November Update – Tenant Nicked My Fillet Steak!

Fillet Steak Blue

It’s a lovely time of year with the autumnal colours and piles of leaves, well so people tell me. Personally when I see those leaves blowing about, it just makes me worry about blocked and overflowing gutters!

The observant amongst you will notice there was no October Update. Actually this is the October update, but as I’m putting it out in mid-November, I decided to change the title to November Update. Radical huh?

Whatever it’s called, this update covers deals that didn’t happen, deals that did happen, and more hilarious stories from my LHA HMO.

Failures Part 2

Building on the surprisingly favourable praise I received for publishing some of my failures last month, I thought I’d start with more stuff that’s gone wrong. Everyone likes a bad news story right?

First up is the pub to 6 flats conversion that I’ve mentioned several times: that’s fallen out of bed. It turns out I wasn’t talking to the decision maker, and when it came down to an offer, the guy I’d been speaking to had to consult with the guy holding the purse strings: he said no.

Lesson 1: When doing any kind of business, not least negotiating off market property deals, make sure you’re talking to the decision maker. A nice phrase to tease out any other decision maker that I learned from Rick Otton (but clearly completely failed to use!) is this: “Is there anyone going to help you make this decision?” So this deal goes back in the hopper: once a month I’ll call the guy and see if things are moving or not.

Second is missing out on a cracking deal: 12 flats came up in auction with a guide price of £400k and an annual rent of £50k. I figured they were worth a bit over £1/2M, but they are a fair distance from me, 2 hours in rush hour and I wasn’t that interested, as I figured they’d go for £450k ish in the aution.

When I checked for unsold lots after the auction, I discovered they hadn’t sold and were available for £400k. Now (stupidly) I did some proper due diligence and realised that a realistic valuation based on selling each flat indivually was £600k, plus the freehold which would be worth about £30k. Also the £50k rent was low, and could be bumped up to £55k without too much trouble.

With possibly £230k ish equity in the deal, £400k was suddenly looking very attractive. I called the auction house… it had been sold that morning, argh!

Lesson 2: Invest the time in doing proper due diligence *before* the auction, and go and bid anyway, you never know, occasionally things don’t sell for what you expect.

Other Deals That Didn’t Happen (Yet)

9 Bed HMO: This was a deal that was brought to me by a sourcer as a 90% finished conversion of a 9 bed HMO. Why was the owner selling? Because he needed cash for 2 other deals that were more lucrative, allegedly. A bit of research revealed that there was no planning permission for this large (sui generis) HMO. As it was over 3 floors it would require a mandatory HMO license, which hadn’t yet been granted. Worse though was that it was listed building and there was no consent from them either. One to avoid, unless the price drops significantly.

The 4 flats in Manchester have gone cold as the vendor isn’t replying to messages anymore.

The vacant building I’ve been trying to buy for 3 months and turn into a couple of 1 bed bungalows, is still ongoing as they company that owns it has yet to make a decision if they want to sell it or not.

The 4 Bristol flats are still waiting the grant of probate so are still months away.

Another deal that came my way is a large 5 bed semi that’s been derelict for 14 years; I was contacted by the owner’s son. A long story short: I’ve put an offer in and am awaiting a response, however the council have been maintaining the premises for the last 10 years and have put a charge on the property at the Land Registry for their costs, which currently amount to nearly £25k!!

I also walked away from another lease option deal for 8 flats. I won’t say anything more as they’re currently still on the market.

Industry Updates

The world of property is aghast at the Chancellor’s surprise reduction of Mortgage Interest Relief, and I’ve already had small time landlords call me asking if it’s worth keeping their properties. I expect there to be some correction in the market as landlords with 1-3 properties AND high earning jobs, are likely to sell.

New landlord legislation came in on 1st October, making it harder again to evict tenants by serving a section 21 notice. There’s more red tape to do at the start of every tenancy too, with more paperwork to hand out. Also the rules on smoke and CO detectors has been tightened. I won’t bother repeating it all in detail here, if you’re not aware, remember even if you use a letting agent, it’s YOU as the landlord who are responsible.

Some people will be aware that there has been temporary office to residential Permitted Development rights that were due to expire in May 2016, well it’s been announced that these are going to be made permanent.


I’ve evicted my heroine addict and prolific shop lifter tenant who is currently serving his 3rd jail term this year. His parents and sister came round to collect his things, such as they were. They were hugely apologetic about him and his behaviour, but most interestingly his sister is a medical doctor at a local hospital! It just goes to show that kids from the same upbringing can go in completely different directions.

Some of his more colourful moments were when he stole all the fillet and ribeye steak at the local supermarket to sell for drugs. The annoying thing was I went that very day to buy some to cook for valentines day and they didn’t have any. That’s right, my tenant stole my fillet steak! Another time he tried to sell his drunk and unconscious girlfriend’s father’s S-Type Jaguar keys to me for £1,500! Comedy gold.

