Some entries in the Land Registry
Sometimes in property you do not have to be clever, or indeed work hard. At all.
A Lovely thing to do with £60k in 2010
Rear view mirror stuff but this was a linked transaction in the land register I stumbled over today located at St Pancras [no doubt more heroic examples in London exist]:
Apartment 4-24, St. Pancras Chambers, Euston Road, London, NW1 2AR
Transaction history
A
2012-01-13
£1,215,000
A
2010-01-05
£575,000
Could well have been an innocent owner-occupier who picked that up as a new build 1 bed flat, put 10% deposit down or £60k and 2 years later sold for a nice little uplift of £640k tax free. I find this motivational as you often need to do very little in property to bag a huge sum - but this is so early in the cycle. It's a lovely thing and made me think to tap this post out at a time of mid-cycle when the received wisdom now is mainly via income-wringing strategies like HMOs or SA or doing actual work like a builder does to add value.
The above example is clearly epic. But try and repeat the trick in the same location, and it rarely works as well. So a one off? Here's what our lucky buyer could have done next in the cycle.
Re-investing in 2013
If the seller above had taken their winnings [£640k + £60k] to any big centre up North in 2013 then they could have bought lots of prime at half price of the peak value, like the one below
260, West Point, Wellington Street, Leeds, LS1 4JT
Transaction history A2013-04-17£125,000 A2006-04-10£248,000
With their £700k from London, they could have bought around 23 of these 2 bed flats with 75% BTL loans [stamp duty was zero back then up to 150k - lovely]. This was perfectly possible in Leeds at the time and you may well know of areas like Manchester M1 or M3 which have done better in this part of the cycle. Anyhow, these units are now selling for around £200,000 and there may be a bit of growth left but if sold the capital has grown to around £2M after paying some capital gains tax.
Where to put it in 2019 for the last part of the cycle?
If we stick rigidly to the 18 year cycle thoughts then 2019 must be a bit like 2001.
Take time to look back in the register yourself and you will see entries which quadrupled
between 2001-2007. Mainly in more high yield areas of a city
[check out Aberdeen or most cities midlands or north]
But that's looking back, let's just stick to the knitting and keep buying in prime.
Where to invest the £2M now?
Well, no-one has a crystal ball for the next place, but in the UK at least you guess that places that have prime stock still well below 2007 levels could well have a good run up until the next market correction. Check out places like Newcastle and Sunderland, prime stock [rents in the top decile] still as much as a third of peak value.
Apartment 70, Echo Building, West Wear Street, Sunderland, SR1 1XD
Transaction history A2017-11-23£59,500 A2007-06-26£182,000
Or if Sunderland is not easiest enough on the eye, what about prime in Newcastle?
Apartment 24, Forth Banks Tower, Forth Banks, Newcastle Upon Tyne, NE1 3PN
Transaction history A2018-10-18£125,000 A2011-05-20£110,000 A2009-02-20£215,000
There are lots of other places which still has prime at such a reduction, this is not tricky to find.
The £2M could fund a dizzying 53 apartments like the one in Newcastle above with 75% loans. This would result at £6.6M out there invested in 2019 in a market that could well double [ie get back to around 2007 levels] by 2024 say. A good time for the original St Pancras buyer to take their £8.5M or so equity off the table, pay some tax and have a well-earned rest after all that work [buying and selling on average 5 prime apartments a year - not too stressful?].
Note how rent has not been mentioned at all, apart from the driver in finding prime areas within a city in the top decile of rents. Holding all these apartments over the period will no doubt bring millions in rent in [they all rent for say £1000 per month], you can work out out if you like and add it in if you like spreadsheets. And you could get geeky and model maintenance, management, tax etc etc and have a right old day of it. Or you can just assume that rent will fund a nice lifestyle and pay the bills while you wait for the cycle to play out.
I have picked some good land registry entries above, but there are better around I am sure but equally you will make a few mistakes along the whole cycle. Apart from St Pancras [we all wish we had bought that, at the very least because it was in Harry Potter 2], these are all based on our previous or current work and the results have been the very similar over the last cycle.
Nothing new in this blog post from previous scribblings, just some land registry entries making the point that the most simple property investing [buying when quite cheap and selling when not quite so cheap] has merit through the cycle. No need to shift strategy and do things such as waving magic wands over 3 bed semis and turn them into 6 bed HMOs or using spells to turn shops and offices into flats. That's for the real property wizards. Just simply buying things from Rightmove and selling them now and then whilst pottering around the kitchen slicing cheese from the fridge.