In our last post, we talked about the importance of assessing your portfolio regularly, particularly given the current economic climate.
The key to property investing is high cashflow investment strategies. Despite the daily news reports telling us otherwise, the market is still full of opportunity. One of our favourite strategies here at Brentor is HMOs.
Here’s the low down on why they’re all but recession proof.
Commercial Valuations
Investment valuations will generally provide a premium valuation compared to a bricks and mortar valuation. They are also beneficial because they will be affected much less by fluctuations in the residential housing market.
Cost of Living
With Interest rates continuing to rise, and homeowners being directly affected by the rising mortgage rates, more people are looking for alternatives. Those who are coming to the end of their mortgage terms are having their monthly payments doubled in some cases. First time buyers are also holding off getting on the ladder in favour of rental accommodation, in the hope that rates come down.
Demand
Naturally, these above factors increase rental demand at a time when there is already a shortage in rental properties. Demand is increasing quicker than properties are becoming available, particularly in city centre locations. Our strategy of providing excellent, high quality, city centre accommodation is ideal in a market like this.
Increase in Rents
With increased demand comes increased rent. Private rental prices in the UK rose by 3.8% in the 12 months to October 2022. This is up from 3.7% in the 12 months to September 2022. HMOs offer up to three times higher rental yields than standard properties, with no sign of this slowing down. This makes them an incredibly attractive investment strategy.
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