Halal finance: Property investment the halal way
Summary
TLDRIn this video, the speaker shares their background in property refurbishment and announces plans to re-enter the property investment market. They explore various property investment options, including traditional DIY approaches, property crowdfunding platforms, and Sharia-compliant financing. The video emphasizes that property is a stable investment, offering decent yields and inflation protection. It also highlights the importance of assessing risk and investment amount when choosing the best strategy. The speaker intends to dive back into property investing through the DIY route, leveraging their hands-on experience.
Takeaways
- 🔌 The speaker has a background in electrical work and property refurbishment and is considering returning to property investment.
- 🏠 Property is considered a stable investment because it is backed by tangible assets and can provide rental income, making it a good hedge against inflation.
- 💼 Property crowdfunding platforms, such as Yielders in the UK and Smart Crowd in the UAE, allow investors to pool funds for property investment, making it accessible with minimal upfront cash.
- 💸 These platforms typically charge management fees, and while they offer higher returns, they also come with increased risks, so diversification is advised.
- 🏗️ Alternatives like Intro Crowd invest in land development, while fixed-income instruments backed by property, such as those offered by Godwin, provide different investment strategies.
- 🔨 DIY property investment can be rewarding, though it requires learning through multiple projects and involves more direct management.
- 💡 Property is a diverse asset class with various entry points and risk profiles, and investors should determine their investment amount and risk tolerance.
- 📊 For portfolio diversification, many investors aim to allocate 30-60% of their portfolio to fixed-income assets, with property being a key component.
- 💷 For investments under £50,000, options include crowdfunding platforms or fixed-income instruments, while DIY investing becomes viable with larger amounts.
- 🏦 Sharia-compliant financing allows leveraging Islamic mortgages for buy-to-let and commercial properties, enabling portfolio expansion with less initial capital.
Q & A
What was the speaker's initial career training?
-The speaker initially trained to be an electrician during their gap year and worked on commercial and residential properties.
Why does the speaker consider property a great investment class?
-The speaker considers property a great investment because it is backed by a tangible asset, offers stability, generates rental yields, and serves as a hedge against inflation.
What are property crowdfunding platforms, and how do they work?
-Property crowdfunding platforms allow investors to pool their funds to buy properties that would traditionally be accessible only to institutions. Investors earn returns proportionate to their investment when the property is rented out or sold.
What is a potential downside of using property crowdfunding platforms?
-A potential downside is that these platforms charge a management fee, which reduces the final amount returned to the investor. Additionally, higher returns come with increased risk.
What are some alternative property investment strategies mentioned?
-Alternative strategies include investing in brownfield and greenfield sites through companies like Intro Crowd and Summer, or investing in fixed-income instruments underpinned by property, such as those offered by Godwin.
What are the advantages of the DIY approach to property investing?
-The DIY approach allows investors to retain a larger share of profits, gain hands-on experience, and learn extensively about the property market, although it requires time and effort to master.
What factors should be considered when deciding to invest in property?
-Investors should consider the portion of their portfolio allocated to property, their risk appetite, and the amount of money they have available to invest.
How can Sharia-compliant financing benefit property investors?
-Sharia-compliant financing, such as Islamic mortgages, allows investors to leverage their money further by using deposits for multiple properties, thereby expanding their portfolio more rapidly.
What investment options are available for someone with less than £50,000 to invest?
-With less than £50,000, investors might consider property crowdfunding platforms or fixed-income instruments that have underlying exposure to property.
Why does the speaker prefer the DIY route for property investing?
-The speaker prefers the DIY route because they enjoy getting hands-on experience, meeting people, and understanding the property investment space deeply.
Outlines
💡 Rediscovering Property Investing
The speaker shares a personal background, revealing that they trained as an electrician during a gap year and worked on various property refurbishments. Now, they're considering re-entering the property investment market. The video aims to explore key questions to determine if it's the right time to invest in property.
🏠 The Stability of Property as an Investment
Property is presented as a robust investment class, backed by a tangible asset that offers stability and protection against inflation. The speaker highlights how property can generate income through rental yields and maintains its value over time. Despite these advantages, the emergence of property crowdfunding platforms offers new opportunities for investors with limited capital, allowing them to pool resources and invest in quality properties, although these platforms come with management fees and increased risks.
📈 Alternative Property Investment Strategies
The speaker discusses various alternative strategies for property investment, including crowdfunding platforms like Yielders, Smart Crowd, and Ethis, which allow collective investment in properties. Other options include investing in brownfield and greenfield sites through companies like Intro Crowd and Summer, or using fixed income instruments underpinned by property. The DIY approach is also mentioned, though it requires experience and effort but offers greater returns by avoiding management fees.
🔍 Diversifying Property Investments
Property is described as a diverse investment class with multiple subcategories and stages in the property cycle. The speaker advises on practical considerations for property investment, such as determining the proportion of one's portfolio to allocate to property and considering available capital. For those with less than £50,000, property crowdfunding or fixed income instruments are recommended. With larger sums, the DIY approach becomes viable, offering higher profits in the long term.
💰 Leveraging Sharia-Compliant Financing in DIY Property Investing
The speaker encourages using Sharia-compliant financing, like Islamic mortgages for buy-to-let and commercial properties, to maximize investment potential. By financing multiple properties instead of buying outright with cash, investors can expand their portfolios more rapidly over time. The speaker expresses a personal intention to return to property investing through the DIY approach, emphasizing the benefits of hands-on involvement in the process.
Mindmap
Keywords
💡Property Investment
💡Asset-backed
💡Rental Returns
💡Inflation Hedge
💡Property Crowdfunding
💡Management Fee
💡Fixed Income Instrument
💡DIY Property Investment
💡Sharia-compliant Financing
💡Risk Appetite
Highlights
The speaker trained as an electrician during their gap year and has experience in property refurbishments.
