Passive Investments - A Great Company to Work with

They really do do a good deal. You put in the equivalent of two deposits. One covers all the work they do for you over about five years – and that includes acting as letting agents and property managers for the time you have up to five properties with them.
The second deposit goes into a property which they source for your below market value. They then refurbish this for you, find a tenant and then remortgage it – to release the deposit for the next property. And all you have to do along the way is sign bits of paper and send them back as quickly as possible.
I am impressed with how efficiently they do all of this. I am now starting on my second property with them. The first was let within days of the refurbishment being complete. I never hear a peep out of them. I guess there are no maintenance issues, as the refurbishment was done so well in the first place.
I’m pretty experienced myself with these things, so I can see that they’re doing well. I trust them so much that in neither case have I visited the property. They operate mainly around West Sussex, but are also looking at Portsmouth.

Another Property in Spain?

We’ve had problems booking our holiday this year. We are in a points system with a firm called Club La Costa. They’re not cheap, but for what you get – top-notch luxury, they’re very good value for money. We like, every other year to go back to Nerja right on the edge of the Costa del Sol. It is a magical sort of place and it’s there that I started writing anyway. However, I think because many people have opted back out of the points scheme, because it is expensive, we can never get a place there. Club La Costa does also do exchanges with the RCI time-share owners scheme, but even using that, we could only find somewhere near Almeria. Too much of a busman’s holiday for me – I already own properties there.
So, maybe the only solution is to buy there. Perhaps a two-bedroomed town house which will actually sleep six. Maybe a half or quarter share. We’re going to talk about it after the Christmas break.
Exciting times. I’m used to property, but this thrills me more than anything else.

Full Management - Way to Go

Now that I own eight properties in the UK, I use Letting Agents and go for full management. This means that they typically take between 10% and 15% of the rent. 15% is fairly common. I never actually pay 15%, because I have four properties with the agent who would charge that. They only charge me 12.5%. The one which only charges is 10% is not as cheap as it sounds. They take a month’s rent for finding you a tenant. So, it is only cheaper if the tenant stays a couple of years.
But what do you get for this? For one thing, it means the end of waiting in for the plumber who doesn’t come. If there’s a problem, the tenant rings the letting agent, who rings you to sanction a repair. They’re supposed to go ahead with anything that costs less than £150, but they still tend to ring and check first. Often, there’s a chance that the repair may be more major, so they want the go ahead first. That makes sense – it saves the contractor going out twice and therefore, in the long run, saves you money.
It’s also worth noting that they can get people out quicker than individual landlords can and they can let contractors in to properties, so you’re not relying on tenants being in. When I’ve had to renew furniture or appliances, the management team of my letting agent has acquired these through their contractors at far more reasonable rates than I could achieve.
So, it’s definitely worth the percentage to me. After all, your mortgage provider expects your rent to cover the repayments by 125% - 130%. The taxman, at the moment, is still allowing you tax against expenditure, and so paying for full management stops you paying some tax on the rent. You’re really making money for the equity in your investment.
I’ve been on the other end of this for the last few months. I’m renting someone else’s investment property. There have been some maintenance issues. They’ve all been solved whilst I’ve been out at work. If I’d have been the householder, I would have had to wait in to get the toilet unblocked, the alarms reconnected and the showerhead mended.
Winners all round.

The New Coventry House

I went to collect the keys on Friday. Before I set off, I’d looked on the ARLA web site to find a Letting Agent and had a conversation with them about the services they offered. It seemed very comparable with my others, but with the added advantage that they gave you three months’ rent guarantee cover, and then when you do have to pay, it is actually cheaper than the policy I have with another company.
The house seemed fine. I might try to do something about the garden, though, once it’s let. That will probably be the only time I visit it. I’ve handed all of the keys to the letting agent, Whitegates. They’ll value it on Monday, Fingers crossed that they don’t come in too much lower than surveyor did eventually. He went form £625.00 pcm to £1000.00. Unbelievable. I actually want about £865.00. Anything else is a distinct bonus.
What is more, I managed to park in Coventry for nothing. All of the estate agents and letting agents are in one road. There is one street, just near to one of the main car parks, where you can park for an hour. Plenty of time!

