What Is Hands-Free Property Investment?

Hands-free property investment is a property investment strategy designed to minimise the active involvement of the investor in the daily operations and management of the property. This is achieved by an investor delegating most or all of the operational responsibilities to a third-party investment company who handle day-to-day tasks on behalf of the investor.

The use of a lettings management company to manage properties can sometimes be classified as hands-free investment but for the purposes of this article, we are referring to a strategic partnership between an investor and a third-party investment company who work together through some or all of the property investment stages perhaps as far as long-term hold..

This relationship can be structured in various ways, with a joint venture partnership being one method. In a joint venture the investor may receive a fixed interest rate on their capital, a share of the rental income and/or a share of the equity.

This strategy allows investors to benefit from property ownership without being directly involved in tasks such as property management, tenant screening, rent collection, maintenance and repairs.

Key Components of Hands-Free Property Investment

The various stages of property investing are managed by the third-party property investment company:

Property Sourcing:

Finding Opportunities: The process begins with identifying suitable investment properties that meet the investment criteria.

Due Diligence: They conduct thorough due diligence, including property inspections, market analysis and financial assessments to ensure the property is a sound investment.

Purchase Process:

Financing: If financing is required, the third-party company can assist with securing mortgages or other forms of funding. They may work with brokers to get the best deals.

Legals: They manage the legal process of the purchase, including contracts and conveyancing, ensuring all legal requirements are met.

Renovation and Refurbishment:

If the property requires renovations or refurbishment to maximise rental income or resale value, the third-party company can manage this process. They work with contractors and oversee the work to ensure it meets the desired standards and is completed on time and within budget.

Property Management:

Tenant Acquisition: Marketing the property, screening tenants and managing tenancy agreements would be managed by the third-party company or their chosen lettings agent. This includes conducting background checks and ensuring tenants meet the desired tenant profile.

Rent Collection: Collection of rent and handling any issues related to late payments or arrears would be manged by the third-party company or their chosen lettings agent.

Maintenance and Repairs: Routine maintenance and emergency repairs would be taken care of, ensuring the property remains in good condition without requiring the investor’s involvement.

Financial Management:

Accounting and Reporting: Investors receive regular financial reports detailing rental income, expenses and overall property performance allowing investors to track the financial health of their investment.

7x Reasons Why Smart Investors Choose To Invest In Property Hands-Free

Investors who opt for hands-free property investment often do so for several reasons:

• Reduced Time Commitment: They may lack the time or expertise to manage properties themselves and prefer to delegate these tasks to professionals. Investors, especially those with other professional or personal commitments, benefit from the minimal time required to manage their property. The third-party company handles all operational aspects, freeing up the investor’s time whilst also helping them to achieve their own financial and wealth goals.
• Geographic Diversification: Investors may want to invest in properties located in different cities or areas which would be more difficult to manage personally.
• Expertise: Property investment companies typically have experience and expertise in managing properties efficiently, which can lead to better returns for the investor. Their services provide access to experienced professionals who understand the property market, rental compliance and property management best practices. This expertise can result in higher returns and fewer rental management headaches.
• Risk Mitigation: By relying on professionals for property management, the risks associated with tenant issues, legal compliance, and property maintenance are significantly reduced.
• Portfolio Growth: Hands-free investment allows investors to scale their property portfolios without the increasing burden of property management. This scalability can lead to diversified investments and improved overall returns.
• Passive Income: Hands-free property investment allows investors to generate passive income without active involvement in day-to-day management tasks. Investors can generate income and/or capital appreciation without active participation, making it an attractive option for those seeking financial freedom or supplementary income.
• Scalability: Investors can scale their property portfolios more easily by delegating management responsibilities, allowing them to focus on investing in new properties rather than managing existing ones.
• Investing in property hands-free enables investors to enjoy the advantages of property investment without the complexities and demands of active involvement.

