Property Investing for the Time Poor
Is property investing possible for the time poor?
How do you go about it?
And what passive property investing options are available?
Find out here
The Perennial Appeal of Property Investing
Investing in buy to let properties is an appealing option for many as the potential returns can easily beat those from other opportunities.
However, becoming a buy to let landlord is not a quick process and the ongoing management is not without effort.
If you don’t have the time to commit how can you get your slice of the buy to let pie? How time consuming is being a landlord and are there other options?
How time consuming is property investment
If you’ll allow the clichéd question, how long is a piece of string. The time spent investing in property varies from case to case, however even looking at a best-case scenario you’re going to find your evenings eaten into and whole days taken up.
The time required can be split into two areas, those being:
- The time spent to find a property or properties.
We have written separate blogs on this as it is a key area –links at bottom of this article.
When looking for investment properties you have two options – stay local or cast your net wider. Staying local is easier in many ways, you’ll know the area, you should have an idea about what type of tenants you’d attract, what rents are achievable and what seems like a fair price for a property.
However, buying locally is unlikely to offer the best returns, to find the best yields you need a willingness to find areas where there is a strong rental market, potentially areas where upcoming changes will lead to a jump in yields (for example, is a new major employer coming to the town, and with it jobs and regeneration?)
Cast your net wide and you need to research areas all across the UK, find those postcodes where high yields seem achievable and then research them thoroughly – what does this research involve? It means working out what type of tenants you’d attract, it means looking at employment statistics and reading as much as you can – could an employer pulling out decimate the town, has the town reached saturation point, there are now so many investors that those high yields are no longer attainable?
The link to our blog on where to invest at the end of this article goes into much more detail.
Stay local and you might feel confident you can answer those questions without the need for further research, but you will still need to thoroughly research any properties you consider buying.
It is worth noting that the days of being able to pick up pretty much any proper in certain areas and then let them for a profit have gone; of landlords with a single buy to let property, a quarter are either making no profit or a loss. This shows the need to be selective and to be selective you need to do research.
- The time spent maintaining the property
You’ve bought the property, or at least found some to place an offer on- that’s just the start though! Your free time is about to take a big hit. Are you going to be able to find time to…
- Find tenants?
- Set up a suitable mortgage – it’s worth noting that this is becoming a whole lot harder, with Bank of England changes requiring lenders to look into investors’ finances in much more detail. The time spent form filling in order to get that buy to let mortgage is going to jump exponentially, and so too are the chances of being turned down.
- Make good the property. If you’re really hands on you might do any necessary work or maintenance yourself, if not you’ll have to find people to carry out repairs and improvements.
- Pay your taxes and claim back mortgage relief. And on top of this, stay ahead of any changes and how they impact both ongoing rentals and the potential profitability of any new purchase. The government’s proposed change to mortgage relief is set to have a huge impact so the investor needs to stay on top of legislation
- Look for new opportunities and investments. For long term success in the buy to let field it is essential to build a property portfolio, so the work of sourcing a property doesn’t stop when you get that first one.
And there’s more still, we go into detail in a blog listed at the end of this article. Suffice it to say that for many property investment and being a landlord is a full-time job. If you only have an occasional few hours to commit can you compete with people who do it full time? Is it possible to compete and to prosper?
Methods to save time
OK, so that’s the reality check – you might have known a lot of that and skipped over the section – we’ll forgive you.
What you really want to know is how you can cut back on the time commitment, how can you invest in property when you’ve got a full time job, perhaps with family to fit in too, not to mention the odd hobby and spot of sitting down just watching Netflix.
You want to save time – the first thing you’ll need to reduce is that big wide net. Rather than scouring the whole of the UK for the best potential yields, you’ll have to zone in on a much smaller area; probably where you live and the immediate surroundings.
Pay for others to do as much as possible
Use letting agents for a full management service – finding tenants, collecting rent, being the point of contact with said tenants. You won’t have to deal with queries directly from tenants, or market the property or chase late rent.
Yes, any repairs will need taking care of in a timely manner, but the agent will know local tradespeople so bar sorting the payment your role can be limited here too.
Of course, there’s the downside – the hefty cut of rental income the agency would take, this cut potentially making the yield either unappealing or outright unprofitable.
Invest with friends
A job shared and all that. Going it alone is time consuming, that’s simply a fact. But what if you invest as a syndicate – this would enable you to spread the tasks and the stress. For example, a group of five people investing could each research different areas, and then different properties once an area has been decided upon.
Once you have a property to rent out, the ongoing tasks can be shared – be it the advertising for tenants, the maintenance if you have syndicate members with practical skills, the bookkeeping and more. The role of the agent can be reduced, if not removed and a further benefit is that with shared resources you should be able to build a portfolio of properties more quickly (though of course more properties means more time to maintain)
Do a bad job
We jest, not really an option is it? But it is perhaps the only other one available to those who want to go it alone and have limited time.
The appeal of investing in buy to let property means more people than ever are looking for their slice of the pie, from individuals to syndicates to companies. It’s an option for those with savings, for those unhappy with the potential returns of their pension annuity, for those who see property investment as a full-time job. That Homes Under the Hammer has a lot to answer for.
Doing a bad job is going to mean missing out on the best properties and then facing problem after problem after problem once the tenants are in. Assuming you find tenants.
Doing a bad job is going to mean losing money – you’d be better off leaving your money under the mattress.
All that said…
We don’t believe you can go it alone as a property investor if you are time poor, even if you intend to leave as much as possible to the letting agent. Maybe you could until recently, but changes to Stamp Duty, how much mortgage relief can be claimed and further attacks on buy to let mortgages mean property investment is now close to being a full-time job
Alternative property investing options
The other option is to treat property as a passive investment, that is to put money into property investment without being involved in the sourcing or management of those properties.
This works through crowdfunding – as an investor you could see a property on a crowdfunded property site and choose to invest, effectively buying shares in that property. The investment can often be as little as £1,000, from which you’d get a proportionate share of rental returns, the capital if the property was sold and none of it requires your time.
As an investor, you’d choose which property or properties to invest in, but beyond that the crowdfunded property platform would take care of all management, red tape and tenant finding.
With this model, not only do you not have to source properties, you actually get to invest in properties chosen by experts, people who know what to look for, can spot those properties which perhaps with a bit of TLC have the potential to return healthy yields.
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Quick recap – your five options
We think that for the time poor investor there are five options
- Find more time from somewhere! Property investing eats up time, or at least it does if you want to do it well
- Invest in something else. It might be stocks and shares, it might be a friend’s business, it might just be a savings account. But choose something which doesn’t require so much ongoing maintenance
- Invest badly. Not much of an option! Invest your money, but then find you haven’t got the time to stay on top of matters, or spend insufficient time researching that initial purchase and live to regret it
- Invest with friends; spread the workload and the cost.
- Invest as a passive investment through a crowdfunded property platform.
If crowdfunding is of interest, please have a look round this site – at the House Crowd we are the leading UK crowd-property platform.
We’d also love to help you with an obligation-free chat about the model and whether it might be for you.