One of the provocative questions I’ve just asked in the previous videos if you haven’t watched it is, well okay if I can’t get these properties to work in the area that I’m in what do I do?
Here’s what I discovered when we first looked at the UK and we were buying here, I was in a city just close to Oxford or a town close to Oxford, where the prices and the capital growth was very good. The yield was low, the cash flow was really low so I could take a certain amount of money and put it into a property and that property would only produce this much cash flow.
If I drove literally three hours from where I was living I could find properties where I only had to put a smaller amount of money down but produces this much cash flow. So instead of in the south getting this much cash flow in the north I was getting maybe three times or four times that much cash flow, which is crazy if you think about it.
So instead of buying a £250,000 property in Oxford I can go by an £80 or £90,000 property somewhere in Manchester, for example, and put less money down and produce more cash flow.
Now the difference of course is the northern properties wouldn’t appreciate as much as a rule of thumb, unless I was to add value, force the value, convert it, do something clever with it, but that’s another conversation for another day. What I am getting in that situation is cash flow.
I started to look at different markets, different areas around the country. And here’s the question you’ve got to look at and when I come over actually to start teaching in some of the other countries, what I’ll be doing is having a quick look at the marketplace and saying well does it work here?
Doesn’t work there, doesn’t work there, might work there and there’s multiple strategies. So even when I talk about passive income you may not be aware of this but there are 6,7,8,9 different variations on passive income. You can do small HMOs, medium HMOs, large HMO’s, commercial, residential, you can do buy to lets for students, buy to let professionals, buy to let for families. There are social housing strategies and that’s one of the things you’ve got to be aware of as a property investor.
You see, each country has different types of exit strategies and for me, I’m looking for multiple exit strategies. So if I know that in the right country, there are certain strategies that work all I’ll look to do is move to that area in terms of my investment strategy not physically move there, but look to move my investment strategy there and I will look to buy into those areas.
But it may not be that it even works in those areas. And I’ve actually been out to countries like Australia, for example, Singapore where I sat with investors and we really analysed the market, and we couldn’t find it working, not the way we can get it to work in the UK.
They said to me, “Dr Ro what do I need to do?” I said well maybe you need to get to the UK and actually that’s what they’ve ended up doing actually. They’ve ended up flying back over to here taking the time to put teams in place of course, given a choice, you’ve got Brisbane the sunny coast there, Perth, Adelaide, whatever it is Sydney, Melbourne, great weather, UK not such great weather, but great passive income. So why not live over there but have that passive income from here?
What a great strategy.
So they’re looking and investing into certain areas, they’re having guidance which is amazing and actually that’s a really clever thing to do. You could be like this asleep somewhere else in the world and cha-ching your alarm clock is creating a passive income for you.
Just think about that for a minute.
So think about, it like this strategy first, then an area where that strategy works and then the property in that area.
I think that’s a very important message to finish off with.
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