Flats for Families: A Case Study
Don't put all your eggs in one basket - how we diversify through Flats for Families.
This is the second part of a four-part series. In the first part, we looked at balancing diversification with specialisation. Now let's consider how this works in practice by looking at a case study: Wellington Road.
Grab yourself a coffee (or tea if you prefer) and let me tell you a little story about the first Lets Delight property purchase: a block of flats. At the time, we were searching for properties to convert into Shared Living Projects in the East of Manchester. So how did Lets Delight end up with a block of flats?
The basic search criteria for a Shared Living Project is a 4 bedroom house. Such a property came up in a search the day before travelling to Manchester for viewings, so it got added to the list without reading all about it. When day of the viewing arrived and we delved into the details, we realised it was a newly converted block of two flats! Had we not had a viewing in the same area before, and another after, we may well have cancelled. Instead, we decided to take a look anyway.
On entry, there was no intention to buy these flats. However, they were newly refurbished to a good standard. We were rather surprised to find on exiting the viewing we both liked them! They were ideal for young families wanting to start a home together and a great way to be Part of the Housing Solution. It also makes good business sense as voids would be low.
Grabbing the first opportunity to dive into a coffee shop, we opened up the laptop with excitement to check the numbers. How much was realistic rent? How much would the running costs be? What should we allow for maintenance and upkeep? It didn't take long to realise that this property was worth investing in. So the next day, we made an offer.
The actual sale took longer than expected and involved some negotiations but we got the keys early in January. Our view of people wanting to make their home there was correct. Within 2 weeks one flat was occupied, the next followed 3 weeks later. The second occupier has been with us ever since.
It is well documented that there are a shortage of homes in the UK. By providing flats for families, Lets Delight provide a part of the solution. 2 bedroom flats are ideal for couples with young families and form excellent homes and - provided they are in the right areas - people want to live in these properties.
Properties that people want to live in make for a profitable, sustainable business. Voids cost money, even if there is no gap between one tenant moving out and the next moving in. Therefore, keeping tenants for as long as possible is great for everyone and, of course, minimising the time a property is empty when a tenant does move on is ideal.
Flats for families provide a stable income for Lets Delight, as well as giving families a lovely, secure home. Tenants tend to stay longer, there is less maintenance and the management is simpler. Shared Living Projects are more work and more variable income, and we will be considering these in the next part of this series.