Getting Started In Property With NO MONEY | Hardcore Property Podcast

Getting Started In Property With NO MONEY | Hardcore Property Podcast


This is the problem. Most people don’t know
how to buy right, not structuring the deals in the right manner, they’re limiting themselves
to their own funds. So let’s change our mindset here around how we structure deals, how we
source deals, how we fund deals. We need to change our mindset around all of that. Hi folks, Paul McFadden here. So today we’re going to take another listener’s question,
and this one comes from Michelle Davidson. So Michelle’ asked “Paul, I’ve got £10,000.
What should I do to get started in my property journey? Should I save up for a deposit or
should I borrow money to get started?” Now, that’s a really good question and it’s not
an uncommon question, I actually get this question quite a lot. And the reason I get
it quite a lot is because when people come across my profile, when people see me talking
about my own personal journey, and how I got started in property with no money, no knowledge,
no resources, you know, no contacts, you name it. What I did have was a burning desire to
make change because I wanted to get out of my circumstances and situation I was currently
in, in my late teens, when I was like late teens, 19-20, yearly 20s, I wanted to get
out of the rat race, I knew I wanted something different. But my biggest challenge that held
me back was finances, was contacts, but what I did do was get resourceful. So when I see
questions like this, a lot of people say, “Paul, I’ve got £5,000, I’ve got £10,000,
I’ve got £20,000. I’ve got a small amount of money, should I continue to save up the
money to get a deposit?” Because think about it, you know, what is a typical deposit for
a property purchase? Normally, for a buy to let, you’re looking at around 25%, so if the
property is worth £100,000, that’s what you’re going to be purchasing the property at, the
lender, the bank, if you’re going to get a mortgage, they’ll give you 75%, which is £75,000,
and you need to come up with the balance of £25,000 as a deposit, and you’ve got your
legal fees, and you’ve got your stamp duty, and you’ve got your other professional fees
as well. So in that example, you really probably need about £30,000. £25,000 for the deposit,
and extra £5,000 in costs, just to purchase the property. Now what happens if, in Michelle’s
example here, she’s looking to save up, now first and foremost, what is the typical deposit
required for a property in her goldmine area, in her location where’s she’s buying? This
is something for you to think about as well. Because if it’s in London, I can guarantee
you, the deposit is going to be a couple of hundred thousand pounds, so it’s all relevant
to where you are, wherever you’re looking to buy, depending on the amount of deposit
you need for the property purchase, in the south side of Glasgow where a lot of my portfolio
is, it is around about the £20,000 mark for the deposit and all the associated costs.
So your money can go a little bit further, if you’re looking to utilise those funds,
and again, even for me, that £20,000 was a lot of money, I never had that. And I’ve
told you and I’ve said this many times what I did to focus on but what I’m suggesting
here is no, don’t go saving for a deposit, because when you’re looking to save up for
a deposit, it’s going to take time. First and foremost, how much money can you put aside
each month? Now for some people, saving is the most difficult thing for people to do.
And with lost of things happening, out in the world that we live in, through social
media, through marketing, through newspapers, through, you know, adverts, through the media,
you name it, they’re trying to fight for your attention, for you to do what? For you to
spend your money. For you to, and it’s not to invest your money, it’s to spend in things
that’s not going to give you a return. So even though that we’re looking to try and
save, it takes a real discipline to save money. And again, how much is that that you can save?
Is it a few hundred pounds, if it’s £500, then again, over the course of 12 months,
that’s £6,000 that you’ll have saved up. Now, if you’ve saved up £6,000, and you’re
looking to, and you’ve only got £10,000 here, and let’s say that you need to try and bring
up, you know, £25,000 of funds, to have available to purchase a property for the deposit and
all of the associated costs, that doesn’t even factor in the refurb cost, and again,
if you’re buying property right, you make money when you buy, and when you make money
when you buy, you’re looking to buy the right type of property that you can buy at discount,
that you can add value through your renovation and the refurb, so maybe you’ll need £35,000.