Panic Stations

sePanic Stations
Two lots of panic about the two houses I’m buying in Coventry yesterday – and I got to hear none of it because my phone had frozen. As soon as I got in, the panic started.
The £145,000 property did not complete as planned. There had been a last minute hitch about the loft conversion, which meant that the solicitor could not draw the funds in time. The vendors had moved out and so they had to spend the night in their caravan. It just shows how important it is to await the sollicitor’s instructions.
The other panic was about the house I am going to buy that is about to be repossessed. The Building Society in question went ahead with the repossession, even though they know the vendor had someone interested. In fact, though the judge threw it out of court. I myself had spoken at length to the Building Society on Friday and tried to persuade them how foolish this was – especially as we are in the weeks of seasonal dip. There may well be someone very senior working there who would know us.
So, now, though one completes tomorrow and the other goodness knows when. I await the deliberations of Mortgage Express.

Financial Crunch - Good News for Some

The Credit Crunch – Good News for Some
I have found another good deal in Coventry. I was offered it three weeks ago. The offer was turned down in favour of another one, of just two thousand more. They came back to me yesterday.
It is a four-bedroomed townhouse, immaculate condition, with four bedrooms, two bathrooms. It is quite close to a teaching hospital, so I'm aiming at sharing young professionals. It will, as usual, depend on how the surveyor sees it. I have it worth £222,000 and I’m paying £1757, 000. Rental comes in at about £1250 pcm. According to my spreadsheet it works superbly, and with the right deal, I could even come out with change. I believe anyway Mortgage Express are coming out with some new deals on Friday.
I shall, of course, be using Faster Bridging Finance. With that, you buy one day cash and remortgage the next day. It’s a really neat system.
I now just need to find a deal in Manchester.

Concept Property

Concept Property is doing some really good deals at the moment. For as little as £3,500 down and no deposit you can get some properties with instant equity and a good yield. However, if you want to use letting agents, who charge10-15% of the rent the rent only just or not quite covers the mortgage repayment. Never mind. Rents will go up. Houses are still doubling in price every seven years. A good long term investment. And the £3,500 represents the full purchase cost. I am so tempted, though I just don’t have the cash at the moment .They are certainly on my list. No brainer, isn’t it?
Offers at the money include town houses in Oldham and Wigan and one-bedroomed apartments in Wigan.
A good way for beginners into property investment.

Bargains

The house I am buying in Coventry is going really well. The solicitors are rushing through the searches. I popped by to see the vendors, with whom I’ve become quite friendly, on the way between Manchester and Southampton. They’re moving into a cottage, so some of their furniture does not fit. In addition, the people they’re buying of are moving to Spain, so are leaving quite a lot behind. The people I’m buying from are merely trying to save money on the moves.
So, they sold to me for £200 a washing-machine, a fridge-freezer, stools for the breakfast bar, a large display unit for the lounge, three beds – though I do have to get new mattresses, and various wardrobes and other storage units. All in excellent condition.
And there’s a decent-sized garage.

Walking away from a deal

I have been offered a fabulous property in Coventry. It is definitely BMV (Below Market Value). The vendor is about to be repossessed. They need £175,000. The property is immaculate, worth £200,000 + and would pull a rent room by room, of about £1200 pcm (per calendar month).
The question with this one is: will the mortgage work, given that more favourable rates are being pulled? A second question is: how will the surveyor interpret the property? They can be such an unknown quantity. Another Coventry house was assessed at £625 pcm. I’d worked out £865. After some work on our part the surveyor eventually agreed £1000 pcm!
Well, I’ve now made the £175,000 offer subject to survey.

Flats of not?

They tell us that we need 10,000,000 one-to-two bed roomed units and 6,000,000 family homes. What we actually have is 6,000,000 flats and 10,000,000 family homes. I met someone today who is vehemently against the number of flats being built.
“They will be tomorrow’s slums.”
Well, yes there will always be properties which are the oldest, least desirable.
“Everywhere is ‘buy-to-let’ properties. People don’t care.”
Hmm.
I’m currently living in a “buy-to-let”. I own seven others. I have a family home in Hampshire. I work in Manchester – Salford to be precise. It’s not an unusual pattern, these days. Many youngsters, anyway, have a portfolio career and are frequently on the move. Renting then can be the best solution. They can move easily. Another advantage I’ve found is that you phone the letting agency and tell them the plumbing’s not working and when you get home that evening, it’s all fixed.
There is a downside accompanied by an irony: young people who can’t afford to buy have to rent and rents are actually higher than mortgage payments on the same properties. I also might try to find somewhere to buy for that very reason. I can always rent it out later.
There is a sadness too. The “Coronation Street” terrace, the back-to-back, is gradually being cleared away by the developers. We mourn that in Leeds and Salford alike. Perhaps we should preserve those –modernise them, maybe. They serve the same purpose as the flats, after all.

