How We Can Grow Your Wealth

Some of you might be thinking ‘HOW can they grow my wealth’. In this article, we will explain how Nichol Smith Investments can grow your wealth.

 

Treat it like a Business.

First of all, we love all things Property. While Investing in Property can be fun it is definitely a business. We put in 100% effort into everything property related, for example, market research, housing trends, and creating professional networks to support our service to build your portfolio. We absolutely do NOT make investments based on emotional factors or because we think a property looks like a good buy. Our Property Sourcing team are fully focused on your investment criteria, and finding properties based on these facts.

Know Our Limits.

We establish early on exactly how much you’re going to need to invest of your own money and have a realistic view of what constitutes ‘overstretching’ yourself. In a modern housing market that requires significant deposits (around 25%) and a host of other legal costs, we will you take everything into consideration at the outset, to ensure no costly mistakes arise.

One Property At a Time.

Identifying a potential property, researching the area and all the things that are involved in a house purchase, requires a lot of time and effort. This is why at the outset at least, we concentrate on acquiring one property at a time.

Buy Low Sell High.

Now, this might seem pretty obvious and of course, you want to sell higher than what you buy property for, but what we’re primarily talking about here is to be aware of market conditions at any given time.  House prices do fluctuate therefore buying below market value will help to protect your investment.

Add Value.

We aim to acquire properties on your behalf at below market value. Often these below market value homes require a degree of renovation, which means not only are we buying properties at below value, we are also adding value. This allows us to gain a significant amount of equity in our homes, and therefore leverage finance to return some money into our savings to move on and buy the next property.

Long Term Compounding.

Although we buy Properties primarily for their cash flow, we can also benefit from compound interest over time. At Nichol Smith Investment, we aim to buy properties that fit our investment criteria and keep them long term to benefit from compound interest. This allows our clients to have positive cash flow from the asset every month, but also sell a property for far higher value from the initial purchase price.

Renovations (Buy to Flip).

Some of our clients prefer to invest money short term in Property for a fixed return on investment. In this instance, we leverage your wealth to buy a property to renovate and sell the property within a fixed time frame to return your money plus interest. This can be used to grow our client’s investment funds or savings.

We hope you are excited about the possibilities for growing your wealth. It’s what we are passionate about and we can’t wait to hear how we could help you build your property portfolio. If you would like to know more information about how we can grow your wealth through property, please book a call with us.


Our Key Principles to Investing in Property

In this article, we are going to give away our top tips for investing in property. The comprehensive list below details our key principles to ensure any property investment is going to be secure and provide great long term returns.

 

Always buy at below market value. This means you’re securing equity at the point of purchase, which helps protect your investment against the market falling. This also means we can recycle your deposit & create infinite ROI (return on investment).

Add value. Increase the value of the property through renovation or extension. We aim to get £3 back for every £1 spent.

Invest for cashflow. We ensure any property purchased for you is cashflow positive after all costs including letting agent fees and buildings insurance (and not just rent vs mortgage payments). A property must produce a good cashflow to allow for essentials repairs and maintenance.

Put 10% aside for unexpected costs. We all know what problems can arise in rental properties… boilers break, washing machines leak, so we always recommend our clients put 10% aside every month into a rainy day fund or a cash buffer.

Buy for Yield/Cashflow, not capital appreciation. Many investors base their entire business model on the capital appreciation and underestimate funding the shortfall in running their property portfolio. This is a very big mistake and a very high-risk strategy to be avoided at all cost. We purchase property on the basis that property prices will never rise, meaning your model is based on instant profitability: income from rent NOT just growth.

Due Diligence (aka doing your homework). At Nichol Smith Investments we carry out thorough due diligence on any property we are considering for our client’s portfolio. This covers due diligence on:

  1. The property: Is it worth as much as it has been valued? How does it compare to other properties sold nearby? How much would it rent for? Get a builders report for renovation costs.
  2. The numbers:  What are the renovation and acquisitions costs? How much will the property be worth once renovated? Do the numbers work as a buy to let property or buy to flip property?
  3. The deal: Fit the deal to a strategy. Be prepared to walk away if it does not fit our agreed criteria.

Invest for the Long Term. The mistake we often see is investors not investing for the long term. If we go by past property cycles, and property prices increasing in value over time, then continually selling your properties reduces your asset base and long term wealth

Buy Existing, older properties. The right type of property can make you thousands every year for the rest of your life.  Existing property older properties are safer to buy because: have established values over a period of years; no immediate depreciation (as you would get with the ‘new car from the forecourt’); limited availability (ie 1000 more not being built down the street); often more robust and less likely to have snagging issues.

Invest in what you know. We buy properties for our own portfolio and our client’s portfolios in local areas where we know property prices, know the market and know we can make good profits. We would not recommend buying overseas (unless you know the area and the market very well), off plan & out of area. These deals tend to carry more risk.

Buying on Emotion. We only buy properties that fit our investment criteria. Do not make the mistake of getting drawn into looking at big, colourful, lifestyle brochures, new build, and dreamy holiday homes. While these places may look nice, we are not investing in properties for their aesthetics.

We hope you have found this article useful in highlighting some important investment principles. We would love to hear from you if you have any questions regarding this article book a call, we’d love to chat.