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Posts Tagged ‘property investor’

Another Good Week In The Property World

Friday, July 16th, 2010

It’s easy to get frustrated in this game.  I’ve written about it before and I know countless friends and other investors who feel the same way.

Property can be S-L-O-W!

But it is great no matter what.  And I do know one or two very special investors who somehow manage to constantly do LOTS of deal, so it’s not slow for them.

But for us mere mortals who can only do one or two deals at a time.  All our focus is on that one specific purchase.  So a delay can be quite soul destroying.

So, it’s been a good week for me.  The 4 flats deal in Southampton has made some progress. I’ve switched to a commercial loan on this one.  It was just getting too hard to convince a BTL lender how it would fit their strict criteria.  And the commercial lender has been very flexible so far.  This week we’ve been focusing on valuations.  4 separate flats with 4 separate tenants, it was never going to be easy to get access to them all. And so it has proved.  We’ve been at it for a fortnight and we’ve now got into to 3 out of the 4.  And the final one is booked for Monday next week.  Hurray!  I’m going to remain positive and say that after that it’s all going to be plain sailing once that’s done.  And then we should be near the finish line. I have a Property Boardroom meeting mid-August and I’m hoping to have it all sorted out by then.

And, the property I have been refurbing is now starting to come good.  All the major work has been done to re-design the heart of the property and create 1 new bedroom and a bathroom, and completely strip back the other bedroom to brickwork and start again.  The kitchen’s not in and with the lounge still looks like it’s out of the 1960′s but I figured it was time to get the valuer out.  So that was sorted out a fortnight ago and was dragging, dragging, dragging. But more good news and yesterday I got a call from the valuer who had finally been instructed by The Mortgage Works to come and take a look. He call me in the afternoon and was very keen to get it done today – that’s what I call fast service!  So he came round this morning and all seems well.  I put £130,000 as the value on it, a number which I had calculated prior to the re-introduction of the stamp duty limit at £125,000.  So we’ll see if it stands the test.  He seemed to agree with me about the figure, if not exactly, then at least ball park.  So I’ve got my fingers crossed for a good result on this one.  And I’ve gone for TMW 80% LTV product so it should all work out nicely.

I can’t wait to hear from my broker.  I’ll keep you posted …

And we’ve managed to agree the next date for our small, select group of Southampton Masterminders to meet up and share goals, ideas and enthusiasm about where we’re going and how we’re forging ahead towards financial freedom!

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Who Says January Is A Quiet Month In Property?

Tuesday, February 16th, 2010

Some say January is a quiet month in property.  Well not for me it ain’t!

I’ve been working on a few deals through the end of 2009.  Here’s a quick run down …

4 properties all in the same complex.  These came to me one at a time but I’ve ended up with all 4 and they’re all great little renters.  All currently tenanted earning a nice income.  The vendor has owned them for a couple years, maximised the use of the plot (by extending out the back to create two new properties) and now he wants to cash out.  He wants his money and I’m happy to oblige and get 4 good properties earning cashflow from Day 1.

Another block of 4 – this time a new build.  This is an interesting lease option deal on a property that has been converted into 4 falts from a detached family home.  Good terms for me (payment of £300 pcm for a property that rents out at £650) but short timescales on the option (6 months) so the vendor gets his money quickly.  Fair enough I say.  These are great to hold or to sell on, either to investors or owner occupiers.  And I’ve already found my first tenant buyer so at least one will be a sandwich.  I like these, so I think I’ll hold on to the rest.

Then the tricky one …  This deal has been jumping in and out of bed.  Another 4 flats  – these all exist on a single leasehold title.  The developer who refurbed them all to a nice standard with lovely open plan lounge / kitchen areas is going into administration and the bank are looking for a buyer with cash who can move quickly.  There’s a bit of a discount in it but at the moment the sticking point is the price.  I put a great bid together at £320,000, but they are looking for £360,000.  Whether or not we can work this one out … only time will tell.

And finally, I’ve found a builder to do the refurb on the purchase I made in November of last year … so I need to get that underway now.

So, all in all, I don’t think it’s been a quiet month for me at all.  And here we are, Valentine’s Day passed already and well into February.

Here’s to a full house and achieving all of the above – 3 out of 3!

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New Year! New Ambitions!

Monday, January 18th, 2010

So firstly … a belated Happy New Year on the 18th of the month, or as my solicitor said on the phone today ‘It feels like Christmas was months away’.

There’s a lot of talk about goal setting at New Year and I for one struggled with that this year. I’m not going to share my new goals here, but I will say … I worried about this for months, and then when they were the last thing on my mind I woke up one morning and instinctively knew what they were.

And I managed to avoid my usual problem – Making them REALLY complicated! Not this time. They have to be easy to track otherwise I get bogged down in following them.

