Why You Should Never Never Sell Property Unless…

Video Transcription:

Hey guys. I thought I'd put some detail around my, never, never, never sell motto and what I actually mean by that, because I think there's a bit of a misunderstanding in that when you say, never, never, never sell, people think that that's actually what you mean, that you should never sell, you should hold forever.

Look, the reason I say never, never, never sell is primarily because we're so focused on trading property, buying and selling property. The reality is, is most people do not buy and sell property. They buy a property and they hold it until they either can't afford it or something goes wrong or it's costing a lot of money or who knows? They're moving to a different place and feel like they can't. So there's lots of reasons why you would sell.

But for me it's a much more mechanical and systematic approach to why I would sell a property. So, it's a never, never sell, but then I have the asterisk, obviously. The asterisk is, until the fundamentals aren't there. And what I mean by that is, my whole model is based on buying places with the best fundamentals. In particular, what I love doing is regeneration, major regeneration projects. That's really what I become sort of known for, but I think the element here, and one of the key things here is, if you're going to sell and, obviously ...

Let me talk about fundamentals for a sec, okay? Shops, schools, transport links, major employers, major investment. Okay. Now what generally happens if you look at very macro level stuff, what happens in an area is you'll buy it and... Oh sorry, you'll do your research and you'll see, wow, they're spending this much money on this. They're rebuilding this and an area will get a lot of investment into it at one point.

That's a good time to get in. And even before, there's a good time to get in. So if you can get in before that happens, fantastic. And the reality is, once that's done, then not a lot happens for a lot of years. So maybe 10, 15, 20 years where very rarely there's major infrastructure and major projects working. I'm not talking about the odd thing here and there.

I'm talking about big, big stuff, and it could be 40, 50 years. But what you tend to find is over that period, rather than maintaining things, they slow, it's a slow degradation, and at some point, when the fundamental start dropping in an area, that's where you kind of want to get out of it.

Because actually why do house prices go up? Because the fundamentals are there. So you've got to continuously when you buy a property, weigh up if the fundamentals are still there or if actually the fundamentals are getting worse. But what you tend to find is the fundamentals increase when there's lots of investment expenditure. Then they'll sit around and they'll be stayed in it for quite a few years.

I think that really at that point is a great time to be holding. But then as you start to see, you know what, the crime rate in the area goes up, there's more articles about graffiti, this stuff happens, that stuff, they're not spending money.

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They're knocking down this, that went bust, this business went bust, this employer left. When you start hearing those sort of things, you've got to go, well actually every time that happens, if there's not an immediate replacement or a fix up, then the fundamentals could be dropping. And that may be an indication of when to get out of a property.

Because I think really, if you can buy it and hold it, the real expense in property is in buying and sell. In holding, there's very little expense in maintaining a property and that sort of stuff. And if you do it right with good agents, what you tend to do is, is a scheduled maintenance program.

So rather than leaving things until you're going to get a two, three, four, five grand bill to fix up major stuff, if you fix it up as you go and you maintain it, well then actually you tend to find not only do you get better rents, and you keep the rents up there, but also you don't get these big hits as often.

You still get the big hits, you know when the boiler goes or something like that. And that will happen. But servicing the boiler, things like that, maintaining it will mean that potentially rather than getting five years out of it, you get 15 years out of it. And I've got boilers where I've got...

What have I been doing now? 17 years I've been investing in the UK market in 2019, so at the end of day, I've got boilers that are probably say 16 years, because I think it was the end of the year. Yeah. So 16 years that I've been investing and some of those boilers are still there and still working.

So that's one of the keys as to when you should sell. Now for me, never, never sell means you're not going to get the costs of buying and selling all the time, so you're restricting that. You're owning for long periods. So whatever the purchase and sales costs are, they're spread over the whole period, which makes it more profitable, increases your turn on investment on your investment, which is good news.

That just gives you a bit of an idea. So any questions, pump them into the thing. Remember, subscribe to my channels. More than happy to answer any questions or do whatever, on any subject, in fact.

All right guys, have a great day.

Live with passion and fun,

Brett Alegre-Wood

Brett Alegre-Wood
December 19, 2019

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