Another tenant has gone AWOL and not been seen for a month now, nor has his mother heard from him, and worse now his housing benefit has been suspended. Annoyingly however there is evidence that he’s coming back, but is not replying to texts and every time I call his phone is off.

What Went Well

Despite all that doom and gloom, there have been good bits (not that looking at deals and deciding not to do them isn’t good, it is).

The 3 lease option flats in Bury have finally been signed. It’s taken an unbelievable 10 months to get this deal across the line, but we’re finally there and I’m in the process of taking over the mortgage, insurance and council tax payments. In comedic timing, the week the signed paperwork turned up, 2 windows were smashed by local oiks which we’re now on the hook for to replace; don’t you just love property?

Wigan Flat Completes

OMG how can a simple no chain purchase of a 2 bed flat from another landlord possibly have taken 4 months?!? I’m never using that solicitor again; utterly shocking.

However it’s done now. It was a recently build flat, less than 20 years old, with a tenant who’s been there 5 years already and will continue. All paperwork has been done and the first 6 months rent has been paid in advance, which is nice. The numbers on that are:

– Realistic value: £68,000 (23% BMV)
– Purchase price: £52,000
– Rent: £5,100pa
– Gross yield: 9.8%
– Net ROCE* after all costs*: 18.1%

*All costs = deposit, solicitor’s fees, broker’s fees, lender’s fee, sourcer’s fee, and annual: insurance, ground rent, service charge, gas safety cert
*ROCE = Return On Capital Employed

In cash terms, there’s £12,177 equity after costs, cash left in the deal of £16,823 and it’ll make me £3,047 per year in positive cashflow. The plan is to refinance in a couple of years to see if I can get most of the deposit out.

Liverpool Lease Options

I’m most of the way through the refurb of one of the empty properties in liverpool, and possibly have a buyer lined up for the one I want to flip. If not, I’ll just refurb that next and flip it, probably in January now. The handover of the 4 tenanted properties has started with Venmores, though the jury is still out on how that’s going.

Helping Mates

Lastly I was pleased to help a friend save a deal that has £40k profit in it, by giving him advice on how to solve the major problem with the lease that was looking like it was going to derail the whole deal. I’m bored of writing now, ask me about it next time we meet if you’re interested in the details.

I’m not sure if there’s going to be a December update, depends on what happens in the next 4 weeks I suppose! If not, have a great Xmas and see you in the New Year, I’m quite looking forward to looking back at how things have gone this year.


September Property Update – Dead Ends & Lease Options

September Property Update – Dead Ends & Lease Options post image

I hope you had a pleasant summer. I’m not sure I can say I had a pleasant one, as once again summer has passed me by without a holiday, but it’s certainly been a busy one. One day I’ll make it up to the family and we’ll have some nice family holidays, but at the moment there’s far too much to do. (I should point out that the wife and kid have both been away, just not me.)

Given that so many people are away over the summer I didn’t bother with an August update email, so this one covers August and September.

One of the interesting things about listening to people in property, is you mostly only get to hear about the success stories. I’m trying not to do that and detail the failures too, because behind each success story are a dozen+ failures. Well failures might be too strong a worried, I’m talking about deals that didn’t come off; dead ends if you will.

Take the 14 flats I mentioned last time. I spent several days on that deal, viewing the properties, researching their use, talking to the planning dept and a planning consultant, talking to the agent, talking to the vendor several times, and in the end… I walked away from it.

The issue was, they’d been converted into flats with no planning permission just 2 years ago, the vendor was lying and saying they’d been flats for at least a decade, but there were several bits of evidence suggesting otherwise. The most compelling of which was the Valuation Office Agency (VOA) who are the gov’t body that sets the Council Tax list. Here’s a great tip: call them up and they’re happy to tell you when a property was first registered for council tax, June 2013 in this instance, certainly not a decade.

I considered going for retrospective planning, however unlike other properties along that road, these had double yellow lines out the front and no parking of any kind, nor any space for bike parking. The conversions were also very poorly done with no thought to building regs. As soon as the council come round, they’d slap an enforcement notice on them for sure.

Dead Ends
The reality is, property life is full of these dead ends. Take Susie Cole’s excellent sourcing business: The Good Property Company. They sourced/bought some 55 houses last year, about 1 a week. Sounds great right? But their sourcer Ash views and offers on 25+ properties a week, plus bids for 4-6 properties at auction each month. So they are only buying about 4% of what they go for. Or put another way, 96% of his work turns out to be a dead end!

I’ll be honest, it’s taken me some time to get used to this. I don’t think anyone likes doing work and investing your time into something that comes to nothing, and it can get disheartening when days and weeks go by and nothing seems to be coming off. But then perhaps that’s what separates the hobbyist from the professional? What was that pearl of Rocky wisdom? It’s in the picture at the top of this post.

