Hey everyone, I'm Robby with RobD and you're in the money, 100K to invest, Wounds is, you make sure you get that right. Yep, you're in a great position but there's still lots of work to do and lots of knowledge that you'll need, so let's get to it. So the first thing you need to do before you start splashing that cash is get clear with your goals and pick your strategy. You need to get really clear about what you want. Why are you doing this? If you haven't got a meaningful goal and you need to get one quickly, because investing in property comes with challenges and at times you'll ask yourself why am I bothering with this? And your answer should be because I have this meaningful goal that I'm working towards. If you don't have that meaningful goal, well then you may become demotivated. But even worse than that, you may actually start to make bad decisions because you haven't really thought about what you want from this, so then you may end up picking a strategy that doesn't fit your best needs. So once you have your goal and you're very clear on that and you put a timeframe on it, you put a number against it, then you need to choose a way of getting to your goal and that's your strategy. With property investment, there are numerous ways to approach it, which can be a good thing because there's so many options, but a bad thing because if you're starting out, it can be a bit overwhelming knowing which way to go. You can do standard bitalettes, you can do flips, you can do refurbs or many other options. And what you choose will depend on what your goal is and which time you have. And also, what are you good at and what are you like doing? So for example, if you hate doing DIY, you're not very good at budgeting and attention to detail, well then doing refurbs probably isn't for you. So what is good for you? Well luckily we've put a whole course together to help you pick a strategy. You'll find that in the description below, so if you haven't picked your strategy yet, make sure you watch that next. Okay, so you've got your goal and hopefully you've got your strategy. Now we can start looking at that cache of yours and see how far it's going to go. So the good news is that 100k of yours can actually buy more than £100,000 worth of property because you can use a mortgage. How much of a mortgage? Well with bitalette, the deposit is normally a bit higher than if you were buying a home to live in yourself. The amount you can borrow changes depending on how lenders are feeling and how the market is performing, but as a general rule, you can normally borrow around 75% of the purchase price, meaning that your deposit will need to be about 25%. So you could hear that and think, oh brilliant, I've got 100,000. That means I can buy property worth 400,000. Well, not quite because there are some other costs that you need to factor in. First of all, you'll need to pay stamp duty. The amount of stamp duty will depend on the purchase price of the property and it'll also depend on whether you already own a property because rates are higher if you do. We'll link to a stamp duty calculator in the description to help you work that one out. You'll also have some other costs involved in the purchase, like legal fees, your solicitor will need to get paid. And of course, if you buy a property that needs work doing to it, then you'll need to have a budget for the refurb. If you add all these together, clearly in total, it can't come to more than 100,000 pounds. And make sure as well you don't stretch yourself to the absolute limit. As you spend longer in property, you'll realise that there's always some kind of unexpected costs. So make sure you include a contingency within your budget. So how many properties should you buy? So let's take your 100,000, let's assume you're going to use a mortgage and you're going to put 25% down as a deposit because that's what most investors will do. You'll also assume at this point that you're not going to do a refurb. So let's run through your options. So one, put down 82,500 pounds as a deposit on a property worth £330,000. The rest of your costs will go on stamp duty and things like solicitors fees, etc. Very nice, but maybe you'd prefer to have two less expensive properties. So you could put down 41,250 pounds each on two properties that are each worth £165,000 the rest again going on stamp duty and those costs. Or you could decide that you don't want to stop there and go for three properties. You put 25K down on each property, each of them being worth 100K and then the rest on your costs. What if you want to stretch it even further and have a bigger portfolio right from the start? Can you do that? Well, just about. You could put down 20,000 pounds each on four properties that are each worth 80,000 pounds and just about have enough left over for the inevitable stamp duty and costs. Now remember, more properties doesn't mean more wealth. The overall portfolio value with each of these options is roughly the same. So whether you go for one, two, three or four properties, the portfolio value, which is the most important number, doesn't change much. So how do you decide what to go for? Well, first of all, let's look at the advantages of going for one or two properties. Well, the first advantage is that there are fewer properties to manage. That's going to make your life a lot easier. Even if you use a letting agent to help you manage the properties, you're still going to have to do a bit of work. You're going to have to liaise without letting agent, you have to choose the letting agent in first place and from time to time, they'll want your input. The next advantage is that it opens up more of the country for you to invest in because the property values that you can afford are higher. In option one, we saw that we can invest in a property worth 330K, which means that you'll be able to invest in most areas of the country, whereas if you end up investing in properties worth 80K, well, then you're quite restricted on where you can invest. Another advantage of going for one or two properties is that the premium end properties, the more expensive properties, tend to be easier to manage and over the long term, do better with capital growth. This is a general rule though, and not a cast iron guarantee. System clear advantages to restricting yourself to one or two of the more expensive properties, but there are advantages to going for three or four as well. The first of those advantages is you've got more diversification, so your income doesn't fall so much if her property is empty. It's pretty obvious if you've got one property and for some reason you can't find a tenant or that tenant isn't paying, then that's 100% of your potential income gone. If you've got four properties and that happens with one of them, well, then it's not such a big deal because you've still got 75% of your income. Another advantage is that the yields on cheaper properties tend to be higher. So if you're thinking about the cash flow that your property generates and that's important to you, then if you add up the cash flow that you'll receive from four cheaper properties, it's probably going to be higher than the income that you get from one or two more expensive properties. And then just a general rule, though. And finally, going back to the diversification point, you don't have all your eggs in one basket when it comes to long-term capital growth, especially if you spread them around so they're in different areas of town or city or even in different cities entirely. Then if you've got one property that really doesn't perform as you thought it would in terms of growth, you've still got others that can make out for. Now remember, when we've been doing these numbers, we've assumed that you're not doing any kind of refurb. If your strategy does involve buying a property and improving it, then you're unlikely going to be able to stretch beyond two properties because of course you're going to need to keep some budget back for that refurbishment. All the advantages and disadvantages for going for more properties or fewer still apply is just that you're probably going to be choosing between one or two rather than having the possibility of three and four as well. If you're working to do refurb, then you're unlikely to go beyond two properties in the beginning and possibly only one because the refurb costs do need factoring in. Our next step is to do your research. Now property investment requires a lot of research. Making sure you get your deal right is so important to your long-term success. You need to be making sure that you identify what a good deal is and not overpay. But don't worry, if this sounds a bit overwhelming, we've got a video here on YouTube that you can watch next to help you with your research. It's a checklist that you can follow along step by step and if you do that, you'll be well on your way to property investment success. So make sure that you watch that next. Now a final thing to do with your 100K, this is actually far more important than it first sounds, it's to take your time. So if you've decided to buy more than one property, then don't necessarily buy them all at once. Why? Because you're going to learn lessons from that first one that you can use for all the others. However much research you do, however much you educate yourself, that's all brilliant. But actually doing it for real is completely different and your knowledge will come on so, so far. So it's almost inevitable that you'll be able to make better purchases once you've done it once and have a chance to digest the lesson. If you've decided to just stick to one, you're just going to go for one more expensive property, then still take your time because it's even more important that you get it absolutely right. Do not rush out and buy the first property that you come across. Really do your research. Remember, you've worked hard for that money so don't rush into spending it before you're ready. We see it all the time, especially with people who've suddenly come into money. They feel pressure to invest it. They're aware that it's losing value in the bank. And that's true. But the difference it'll make over the long term if you just take a little bit longer at the start and make the best investment you possibly can, will be enormous. Hopefully that'll give you a good idea of what you need to be doing next. Well, next you need to pick an area to invest in. But don't worry, we've got you covered. We've got a video on all the best places to invest in right now.