Probably the number one reason people get into property investing in the first place is to get to a level in order to achieve passive income. One of the biggest mistakes so many property investors make is that passive income can be achieved without actual money or yours or JV money. This is just not possible. There has to be someone’s money in the deal—whether it is yours or your JV partner. Banks are not foolish. Banks have tightened up to the over the hill extent. So much time…so many questions…such slow motion. Molasses moves quicker.
Next issue I have seen over and over again is that property investors get caught in the mouse trap. They want to have 100 properties in order that they can have passive income & sit on the beach in Spain. They over leverage…they run low on liquidity which is the life blood of property. Whats wrong with patience when building a portfolio of high yielding HMO properties?
In order to achieve passive income one should take a very long term perspective utilising HMO properties. Rome was not built in a day. If you want to achieve the potential of passive income maybe you look to emulate this idea we use. For every 3 properties purchased we look to seek 1-2. This way you maintain liquidity and also build slowly overtime passive income. We are constantly selling our Professional HMOs and Social HMOs. The social HMOs are the closest thing to passive income as once they are tenanted and passed all the stringent inspections, we simply get a BACS payment monthly. We have purchased close to 20 HMO properties this year and sold a good number of these to property investors.
I personally think the bottom line is to make a business plan….control your ego…sometimes less is more with property…