In business we are always interested in ROI and our return on investment, but are any of us thinking about COI, cost of inaction when it comes to investing?
I have been investing in property for over 7 years and when I talk to people who are wanting to start property investing, they are almost always worried about the risk and if the property market might crash once they have made their investment. But no one has ever been concerned about the cost of not making that investment and not taking action.
I remember when we made our first purchase in 2017, a Grade II listed town house with 5 bedrooms, it had been empty for some time and needed complete refurbishment. It was an absolute steal at £125k, but I remember many people at the time giving us negative comments about the property market and how interest rates will go up etc etc. But I did my homework, I am advocate of spreadsheets and making sure you do your due diligence and I knew we could make money on this property and that it would rent well by researching the local market and getting a number of valuations back from different agents on the post renovation value. We were able to add £75k worth of value to this property by spending £45k on the renovation at the time and the property is now worth £290k. We have never had any voids and remains one of the most popular student lets in Gloucester, generating £2,200 per month as 5 bed HMO. So what was the COI on this property? £349,800 over the last 7 years, capital appreciation plus rental income received.
We use a strategy called BRRR (buy, refurbish, refinance and rent) with our investments, so we are always looking to purchase for the long term. Buying using this strategy also ensures that we are building in a buffer, if property prices drops, because you are adding value to the property through refurbishment. When researching whether a property deal stacks, we look at the ceiling price of value that can be achieved on that property in that area, rental strategy A, B & C, so this could be student let, HMO or AST, what rental income can you achieve on each of these strategies. If the property deal still stacks then you are onto a winner!
The truth is that no one can time the market and predict when the next market crash will be. But as long as your treat property investment as a long term investment strategy and do you research to evaluate the risk, then you could be benefiting from the passive income that property investment brings.
So what has your COI been when it comes to investing? I wish we had started MJP Homes Ltd earlier, so that we could have benefited even more from the capital appreciation and rental income that comes with property investment.
In the last 7 years we have been built a portfolio £3.1m, with gross monthly rental income of £23k. We are looking for investors who want to partner with us, generating their own passive monthly and annual return by working with MJP Homes Ltd.
If you are interested in working with us, then please get in contact.