These monthly updates have definitely become less frequent, so perhaps a Quarterly Update is in order. It’s been a busy few months, some good, some bad. Let’s start with some good news:
4 Bristol Flats
I’ve previously written about the 4 Bristol flats I bought in March, 2 were vacant and 2 were tenanted. The 2 vacant flats were spruced up with pot of paint and some new carpets and both sold within 2 weeks for full asking price and we’re due to exchange imminently. (I’ll list all the figures once everything is done.)
The 2 tenanted flats were a different matter. We tried to find investors who would buy the 2 tenanted flats, which both had 9+ year tenants in, and offered a 10% discount. Sadly after several months we were unable to, which I confess surprised both myself and my business partner. The best offer we had was 30% below what we’d sold the vacant flats for, which was obviously unacceptable.
We had no choice by to evict the tenants (thanks to Jim “HMO Daddy” Haliburton for his DIY Eviction tips) and sell the flats with vacant possession. Not surprisingly, the tenants were not happy! This is definitely the worst part of being a property investor, asking people to leave their homes is an unpleasant business. Fortunately for me, my business partner was point man for the discussions with the tenants. Both tenants left within the 2 months’ notice after we preemptively returned their deposits and offered to pay £500 each towards their moving costs.
Both of the newly vacant flats have been sold, again for asking price, although 1 has since fallen out of bed. It was in line with the typical average that 1 out of the 4 flats’ sales would fall over, so this one went back on the market last week. Fingers crossed, it’ll all be done and dusted by Xmas.
The refurb on the Telford flip has been done, although it ran over budget slightly due to builder issues, the results were fantastic. Take a look at the RightMove Ad. It’s a lovely looking property that’s been well staged, there’s just one problem: 2 months later we’ve not had a single offer!
It’s easy to say that the reason is it’s a quirky property etc etc, but the truth is, if a property isn’t selling the reality is, the price is wrong. As an investor here, there’s a balance between how long you wait for the price you want, against the monthly loss of finance interest charges, and possibly more importantly, the opportunity cost of having the investment money locked away.
It is inevitable that some property deals don’t go quite as planned, and in property you have to take the rough with the smooth and mitigate the downside wherever possible. In this case having a great relationship with your business partner is vital, and we’ve decided we’re going down the Plan B route, which is to refinance the property and rent it out. It’s not ideal, but it’s an acceptable second option, and it releases much of the investment cash for another deal.
Tenant Issues – Non payment of rent
It’s a landlord’s worst nightmare, when a tenant doesn’t pay the rent. One of my tenants being managed by Venmores in Liverpool, has managed to not pay any rent for far too long, and is several £thousand in arrears! It’s a long and complicated sorry story (buy me a coffee and I’ll tell you about it sometime) that I trusted Venmores to resolve, after all, isn’t that what we pay letting agents for? Well as Susannah Cole is fond of saying: it’s their fault, but it’s my responsibility.
By getting involved directly and meeting with the tenant (who’s been in the property with her family for 7 years) we’ve agreed a settlement which has her paying the full rent again (even though it’s somewhat below what the going rent should be) and a contribution towards her arrears each month. It’ll take some time to clear her debt, but the tenancy is back on track, and we’re rebuilding the landlord-tenant relationship.
Storm Damage Unreported
Whilst attending a Gas Safety inspection at one of my properties I noticed that there was ridge tile on the roof missing. The tenant claimed to have no knowledge of it, despite the fact it would have made quite a mess when it hit the ground. I thought I’d try using www.MyBuilder.com again, so posted up the job at 8am in the morning. By 10am I’d had 4 quotes for: £220, £120, £90 and £60.
Whilst I don’t necessarily always go for the cheapest quote, the £60 one was from a lifetime roofer with some 40 years experience, who had a spare morning. I said I’d meet him at the property at 11am. When I arrived he was already on the roof and half through the job! From posting the job to have it done, for £60, took 4 hours, now that’s good service.
Retired Romanian Police Colonel
I’m very pleased to have moved a new family into one of my properties, they’re a lovely Romanian family headed by a retired Romanian police Colonel who was a prison Governor back in Romania. I’ve known some landlords who’ve had a torrid time with Romanian tenants, but I have faith that this family are decent honest people who will make excellent tenants.
First Significant Water Leak
I’ve had my first significant water leak in my LHA HMO. One of the tenants found 1/4 of his room under an inch of water. The carpet is probably ruined but the bigger issue is, where is it coming from? The primary suspect is the shower on the floor above, so I’ve got a plumber resealing it today.
First Tenant on Universal Credit
I’ve been quite busy in the last 2 weeks dealing with my first Universal Credit application by one of my tenants. I’ve been supporting him partially because he needs it, and partially because I’m interested to learn all I can about what it entails for future claims. For those that don’t know, it’s almost completely done online, which sounds great except when you have DSS tenants who’ve never even had an email address before, let alone have access to a computer or smart phone. Universal Credit has a terrible reputation amongst landlords, so we’ll see how things go.
A Commercial to Residential Project
I’ll finish with some good news, I’ve agreed a significant commercial to residential deal, which is by far my biggest property deal to date. I’ll provide more details in the next update.