Your 2026 property success - Pt 3: Setting a winning strategy

0:01Hey everyone, it's Rob B here with Rob D and you are listening to the Property Podcast. This is the third part in a four-part series where we are helping you set yourself up for the best year ever. And in this episode, we are going to help you set a winning strategy.

0:22Thank you for joining us for this series that we've put together to help you have an amazing property year. If you haven't listened to parts one and two yet, you can find them in the property podcast feed and make sure you subscribe. You'll want to get all our future episodes sent directly to your phone so you can subscribe in Apple Podcasts, in Spotify or wherever else you choose to listen. So we've talked about how to figure out where you are now and where you want to go. So now all that remains is that trivial bit in the middle. How are you actually going to do it? And of course, it boils down to buying property.

0:54That's kind of what this show is all about. but you can buy a property and use that property in any number of different ways to generate completely different outcomes. So in this part of the series, we're going to be talking property strategy and running through the main strategies that people follow along with their pros and cons so you can pick out the ones that sound like they might suit what you're trying to achieve and dig into them further. The great thing about property investment, there are lots of different strategies available to you. The terrible thing about property investment is there's lots of different strategies available to you because it means that people can sometimes make the wrong decisions or just procrastinate because they're overwhelmed with deciding on which way to start.

1:33So we're going to quickly run through some of the options available to you now. We covered these all off in far more detail in the podcast and we'll link in the show notes two episodes that will really help you deep dive into these strategies further. But let's rattle through some of the main options. First on the list is flipping properties and this is normally renovating. You often will see this on Homes Under the Hammer. If you've watched that series, I'm sure many of you have, where people go in, buy a property, it's normally knackered and they'll go spend some money, do it up and then hopefully make a profit at the end.

2:06Now this type of strategy takes a lot of expertise or a very good network because you need to be good at doing refurbs. If you have that skill set, then lucky you. Maybe this is a strategy for you. If you don't, then you need to have a good network, a good network of tradespeople who you can trust to deliver on time and on budget. Because if you get it wrong, those mistakes you make can be expensive. Some property strategies, the risk is pretty low. You buy it, you hold it, you leave it. With this type of strategy, the rewards might be higher sometimes if you get it right. But you can also lose money deploying this strategy.

2:44So you need to be careful. You also need to be careful in the type of market you operate. So if you're doing this when the property market is a bit subdued and not many transactions are taking place, it's then harder to do this strategy. Not impossible, just harder. So you need a lot of capital and you need a lot of expertise or a very good network. If you get it right, you can make big chunks of cash. If you get it wrong, you can lose big chunks of cash. The other thing you'll need for this strategy is time. It's a more time intensive strategy. So the upside to this is more money, possibly. Downside, time needed and the expertise needed.

3:23There's only so many people who could do this strategy or do it well. A quick note, you don't always have to sell your properties. Some people adapt this strategy, they refurb it but then they refinance, take money out and hold the property and rent it out. A lot of people I've spoken to over the years who've done refurbs, the common regret that they have is they didn't hold more of the properties. So that may be a version of this strategy that you may be interested in. Next on the list is HMOs. HM what? Now the HMOs are houses in multiple occupancy, multi-lets to you and me. This is where you take a house and rent it out room by room rather than to a single family.

4:02Why would to do that? The reason is they'll generally make more rent if you rent each room out individually rather than the home as a whole. So people look at HMOs as a way of building up cash flow. So if you have a goal like I want to earn so much every month so I can go part-time at my job or whatever then that might guide you towards a higher cash flowing strategy. But as you'll start picking up on as we go through these different approaches there are always going to be trade-offs. Nothing is perfect. And the drawback of HMOs is complexity. So there are different types of HMO, all with different regulations attached to them.

4:38The type of mortgage that you need is going to be a specialist mortgage. And so it can be harder to work out how much you can borrow and whether you can borrow at all. If you're buying a property that isn't set up as an HMO already, then there's complexity in actually setting it up to operate in that way and whether you're even allowed to do that. Because in some areas you need a license and in some areas they're just flat out not allowing anymore. and then there's complexity in the actual operations. So if you're renting properties out by the room then of course rather than just one family who all move in and out at the same time there could be people moving in and out all the time and there can be conflicts to manage as well.

5:11So that's either complexity you need to deal with yourself or that you need to pay someone else to do for you which eats into your returns. A kind of subtype of HMOs is student-led. So in most areas there's demand for room rentals from all different types of people but students is generally the first one that comes to mind. This is in some ways simpler because you're often letting to a group who all move in and out at the same time but you also need to be aware that there's normally a month or two in the summer when you won't be getting any income and you really need to think about your timing because people generally sign up way in advance for the next academic year so if you get it wrong you could be without revenue for a very long time.

