Some Useful Web Sites to Help with Due Diligence

Some Useful Web Sites to Help with Due Diligence
If you want to become an expert on buying UK properties below market value, you need to know several things:
• What properties are worth
• How much they rent for
• How much ones have sold for locally?
It is also ideal if you know the area and you can go and visit. It’s good to have a sense of how desirable and how easily rentable a place is. Also, you need to consider what transport links are like, whether there is access to shops, schools, nightlife – all depending on the type of property, of course. Is the finish right for the type of person who might be interested in letting that type of property? There isn’t much point in having a fabulous school near a good bachelor pad or good night-life within walking distance or a short cab ride away from a good family home. All of this is called due diligence and must be done.
Even though it’s harder to get a mortgage right now, it’s still more demanding finding the right tenants that it is just buying the place. Getting the location right can make it easier to rent to the type of tenant you want and thus avoid problems including voids.
There are several web sites which can help you with this

David Phillips Furniture Packs

David Phillips provide furniture for landlords. They provide a next day service. There is no minimum order size or value. All furniture is assembled for you. They will even dispose of old furniture for you.
We used them to furnish a house that was not selling or letting. We had completely refurbished the house, including putting in a new kitchen and bathroom and replacing the kitchen floor. We had installed a new central heating boiler. The garden had been relandscaped. However, we were constantly told that the smallest bedroom was too small, that you wouldn’t be able to even get a single bed in it. That, we knew, was nonsense. My parents used to keep bunk beds in there.
The lady who had organised the refurb suggested we furnish it. She pointed out that unfurnished spaces can often look smaller than furnished ones. She liaised with David Phillips. The furniture was delivered and assembled by midday. A table had to go back because it had a crack. It was the people who delivered the furniture who noticed that, not ourselves. It was replaced the next day.
The house, which already looked very good, now looked even better. We uploaded photos to the estate agent’s site. Two days later we had three good offers on the property.

Buying at Auction

Buying at auction can be tricky. You have to complete in a very short amount of time. Also, you must, of course have the property fully surveyed. That might be a loss. The result of the survey might tell you not to touch the property. Or, of course, someone else at the auction might pip you to the post. You have to also remain very strong-willed and not bid over the limit you have set yourself.
However, if all of that still gives you a positive go ahead signal, buying at auction can be extremely lucrative.
A company that helps is Auction Finance. They cane set up a loan before, during or after the auction. 80% loan to value is still the most common way of lending but in certain circumstances they will loan 100%. They do do buy-to-let and they will consider almost any property. They pride themselves in fast completions. They have no restrictions on the size or location of your property portfolio. They can also offer development finance, land finance and bridging finance, both open and closed.
Well worth a look!

Properties in France

Leap Frog is a company that is offering properties 100% financed with guaranteed rentals. The properties are reasonably priced. They are well worth a look. That particular development is in the Pas de Calais region, a short distance form Berck and Le Touquet. You get to use the apartment several times a year yourself and it is affiliated with other developments in other parts of France, so you can use those too and their facilities, such as swimming pools.
Apart from that, they really have some interesting properties at very fair prices, both new build and resale.
Some of the resales are extremely interesting. There is a beautiful detached villa with swimming pool in the Languedoc-Roussillon area, going for just over €1,000,000. A smaller property, needing some work, in the same area is going for a mere €297,970.
For the investor, their buy and lease back is definitely the ticket. It doesn’t stop you being able to send time in your property if you wish.
Their site is fully searchable and you can look for properties in any area in France.
They also offer help with the rather complex business of buying in France.
The people I met at the Property Investor show were very approachable and easy-going, I imagine a pleasure to work with. A thoroughly interesting company.

The Buy-to-Let Business- Buy-to-Let Packagers

One problem that often occurs when one is buying BMV is that the surveyor, clever chap or chapess that he or she is, decides that the price you are willing to pay is the actual amount the property is worth, whereas in fact you are relying on what you are buying being at least 18% below market value.
There are some companies appearing now who package the whole deal and are most likely to find a surveyor who is sympathetic to what you are doing. Of course, nothing is guaranteed. But there is more chance of getting a deal by using one of these firms.
Some of these companies, also, will take a hefty percentage on the bridging loan and the mortgage deal. Not so The Buy to Let Business. Their aim is to complete everything as quickly and as easily as possible and at minimum cost to the investor. They have a solid programme of training for their agetns which keeps them all on the ball.
Another snag can be that a company can be just as unrealistic as some of the wannabe landlords / property investors, and can lead to inexpereinced landlords not generating enough cash flow. I have a very strong feeling that this particular company will act with integrity. I base that decision on having met two of them at last week’s Homebuyer and Property Investor Show. Let’s hope I’m right.

