One of the reasons why we managed to hang on was the agent was favourable to our offer. This is an important point in any negotiation.
This is a probate property, meaning the sale was as a consequence of the elderly lady who died there. This means the property is generally out dated, untouched and requires modernisation; often, but not always, prerequisites for getting a deal.
We had secured two buyers for this property. One buying blind, the other has seen the property, I guess this was a little like playing poker. The chap who saw the property naturally loved the property, this was no surprise, as this property has many features which are rare to find. Furthermore he had also purchased another property from us facing a Square similarly with beautiful features, and had seen the price rocket within the space of only one year.
His issues were finding the most efficient way of purchasing the property, buying from offshore means the stamp duty is 15% and there are no benefits when selling the property, as the capital gains exemption for offshore companies have now disappeared. Whilst this buyer was pondering, the buyer who was coming in blind got his ducks in line and is in the process of transferring the exchange monies across to the lawyer and getting ready to exchange on the deal.
Here we have two relatives who have joined forces and are purchasing the property in order to be able to afford a property of this amount. It is better to have half a property like this than to have a whole one in a lesser area. The gain you make by partnering up will be far greater than going solo. Of course this works well only if you have a water tight agreement between the parties involved covering off all possible eventualities.
For one of them this will be the first time they have bought through us, though they have been tracking us for many many years, showing interest and then quieting down again. This type of behavior is exhibited by many investors who see the importance of investing in property, take a step but then sit back down again. And all the while the prices go in mostly one direction and that’s upwards. This procrastination costs money, more money is lost by procrastination than making a wrong decision when it comes to property.
The other party involved in the deal has made money already by purchasing through us. The property they bought was an ex council located in Camden in June 2012 for £275k, the current value is around £475k. This will be remortgaged in order to part fund this new purchase.
The property has gone up by £200k within three years. Unsurprisingly the client has taken the decision to off load a few random properties he had purchased in North London to invest more in more central locations.
Most Asians tend to purchase where they live, often starting with their own property and turning it into a buy to let investment when they trade upwards. Having made money in this location and feeling comfortable in this zone they venture out and buy more of the same as they know the streets and the prices and they build a relationship with the agents. There is much merit to knowing your patch and sticking to what you know especially if it works. But in the same token it’s also good to keep your eyes open to greater possibilities.
The majority of clients who invest in central locations never buy outside in the outer parts of London again. Making profit can be a drug and once you have had a strong dosage it’s difficult for you to go back on a lesser dose again. This is why they stick to these locations, this level of dosage is hard to find anywhere else.
This property was always recommended as a buy and hold property. There is money to be made by reselling but not too much. You will be coming away with the crumbs rather than the whole cake. The current environment is not the best for property prices at the moment. Investors do not like instability and variables. Even if the variables turn out to be bad it is not an issue, it is the uncertainty which makes people nervous. This is precisely why one should exploit this situation and purchase, it will not stay around for too long.
I have no doubt once this property has been refurbished it will be valued at a minimum of £1.6m later on this year. As it’s a buy and hold the plan will be to convert to a two bedroom and rent out and gain an income. This will merely pay the mortgage and nothing more as the yield in these locations have not kept up with the capital values and so a rental yield of 2-3% is the norm.
We have been trying to push for a delayed completion but the response from the vendors hasn’t been encouraging. So it’s best to be quiet, get the money to the lawyers and then talk.
We recently got a full three months on a property we exchanged on using the same method, this was when the agent was advising us there was no way the vendor would agree to this and we would lose the sale and they may lose the instruction.
Money has its own power to convince, it needs no one talking for it; it also speaks many languages and has great powers of persuasion. Many rulers of nations and up keepers of religious faiths have been swayed by its power, what to speak of us lesser mortals.
