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Our Investment Model

Maximise long-term wealth generation

Our investment model is designed to maximise long-term wealth generation.

It’s not the trendiest way of investing, and it won’t get you any results worth shouting about within a year or two. But over the years and decades, it will leave you in a radically different financial position from where you are now – and require minimal effort along the way.

We’ll explain the theory behind our model, to help you decide whether it’s the right one for you to pursue.

The sources of returns in property

The total return you make from property is made up of rental income and capital growth.

The total return you make from property is made up of rental income and capital growth.

Rental income is normally talked about in terms of yield: the amount of income a property generates as a proportion of its value.

In general, most properties are biased towards one or the other: it’s unusual to find a property that has the best capital growth prospects and also generates the highest yield. There’s a continuum, with high yield at one end and high capital growth prospects at the other.

Strong, reliable rental income is essential. You need it to cover your expenses, and a healthy surplus can go towards saving up for your next purchase.

But historically, the returns from capital growth have dwarfed the returns from rent.

So over the long term, you’re likely to be worse off if you drift too far to the left of the continuum – and over-emphasise rental income at the expense of capital growth.

That’s why we stay away from properties that offer high income, but lower capital growth potential – such as HMOs, and cheap properties in less desirable locations.

Instead, we target investments that still make a good monthly rental profit, but with the primary objective of delivering strong long-term growth.

Where we buy

We target areas that have the magic combination of strong capital growth prospects and strong rental demand.

This guides us towards areas that we believe are earlier in the 18 year property cycle : for example, there’s clearly more room for growth in the North West than there is in the South East at the moment.

But there’s a sweet spot: we don’t want to be too early, and be waiting years for growth to begin.

There’s another aspect that investors frequently overlook: the micro-location within a broader area.

Past cycles tell us that the best-quality, best-located properties benefit from the earliest growth and the fastest growth.

This leads us to targeting prime properties in central locations – while maintaining the balance of not going too prime so the rental yield suffers.

Giving growth a nudge

The old maxim that “you make your money when you buy” isn’t true when you intend to hold long-term – but it certainly helps! For example, say you manage to secure a 10% discount from what a property would normally sell for. If property prices are growing at 4% per year, you’ve effectively earned two-and-a-half years of price growth from day one! Getting a discount also:
  • Reduces the amount of money you have to put in (so you can buy more).
  • Lowers your mortgage costs.
  • Opens up the opportunity to refinance the property sooner to free up more cash to invest with.
Besides, getting a discount is impossible with many other investments, like the stock market – so it’d be silly not to take advantage! That’s why we always secure a discount on every deal we source for clients.

The cost that investors always forget

Everyone is aware of maintenance costs and mortgage costs…but what about the cost of your time?

It’s the most important cost there is, because you can’t earn more time – but one that investors often fail to take into account.

Many of our clients are doctors, IT contractors and solicitors whose time is worth hundreds of pounds per hour in the marketplace.

If they were to spend hours dealing with refurbishments or issues with challenging tenants, that could easily translate to an “opportunity cost” of thousands of pounds.

That’s why we favour investments that allow you to be truly hands-off, and we design our process to save you time at every stage.

In our opinion, the ideal investment is one you can forget you own for months at a time – then when you remember, you notice it’s deposited rent in your bank account and grown in value!

Putting it all together…

Combine all these factors, and you end up with the perfect Property Hub Invest property:

  • In a part of the UK that has strong growth prospects
  • Within one of the most desirable areas
  • Ready to move into, with no work needed
  • Attractive to high-quality, low-maintenance renters
  • And available at a discount!

Will this be right for everyone? Absolutely not. But if you want to build long-term wealth in the background while you get on with other things, we believe our model gives you a strong chance of success.

Want to find out more?

Property Hub Invest Ltd is a company registered in England and Wales with company number 07495608.  
 Suite 101, Bloc, 17 Marble Street, Manchester M2 3AW