Poperty Investor Show London March 2008

hThere were a lot of the same ideas around this year. However, some new ones include finance for auction and possibly this might suit the property I have seen in The Royal. This is the flat which is not finished off yet. It has two massive bedrooms, a very big lounge, and a roof terrace and because of the way it is, one can find one’s own bathroom and kitchen. Of course, it’s difficult to buy a house in that state with a mortgage. The same goes for auction properties.
Another new concept was the E-home. These are homes with work spaces attached. The work and living space is very carefully divided. The units are also in very pleasant surroundings yet only ten minutes walk into town.
I’ve made contact with some mortgage packagers. They find the bridging finance, the remortgage and instruct the survey with trusted companies, which leads to more success.
I’m now looking at buying land through a company which does the due diligence for you. You can buy individual plots. You can sell them on after two years.
I’m looking at some new concepts in hotel rooms, where you get a pro rata 75% share of the hotel’s profit. The rooms come with their own pool each. You can have some usage during the year.
It was a good show, with some quite exciting possibilities.

Spanish NIE Numbers

This is a number you have to have if you are purchasing a property in Spain. It identifies you and makes you liable for tax. The usual proceedure s to first go an queue at the local Police stain – local to where you’re buying in Spain, that is. Then you have your passport copied and authorised. Then comes the four week wait.
However, in quite a civilized way now, you can get it in ten working days – wihtout even having to let go of your passport.
This seem excellent. We’re applying for my husband’s. We’ll let you know. Watch this

Property Programmes

I’m actually watching one right now – “A Place in the Sun at Home or Abroad.” You always see these couples who have a certain amount of money and I always ask myself whether they’ve actually sold their house yet. I wonder, if that’s the case, where they are living now. And if they haven’t sold their house, how they can even be looking?
Even so, I like looking at their potentiel life styles. And I look at each property as a potential place for me and imagine what my life-style would be like there.
Why are these programmes so fascinating?
Why are we so interested in homes?
I’m going to tow shows soon: The Home Buyers and Property Investors Show and Grand Designs.
I can’t wait to see what they have on offer.

Advertising a Property Abroad

A friend of mine who is very into Web 2, who happens to also be a writer like I am, swears by Google Adwords for optimizing the number of bookings she has.
She does also have a really pretty site. Interestingly, her “cottage” is really a bungalow, and is not in a really touristy area. Yet she has almost solid year round bookings. I think she’s partly cashing in on people who return. She has a real good set up there – dishwasher, wi-fi available and a really comfortable place. Her site contains really inviting picture. It’s not just the cottage she attracts you to, but the type of holiday you could have there.
Unfortunately, I don’t have her IT skills. But I have just set up my Adword page. There’s a technical problem, and the engineers say they will get back to me.
In the meantime, anybody interested in a beach holiday in Vera, Almeria, Spain?

Closed Bridging

Joy of joys. I’ve found another Closed Bridging company – who charge nothing, for the closed bridging deal. It’s same day remortgage. Also, you can use your own broker.
Closed bridging really does enable you to buy property below market value. You can even come out with change. So, now it’s full steam ahead with my purchases in Manchester. I stand to make money on one of the deals and break even on the other.
I signed up and I had a phone call from them yesterday. I’m dealing with old friends. Powell Callen. They’ve done some excellent work for me in the past. So, I trust them absolutely.
Great day!

The Homebuyers and Property Investors’ Show

This show takes palce this year on the 7th, 8th and 9th of March at London’s ExCel Centre. Ther will be over 250 exhibitors. On Friday, it is open 10.00 a.m unitl 6.00 p.m., Saturdya 10.30 a.m unitl 5.30 p.m. and Sunday 10.30 a.m unitl 4.30 p.m.
I notice some old frids – Alan Boswell, whom I use for all of my insurance on my buy-to-let properties, Currencies Direct, whom I have used for freign exchange, Faster Bridging, who I have used to buy a property in Coventry – and ained £171,000 equity immediately – Ready-to- Invest, run by a couple hwom I admire and who for me are role modles and good old Fuel have got me some brilliant mortgages in the past. I notice, too, that Win Investing are also there. I’ve used their expertise about stock market investment before. Interesting to know that they are now tunring to property.
There is a fantastic lsit of seminars lso. There isn’t one I wouldn’t recommend. They all have advice to offer. But I would particularly recommend those by Vanish Patel, John Howell, David Sandman and Ranjan Bhattacharya.

