Property investment when Bank of Mum and Dad is closed
Watch any programme about property investment on television, or read any newspaper or magazine article about successful property investors, and you’d be forgiven for thinking that property investment is out of the reach of most mortals. That investment property deposit seems a hurdle too high to jump.
A year or so ago, I spoke to a young couple who were in this position. They desperately wanted to invest in property as an alternative to a pension. But they didn’t have equity in their home, and couldn’t tap the bank of mum and dad for an investment property deposit.
I was reminded of the advice I gave them when they phoned me up a couple of weeks ago with the deposit to invest (they’d chosen Southall as their preferred investment area). It just goes to show that, with a little careful budgeting, property investment is open to anyone.
Ignore the doomsayers, and media hype about how hard it is to safe a deposit, sure it takes discipline but its eassier than you may think.
Here’re the tips I gave that young couple:
1. A budget for saving an investment property deposit quickly
Here are five small changes you can make today which will transform your ability to invest in property very quickly:
- Drink instant coffee
Okay, so you love a Starbucks before you start work in the morning; but have you ever stopped to think how much that costs you? With an average price of £2.50 per cup, switching to instant coffee in the office could save you an incredible £1,200 per year.
- Take a packed lunch to work
Even the hardest-working property investors need to eat, but, just like the money you could save by making your own coffee, there’s a small fortune you could put in your piggy bank if you make your own lunch. Instead of spending £5 each day on a shop-bought sandwich, salad, drink, and snack, spend half that and eat healthier. That’s good news for your waistline and another £1,200 to add to your investment property deposit savings.
- Stop wasting food and buy more wisely
Did you know that we throw out around a third of all the food we buy? The average spend on food is around £100 per week. Eating more wisely and learning to cut out that waste will immediately save you £30 – or £1,500 per year.
Instead of buying processed foods or pre-packaged ‘TV dinners’, improve your lifestyle (the real reason for becoming a property investor) and cook from scratch. Replacing your weekly takeaway with a home-cooked slap-up meal will save you another £800 in a single year.
And while you are cooking, why not turn off the TV and speak with your partner and kids, you might find it the best part of the day, involve them in the process as well.
You might also decide to buy cheaper brands, saving up to 30% on your food shopping bills: let’s say another £1,000 over the course of a year.
That’s an incredible £3,300 saving on your food bills alone!
- Always take a list with you
Whenever you go shopping, always take a list with you. Not only will you ensure you buy only what you need, but if you stick to your list, you’ll cut out all those impulse buys that seem nothing at the time, but add up to a whole bundle of cash. Remind yourself why you are budgeting, too, by writing “investment property deposit” at the top of the list.
According to research, every person spends an average of £1,100 every year on impulse buys. For a couple, that’s £2,200.
- Earn extra cash in your spare time
Working an extra part-time job – maybe a little bar work, or serving in a shop, or driving for Uber – could easily earn you another £5,000 each, or £10,000 between a couple in a year.
2. A deposit of £17,900 – but it doesn’t stop there!
With these five simple tips, you’ll be on course to save a deposit of more than £17,000 in just 12 months. That works out at an incredible £1,417 every month that you never knew you had available to save. You might also have some items you could sell, or walk to the station instead of drive… Suddenly you’re fitter, happier, and you’ve got around £25,000 in your account as your investment property deposit.
3. Once a property investor, always a property investor
With that first property investment under your belt, you’ll be well on your way to a second, third, and more. With the right strategy and proper investment research, you’ll invest in the best property in the best locations. Soon you’ll find that values and rents rise. This will enable you to add to your property portfolio. If you invest in off-plan property, you’re likely to see a rate of growth above the average.
So what are you waiting for? Start budgeting now for that investment property deposit, and you’ll be on your way to benefitting from the number one income investment: property.
If you have further questions, don't hesitate to give the team a call on +44 (0)207 923 6100.
PS. Have you got existing debts, ask about how you can pay them down quicker than you ever thought with this simple formula and plan.