Had an interesting dinner over the weekend. The couple had a very large portfolio of buy to lets, HMOs as well as flats. My wife thought they were easy street. 100,000 coming in a month…at a minimum. All good….NOPE…not really. They were rathered leveraged with all of their portfolio. They did not learn from barely surviving the crash in 2008. Yes they are enjoying the very low interest rates and I did not want to be a party pooper, however at some point interest rates will go up. In the worst case they might spike. Are these property investors prepared? Nope! They were not on capital repayment. They are living the high life now. Spain and Sushi! I honestly felt they had no plan for retirement. My wife criticizes me for being conservative. However I have seen too many blow up in real estate crashes. Leverage and interest only are a toxic beverage.
This dinner made me think of this post to write. We do a boring & vanilla strategy which has consistent and high returns via our investing in UK Property with our JV partners. It might not be sexy. We do not have several hundred properties. We utilize a strategy with our JV partners of selling in order to buy. We sell HMOs both professional tenanted and social housing HMO which are guaranteed rents via a corporate client in order to raise money to keep more properties either free and clear or with very low leverage…When I mean low leverage…I mean 50% LTV if that. Our families personal retirement goal is to have at a minimum 5 HMOs per year that cash flow in the area of 11,000 each. We roll our profits from commercial conversion deals….sales of Professional tenanted HMOs and compound our money over time via these Social housing HMOs in which they are on a 5 year contract with a corporate tenant…no voids…no management plus maintenance is covered up to 5,000 per year. We simply collect a BACS payment. These HMOs we have sold to investors from Saudi Arabia and many other places. The reason is very simple. We sell them at a 9% net yield and they can be an armchair investor.
As a turtle is slow and steady, so hopefully will be our Boring & Vanilla Retirement Strategy With AWESOME Results via UK Property
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