YOUR PROPERTY PORTFOLIO POST PANDEMIC

Has the events of this last year changed the shape or direction of your property portfolio?

The week just gone was monthly mastermind week so I had the privilege of observing and working with a broad spectrum of property investors over four super productive days. Hearing about and helping advise on so many different property business plans in a relatively compact period of time always leads me to reflect on my own portfolio and business plan I have with Chris. 

Whilst it would be too soon to claim we are fully ‘post pandemic’, the success of the vaccination programme is certainly turning the nation’s attention back towards optimism and growth. The last 14 or so months have thrown up unexpected challenges and opportunities for property investors. Being in this reflective mood after mastermind week, I hope that this post might encourage some healthy conversation and knowledge sharing in relation to property pivots, doubling down on what works or new ideas altogether. 

What I’ll do is lightly touch on some of the most common property strategies, reference a bit about what we’ve done and encourage thoughts from others around the country in relation to said strategy. 

#1 BTLs and HMOs

The first property investment portfolio that I created was all single lets and HMOs. Those properties were the vehicle that provided enough financial independence to leave employment in early 2014. I was incredibly grateful for them back then and even though I had fallen out of love with single lets for some time, the covid lockdown reminded me once more how grateful I am for those properties. Yes there were some notices given but on the whole those properties continued to provide great homes for people throughout the lockdowns, and in return continued to provide me with a decent cash flow. 

Whatever an investor might choose as their primary focus, I’m a firm believer that a portfolio of residential let properties should feature as part of their overall portfolio. 

On the HMO front my multi-let professional properties fared surprisingly well however a couple of my student lets in Edinburgh did take a hit with a period voids and the need to lower rents for the first few months of a tenancy to incentivise the re-lets. Fast forward to now however and that student let market is thriving again, with even the summer months being taken on (I’m guessing that is in part to do with students wanting to have a summer of fun after so many months locked down with their parents). 

GOING FORWARDS

I was already starting to feel the love again for single lets in 2019 and we (Chris & I) have continued to invest in this space by developing flats in the upper parts of a shop (mid build as we speak) and adding family homes to our portfolio that are serving the Rent to Buy market and the long term vanilla BTL market. If anything, I think the pandemic has only further validated the value of having good residential assets in the portfolio. We will continue to allocate a portion of our focus and funds into adding alternate RTB and BTL assets. 

What about you, have your views shifted in any way when it comes to BTLs and HMOs?

#2 SERVICED ACCOMMODATION

When we first went into lockdown, approx 35% of our SA portfolio served the public sector (for Emergency Accommodation) whilst the remaining 65% was all private sector, and split between predominantly contractors and a good amount of tourism bookings. So when lockdown kicked in that 65% of the portfolio naturally dropped off a cliff as the Easter bookings had to cancel and some of the contractors couldn’t continue on site. Thankfully we had built solid foundations with our local authority over the previous year (that choice was made to introduce healthy diversification of bookings) so we were able to quickly pivot towards the Emergency Accommodation sector at the end of March with the first lockdown. We have served the councils needs effectively and as a result now have 70% of our portfolio serving the council, and their demand has remained steadfast throughout the various lockdowns. 

GOING FORWARDS

We are working hard to secure a place on the key supplier list with the council, alongside working the contractor bookings and a summer of healthy summer holiday bookings with a select few properties. 

What about you? How has the pandemic altered your approach to SA? Or if you’re just getting started with SA, what is your primary guest audience?

#3 COMMERCIAL

Aside from our SA commercial property, our first ‘true’ commercial property had just come into our ownership a few months prior to lockdown. We initiated conversations with a local independent baker pre-lockdown and following our refurb (somewhat delayed over lockdown) the formal lease commenced in October and both sides are very happy with the outcome. 

GOING FORWARDS

In terms of commercial going forward we are a little less attracted to the big high streets having seen how they were affected and how they have played severe hardball with landlords in terms of paying any rent. Pre lockdown we were starting to look into light industrial for trade counter providers – a space we’d still love to get into but now finding the price for vacant industrial has risen sharply while the rents haven’t. Still great contenders for pension investments however. 

If commercial property is your main focus, how has your strategy changed in terms of the types of property and end tenants you may be targeting?

#4 FLIPS

Flips have never really been part of my plan, perhaps because I still feel I’m building the asset base. I did flip a property back in 2012 in Edinburgh and in hindsight wish I’d kept it (I would have done far better taking the capital gain out of a refinance tax free and keeping the cash flow). 

GOING FORWARDS

The occasional flip is now however on the horizon. I didn’t think I would but with the appetite from buyers as it is for certain types of property along with the rising price of the properties I’d like to buy and hold, I figured replenishing the capital pot needed to ‘leave some money in’ the properties I want to hold, would be a big help. 

What about you – curious to know if flips are already working well for you now or if you plan for a flip to feature this year?

#5: DEVELOPMENT

In it’s broadest terms, I’ll use ‘Development’ to refer to adding value to existing resi, commercial conversions and new build. 

So this is a seriously interesting area. It;s where many of us want to expand after progressing through a few more simple deals and it’s certainly where Chris can leverage his building experience. For us, this is all about developing to serve an end user audience we have validated in some way so it helps mitigate development risk.

GOING FORWARDS

Anything we develop would need to feed our existing property business avenues of serviced accommodation, BTL or possibly rent to buy. We are just in the latter stages of diligence on a site that presents an opportunity to reconfigure an existing house for SA, whilst also adding a few new build units to serve the same contractor SA audience. We are very excited about the potential of that. 

With our Government promoting ‘Build, build, build’ and reforms in planning policy, does development of some sort feature for you?

To close, I really hope this post sparks some interesting discussion and knowledge sharing – so, how has the events of this last year changed the shape or direction of your property portfolio?