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What to consider when looking for an investment property or Buy to Let.....

7/17/2017

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As a property sourcing agent and a letting agent, we get asked questions all the time about what are the things you should consider when buying a property to rent out. I have tried to cover the key things I think are important in this blog. Here are my top 10 tips!
1)    Location, Location – You hear this all the time in the property industry but it is so true.
​At times when the market is buoyant don’t settle for 2
nd best in terms of the location of a property. I am not suggesting you only look for the best streets or areas but you need to make sure that the location of the property is right for you  and is reflected in the price you pay. A house next to a pub or a take away might put off potential tenants and when the market is tougher it will always make the place more difficult to sell.
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2)    Tenants – this is about knowing your ‘customer’ or in this case your prospective tenants. What type of property is there a shortage of in the area, what is popular? You want to be able to let your property quickly and easily and have a choice of tenant to get the right ones. Most properties will let in time but also be aware that some investment strategies won’t work in every area. For example, if you are looking at turning a property into an HMO, know the local market and the tenants looking for shared accommodation to make sure it is appropriate to your chosen client base.
3)    Actual Cost – make sure you know your costs as this can have a dramatic effect on your return on investment. Factor in broker costs, mortgage or borrowing costs, solicitor’s fees, additional stamp duty for 2nd homes, buildings insurance, letting agent’s fees and maintenance fees on leasehold properties. These soon mount up so make sure the price you are paying makes it worthwhile once you have paid all of these. The key is buy at the right price and don’t rely on the market rising to recoup your costs. Also think about the tax implications of your investment and any licences you might need.
4)    Yield – work out the yield on the property based upon the rent you are confident about getting. Don’t rely on what the agent selling the property tells you as they want their sales commission. Do your own research and be confident about the rental value of your property. The basic calculation is to work out the annual rent received as a percentage of the purchase price. For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield. This should be taken with caution as this is the gross yield and does not include all your purchase and ongoing costs. Also be aware that your deposit value will change as the market fluctuates whereas the amount you owe on the mortgage will not be affected in the same way.
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5)    Financing – shop around for the best mortgage deal. Find a good broker who knows the BTL market well. Make sure you are able to provide all the financial information required and which deals work for you. Think about whether you take an interest only mortgage or repayment. Most investors use interest only but this is not a one size fits all and a good broker will be able to advise what is the best for you and your circumstances. If you are looking to buy at auction make sure you have the funds ready to complete quickly. Possibly consider joint venture opportunities with other investors as an option?
6)    Resale potential – with our clients this is something we always consider. If your house is the worst one on the street or there is something that might put buyers off if the market is stagnant the property won’t sell easily. It’s easy to consider the here and now but always be mindful that if you do need to sell in the future that you’ve given yourself the best chance of doing so!
7)    Buy right – this refers back to the points raised above but most importantly you should not rely on the market to rise to maintain your investment. You must buy at the right price. With all the fees to pay as soon as you complete you are behind if you pay too much for a property. Negotiate well and walk away if the deal doesn’t stack up or you will regret it later.
8)    Work required short and long term – be aware of any work that needs to be done to get the house ready to let and make sure this is planned in, completed quickly and budgeted for. Plan for any major expenses required at the property for the future and timescales ie, external redecoration, roof, boiler replacement.
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9)    Ease to service – think about how hands on you want to be with the property. If you are not local then do you have contractors to call on for maintenance issues? Do you want to be the first point of call for your tenants? Will you need to employ a letting agent? Research fees and service provided and get recommendations. A good agent will look after and nurture the relationship with the tenants which is the key to a successful let.
10)   Have a Plan – whether this a first investment purchase or one of many have a plan or an exit strategy in mind. What are your plans for the property? Are you going to rent it out and sell it in 10 years? Are you looking to pay off the mortgage? Are you hoping to re-mortgage and draw down capital to re-invest or spend? I think it is important to have a plan then you can make sure the mortgage deal and any insurances are the correct ones and you can keep a track on the market and rental prices to achieve that plan.


