Is this possible:
Question is, does this work? Can I use BTL mortgages for this or do I have to use bridging finance? Can I refinance BTL mortgages in this price range? Will there be limits to what I will be able to pull out of the re-mortgage bit. (This is all assuming I take zero out of the company)
Your intention is sound, but your strategy to achieve it is a bit off beam. I know something about this, because I have been teaching investors how to achieve exactly this outcome, and a lot more, since 2013. Here is how to refine it to make it more achievable.
If you’re thinking of buying at auction, bidding is the least of your worries. Before you set foot in the auction room you must have done your homework.
Check out the auctioneer’s catalogue and don’t go in blind. Check the properties you’re interested in. Find out as much as you can about them:
Then you need to get your calculator out and work out the maximum price you can realistically pay for this property, to ensure you have profit built in after any work that needs doing.
You’ll also need to calculate how long any refurb is likely to take and KNOW (not guess) how much it will cost to do it and how long will that take. If you’re experienced in refurbs and...
If you secure a lease option and want to turn the property into serviced accommodation (SA), does this mean the property owner would need to remortgage to get a mortgage that allows short-term lets, or would consent from the lender be enough?
No landlord you approach will have a mortgage that will permit SA usage. It is a highly specialised form of mortgage and which would only be in place if they already operate as SA. In addition, no standard mortgage lender will consent to SA usage, so you can assume that a new mortgage will be required.
Most lease option deals fall over at this point, as the landlord can’t be bothered with the hassle of that just so you can use their property. If they remain interested at the point it will quickly wane once they realise both the set up costs and the higher ongoing interest rate they are going to have to pay for years to come - all so they can let you use their property for SA.
If you’re a landlord you need tenants - not least because you’ve got a mortgage to pay or a bridging loan to pay back. When you purchase a property do you have an idea of who will want to rent it?
If you’re doing a refurb your potential tenants may influence your choice of décor and layout. For instance:
Student accommodation needs to be robust and easy to clean, so no fancy wallpaper and plenty of workspace will be needed in the kitchen to accommodate more than one meal being prepared at a time. An efficient and cost-effective hot-water system is important for high demands for showers, laundry and kitchen use.
A family home can offer more up-market fixtures and fittings to make it attractive to potential occupants. Generally, it’s wise to decorate in neutral colours to avoid alienating a possible tenant who doesn’t like a particular strong colour.
This depends on how much effort you want to put in.
I have a deal on a plot of land for £30k and GDV will be £410-420k, build cost will be £150k, my profit will be about £240k.
I have paid the planning consultant to check the plans and he is confident that we will get planning. The owner of the land won’t get a lawyer to sign an option agreement; he only wants to give us word of mouth.
I have told him we both need a solicitor to do an option agreement, that after we get planning approval, he will only charge us £30k for the land. We have invested almost £500 on the deal so far and we’re not sure what to do, do we walk away?
If we get planning but have no option agreement, he can change the price on us or back out without any paperwork.
Developers use a lock out option contract to tie the seller in for a period (usually 12 months, but can be longer) so they have time to apply for planning. If they get it, they exercise the option and buy the property...
A smart investor is always looking for properties that are considered unmortgageable by the mainstream mortgage lenders. Why? Because the sellers know they can’t expect to get full market value for a property that doesn’t qualify for a mortgage.
That means that the pool of potential buyers is MUCH smaller. Consequently, they know they’re going to have to negotiate and bring the price down to make the sale. We’re not talking about knocking off a couple of thousand here - but anything between 10-50% below full market value.
So how do you find these properties?
We’ve been searching for a property to flip for several months, consistently doing viewings and putting in offers. But, our offers are always rejected.
We’ve done our due diligence so know what our maximum is to make a decent profit. We follow up properties that we’ve offered on and have broadened our area with no luck.
How do we get vendors to accept our offers? We viewed over 50 and made offers on many without having any of them accepted by the vendor. Any help/advice is gratefully received.
You are doing nothing wrong and plenty right, but an understanding of human behaviour will enable you to get a better perspective. It’s human nature to over-value what you own already and under-value what you seek to own.
Whilst your calculation of what you need to pay for a property is probably accurate, it is not matching seller’s expectation of the sale price that they can achieve.
If your offers were being...
It’s nearly the end of another year and the time when that ‘quiet’ time between Christmas and New Year is an excellent time to reflect on your year and make plans for the year to come.
So how was 2019 for you? What did you achieve that made you feel good? What was in your plan at the beginning of the year, but somehow didn’t get done?
What would you like next year to look like? And more importantly, what will you need to do to make reality match that?
If you’re reading this, you’re probably either already in property or you’re seriously considering getting into it - and you must be aware that it’s one of the industries where the people outside it are known for being negative about it. In order to succeed, you’ll need to be able to combat negative input.
To overcome the challenges along the way, you’ll need to develop a positive attitude to dealing with these. It’s all about seeing a...
I am looking at a mixed use building currently fully let. It consists of:
My question is:
So you have an annual rental income of £9,540. The guide price is therefore based on 10 x income and that is not unrealistic for this type of property. If it...
We have brokered hundreds of bridging loans, I also run the UK's best established (only?) training programme (the Ninja Investor Programme) to educate investors in the intelligent use of bridging. But the minute you mention the word ‘bridging’, people who haven’t learned about it tend to say, ‘that’s expensive!’
Bridging interest rates are higher than most mortgage rates, BUT if the difference is not doing the deal or paying a little bit more and making a good profit then bridging isn’t expensive at all. I’m always surprised that people prefer to borrow money from a Joint Venture partner rather than from a bridger - and then give away 50% or their hard-earned profits. No bridger will take 50% of your profit.
The interest rate for your bridging loan depend on a number of factors that you don’t have much influence over. When you find a deal, you want to bridge that specific deal. The rate depends...