So I had a bit of a lull on the enthusiasm front in July and with August traditionally one of the quietest months in property (second only to December) it wasn’t looking like I had an easy way back. But what do you know, yet again I’ve had a great August.
Finishing the ‘flat under the stairs’ refurb meant the next step … getting the re-mortgage. Thank you to TMW (The Mortgage Works) for providing their 80% LTV BTL product for that and for valuing the flat at £125k (all my previous projections were on £120k but it’s easily worth the higher figure). They are the slowest company in the world, and I couldn’t recommend them to anyone. As I tweeted earlier this month, unless you really really need 80% LTV I’d suggest going with another lender at 75% (of which there are many). It’ll save you a lot of hassle and I’m sure you’ll get through the process a good deal faster than I did.
But nonetheless, I’m grateful that I’m now through those troubles and on the other side sitting pretty with my 80% LTV.
When I bought that flat it was a cash purchase, and I’ve spent a lot of money on the refurb so I’m very very happy to finally get that back.
Which leads me on to the next one … 4 flats in the centre of Southampton. I’ve blogged about these before and it’s still going on and I haven’t managed to get my hands on them yet. But there are good reasons for that, and I’m now getting excited because we’re very close. The commercial loan is with Santander and we’ve spent a LOT of time discussing how much lending they’ll let me have. The valuer wasn’t sympathetic to my situation and significantly changed the valuation. Firstly, he took £20,000 of the valuation. Now strictly speaking this isn’t his fault and is more due to the constraints put on him by the bank. I could forgive that if it wasn’t for the other problems. He reduced the rent below the level currently achieved claiming that we got lucky and the local market couldn’t sustain the rent. Utter nonsense, but he has his right to an opinion. Just to demonstrate how wrong he is, one of the flats has since come up for re-letting. We put the rent UP by 10% and rented it so quickly there wasn’t even a void period. The new tenants moved straight in even pushing for an earlier start date.
But the real icing on the cake – the valuer claimed it would take 4 – 6 months to re-let the properties. Now bear in mind these are pretty nice, standard 1 and 2 bed buy to let flats, close to the town centre. They are near pubs and ‘live music venues’ and this put the valuer off. He didn’t stop to 1. look at the facts or 2. consider that it would put HIM off, but having a pub round the corner is a bonus for a lot of young people – the target market for the flats. And he didn’t think to ask the agent how long they took to re-let previously. If he had, he would have discovered that the zero days void I described above is actually typical. Instead he said they’d take 4 – 6 months to re-let. And this scared the lender, because it got them thinking … 6 months, there are 4 flats, so basically we should consider that in any year at least 1 flat will be vacant. So they wanted to down grade their rental expectations. And that resulted in even less lending.
So all in, I applied for a 65% loan against purchase price (£360,00) and I’ve ended up with £170,000 of borrowing. That’s an LTV of 47% … groan! It gets me angry just thinking about it. AND, let me add, when valued as individual units on separate leases the flats are worth £480,000 (!) They’re not on separate leases yet, but they will be the moment I get my hands on them.
That rollercoaster out of the way, and after some frantic calculations, I’m now VERY excited that we’re nearing the finish line on this one. The bank has the green light from me, the contract has gone back to my solicitor signed and ready, and it’s now just a matter of waiting to get across the finish line. I’m expecting September is going to be a good month for this one!
AND … while all that’s been happening I’ve bought another place, a small 2 bed ripe for a quick refurb. The double glazing has gone in and the refurb is well underway. There’ll be a new, smaller bathroom to allow space to make the 2nd bed into a double, the entire place has been skimmed to flatten the walls and ceilings and it will be freshly painted. And the kitchen will get a serious make-over as well. Then it’s carpets down and straight back on the market. I’m looking for a quick turn around on this one and I’m excited to see how it works out.
And given that my full time investor status has been downgraded to part time now that I look after my son 3 days a week, I think I’m doing pretty well working 2 days / week!
Here’s to a great September! Happy investing!
Rob
