Where do you think the right location is to invest? I used to think it was in my home town. 7 years later I was buying in the depths of Glasgow in suburbs I had never heard of but everyone else in Glasgow had if you catch my drift!
I used to only buy in my home town of Harlow. It was what I knew and it, at the time, could offer me a 12% yield. Me being the accountant would invest based on the numbers. Fortunately for me if the numbers did not hit the magic 12% then I would not buy.
It started to become more and more difficult to get a 12% yield. It was only then did I decide to consider other towns. I widened my net to Essex, then surrounding counties and then surround countries! I never ventured further than the UK though.
So now I sit on a mixed bag of properties all over the UK which keeps my field manager VERY busy. Am I glad that I have my portfolio spread all over the UK? Hell yeah!
The reason being because of one rule:
Diversification.
This, simply put, is not putting all your eggs in one basket. I believe every area will have it’s time. There will be a point when:
Harlow booms
Glasgow booms
Wisbech booms
Hull booms
Etc.
And I will be there to capitalise on it when it does. Also there will be a time when:
Purfleet crashes
Stoke On Trent crashes
Aberdeen crashes
And I will be there also to capitalise when it does. I will buy more and I will have the infrastructure to manage anything I buy.
Now I know my investment strategy is not for everyone. It scared me enough not to do it when I was young but I GREW UP! I am glad I did because now I have a robust property lettings business which will provide for me, my family and my family to come.
So when you see a property deal from me, my competitors or wherever try and be a bit more open minded. Look at the numbers. Are they your sort of numbers? Whether it is a minimum yield, monthly cashflow or money in whatever it is please read the numbers. Location is secondary. Kirstie and Phil will be majorly disapproving but lets face it – they are TV presenters not a property tycoon like me!
In terms of managing properties, if (like you) I was buying way outside of my local area, is there a National Lettings/Management company you would recommend?
Obviously when the volume of properties increases, it probably makes more sense to employ your own manager. What would you suggest is the Tipping Point at which it becomes viable to employ your own manager/team?
I would have thought it makes sense when the breakeven point is reached - i.e. property manager costs £25k/year - so when agents management fees exceed this figure? At £500pcm rent, paying 10% to agents, that's £600/year per property. So when portfolio reaches around 40 properties...
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