Bristol Flats
And so I’d better mention the 4 Bristol flats, which have also fallen through, well kind of. Long story short, the vendor dropped down dead the day before Exchange and Completion of the purchase. It’s terribly sad for his family. Worse, it seems he didn’t have a will, so the estate has to go to probate, which is likely to take to next year now. I know, you couldn’t make it up!

We’re still confident that deal with come back, but it’s created a cash flow issue for me, as I’ve got the cash earmarked for that deal in the bank… what do I do with it in the mean time and how long do I wait for a deal that may not come off? There’s a cost to keeping underutilised funds, but if I sink it into another deal and these flats suddenly come back, I have to go off and raise that cash again. Oh decisions, decisions.

Property Sourcing
There are other deals that I’m looking at, I’ve been to see another small block of flats in Manchester that are all tenanted and look interesting, it’s early days with them still. Every week other possibles come in, e.g. yesterday I picked up a lead on an unmortgageable property that got a zero valuation by a mortgage company. Perhaps that’s a good purchase for someone with cash in their pocket doing nothing… oh, hold on! :) I’m going to arrange a viewing as soon as I can.

The direct to vendor stuff has taken a back seat over the last couple of months and that’s something I definitely want to improve on towards the end of the year. One main reason is that January is a monster month for direct to vendor deals, simply (and sadly perhaps) Christmas is the time most couples decide that they’ve had enough and they want to split up.

Also allegedly December is a slow month for repossessions as banks are more reluctant to evict little Johney just before Xmas, so January sees a bumper set of repossessions too. As a result, I want to start getting my signs and marketing out in the run up to Xmas, so they’re already in the public’s subconscious come January.

The LHA HMO continues to be a high yielding pain in the backside. New for this month is one of my tenants getting beaten up and stabbed with his own screwdriver in what I suspect was a drugs debt related beating. So an hour before showing a potential new tenant round, I was cleaning the blood splatter off the landing walls, stairs, hallway and front door! Ah the glamorous life of a landlord; they don’t tell you this stuff at landlord school, hoho.

Lease Options
The 3 Bury flats deal is *still* dragging on, for some reason the vendor just can’t quite seem to commit and sign the contracts, which is highly frustrating to say the least. That’s another deal that’s had weeks of my time in since January and if that all falls apart, I’m going to be mightily annoyed.

On a brighter note I’ve taken on a small portfolio of 6 lease option properties in Liverpool. I had to buy this deal so it’s cost a pretty penny, but there are 6 decent houses, 4 with long term tenants in (3, 7, 10 and 15 years respectively!) and 2 that are vacant and need minor refurbs before letting / selling.

The Return on Capital Employed (ROCE) is in the region of 40-50%, plus there’s built in equity on day 1 of about twice my investment, so I’ve doubled my money from the start, on paper at least. It’s been quick to seal the deal: just a few weeks, and I haven’t had to go through the hassle of getting my own mortgages.

Happy dayz!


July Property Update – Flat, Flats, Flats!

Eviction Notice

July has seen been a good month with some good progress and some great prospective deals. I’m buying my first flat in Manchester at a genuine 23% discount off it’s market value; have agreed to buy 4 flats and their freehold in Bristol, and getting close to 3 other deals.

1) Lease Options – The 3 Bury flats I’m acquiring on lease options are progressing. We’ve had some remedial work done (damp proof course and wood worm treated) and have started interviewing tenant buyers, with one interested in taking all 3 flats for his extended family.

2) LHA HMO – I’ve finally got read of my most troublesome tenant so far. He was a pleasant and intelligent enough chap… when sober, which wasn’t too often sadly. However I used some of the techniques taught by Jim Haliburton (the HMO Daddy) from his DIY Eviction course which I went on last year, and the tenant left without any issue and without the need for expensive and time consuming court action. Marvellous, thanks Jim!

The tenant who intercepted 2 months worth of housing benefit has started to pay that back by earning his keep and I’ve put him to good use cleaning up after the tenant who left and painting his room. So far, that’s working well.

Now I need turn the same eviction techniques on my second to worse tenant. As I’m writing this I’ve just had a call from one of the local bobbies asking for access to the HMO as one of the neighbours have called the police due to his arguing with his girlfriend. *sigh*

3) Property Sourcing – The repo properties I mentioned last time haven’t come off. It’s a long story but unbelievably, 3 houses within 20m of each other have all been repossessed within 2 months of each other. The insider info I had was that one of the houses splitting them had been sold setting a new sealing price for the road, which was what I was basing my post-refurb value estimates on. Sadly that property has fallen through, so I’m no longer confident of the end value and have withdrawn my offer… just as the bank were saying they would accept it next Thursday when they dropped the price again!

