One of the key secrets to investing is knowing when to buy and knowing when to sell.
Whilst property investment (as opposed to property trading) is very much a buy and hold long game in many capacities, sometimes for some sites, the decision to sell can be highly lucrative.
Success and Failure are both very predictable and timing the market is certainly a key consideration but there is a formula we teach our Property Entrepreneurs – to know when to hold and when to sell, especially where commercial valuations or demand from the investment/yield markets are involved.
Essentially, if you have a cash flow property be it an HMO, Serviced Accommodation, Leased Block or similar, this is normally seen as a buy and hold, but if you can achieve a sales value that releases in ‘Profit’ what it would take you 10 years to achieve in ‘Cashflow’ this could be the right time to sell and move the capital on.
At Manor House Developments which is part of our PPN UK Group, the strategy we deploy to capitalise on this, which is as close as you can get to ‘having your cake and eating it’, is called ‘Build to Rent to Sell’.
We acquire large sites, develop them into high yield blocks, rent them out for cashflow via either PRS or more frequently on a lease, then list them on a yield basis at the top of the market where the profit margin from the sale would equate to 10 years or more ‘Cashflow’ returns. This also de-risks your exit which is one of the dangers of development, especially on sites that can take several years to build out.
Once developed, rented and put on the market for sale, if it rents for Cashflow, great! If it sells for 10 years cashflow in one single capital gain and profit transaction, great!
It is possible to have your cake and eat it with development and even though property investing is a long-term game, sometimes there is a right time to sell and the Property Entrepreneur formula is when you can achieve 10 years gain in a single accounting year.
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