seeking help

[jock_stein]

Hi forum, Ive been pondering investing in buy to let property for a while. Ive researched alot on the subject but feel like theres some crucial queries of mine gone unanswered. Ill try to keep this as short as possible, i understand that there wont be a cut and dry answer to most of these questions but any thoughts, advice or guidance will be greatly appreciated.

Im considering investing in 3-4 pretty crap flats in my towns student area, or one nice house. Im also considering renovating the flats to demand more rent but would this idea be flawed giving my target tennants? which out of the above options would pose the greater risk? If i had 1 flat lying empty for a few months it wouldnt hurt as hard as the house being empty.

If i were to use a letting agency would i have to pay them 4x the money than i would for the house for their services?

And the lawyer fee id assume would be much greater with 4 flats vs the house? Is it realistic to buy safely and fairly easily without using a lawyer?

Is it best just to invest in the city i know and live in, or would it be wiser to look for somewhere with a large student population or a city with more potential growth (if such a city exists in 2012 )

In this climate what % below the asking price is realistic but not insulting?


thanks every so much in advance for anyone who took the time to read and even more to those who reply

 

[Gareth Hughes]

Just bumping this one up (new members' posts tend to drift down the queue) - I've no experience of this apart from having lived in some crappy student flats in my time.

 

[Keith Bowman]

If you mean three or four flats or rooms in one house, you will come up against the more onerous rules about houses in multiple occupancy - you would be ill advised to go down that route without professional advice! There might be other forums aimed at private landlords which would be even more relevant than this one, although I am sure everyone here would still be pleased to welcome you.

 

[Sonyaclegg]

I can help in some regard. You must seek Solicitors advice when purchasing, especially flats or apartments. The Titles can be complicated so best to get expert advice to avoid problems at a later stage. That's my advice as a Solicitor. My advice as a Landlord is if you are concerned about rental voids, you may want to consider the flats option in an attempt to spread your risk. As Keith states, multi occupancy in one property poses its own challenges so you will need to be aware of the regs before you refurbish as there will be extra costs involved, such as the number of bathrooms, fire doors, escape routes in case of fire etc.

In respect of refurbishing, spend enough to make them clean and bright for students. The finish would need to be better for young professionals. Have you considered tenants who can claim Housing Benefit? But beware, the benefit payments are due to change to a Universal Credit whereupon the benefit payment as a whole is paid to the family/individual so not directly to you.

Always best to invest in an area close to you and one you know to allow you to be on hand to repair/attend property to keep your costs down.

You could consider marketing the property yourself to save on costs. If the student market is your target, you can contact the local Uni, Hospital, large employer and send the details in. An agent will charge a finders fee for each tenant for each property, normally a months rent or 10% or thereabouts a month for managing the property for you.

The rental market is very strong at the moment so you should not have any problems renting providing you target your preferred tenants accordingly.

As for the offer, there are no set rules. All the vendor can do is say no and you increase your offer.

 

[Owain]

students appear to be demanding better properties - en-suite bathrooms are now routine for new build student places.

A "nice" finish is not necessarily expensive to provide, and can be hard-wearing - engineered wood floors are robust, and can in extremis be sanded and resealed. A basic white kitchen with white free-standing appliances to co-ordinate. Scratch-n-dent appliances can look good but not be expensive to buy. Clean fresh paintwork in a standard colour throughout which is easy to touch up.

Depending on your location - I know a landlord who does well with letting a student flat Sept-May and does weekly holiday lets over the summer. More work over the summer, but the weekly holiday let is about the same return as the monthly student let. It can be worth charging a slightly below market rent to encourage good tenants to stay and decrease void periods.

More than 2 or 3 tenants sharing a flat/house, as well as bringing you into HMO territory, can be more complicated as tenants fall out with each other and move out/in or fail to agree on bills etc.

Agency fees and void periods will swallow any profit, so try and avoid both if you can possibly manage the properties yourself and find reliable tenants.

 

[LadyArowana]

My lovely builder who did the small amount of renovation on our family home before we rented it out ( not as an HMO ) also had a student let property of his own. His view was that location was very important for students and that properties within easy distance were always the first to be rented. He had the advantage of being able to do ongoing maintenance himself ( or have his people do it as fill in during slack periods ) of course.

Sonya has made excellent points as regards the regulations in respect of HMO's, you might find a property for sale that had already been renovated to comply, but if you were looking to convert something yourself then it would be worth knowing what was involved before you bought. There are also stringent regulations as regards the furnishings of rented properties for fire safety reasons.

