Today Everyone’s a Property Investor
I mean everyone seems to be a property investor. It is not just local property investors in Manchester who are interested in Professional and Social HMOs. For example we have a man from China who wants to see our Professional HMOs for property investors from China. That is a sure long way to fly….Simply everyone loves property at the moment. However at some point economy will shift, markets will change, and people will want out for various reasons. No one knows when this will happen. Personally what I do with my JV partners is try to build and sell portfolios of high cash flowing properties that are based on Professional HMOs and Social Housing HMOs. Even in the great depression, the version of shared housing flourished and made fantastic returns for investors who were not overly leveraged. In the USA, they were called boarding houses. The fact is that Professional HMOs give a tenant a cheaper alternative than living in a one bed flat….plus the social impact & being around people.
I have been 3 real estate crashes and the current situation is starting to smell like a crash again. For example, just saw a post on Facebook what a great deal a property is. It only costs 120,000 and generates 600 a month. Great….They forgot to state, this is gross…there will be voids…there will maintenance…and yes management. This 6% gets down pretty quick. Maybe 3-4%. This probably did not include the cost of a mortgage. Oh, I forgot…that does not matter as prices will go up???? I think people forget prices can go both directions….yes…increase…and as demonstrated in 2008…DOWN.
Going back to the current situation , whilst this doesn’t mean you can’t find good deals (you definitely can), it does mean you would be wise to understand what changed, how we got to this place, and what may be changing in the future. If you can understand the past, you have a better chance of being prepared for the future. Now best selling books are based on property. The internet is full of them blogs, podcasts and countless get rich property courses & mentors. There are more blog posts about real estate investing than you could ever hope to read. There are TV shows as well.
Next question is what happens if interest rates more than expected? We are at crazy not realistic interest rates. When I was in college it was an easy 6% per year. How many are really ready for this…and BTW…interest rates do not have to go up gradually. They can spike as they did in 1994.
Today…in 2017…Supposedly prices can go only 1 way…UP
If you’re anything like most real estate investors today…you are pumped up to find your next (or first) great deal. The only problem is the overwhelming discouragement of not being able to find anything that makes sense to buy! This is a fact. Deals are hard to come by. The only way is to create value and at the same time be aware that the next property turn down can be around the corner. We create value and try to create recession resistant cash flowing properties. We create professional HMOS that gross in excess of 20% cash on cash. There is a lot of room as a pose in the above example of a buy to let. More so we work with councils and the Govt for Social housing. Regardless of a good economy or bad economy, there will be tenants who need housing.
My point is to be cognizant of future events which can effect your property portfolio and plan accordingly…
thoughts and comments???
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