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.