Advice on investments


You’ve decided to invest a property. Great! I’m sure you have an ideal image in your mind about your perfect home/investment, and I’m sure you can visualise exactly what you are looking for.
Without putting a dampener on your dreams (after all, dreams and goals help us work towards achieving our desired result), there are a few things you will need to keep in mind, the main one being finances.
Too often, I’ve seen investors look the price of the property, and excitedly calculate their annual yield from the rental monies they could potentially achieve on the property. This is a great start. Unfortunately, if it was this easy to work out, every investor in the world would be rich and owners of multiple homes.

There’s solicitors fees, agent’s fees, tax, keeping an amount of money as an emergency fund should something go wrong, along with all the other costs involved in purchasing a property. Suddenly, the yield you have calculated seems to be dropping with every calculation.
I advise that you should look for properties that can give you a pre-tax yield of between 4-6% annually. It’s difficult to find, but not impossible. The next thing you should work out is every single cost. Granted, it’s difficult to work out exact figures but it’s good to have a rough idea of what you will end up with.

If you would like, I can generate a report for you breaking down potential costs. All you need to provide me with are the following:

– Price of property
– Estimated rental price per week

I will provide it for FREE. No incentives. No catches. I want to help you make an informed decision and I ask for nothing in return.

Simply fill in the form below with the information required and I will get this sent over to you as soon as possible. The picture above gives a snapshot of what the report will look like, but trust me, there’s so much more to consider, which you will be able to see once you have requested a report.

Please keep in mind, and I cannot stress this enough, the figures I send to you are a rough guide, and not to be taken as the exact amount you can expect. The property market has ups and downs so use them as a guide.


Understanding Your Credit Score

Great advice for those interested in purchasing a new home – article gives a good overview of why credit scores are important.

Carrie Goldstein Mortgage Blog

Understanding your credit score and how it impacts your home ownership prospects your credit score is an important part of your financial profile. It has a direct impact on your ability to take out loans. The score itself is a numerical reflection of your credit history. It gives lenders a way to discern your reliability before approving a loan like a mortgage for instance. Though this is the basic function of a credit score, it can also have a far-reaching influence over other aspects of home ownership. Mortgage Loan Approval: Will Your Score Make the Cut? First and foremost, the status of your credit score is a deciding factor in whether or not you are approved for a loan. Even if you put down a large down payment on your home, a low credit score can still cause the loan to be rejected. For this reason, it’s best to wait…

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What goes up, must come down

ImageThe media has been inundated with news of house prices decreasing recently, with research from plenty of sources citing some of the possible reasons why this is happening.

Rightmove, RICS and Nationwide are amongst the companies that have conducted the research and they have all found similar findings. A brief overview of the findings are below:

Rightmove have reported that in London, asking prices for properties for sale have dropped by 0.5% last month, compared to the first 5 months of 2014 where the increase was much more substantial. The report further states that there had been an increase in sellers on the market, but with the implementation of stricter mortgage lending criertia introduced by the Mortgage Market Review (MMR), buyers have become more reluctant to purchase.

A report by the Royal Institute of Chartered Surveyors claims that the slowdown in the market is due to a lack of choice of properties for buyers. The possibility of rising interest rates also is a deterrent to those who were initially interested in buying a home. They also reported that there has been a decrease in the demand for local properties for the first time since June 2013.

Nationwide’s report informs us that for the past 13 months, prices have risen, but similar to the other reports, they have also reported the growth to be slowing down. Their report have also placed some of the blame on the MMR, but also said that “the underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer.’

How has all of the recent news regarding the slowdown of growth affected sellers? I have been speaking with a client who has instructed a handful of agents, including myself, to sell his property. We valued it at £330,000, and advised him to consider offers below this amount. We believed the valuation to be an honest and true reflection of his property considering the age of the flat, the facilities it has and based on the view it had (which was of the main road – not one of the best looking roads at that). This was in March and he had agreed with the figure we had given him so we proceeded to take marketing pictures and place the property on all the major portals. We had interest in the property fairly quickly and conducted two viewings at the flat. One of the viewings went particularly well and they placed an offer on the property at the full asking price of £330,000. By the time the offer had been received, it was now April. I sent the details of the offer to the vendor and then called him to follow up and to see what his thoughts were. Based on the valuation I had given him and his apparent agreement of the price when we were first instructed, I was confident I would get the offer agreed for the buyer so we can proceed with the paperwork and instruct solicitors.

