Business Plan - Property

[Nihil obstat]

Hi all,

I am new to the game and I wish to become a successful entrepreneur, one day - and have spent many months now, reading the appropriate books and speaking with other successful business persons and entrepreneurs. I am a very small fish in a very large ocean, swimming against the flow!

I have hit a little hurdle: although there are many sample business plans out there, I am struggling to find a business plan that matches my first venture, and that is to buy property (paying below market value), rent out those properties (with a rental income that covers the mortgage), and then (when the time is right) either remortgage or sell thus reinvest in order to expand my portfolio. I have one property already (and currently being rented) that is being managed a well established and reputable company.

Is there anyone out there who, has a business plan that may suit or at least, be able to guide me accordingly or, knows of anyone who, may be able to assist?

Your time and assistance is appreciated.

Kind regards,

Les.

[Peter Bowen]

Hi Les,

A few years ago I bought properties near the local university and rented them out as furnished accommodation to students. it was a pretty good business and we got income and capital growth. It's a little harder to find properties that give good income right now but you may have better ideas on this than I do.

I made up two spreadsheets (sorry, don't have them anymore) that I used - the first was to do the calculations on properties I was considering purchasing and the second was a long term plan showing when the rental income from the pool would be enough to fund the next purchase etc

I also put together a property management system as I was managing the rentals myself to keep the costs in-house. You'll have to have a planned way of dealing with entering into contracts, handling late or non-payments, end of tenancy inspections etc.

You will probably have to consider how you are going to finance the new purchases - what are the requirements from your financier and how will you meet them and structure their income requirements into your purchasing plan.

And, you probably should think about how you are going to maintain these properties - unplanned maintentance and neglected maintenance can eat your profit fairly quickly

Hope this helps

Cheers

Pete

[www.infoebookstore.co.uk]

I can't see how anyone can make any money getting into this when the interest rates keep going higher.

I have a property that I rent out and I break even (obviously not taking capital growth into account) and that is on a fixed rate of 4.49% interest only. If the rate is at 5.5% or higher when I come to remortgage next year I will have to sell as the interest only payments will be higher than rental income.

sorry this doesn't help much, just my thoughts.

James

[Nihil obstat]

Firstly, thank you for your replies.

Pete, I will try the spreadsheet system that you mentioned; property management is in hand with a well established and reputable estate/letting agency and I am fortunate to deal with the actual owner or his secretary if, he's on the golf course; and I intend to purchase further properties via bridging loans (if possible hence my need for a professional, but realistic business plan) or from remortgaging . . . haven't got to that stage as yet!

Thanks.

James, yes, it is a worry with interest rates rising on a regular basis and I must say, although my profit margin per month is minimal (and reducing frequently with the rise in interest rates, etc.) my main aim is to build capital growth and to have sold the property in advance of that profit becoming a deficit . . . one would hope, anyway!

Thanks.

Kindest regards,

Les. A. C.

[Peter Bowen]

I was always able to sleep better (but buy fewer properties) by using an interest rate 2% higher than the current one for my investment calculations. I figured that I'd have time to sell or raise rents before the real rate went up 2%.

Right now it does seem hard to find profitably residential rental stock and I'm not comfortable betting on a continual rise in the market - even though I did benefit considerably from it by buying at the bottom of the rising market and only buying positive cash flow properties.

I think you've got to look a lot harder and find an angle that hasn't yet been done

Good luck

Cheers

Pete

[Nihil obstat]

Now that is a good idea . . . and it should, as you say, allow sufficient time to either increase the rent or sell!

Nice one Pete, thanks!

Les.