The underlying rents being paid to the Landlord-Owner have also increased substantively over the last few years, that it is now much harder to generate a monthly differential-income through individual room rentals, especially with the increases in running costs. This used to be a great way to start off in property without the need for mortgage deposits, but I hear many beginners glossing over such details as they buy into this property strategy.

Don’t forget the upfront compliance time and costs for converting the property to a House of Multiple Occupation (HMO). And with greater numbers of people living in the property, you can expect exponential energy costs and general wear and tear than with a single household. However, room tenants are typically charged an all-inclusive monthly rent.

Previously, this was the “bread and butter” strategy for many property investors, especially when Buy-to-Let mortgages first arrived onto the British market. With a Bank of England interest rate down at ½% for years and mortgages at an added 1-2% higher, life was fine while the property values grew, especially between 2010 and 2020.

But things have changed in recent years, with B2L mortgages at 5-8%, greater stamp duty payable, EPC regulations, and higher taxes with mortgage interest now not tax deductible for individuals. The government is now making life too hard for compliant landlords, many of whom have sold off in favour of other asset classes like cryptocurrencies and precious metals.

Here we combine construction work on downgraded properties in need of an uplift in value, before implementing the Buy-to-Let strategy mentioned above. However, since Buy-to-Let mortgages only offer 75% of the new loan value, it is increasingly difficult to cover all upfront expenses and pocket any excess. So, this strategy is a long-term one if the investor is looking to fund further properties that are recycled in this way.

Another common problem for newcomers is overpaying for properties through their lack of experience without a sufficient margin to make the numbers work in their favour. It is the experienced investor that ends up taking them out of their financial hardships later on. So, where does that leave new property investors entering the market? Read on...

Because it is a new year, I thought that I would compare my notes of the UK market with other prominent educators. In this month’s video conference I compare their advice with my own, remembering the “simple man’s strategy” that I have proposed and that is mostly ignored or unknown by property trainers. For that, please join up via the button below...