Happy New Year! Oh, it’s possibly a bit late for that. Where did January go?!?
Not to worry: all my properties are full, there are no rent arrears, all my tenants are happy, life as a landlord is a box of roses…
Haha in my dreams! But that’s the public face of being a landlord and property investor isn’t it? That’s the rosy picture that many of the gurus portray. Someone even told me this month: “When someone asks how business is going, the answer is always: Awesome!” That might be good PR, but sadly reality is somewhat different, and I have no appetite for sugar coating the truth. It’s the Engineer in me, I call a spade a spade, as you’ll see:
January has been a nightmare month of fire fighting, particularly with the Christmas effect: I’ve got several tenants in arrears, 3 of whom have had their housing benefit suspended by the council for some infraction or other, I’ve got a couple of voids (empty properties) and whilst I’ve had plenty of interest I’m being picky about the tenants I take. You soon learn as a landlord that it’s better to have no tenant, than have a bad tenant.
Additionally 2 other tenants have handed their notice in and will be moving on February; whilst it would be lovely if tenants stayed for life, tenant churn is a fact of landlord life, particularly when you often deal with single housing benefit tenants as I do.
To compound that the agency I’m using in Liverpool are being a right pain: with staff going off sick and others having to picking up their work; not noticing issues over housing benefit; not chasing arrears well; and some of the staff crazily claiming they’ve never heard of legal subletting with the owner’s permission (what’s effectively happening with my lease option properties) and getting very confused as to who’s name to put on the housing benefit claim for direct payment from the council.
This is the “broccoli” of being a landlord as Susannah Cole would say. It’s all very well going after the shiny new deals, but it’s vitally important not to take your eye off the ball over your current portfolio.
The major impact of this has been that I’ve not yet managed to formulate my goals for 2016. To be honest I didn’t quite meet my goal for 2015, the primary reason being that the main flip deal I have in the pipeline hasn’t come off yet. It’s been frustrating to agree to do a deal, ring fence the money for that, only to suffer now 7 months of delays, with more to come. If it had completed in a timely fashion I’d have comfortably hit my 2015 target, but that’s just the way it goes.
The December auction cycle proved fruitless. There were 4 properties I was seriously interested in and all went for more than my top bid. One 5 storey Georgian grade II listed building in Liverpool L1 that I was particularly interested in went for a shocking 60% above its guide price!
As I said in December the 3% stamp duty change (the details of which still haven’t been finalise) is likely to make the auctions ridiculously busy, February 2016 most so I think, but that’s not going to stop me keeping my eye out for that cheeky little deal.
The last 2 months I’ve listed many of the deals that had arrived on my desk. The purpose of that was not only to demonstrate what’s going on, but also to show that much of property investing is looking at things that never happen.
Out of the 10ish serious opportunities I’ve looked at, I’ve only agreed to do one: a JV with someone on a property in Shropshire, I’ll provide details when the deal is done, but it’s a simple buy, refurb and flip.
Of the 2 refurbs I mentioned last month, 1 is finished and I’m currently advertising for tenant buyers. After 1 week just advertising in the window of the property, I’ve had 12 calls from 5 different people. I’m expecting a lot more this week.
The other refurb has started after I eventually agreed a fixed price with my builder. I always get fixed price quotes based on detailed specs. Yes it’s more work up front and creates some delays, but it creates certainty on both sides, you both know where you stand, and there are general no nasty surprises. And as happened with the last refurb, if it over runs, that extra cost doesn’t come out of my pocket.
That’s all for this month, hopefully the fog of January’s turmoil will have settled by the end of Feb and I’ll be back to growing the business.