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.