Investing in Property – Millionaires who started with next to nothing

Brett Alegre-Wood
December 20, 2016

3+1 and Set and Forget strategies in action

It always makes me feel good when I hear about a property investor who has reached the goals they set for their property investment. Especially when it’s been done using the investment education contained in the 3+1 Plan series. A couple of weeks ago, I was told about the success of a married couple who had started investing in property after reading my book. It is the story of these new property millionaires.

No money? No problem

Neil and Sophie were both working jobs with long hours. They owned their home, and after mortgage payments had a reasonable amount of disposable income. In their early thirties, they were desperate to start a family. The only problem was they couldn’t see a way of ever being able to afford to do so.

Sophie didn’t want to have children and return to work. She wanted to be a stay-at-home mum, not an absent parent. Without Sophie’s wage, they wouldn’t be able to keep up the mortgage payments. They’d lose their home.

One of my clients gave them a copy of the 3+1 property investment book, and after reading, they made an appointment with one of the teams at Gladfish They discussed their goals, deliberated their options, and created a plan using the strategies and principles described in the book.

The beauty of the 3+1 Plan

Neil and Sophie liked the idea of the 3+1 Plan. It’s a simple approach, and to them, it made perfect sense:

  • By using cash flow strategies, property investment checklists, and employing the help of others, they could build a growing property portfolio while continuing in their jobs.
  • After a few years, their property investments would allow them to start the family they wanted.
  • The income from their property investment portfolio would replace Sophie’s income, allowing her to be the type of mother she wanted to be.

The 3+1 Plan is based upon ownership of just four properties: your own and three investment properties. Neil and Sophie already had a head start: they already owned their home.

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How the 3+1 Plan works

If you look at your finances, you’ll notice that they are roughly divided into thirds:

  • A third of your income is paid away in tax
  • A third is paid on rent or mortgage
  • A third is spent on living

The basis of the 3+1 Plan is that the rental income from three properties will eventually replace your income. Of the gross income that you receive from your tenants, budget to pay a third on tax and costs; a third on mortgages; and that will leave a third for you to spend as you wish. (Of course, in the long-term, when the mortgages on the properties have been repaid, you will be left with more of the gross income.)

Neil and Sophie needed that final third to replace the disposable income they would lose when Sophie gave up work to look after their children.

Finding the deposit to start investing

Neil and Sophie were in the ideal position to start investing in property − they just didn’t know it. They had a few hundred in the bank, but this wasn’t enough to use as a deposit to secure their first investment property. What they did have, though, was equity in their home.

With a Gladfish property consultant, the couple explored their options to examine if they could create a plan to meet their financial and lifestyle goals. And this was the plan they constructed:

  • First, they would research the best places to invest in property in the UK.
  • Next, they’d conduct a full cash flow projection.
  • Third, they’d talk to a mortgage broker to find the best buy-to-let mortgage.
  • Finally, they’d release equity from their home to fund their property investment.

They decided to buy off plan property in London. They could stage the payments, and the equity released from their home would enable them to buy two properties to start their portfolio.

Always invest with property fundamentals

When the economy and property markets are roaring, almost anyone can make money investing in property. What’s more difficult is investing through the cycle of economic and property trends.

Neil and Sophie took the advice contained in the 3+1 Plan and made sure they bought residential investment property where the property fundamentals were strongest. They looked for evidence of shops, schools, transport links, major employers and major investment. Excellent property fundamentals mean that the negative impact of an economic downturn is cushioned, while the positive impact of a strong economy is magnified.

By the time that Neil and Sophie’s investment properties were due to settle, they had increased in value by more than a quarter. It gave them the firepower to refinance and purchase their third investment property – again; they chose an off-plan property investment opportunity.

Maximising rental income

As their first two properties were nearing completion, Neil and Sophie weren’t worried about long void periods or lower-than-expected rental income. They had the peace of mind that the investment property guarantees would kick in. As it turned out, both properties were tenanted within a couple of weeks of completion – but then tenants love new build homes. The same tenants are still living in those properties.

When you reduce void periods, get great tenants who respect your investment property, and plan your cash flow correctly, you’ll maximise the profit from your rental income.

Investing with no stress

One of the objectives that were top of Neil and Sophie’s wish list was to be able to invest and not have to worry about their investment. They didn’t have the time to spend on managing their investment property purchase and didn’t want to become landlords. The potential profit and income from property investment appealed, but they were concerned that being a landlord would become a second job for both of them.

By utilising the services of a progression team, they were able to keep their investment simple. Their sales progression manager kept everything on track, helping to liaise between the developer, solicitor, mortgage broker, and themselves. It’s part of the Set and Forget property investment strategy that removes the stress of property investment.

They also chose to have their property managed by a professional management company. While there are management charges, this meant that neither Neil nor Sophie had to become involved in day-to-day landlord duties. It wasn’t only an important consideration when they first started investing and were still working, but would also be important when they had their first child. Remember, Sophie wanted to be a stay-at-home mum, and not a landlord available at a moment’s notice.

Fast forward 24 months

A few months ago, the couple’s third off-plan property investment completed. They now have an investment property portfolio of three properties, each of which is rented out.

Their investment has done well. The three properties were recently valued, and are now worth more than £1 million. They’re working hard at paying off the mortgage on their home, and are on course to do so within the mortgage term.

Perhaps most importantly, the rental income from their three properties has replaced the disposable income that Sophie was earning. Yes, you heard that right. I did say ‘was earning’. Neil and Sophie are now proud parents, and Sophie can be the mum she wants to be for her daughter.

Contact one of our team on +44 (0)207 923 6100 to find out how property investment could match your current situation with your financial objectives. You may be surprised how quickly your dreams could come true.

Live with passion

Brett Alegre-Wood



Being a Property Investor, Best Places to Invest, Buy-to-let property, Buying a property, buying off plan property, Investing in Property, Investing in UK Property, Off Plan Property, Off Plan Property Investment, Off Plan Property Investors, Property Education, Property Investment Education, Property Investment UK, Property Investor, UK Buy To Let Property, UK Investment Property, UK Property

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