I hope this gives a flavour of the key points when purchasing an investment property. If you would like any further information then please give me a call on 01304 825153 or email office@kearsneypropertyservices.co.uk.

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Property Sourcing - Finalising the Transaction

6/8/2017

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You may remember from my last blog on Property Sourcing that we had just had the offer accepted on an investment property for my landlord and I covered everything that we had done to get to that point. On this occasion the client wanted us to follow the sale through to completion as they are very busy and did not have the time to worry about this.

We used a local conveyancing agent who provides a very efficient and cost effective service and this meant that any issues could be dealt with quickly and resolved. Having bought properties nearby we were not concerned about any local items that came up in the search and were fully aware of any building works in the area. 
The sale went through relatively quickly. We were informed by our broker, again a local contact who we work well with that the top of the chain was buying a new build property which had an eight week exchange deadline but as we were the bottom of the chain we knew we could easily achieve this. 
As the property sourcing agents, we kept in contact weekly with the progress chaser and fully updated our client. At one point, we were informed by the broker that we were the only ones in the chain not ready to exchange but we made a calls to the other agents in the chain and it was proved not to be the case. As suspected it was the developer at the top of the chain who was pushing. 
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Following this up with the sales office on the actual development it became clear that although he wanted exchange the house was way off being completed so they would in fact be looking for a delayed completion. Exchange happened after 9 weeks with a further month agreed to the completion date. This worked out in our client’s favour as had we agreed with the vendors that we could carry out viewings after exchange to get the property let and we organised this one weekend for an open house. In the end we let the house to some of our current tenants who had just been given notice by their landlord as they needed the house back so it all worked out really well.  
After completion, we picked up the keys on behalf of the new owner and have since organised and project managed the decorating and minor remedial works in the house ready for the new tenants. 
The client was very happy and had found the process worked well for them and the void was only 5 weeks. They had opted for us to oversee the whole process but there was always the option to pick and choose which parts of the process they required. Looking for properties is something we enjoy doing and are experienced at.  Our local contacts makes it easier for us to be able to make sure the process goes smoothly. What we offer is a tailored service to suit each client. 
Hopefully my blogs have shown what property sourcing is and how involved it can be. If you would like any more information or advice on buying property in East Kent then please give me a call on 01304 825153 or drop us an email office@kearsneypropertyservices.co.uk.
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Polystyrene Tiles in Rental Properties - What are the rules?

4/3/2017

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The other day when I went to value a property for rental I met the landlord who had being busy doing all the right things to get her flat ready for renting it out first time. 
Having lived in the property herself this was her first Buy To Let and she had redecorated the flat throughout with new carpets and it was all looking great. When I walked into the flat I thought this is promising and will rent easily, then I went into the lounge and noticed the ceiling had polystyrene tiles! These weren’t the usual small square ones but larger ones with bevelled edges. They had been newly painted with white emulsion and actually looked quite smart. My face must have told the tale (I’d never make a poker player!). ‘Are these tiles in many rooms I asked?’ Yes, everywhere except the hallway, kitchen and bathroom” was the response!
The flat was ready to be let and the new carpets down so if they had to be removed it wasn’t going to be a straightforward task. “Let me go away and find out about the tiles” I told the landlord. I had heard that it was illegal to let a property with such tiles for Health and Safety reasons but thought I would get the official line and then we could look at what needed to be done.​

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When I returned to the office, I searched online and there did not seem to be a consistent agreement on whether these were permissible. I looked through the forums where the question had been posed and was still none the wiser.
After being told by the Fire service that they would recommend they were taken down but didn’t seem to know whether it was ok to leave them up, I decided to call the local council. I spoke with building control who confirmed that it was ok to leave them up in a rental property and they checked with the private housing section who reiterated the same and they posed no increased health and safety issues. They gave me the names of the officers concerned and told me to include this information in the property file in case of any enquiries. They told me if they were painted in emulsion and the regulation smoke alarms were in place then it was fine. 
The landlord was overjoyed that they were not unsafe and she knew to remove them would have been a major exercise. I thought I would write a short blog about this as I hope this would help anyone who finds themselves in a similar situation. 

