Buying Property with a Margin of Safety

Buying Property with a Margin of Safety is the key to surviving in property. Yes, I know that prices have been on a sky ride in London. Many investors just look at appreciation or potential appreciation…I personally believe it is more prudent getting that appreciation in property as a gift….Myself and my JV partners look at cash flow. We buy cash flow in the Greater Manchester area via both Social and Professional HMOs and we sell cash flow. The issue we are having for better or worse is that our social HMOs are basically only for Cash buyers.  Banks have not been too keen on lending on them. Even with the Professional HMOs that cash flow so amazing…23,000 for a 4 bed…Banks have gotten much stricter. They will value a Salford Manchester HMO for less than what it costs us to refurbish with en suites. Thus buyers need to come up with on an example

Brick mortar 120k value

Rents gross 23,000

Sales price 173k

SDLT 3%

Basically a nice chunk of money….yet the hmo investor still gets a healthy return with a lovely. As we are always focusing on how to grow safely we are looking at properties that we can refurbish ….tenant…management and sell on as a turn key investment that is available for mortgage. There are areas in the North that can provide double digit returns, 50% below 2007 prices and with full management in place. Keep posted on our projects for sale. We are in the process of looking to supply Property with a Margin of Safety. These are basic terraced houses. Not new city centre flats with maintenance and ground rents that can kill you. Coming soon….turn key, profitable, under 70k properties between 8-11% with management in place.