What Should a First-Time Property Investor Buy?

I get asked this question a lot...

“What's the first property investment to make when getting into this game?”

There are so many ways to get into the real estate or property sector - for most people it tends to be via residential property ownership.

Residential property is accessible because we're all so familiar with it - we rent it, or we buy it because we want a place to call home.

This was the route I took when I started my journey into the property business.

If you're lucky enough to get in at a good price, then you're off to a great start.

People will often reach a point where they feel they’re sick or renting and decide they want to buy their first place.

It might be a small apartment at first, then as they get a little older, or perhaps after they start a relationship, they start looking for a bigger place.

Many will decide they don’t want to sell that first property, opting instead to hold onto it as their first rental property.

This is pretty common and we to call these people the accidental landlord.

The BRRRR Strategy

A popular strategy is the B-R-R-R-R strategy, which is a straightforward way of adding value in a tried and tested manner that the banks are familiar with.

What does B-R-R-R-R mean? It stands for Buy, Refurbish, Rent, Refinance and Recycle

Buy
Buying is straightforward enough but finding something that you can add value to will usually require a little research and preparation.

A rundown property, often referred to as a ‘fixer upper’ is usually a good start.

Refurb
You can drop a lot of money into refurbishing a house so be careful.  You would be amazed the difference an upgraded kitchen and bathroom can make.

Once you have finished freshening up your property it’s time to start looking for a tenant.

Rent
There’s an old saying in carpentry ‘measure twice, cut once’ and renting out can be a little like this.

Check the tenant references twice and sign once.

As soon as you have secured a reliable rental income you can turn your attention to taking out a new bank loan.

The objective of taking out a new loan is to release that extra value you created in upgrading and refurbishing your property.

This can be tricky because valuations between surveyors can vary a lot, but this is a key step in the process - banks will only lend out 70% of the property’s value.

Refinance
If you’ve done your homework and managed your costs the 70% loan should allow you to recover all your initial deposit and refurbishment costs.

Recycle
With your new tenant’s rent covering the monthly payments on your new loan and with all your cash back in your pocket, you start the whole process again.

The big idea is simply - rinse and repeat. 

Hang on to each property and just go again, play the game for as long as you can, and you’ll build yourself a nice portfolio.

What I have described above is exactly how I got into property; it gave me my first taste of the potential rewards from investing in property.

There are various tips and strategies on how best to do all this, check out our mastermind and our coaching programs to learn more.

If you found this article of interest, you should find my Property Investment Scorecard of interest too – click below to benchmark your property investment knowledge…

https://eliteproperty.scoreapp.com