Why did I invest in the North West?

I am a Londoner born and bred. For years I did not go North of the Watford Gap. So why have I invested in the North West and why am I now living here full time to manage my portfolio and   to expand it further? Do you want the short answer or the long answer? For the long answer keep reading this newsletter and the reasons will become clear in detail. For the short answer read here

When I decided to invest in Buy to Let Property about 4 years ago I had two choices

One was to invest where I knew (London) and look to buy low yield properties with capital growth potential And had I done that then I would probably have nearly doubled my capital base.

But I was concerned about what would happen if interest rates went up or capital growth stopped. I also did not like the fact that the market was so competitive and that I would be heavily reliant on mortgages to build the portfolio

I was also concerned that I would be putting my eggs into relatively few baskets so if I had any problems in a single property that would have a big impact on me. I was concerned the London market was overheated.

The other was to look for opportunities elsewhere To try and find the next big thing and get in before everyone else. I looked at many different types of opportunities from HMOs to Holiday lets. I looked at many different areas of the country. I looked at many different investment strategies from options to flipping to rent to rent and joint ventures.  I looked at many different Locations from the Midlands to Bournemouth.

But in the end I settled for the North West and for a high yield buy and hold strategy.

Why?  For 6 main reasons (reasons that were confirmed time and again as I started buying)

  1. Because I could start with very inexpensive properties let to single families providing a high yield
  2. Because there were literally thousands of potential properties throughout the region so I could cherry pick the best.
  3. Because I was in the fortunate position where if a property cost £50,000 that was a sum I had in cash and could afford to lose. I would not have been in that position in London buying for £500,000.
  4. Because I could buy freeholds for that money. I have had buy to lets in London and always leaseholds and know what a pain they can be. I did not realise how much of a pain till I purchased freeholds and found what a joy they are to own.
  5. Because you do not have to deal with sharers and buy and large do not have to furnish your properties to rent them.
  6. Because as soon as I purchased my first property and saw how quickly it rented and saw the rent coming in in accordance with my expectations I realised this was a winner

What I also realised is that the North is on the verge of a renaissance and the more I investigated the history of the North the more I saw you had to put this in the context of a decline that has been happening for the last 100 years or so. There have been ups and downs in that decline but the overall trajectory has been clear. During that time all the industries that made the North the powerhouse of the Industrial Revolution declined or disappeared. From mining to shipbuilding from Cotton to Fishing they have all gone or have only a rump left.

Now steps are being taken that I believe will lead to transformatory change and put in place the building blocks of a real revival. The Northern Powerhouse is a good example of a plan for the North that I think could work if implemented properly.

But what is my downside if I am wrong?  I think very low, I do not get high yields because rents are high Rents are low Typically £400 per month for a two bed house. I get my yields because prices are even lower. As long as rents do not fall then I cannot see how I can really lose. My rents are spread over many properties.  No problem with any one property poses that much of a threat.  I have a very strong cashflow so interest rate rises would not destabilise me. I am not looking to sell so if prices actually fell further it is a buying opportunity and does not affect  me as I can ride out any falls till they go back up Also critically it is nice up here. The people I have met are more friendly and live in communities that do seem to have more cohesion and structure even where they may not be as well off. To me the qualify of life is better in many ways and for the life of me I cannot understand why more people with middle income jobs and transferable skills like Teachers Doctors and Nurses do not come and live here where their money would go so much further.

So for me this is the right place to be at the right time

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