Property investment is considered stable and a good store of value due to its asset-backed nature.
Rental returns can provide decent yields, helping investors keep ahead of inflation rates.
The emergence of property crowdfunding platforms allows for smaller initial investments.
Investors can pool resources to buy high-quality properties through platforms like Yielders in the UK or Smart Crowd in the UAE.
Property crowdfunding involves a management fee, which reduces the final returns.
Higher returns come with increased risk, so caution is advised when investing in property.
Alternatives to traditional property investment include investing in land development with companies like Intro Crowd and Summer.
Fixed income instruments underpinned by property, such as those from Godwin, offer another investment avenue.
A DIY approach to property investment can be rewarding but requires hands-on involvement and understanding of the market.
Property investment is not a homogenous asset class and offers various subcategories and investment stages.
Investors should consider the percentage of their portfolio to allocate to property, often between 30-60% for fixed income.
The amount available for investment influences the investment strategy, with less than £50,000 typically directing towards crowdfunding or fixed income instruments.
With more than £50,000, DIY investing becomes a viable option, potentially leading to higher profits.
Sharia compliant financing can be a strategic tool for DIY investors, allowing for more properties with less upfront capital.
The speaker plans to return to property investment using a DIY approach, valuing hands-on experience and market understanding.
Transcripts
something that you may not know about me
is that i actually trained to be an
electrician in my gap year and i worked
on a number of commercial and
residential properties and then with my
family i worked on three property
refurbishments now i'm looking to
actually get back into the property game
and in this video i want to answer a few
key questions to figure out if it is the
right time to be getting into property
investing again
[Music]
property is a great investment class
because it is backed by an asset a
property it is incredibly stable and it
will relatively rarely go down to
completely zero there's always something
that you will get out of it it can also
generate you decent yields through the
rental returns property also makes sure
that you keep ahead of the inflation
rate and so it's a great store of your
value for a long period of time
so is that the death knell for property
then
not quite
a new breed of property investing
platform has emerged over the last few
decades which allow you to get started
with very little upfront cash pull it
together with other people so that you
are able to buy the same kind of quality
properties that would be only the remit
of institutions in the past and that
gives you obviously a much higher level
of return as well these are called
property crowdfunding platforms in the
uk we have people like yielders and
abroad we have people like smart crowd
in the uae or ethis in malaysia and
indonesia the investors then club
together and rent out this property and
the returns they get will be
proportionate to how much they put into
it and then eventually the property will
be sold off and they will make the
returns again proportionate to how much
they put into it one thing to note is
that these platforms do charge a
management fee which is to be expected
so that does mean that it will incur a
little bit of cost to you for the final
amount that gets into your bank account
yes but as ever wherever you're getting
access to double digit returns the risk
has gone up so that means that you
should keep that in mind that doesn't
mean by the way don't do it but what i'm
saying is you need to appreciate what
you're getting into and you probably
shouldn't be putting your entire life
savings into something like this
interesting alternative examples of
investing in property include things
like intro crowd and summer these
companies invest in brownfield and
greenfield sites and then get the
planning permission on them and then
sell those on further strategies like
intro crowd and summer done well can be
highly lucrative another approach could
be to invest in a fixed income
instrument that is underpinned by
property an example of this can include
godwin finally you can take the diy
approach this is great because it means
that you will get a lot more of the
overall cut however be aware that it
will probably take you two to three
properties to properly get yourself into
it and understand how this whole thing
works
but it is a hugely rewarding experience
and it will teach you everything you
need to know about the property market
[Music]
so what we've learned is that property
is not just a single homogenous asset
class it actually has different kinds of
subcategories within it there are
multiple ways of you investing in
property at multiple stages in the
property build cycle with different risk
profiles as well and different entry
points as well in terms of how much you
need to put up but now thinking really
practically how do we actually decide
where to put our money if we're going to
invest in property well the first
question is how much are you actually
going to put of your overall portfolio
into property for most people the way
they think about it is that they want to
park somewhere between 30 and 60 percent
of their portfolio into things that make
them a fixed income for muslims because
they don't really have many other fixed
income options they typically look at
property to form that part of the
portfolio and with fixed income you're
typically looking at investing somewhere
between 30 and 60
depending on your risk appetite the next
key thing that you need to look at is
how much do you actually have to invest
because let's say you have less than 50
000 pounds to invest
realistically you're not going to be
doing diy investing you're either going
to be looking at property crowdfunding
platforms such as the ones that we've
mentioned or perhaps some fixed income
instruments like godwin and others like
that that have an underlying exposure to
property as well if you have more than
50 000 pounds then the diy option comes
into play and you will make more profit
out of that if you do that properly and
in the long run because you don't have
to give your fees out to anyone else
other than yourself however if you don't
want the headache then the other
investment options are still out there
for you and you can still avail of them
if you do go down the diy route then the
secret weapon that you should make use
of is sharia compliant financing islamic
banks do offer islamic mortgages for
buy-to-let properties and commercial
properties and the benefit that you get
with this is that it makes your money go
further so rather than investing a
hundred thousand pounds into one
property you could invest twenty or
thirty thousand pounds as a deposit for
two or three properties that way over
the next 5 10 15 20 years you can expand
your portfolio much faster and become
the owner of many more properties at the
end of that journey rather than if you
just bought with cash that way in 10
years time or 20 years time you'll end
up with far more properties
so will i be going back into property
investing absolutely i'll be going down
the diy route because i really like to
get my hands dirty meet the people and
really understand that space so
inshallah i'll be diving in in the next
few months wish me luck
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