Last month I was hoping to try a rent 2 rent / lease option, with advanced LHA strategy with a local landlord I’d contacted. However my powers of persuasion are clearly not yet perfected as I’ve been unable to convince him to go for the deal. Which was a shame as a fake ad on GumTree has resulted in about 15 possible tenants, of which 4 or 5 were serious possibilities.

It’s taken some looking but I’ve finally found a property sourcer who’s doing things what I would call “properly”. There are many wannabe property sourcers out there, many of whom are really nice and earnest people, but who aren’t able to come up with the goods. This guy can and is though and I’ve already bought 1 deal off him: a cheeky little flat. I’ll give you the full details once we’ve exchanged but it’s a genuine 23% BMV (Below Market Value) deal, from another property investor how just wants a hassle free and quick sale. Perfect.

4) Flats, Flats, Flats – You know it’s funny, I never had any intention of buying flats, but like London buses, 3 deals seem to have all come along at once.

As well as the flat above, I’ve agreed to buy 4 flats and their freehold down in Bristol as a JV with a southern investor friend of mine. I’m putting up the cash, he’s doing all the work and we’re splitting the deal 50:50, nice and simple. Hopefully I’ll be able to give you more details next month. This deal also has the benefit of leveraging my friend’s previous relationship with Shawbrook for the financing, which gets me an “in” with them for future deals.

I’m also looking at a block of 15 flats in the NW that I’ve come across, which I think I can pickup for less than £20k per flat! It’s early stages at the moment but I suspect there’s a planning issue, so I’ve booked a call with a planning consultant; if I can fix that problem, that’s a game changing deal for me. It’s been helped by using a bit of internet sleathing to get the phone number of the vendor directly. :)

5) Pub to Flat Conversion – Yet another flat deal is a pub that I’ve found that’s half way through a conversion into flats, but the project has been stalled for several years. The developer who owns it just hasn’t got the time & resources to finish it, so I’m negotiating with him on a price to take it off his hands. The tricky bit is working out how much it will cost to finish the job, as he’s a thumb in the air kind of guy, so there’s no schedule of works to go off.

6) Direct to Vendor – As I mentioned last time, I’m still working on improving my patter for direct to vendor negotiations, and it’s improving. One deal I’m working on for example is a divorcing couple, however the relationship has broken down and they’ve both said to me that they’d be happy for the property to be repossessed before they see the other half benefit from it!

As June was, July has been another good month, with some real progress and some tantalisingly large deals within reach.

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June Property Update – 3 Lease Options Agreed

Lease Option Deal

June has seen some good progress, having all but signed up the lease option deals on 3 flats in Bury, and had offers of a couple of others through approaching local landlords. I’ve also started a direct to vendor campaign and have been calling leads about their properties.

1) Lease Options – FINALLY! The 3 flats in Bury are a go. The vendor has agreed to everything and has signed the Head of Terms, and that’s now gone for formal contracts. We’ve also got the keys for 2 of the 3 flats (the other is still occupied by a tenant).

The down side is the flats are in a worse state than I originally thought, with leaks from the roof, a failed damp proof course, woodworm, and a broken fire alarm being the main issues. However, we’re off in the right direction, so I’m looking forward to some very good progress on this in next month’s update.

2) LHA HMO – The LHA HMO is now running at full capacity and bringing in £2,000 per month, although every fortnightly payment is still a faff, as payments regularly stop for one reason or another. E.g. just today I was chasing up the housing benefit (HB) for another one of my tenants that’s in jail.

He got 6 weeks inside so the HB was suspended, but should still be paid once they get confirmation that their release date means they’ll only be away for less than 13 weeks. Despite getting this, the benefit was still suspended and I had to appeal to the Housing Benefit Area Manager to get it correctly released.

I’ve also had to give my most troublesome tenant his marching orders. Being woken up at midnight on Monday by the neighbours moaning about the noise, because the police had been called to a domestic and were throwing people out, was the last straw.

Another tenant has been given his final warning, also for anti-social behaviour including noise arguments and more seriously, buying drugs on the drive!

3) Property Sourcing – There are 2 repo properties that I’m close to buying, as I’m offering exactly what the estate agent believes they’re worth, and slowly the asking price is coming down. I’m fortunate in that I have a bit of insider info as to the real value of them, but I’ll share that with you if one of them comes off.

I was lucky that the local council had sent out an email and accidentally exposed the email addresses of 160 local landlords… so it seemed churlish not to take advantage of this and email them all myself to say hello! 😉 From that I’ve had 5 good leads from landlords that are thinking of selling up, and negotiations are proceeding gently that may present some opportunities.

One such opportunity is a rent 2 rent / lease option, with advanced LHA strategy. I’m just holding off until next week’s summer budget, to see what the Chancellor does to housing benefit before I decide.

