.'s largest real-time database of repossession and refurb opportunities.

    3. Planning gain

    Buy a property, get planning permission, and sell it on for someone else to develop.

    This can be risky as there is no guarantee you will get planning permission and you are also at risk from council Planning Departments moving at a snail's pace.

    4. Buy an unmortgageable property and make it mortgageable.

    There are a myriad of reasons that make properties unmortgageable, which means they are only appealing to cash buyers.

    If you buy an unmortgageable property for cash, solve the problem that makes it unmortgageable, if you have got your numbers correct, you should then be able to sell on into the retail market for a profit.

    One way to achieve this, is to use bridging finance, but it's vital to make sure you have a financial exit for the bridging, if, for any reason, you are unable to sell.






    See - 18 ways to use bridging finance.

    See - 11 scenarios that make a property unmortgageable

    5. Extending short leases

    A leasehold property with a lease of less than 80 years are considered unattractive in the market place and with lenders. The shorter the lease, the more the value of a property is affected.

    If you buy a property with a short lease, and then successfully extend the lease, you will significantly increase the value.

    Property Tribes Lease Extensions advise on these matters and also source a range of solicitors to undertake the work, giving you the opportunity to find the most competitive quote.

    6. Re-modelling a property

    Changing the layout of a flat can give you an extra bedroom, and thereby increase the value.

    One strategy is to find a flat with a large living room and move the kitchen into the living room to create open plan living. You can then turn the kitchen into an extra bedroom.

    Changing the layout to work better, or adding an ensuite bathroom, or moving a downstairs bathroom upstairs can all add value quickly.

    7. Loft conversion

    If you look for streets where most of the houses have loft conversions, and find a house with an unconverted loft, then you know that you can add value by converting the loft into extra bedroom space. This can cost between £20 and £30K and increase the value of a property by £50K.

    8. Take a single occupancy house and turn it into an HMO

    HMOS are well known for delivering increased cash flow. However, there are planning and compliance issues that need to be assessed carefully before undertaking this strategy.

    See - HMO vs. single let

    9. Make an ugly house pretty

    If a house has an ugly exterior such as pebble-dashing or other unattractive finishes, you can change the property to look a lot more attractive. This could be through something as simple as rendering or adding cladding. (Planning permission may be required).

    10. Adding space

    Adding an extension, or extending out over a flat roof all increase the footprint of a property and add value.

    It's important to do the numbers, budget carefully, and stick to your budget rigidly to ensure that the profit is not eaten away.

    These are just a few suggestions to get the ball rolling. I am sure there are others such as title splitting, permitted development etc.

    I would like to focus on strategies where you actually OWN the property, not just control it.

    If you are interested in those kinds of strategies, see:

    Ways to make money from property without actually owning it.

    If you are looking for a short term result without much effort, please see:

    The difference between knowledge and experience in one image

    The short cut to wealth finally revealed

    Money for nothing and your bankruptcy for free

    What is a short cut too far in property?

    My personal belief is that the most money to be made in property is through boredom.

    Whether you are aiming for monthly cash flow or capital appreciation, or a combination of both, it's important to devise your personal property strategy, create a business plan, and stick to it, taking action every day.
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    Great thread Vanessa !

    In addition to the angles you've already highlighted my 4 current core strategies are:

    1) Convert buildings with lower value uses like office into higher value uses like residential.
    2) Create additional homes - typically extra apartments on top or behind or alongside your existing building or within it.
    3) Add bedrooms to your existing apartments/houses. Taking the kitchen (with it's own external window) and putting it into the living room (creating a modern open plan living space) is one of my favorites.

    In summary "intensify" or increase the density of the existing spaces you have. Combined with a high quality refurbishment these approaches can add a great deal of value with relatively low/no planning risk - because you already have a building to start with.

    And the most eco-friendly building is the one that has already been built.

    4) Additionally if you get your timing right then flipping contracts for off plan new build apartments can work very well. You can limit your risk using low deposits and SPV's. I'm buying two in each of my own office to residential conversions on 5% exchange deposits for example because I believe the housing market will perform particularly well in the areas that I'm investing in over the course of the next couple of years - I intend to flip one and hold and rent one in each case. This strategy does of course come with a financial health warning because it is a much more speculative strategy.

    Happy hunting everyone !


    Smile Martin
    www.inspiredassets.com
    www.inspiredhomes.uk.com
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    Thanks Martin - great additions. Smile

    Would you say - as a general rule - that these short term strategies require more cash funds upfront?

    You may want to buy for cash, you may need to put in large deposits, if using bridging finance you need to be able to afford larger monthly payments, and if doing refurbishment, you need to be able to afford the planning fees, building out costs etc.

    I am therefore concluding that the "short term" money-making property strategies are largely undertaken by people with large amounts of cash, access to JV or private finance, and/or people with a lot of experience, and/or people with a high risk threshold. Would you agree with that?

    See - Interview with property developer, Martin Skinner
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    Having built up substantial portfolio's from scratch twice now (£250m with Nice Room & £100m+ with Inspired Homes I would argue that you don't need to have bucket loads of cash to start with.

    It does depend very much on your capacity for handling risk however.

    Also the strategies that we've been discussing involve short-term individual transactions but to establish a well balanced and sustainable portfolio takes time. It took me 5 years with Nice Room and it's taken me 7 years with Inspired Homes.


    Smile Martin
    www.inspiredassets.com
    www.inspiredhomes.uk.com
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    No 6 has worked well for me in the past, especially ex local authority flats. The old ones are often laid out poorly, or have a storage room that can be converted to a bathroom or kitchen.
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    One idea is simply buying into a rising market... All strategies carry an element of risk of course, the risk here being that you got it wrong - expecting the market to rise!

    I wish I'd bought several properties locally last year to simply sell on, as the values were rising fast and significantly!

    When buying into a rising market with a view to selling on within a short-ish period, it's normally best to do something to the property such as redecorating to justify your act:-)

    Angela
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    Author of The Complete Guide to Property Strategies and The Complete Guide to Property Investing Success
    Learn more at http://www.completepropertysuccess.co.uk

    I also post property updates on my Facebook Page

    "It is the small decisions you and I make every day that shape our destiny" Anthony Robbins

    Martin,

    I've just checked your website and looked at the Croydon development. You're obviously doing it very successfully, but I was amazed that you can get a 2 bed apartment out of 397 square feet!

    I'm in the process of buying a property with 815 square feet of space with a view to converting it into two 1 bed apartments and I never even considered that it might be possible to get more than one bedroom per unit.

    Martin
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    @martin

    I never even considered that it might be possible to get more than one bedroom per unit.

    [Image: light-bulb-moment1st.jpg]

    Smile
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    Not so much a eureka moment Vanessa. More a 'how on earth is that possible?' moment.

    Obviously, Martin has proven that it can be done - and done very nicely too, if his marketing is anything to go by, but given the floorplan I have on this next project, I can't imagine being able to get a second bedroom in either unit, without extending with a dormer or similar.
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    Thanks Martin.

    I suspect the second bedroom must be a single?

    I know Martin S. is focusing on compact spaces that are optimised for storage and space.

    Hopefully Martin S. will be along to give some details.
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    (31-01-2015 10:11 AM)Vanessa Warwick Wrote:  5. Extending short leases

    Is this happening much as a strategy outside of London?
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