DGlets

Say you invest with a 75% mortgage, and your property goes up in value by 3% per year. That means that your investment (the 25% you put in) has gone up by 12% – and that’s before even thinking about the rental income!

That excludes tax and other costs, but it’s also assuming you don’t invest in the right place to achieve higher growth, add value, or anything else.

The risk? Principally, that you’re forced to sell during a market crash and lock in a leveraged loss. But this is relatively easy to protect against.

Option 1: Earn your returns

"Someone who takes time to study different property markets, invest into select properties using leverage, build them or fix them up and selectively hire or contract people to help him, and then re-sell the homes or rent them out, can earn a good living from that activity. It’s his time and attention that is adding value and generating returns."

The key here is that you’re earning your money through the application of your own time and skill. This is how you can earn fast (relatively speaking) money with property: find the opportunity, add value, then sell or release cash to profit.

Option 2: Let leverage plus inflation produce returns

More passive, buy-and-hold investing does work – but only if you use leverage (in the form of a mortgage), and wait while inflation lifts the value of your property while your debt remains static.

Effectively, in exchange for putting in less work, you’re accepting that it’ll take more time to see results.

Option 1 and Option 2 are both completely valid ways to invest. I wouldn’t even say that one is better than the other: it’s just a case of which suits your skills, preferences and desired timescales best.

But it really is a stark choice between the two – because you don’t want option 3…

Option 3: Go nowhere, slowly

Back to Lyn again:

"After maintenance and recurring taxes, the majority of unlevered real estate, even when rented out for cashflows, doesn’t outperform gold."

At first, this seems like the “safe” path: don’t take on the risk of a mortgage, and just hold property for the long term. As a result, many people stumble into this route by accident – yet the data shows that it’s relatively unrewarding.

Sure, you’ll end up with an asset that’s worth more in the future – but a non-property asset could have got you to the same place with a lot less work.

This week’s biggest news…

It’s been confirmed: there will be no more special tax treatment for holiday lets. As of April 2025, they’ll be treated the same as any other buy-to-let – which will likely mean higher tax bills for owners.

This sounds familiar: plans to require an EPC grade “C” are back on the table, with a deadline this time of 2030. We’ll have plenty of time to re-hash all the arguments in the coming years, but everything we said in this video last year still stands.

The average cost of a 5-year local property license has hit £700, and 20% of councils now operate some kind of scheme. Cumulatively, landlords paid £20 million in fees last year.

Apparently, the average tenant spends more than a third of their gross pay on rent – but unless I’ve missed something, it assumes that every household has only one earner. Nevertheless, the regional and city-level breakdowns are interesting.

At almost the exact moment we reported last week that OpenRent listings would no longer appear on Rightmove, the two kissed and made up – so in good news for self-managing investors, this will still be an option to get widespread visibility for your listing.

Why you shouldn’t buy cheap properties (and what to buy instead)

You’re ready to buy your first (or next) property. The options are overwhelming! So how do you make a decision?

Many investors pick an area (like one of our favourite hotspots), then buy the property with the highest rental yield they can find. Getting the maximum bang for your buck: seems logical, right?

Unfortunately, they often come to regret it as they learn more. I know I did – because I’ve made this mistake too. To protect others from falling into the same trap, we even refuse to sell this type of property through Property Hub Invest - even though it’s a terrible business decision because they’re easier to find, and easier to sell.

So what’s the problem? And if high yield isn’t the answer, what is?

Why not buy cheap?

They’re more hassle. Cheaper properties tend to have issues, and attract tenants who are more challenging to manage too.

The return is never as good as it seems. If you buy for £50k and rent it out for £420 per month, that’s a 10% yield on paper. Great! BUT… even a small repair can wipe out a month’s profit!

And the big one… The capital growth is never as good. Capital growth results from a combination of high demand and an ability to pay – both of which you only tend to get with quality homes. By straying from quality, you cut yourself off from a major source of investment returns.
So what counts as “quality”? There are 3 attributes you can use as a rule of thumb:

Quality attribute #1: In the top 10-20% of rents

Rent is a good proxy for quality, so if something commands rent in the top 10-20% of the market for that property type (e.g. 2-bedroom flats) in a particular area, that’s a quick quality filter.

Another benefit is that people who are paying this level of rent tend to be more financially secure, so you’re less likely to get sporadic payments and arrears (but you must still reference applicants thoroughly!)

Quality attribute #2: Uniqueness

People value what’s rare, so a unique property tends to benefit from the most capital growth.

This can be at an individual property level (e.g. the penthouse in a development, or the only house on the street with a large garden) or a local level (e.g. the best development in town).

Quality attribute #3: The best area

The majority of a property’s value comes from its location, not the physical structure itself. If you buy into a popular and growing area, you reap this benefit as it continues to expand and improve – without needing to do anything to earn this yourself. So filter for areas that are already strong in terms of transport links, employment and leisure facilities – and look out for those where more improvements are planned for the future.

I've got a quick tip for when you try to negotiate prices – don't ever ask for discounts!

Instead, give the most ridiculous offer, give a reason why it’s a great offer, shut up and expect the other party to say “no”!

Contrary to what people believe, “no” is the start of your negotiation, not the end.

For example, if the seller of a property is asking for £100,000, my first offer would be £70,000. I justify by saying that my finances are ready and I can complete within 3-4 weeks. When the seller says “no”, then I would increase it from £70,000 to maybe £73,000 and focus on the value that I can bring, until we get to a price that I am happy with, say £80,000.

What if the seller gets offended and shuts the door in my face? Then move on! Play the numbers game and never be needy. Whenever you’re needy, that’s when you pay too much for it.

JF Kennedy once said “Never fear to negotiate, but never negotiate out of fear”!

Best wishes

It’s the end of buy-to-let as we know it!

Or that’s what people would want you to believe, with drama surrounding government fiddling and the rise of interest rates.

There’s been a lot of talk about the changes that have come to buy-to-let properties. But it’s just a load of nonsense.

For starters, property investing doesn’t begin and end with buy-to-lets!

Have you thought about all the other strategies you could use for a well rounded, diversified portfolio? How about all of these…

Serviced Accommodation
Rent to Rent
Buy, Refurbish, Refinance Flips
Deal Packaging
Rent to Own
ALL of which have ways to combat any changes that come your way.

It’s structural. Demand is 46% higher than average, and supply is 38% lower. That’s not going to change any time soon.

Big cities, big rents. London, Manchester and Glasgow are leading the way. Remember the “race for space”? Seems like everyone’s racing back.

Small is beautiful. Competition for 1-bedroom flats has jumped, and demand for houses is declining.

We’ve peaked. Rents will keep rising, but the rate of growth will probably slow down. Zoopla predicts 4-5% rental growth over 2023.

Summary: The population is rising rapidly, households are shrinking… yet the number of rental properties is the same now as it was in 2015. All the factors are in place for another strong growth year.

Available For new year.

Very well situated wiith residents car park. Great transport links.

Property Details