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Article > Portfolio Rescue Case Study

 



Article kindly supplied by Matthew Moody

Wealth Success Alliance

 


At Wealth Success Alliance we receive lots of calls each month from property investors who over the last five years purchased properties that haven’t cash flowed in line with expectations. In some cases, the investors bought several properties through pitches from slick sales people and never carried out the appropriate research on them!

95% of all property buyers in the UK work a full time job as most do not have enough properties to subsidise their earnings to allow them to live in the same manner as they have been accustomed to. This therefore leaves the properties and the investors’ future returns on their investments in the hands of letting agents or their attempts to self-manage on top of a demanding job. For many of investors their portfolios are in a town where they do not even live. For some in a town they have never been to and for many investors especially from the South of England it would be quicker to drive to Paris for a romantic weekend than go and visit their portfolio.

Most developers told investors that when they bought the property they would guarantee that they will be able to rent the property out at a fantastic yield and then passed the investor onto an agency that they had set up in business with to take on every investment property they sold to investors. In the short term this worked well for most investors but once the initial obligation was fulfilled by the developer of letting the property the new landlord was left with an agency they had to hope was a good one. To be fair some agencies did and still do a fantastic job for their investors yet for many their investment was in the hands of people many miles away and who if they did not re-let the property only lost money by not letting out the property but it was the landlord who had to pay the mortgage if there was no rent coming in. The investor then had to hope that the next agency that promised to help them and gained their trust didn’t turn out as bad as the first agency. Unfortunately too many investors were left with lots of voids and some who had bad tenants from their previous agency also had damage to repair and pay for.

 

Wealth Success Alliance

 

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• Why you have to CREATE an “Extraordinary” business and watch the money flow to you
• Utilize military-grade secrets to CONQUER your market and dominate the flow of wealth

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Recently we have helped a couple of investors who bought properties and in particular HMO properties in Leeds. They were sold them through a well known developer who during the decade sold lots of properties promising very high yields. The properties are situated in the heart of the multi let heartland of Headingly where all the students tend to live so it looked like a great investment. The investment looked attractive as they bought into a story of properties that will never be vacant due to the high level of student population and to be fair to the developer, they were also finished to a good specification.

Unfortunately for the investors it was not until they took over the properties that the problems started. They had been sold five bed multi let properties and this is what made the yields so attractive. Unfortunately the houses had been built with at least two of the rooms too small for the rents promised and were hard to fill when unoccupied as most tenants want a room they can feel comfortable in, have all their belongings in and still have space.

Our investors who both work full time left the properties in the hands of an agency who at the time we were asked to help had the houses only 66% full and this did not allow for any essential maintenance works to be carried out and so left the properties falling into even worse disrepair. This lead to not only 66% occupancy rate but also to a drop in rental value per room by more than 20%-25%. Unfortunately this is a common problem for investors who do not have the time to look after their own stock especially in the HMO market and also in the single let market for absent far away landlords.


Although the mortgages are all on trackers and the mortgages would still be paid, the investors understood that once the interest rates rose they could be in serious trouble financially and because their portfolios where not making any money they could not spend any money to improve them. The landlords where also in the situation unfortunately like with so many others, their properties were in negative equity and therefore were unable to sell.


After contacting Wealth Success Alliance we undertook a full cost benefit analysis on behalf of the investors on their stock and come to the conclusion that if run properly the portfolios could be saved using the short window we have in the low interest rate freeze.

After only two months using Wealth Success Alliance, a systemized approach to property rental and management that we as a company use for all HMO and single let properties to maximise occupancy levels the portfolios are now already running at above 80% occupancy with all new tenants paying 25% more than the previous tenants for the same room. This has pleased the owners of the portfolios and they are happy to have a partner in their business that can help them turn what would have been a huge loss if they had given the properties back to the banks into a profit in the future. The other positive factor is our work has also pleased the existing tenants as they now have nicer cleaner homes to live in and are happy to pay the going rate for the property than leave and find another home to live in.

All too often, we at Wealth Success Alliance come across investors who could not take any more and gave their properties back to the banks before contacting a company like ourselves. If you find yourself in the same sort of situation as the investors above or you know you are not getting the rents you possibly could do due to living too far away from your properties to really look after them, we as fellow property investors ourselves urge you to seek advice from a company like us to help you improve your fortunes or take the time to find a great letting agency out there in the town where you have property. Remember it is your investment not the agents and it is you that pays for the voids so it is well worth you investing a couple of days investigating in person the right company or agency for you and your portfolio.

Wealth Success Alliance

 

WSA have produced a free "5 Stage Blueprint for Business Mastery” report.

 

In this brand-new report you’ll learn:

• How the importance of COMMIT will make – or break your business before you’ve even begun
• Why most businesses fail and how to avoid this through the CULTIVATION of lifelong fans
• Where to start with the CONSTRUCT of systems that allow you to break out of your business and take back control
• Why you have to CREATE an “Extraordinary” business and watch the money flow to you
• Utilize military-grade secrets to CONQUER your market and dominate the flow of wealth

To Grab Your Copy Please Click Here

 

 

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