So … onto my property news.

Since I last wrote, I completed on the 2 bed flat I’ve been blogging about for months. This was the longest running transaction ever (11 1/2 months all in!). It was tenanted from day 1 and I’m in the process of discussing quote with builders. I’ve shown 3 round so far – got 1 quote back. Looks quite interesting, except the first disappointing thing … my request for a ‘quote’ has resulted in an ‘estimate’. I don’t think this is a deliberate ploy and is nothing but a minor wording difference, but I still noticed!

While talking to builders I’ve also been pushing through some other deals and it looks like that’s coming to fruition. There’s a deal in Bitterne that is coming together nicely, figures to follow another time.

And while discussing that deal, I got to hear about another … worthy of a blog post all by itself. Check out ‘Rent 2 Own Progress’.

And there’s potentially another deal in the offing. A small block going at a discount because the title is all messed up and a little tricky. Well worth a look! More news as it happens!

Bye for now!

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Rent2Own Progress

Monday, January 18th, 2010

The other day a very cool thing happened to me which I’d like to share. But first … a bit of background.

I’ve been peddling the Rent2Own idea locally as much as I can … to anyone who will listen. Most of my property deals are regular deals and come from estate agents, and so I’ve naturally targeted them (among other routes).

Now the EAs have proved a bit tricky. Most don’t want to know about lease options or rent 2 own. Some don’t understand. Others can’t get their heads around it. As a group they have failed to produce a single useful R2O deal or even really demonstrate they understand it. Some have even been happy to try and then I’ve realised they just don’t get it from the way they try to explain it (‘Equity Option’ anyone?!?).

I regularly tread my patch chatting to them all, asking about new props / deals etc … and I’m constantly trying out different angles as hooks to get them into the R2O thing … and to get a deal.

Now that just hasn’t happened. In fact, worse, the opposite has happened. The one time I did find a perfect deal, got the vendor on side, agreed terms, and was all ready to get the paperwork out … the agent couldn’t understand it and scuppered the deal … very frustrating! He told the seller to turn me down and then lied to me about the reason!

So … yesterday I popped in to an estate agent to go over an existing deal we’re doing and I casually asked if he’s got anything else.

And he actually suggested that I do a Lease Option on a particular deal of his (well actually it’s 4 deals!) I nearly fell off my chair. Here was an estate agent who understands what lease options are, what financial ingredients are needed, he knows I’m into Lease Options, gets how they work, and knows this is an ideal opportunity to use the concept.

Fantastic result!

Suddenly all those months of blank looks and glazed eyes seem worth it.

There’s still some way to go on this particular one … but I’m overjoyed. I’ve actually found an EA who gets it, he gets what he can get out of these deals, how it can work for the vendor and how it can work for me.

Here’s the idea: it’s a new build of flats and we’re taking advantage of the fact that it’s very hard to get a mortgage on a new build flat at the moment (not impossible but you need a big deposit, certainly way bigger than the 10% a FTB might normally have). That means the developer can’t easily sell right now, so he’s open to ideas … and with a lease option the developer gets something along the way (a monthly payment) and he knows he’s going to get a sale out of it in the end. And for me … I get some rental income in the mean time before buying and we can both establish the property as ‘USED’ quickly because there’ll be a tenant in place so I can buy / sell on at a later date.

And regardless of the specific result on this one, it just seems like finally a tiny crack has appeared in the armour of the large army of disbelievers!

Now that really is cool! :)

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Cashflow Southampton

Monday, November 9th, 2009

Eariler this year I hosted a few games of Rich Dad’s Cashflow 101 and wow … what a game it is!

And I’ve just decided to start it up again. Disappointingly I can’t find anyone who hosts a larger game of Cashflow locally in Southampton so I am going it alone and will, one day, expand to more than a single table with one board.

So that’s another thing to get going sometime soon … a wider game of cashflow, probably in a central Southampton venue rather than personally hosted by me at my home.

If you want to play Cashflow in Southampton please get in touch by sending me a tweet to PropertyBob or by sending me a comment on the blog.

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Effective Use Of Capital

Tuesday, November 3rd, 2009

The BBC showed a documentary on Warren Buffett and Berkshire Hathaway last week. It was great. He came across as both down to earth and incredibly insightful. The man would seem to be as big as his reputation (bigger even!).

So, it was amazing viewing. Catch it on iPlayer (if you can find it – I couldn’t).

The BBC presented it as a series of lessons in Buffettology and the one that stuck in my mind is:

‘Effective and Efficient Use of Capital’

We could all do with some of that and it got me thinking that this is, indeed, a key part of any property investors make up (and probably any investor, given what Mr. Buffett says). We always need to be watching where our money is currently invested and deciding if that is the best place for it. Or could we make better use of it elsewhere?