4) Private Finance – I’ve received a £100,000 payment from an investor this month, which is always nice, as it bumps up my ability to move quickly on bigger deals.

5) Commercial to Residential – I spent several days this month looking at an office that’s been empty for 8 years! The asking price has halved in that time and is down to approx £1,000/sqm. What got my attention is that the residential properties in that area are going for £2,000 – £3,500/sqm, so there’s a chance to sell for double – triple the purchase price, after a major refurb (£100k ish).

So on paper, the numbers really stack up, as there’s probably at least £100k profit in it. The issues with it are: it’s not in a great location; there’s no outside space; and the parking is a nightmare. I consulted someone whose opinion I trust and on their advice was:

“Who’s going to spend £1/2M+ on a property with no garden, poor parking and in a bad location, even if it is a large property, when there’s a very nice semi 100mdown the road that doesn’t have any of those problems for the same price?”

Well when you put it like that, it seems obvious! :) As Susannah Cole says, always start with the end in mind: who’s your buyer and what are they looking for?

6) Direct to Vendor – I’ve also started a collaboration with someone on a direct to vendor campaign. Having got 20 initial leads I’ve been busy phoning them all, but it’s very much in the early stages, and I’m very much aware that my initial sales patter needs rapid improvement. Something I’m actively working on.

All in all, June has been a good month and I’m looking forward to what July will bring.


MMR Vaccine – What Did Dr Wakefield *Really* Say?

MMR Vaccine – What Did Dr Wakefield *Really* Say? post image

A very good friend of mine, who’s expecting his first kid soon, posted up recently about the MMR vaccine and how Dr Andrew Wakefield’s research caused a lot of harm.

When my daughter was due her MMR jab, I did considerable research into this subject, but that pre-dates this blog by some years, so I thought it would be useful to summarise the several weekends of research I did on the subject at the time.

For things like this, I always like to go back to the source, as the internet is full of opinion and conjecture. This is the link for the full text of the original research that ex-Dr Wakefield did, ignore his summary and read it:

Note at the very bottom it says this:

“We did not prove an association between measles, mumps, and rubella vaccine and the syndrome described. Virological studies are underway that may help to resolve this issue.”


“If there is a causal link between measles, mumps, and rubella vaccine and this syndrome, a rising incidence might be anticipated after the introduction of this vaccine in the UK in 1988. Published evidence is inadequate to show whether there is a change in incidence or a link with measles, mumps, and rubella vaccine.”

I don’t think the published evidence was/is inadequate, just do a Google image search and checkout the rates of autism yourself. Take a look at the graphs and see if you can spot the step change when the MMR was introduced? (Pssst you won’t find one.)

“We have identified a chronic enterocolitis in children that may be related to neuropsychiatric dysfunction. In most cases, onset of symptoms was after measles, mumps, and rubella immunisation. Further investigations are needed to examine this syndrome and its possible relation to this vaccine.”

The point I’m trying to make is that ex-Dr Wakefield’s own research said they hadn’t found a link, the incidence data didn’t support a link, that there might be a link just because A followed B, sometimes, but that further research was necessary.

So now go back and read the summary of findings at the start, which begins:

“Onset of behavioural symptoms was associated, by the parents, with measles, mumps, and rubella vaccination in eight of the 12 children, with measles infection in one child, and otitis media in another.”

Note is says: “by the parents”. Nothing in the rest of the findings says he found a link. That’s because he didn’t, and he said he didn’t, as I’ve quoted above.

I actually feel a bit sorry for ex-Dr Wakefield, as it seems to me that somehow he got caught up in all this and misrepresented his own findings to people who it appears, didn’t do a very good job of reading the research in question.

Now having said all that, it’s absolutely true that vaccines are not completely safe. A small minority of people will respond badly to them, that’s just a fact. But in general*, the good vaccines do FAR outweighs the risk of side effects. But do your own research, the internet is a marvellous tool, as long as you’re careful what you read.

[* In case you hadn’t worked out already I’m definitely pro-vaccine, but I say “in general” as in my mind, based on the evidence I could find, the jury is still a long way out regarding the HPV vaccine.]


May Property Update – Auctions… bah!

May Property Update – Auctions… bah! post image

May has proved to be a frustrating as April was. There’s been lots of activity to source property to flip, and we’ve come close to a few, but all have slipped through our fingers for one reason or another.

1) Refinance my existing portfolio – You’ll recall that I have postponed a decision to refinance my HMO. Since then a second lender has potentially become available, but as the first, the initial costs are prohibitive. I’ve decided that this property will remain unencumbered for the time being, to be used as security for bridging finance, and as a potential emergency fund for future use, should the need arise.

2) Lease Options – The 3 flats I’ve mentioned before continue to be tantalisingly close to signing, but as I’ve mentioned, getting the vendor in the country and in a position to sign is proving very tricky.

