Halal finance: Property investment the halal way

Summary

In 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

00:00

💡 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.

05:00

🏠 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.

Keywords

💡Property Investment

Property investment involves purchasing real estate with the goal of earning returns, either through rental income, property appreciation, or both. In the video, the speaker discusses different strategies for investing in property, emphasizing the stability and potential returns of property as an asset class. The concept is central to the video's theme, which is about exploring various methods of entering the property market.

💡Asset-backed

An asset-backed investment is one that is supported by a physical asset, such as real estate. In the video, property is described as an asset-backed investment, which provides stability because it is tied to a tangible asset that generally holds value. The speaker highlights this as a key reason why property is considered a secure investment option.

💡Rental Returns

Rental returns refer to the income generated from leasing a property to tenants. This is one of the main ways investors earn money from property investments. The video explains how property can generate decent yields through rental returns, making it an attractive option for those looking to earn regular income from their investments.

💡Inflation Hedge

An inflation hedge is an investment that protects against the eroding value of money due to inflation. The speaker mentions that property is a good store of value over the long term because it tends to keep ahead of the inflation rate. This means that as prices rise, the value of property and the rental income it generates typically increase as well, preserving the investor's purchasing power.

💡Property Crowdfunding

Property crowdfunding is a method of investing in real estate by pooling funds with other investors to purchase property. In the video, platforms like Yielders, Smart Crowd, and Ethis are mentioned as examples of property crowdfunding services. These platforms allow investors to get involved in real estate with less upfront capital and to share in the profits proportionate to their investment.

💡Management Fee

A management fee is a charge that investors pay to a company or platform for managing their investments. In the context of the video, property crowdfunding platforms charge a management fee for handling the investment process, which reduces the final amount that investors receive. This fee is presented as a cost to consider when deciding whether to invest through these platforms.

💡Fixed Income Instrument

A fixed income instrument is an investment that provides regular income, usually in the form of interest payments. The video discusses investing in fixed income instruments that are underpinned by property, such as those offered by companies like Godwin. These instruments are presented as a less hands-on alternative to direct property investment, offering stability and predictable returns.

💡DIY Property Investment

DIY (Do-It-Yourself) property investment involves personally purchasing and managing properties rather than investing through platforms or funds. The speaker advocates for this approach, highlighting that it allows investors to retain more of the profits and gain a deeper understanding of the property market. However, it is also noted that this approach requires more effort and experience.

💡Sharia-compliant Financing

Sharia-compliant financing refers to financial products that adhere to Islamic law, which prohibits interest (riba) and certain types of speculative transactions. In the video, Islamic mortgages are discussed as a way for Muslim investors to leverage their capital by using financing that is compliant with their religious beliefs. This financing option allows investors to purchase multiple properties with less upfront cash.

💡Risk Appetite

Risk appetite is the level of risk an investor is willing to accept in pursuit of returns. The video emphasizes that property investment, particularly through crowdfunding platforms or DIY methods, involves varying levels of risk. The speaker advises viewers to consider their risk appetite when deciding how much of their portfolio to allocate to property and which investment strategies to pursue.

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