Is it possible that a Buy to Let Portfolio Might Just Be a House of Cards or even a bad avenue toward wealth creation? Firstly this is my own opinion…some will agree and some will not….
Many buy to let investors, including myself, have tried to manage these houses on our own. “It’s only one house. Or two. How hard can that be?” Yeah, right! The late night phones….the late payments….the promises….your personal relationship to the tenants…
Self-managing buy to let houses introduces a set of complications that could turn into a personal nightmare. The converse is trying to find an estate agent to manage. Good luck on that one. Been there on both sides of the pond and unless you get very lucky, you even can have more aggravation. What I have seen however is that bigger blocks seem to manage easier than single family or buy to lets or even commercial.
Perhaps this is why, in my nearly two decades in property investing, I’ve noticed a trend. Many investors start out flipping houses, then graduate to rental homes. But after a certain frustration level is reached, I see many of these investors selling off their entire portfolio to jump into multifamily investing or commercial. The UK equivalent is HMO properties. HMOs cash flow so much better than buy to let. However they are not perfect and have drama issues ( tenants do not get along…late payments…voids)…
More so, there is a recession lurking. No one knows when, however when it comes…those over leveraged or non capital repayment will have issues. What I found in the US was that multiple family or blocks of flats actually rents went up as well as occupancy went up. I personally saw in 2008 buy to let portfolios crashed and blew up in the Great Recession, while multifamily assets continued to perform well.
Thoughts
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