Buying Cheap Properties with High Returns or Nice Properties with Low Returns?
This is always the question. However only if you can manage the properties properly should one attempt to buy cheap properties that yield a great deal. Conversely there are those who simply like to sleep at night and are happy making 3-4% net. Do not be lulled into 6-8% yields in Manchester. You will have voids…maintenance…boiler issues….non payments. Even the best tenants can be problematic if their financial situation changes. We saw this in the last recession.
An alternative are professional HMOs or even social HMOs. Yields are higher than buy to let but `each have their caveats. Professional HMOs yield well but must be managed. Without proper management you will lose money. More so the banks will not lend unless you have HMO experience. We get calls all the time from ex course attendees thinking that banks will lend 75-85% without experience.
The social HMOs are great as once they are approved they simply cash flow between 9-10% NET! This is huge however most banks will not lend on them.
No free lunch in the property world….just always a great deal of learning with buy to lets….HMOs and even low yield properties.