Current Account Mortgages

These are amazing things. Every time any money hits your bank account, it starts paying off the mortgage. So, you have your current account, your savings account, any other loans and your mortgage all rolled into one. You can afford to take it interest only, because by the time you get to the end of the term, you’ll have paid off all of the interest and quite a lot of the capital. Interest is, in any case, calculated on a daily basis.
All banks have them, though they don’t advertise. They are a bit picky about who they let have these mortgages. The interest rates do tend to be a little higher than on other mortgages, but you still end up paying less.
They tend to suit the self-employed or people whose earnings are unpredictable, given that there is a sufficient base to pay off the monthly repayments. For instance, a writer, like myself, who also has a regular day job could use the day job to pay the bills and the mortgage. The royalties and paid visits go into the mortgage account, and reduce the mortgage.
I’d be interested in hearing form someone who has one of these accounts. Let us know how it is going.

Working with the right people

I’m in the middle of quite a complicated deal. I’m buying a property very BMV and then selling it on and sharing the profit with the original owner. This is called a “deferred consideration”. I’m working with a solicitor and a mortgage company who really understand the technical process of buying below market value. Yet they’re decidedly nervous about the “deferred consideration” idea. We could go ahead, and then just make a private arrangement with the vendor. The problem with that would be that our friends in the Inland Revenue would then demand their pound of Capital Gains Tax. We’ve now actually reached a stale-mate position.
It just goes to show that you really have to work with people who understand what you’re doing.

Brighton - vibrant town

Business took me to Brighton today. Though my course was interesting, I couldn't help looking at the flats opposite. Typical city new build. Nice balconies. And of course, I also had to look at all the estate agents on my way down from the seafront to the station. Prices a bit lower than in London, rentals about the same. Now, I'm not saying I've done the full Due Diligence, but my gut feelings are that the yield would be high here, and you'd have few voids.
There's a buzz about Brighton anyway. Seafront, the Lanes - good for creative shopping and eating, and the ease of commute to London and its airports. . Mixture of young professionals, artists and aging hippies. Downside: huge Police presence and dire warnings about what happens if you're caught drinking or doing drugs in public.
My daughter (25, working in the City) and her partner (27, IT expert with fashion company) - both of them Londoners through and through - say they'd like to move there when they start a family. I can see why.
The bottom line always for me is - would I like to live there? I would - tucked away from the buzz but within walking distance of it. The writer in me needs the solitude and the access to people.
Just a thought: maybe Passive Investments will come up with the goods. Thy;re acquiring five properties for me in the area by constantly buying BMV and reinvesting the deposit .Great if they found one there.
That;s one of the bets things about being a property investor - owning properties in places where you'd like to live, but can't.

A deal?

I've been offered a deal in Coventry. The sellers are desperate, as they want to buy a cottage form soemone who is equally keen to get to Spain as fast as possible. I think it might work. Rental would be £900 pcm. Value of property is, or could be interpreted as being, £167,000. There are some deals out there which would make it work. There would only be a couple of thousand immediate cash, but as the house is in excellent condition, this would not matter all that much. I'm trying to give them £145,000.
I do have some very good software which analyses deals. I've run this one through it. It stacks up. It doens't make huge profits to begin with, but it does work.
Fingers crossed that the surveyor will agree.

Being on the other side - landlord becomes tenant.

So today I'm a landlord who has become a tenant. I'm renting a small one bed roomed flat in a Grade II listed building within walking distance of the University of Salford. The letting agent seem to operate in slightly different way form the ones I employ. However, one good thing is that you pay one month's rent plus the rest of this month's to bring the paying date up to 1st of the next month - in this case October. Very sensible. One is usually paid on the last day of the month.

It's a very secure ;little place, and I did manage to beat them down on the rent - by £25.oo pcm (per calendar month). However - there was a,list of faults:

• the toilet was block -(Yuk, somebody else's poo keeps floating up whenever you flush - bet it was somehting to do with the people who spent eight hours cleaning the flat.


• two of the three smoke alarms are hanging don form the ceiling.


• walls quite badly marked, especially near the storage heaters


• inventory not correct.


• no instructions for washing machine, alarm system, oven etc.

