Ask Me Anything: How to Raise Money, LTD vs Personal & Clubhouse
In today’s episode, Kevin gives an update on what he’s been up to recently, current opportunities and hosts a question and answer session to help members of the community with any of their property challenges. He advises listeners on various ways of raising money for their property investing with in depth details of the different options, strategies to use during Covid-19 and tips on rent to own, rent to rent and how to start building a ‘power team’.
A lot of people are saying that property in London could now be dropping in price, this hasn’t been the case for many years. Consider doing the opposite of what the masses are doing and perhaps think of investing in this location.
In terms of raising money for property investments, there are various ways of doing this and there’s never been a better time with interest rates being so low. Reach out to people, let them know you’re in the property business. Joint ventures, banks, private finance and bridging loans are all ways of raising money. Bridging is the most expensive way of raising funds, more suitable for commercial properties and HMO’s and private funding is probably the best way as there are no upfront costs.
There is a huge demand for rent to own currently and there are big benefits to this. As a landlord you have no maintenance, no management costs and you’re helping someone become a home owner. It can work in any part of the country and is the most hands free strategy, which can be done remotely.
Don’t state the rent and terms for a rent to own when advertising. Try and be deliberately vague. A lot of potential applicants will just read the ‘rent’ part of an advert or won’t be eligible, for example if they can’t afford it or are on universal credit, but this is still a great way of building up your tenant database.
Covid shouldn’t be a reason to alter your plans and strategies. The world and business is still moving forward. There is still a housing shortage and people still need homes. One thing you can alter slightly is changing from guaranteed rent to offering landlords profit share agreements. It’s risky offering guaranteed rent without knowing when the pandemic will end and when furlough will end. Remember to market in the right places and in multiple places.
Depending on your personal circumstances, you’re probably better putting everything into a limited company rather than paying personal tax. You’ll have limited liability and it’s a better strategy long term as you can pass shares on, sell shares etc. However, the best advice is to get yourself a property tax accountant.
If you’re trying to build a ‘Power Team’ let people know where you’re based and what you’re looking for and start to build your team around that area. Remember to use your name, property is a people business.
If you’re a young person trying to get into property with no funds or income, try to get a job working for somebody who is already in the property business. Don’t do the obvious thing and get a job in a letting or estate agent, most don’t buy property and they won’t teach you how to become an investor.
‘If the taxi driver in New York says to you ‘which stocks to buy’ then you need to get out of that stock immediately because if the man on the street knows what stock to buy, you’re too late to the show’
‘Observe the masses, do the opposite’
‘Property is a people business’
‘You’re not going to learn about property working in an Estate Agent’
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ABOUT THE HOST
Kevin McDonnell is a Speaker, Author, Mentor & Professional Property Investor. He is an expert when it comes to creative property investment strategies. His book No Money Down: Property Invest talks about how to control and cash flow other people’s property to create financial freedom.
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