So in this example here, Michelle’s got £10,000 set aside, and then she goes and saves £500
a month through the course of a year it’s £6,000, so at the end of one year, she’s
got £16,000. If she goes another year and does the same thing, and she keeps disciplined,
and resists all of the temptations out there, which is a difficult thing to do in the first
place, and let’s face it, life gets in the way. Things happen, emergencies happen, issues
happen, problems happen, family – there’s always issues with family, isn’t there? So
with all that in mind, what’s going to end up happening, listen, we’re all human, people
are going to tap into their savings, they will tap into those resources. So what should
really only take, if you’re being, you know, consistent and disciplined, it should only
take you 2 to 3 years to pull up some extra money to get 25, actually probably 4 years.
You know, 4 years that’s £24,000 if we’re going by the £500 a month, £6,000 a year,
plus our original £10,000 gives us £34,000 that on average we need for the deposit, for
the associated costs and the refurb for one property purchase. 4 years. And the question
is, how long has it taken you to save up that original £10,000 in the first place? So when
we look at all of these variables, what’s going to happen in 4 years? The strategies
are going to have changed, the strategies that are working today are not relevant in
4 years time, most likely. The market. The market could have fluctuated and changed.
The property that you’re looking to buy right now, could have increased in value, which
means what also has increased is the deposit that you need. Financing may be more difficult,
may be easier, whatever it may be. 4 years is a long time in this property game. I’ve
been in property for 13 years, and there’s been multiple, every cycle there is, I’ve
experienced in those 13 years. So when we’re thinking way into the future, I’m going to
save money, the challenge you’ve got there is that it’s going to be slow, it’s going
to be painful, you’re going to need to be really disciplined, and then when you’re doing
all of this, what you’re not doing and this is the key, key thing is that you believe
you need the deposit money, those funds available before you can actually start mastering the
art of property, understanding different investment strategies, understanding how to structure
deals, understanding the importance of cashflow, understanding your goldmine area, understand
all the refurb costs, understanding and getting together your power team, you know, how to
source properties, and here’s the key thing that’s going to accelerate your whole journey
and change the whole 4-yea5, 5-year cycle of saving money, how to master the art of
raising finance. Because if you master the art of raising finance, you can master the
art of using other people’s money, and other people’s money is not just an individual’s,
it could be private institutions, it could be non-traditional ways of raising funds,
so we talk about this at Property Protege, we make a big focus on raising finance, because
it’s the number one skill you’ve got to master. Because if you can master the skill of raising
finance, then guess what? You don’t need to wait 4 years, you can go out and do that.
And we’ve had people that come off the back of Property Protege, and inside a week, a
month, a few months, they’re raising 10s of thousands of pounds. Some people, 100s of
thousands of pounds. It’s a whole different, there’s a whole different game out there,
because you don’t know what you don’t know, and if we keep on doing what we have been
taught at school, at high school, at college, and what is that? Get good degree, get a good
college education, whatever it is, college education, university degree, then go and
work up the corporate ladder, and as you’re working up the corporate ladder, what should
yo be doing, saving for a deposit, to buy your first house. It’s the same traditional
bullshit that we’ve been taught that needs to be shook up, it needs to be changed, we
need to think differently. Because there’s another game getting played there, and the
good news is that you, Michelle, and anyone else, you can participate in that game, you
don’t have to wait that length of time. You can start acting now. And how can you do that?
Well first and foremost, listen to podcasts, get this knowledge. We’ve got, I have no idea,
over 100 hours of podcast material out there with lots of great content. Or if you’re looking
to accelerate your journey and looking to fast-track it, then do what I did in the early
days for me, I surrounded myself with the right people, I invested in my education,
so what would I do? Here’s a different question, I’m going to propose a different question
to you, Michelle. For £10,000 that you’ve got, it’s not a lot of money I’m afford, it
might seem like a lot of money to you, in the early days for me, it was a lot of money,
I promise you, but could you maybe focus on a different strategy, such as an assisted
sale? Could it be a delayed completion? Could it be an option? Could it be that you joint
venture with someone and you put some of the money up? Or you joint venture with someone,
you’re sourcing deal, and because you’ve sourced the right deal, someone else brings all the
money to the table for you to do the deal, meaning you’ve got that £10,000 of disposable
income to build your business, start your business, get your business off the ground,
or more importantly, invest in the number one investment you’ll ever make in your whole
life, this is for everyone, not just Michelle, and that is investing in yourself. Investing
in getting the knowledge, the know-how, the understanding of the different investment
strategies, understanding that to do with your money, understanding how to raise finance,
understanding how to structure deals, how to source the deals, understanding all the
different moving parts to property. That is the single best investment someone can make.
