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.