I'm not sure how much difference there is between the requirements for B and B versus HMO, but guess there would be some similarity. Something like this http://www.primelocation.com/for-sa...h_identifier=b96d6eb28e53b6189f63c0dde8f0e4d3 which is already set up might make an easier transition.

 

[jock_stein]

Thanks to those who replied (especially sonyaclegg really is the helpfull advice i was looking for) I thought this might of got ignored i do really appreciate it.

As for the offer, there are no set rules. All the vendor can do is say no and you increase your offer.

Surely giving this the best advice is to just start bidding on every property that matches my target. Bid 50% of asking price and slowly increace it till accepted?

Can i bid for the property without using a lawyer and then once a figure is agreed with the sellor bring the lawyer in to check the deeds ect ?

When i bought my house the lawyer i used wasnt helpfull atall and im sure i could of got it for less which still frustrates me greatly, so im not wanting to make any mistake this time round.

You could consider marketing the property yourself to save on costs. If the student market is your target, you can contact the local Uni, Hospital, large employer and send the details in. An agent will charge a finders fee for each tenant for each property, normally a months rent or 10% or thereabouts a month for managing the property for you.

I was planning on using an agent because the person i do know in real life whos done this says its kind of an insuarance aswell for damages or extreme circumstances. Is he exagerating there benifit? If its mainly just donkey work invovled I'd do it myself and i know loads of tradsmen desperate for any work at the moment who have given me extremeley fair pricing for work done on my house.

thanks alot people

 

[worms]

If I am picking up correctly on the clues to location in the OP's post, then I would urge real caution on where and what you buy. There are huge numbers of modern, buy-to-let properties close to the city centre, so you need to choose your niche wisely!

Yes to buying in the town you live in and know, rather than buying elsewhere - the further away, the more external (expensive) inputs you will need. I'd target one of the specialist colleges or courses, go for the quality end of provision and look for tenants who are willing to take a full-year lease and pass on to the next generation of students coming in to the course. If you get quality and location right, then if it doesn't fit with your expectations/lifestyle you can sell-on easier.

 

[JoceAndChris]

Interesting thread.

Counter to the advice being given, we are doing really well with our pretty Highgate ( N6) garden flat, targeted to young professionals. It is always spoken for before the current tenant leaves, because we have a tiger-ish agent, it is pretty with front and back garden, and I make sure I build a relationship with my tenants so they will speak well of me when they're showing new people round.

We did it to a high standard, it's just one bed, but we charge £1300 per month and are under charging. We'll put it up next time.

The maintenance is fairly easy as we have built a relationship with various repair men. It's simpler to replace white goods than repair, we've found. Current tenant prefers to be there to let the tradesmen in, but the last one was very busy and preferred to hide the key for the tradesman.


Strongly recommend London and just one property!

 

[worms]

Counter to the advice being given...

Joce, I don't think this is counter to the advice at all! Quality, location, relationship - all key features. There will always be people who do very well at the other end of the business, but it wouldn't be for me!

 

[JoceAndChris]

Me neither. This is someone's home you're making. It has to be treated sensitively, and well. The capacity to inflict misery on others is great.

 

[worms]

The capacity to inflict misery on others is great.

Sadly this is a capacity that some tenants also possess!

 

[Moo]

We bought our little two-bedroom buy-to-let in Norwich over fifteen years ago. I did it up with loving care and put it in the hands of a highly recommended independent agent because although I lived in the area I knew I'd be too much of a soft touch when it came to choosing tenants and collecting rent.
It's been a great success. Only one 'void' period, which enabled us to get in and freshen up the decorations, and a succession of tenants who have invariably looked after the place with meticulous care. Not students, I hasten to add!
I think the secret has been getting the right agent. He is really canny when it comes to choosing the tenants, and is assiduous about dealing with any problems that have arisen. It's our experience that tenants really appreciate the fact that we care about them and are prepared to go the extra mile to keep them comfortable.
One little wrinkle that has been useful: instead of buying a washing machine, we've rented one. This means that if/when something goes wrong, the tenants just have to ring the chap direct and he comes straight round and sorts it out or even replaces it, if necessary. We pay the quarterly fee by standing order, and its tax-deductible. It would certainly be a useful thing to do if you're letting sto students!

 

[DJH]

Interesting thread.

Counter to the advice being given, we are doing really well with our pretty Highgate ( N6)

Is that near Highgate School. I fancy I repaired and re-gllded the large lead commemorative plaque on the cricket pavilion there. Did some funny old jobs all i all! 8)

 

[JoceAndChris]

A view I enjoyed every day for many years! A rewarding project I'm sure.