What is 'Momentum Property Investing'?

• Posted by Ben James
• Date 25th March 2016
• Leave a comment

In the trading world Momentum Investing is defined as follows: 

Momentum investing is an investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.

This strategy looks to capture gains by riding "hot" stocks and selling "cold" ones. To participate in momentum investing, a trader will take a long position in an asset, which has shown an upward trending price, or short sell a security that has been in a downtrend. The basic idea is that once a trend is established, it is more likely to continue in that direction than to move against the trend.

The same methodology applies to property investing. Find an investment strategy that's earning capital growth and providing returns and repeat the strategy over and over building more and more momentum as you go. We regularly see a lot of buy to let landlords with a property portfolio of 5-10 properties trying to build an income to replace having to work, all with the same problem, it's taking years! For those property investors with goals to replace their employment income with an income from property in the very near future that's not ideal, and on top of that, there's a few problems to tackle first:

1. What strategy allows you to build momentum and buy multiple properties?

2. How are you going to find them without paying over the odds?

3. How are you going to be able to afford to pay for them all? 

Strategy

At Estateducation, we focus on a number of different strategies such HMO Conversions and Commercial Conversions with both providing an asset that upon refurbishing / converting will provide an upward value. 

Finding the opportunity

We learnt a long time ago that whilst you can find exceptional deals via Estate Agents, you can't rely on that source to provide you with a constant flow of property investments that enable you to keep up the momentum. So what did we do? We took the initiative in finding the deals ourselves, dealing direct to vendor and putting together ventures that held a value from day one of buying. 

Purchasing Funds

This is the part almost every property investor struggles with, especially when you've got 4-5 ventures under management at the same time, and it's good old liquid cash. This is where joint venturing really pays off, both for the property investor and the party that has some spare cash stuck in a fixed deposit producing nothing more than 2% per annum. It allows leveraging the skills and experience of the property investor with the funds of the equity partner to produce property profits that otherwise would not be achieved by either party without the other. The property investor gets to buy more properties and continue momentum and the equity partner makes sizable returns - it's a complete win-win. 

To find out more about 'Momentum Property Investing' and how we can help you accelerate your results please get in touch or simply leave a comment below, we would love to help.

Thanks for reading,

The Estateducation Team.