Most investors are die hard single let fans.
They buy low priced high yielding units.
They source and buy at a discount.
They add value – spending £1 to add £2.50 – £3.
They remortgage & buy more.
They leverage and keep a contingency fund.
They let inflation & compounding l o o k after them.
Wash rinse & repeat.
In fact, our main buying model is based upon the Buy-Refurbish-Remortgage to No-Money-Left In.
But You’re smart to know, just as with e v e r y t h i n g single let units have their pros and cons.
Here’s a short list:
Single Let Pros: •
Ease of Sale – The simple reality is single lets are much easier to liquidate should you ever want to exit. The potential pool of buyers is much larger along with generous financing & mortgage options. •
Bills – Tenants are usually responsible for all the utilities and bills so no there’s need to factor these into your deal anaylser when crunching your numbers
Duration – Tenant turnover is quite low. They usually stay longer, as they are the stage of their life where they are more settled & reluctant to move (lower voids..) •
Ease of Tenant Management – This is another area where the burden of tenants of single lets can outshine other units •
Many families have their own appliances, so there may not be any reason to furnish the property
Single Let Cons: •
Income Diversification – When a tenant moves, your void period is generally 100%. A genuine question: Going into war, is it better to have one soldier on your side, or four? Of course you would have four –if one goes down, you still have three others to get the job done. You with me? This is one of the advantages multi-lets have over single lets.
Area & Purchase – If you purchase in a higher gross yielding area, this can actually have a lower net yield which can make you bankrupt. That’s why it’s important to buy in the ‘not best not worst areas’. This is one of the biggest mistakes most investors make when buying ‘vanilla’ single lets – basing their buying decision on the headline gross yield.
Theft, vandalism and squatters setting in is generally a problem when the property is stood empty as they will be no-one keep a hawks eyes view of your property
Maintenance – Generally more wear & tear depending on which market you’re targeting so factor these into your monthly costs
Scattergun – management can be a nightmare if your properties are spread out and not in one goldmine location. So there’s no economy of scale. And you won’t have a better understanding of tenant demand, actual sale price, who the local surveyors are, best and worst Estate and Letting Agents, refurb teams, solicitors, competitors to keep close, actual achievable rentals, best streets with highest uplift potential, and so on.
This is important.
So while none of the above are deal makers or k i l l e r s, and although these bread & butter grot-boxes will never win grand design of the month, every strategy you use will have its benefits and drawbacks.
Ask 100 investors and you will get a varied response. But remember, which ever strategy you choose, your priority should be not to lose!
So, let’s talk about it! Do you prefer single lets, and if so, why?
