1% Rule in Property
The 1% rule states that if you can rent the property for 1% of the purchase price, it will cash flow. However you need to take in account todays soaring UK property market as well as voids, management and even if you have working tenants they might not pay you & you can not evict them. In todays UK property market, properties are selling not in weeks..not days…sometimes in hours. There are very few properties on the market. So what does a wise investor do? In our opinion, look long term and let compounding work for you over time. There are so many course sellers who speak about BMV properties. At this stage in the property market they are very hard to find if at all.
As we do not live in the UK, we want quiet and consistent cash flow with rents. There is nothing better than social housing for this. We have done over 140 properties with our UK JV partner. We get paid like clock work, have no voids, no management and no drama. Yes it would be nice to get 1% or 2% monthly rent…however in the real world this is very hard to accomplish at all.
One could try to buy in rough areas with LHA tenants and chase yield however you will probably have alot of drama and headache. Quiet or yield, that is the question!
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