1st time cash investor strategy

jazzfriend100

As a first time cash investor with £130k seeking rental yield over capital appreciation would you go for 1 property at that value or 2 cheapos at £60k-ish??
Also, I'm correct in thinking no HMO licence is needed for under 5 occupants? Would best strategy be 2 2beds at 65k with 4 tenants total?
Thanks!

lisyloo

I think you need to look at the areas, type of tenants, rents those properties can support rather than just those numbers.

With the 2 properties you have twice as much maintenance e.g. 2 boilers and twice as many tenants to deal with.
They are also lower value tenants e.g. more likely to be on benefits rather than working.

On the other hand you have some diversity of risk e.g. if one property or one tenant is an issue then you still have income from others.

Personally I’m anti-btl, but I’d base it on the rents that could be achieved, the type of tenant expected and demand for that type of property I.e. the local situation, so I don’t think its as simplistic as your question implies.

need_an_answer

I personally would never take the "cheapo" option simply because a cheap property in a cheap area could attract a lesser tenant who wouldn't value the property.

I see HMO set ups as more risky too...higher on paper returns yes,but they can be much more time consuming in terms of issues and maintaninance.

If you are looking at purely income then you're not looking at the whole picture and as a first time investor into the slightly more risky side of rentals you may find you have a steep learning curve.

Every LL has their preferred type of rental and whilst yours is not mine and I don't wish to offend...HMO/Students are not IMO the best or easiest way to start.