3) LHA HMO – Both my jail birds have returned from prison now and I got a bumper payout of housing benefit in May as a result.  Unbelievably one only managed 2 weeks of freedom before getting locked up again!  He’s out the end of June again.

After much faffing with the council, the VOA’s rebanding of the HMO into 5 separate bands has gone through, and I’ve finally got everyone uplifted to the 1 bedroom rate, so I’m now getting £2,000 per month housing benefit on a property that’s cost me £100k to buy and refurb.

The £2k council tax bill I got when the VOA rebanded the HMO has been successfully appealed down to…. £24 !! Hoho.

4) Property Sourcing – I mentioned last month that I was upping my focus on auction properties, and have attended several property auctions to bid on properties. My general experience has backed up what several developers have said to me recently, which is that there are not a lot of bargains at auctions these days.

One auction I went to had just 5 lots, so I was hoping it was going to be a nice intimate auction… oh no, it was rammed.  All 60 seats taken, people stood in double ranks down the side and back, and struggling to get in the door; I estimate there were 110 people there.  Most properties went for 15% over guide and the one I was bidding on (as most) was bought by a home owner for a price that left zero profit after refurb, so they basically bought it for full market value.

All the properties I bid on were bought by home owners, not developers, and were a good 10% over my max price (set to leave some profit in the deal obviously).

I’ll continue to keep an eye out for auction properties, but look more to buy pre or post auction.

Over the month I’ve continued to bid on local properties found at estate agents, but have also been looking at some JV deals in London, and some bigger deals like buying a block of flats and doing a wholesale to retail strategy, and also looking at some commercial to residential conversions.

No one said property was easy, and I remain confident that the hard work will pay off soon.


April Property Update

April Property Update post image

It’s been a bit of frustrating month to be honest, lots of work going on but not a lot to show for it. My primary focus has been sourcing my next property, which I intend to renovate and sell on (flip) for a profit. The DSS HMO continues to be a frustration too.

1) Refinance my existing portfolio – the 2 remortgages have finally completed and I’ve got another £70k sitting in the bank now, which is nice. Well actually I have an offset mortgage on my own home, so really that money is sitting in the mortgage account and reducing my home mortgage interest significantly, but is readily available to spend.

At the moment I’ve put re-mortgaging the HMO on hold. You may recall I had a wholly unsatisfactory valuation last month, and whilst I’ve found another lender, the fees and interest rate are exorbitant. On a £100k loan, the first year outlay will be approx £6k in fees (broker, arrangement, solicitors, valuation etc) and another £6k in interest.

So if you know anyone who’s interested in funding a private mortgage, fixed for 5 years say, on this HMO then please let me know.

2) Lease Options – I’m continuing to progress the acquisition of lease option properties and am very close to picking up 3 flats, but the vendor is a nightmare to get hold off and keeps leaving the country for 6 weeks at a time without getting me the information I ask for.

I remain hopeful that this will come off.

3) LHA HMO – Last month I had 2 of my tenants sent to jail, since then one has returned so the housing benefit for him should be reinstated shortly, however I’ve had a 3rd arrested now!

The VOA (Valuation Office Agency) who are responsible for council tax have visited the property and decided to reband each room as a separate unit for council tax. Actually I’m not that bothered about this, as it means the tenants pay their own council tax and as they’re all on benefits, they get council tax benefit anyway, so that will actually save me £1000 per year.

The fact that they backdated the change to September 2014 and sent me a bill for over £2000 was rather annoying, but I’ve got an appeal in for that.

4) Property Sourcing – I continue to call estate agents, view properties and offer on them, as well as working with local sourcers. I’ve also upped my game at the property auctions, however there’s nothing new to report so far.

The tricky bit is that with houses that require refurb, the estate agents over price them, let alone leave any profit in. E.g. a £120k post refurb house, that requires a £20k refurb, will be valued at £105-110k. Whereas I need to buy a house like that around £80k, bearing in mind there’s about £5k of buying and selling costs to factor in too.

In summary, work output is good and it’s just a matter of time. As people say, property is a marathon not a sprint.

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Bought Another House – March Property Update

Bought Another House – March Property Update post image

My main property activities for March have been:

1) Refinance my existing portfolio – Of the 3 remortgages I have been doing, 2 are ready to go through after getting held up with letters between the solicitor and bank taking weeks to go back and forth. Honestly in this day and age, how sending a letter in the post is still the default communication method mystifies me, especially when one goes missing, which happened this month.

Fortunately having efficient systems in place in order to monitor and track the conveyancing process, meant that I spotted the problem and managed to get the solicitor and bank to upgrade to the more modern of technologies for communication: sending letters by fax machine!

Anyway fingers crossed, 2 remortgages should go through soon releasing another £70k in equity.

