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“There’s Gold in Them Thar Valleys”

It is said that the days of the Welsh Valley Gold Rush when Coal was King is long gone. From Treherbert to Pontypridd the loss of the coal mines has decimated the Rhondda with unemployment at a record 25% in some places.
However, not all is doom and gloom; there is a niche market that is proving that there may be gold in them hills. This niche market is in the depressed undervalued property market. We spoke to local estate agent Lanyons who basically told us that there are a small number of savvy guys making good money and building substantial property portfolios to boot. But as he pointed out these guys know what they’re doing as the market is still very quiet when it comes to selling, so most investors are in it for the long term rental yield which can be as high as 12%.

We met, Rhodri and his partner Dean from Swansea who showed us how they were making over 100% per annum on their initial investment and said that this was impossible to achieve in their home town simply because the equation did not add up. He explained to me that similar houses in Swansea would cost double the figure that they are paying in the valleys, whilst achieving virtually the same rental income.
The simple matter is that with a lot of hard work and good contacts they can buy depressed property that needs renovating at the right price with a good rental income upon completion. Each one takes no more than 4-6 weeks to renovate to a decent standard and then is sold on to their band of waiting investors. They say that having the end buyer already waiting for the completed property is key to their success. So much so that they would not entertain buying a property if they did not have the end buyer already signed up. They have definitely found “gold in them thar hills” but they do miss a few good deals due to lack of cash flow. To allow them to maximize their potential they have brought in outside help. They have offered a few selected individuals joint venture partnerships, where the investor puts up the money to purchase and renovate a property, Rhodri’s team renovates, sells to their end buyers and they split the profits. They target 6 properties per investor in a year with the profits being re-invested so that there is no need for further funds other than the original investment.
In the opinion of local estate agents who know Rod and Dean very well this window of opportunity cannot last forever as the stock will diminish. They state that there may be another couple of years, but warn that prices are starting to creep up.
Rod and his team are fully aware of this fact and are spreading their wings further afield to the North East of England where Dean has contacts in the property market. They have already bought a couple in this area for a very good price and a team in place to renovate them and the equation working out the same as the Welsh Valleys.
For any reader interested in hooking up with these guys give Rod a call on 0751 4619348 or e-mail him at investmentdirector@primeci.com

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