The answer to the question is obtain approval from the Building Control Department and Private Housing at the Local Council. Ideally, remove the tiles before the property is renovated but if too late then it is fine to let the property with them in situ.
For further information call Karen Southon on 01304 825153 or email:
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office@kearsneypropertyservices.co.uk 
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Property Sourcing.......what's involved?

3/2/2017

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How using a property sourcing agent can save you time and money when looking for an investment property....
Finding a property to buy, whether you are looking for a Buy-to-let to add to your portfolio or somewhere to live, can be very time-consuming and frustrating. How long can you spend trawling the internet looking and then trying to get through to estate agents to arrange a viewing at a time you can make it around your own commitments.

There are many relocation organisations who generally work for companies relocating employees to new areas of the country and they take care of the search and settling in process but for any individuals looking to move or investors there is very little help available. I have recently just agreed a purchase for a client who was looking to invest in the Dover area and it really hit home how time consuming the whole process is......
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Taking out the client briefing and engagement stage, the actual Property Sourcing part of the process involved a lot of time following up contacts and identifying possible properties which would be a viable investment. In this particular case we submitted offers on 4 different properties before getting one accepted and progressing the purchase.

So.....what actually took the time? Well initially it's the identification of the properties that will work for the client. As we have a lot of local contacts we are kept informed about properties before they come on to the market so that is a start but there is still the trawling of the internet to see what is available and then emailing and following up the requests to agents for more information or viewings. A lot of agents now operate "Open House" viewings which can be a while away and possibly not at a convenient time. The chance to look around a property with lots of other prospective buyers can be daunting for the uninitiated but it does generate interest and I can understand why agents favour this as it saves time and often encourages offers so as "not to lose out". It is also a benefit to the vendors as they can showcase their property once to a large audience. Nevertheless the timings of such viewings can extend the search time and be frustrating if the property is of real interest.

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As generally we are buying for investment, it does take the emotion out of the purchase. If you are going to live in a house then it is easier to get carried away and pay more than perhaps you wanted to as you can imagine your life there, etc, etc......For property investment we set a ceiling price and that is it. Often this means that in order to move forward with a purchase we have to make several offers and walk away before the right one comes to fruition. All of this takes time, negotiation and searching.
If I could count how many times I've been given a false rental valuation on a property to make it seem attractive to buy to an investor then I would need to have a sit down! I know how much a property will rent for because that is what I do for a living, I know what type of tenants it would attract and can work the yield out for myself. Having been in the letting industry for nearly 10 years running my own agency this is second nature but it does worry me that if I didn't know the local market I would believe what I was being told and make a bad purchase only to find out when I tried to let it the reality of the situation!

​Anyway, so back to the search - now we have found the ideal property, it all stacks up financially and is in the right area so we submit an offer. I will make sure the offer is accompanied by the full facts of my clients' circumstances and intentions so there is no ambiguity and the vendor can be appraised of the situation to allow a decision to be made. This is where more time can be lost as the agent puts the offer to their client. In the recent search we had to wait over a week with one offer before we had an answer! The local market is still busy and I think they were holding out for a better offer so the search continues whilst this goes on as we cannot stop looking. In this case the offer was declined so luckily we had continued our search. So we now have an offer accepted, the hard work has been done, we have the beginnings of our investment and the sales and purchase process begins.

This particular case took two and a half months to get to this stage! We went to auction, viewed tender properties as well as ones on offer through the usual portals so it was an extensive search just to end up with an offer accepted on a 3-bed terrace!
So, when you are thinking "How can a property sourcing agent help me?" maybe this helps to put the process into perspective. Consider, what is my time worth? Do I need the hassle of dealing with agents and vendors? And how much can I save by buying the right property at the right price?

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The process doesn't stop here for us as we will follow this sale through and our next blog will cover this. For more information, or if you have any questions about the property sourcing service we offer at Kearsney Property Services just give me a call on 01304 825153.
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    Karen Southon

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