We have just exchanged on a two bedroom flat in the prime neighbourhood of St John's Wood.
The client in this case purchased blind, hopefully he'll be pleased when he finally sees the property, which is due to complete in a couple of weeks.
We are working on another deal, which we will be closing soon, in Camden. This has a purchase price of £560k. It is a three bedroom property in Camden, which is prime student area, surrounded by universities. The price of the property equates to £650 per sq. ft. This is not very much, given less desirable areas go for these amounts.
As the area attracts students, this flat is prime for room lets. This property should attract a rental of £800 to £1,000 per week. This gives a potential yield, on the conservative end, at 8%.
With this kind of yield, if there is any dip in the market it is not that relevant, as it is producing money on a monthly basis.
Whether the market goes up or down, if you’re generating money on a monthly basis it doesn't matter too much.
The Borough of Camden, where the property is located is going through massive regeneration. Hundreds of millions are being pumped into this location. So the numbers and prospects look very good for this property. However, there is always the concern regarding what prices will do, what if they go even lower?
Well, you are coming in at £100k cheaper than the market price, and having a £100k cushion helps. During the worst financial crisis of the decade in 2008, London property prices only dipped 15% and this was only for a period of two years.
If we apply this same drop to the property, you will only get back to the price you paid. Given central London property history, this is probably the worst case scenario.
Even considering this eventuality, you will be earning circa £15k per annum. All this assuming a deposit of £170k, 30%.
On another end of the scale, we have been offered a site totally off market for circa 40 flats in Harrow.
The GDV for this development is expected to be around £15m.
It would be particularly suitable for a builder who wants to keep their workforce busy.
Call us now for details of this very exciting opportunity.
Beware of the wolf in sheep’s clothing
Let me tell you a story about a landlord that didn’t trust his gut instincts. His buy to let property had been empty for one month, this is because it was the run up to the Christmas period, which is typically a quiet time, and therefore there had not been any interest in the apartment. Understandably, the landlord was getting quite concerned. In time, he was approached by a family that was desperate for accommodation. There was something disconcerting about this family, so I advised him that it might be better to have the property empty than just any old person in there, and that he should trust his gut. However, he decided to let them move in, as he was anxious to have tenants in his empty property.
Once they had moved in, they proceeded to redecorate the property, painting the walls black and all the radiators dark purple. Numerous complaints were received from neighbours about their behaviour and loud music at night. There were several incidents when the police were called out to the property, and it was suspected that they were taking drugs.
They had paid one month's rent in advance, but had then failed to pay any further rent. The landlord had to issue proceedings for possession, in order to evict them. This took four months, by which time the rent arrears had risen to several thousands of pounds.
The night before the bailiffs were due to come to evict them, they had a huge party, during which several windows were broken, and other damage was done. It was left completely filthy, with rubbish in all of the rooms. Much of the furniture had been either broken or removed from the property.
The landlord was left with a property which needed several thousand pounds of work (including re-decoration throughout and replacement of almost all the furniture) to make it fit for re-letting; a bill from his solicitors for the eviction proceedings; and no chance of recovering anything from the tenants, who had disappeared without a trace.
Moral of the story?
Never let anybody move into your property without full references, and be very, very careful who you rent to. Once in, it is not so easy to get them out. This type of nightmare story only happens rarely - but this does not mean it cannot happen to you! Use our service to find a tenant and manage your property, in order to reduce any risks.
