By Harry Fenner. Property investment has a reputation; that it’s only for those with large stores of capital. This is not entirely true.
There here are many ways to enter, and successfully navigate, the jungle that is the property sector. My journey is proof of that. What you do need though is the right mindset, a hunger to learn the industry inside out and a flexible growth strategy.
Here are 5 important steps to help start and grow a property portfolio from scratch with minimal funds.
Have the right mindset
My mindset is influenced by my sporting background, if you lose, the only option is to try harder and be smarter in order to win. This is pivotal when working in business. When closing deals, I try to remain focused and take a rational, objective approach. I make a specific effort to separate any emotions I may have about a particular deal from the factual reality. This ambition and focus have garnered me my biggest successes.
Property is a market that rewards clever confidence, but not foolhardy ego. There will always be more successful investors than you are, so my advice is to be smart, not bullish.
You also need a rather thick skin, and during a life investing in the property market you will be have your hopes lifted, only to be dropped more times than you will care to count.
This process cannot dampen your enthusiasm for a deal. If it does, you may be too slow to act upon genuine opportunities when they arrive.
Know the market
Any successful business or investor needs to be in right place, at the right time, with the right idea.
In property, the market can wrong-foot entrepreneurs easily. Therefore, it is crucial to learn the sector inside out and consider how wider market trends could impact your business model.
You need to follow the economy and how it affects the construction market, along with rental and sales patterns. This will help you to time your investments effectively, and timing is extremely important in property. You need to make informed decisions about when to sell, buy, refinance, repurpose and develop.
Understanding the banking system is also crucial; learn about legislation, differing debt products and lending policies.
You have to be able to look upon your investment strategy and business from 30,000 feet so you gain a view on how your model is influenced by wider sector dynamics. Once you start thinking in this way, you decisions will become better.
Influence to gain investment
The insular nature of the property market can prove difficult to infiltrate, so it is important to try and raise funding in creative and less-obvious ways.
For example, I developed a business model of finding development opportunities on favourable terms, or businesses in trouble with tangible assets, who could not continue trading without an equity release. These deals proved extremely profitable whilst giving me the capital to continue the application of my model to bigger opportunities.
When I started out, the pressure from investors was immense. I spent months persuading investors to trust me with their money on deals, and I needed to deliver what I told them I would. Where investor relations are concerned, your aim should always be to manage expectations so that you deliver better returns to them, quicker. Once you have a reputation for delivering results in property, you are on to a winner. Property is an outcome driven environment.
As you grow your experience and capital, you are able to approach deals in a different way. Club deals with partners you share a vision and common interest with become more appealing. Of course, you can win and lose together, but more importantly when things go right you share the upside. Doing good business with good people is predominantly what motivates me at this stage of my career.
Have a replicable growth strategy
My first foray into property came after a chance conversation I had at the Conservative Club in Swindon where my Grandad used to play snooker. I came across a homeowner who was facing repossession and bankruptcy, so after a chat with the owner I decided to buy their house for a fixed price to remove the risk and uncertainty they were facing at auction.
I then formed a blueprint of finding motivated sellers, and building mutually beneficial relationships with them. I’d move quickly to take out a bridging loan and buy the properties at a good price, then I’d switch them to conventional re-mortgages, where I was gaining funding based on value, not on purchase price. This consistently left me with cash in my pocket, equity in the property and little to no financial input from myself. I became well-versed in the method, undertaking several similar transactions on a monthly basis.
Keep an open mind
Whilst the pandemic has been a testing time, creating an uncertain atmosphere for many businesses, it has also been a period of prosperity for many investors and businesses that pivoted quickly and changed their tactics. Therefore, it is crucial for entrepreneurs to stay mindful of the opportunities, whilst mitigating risks associated with the challenges they face.
About the Author:
Harry Fenner, 31, is the CEO of Navana Property Group– a leading and innovative UK property company. He has built up property portfolios currently valued at £46m. Navana specialises in management, development, investment, placemaking and financial services for the real estate market. Harry holds stakes in firms who specialise in building supplies, aggregates, recycling and conservation. Those investments are worth £250m and generate annual profits of £50m.
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