Week 2: The Plan
It’s full on winter blues as the hype over Christmas and New Year’s unfortunately is still running through my veins and i’m struggling to knock off the sluggishness. Plus my plan to go running early mornings, well...fingers crossed should materialise before the weekend is up. So much for soaking up all that new years vibe and brimming with energy. But I always lag behind for some reason so no doubt I’ll be bouncing off the walls by this time next week. So the new year began with the not so fun task of getting the car M.O.T’d, taxed & serviced. I know not work related but just think about it if you don’t take care of your wagon then no transport from A to B. So how is one to get around for all those lovely viewings. It is important to stay on top of these so as to minimise disruptions in your business. I ALWAYS attend to my personal matter first before conducting any form of business whatsoever. It’s good practice and always nice to tick the items off from your ‘to-do’ list once they’re complete.
Anyway, i’m not one of those people who go mental with writing tons off new years goals etc but for this particular task/project it is necessary. At this moment in time I would like to be financially free, not rich, but free. For those of you who are wondering what’s the difference well the former is the single minimum amount required for you to live comfortably and the latter is any excess beyond this. At some point I would like to trade my day job for the property game so I would need to build a replacement income sooner rather than later. My time frame is twelve months which brings it to the end of the year, (31st December) to be precise. Since Article 4 is coming into effect in June this year I am planing to acquire a few HMO’s by then or at least have my applications in place. So by the time it comes into force I would’ve had grandfather rights on this. Basically, the council will have to honor this as I made an application before this date.
I’m thinking mini HMO’s (House of Multiple Occupations) a multi-let of no more than 5. Reason being I don’t want to carry out major works in converting these houses not only will this be time-consuming but in this stage of the business I just don’t have the funds. I’m trying to be as practical as possible so something which requires a light refurb just to spruce up the place. There are plenty of good condition 4/5 bed family homes available on the market which can, with a bit of imagination and a little tweak here & there, be converted to a shared house setting. I don’t have any intensions to purchase these houses at the moment so why will I spend a fortune on them?? I will purchase at some point but this will be at a later stage and as part of another plan.
In doing so, I am looking for a certain type of house which has to fit my criteria of: 3+ bedrooms, 2 bathrooms, spacious kitchen diner and 2 receptions (if possible). My chosen strategy is ‘Rent-to-Rent’ (R2R) as this format is great for newbies where one is time rich but cash poor. The barriers of entry is pretty low too and anyone can virtually embark on this. As I will be renting out this property from a landlord there is no need to be messing around with mortgages etc. A few bits of paperwork to go through and the property is mine subject to terms and conditions of course. I’m not about to go into all the in’s and out’s of R2R and its comparison to other strategies, as everyone has to do their own research and see what suits them best.
One might assume I came to this R2R decision rather quickly but I can assure you this is based on months of wondering around and lots of reading. Remember my first blog? where I spoke about the painful 9 month process?...Well this is the product. Sorry (going off track), property location is to be in the county of West Midlands (my hometown) and around (yet not in) the City Centre with a reasonable commuter distance. I am looking to obtain a minimum profit of approximately £500 per month per property after all expense is paid for. Hence, in order for me to reach my desired goal of £5k a month of passive income I will roughly need 10 of those, so a target of 1 house per month. This month is all going to go on the set-up and marketing so technically I will be loosing 1 month out the 12 leaving it very tight.