8:31 AM, 3rd October 2013, About 10 years ago 49
I have questions which I’m sure many people outside of property investment ask themselves before drawing a blank or getting confused or deciding they don’t have enough information to make a decision.
“How much money do I need to begin a viable property development business?”
“What’s the most sensible route as an entry point?”
I’m in a position right now to seriously consider this, having just been given notice of redundancy. I have savings, shares, redundancy money and the option to release equity in a flat I have which I currently let out. Altogether this would amount to around £250k. Below are the scenarios I’m considering as viable options. It may help to know I’m 45 and have a family of dependants:
1) All in – Devote all my energy into buying high yield properties in the north of England, circa £50-60k @ £400 to £450 per month rent.
• Lot’s of fun and what I would prefer – an adventure!
• Steep learning curve
• Large portfolio to spread risk
• I’ve no experience in managing a large portfolio
• Lower equity yield than most property
• I live near Watford
• Can I deal with the admin?
2) Eggs in one basket – Buy 1 or 2 flats in west London (where my current flat is), @ between £1,2oo to £1,700 permonth rent
• High equity yield from London Cross Rail benefits
• More local to maintain
• Easy to rent to professionals
• Low rental income means it could not be my “new profession”
• Lower relative rental yield than north England option
• Slow way to build portfolio
There’s a third option which would be to buy up to 8 houses in South Wales, where I originally hail from, which would give me a geographic advantage and I also have family and friends who are tradesmen and could possibly manage the properties, which falls in between the first two options.
As you can see from my options, I’m stuck between the pragmatic and the adventurous options and I may not get another opportunity to chase my dream again, but I’ve got a lot at stake if I fail.
One of the things I’ve been interested in pursuing is a mentor system where an old hand in the housing game could act as mentor, for free, or a small stake in the business. Maybe someone who works in a different location, is semi retired, or deals with much bigger fish, so as not to have any conflict of interest. Does such a thing exist? If not, is that something we can kick off in this forum?
What I’m seeking from you all is your opinion or advice, all of which will be gratefully received!
Previous ArticleLegal Advice - West Bromwich Building Society Class Action