Real Estate Investor Magazine South Africa November 2016 | Page 62

UK INVESTMENTS

The New Way

to Invest in Residential
Find new markets and the right properties
BY NEALE PETERSEN

R

esidential investors are still stuck in their habits
of the old buy-to-let investing model. Many
have even abandoned buy-to-let investing
for other asset classes saying that the good deals
are no longer or there are no more opportunities.
Andrew Walker and Warren Brusse of UK Property
Partners who I accompanied on a mind-blowing tour
of West Midlands and North East United Kingdom
(UK) opens your eyes to the massive investment
opportunities that are just not available in South
Africa. Andrew Walker has been operating in the UK
space for 10 years already while Warren with his 3
years UK experience has also been successful in South
Africa property investment.

Here are some of the lessons I learned on
the investment research days:
The biggest change in your investment
strategy is the fact that:
•
•
•
•
•

Buy-to-let versus House of Multiple
Occupancies (HMO’s)

The profits from HMO’s are clearly higher than buyto-let in the UK simply because the HMO’s have
multiple sources of income versus once source of
income. A property is defined as a house in multiple
occupation (HMO) if both of the following apply:
at least 3 tenants live there, forming more than 1
household, you share toilet, bathroom or kitchen
facilities with other tenants.

Here are the twelve key stages of HMO
investment
1
2
3
4
5
6

The new way of investing is:

7
8
9

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10
11
12

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60

We can no longer rely on capital appreciation
alone
We cannot rely on easy credit and multiple
mortgage bonds
We cannot get a never ending supply of motivated
sellers
There is not a functional market of buyers and
sellers all the time
We cannot rely on zero money down

• We create high levels of cash flow
• By default we start creating our own capital
appreciation
• We pull out a portion of the capital after
refinancing the property
• Massive cash flow profits of 20% per annum plus
per property

We buy in areas of high demand
We put down our first lump sum and our money
where our mouth is
We create massive value with the property with
refurbishment

NOVEMBER 2016 SA Real Estate Investor

Set up your Limited company based in the UK
Open your bank account
Deposit your upfront investment
Find the right location with tenant demand
Find the right property that works the plan
Calculate a practical refurbishment plan for a
workable HMO
Crunch the numbers and overall running costs
Make the offer on the property
Co-ordinate the core refurbishment issues with
the right team
Find the right tenants and fill the rooms
Create a positive cash flow profit machine
Refinance the property with bank within 12
months
www.reimag.co.za