The 3rd remortgage has been a complete disaster, this is the one on my HMO.  The Mortgage Work’s valuer (actually a Country Wide Surveyor) decided that my HMO is worth £0. Utterly unbelievable. I’ve yet to speak to another investor or broker who has heard of such nonsense.

I was tempted at first to pursue this as has patently not done his job, which is to value the property, and not followed the RICS guidelines on how to do this. But life is too short to get bogged down in complaints etc, so I’m moving on.

I’ve sourced 2 other possible sources of funding which I’m progressing, and am also open to the idea of a private mortgage.  So if you know anyone with £100k ish who’d like a 5 year fixed rate of return, please ask them to get in touch.

2) Purchase another single let – The purchase of the 2 bed end of terrace in Warrington exchanged and completed yesterday. You may recall the numbers are:

  • Purchased for £85k
  • A £10k refurb to split the 2nd bedroom to make a 3rd bedroom, will make it worth £115k – £120k
  • So £20k+ equity from the start
  • It’s got a tenant already in situ, giving a yield of over 8% from day 1.

The tenant is a joiner by trade and I’ve agreed with him that he does a fair chunk of the work that needs doing in the house, so I get the renovation done nice an cheaply, probably far less than the £10k I’ve quoted above.  I will be careful to monitor the quality of the work mind.

3) Jail Time – Unbelievably TWO of my tenants were sent down within 10 days of each other! So I had to gen up quick on the rules for housing benefit tenants when they are sent to prison. Fortunately as they will likely both be out within 13 weeks, it shouldn’t affect their claim so I won’t be out of pocket.

No one ever said this landlording business was easy, did they?

4) Property Sourcing – I’ve continued this month to focus on finding good local property sourcers, and have spoken to 10 now.  Sadly it seems the sourcing sector is full of fakes and flakes, with only of couple who are approaching anything like the level of professionalism required.

Plans are afoot to bring sourcing in-house starting after Easter.  That’s not to say we won’t continue to be open to deals brought to us by the few sourcers who are actively coming up with deals, we will, but we’ve decided we can’t rely on them.

5) Lease Options – Work has progressed on 3 flats that we’re looking to take on using lease options and we’re very close to getting contracts drawn up.  I’m cautiously optimistic that in next month’s newletter I’ll be able to report we’ll have these in the bag.

Several other lease option leads have been put on the back burner due to the vendors’ situations, and that’s fine, but more leads have come in which need progressing.

I have to say I do love the flexibility that lease options bring.  If you don’t know how they work, just think about buying a car using the currently popular Personal Contract Purchase, where you pay a deposit, pay a monthly fee, then there’s a balloon payment in 3-5 years which you can pay, or you can hand the keys back. That’s basically how lease options for houses work, except houses are typically worth MORE in 3 years, not less like a car!

Rick Otton is the undisputed expert on lease options and was doing a boot camp in April which I did consider going on, but it clashed with a weekend I’d already booked with Susie Cole.  But I got an email this week that he’s had to reschedule till 19-21st June.  As that’s currently free, I am thinking about going.  If you’re interested then get yourself along to one of his monthly meetups, I think they’re a £tenner and you can bring a friend. They are like no other property meet I’ve ever been to, but I won’t spoil the surprise for you! 😉

In summary it’s been another month of ups and downs, but things are ticking along nicely.


February Property Update

February Property Update post image

Below is my February property update / newsletter:

I’m continuing to work with Susannah Cole from The Good Property Company in Bristol, and also Trish McGirr from Come On Homes in the north of England, who are both experts in their fields with experience of nearly 500 property deals between them.

My main activities for February have been:

1) Refinance my existing portfolio – Of the 3 remortgages I have been doing, 2 have come back with firm offers at the (I thought optimistic) valuations I’d submitted, without any deductions; they will release £75k in additional cash.

I’m waiting to hear on the 3rd valuation (a HMO) hopefully this week, which I’m very optimistically am hoping will give another £80k cash, but I suspect as Meat Loaf said, it’ll be a case of: “2 out of 3 ain’t bad”.  But my target of raising another £100k cash should be easily achieved.

2) Purchase another single let – The purchase of a single let in Warrington I mentioned last month is going ahead and is in the conveyancing process at the moment. The figures roughly are: 2 bed end of terrace in Warrington for £85k + a £10k refurb to split the 2nd bedroom to make a 3rd bedroom, will make it worth £115k+ so has £20k equity from the start, plus it’s got a tenant already in situ, giving a yield of over 8% from day 1.

There’s currently a small issue with a restriction on the title from a former housing association, which is delaying things, but it should get sorted this month.

3) Raising Private Finance – I’ve launched 2 investment clubs this month: my Silver Brick Partners club (fixed interest, fixed term loans) and my Gold Brick Partners club (joint venture profit split on deals).

