Trish P Posted April 10, 2019 Share Posted April 10, 2019 I am currently purchasing our 10th property. We have been investing for 7 years. Last year we completed on a new build project for 2 maisonettes. We currently have one property waiting for planning to build 6 luxury flats and are purchasing another property with a JV that will go for planning to build another 2 luxury flats on the side. We have just been provided with the name of a potential investor to JV again with and I have a property in mind. However, having been stung with negative equity in the 90's crash im wary of the speed of escalation of our business. Most of our properties are 75% mortgaged, although this will change significantly when the 6 flats are sold. Can anyone offer any advice on how to reduce the level of risk while still maintaining growth? Link to comment
Farmer Andrew Posted April 10, 2019 Share Posted April 10, 2019 Its a nice problem to have! I've never had a business or portfolio big enough to have a similar problem. Unfortunately, there is usually a correlation between risk and return. From a theoretical point of view, some ideas: Restructuring your activities and focus on those activities where you generate most value Diversify your activities - do what you have been doing but build a furnished holiday lettings business rather than a straightforward BTL portfolio; do what you have been doing but for other people and charge them a fee for doing so; train / mentor other people to do what you have done and charge a fee; Reduce the size of your projects, but do more of them Reduce the size of your portfolio - sell some of the properties that are not performing as well, where you expect to see least returnsDiversify your portfolio: areas (within UK), countries, types (HMO, furnished holiday accommodation, professional Split your activities and portfolio into more ltd companies - not sure if you have directors guarantees; De-gear; Diversify your funding so that you are not reliant on just one or a small number of lenders Extend the tenor and amount of the fixed element of your funding Transfer risk by pre-selling some of your units Transfer risk through JV Transfer risk through diversification of your shareholder base Derivatives ... Link to comment
EmmaJayne Posted April 10, 2019 Share Posted April 10, 2019 I’m def not an expert but from reading on the hub seems wise to keep a really healthy cash buffer! If you can cover mortgage payments it buys you time to do a couple of emergency discounted sales if the market crashed ... and totally agree diversify ! And stress test your interest costs vs outgoings at different levels to know where your risk point is? , great problem to have though! Link to comment
Trish P Posted April 11, 2019 Author Share Posted April 11, 2019 I hadn't thought about checking where my risk point is. That will keep me busy today. Thanks. Link to comment
Adiel Stephenson Posted April 12, 2019 Share Posted April 12, 2019 If you believe that post, you'll believe anything. The question isn't even understandable, the facts contradict each other within that one paragraph - and there isn't even a surname or a picture. Come on... Link to comment
Trish P Posted April 12, 2019 Author Share Posted April 12, 2019 Sorry Adiel. Not sure what you dont believe? If something is unclear, im happy to clarify? Link to comment
amasonestates Posted April 15, 2019 Share Posted April 15, 2019 On 4/12/2019 at 11:08 AM, trish p said: Sorry Adiel. Not sure what you dont believe? If something is unclear, im happy to clarify? I assume he is talking about Emma Jayne Link to comment
EmmaJayne Posted April 15, 2019 Share Posted April 15, 2019 ha ha I hope not! I am real btw - it’s my forum name, never doubted others without a pic either? Going to put my co logo there when it’s designed. Just bouncing some ideas in case useful stuff comes up - not an expert Link to comment
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