5:49There's also competition to be aware of from lots of new fancy shiny blocks that are going up that just weren't around 10 years or even five years ago. So I would say to some degree are property on hard mode. They are more complex. There's more to think about. But the reason for taking that on is the higher cash flow. Property Hub Invest is our business that sits behind the podcast. And it's not for everyone. But if you're short of time and you want someone to help you build your portfolio using the same strategy that we talk about on this podcast, then it could just be for you. And it's how I've acquired all my properties for years now.

6:22The great news is you can find out if it's right for you by sitting down for a completely free one-on-one strategy meeting with a member of our team. So at the very least, you'll go away with way more knowledge and it will have cost you nothing at all. You can find out more and book that in by going to propertyhub.net slash invest.

6:41Next on our list is buy to let. It's the basic one, the simple one, the probably the one that's the easiest to understand, to execute. And it's the favorite of Rob and I. This is the one that we've done the most and that's because it's tried and tested it's stable it's predictable you buy a property you put your deposit down you normally get a mortgage leverage is very important when it comes to property investment and then you rent it out and as best as you can you leave it so of course there'll be a little bit of work to do on the way with tenants coming in and coming out and the odd refurb or repair but most of the time not a lot happens and for busy people and if you're a busy person listening to this, this is a great strategy.

7:26It's not get rich quick. There are no big fast wins with this strategy. You can get wealthy over the long term. If you give this strategy time, it's very, very powerful. It can also be very forgiving because if you buy at a point in time and then the market falls, unless you're going to sell, it doesn't matter. Eventually, property prices will recover. History shows us that. So it might not feel great but it's not going to hurt you financially. You'll still let it out and you'll still collect rent and that's important. So look for areas with strong rental demand and you can do that by finding areas with good jobs, good schools, good transport links.

8:08And not only are those areas the best for rental but they're normally the best areas for capital growth as well and that is where the wealth is made. Yes you will make rent and that's great but that's the bonus really the real money that's made with this strategy is capital growth over the long term so it's a steady one some people might call it a bit boring but you know what when it comes to investment rob and i like boring i love boring but maybe you want something a little bit more exciting a little bit more picturesque maybe and that's where you might want to turn to short-term lets so this can apply to cottages in the countryside or apartments in a city center where you're going to get a lot of business travelers and if you get this right this can be a nice mix of buy to let where you're getting a long-term asset that's going to grow over time and something that's going to generate a bit more cash flow for you as well in the style of HMOs because much like if you're renting out properties by the room you'll end up with more than if you rent it out as a whole if you're renting out a property by the night or the week the rent that you charge is going to be higher so the perfect version of short-term lets leaves you with a quality property that's rented out every night producing loads of income for you and because it's a quality property in a good location which it kind of has to be for this to work it grows in value over time but like I said always trade-offs no strategy is perfect and a drawback of short-term lets is of course hassle you can get other people to manage them for you but again that eats into your profits if you're going to be doing it yourself then there's a lot to be thinking about especially if the property is going to be turning over regularly there's also a lot more to think about in the setup so you'll need a special type of mortgage which will have a higher interest rate attached to it and give you less choice than you'd otherwise have?

9:47And are you actually allowed to operate the property as a short-term let? Many city centre flats, for example, are specifically banned from doing this in the lease. But the main thing to be aware of with short-term lets is getting the location right. Because you're not going to have the dream scenario of having it rented out every single night of the year, but you need to have it rented out for quite a lot of the year in order to come out ahead. If it's only occupied for the couple of peak months in the summer, your numbers are not going to work. If you don't get the right property in the right location and make sure it's marketed well, you could end up actually making less money than you would do with buy to let, with a lot more hassle because your occupancy is too low.

10:25So plenty of strategies for you, all very different, none of them perfect. So it's all about finding the right one for you. So that's strategy. There's a lot to take in there. And hopefully you've started to identify which strategy is best for you. Like I've said, if you want some help with this, speak to people who've been there and done it. Go to networking groups or if you want, speak to Property Hub Invest for free. They'll give you the advice on this as well. To have a chat with one of our in-house experts, go to propertyhub.net forward slash invest. Bit of homework for you. If you haven't already, subscribe to the podcast so you don't miss out on all this education and head over to our YouTube channel, search for Property Hub UK, where you can subscribe there as well and double down on your knowledge.

11:06Who doesn't want to learn more? Hopefully you, because tomorrow is part four of this four-part series, so I'm going to wrap it up. I'm going to make sure that the final pieces are in place for the best year ever. We'll see you then. Bye-bye.