Barry Davies was the headline speaker at our October “Halloween” PIM.
His “hold on to your seats” presentation was excellent, full of detailed examples and useful advice – it generated masses of questions and discussion, late into the evening.
Barry is a passionate believer in the power of Let to Multi-let, with or without Lease Options, to enable investors to replace their income, without needing large deposits, or mortgages. He showed us exactly how this can be done, in just a few deals.
First of all Barry told us how he started in property, in 2007, before the crash, when his first deal turned into near disaster, as the market fell and his projected £40k profit from converting a property into 2 flats, turned into a £7k loss. Worse followed, as he lost his job. He needed to replace his income. Fast.
So he turned to HMOs and multi-lets, using rent to let. The advantage being that it is possible to generate £500-2,000 profit per month, without needing to invest large sums.
Of course, if you buy a property and convert to HMO, you can do very well too – but for a larger property, you will probably need to invest £50-100k. So unless you have very large liquid assets indeed, you’ll start to run out pretty quickly.
Converting to multi-lets increases rental income by 50-200%, on average – but it is more complex than a single let, so do follow Barry’s Golden Rules:
- Minimum 5 rooms
- Minimum profit £100 per room per month
- Rent out double rooms if possible (en-suite are even better)
- Max 4 people per bathroom, ideally 3 or less
- Keep the property in good condition – people happy to live in poor properties are often poor payers
- Include bills – you may end up paying them anyway
- Be very picky about your tenants and get proper references
Barry told us a telling tale about his girlfriend, who goes to such great care to choose tenants who get along with each other -that she will turn down otherwise good tenants, if she thinks they won’t all get along. At first, Barry thought this was mad! But of course, eventually he discovered that she hardly ever has voids and many of her tenants stay for years… so it is very worthwhile.
Barry then moved on to explain Lease Options and how they work with HMOs.
Lease options give you the opportunity to buy the property within a set period, typically 5 years. The advantage is that you are effectively investing in the market – you do not even need to buy the property, you can sell it straight on, taking the increase in value.
Barry has found it is perfectly possible to find owners happy to do lease options. Usually they are looking to sell anyway, but a lease options, with HMO rental, gives them a far better return than is currently available in alternative investments eg bank accounts. They are also more likely to be wealthy and successful business people themselves – so if you feel uncomfortable dealing with people under the pressure of possible repossession, this is a great strategy for you.
Barry finds lease options through letting agents, JVs and Estate agents – offering to pay their commission at a good rate ensures they come up with new deals for you.
This really was a fascinating evening – inspiring everyone who was there, with new possibilities.
Do make sure you join us for our next PIM on Thursday 28 November 2013 at Holiday Inn, Bristol City Centre, 6-9 pm.
For more info and to reserve your place CLICK BELOW!
We look forward to seeing you there on the night.
All the Team at Property Options – For Successful Property Investment