Day 1 Positive Cashflow from UK Rental property ?

NVP

Legendary member
37,586 2,008
i'm researching this at the moment....(after now watching far to many get rich in real estate videos from america)

is it really possible...at all outside the USA ?

I mean sourcing property with % borrowing + equity investment and then generating a positive net cashflow (after taxes and expenses) from rental income

and it better be a good return.... as the Equity "stuck" in the property could be invested elsewhere (and much more liquid) with returns of 5%+

and lets forget Capital Growth.......ignore resale.i'm talkign ongoing solid reliable cashflow model ;)

N
 

NVP

Legendary member
37,586 2,008
The closest I can imagine is sourcing cheap properties in areas where the goverment sponsors the DHSS style housing schemes.........?
 

scose-no-doubt

Veteren member
4,630 954
In the NW, some higher end (2.5/3.5k pcm) properties can net +ve too but where people (my clients) are falling short is the keeping them occupied.
 

timsk

Legendary member
7,388 2,170
Hi NVP
I'm no expert in these matters but, that said, there's one thing of which I'm fairly sure. Let's say you've got a spare £100k to invest. You're much better off getting 2 (or more) properties with an equity stake of £50k each than one property at £100k. The reasons are threefold, the rental income from the two cheaper properies is likely to exceed that of the big one and, if one property is vacant or you've got duff tennants etc. - at least you've got something coming in from the other one. The third reason is that, generally speaking, there are more prospective tennants at the bottom end of the market than there are at the top end. True, there are more properties to rent at the bottom end - but that's where your skill and judgement comes in when buying. Get a good deal, do it up nicely and make it more desirable than the other lettings and you'll bag the tennants time after time.

I suspect where a lot of people go wrong in this game (and I've a mate who's made this mistake) is that they leave themselves little or no leway. So, after they've bought the place and done it up (which might just meean a lick of paint), they bank on getting the maximum return based on constant occpancy in order to service their mortgage debt. They have to have, say, £650 coming in each month just to tread water. If you can offer your property (which is as nice - or better than theirs) for, say, £600 p/m - you'll come out on top.

The moral of the tale is not to be greedy, be flexible and factor in periods when the property is empty and requires maintenance etc.
Tim.
 

NVP

Legendary member
37,586 2,008
Hi NVP
I'm no expert in these matters but, that said, there's one thing of which I'm fairly sure. Let's say you've got a spare £100k to invest. You're much better off getting 2 (or more) properties with an equity stake of £50k each than one property at £100k. The reasons are threefold, the rental income from the two cheaper properies is likely to exceed that of the big one and, if one property is vacant or you've got duff tennants etc. - at least you've got something coming in from the other one. The third reason is that, generally speaking, there are more prospective tennants at the bottom end of the market than there are at the top end. True, there are more properties to rent at the bottom end - but that's where your skill and judgement comes in when buying. Get a good deal, do it up nicely and make it more desirable than the other lettings and you'll bag the tennants time after time.

I suspect where a lot of people go wrong in this game (and I've a mate who's made this mistake) is that they leave themselves little or no leway. So, after they've bought the place and done it up (which might just meean a lick of paint), they bank on getting the maximum return based on constant occpancy in order to service their mortgage debt. They have to have, say, £650 coming in each month just to tread water. If you can offer your property (which is as nice - or better than theirs) for, say, £600 p/m - you'll come out on top.

The moral of the tale is not to be greedy, be flexible and factor in periods when the property is empty and requires maintenance etc.
Tim.

agreed ...........if I were to go into this business i'd be hunting a growing portfolio of smaller units more than a trophy property

There must be quite a few companies out there owning large porfolios of such units and also reaping the rewards of being a company as well

economies of scale follow

N
 
 
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