Off Plan and Guaranteed Rental Returns on Property
If you are like me, you probably get at least one email per day either for a never seen before Off Plan property deal or a Guaranteed rental yield for 1 or 2 years. Been there…seen that in my property career. Recipe for losing money. The people who have made money from off plan were either gamblers that hoped prices & got lucky that prices would continue to rise or the property investor who picked up those off plan deals at 50% off afterwards. The same with guaranteed rental yields. I saw a project in an area of Manchester being marketed with guaranteed yields to offshore investors. Myself and my JV partners were looking at a building that was in a very bad state nearby to convert into flats. This project was targeting offshore investors with guaranteed yield of 7% for 2 years. All I could think, was good luck. After the two years…watch out below. Not to paint with a broad brush….however myself and my JV partners prefer the muck and creating value. We like terraced houses that have been around 100 years and will be 100 years after we are gone. We like offices to convert to residential. The key is to create value and uplift. In property there is no free lunch.
Now the world for property investors is changing very fast & is even more challenging. The bread and butter buy to let is now going through tremendous tax shifts as well as mortgage shifts. What this all means is that you need to have much greater yields on your property investing. The only way I see this is creating value…One is converting properties or creating Professional HMOs. Do not just chase yield. The properties need to be managed. I have spoken to many property investors looking to buy North of Manchester, where yields are much higher than the rest of Manchester. There is one reason…they are hard to manage. We prefer, residential areas in which there is pride of ownership…near the city center….More and more people are moving to Manchester as it is affordable and they need housing that is affordable. Many of the city center properties are beautiful but not affordable.
Really do your homework before investing in property…however do not get stuck in paralysis by analysis.
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