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Target Growth - What About Cashflow?

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I am currently looking for my second property and am looking to spend up to £110K.  I'd like to buy and hold for up to 20 years, possibly release any extra capital along the way, and eventually sell off when I retire.  I've heard the 2 Robs talk about targeting growth on the podcast, and they don't seem too concerned about generating any serious income.  But how little is too little?

I've been looking at flats in the Salford area, and when all expenses have been accounted for I'll receive <£100 per month.  When I stress test at 5.5% I'll be making a loss of £5.  Any void periods may mean I make nothing for a year and some of these properties have issues with doubling ground rent.

What is the general approach with this strategy, do I just need to suck it up and let growth blow all this out of the water?  Is the above example pretty typical, or do I need better numbers?



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I wouldn't go anywhere near those numbers. Yes, capital growth may dwarf any rental income, but the emphasis is on may. And you're getting very little now and potentially less than nothing with the stress test - that's the way to repossession.

A £110k flat in Salford is not going to see fantastic growth beyond any other property in the area. Chances are it won't be in the prime areas and isn't going to be in the fanciest blocks where people will want to live, so potential voids and average growth. For the same amount, you can pick up lots of property that will clear £200pm easily and would grow at a very similar rate, so why take the risk?

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