Many people think that they can and should invest in UK residential property, and that they can easily do so alone.
The reality is, that whilst it is possible to have a full time job and invest in property on the side, it is not necessarily advisable. Not only could you risk your health and well-being through working all hours, but you could also risk making costly mistakes if you go too quickly, or buy without having a proper strategy in place. For example:
The stages involved in building a portfolio are listed below. We’ve also made some assumptions on the amount of time it would take to establish a basic portfolio.
The truth is, many people don’t have any idea of the time and effort involved in building and managing a property portfolio, and won’t take all of this into account.
For the kind of High Net Worth Individuals that we work with, ‘time is money’. The opportunity cost of time spent building and managing property investments can be high.
To illustrate this, let’s assume an investor earns £150,000 per annum. This equates to an hourly rate of £96.15.
The time spent on the above activities would equate to 185 hours in the first year. Let’s say they analyse 10 properties before completing on their first deal. So that’s 205 hours in the first year @ £96.15 per hour = £19,710.75.
Note that due to a lack of experience and knowledge, this investor may be more likely to make mistakes which can easily cost hundreds of thousands of pounds. Further, necessary activities may take longer than the above estimation due to not having strong industry expertise.
The alternative is to work with trusted professionals. Within this, there are two main approaches:
You may be able to save cash by working with numerous service providers. However, overseeing their work will require time and effort. It also increases the burden of due diligence since you need to evaluate different providers to ensure that you are getting the best value, and that they are properly skilled and experienced. Ultimately, working with a single provider can help to minimise the risk of things going wrong and save you from wasting time and money throughout the life cycle of your investments.
It’s not necessarily cost effective to ‘DIY’. Being ‘hands-on’ to save money on professional fees can be a false economy.
If you would like to discuss building your portfolio with SPI Capital, get in touch via firstname.lastname@example.org to arrange a confidential, no obligation conversation.