When people talk about multiple streams of income in property, they often seem to mean doing more and more things at once.
A bit of buy to let. A bit of flipping. Maybe a HMO or two. Perhaps some sourcing fees on the side.
Before long, what started out as a plan to create freedom begins to look suspiciously like another full-time job, only with more boiler problems.
That can work, of course.
But it is not the only way of doing it, and for most investors it is probably not the best place to start.
One of the things I like about property is that a single deal can sometimes produce more than one benefit, and occasionally more than one income stream, without you having to keep buying more and more properties just for the sake of it.
I was reminded of this this week when I received an email from someone offering to place advertising hoardings on well-positioned properties, in return for what we would call rent.
A simple example comes to mind.
A friend bought a one-bedroom flat in an area we knew well. It was a straightforward enough deal. Nice flat, readily lettable, and bought for sensible long-term reasons rather than because anyone thought it was going to change the world.
But the flat came with a garage, and the eventual tenant did not want the garage.
So instead of leaving it empty, he let the flat to one party and the garage to the neighbour.
Same property, two income streams.
That was not the original grand plan. It was just a case of noticing what had value and not wasting it.
And I think that is the first lesson.
Investors often look at a property and ask only one question: what is the rent?
Fair enough, as far as it goes.
But sometimes the better question is: what, exactly, have I bought here?
Is it just a flat? Or is it a flat plus parking, storage, a garage, a lock-up, a bit of outside space, or some other feature that may have separate value to someone else?
Often the answer will be boring.
But not always.
The same principle works on a bigger scale with HMOs.
One of the reasons HMOs can be so powerful is that they turn what would otherwise be one rent into several.
A normal terraced house let to one family gives you one income stream.
The same sort of house, in the right area and done properly, might give you four or five separate rents instead.
I did exactly that with a modest terraced house I bought for about £80,000. I spent roughly £40,000 converting it into a five-bed HMO with en-suites, and once it was fully let the positive cash flow was around £1,000 a month.
That is a very different beast from an ordinary single let.
Now, before everyone dashes off to turn every terrace in Britain into a HMO, the obvious caveat is that more income streams often means more management, more regulation, more compliance and more opportunity for something to go wrong.
So I am not saying more moving parts is automatically better.
Often it isn’t.
Sometimes chasing more income just gives you more admin, more stress and more people ringing you at inconvenient times.
And that is where investors have to be a little bit honest with themselves.
There is no point creating three or four little income streams if, in reality, you have also created three or four little headaches that eat up your evenings and most of the extra profit.
The trick is not just to create more income.
The trick is to create better income.
There is also another point people miss.
Multiple streams of income in property do not always have to come from rent.
A flip, for example, is not an income strategy in the monthly sense, but it can still produce a chunky lump sum when you sell.
And if you know your patch well and come across a deal that suits somebody else better than it suits you, there is nothing wrong with passing it on and taking an introductory fee.
I have done exactly that with a friend who buys in one of the same areas as me. I cannot do every deal I find, so if a property suits him and not me, I pass it across and he pays me a percentage of the agreed purchase price.
That is another stream of income, even though I never own the property myself.
So perhaps that is the real point.
Multiple streams of income in property do not always mean more properties, more complexity, or chasing every fashionable strategy that appears on YouTube.
Sometimes it is much simpler than that.
Sometimes it is about seeing a bit more clearly what a deal can do, and not being too narrow in how you think about value.
Not every property should be squeezed for every possible penny, obviously.
Sometimes the cleanest and simplest income stream is the best one.
But equally, not every property is just one house, one rent, end of story.
Sometimes there is a bit more in it than that.
And for investors who are prepared to think that way, that is often where it starts to get interesting.
Here’s to successful property investing.
Peter Jones
Author, property investor and ex-Chartered Surveyor
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