For many who want to escape the rate race, building a property portfolio is the only proven strategy that can produce the sort of returns that will provide for a comfortable retirement. However in 2008, after the global economic meltdown, the rules of the game changed with devastating consequences for anyone wanting to invest in property. Post credit-crunch, the average investor is now required to provide a deposit of around 25%. To add insult to injury, many lenders now cap the number of properties or the total value of the investor’s portfolio. For the average investor, this will severely reduce their chances of building a portfolio which will provide enough cashflow for financial independence.
There is however, a little known strategy that can provide exceptional cashflow, requires no mortgage and no deposit. I have been using this strategy for the past few years to control a portfolio of properties which now nets over £5000 each and every month. That’s £5000 clear, in my pocket which means if I stopped working tomorrow (which I have no intention of doing) the income from the properties would more than cover my living expenses. In effect, I am financially free…
Knowing your “Why”
Before I tell you my strategy, there is something that is of greater importance. You see, it is quite easy to be told “how” to do something. The “how” is the easy part. I have created a system now that I am convinced anyone can follow should they wish. What is far more important is your “why”. Although I named this article “How to build cashflow from a property empire after the credit crunch” really, it should be called “Why do you want to build a property empire after the credit crunch?” So let me ask you a question, why do you want to invest in property? What are you looking to achieve? Really think about this and write it down.
Are you a control freak?
If you’re like me, the reason for investing in property isn’t just to collect bricks and mortar. It’s for the lifestyle it can provide. And the only way that it can give you that lifestyle is through cashflow. So if we both agree that it’s not the property itself that we want, then that brings us to an important point. Do you actually want to own the property at all? What if I told you that it is possible to make substantial cashflow from property that you control, yet do not own? The way to do this is to find a struggling landlord who is prepared to rent you the whole property and then rent it out on a room by room basis on a corporate let. The strategy is called “rent to rent” and is one of the most powerful ways of creating cashflow.
The main advantage of controlling a property this way, rather than owning it, is that unlike the latter, you do not have to find a whopping 25% deposit to purchase the property, nor do you have to pay stamp-duty if applicable. You are also not subject to mortgage lenders’ draconian limits on portfolio value. In fact, it costs me on average £3500 to find and refurbish a property up to standard and I earn over £500 per month on each property. When I compare this to earlier on in my investing career when I was trying to purchase and refurbish 2 or 3 bed roomed properties and having to come up with over £20000 of my own money, it’s a no brainer. I much prefer to be in control!
The 5 Step System
- Find a struggling landlord
- Rent the whole property as a corporate let and get permission to sub-let the rooms
- Refurbish the property to necessary standards
- Advertise the rooms
- Vet the prospective tenants and manage the property
Does This Really Work?
The short answer is, it works for me. I have, however spent the last few years refining this system to give the best possible chance of success. I had to be thick skinned at the start and I have lost count of the number of lettings agents who told me this can’t be done or even, that it was illegal. But I had the courage of my convictions and I knew that I could make this work. I had a big enough why. And with that, anything is possible.
About the Author - Francis Dolley is the UK authority on this unique rent to rent strategy. You can learn more at www.multiletcashflowsystem.com.