All the headlines speak about a housing shortage in the UK. However there are so many areas in the North, that there are countless houses sitting empty in need of refurbishment and most importantly have demand to be rented. I am speaking first hand as we are buyers of these properties. However easier said than done. Most property investors get burned. We had one gent whom we sold many Social Housing HMOs from Saudi Arabia. One day he called and told us he did not to purchase any more of the Social HMOs as he can get 20% returns from Professional HMOs in Liverpool. Fast forward only a couple short months, his appointed property manager let me down….over promised and under delivered and his 20% returns turned into losses.
There can be great profits to be found in buying, remodelling, and flipping or renting out inexpensive properties. However, it is crucial to realise that a low price tag doesn’t always mean a cheap or valuable deal. In fact, you can lose money fast buying cheap real estate if you aren’t careful or know what you are doing.
One of the first things to be aware of is location. In property…three words…location…location…location…We are buying in Liverpool and looking to buy in Newcastle. The prices are about 40% below what they were in 2008. More so we are entering into various rental arrangements with charities or councils. We will be at almost double digit yields plus we have a margin of safety. With social housing, in a good economy or a bad economy there is still need. Social housing is virtually recession resistant. Compare this to brand new wonderful flats in city centre Manchester. Those same type of properties in 2008 collapsed yet so called investors are flocking back…like sheep to slaughter once interest rates increase.
Make sure you have your solicitor check the title on the property diligently. Forgot about going to an auction and not bothering to read or have read the legal packs.
Buy right…Even cheap can get cheaper. On the two properties in Liverpool we are in the process of conveying, even though they were cheap we got an additional 15% below asking price due to time of year and cash offers. The key is buying undervalued property and locking in profit from the beginning. We’ve all heard it time and time again—you make your money when you buy.
We always get surveys. Where many property investors fail is buying “cheap” homes and then finding out they may have to put in several times the purchase price in renovations, repairs, or even tearing down the parts of the property and rebuilding. Always get inspections done unless you’re very experienced with rehab numbers.
Last and most important….None of your good buy will mean anything if you can not manage the property. Really be careful with estate agents that say leave it with me….If the property is not managed correctly you will defiantly lose money. Many investors just aren’t cut out to effectively operate lower-end properties. They don’t understand the quirks, tenants, or the processes. Poor management can destroy even the best opportunities on A-class real estate. Great management can effectively turn a lemon property into lemonade. Beware of trying to manage these cheap houses from afar. It can turn into another full-time job easily. Universal credit is on the way and opens a new area of issues.
Our goal is to keep some of these cheaper properties for long term growth and sell off some to investors. We will offer a complete turn key. Property management and maintenance. My colleagues own 50 properties exactly like this in Manchester and have the skill to manage. This is really the key…management. Anyone can buy a property and “TRY” to refurbish it….The management is the difference
Recent Comments