If you have filled up your car or gone to the store, you have noticed prices have started to shift upwards. If you get a paycheck, you probably have not seen a wage increase. The consumer price index surged to 2.3 per cent last month, which is the highest level since September 2013, according to figures from the Office of National Statistics. The increase in the oil price and the slump in the pound are the main contributors to the rate increase due to Brexit.
What I find interesting, in our market of Greater Manchester, prices also are shifting. Prices in Manchester are shifting upwards and we here and there get out bid on properties we look to buy for our Professional HMOs.
Our money is worth less since Brexit, trips to the EU are more expensive, how do we keep up. I was in college during the 1980s and we had double digit interest rates. Investors who were leveraged in property got destroyed. I remember seeing empty projects. Contrarily, I saw in college small property investors succeeding by renting out duplexes and triplexes ( small blocks of flats) and simply raising rents. I personally believe the same strategy for Professional HMOs. It is much cheaper to live in a Professional HMO than a single let flat. All bills are included …plus the friendship of the roommates is an added plus.
Some property investors had very little or no leverage. I remember asking them, what was their secret. They did not look to own half the city. They were satisfied with 10 to 20 flats. They rolled their profits into more properties that they could rent. They survived and the values of those flats jumped tremendously….due to time and due to inflation. The flats cash flowed because there were almost 30,000 students and it was hard to find a flat. Same rules today apply I believe.
Look for areas in which there is demand…low leverage or non…pass along the higher rents….and actually inflation works for you. Myself and my colleagues believe in this and are holding more properties. We specialize in both Professional HMOs and Social Housing HMOs. These cash flow so much better than single lets….albeit there is more moving parts.
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