And not really any body's fault, but I couldn't find my way into the main part of the building. And somehow, despite the clean, the atmosphere of the previous tenant still lingers. Never mind though, I'll still soon chase him out.

I think it;s actually going to be a nice flat. It's in the old part of the building, and is an interesting shape. It looks out on to a small garden at the front, and though it's near the main road, you hardly hear it. At the back, it looks through French windows on to a type t terrace. There are some flower baskets, and it does seem very pleasant. It's a very secure place. Two locks to get in, phone entry, alarm fitted, gated car park.

But, of course, the very best news for me is that it is five minutes walk from the office.

New Bank Account

I've had my new Alliance and Leicester bank account detials today. It's a bit like driving a new car. It's got some nice features as well. Like higher interest on the both the current and the savings account and no bank charges except on cash transactions.
I think it's actually going to make for better cash flow. I might actually begin to see a small profit on some of my rentals, though I do now have to have some redecorating done on the flat in Streatham.
The set-up process was all very straight forward, though I do need some extra bits and pieces which I guess will come in a separate mailing. That shows good security anyway. Cheeky creature that I am, I have already asked for an overdraft.
The banks will do all the changes for you, but I've opted to do these myself. I still want to keep some things going through the old Barclay's account, and I'm now going to sue it for all my other little enterprises which aren't directly to do with my Buy-to-Let portfolio.

Solicitors

I aways say you can only go as fast as the solicitors and mortgage brokers will let you. f course, there is your own time to add in as well. You may also have day job. I was asked today to provide mortgage statements for all of my buy-to-let proprieties for the last twelve months. Should be quite an easy job you would think, as I tend to file them as soon as I get them. But then the odd one gets moved, or misfiled .... and you just can't find it.
There is a tiny glitch on my credit record. Yet I have been approved for two other mortgages,a car loan and a contract with BT in the mean time. Now a provider is being a little more fussy - it is their right after all. The broker says "Lets show them all your buy-to-let mortgage statements." Fine idea. It's just that there are a couple missing. With the amount of paperwork one produces in property investment, it can be a bit like looking for that needle in that haystack.

The Way to Financial Freedom?

Thee are few people who would disagree that property investment is a way to financial freedom in retirement. But several factors can harms day to day cash flow. Your really need:

1. Contingency funds
2. Good scrutiny of each deal before you commit, to make sure that cash flow will be positive.

Think about the following:

• High bank charges - make sure you are not charged for every single action.
• Voids - they do happen.
• Charges by letting agents 10 -15% though you can get a good deal by having several properties with the same agency.
• Repair bills - rented accommodations tends to rot quicker that owned property - tenants don't feel a sense of ownership, are often sharing or are inexperienced householders, and usually finishes in rented property, although sturdy, are usually less robust than those used bu the home-maker.
• Rising interest rates.

Try to get positive cash flow -after all, that will also help you on the way to your next property

Mortgage Offer

That mortgage offer came at last. I'll be raising another £20,000 on a property in Islington. The mortgage repayments actually go down by just a few pounds. Interestingly, the surveyor set the value at £276,000, whereas I know that some similar properties have sold for over £286,000. He reported signs of aging. However, nothing too drastic on the mortgage report.

I'm now in contact with an agent in Manchester. All because I spotted that a flat I wanted to rent last week was actually up on Right Move as one for sale as well. I offered to buy it as well, but the owner / landlord is going through a bit of a crisis at the moment so can't think. A pity really, as the flat was a good price both for sale and rental and in an ideal spot. He's introduced me to a superb property on Salford Quays. The rental / price combination does stack up, though not for a BMV deal. Wish I could find the capital for the deposit. I'll have to do some BMV deals to finance some ordinary ones.

Strangely I have had two enquiries about the very house in Islington that I'm just remortgaging. I guess it's that time of year agina, Everyone is on the move.

Property News

The cutest property I own is small apartment on a pretty site, near Almeria in Spain. It is within walking distance to the beach, shops and restaurants, and is just crying out for a winter let. I'm offering this at a really reduced rate to anyone who replies after seeing this blog.
I've had one mortgage offer today. That is to refinance a three-bedroom terraced house I own in Islington, London. It will make me abut £20,000 and will also cut the mortgage repayment by a few pounds.
Another is going through at about an extra £20,000 and will save about £200 on the mortgage repayments.
However, my credit profile has been looked at a lot lately. Still, enlightened lenders don't mind. They know why I'm doing it.