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50k to invest in the West Midlands


kish151

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What would you do with 50k to invest in 2015 in the West Midlands??? 

 

To keep things simple I'll give 2 options to chose from but feel free to offer any other ideas on what you would do in this situation.

 

Option 1) Buy two small family homes in a reasonable but not great area putting down 25k on each property that are valued at approx 100k.

 

Option 2) Buy one medium sized family home in a better area putting down 50k on a house worth approx 200k.

 

Let's assume you don't need the rental income to live off and your goal is to get yourself into the best financial position you can for the long term. I've worked out that Option 1 would achieve better rental income but feel that going for smaller and cheaper properties would not benefit as much from long term capital appreciation.  Option 2 being the opposite of that and trying to acquire properties with more scope for appreciation although achieving less rental income.

 

I'm torn between the two approaches as things I've read and heard lean me towards option 2 however Option 1 has it advantages also such as spreading risk if you buy two houses in different areas.

 

What would you do?   :huh:

Kish

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I'm always wary of false dichotomies, so here are a couple more options...

 

3. Keep saving so you can buy two houses in a better area than you can now (somewhere between 100k and 200k)

 

4. Using the cash plus a bridging loan, flip a property to increase your funds

 

In terms of your original two options, I normally prefer to spread my bets but given your goals (and not knowing anything about the areas) it seems like #2 might be best for you.

 

And remember, whatever you choose there are going to be various fees so you'll have to budget a certain amount of your capital for those and bake that into your calculations.

 

Looking forward to hearing others' views!

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Hi Kish,

 

I'm not sure I agree with the premise that cheaper properties have less long-term potential. I would consider the areas carefully and look into the much talked about "fundamentals" of where the potential investments are because it's highly possible that with an expanding commuter belt (I'm referring to Birmingham as the centre of this belt) there are areas which are relatively cheap but still tick a lot of boxes for future home buyers and thus open to potentially experiencing significant appreciation in the coming years.

 

 

I'm also looking at the West Midlands as a potential investment area - please keep us posted on whatever decision you make.

 

Good luck!

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Thanks for the replies guys.

 

Rob I know that in reality there are numerous options but I just wanted to see what people's views were on these two particular choices.  In reality saving is different to taking action now so I'll rule that one out for the other options are all possible.

 

Hi Luke, I was being a bit generalised by saying lower priced house have less room for growth but from my local knowledge I'd say it's what I've seen happen.  I'm sure there are still plenty of opportunities to find lower priced properties that will increase in value by looking at future investments areas etc.

 

Have you been looking at any particular areas?  It would be good to hear what others in the area had researched.

Kish

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  • 5 months later...

Hi Kish,

 

i'm a new member and have just noticed this thread as it is about investing in Birmingham, which is my plan.

 

I have recently come into some money and have a friend who has a number of properties that he wishes to sell. One of these is in Acocks Green, Birmingham and is a 4 bed mid terrace terrace on a main road. This seems like a good bet as they worth about 150k and my friend wants a quick sale and will  take a bit less. Obviously I will do all the due diligence before but I may get some decent equity locked in and can then remortgage within a year or so, and buy again, still in Birmingham. I don't think you can go wrong with a good solid terrace in Birmingham as the city is on the up as far as I am concerned. I feel like I know the areas to avoid having lived here for over 30 years, so I will stick with where I know for now.

Anyway, good luck with your efforts.

 

Chris 

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Hi Chris, i agree the city centre is definitely improving with grand central and john lewis this week especially!

What areas would you target then if you don't mind me asking?

I don't know anything about Acocks Green so cant give you any feedback.

Kish

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Tough to say, there are so many diverse areas in Birmingham, each with their own good and bad spots.

 

Research is definitely the key here and there are very few areas I would discount completely. Some of areas close to the city centre are quite run down but are going through major redevelopment (Digbeth is one example) so it is worth getting into these sort of places before prices really go up (as I think they will with HS2 hub, Bull Ring, train station, universities etc).

 

It is really quite unique in that you do not have to go too far from the city centre to get affordable housing, and you can't say that about London and some other major cities.

 

The city has a massive student population, business is coming in and young people want to study here. You can't really go wrong. I have been tempted to invest in different towns and I probably will, but for now I will stick to what I know!

 

Regards

 

Chris

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