Considerations For Hands-Free Property Investing

Management Fees: Property management companies charge fees for their services, which typically range from 10% to 15% of the rental income plus additional, operational costs for maintaining the property and tenancy. These expenses need to be budgeted for to assess the projected investment returns.

Additional Costs: There may be extra costs for services as part of the ongoing management of the property such as tenant find, maintenance and emergency repairs.

Shared Goals: It’s important that before choosing to work with a third-party company that you have shared goals and values to ensure a more cohesive working relationship.

Long-term Commitment: Working with a third-party investment company is likely to be a medium to long-term commitment so all parties should enter the relationship with this commitment in mind.

Finding the Right Third-Party Company: It’s important to spend the time to find a trustworthy and competent company to work with.

Upfront Costs: There may be significant upfront costs involved in setting up the property for rental, including property acquisition, refurbishment works, marketing and tenant find fees.

Communication: Two-way open and transparent communication is important to establish a good working relationship.

Not in total control: By investing hands-free, the investor will have limited control over day-to-day decisions and property management practices.

Investments go down and up: Although property is considered a very stable asset class and property prices have historically increased over time, as with any investment, property can go down in value as well as up.

Agree Terms: It’s important to thoroughly understand any fees involved and the terms of the agreement before committing to a hands-free property investment.

Investment Goals: Align hands-free investing with your long-term financial goals and desired outcomes. Consider whether you prioritise steady income, capital growth or a fixed return.

Is Hands-Free Investing Right For You?

Deciding whether hands-free property investing is right for you depends on various factors related to your personal circumstances, financial goals, risk tolerance and investment preferences.

Time Availability: If you have a busy schedule due to work, family or other commitments, hands-free property investing might be ideal. It allows you to benefit from property investments without dedicating significant time to acquisition and management.

Preference for Passive Income: If you prefer a passive investment strategy where you don’t have to deal with the daily hassles of property management, hands-free investing offers a way to earn an income from property without active involvement.

Lack of Experience: If you’re new to property investing or lack experience in property management, relying on professional managers can mitigate risks associated with inexperience.

Leveraging Expertise: Property investment and management companies bring expertise in the acquisition and management of property, potentially leading to better property performance and higher returns.

Long-Term Investment: Hands-free property investing is suitable for long-term investors looking for steady income and capital appreciation over time.

Income Stability: If you seek stable and predictable income streams, professionally managed rental properties can offer consistent returns.

Risk Mitigation: Professional management can help mitigate risks related to tenant turnover, maintenance issues, and legal compliance. If you have a low tolerance for these risks, hands-free investing might be appropriate.

Dependency Risk: Consider your comfort level with relying on a third-party company. Choosing a reputable company is crucial.

Steps to Getting Started

Investment Strategy: Develop a clear investment strategy, outlining your goals, budget and timeline.

Research: Identify investment companies who are investing in your chosen area/s and who offer hands-free investment opportunities. Review their websites and social media platforms to get a sense of who they are and whether they share your values. Look for testimonials and example projects.

Consultation: Speak with potential investment companies to understand their services, fees, and investment processes.

Due Diligence: Conduct thorough due diligence on the property and the company before making a commitment.

Regular Monitoring: Even with hands-free investing, maintain regular oversight through financial reports and periodic reviews to ensure your investment remains on track.

Hands-free property investing can be an excellent option for those seeking passive income and professional management of their investments. It is particularly suitable for investors with limited time, those new to property investing, or those looking to scale their portfolios without the burden of daily management tasks. However, it is essential to know your personal and financial goals to determine if this strategy is the right fit for you.

At Amplus Properties Limited we provide client focused and inspiring housing within the supported housing and Co-Living sector to help address the shortage of suitable accommodation that’s available. 

We work with busy professionals and business owners who would like to achieve hands-free returns on their capital. We typically work with investors who share our aim of wanting to make quality housing available to all and who would like to share in the profits we create through design-led property investments. 

By investing in property opportunities in the South East of London and Kent areas, we help our investors to grow their capital and achieve their own financial goals quicker.  

Please get in touch – we’d love to hear from you.