How market changes affect you as a property investor

Enhanced Transcribe:

Hey folks, I thought I’d share a quick message to all of you who are property investors and maybe new to property or have been in the market for a while and just looking at strategies at the moment. 

The market has changed on the financial side with regards to the bank’s value and has been a bit more cautious as you’re probably aware. I think we are knocking on the door of an upcoming recession well we are actually in it. 

Point being there are always opportunities in the market and although, yes, there’ve been certain areas of the property market that may have got stuck a little bit, tenancies changing, new policies coming in, even with the eviction process for tenants and that’s something you have to be aware of. 

What is really, I think a sign of the times and saw this back in 2008 2009 as we came through the last recession is the massive demand and I mean massive demand for government housing to the extent that in reality we don’t have enough properties to provide housing for people in this country. 

If you then zone out into different groups of people and look at something like social housing, for example, the government is crying out. You’re probably looking at 1.5 million+ people on housing waiting lists and some of those areas have waiting lists of 10, 15, 20 years or so. 

This is an opportunity for us to help the government provide housing for people. To give you some context one of the properties that we have that rents out for about £75-£80 per room per week that property is a five bedroom HMO, so that would yield 18, 1900 a months gross rent. 

The council approached us, and actually a good member of our team has done some research and made phone calls and they come back and actually said we would like to take this property off you for about £480 per month versus, say, 350, 325, 375 and that’s per room per month. 

So all of a sudden you got 480×5 rooms versus 300, 350×5 rooms and they are desperate and they said, under the circumstances due to Covid the pressures been building up it was already there, but now it has been accentuated and this has been happening now over the last four, five, six weeks. We have a policy of looking out and I have somebody that’s in my team, Nicky she is amazing she has done a lot of great work getting in and talking to councils et cetera and establishing what they are looking for and putting our credentials forward.

If you get enough influence then you get opportunities. So my point being that this is without a doubt happening around the country. You’ve got a growing social housing list, a situation that has been compounded by Covid19. So more people need a home, we want to provide their home if you’re a socially conscious person of course you want to do that. If you then look outside of that, and you say what other areas are there to consider you now can start to look at charities and local non-profit organisations, which is another area we focus. 

Those groups of people are also in huge demand, it can be anything from war veterans to vulnerable tenants and the main concern at the moment is that whilst those charities are looking for houses they are also looking for specific types of houses in specific areas. Their concern is they can’t find them and they are looking for landlords who are socially aware, socially conscious and are prepared to bring those properties to them. Whether it’s the council, whether it’s a charity, asylum seekers is another one so this is where you get a guaranteed rent and by the way, with these schemes you are normally given a guaranteed rent anything from a year to five years. We secure tenancy agreements up to seven and 10 and we’re actually looking at a few at the moment. 

Those types of strategies enable you to get a guaranteed rent for a longer period of time and that time will depend on who you work with. So with the non-profit organisations that I tend to deal with they are normally three years up to five years, whereas councils come in at maybe three to five, then you’ve got the asylum seeker type strategy which can be five, seven years, 10 years. 

These are HMOs and family let’s as well as so you have the option to take your buy to let and hand it over to an organisation as a buy to let. Or you have the opportunity to take property and then have each let out. There are several caveats to what I’m saying to you now that is the one you’ve got to decide is your property a licenced HMO or can it be licensed as HMO? All the rules still apply but my point is what might be a 500 per month rent property could suddenly become 12, 1500 per month rent property because you change that strategy and there will be a guaranteed situation a growing demand over the coming next I think 12 to 24, 18, 24 months as a minimum and really there are opportunities if you are looking. I think there are a lot of people out there who are either vulnerable or in situations where financially not in a position to be able to afford to rent their own property. 

When people say to me social housing tenants aren’t the best quality tenants my answer to that is they’re all human beings they need a home their circumstances are such that they’re not able to maybe work or not in a position to rent their property privately and as landlords I think there is a social responsibility to provide housing to people that are in a difficult place. 

I know when I was a student and when I was going through my early years I was grateful that there were people renting so I could get a room. I lived in Yorkshire. I had Asian landlords, English landlords. We had a whole range of landlords at the time, but they all provided us with a home which I was grateful for. I think it’s important as a human being to take respect for those people who were put into our properties. The main thing is to be aware that these will be in properties that aren’t necessarily the most luscious in green and upmarket area, so you’ll tend to find that social housing markets the council have areas for regeneration and they like those areas to be regenerated and for social housing tenants to be there because they’re typically low-cost properties and the rental figures will be lower and so it’s more affordable for the council to place people there. 

That’s typically how it works, but we’ve had some fantastic social housing tenants and asylum seekers who looked after the property really well, I think it’s important to take a bigger view on this. 

I think if you have an opportunity to help others and at the same time, help yourself and become financially secure, what a great way to do business. So go look into this, I think it’s a great strategy.

Dr Ro signing out.

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