In fact, this seems to be a recurring theme of Mr. Buffett’s that came over in the documentary. I also remember this featuring heavily in Roger Lowenstein’s excellent biography of him. Somehow, the magical Mr. Buffett has managed to persuade many of his business managers to relinquish a large portion of the funds their businesses generate back to him, rather than retaining them in their own business. The thinking being that Mr. Buffett is in a better position to determine how to use the money to get the best return.

And so to my own business: I’ve been aware for a while that I’m not treating my captial with the respect it deserves and this documentary has brought that into sharp focus. How to improve things in the immediate future? And how to do better next time?

The thing is … I have a lucrative refurb project in the pipeline. And it’s been in the pipeline for AGES. Far too long. So I’ve had money allocated to that project and I haven’t used it elsewhere because each month I think ‘Great, this is the month its going to happen’ and somehow time slips by and we don’t get there. And so it is that since December last year right through to November (yes 11 months!) I have had a good chunk of capital languishing waiting to be put to good use on this specific deal. All the while, it’s been earning … well pretty much nothing.

With any luck I’ll be through this particular lesson within a week or two and the money will be hard at work in the new property. Then my attention will turn to the refurb and then to releasing the cash, probably through a loan.

So in terms of the immediate future, I feel I’m at least on the right track.

And next, on to preventing this from happening again? Well here I don’t feel so easy. What to do? Should I be negotiation and agreeing purchases without having the funds available to complete? That sounds risky and a recipe for a quickly ruined reputation. But the alternative is to have the money sitting in the bank while the world takes it’s merry time to exchange and complete on each purchase. Yes, I can do my best to line these up. So that release the equity in my current project co-incides with completing on the next one. But so far that seems tremendously hard. Perhaps that it’s. It’s just hard. But that’s the way things are.

So I’m hoping to get this purchase sorted, and get it turned around fast. Then I can refinance my cash out. And whilst I’m doing that I shall be on the hunt for the next one. Then all I need to do is line them up!

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Buying Buying Buying … Next Investment Property On It’s Way

Monday, October 19th, 2009

And so after a glorious 2 week holiday in the US to visit relatives and friends, PropertyBob is back and straight on it.

2 things have happened for me already …

Firstly, we’ve actually made some progress on my mammoth long running flat purchase. The last step in the chain to buy the place (going since January!) is to get buildings insurance in place. No small feat when the property has had subsidence AND the existing insurance has lapsed. But it looks like we’re coming through. Delite Insurance Broker has found with what appears to be a great policy from Nelson Insurance The premium is very reasonable and, better still, the excess for subsidence is the same as on a normal policy £1,000. This means it is far easier to get a regular every day mortgage rather than going to one of those specialist lender’s who fleece you. So … good good good. More on this if it comes off, when I’ll tell you all the financial numbers for the whole deal.

And the second thing … one of my estate agent friends has potentially found me another property. And this one could work out quite nicely. It’s a 3 bed house arranged as 2 flats, still on a single title. The bottom flat is rented out, the top one was being used by the owner’s brother, who recently moved out into council accommodation. So the owner’s looking to sell. Only at the moment it isn’t mortgagable because it is neither a 3 bed house nor 2 separate flats (because they’re not on separate title). All of which suggests to me that we could work something out. He gets the price he wants with no haggling from me AND I’ll sort out the split title problems for him (and pay half the costs!) and I get another property. Still very early days so hopefully I can share more details soon if it goes somewhere.

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Your Property Deal Ain’t Over Till It’s Over

Thursday, August 20th, 2009

Until your deal is done it’s not a deal and it isn’t done.

Anticipate every problem you can think of, plan for the worst and don’t be surprised if you’re surprised.

Let me explain …

I’ve been doing one particular deal since January. It’s August now and it’s still not done. And once we complete I’ve got a 3 month refurbishment to do. So all in, I’ll be lucky if I get this finished in 12 months start to finish.

Now it’s a great deal and I don’t want to pull out so I can be patient, but boy does ‘being patient’ take a long time! And it takes LOADS more time than I ever imagined.

Guess what’s caused the most recent problem …. yep you guessed it, finance! It’s been going so long my mortgage has expired, and after 2 extensions the lender has lost all patience (and to be honest I can’t really blame them!).

That doesn’t account for the 7 month delay. There have been lots of other reasons, it’s just the latest. But add them all up and it’s pretty costly. I’ve had the money ready for this deal all that time and it’s sat there doing nothing.

I could have bought another place, refurbed it and got a remortgage in the time it’s taken this one so far!

The lesson … don’t ever expect the deal to get done until it actually is. It’s a good job I can afford to wait. And until it’s done, don’t under any circumstance expect the return or any money from it. Don’t expect anything, and never need a deal to go through. That starts to get dangerous!

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