Building Your Own Teams

If you’re being smart with property investment, you need to have your own fully trained people around you. I’m currently trying to buy Below Market Value properties. There are three ways of making money with property: when you buy it, when you rent it and when you refinance it. The two latter are normal and easy. The first is a little trickier.
One way is to take bridging finance, buy one day and then refinance, remortgage the next day. There are companies who will set this up for you. However, I have the urge to do it myself and set a slightly different pattern.
I’m negotiating a drawdownable amount form the bank. I buy, as normal, with an 85% loan-to-value mortgage. I have a floating agreed amount of about £45,000 which I use for a deposit. The first mortgage is a slightly expensive one, with no penalties. As soon as the place is tenanted, I remortgage for the full value. I’m aiming to buy enough below value each time, that I’m making £3,000 to £4,000 after paying all the costs – solicitors, stamp duty if needed, voids and any refurbishment costs. £2,000 then goes into my own residential flexible mortgage, and can be taken out again for the next loan, thereby reducing the amount I need to borrow. £1,000 goes into the emergency pot. This can cover voids and if not needed for void, goes towards the tax bill. £1,000 goes towards paying my own personal debts. I’m determined to pay off my own mortgage and personal debts in three years. Eventually, I’d actually have enough in my personal flexible mortgage fund to pay outright, giving myself a bridging loan overnight. The day my husband and I retire, I stop borrowing the mortgage back. But by then ….
Detailed business plan to follow….
Now, I already have one solicitor who understands the process. I have two very bright young men, an estate agent and financial advisor who are beginning to understand.

Paper Work

No matter how much we like our work, there’s always something about it which we like less than the rest of it.
When it comes to property, what really makes me fed up has to supply mortgage providers with endless bits of paper. It is, after all, all there on my credit file – which is actually 31 pages long. They always say “Well you can fax everything to us”. Faxes get upset after a few pages, I’ve found.
It takes ages to copy everything. Yet if you supply originals, the problem can be that you don’t get them back for a long time and then you need them again for something else.
I do wish we could move to the paperless society.
I tried to email some copies of papers yesterday. They bounced. They’ve now suggested I fax them. But we’re talking about forty pages and that’s including payslips – which don’t fit in a fax machine. It ought to be possible by email, but banks tend not to like attachments. Surely though, we have the technology to do this all better now?

Good Deal or Not?

I’ve seen a nice little two-bedroomed flat just near where I live.
The good points:
• It is near the university
• You can easily walk into town form there
• It is first floor
• Reasonable decorative order
• Good size
• Vacant possession
• Allocated parking
The bad points:
• Furniture and carpets are ugly
• It is very near university accommodation with possible noise problems
• Parking is not secure
The deal:
• The property could be valued at £124,000 – some similar nearby are less, some more.
• I would be happy to offer £102,000 AND GET A MORTGAGE FOR £104,500. Neat little trick – I’ll tell you about it sometime. That would be £22,000 under “purchase price”.
• The mortgage I’d look for would be 85% loan to value, 4.99% interest, interest only, 12 year term.
• The mortgage lender would want 130% rental cover, based on the 4.99%.
• Expected rent: £575 pcm.
• Total fees would be £1620.
• Total monthly expenses, including Letting Agent’s fee, ground rent, maintenance, service charge £128.75
Well, does it stack up?

The Good News and the Bad News – Property Management Issues

Bad news: My tenants in my house in Islington have come up with a list of things which need doing.
• The bath needs resealing. There has been a leak form the bath on to the ceiling below. Surely they should have noticed this before it got to that stage?
• There are window keys missing. They were all there before the property was rented out, and this has come up before. Reluctantly I agreed to get them supplied at that time. Or were they never supplied? They haven’t lost them again, have they?
• The seal on the freezer has gone. I wonder whether they have not been defrosting it? On the other hand, it owes us nothing. It is six years old, and you do just have to accept that tenants, especially those sharing, do create a lot of wear and tear.
The Good News: I don’t have to do anything, I just authorise my Lettings Agent to get it all fixed. They often will for a very good price and even if the price is not so good, at least I don’t have to travel up to London to do this. That saves me time, and time is money.
Other Good News: My tenants in the flat in Streatham have accepted a rent increase.
Those are the ups and downs of being a landlord.

