Singing Pig

hi all, im going to start my bmv buisness soon, and im after some more advice if possible!, il start by telling you guys my situation:-il be arriving back to the u.k in the next couple of weeks, iv been away from the u.k for 9 monthes (travelling the world), so im a little out of touch of the housing/finance market!

my short term goals are:-

buy cash flow positive property, i want to build a steady portfolio, im not looking at being to aggressive to begin with, i want to create a stable and managable portfolio. il look at doing a couple of deals this year buying at 25% bmv.

with regards to cashflow, rents nationwide seem very similar i.e 300-575 pcm, but property is very different 50,000-200,000 so when i pick an area for my bmv operation surly it would make sense to go for property close to 50,000 so i can get positive cashflow, does this way make sense or am i missing the big picture?

also finance should be easier to obtain for lower priced property?

also because im only wanting a few deals to start with do i bother leafleting, or should i rely on leads?

another major factor, is finance, is it possible to do no money down deals?

i currently live in kendal cumbria, but bmv is going to be a problem there, because property exceeds 100k, and im also wanting to move to another area in the north-west where i can do bmv deals!

so just your thoughts please guys!

many thanks in advance dave

Hi Dave

Welcome back to the UK (surely you have seen somewhere better to stay??)

You are right that there is a lot more variance in house prices than there is in rents so clearly some areas will work better for cashflow than others, however you also have to take into account other circumstances:-

 1. Having bought property all over the UK, I can tell you that it's best to take the Dorothy approach - "there's no place like home".  Investing too far from home means you probably have to engage managing agents which eats into the extra cashflow you were hoping to achieve.  If you choose to manage them yourself then you run the risk of spending that cashflow on petrol to charge up and down the country each time something goes wrong or you need to do a viewing.  You should find that once you have your base, there will be enough local price variance to find a patch that works.

2. Local economic factors - there is a link between the economic performance of an area and its house prices so going where the houses are cheapest may not bring you enough of the right kind of tenants.

Given current mortgage rates, the disappearance of same day remortgages etc there is a growing need to put deposits in or pick your way through the minefield of alternative financing packages being touted by all and sundry at the moment.  So be very careful what method you use to buy your properties.  Some are decidedly dodgy both from a legal and taxation perspective. 

Cashflow-wise, multiletting and HMOs seem to be where it is at, but you really need to do your research to ensure that any property you consider is not only suitable for conversion but also is in a location that has a proven demand for letting by the room.  You also need to be prepared for a bit more work as you have more wear and tear and changeovers and very few agents will take on HMO properties to manage.  I believe there may be a possibility of doing no money down on HMOs using commercial lending - something I am exploring at the moment.

I am unsure as to why you think BMV is a problem because property exceeds £100K.  I have found most of my properties market values are in the £100-£150K range and with the right level of discount from the vendor these were stacking until everything went haywire.  Still with the right deal, the right finance and the right approach to rental you should still be able to get properties over £100K to work.

Now leafleting - there's a can of worms.  I spent about £10K on leafleting over the last year and didn't get a single deal from it.  The results I'd been quoted were 10K leaflets - 20-30 leads - 1-2 deals.  It was more like 10K leaflets - 3-5 leads - no deals.  I tried all sorts of wordings and nothing seemed to quite hit the spot.  But I know other people have had terrific success with identical leaflets to mine, so it just goes to show that it can still work.  I think it's a case of try it for a bit and see what happens.  At least with leafleting you are being very specific about where you want to invest.  The problem with buying leads is that you can often be tempted to go further afield than you planned, just to get a deal under your belt.

Hope this helps