There are 4 main ways to make long term, sustainable income (Cashflow) from property, best utilising your funds in the current market, without huge demands on your time.
These may surprise you. And most people don’t do them. Not because they can’t be done, but because they don’t know what they don’t know, they’re over-concerned about protecting their cash, or they’re just too busy to do it.
These strategies are best suited to people with funds but busy lives, other careers or businesses. If you don’t have (m)any funds but you have spare time, this article isn’t for you:
1. Long term buy to let
The least innovative but most proven way to make long term cashflow and equity is to buy common houses with good yields (cashflow) in local areas, that the majority of tenants would want to live in/can afford. We own over 300 and they’ve stood the test of time, market crashes and credit crunches.
They never become unfashionable.
They contain the least risk, you can get lending on them the most easily and they are the easiest to manage.
With some cash you can build up a good sized portfolio in a relatively short space of time, predictably increase cashflow per unit, and protect your money from low interest rates and inflation.
2. Boutique HMO’s
The new high end multi-let model, ‘Boutique,’ is about creating high standard of all inclusive, transient living; a halfway house between a hotel and renting a property.
Yes these need cash, but you’re still reading, and the returns and demand for these are at times eye watering.
Standard multi-lets are becoming old hat.
In our local investing area, we get more rent for a very small ‘Boutique’ room than we sometimes do for a 2 bed flat!
The worry of voids doesn’t seem to be an issue as long as you are central; you often get long waiting lists for your rooms. People are paying premium for convenience, so a nice, trendy all in one room with TV, sky, wi-fi, wet room, get up and go suits their high flying, fast moving lifestyle.
And they pay big for it.
It’s a great way of protecting your cash from low rates and inflation, and in time you’ll get growth too. Where prices are high, these often work the best.
3. Commercial conversion
With new relaxed planning laws, a specific niche opportunity has opened up.
Commercial (B1) property (offices) are now much easier to covert into residential (C3) flats.
It’s all changed.
Previously planning applications, section 106 contributions (taxes), affordable housing and other restrictions meant only seasoned developers could make any margin out of this niche.
Profits in the £100,000’s are there in the ‘change of use,’ either holding the flats for rental income of selling/flipping them on for a more immediate profit.
Here is a real example live in progress:
4. Handsfree Investing/Portfolio Building
If all the above sounds too much like hard work, or you simply can’t spare the time, consider a partnership with an experienced investor/group/company who will build your portfolio for you.
It could be individual single lets or bigger block deals. Check for their history and experience, and if they are doing it themselves.
“The baby without the labour pains”
If you can strike the right partnership for you the leverage is in not missing out on this buy to let boom.
In the very busy world we’re in right now, the opportunity cost of not investing or making a decision because you don’t have the time yourself could be the most expensive one.
The property boom isn’t going to last forever, so over to you to decide which road is best for you to maximise your return and minimise your risk.