Fluid populations

I am currently living in a pleasant little flat for which I pay rent. My husband may well be doing the same thing in either Plymouth or Swansea in a few weeks’ time.
My flat is a Grade II listed building – a former hospital. The hospital is replaced by a huge modern teaching hospital about five miles away.
There are two things I particularly like about this building: I can walk to work. There is a secure, gated car park. In fact, the whole building is very secure.
At first glimpse, you might think that the building was only half occupied. In fact, it probably is only half full at any on time. There’s a parade of suitcases going backwards and forwards most days. There are few people my age living here – though there is a near-retirement age couple in a flat near to mine. Most of the occupants are quite young. Some are young professionals who are not yet on the property ladder themselves. There are some postgraduate students, some mature but still young students. I know of at least one other university worker who has a proper family home elsewhere, just as I do.
Every city in the UK is building masses of one and two bedroom units near to the centres. (I can walk to the middle of Manchester form mine in fifteen minutes. I am in the middle of Salford.) This is to fall in line with government predictions for housing. They seem to remain mysteriously empty for long periods of time. Yet this is deceptive. When I first started looking in this area, there seemed to be lots for rent. But in fact they were renting very quickly. If you hesitated, the flats were gone. They do empty again just as quickly. People have portfolio careers, particularly those under forty. Those over forty often work away from home, but the homemaker, the child rearer will stay in one place.
In summary, we do need these small units because:
• People have portfolio careers these days
• Highly skilled specialized people have to go to where the work is
• Families are smaller and many young people are opting not to have children
• Divorce is easier
• We are becoming more insular
• Young people cannot get on the property ladder.
On the whole, these new places are well designed, look good and are comfortable.

Paperwork

There is a lot of paperwork involved in property investment, especially at the point that you apply for a new mortgage. It’s wise to stream-line this as much as possible.
When you deal with a new mortgage broker, or a new solicitor, they will want proof of residence and identity. Your latest bank statement or utility bill should be to hand. I tend to use credit card bills. You do have to send the originals and it’s easier to do without your credit card bill than a bank statement. I personally never do without my passport or my driving license. They can keep hold of these for up to a fortnight. Who knows when you might get that sudden invite to go abroad and you might want to hire a car too? And you may get another request to see your identity in the meantime. The trick is to find a tame local solicitor who will certify a copy of your passport. Store one on your computer and you can print it out when needed. Solicitors usually charge about £5.00 for this. I find it worth it.
Keep your mortgage statements handy also. They often want to see these. I usually provide a copy rather. If you work through a broker, they are going to copy them anyway. And, as above, you may suddenly need them again. Don’t offer them unless they ask for them.
Many Buy-to-Let mortgages are self-certifying so you don’t have to prove income and in any case, there are plenty of Buy-to-Let mortgages around where you don’t need an income. Just occassionally you do, so have your payslips handy too.
The real nightmare is if they want to see tenancy agreements. These are usuaIly upwards of six pages. I find it a good idea to photocopy these as soon as they arrive and store the photocopies. You can then have a set ready quickly.
And of course, all of this implies you need a photocopier at home. I bought one in 1994 for £600. It has only just given up the ghost. It was a godsend. They’re now relatively cheaper and more efficient.
This is the down side, that bit that you hate of the job you love. So make it as simple as possible.

The Positiva Property Group

I don’t know quite where Caroline Edwards found the name for her property company, but it is certainly very apt. Doing business with the Positiva Property Group is a very positive experience. Caroline and her team deal with property in Spain, including sales, rental, finance, management and inspection tours. They currently operate in the Alicante, Almeria, Granada and Murcia regions and also have connections to the show-case Polaris World sites.
Of course, there are many companies who do precisely this type of business, but Positiva is an independent group and you get the personal touch. I first met Caroline when I was looking for property in the Almeria area. She has since sourced and helped me find the finance for a second small property almost right on Vera Playa. A complete no-brainer. A few weeks’ rent has covered the mortgage.
Another plus of working with this company is their extensive knowledge of the area – not just in terms of property but also about where the best beaches are, where to shop, where to eat and indeed to find anything you require.

To Raise Rent or Not to Raise Rent?

Our tenants should, I think, expect rent to go up from time to time. Our costs do, and inflation does exist. I’m quite pleased that the house I own in Islingtopn let very quickly this time last year, even though this is just about the worst time for finding new tenants. And they accepted the full suggested price.
Well, it’s renewal time now. My agents did suggest a rent rise. So, I went by their advice and asked for a £50 per month increase. The rent is currently £1300 pcm. The tenants have come back and said that one wants to move out, but they have found someone to replace them. And could they keep the rent the same as it was? I asked the agents what they thought. One of them – and this particular one always seems to me to be a little anti-landlord – said it would be good to go with what the tenants want. I suspect his colleague may have suggested differently. The less senior colleague I spoke to wasn’t really very forthcoming. I did suggest that we built into the contract that the rent will go up by inflation rate next year. That may be beyond the normal procedures of this particular agent.
It is a difficult question. Why punish those who have been good tenants by putting up the rent? On the other hand, there are those extra costs to consider and would one really lose them for the sale of an extra £50 per month between three of them, when to move they would have all the problems of getting their deposit back, finding a new place and a deposit for that? Especially given that the new place will probably be as expensive, at least, as the one they’re leaving?