If you don’t have, I’m talking about accessible like this, enough for the typical deposit,
acquisition costs and refurb money for typical deal in your area that you’re looking to go
and buy, if you don’t have that easily accessible funds, if you have £30,000 and that’s what
you need, and that’s only going to get you one property, then you’re limited to one property.
What do you do when you go and invest that? You need to hope that you buy right, to add
the value, to refinance, pull your money back out to go for property number 2. If you don’t,
you don’t have a good investment criteria, you don’t buy right, you don’t add enough
value, you’ve bought the wrong property in the first place, what’s going to happen is
that you won’t get all of your funds back out and you’re going to be left with having
to save again. This is the problem. Most people don’t know how to buy right, not structuring
the deals in the right manner, they’re limiting themselves to their own funds. So let’s change
our mindset here around how we structure deals, how we source deals, how we fund deals. We
need to change our mindset around all of that. Because there’s a different game getting played,
I’ve said this so many times, and it’s up to you whether you want to participate, and
what I recommend to anyone, who’s limited on funds, and hey, if you’ve got a couple
of hundred thousand pounds, if you go and invest that right, what happens when it’s
tied up? What do you do next? Are you sitting there twiddling your thumbs? No. So you should
be mastering the art of raising finance. This is why I’ve never put a penny of my own money
into any deals I’ve ever done, from day dot, from the day I’ve got started in property
to today, and we’re involved in some large scale land developments. You know, I’m talking
about one of our largest land development is over 2,500 units. Not a single penny of
my own money’s went into that. Why? Because I’ve mastered the art of raising finance,
I’ve mastered the art of structuring deals, I’ve mastered the art of doing joint ventures,
all the stuff that you should be mastering. And how do you do that? By listening to the
podcasts, by reading the books, by getting yourself out the at networking events, by
speaking to people who have been down that path that you want to travel, who have went
and done what you are looking to do, and more importantly, invest in your education. You
know, invest in it by going on the Property Protege, going on another education companies
courses out there in the UK. Go and find the right fit for you, because it’s going to help
you fast track your journey, you’re going to get knowledge, hey, if you came on Property
Protege, you’re going to get knowledge that’s taken me 13 years you’re going to get that
condensed, the do’s, the dont’s and what to avoid, learning from my mistakes, that’s real
wisdom, not going and making your own mistakes, learning from other people’s mistakes, my
mistakes, and how to do it right and you can condense that into a year, two years, three
years. We’ve got people, students that came through the Property Protege, who are now
doing what I’m doing today, 13 years later, inside their first 2-3 years. That’s how crazy
education, and that’s how crazy an investment in yourself, that’s how crazy it could go.
So that is what I recommend that you would do, Michelle. Don’t think about saving up,
think about investing that money in yourself, into your business, master the art of raising
finance, master the art of sourcing deals and structuring deals and you’re made, you’re
set up fro life. So if you’re listening, and you’re maybe like Michelle, wondering, “Should
I be saving more money or not”. No. Stop that. It’s not going to happen, it’s not going to
work. Even if you do do it, strategies are going to be out of date when it comes to the
time that you decide that you’ve got enough funds, and if you’ve still got the appetite
and excitement to buy property and life gets in the way, so let’s think differently around
how we finance our deals and how we do things, and realise, the number one investment you
can make is not in bricks and mortar, a house, it’s in you, and if you’re limited with funds,
that is the first investment you should be making. And if you’re interested and looking
at our program Property Protege, I’d encourage you to go to PropertyProtege.com, check that
out, see if it’s the program that works for you, if it’s the right fit, great, book in
the call, we can have a conversation and a chat and welcome you on board in our program
and that will be the start of an exciting journey going forward, whether you’re new
or an experienced investor, we cater for everyone. So thanks again for listening, all the best
and I’ll speak to you again soon. Bye for now.

Leave a Reply

Your email address will not be published. Required fields are marked *