Chris Gray Special: Part 2 – How To Find Hot Property Deals and Invest In Property Without A Deposit

How do you find great property opportunities in an area?

And how can you invest in property when the banks won’t help?

Part one of our series on Chris Gray revealed how TV’s Chris Gray made virtually double his annual income with his first property.

Part two reveals an awesome lesson Chris learnt on how to find great property opportunities in an area before anyone else. Plus a strategy he used to invest in his second property without a deposit.
 

Chris Gray’s Second Property – What He Learned

 
At the age of 22, Chris had bought his first property in the UK for around £20,000 under market value which back in the early 1990s was roughly double his annual income as an accountant.

By renting out two rooms to friends Chris was also effectively living in his apartment almost free of charge as the rent covered nearly all of his mortgage repayments.

The experience made him wonder if it was possible for him to become a full-time investor one day.

But he didn't think about this idea seriously until a chance comment from a real estate agent.
 

Lesson # 1 – How Chris Found A Great Investment Property Opportunity
Before Everyone Else

 
After buying his first property Chris started to regularly catch-up with the real estate agent who sold it to him.

One day over a few casual drinks the agent mentioned that a developer had just released some new properties in St Albans around the corner and for whatever reason, had priced them roughly £20,000 below what she had assessed the actual market value to be.

This immediately raised Chris's eyebrow – could this be the next big opportunity he was looking for in property?
It was enough to make Chris consider how he might be able to invest in property once more.
 

It also taught Chris another great lesson as a young investor – it pays to know the local real estate agents in an area as they are always the first to know when a new property opportunity hits the market.

This lesson would later prove to be one of the keys behind his success as a professional investor.

Today, as one of Sydney's most successful buyer's agents Chris facilitates anywhere between 50 to 100 property purchases a year on behalf of other investors.

He has also purchased several (14) properties himself as an investor.

Many of the great properties that Chris has been able to find over the years have come from tip offs from real estate agents whom Chris enjoys strong relationships with.

And of course, his real estate agent friends love him because he is able to facilitate a quick purchase if a property is right.
 

How Chris Bought His Second Property With Someone Else's Money

 
But before Chris could purchase his second property, he had another problem to overcome.

Chris was still working as a junior accountant and had already borrowed 7 times his income to purchase his first home.

It meant that banks would be too scared to lend him more.

Chris would need to look at other ways to purchase the property.

He thought about it for a while and came up with an idea – could he buy the property with the help of a partner?
The idea had merit, but who could he ask? Who could he trust? And how could he make the offer win/win for both parties?

Chris discussed the idea his father and the conversation eventually turned into an offer.

• If his father was willing to put up the deposit for the property, Chris agreed to pay him interest on the deposit equal to whatever the bank mortgage interest rate was at that time. This was also double what his dad was getting in a savings account
• The tenants rent would cover all the remaining mortgage repayments as it was positive cash flow.
• Chris would use his knowledge to put the deal together, negotiate the price and deal with the day to day running of the property.
• Chris and his father would then split any capital growth 50/50.

It was a win/win proposition for both parties.

Chris's father was able to own an investment property completely passively and enjoy double the interest on his deposit, as well as get 50% of the capital growth.

At the same time Chris was able to get into his second property with no money down and enjoy 50% of the capital growth in exchange for putting the deal together and managing the property.

Chris's father agreed to the deal.

This experience taught Chris another great lesson as an investor – you don't always need finance from a bank to invest in property.

This of course is just one way of the many ways Chris has learned to invest in property without money.
Note – After speaking to literally hundreds of parents over the more recent years as an advisor, Chris has found lots of parents want to help their kids but don't want to just give them a handout and spoil them. In his experience, many parents are waiting for their kids to get motivated and come to them with a proposition.
 

What Chris Discovered

After Chris bought his second property he sat down and looked at his sums again.

1. By bringing in a partner, Chris managed to purchase his second property for roughly £20,000 below its market value. As he got 50% of that equity as part of the deal, it meant he had walked into instant equity worth roughly his annual income as an accountant.

2. The rent from his second property was also positive cash flow from day one meaning it covered more than the mortgage.

3. Not to mention Chris already had £30,000 equity in his first property and was virtually living in it for free because he was renting out the bedrooms to some friends and it was covering his mortgage repayments.

Chris was starting to see the immense power of property.

Property allowed him to control a large asset with a small deposit and have someone else pay it off while it appreciated.

Because the property market is seen to be less volatile than the stock market, Chris was also able to borrow more money for property compared to shares.

And there were also tremendous opportunities to invest without money such as with a joint venture partner.

Chris could see why property had become a favoured investment vehicle of the rich.

But he also saw that there were clearly rules to follow in order to succeed.

For the record, Chris's first and second properties were both purchased for around £80,000 in the 1990s. Chris still holds these properties and estimates their worth to be somewhere between £350,000 and £400,000. Their rents have also gone up significantly and provide a handsome return for Chris and his father.

Chris had bought his second property at the age of 23.

When he was 24 he decided to tap into some of his now growing equity and bought the car of his dreams – a Porsche.
A few years later, Chris sold the Porsche and used the funds to emigrate to Australia, taking a gap year off to explore the world on the way. His journey eventually landed him in Sydney as a 27 year old where he decided to start a new life.

It also started a long love affair with Australian property.

But where would Chris invest in Australia? And would it be possible for him to replicate his results from the UK? We'll reveal the answer in part three of our Chris Gray series.