Posted by tungstenmg Last updated 11th August 2019 reading time
When TMG started their investment journey, we made a few rookie mistakes when looking at the area we wanted to invest in. Initially, we looked to invest in areas in close proximity to where we live, which we thought (through conditioning from parents and peers) were ‘cheap’ and as the area isn’t in the travel zones 1-4 of central London, it was a less desirable area to live. We quickly found however, that although we may not want to live in these areas closer to home, it did not mean that these areas we had initially identified offered a good yield or investment opportunities for HMO’s based on our budget. We realised that we needed to reconsider our area of investment, do more desktop research and visit areas. To be fully transparent, we stumbled on the Medway region via a conversation at Progressive Property VIP with someone who invested in the South East. We initially had not considered investing in an area 30 miles from home. This proves the power of networking and illustrates the openness of others in the property community to help. We realised the Medway region allowed TMG to use the HMO strategy we wanted to pursue. Unfortunately, many fail when they force their strategy onto a specific area where it isn’t a good fit. Medway, Kent has been an ideal area for TMG as there are several large academy schools, a university, the Maritime Medway Hospital, quick links to London and it is a highly populated area (with nearly 300,000 people).
Many fear the impact of Brexit. TMG are however engulfing themselves in continual investment even with the uncertainty that Brexit brings. Part of our HMO strategy is to gain great yields and offer the best rooms to rent in Kent.
One of the key factors to London’s success in the lead up to Brexit is the continued investment in amenities, which ensures that better links are created across London and the surrounding areas. This is being achieved through the development of cross rail and further over/underground station investments. As we have alluded to in previous blogs, the Medway region has a huge regeneration programme underway and has brilliant local transport links and services.
Although we have made TMG as robust as possible, we need to keep an eye on external factors and consider the market we appeal to, as the UK may see a decrease in foreign works permanently or temporarily as we work our way through Brexit. Consideration needs to be given by those Landlords who’s target audience is foreign tenants with an open mind to exploring the domestic market. Chris Worthington in the October YPN magazine showed that 86,000 fewer EU workers are employed now compared to this time last year (source Bristol Chamber of Commerce). TMG’s strategy to continue to invest in London and the South East is supported by Rightmove showing a 3.4% increase in London’s rents in Q2 of 2018, which is the first increase since 2014. In addition, as landlord will start to exit the market due to changes in a tax relief and stamp duty, TMG see this as a huge investment opportunity.
TMG do not fear Brexit or the South East as we have made TMG different (but not ‘crazy different’!) by utilising our peers and support networks as a sound board to ensure our ideas are good business ideas. We all make mistakes but if you can test your ideas with those who have a wealth of knowledge and experience, you can see if your idea of ‘different’ is differentiating your brand with a positive impact. Having been in the events and hospitality industry for 11 years, I have the peoples skills and customers service insight that gives myself and TMG a unique angle. I am extremely organised by nature and also find interacting with all walks of life enjoyable – I can be in an investors meeting in the morning and then on a construction site in the afternoon with the ‘lads’!
“If you don’t find a way to make money while you sleep, You will work until you die.” Warren Buffet
Take Away Points
Make sure you have found an area that suits the strategy. Do not force a strategy onto an area.
We all have to take a risk to achieve greater outcomes, but make sure you have the foundations, knowledge and product to make you as robust as possible.