Is it important where I buy Below Market Value (BMV) properties?
Here’s what people have said to me:
- As you’re going to get letting agents to manage your properties, buy anywhere in the UK.
- Buy in the north of England because property is cheaper and more people rent there (than in the south).
- Buy properties within an 8 mile radius of where you live.
- Buy properties in areas where there are a lot of 3 bed properties for sale at £150K or under.
- Buy properties in an area you know well.
- Buy properties in an area where people don’t want to buy property.
I think there is no right or wrong answer, it comes down to your strategy.
I was recently considering buying a property in Wigan for £100K. It was going to cost me £4.5K and the net cashflow would have been around £100 PCM (ROI 26.67%). However I decided against it, on the grounds:
- With only £100 PCM, the property will probably become a liability the first time it requires any maintenance.
- House prices are cheaper in the north of England but so are the rental returns.
- Having a strategy of buying properties in the north would require me to keep spending time doing careful due diligence on letting agents.
Having lived in Shoreham-by-Sea since 1984 I know my local area (and Sussex) well. I am forming my strategy on point 3, 5 and 6 above.
When it comes to buying BMV properties, I am going to target Lancing, Worthing and Portslade. If I need to go a bit further out: Littlehampton, Bognor, Crawley, Newhaven and Eastbourne.
The good thing about Lease Options is that they can be done in popular locations – including Brighton and Hove.
Thinking a few years ahead – when I own a big enough portfolio – I would like to employ somebody to specifically manage my properties. I like the idea of opening a letting agency!
