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Sunday, October 11, 2015

One sale & two property purchases

After a period of inertia in my property portfolio for the last few years; over the last couple of months there has been a sudden spate of activity.

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Moving my property portfolio upmarket

I've decided to go up market and for more quality property aiming for capital growth and to add value through development.  Just like in business generally, the mid market whilst promising the widest appeal also risks over supply and ubiquity which make rental properties hard to rent and then ultimately to sell. and thereby maximise your capital return.

There is invariably money to be made at the bottom of the rental market where high rental yields for those prepared to accept a low capital growth in return for a cash cow.

However, anybody who has invested in luxury property in London will know that capital growth can be stellar.  I can't afford to be in that market and to a degree I think it's ex-growth.  Conversely, I don't  want to let to tenants on benefits or own a street of income producing houses in Sunderland.  For me the way forward is a small portfolio of exclusive, unique and desirable properties in good locations.  This means if I ever want to sell I know there will be a line of owner occupiers cuing up to buy them (what ever the state of the economy or local market).

Selling an under performing rental property

I've written before about the fact that sometimes a landlord needs to concede defeat and just sell up and here is some advice about selling a btl property. Selling an under performing property makes sense.   Holding on desperately to a property hoping that it's lettability will improve or that it will start attracting good quality tenants can be a false dream.  Some properties do just not rent well and will just cause you problems.  The answer is just to get rid.  This gives you an opportunity to buy a property that is better suited to your rental model or to use your funds for alternative investments. This is exactly what I'm doing with one of my properties and having just agreed a sale I'm 'hopeful' that I will have additional funds in my war chest before Xmas.  This brings me on to my purchases.

Buying 2 new investment properties

I've already bought a penthouse repossession which I'm refurbishing and believe that I can add a bit of 'bling' and value by reinstating it's spiral staircase, adding an additional bedroom and giving an overall make over.  I'm hoping that by spending £30,000 I can take the value significantly north of £200k having spent £150k on it's initial purchase.  I'm guessing that this property once finished will be a perfect bachelor pad for a well healed footballer, professional or business person once the refurbishment work have been done. I expect to make at least 10% on the gross development value (GDV) of the project but hopefully there should be the potential to easily double that if I get it right.

The second property I'm looking to buy is luxury Bakewell accommodation in the picturesque Peak District town.  It is in a converted mill and presents an opportunity for both a holiday let or holiday home.  This town and the property should have a ready market of buyers amongst the increasing number of well healed retirees in the coming years should I want to sell.  So busy few month with half a million in property purchases and a sale going through.  I'll keep you posted on how it goes!

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Caroline J said...

I'll be interested to see how your Bakewell one goes - just buying a holiday let in need of renovation myself, first project ever!

The Editor said...

Hi Caroline, I'll be honest this is my first ever holiday let so something different for me too. My thoughts on the holiday rental market are that I need:

1. A good year round letting market. I know that Bakewell where I'm buying my holiday let has a brilliant year round demand. Slow months are November and January & February. Otherwise there is strong demand throughout the year.
2. I have a good route to market. I already have a business in Bakewell where rental accommodation is needed. I'm aiming to cross sell my accommodation. I also want to establish my own website for the holiday let business to be able to market it separately.
3. Having good contacts in the local area for cleaners, tradespeople I think will be vital. Because I run a business in Bakewell and now know a number of business owners in the town I've got this.
4. Because I'm in the town on a regular basis I will be able to keep close control of my holiday rental business. This is vital in my estimation. Standards of accommodation and service are much more demanding than buy-to-let and keeping close control over the running of the operation will be key.
5. I'm just in the process of refurbishing the holiday let. It's a great shell and fantastic location overlooking the River Wye. I'm mindful that holiday letters will need a high level of fit out and decoration. I'm also sure that given the turnover of occupiers that fixtures and fitting are going to have to be robust and practical to withstand the intensive use.

Caroline you must let me know how your project goes too.


CarolineJ said...

Hi Chris,

Useful tips, thank you :) I was basing my calculations on 20 weeks' occupancy, however I've heard from my friendly roofer that one two miles up the road, slightly smaller with not such good views is getting 40+. I live about 300 yards up the road, but there's a good local cleaning service who do holiday let changeovers.

Don't know if this will let me leave a URL in the comments, but I'm blogging about it at