I’m pleased to say I have secured investments for each of my 2 clubs, with move investors in the pipeline.

It goes without saying, that if you know anyone who is either fed up with getting a terrible rate of interest on their savings, or has always wanted to invest in property but didn’t know quite how to start, then please ask them to call me, or pass on their details to me.

4) Property Sourcing – A key activity this month has been investing time in building relationships with property sourcers in order to leverage my time.  I realise that this means this month has been a bit slow on the property sourcing front, but it should pay dividends over the coming year, as I’ve now got 8 sourcers who are looking for that next great property deal for me.

5) Lease Options – I’ve actively progressing lease options as a strategy, and currently have 3 deals going through, 4 more where I’m in negotiations with the vendors, and another lead that’s just dropped in. 1 deal has fallen out of bed, but that’s the way it goes.

It’s been another busy but exciting month, time is the biggest issue at the moment as there’s so much to do, and never enough time, I wouldn’t change it for the world though.


My Property Journey – January Update

Colin McNulty’s Property Diary

Oh my, was it really November since I last posted on here? Where does the time go?

Well 2014 can go swivel, for a whole host of reasons, not least of which having to watch my father slowly die. This is my Facebook post from the time, and I don’t think I’m going to say more than that:

Waking up and being disappointed to discover my father is still alive has to rank up there with one of the worst experiences of my life.

As my father-in-law (who also suffered horribly before his eventual death) said, before he lost the faculty of coherent thought and speech: “We wouldn’t let a dog live on like this, why do we force humans too?”

What I think right now about religion’s backing for the State’s moratorium on euthanasia, and the needless suffering that causes thousands of people on a daily basis, is probably unprintable.

Moving swiftly on to 2015, it’s all change. As you may have noticed from the change in title to this blog, I’ve refocused my life on our property portfolio. It’s modest at the moment but that’s changing A LOT in the coming year, as I’m focusing all my time and effort on increasing it.

It’s my intention to post a monthly update here, partly as a personal record for myself, but also to keep any interested parties informed (let me know if you want to get the monthly updates by email), so here’s what happening in January:

As some of you know, I’m working with Susannah Cole, who from a standing start has bought (for herself and with her investors) over 150 properties in Bristol in the last few years. She’s an expert at buying property at a discount, refurbishing them, and selling them on for a healthy profit (this is called “flipping” property); we will be working together to do the same in Cheshire this year.

I’m also working with Trish McGirr, a hugely successful northern property investor who’s acquired (through normal purchases and otherwise) some 300 properties. Already with her help, I’m actively pursuing 3 flats and a house.

As you can see, I very much believe in standing on the shoulders of giants, and when there’s tens of thousands of pounds to be made, why wouldn’t you get the best experts in your camp?

My main activities for January have been:

1) Refinance my existing portfolio – I have 3 remortgage applications underway at the moment, which should release (pending valuations) between £120,000 and £160,000 of further equity to use in the business

2) Purchase another single let – I have agreed a purchase of a 2 bed end of terrace in Warrington for £85k.  After a £10k refurb to split the 2nd bedroom to make a 3rd bedroom, it will be worth £115k so has £20k equity from the start.

However this property it comes with a tenant in situ, generating a gross yield of 8.1%, so I will be keeping this property and adding it to my portfolio.  It’s an example of the sort of properties I will be buying and flipping, and if I had flipped this, it would have returned around a 15-20% profit margin on total cost.

3) Raising Private Finance – I’ve been busy talking to old friends and colleagues throughout January, not only for great chats and the chance to catch up, but also with a view to raising additional finance.  I’m putting my own money up (about £1/4M) but my 18 months cash flow forecast already predicts that’s not going to being enough.

Towards this end I’m launching 2 partnership programmes, and will be looking this year for a few select people to become Silver Brick Partners and Gold Brick Partners to share in my property business.

Silver Brick Partners with be eligible for generous rates of return for simple fixed period loans. Because of the profit margins involved (as evidenced above), I am able to offer much better rates of return than the banks are offering.  I’m looking to take only 6 loan partners this year, and already in January have 1 partner ready to go, with another having expressed initial interest.

Gold Brick Partners are those people who wish to more fully share the risks and rewards of property investing. Typically having a six figure sum to invest, these investors will be true joint venture partners, who will fund the purchase and refurb of properties whilst I do all the hard work! Profit will then be split on a 50:50 basis.  Subject to successful 13.3 vetting, I’m looking to take only 3 JV partners this year, and I’m currently in advance talks with a potential investor.

It goes without saying, that if you know anyone who either is fed up with getting a terrible rate of interest on their savings or has always wanted to invest in property but didn’t know quite how to start, then please ask them to get in touch with me, or pass on their details to me.

As you can see, it’s been a busy but exciting month, with much more still to come. It’s going to be a great year! 😀

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