We’re about to exchange on a probate property in St John’s Wood. The property is being purchased at just under £737k.
It is a two bedroom, fourth floor flat, in a well maintained block, with a long lease. It comprises of 825 sq. ft., which equates to £893 per sq. ft.; and the higher the floor the more desirable the property, generally away.
The property, being a probate sale, is dated and requires refurbishment. However, we will be doing the works in two stages, the first will cost no more than £5,000, that’s my aim anyhow. You do not really know what works are essential, until you have had a strip out and looked underneath the bonnet.
This will be a light refurb to get it to a stage of rental, as the location is so strong as long as the property is clean, it will be rented.
Then we will move to stage two, which will be a remodeling of the apartment. Here I mean shifting the kitchen around, building another bathroom, increasing the ceiling heights etc.
The reason we will be doing it this way is, that the managing agent may be cumbersome to deal with. This will take up time, and expense. It is a comfort to know there will be a stream of income coming in during this time, therefore, there is not too much pressure caused when things do not happen in a timely fashion.
The mortgage we got for this client is a redemption free mortgage, this means the property can be sold or refinanced without the need to pay a penalty. The purpose of doing this is, when the property has had its second stage of refurbishment, we can look to refinance it with a view of extorting some money from it.
This allows the investor to move forward and do other deals with the money extracted. Ordinarily you would have to wait for the mortgage terms to expire, and the property market to have risen in order to take money out, which would take about two to three years during a good time.
Currently the market is looking a little flat, therefore we are adding value and then extracting the additional value, this should happen within seven to eight months of completion.
We will aim to start the light works not at the point of completion, but at the point of exchange; this will save a couple of months of valuable mortgage payments.
This is a great time to purchase, and we are focusing on strong yield investments, typically 8-10% per annum. This will mean you’re making money, whatever the outlook in the property market.
Using an agent
For many landlords, a letting agent is an absolute necessity. While some property owners choose to find their own tenant and manage their affairs themselves, a very sizeable proportion still choose to entrust their investment to an agent.
There are several important factors that you should consider when choosing a letting agent. Your final choice will of course depend on your individual situation.
1. Work out what you need
There are, broadly, three types of services offered by letting agents. Before choosing an agent, you need to consider how comprehensive a service you require.
The most comprehensive type of service, generally referred to as ‘full management’, sees the agent take on virtually all the work of finding a suitable tenant, drawing up contracts, collecting rent (and paying it to you), and dealing with problems like maintenance. This level of service will cost the most.
Alternatively, you might ask an agent to simply find a suitable tenant and collect the rent, on your behalf. This level of service is cheaper than full management.
Or, you might choose the cheapest option, which is a simple tenant find service. Here, the agent simply finds a suitable tenant and draws up a contract, and then leaves you to collect the rent and arrange things like maintenance and inspections etc.
2. Understand the fees
Agents’ fees tend to operate in one of two ways: a fixed fee, or a proportion of rent.
Generally, full management services are charged on a percentage basis, and flat fees are more common for simple tenant find services. Fees for these services can vary significantly from agent to agent.
3. Ask around
A personal recommendation is often the most reliable form of endorsement. If you know other landlords in your area, ask them which agencies they would recommend – and which they would not.
4. Remember maintenance
If you want to find an agency that will also take care of property maintenance for you, you need to consider a few extra factors. To begin with, you should understand the fees for arranging maintenance work; are they included in your management fees, or are they an extra cost? Similarly, you should consider whether the agency will guarantee that they will only use tradespeople who belong to the relevant trade associations or guilds. This can help to ensure high standards of work.
For your own tailored package to suit your needs, and requirements, along with clear cut fees then please contact me today.
BUY TO LET OPPORTUNITY
Castlehaven Road, London NW1 Purchase Price: £560,000
l Excellent location
l Three bedrooms and over 20ft reception room
l Current rental yield is 6% and there is potential to achieve 7.5%
l Potential to turn into HMO (subject to planning)
l High student demand
l Resale value expected to be around £650,000
Call us now to reserve
