How to Earn Income from Property
Property, property, property - that’s the asset class we’re diving into this week.
It's one of your core asset classes you need working for you and a super juicy asset class to accelerate your wealth creation.
We're talking about investment property, NOT the home you live in.
Remember a previous topic we discussed…
Your home is NOT an asset!
Now that we are clear we are talking only about Investment property, let’s explore the different ways you can make money from this amazing asset class.
There are literally thousands of different strategies you could use in investment property investing, so we cannot go into each one in fine detail here.
Instead I have clustered the strategies into the primary investment categories and outcomes plus I use examples to spark a new way of thinking about what investment property investing can do for you and which strategies fall into the different wealth generation categories so you are more empowered in knowing which to use for your specific wealth creation objective.
Plus I am doing a deep dive masterclass on How To be A Successful property Investor called Real Estate Riches.
Click here to register for the Masterclass
INVESTMENT OUTCOME CATEGORIES
The first investment outcome category is the way you make money from property. There are two primary ways any asset grows your wealth.
The first way your investment contributes to your wealth
is by generating income.
In investment property this is referred to as the yield.
Yield is the income you get from somebody utilising a space owned or controlled by you.
That is all property investing really is!
Investment property = providing a space that somebody rents and you get paid income in return for them being able to benefit from the use of that space.
When you think of property as just a space your whole view of investment property expands.
That space can literally be a parking space, a tent, a garage, a garden shed, a tree house, a storage container, a yurt in a field somewhere, and of course the more traditional forms of investment property space such as an apartment, an industrial unit, a family house, a retail space, a commercial space and the list goes on.
I hope you are starting to realise investment property is a significantly bigger asset class with a huge array of things you can earn money from, than you may have thought.
The second way assets contribute to your wealth
is through capital growth.
In investment property this is via the increase in the value of the property.
Every asset makes money for you in these two ways.
The income that it generates and the growth in its value. These together are your Return On Investment (ROI).
PROPERTY INVESTMENT INCOME STRATEGIES
But-To-Let
In Investment property, when we think about income strategies, the one that most people think of is “buy-to-let”. Owning a property and renting it out.
It could be an entire house, it could be an apartment, it could be a single room, it could be an industrial unit, it could be a garage or a carpark. The point is - own it, rent it out for a period of time, get income back.
To increase the yield, i.e. the income a property can generate, divide the place into smaller bits and rent each out separately.
Buy-To-Let is also a great strategy to use to get the power of good debt also known as leverage working for you.
Multi-Lets and HMO
You could take an entire house and instead of renting it out as one unit, you rent out each individual room. This is doing room lets in a model known as House of Multiple Occupancy (HMO). You could also convert the dining room or other underused spaces into another habitable bedroom and increase your ROI significantly by increasing the number of bedrooms available to rent.
Serviced Accommodation
As opposed to a long-term buy-to-let model where somebody gets beneficial use of the space and you sign a contract and off they go, you could do short-term serviced accommodation. Serviced because it's furnished and you might provide some services. And short terms because you rent out the space on a short term basis, typically by the week or day. This could be the same as the buy-to-let apartment but instead of a year-long lease, you furnish it and make it available for short term rental on sites like booking.com or airBnB.
Serviced HMO
Better still, you can create a serviced accommodation HMO. One dwelling with multiple rooms that you rent out individually on short term lets.
Rent to Rent
You don’t even need to own a property to get income from it. There is a super cool strategy called Rent to Rent (R2R).
With R2R you can do all the investment strategies you can do with properties you own, but to make them profitable it is likely you will need to go with the serviced accommodation model - either whole unit or HMO style multi-room lets.
HMO and Serviced Accommodation HMO’s are fabulous strategies and you can build a portfolio of these HMO’s by buying below market value and / or adding value then refinancing and repeating the process.
There’s a problem with this though:
- It takes time
- It takes (a lot of) money
- It is not readily scalable
- You’re at the mercy of the banks for funding.
Back to R2R.
Imagine you could control an unlimited number of these super-profitable multi-lets with no money in the deal, no mortgage, no deposit, and no credit checks. And if something changes in the market and demand dries up you aren’t left holding the property, you just give it back to the owner!
We’re back to the “is this really possible?”
Yes it is and this awesome property investment hack is what R2R is all about.
The awesome thing is R2R is not only a hack for large multi-let HMO type strategies, you can also use the R2R strategy on a traditional buy-to-let unit, or even a single room or a unique space.
On Airbnb, Booking.com, and other short term rental sites, unique spaces are really popular. You could literally pitch a tent in your garden. Do you have a spot with a lovely view? Could you build a treehouse that people could come to, pitched as a unique experience, an outdoor opportunity, a writer's retreat?
Don’t let your wealth get limited
by the limits of what you know.
Don’t get stuck by what you believe the traditional model of property investment is.
I've covered just a few property investment income strategies here.
In the Real Estate Riches masterclass I cover these at a much deeper level plus capital growth strategies too.
Hopefully this has gotten your juices flowing and you have an inkling of why this investment class is so juicy.
There are so many ways you can get investment property working for you to bring more cash flow into your life which can then be used to buy other assets and accelerate your freedom.
If you haven’t yet signed up for the Property Investment Masterclass do that and keep focusing on your freedom, taking actions, and most importantly, enjoy the life that you have now.
P.S. Here’s the details of the Masterclass...
REAL ESTATE RICHES
Understand the Building Blocks and Core Strategies To Create a Powerful Investment Property Portfolio
In this Content Packed Wealth Builder Masterclass, You’ll Learn:
- Why Real Estate / Investment Property is a must have asset class in every wealthy person’s investment portfolio and the role it plays in your wealth creation.
- The three ways you can invest in real estate and the pro’s and con’s of each so you can make informed decisions about what is right for you.
- The Power of Leverage and why this makes property investing so sexy.
- The Yield / Capital Strategy Curve to know what strategies to focus on depending on your wealth creation objective and where you are on your freedom journey
- Five Core Property Investment Strategies to include in your wealth creation
- The Buy-To-Let Income strategy
- The (Capital Appreciation) Growth Strategy
- The Buy, Refurbish, Refinance (BRR) Strategy
- The Cash Injection Strategy Property Flipping Strategy
- The Serviced Accommodation Income Strategy
- How and where to find property bargains
- Investment Financing options
- How to increase yields and capital values to increase your returns
- How to read the numbers and evaluate the different types of property deals. You’ll also get access to The Wealth Chef’s Property Evaluation Tool.
- Additional strategies to profit from investment property without ever owning it.
