Thursday 31 March 2016
When was the last time you invested in bricks & mortar in Clapham, Brixton and surrounds?
I've been speaking to many of you over the past months, and thank you for all your lovely comments. I get great feedback on the blog so I certainly will be keeping things up. My aim is to help everyone invest wisely and of course make the most return on their investment (big or small).
Some critics however had asked me when the last time was that I did a deal myself - not orchestrated, sourced, pointed someone in the right direction - just myself. I had to confess it was indeed some years ago that I had bought myself. I had been busy building a portfolio of loyal landlord customers that are customers of my estate agency, XanderMatthew. Now that I am not so actively involved with that side of things any more (I am of course still involved, but less directly), I thought I'd get out there and show my clients first hand how things are done.
Today I have completed on the second flat in as many weeks. How did I do this so quickly? Well truthfully one was bought through an agent - I had actually put the offer in last year August (slow solicitor on the seller's side, management information coming through slowly, the list goes on). It's been a cake in the oven for some time now. It just happened to nearly coincide with the other one that I bought at auction.
Auction? Yes, auction. It's not as nervewracking as one might think. With a good look at the legal bits to ensure there is no silly business like a short lease, wrong rights of access and a of course to see if there's parking or gardens actually included. Simples. When in doubt obviously speak to a qualified professional. Hand up, hopefully nobody bids over your maximum that you set and then voila! My solicitor was even able to complete early (saving me thousands in stamp duty). Excellent service of course. If you want access to this then come and speak to me at the next event and I'll tell you more.
So, putting my money where my mouth is, I went ahead and bought two. Well, nothing by halves of course, I have an audience of followers to demonstrate knowledge and expertise to. Sceptics watch out.
Deal number 1: 3 bedroom ex-local authority flat in need of full refurbishment. I will post before and after pictures, along with numbers as the works complete of course, no good showing you a building site. This property is suitable for a long term hold and rent strategy. As you will have read in my previous posts 3bed apartments are a sweet spot in the lettings market and if the flat is big enough you can even convert the lounge to an open-plan kitchen/living and make a 4th bedroom. This flat however is slightly too small I feel, so I will keep it as is. 3beds are always amazingly popular in the summer (you will have read that I'm sure) so the building work should be complete just in time for a peak summer rent on a long let basis. £295k for a 3bed, yes please! Even at a pessimistic rent of £2000pcm and including all costs the gross yield will be over 7%. Once the property has been refinanced however I'll be looking at a ROCE of 25%.
Deal number 2: 2bed (well, one and a half really) flat on the second floor of a detached Victorian building with shared parking to the rear and communal gardens. This flat was totally unloved by the previous owner and actually sold in auction as a repossession. Very rare, but it still happens. The property had been sitting on the market for over a year with two agents and it failed to sell. There is some Japanese knotweed in the garden, yes, the parking has been fly tipped a few times, cracks down the front and back of the building and the flat itself is about as basic and dirty as you can imagine. Upon reading the legals it came to light there is a treatment plan in place for the knotweed, and the cracks are actually nothing more than paint peeling off due to poor preparatory work. £160k later and the keys are in my hand.
Over the coming weeks I will elaborate further on certain deal structures. Joint venture, private investor finance. I will also be keeping you up to date with the progress of the two deals I've got going through - I say "going through" because the end result (a sale or a let) has not been reached as yet. Until then the money I've laid out is just that - expenditure.
If you are interested and would like to know how to make the best from your investments why not come have a chat with me at the next PIN meeting that I'll be speaking at? On Tuesday the 5th of April I'll be at Wimbledon PIN together with host Trevor Cutmore. I'll be giving the lettings update as usual, but I'm acutely aware that more and more of you want to know how to make big money quickly in property. This is possible, but don't forget investing a long game. Better to hedge your bets with a few let properties and then play with a few "flips" on the side. Come talk to me about your strategy. Hopefully see you at the next PIN meeting, or email me on firstname.lastname@example.org.