Everyperson House Rule
Hey guys,
The one thing I have learned from properties that I have owned is that it doesn’t matter how good the deal is, unless you can get a tenant it will soon turn into a very painful financial decision.
That’s why as part of my two laws of property I also say that the property must be able to attract a tenant.
For me this means looking at the mass market in each area and buying houses they would live in. I call this the “Everyperson” house.
Imagine a ‘bell curve’ diagram. Poor people live in houses at one end and rich people live in houses at the other. The everyperson lives in the middle and makes up by far the biggest proportion of the market.
Now I never buy where poor people live. They tend to not pay the rent, they wreck the house, the don’t treat it like a home and I end up with void periods or added costs in repairs. This is totally against my Set and Forget philosophy. Now I am not going to get into a political argument about the poor, remember I am an investor and as such expect a return on my investment, if I was a charity they I might think otherwise.
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A great case in point is that Simon and I attended a Landlords Association course. The morning was spend telling stories of horrific things happening to landlords. The common thread was that every property without question was either a HMO (House for Multiple Occupancy) or a cheap property under about £120K. Not one instance was the property in the Everyperson category.
In the UK I have been associated with over 1000 property sales and we only have once instance of a ‘tenant from hell’. Sure we have had people miss payments, leave damage but in all cases they have fixed up the problem or the deposit has covered the damage.
Now I don’t buy where rich people live. When times are good everything is fine but when times are tough they tend to go and live with the everyperson and I am left with void periods. Again this is against my Set and Forget Philosophy.
Obviously the Everyperson house will change between areas — London city centre would be a 1 or 2 bedroom apartment valued between £200,000 and £350,000 and Newcastle would be a 3 bed terraced house outside the centre worth between £75,000 & £200,000.
What I am saying is this buy a house that will have the biggest demand for the area. Stay away from huge mansions or low valued properties but always always buy with good solid fundamentals, the shops, the schools and the transport links.
Always think — I’ll buy this, but who will rent it?
Live with passion,
Brett Wood
