Investing in Affordable Housing for the Long Term
Affordable housing is not luxury off plan city center wonderful flats. Affordable housing could be inexpensive Buy to lets…..professional HMOs or even social HMOs that are on guaranteed 5 year contracts with no voids…no management and virtually no maintenance. We invest in affordable as we feel it is much less risk. We like to buy in areas in which prices have not surpassed 2008 prices.
Currently unemployment is low, however median income has not increased. The gap between the wealthiest and the less fortunate in society continues to widen. The middle class is hurting. The lower class is hurting. More so interest rates might start to spike up. People in these segments are being squeezed out—either elevating to the upper class or moving closer to the poverty line.
This is the reason of our model of Professional HMOs. They are a completely affordable way to live. Many people are speaking about saturation however our rooms in our Professional HMO are full. At some point the economy will shift. There will be more of a need for affordable living. On the other spectrum, Social Housing is not effected in a good economy or a bad economy. There will always be a need. You have a greater need now for emergency housing from Manchester city council….Plus there are more and more needs for social housing on 5 year govt contracts.
Why another reason for affordable housing /Professional HMOs are simply:
Affordable housing is in tight supply with no signs of that supply increasing. It is a sellers market in Manchester. Prices are shifting higher and higher. Simple supply and demand dictates that tight supply and increased demand ultimately lead to increased rents. Assets generally become more valuable under those conditions. Increasing rents should be done responsibly. There is a fine balance between raising rents to keep pace with the cost of living and inflation.
Ideally if you can pay down a mortgage while tenants are living in your property you will create wealth. Just in the potential for price appreciation. Potentially, we are closer to the top of a cycle than the bottom of one. If there is ultimately a downturn (and at some point there inevitably will be), affordable housing demand should remain strong.
This is why we invest in Social HMOs and Professional HMOs