We spoke at great length about the offer and he told me that prices have increased, which I agreed with. I also reminded him that the figure of £330,000 was the top-end of what he could expect to achieve and that we had previously advised him that he should consider offers less than this amount. He wasn’t too happy with it as he believed he could sell the property for a lot more, and he informed me that Zoopla have valued similar properties for £343,000. I told him I didn’t agree with this figure as it is too high. Newer properties, with a better location, better facilities and better views were selling for this amount. But he was determined to achieve a higher amount, so he rejected the offer. We then adjusted the asking price of the property to meet his demands. I informed the buyer of this who (unsurprisingly) didn’t agree with the new figure and immediately withdrew his offer. He had enough money to increase his offer but felt it wouldn’t be a good investment to spend that much money on that particular property. 

Enquiries dried up for the flat, and by now it was May. I called the vendor to catch up with him and to provide some feedback on how we were doing after the price increase. We actually had no interest and no viewings. I advised him his expectation is too high and he needs to lower the price, which he again disagreed with. He then told me Zoopla has valued similar properties now at £351,000! I actually couldn’t believe what I was hearing. I informed him that Zoopla’s figures are estimates, and they actually haven’t seen his property and he needs to listen to what we are advising him as we are active in the market – the most his property can achieve now is around the £335,000 – £340,000. Realistically, he wouldn’t get more than this. He then told me one of the agents actually got him an offer at £337,000. In my mind, I thought ‘wow, that’s a great offer’ and assumed that he had accepted it. However, he then told me he had rejected it and he now wants £350,000 as the minimum as per Zoopla’s suggestions. I couldn’t help but think he is going to be disappointed if he keeps rejecting offers based on a valuation from someone who has never seen the property.

A week later, I called him again to see if the property was still available. He informed me that the offer was withdrawn as the buyers couldn’t increase. He then started citing some research he conducted on the Internet about house prices and I gave him our feedback, which was the same as before – no interest at the price he is looking for.

Now it is June, and I am due to speak with him again shortly. At £351,000 we have received no enquries whatsoever for his properties. With all the recent media coverage on the prices slowing down, I wonder if he regrets rejecting the two offers he had received. It will definitely be an interesting conversation.

Government publishes renting guide for tenants

I was pleased to see that the government have published a check-list with advice and guidance on how to rent a property for tenants. To read their guide, click here.

The guide is great and provides tenants with the basic knowledge they need in order to rent a property. I’ve met too many tenants that do not know their rights when it comes to renting a property, especially with first time renters or those from abroad. There are an increasing number of tenants that I have spoken to who take the advice of a lettings agency without questioning them, and the guide published by the government gives tenants advice on what to look for when speaking with an agent. I’ve had situations with tenants where they are willing to hand over their money without really doing their own checks. Far too often I’ve heard the expression, ‘I love the property, I can pay a deposit right now’.

A property is a huge investment whether you are renting or letting a property out. For tenants, they hand over a huge amount of money over the course of their tenancy and it saddens me when I speak to some who have had terrible experiences in the past.

As I love to tell personal stories based on updates on the property industry, I’m going to share a story with you which illustrates the lack of knowledge that tenants have about their rights.

An applicant was completing their paperwork before their big move and we had started chatting about ther current home. They mentioned they were having problems with the landlord and the agent regarding the release of their security deposit. When they first moved in to that property, the check-in and inventory reported damp and mould issues in one of the rooms, and they were advised by the agent that they will inform the landlord with the view of getting it repaired.

However, the landlord failed to repair it and the tenants periodically reminded the landlord and agent that the mould issue hasn’t been fixed and it seems to be getting worse. The response was the same every time from the landlord – ‘no problem, i’ll get it looked at’.

They stayed at the property for 2 years and the landlord did not send anyone to look at the issue to get it fixed. As it was time to leave, they didn’t report it in the final few months of the tenancy and at this point, the mould had gotten considerably worse.

The tenants told me that the landlord was going to deduct some money off the deposit for the cost of the repairs for the mould issue. I thought this was strange but the tenants thought it was normal for this to happen as the mould got worse throughout their tenancy and they thought it might have happened because of the way they they were living there and assumed they were partly responsible. I asked if they had agreed to the deductions already to which they said ‘no’.

Now, agents have no obligation to offer tenants advice but they do have a duty of care towards them. Appalled at what I had heard, I advised them that they shouldn’t agree to the deductions. They had reported the issue to the landlord on many occasions and they had written evidence of this, so how can the landlord attempt to extract money from the tenant to repair an issue which is the landlord’s legal obligation? The health risks associated with sever mould are well documented and the tenants are lucky that they didn’t suffer any health issues from it.

The tenants were unsure of my advice, but I assured them that they had every right to contest the landlord’s proposed deductions. Reluctantly, they said they will try to contest it.

A week later, I received a phone call from the tenants who were extremely happy and grateful for the advice I gave to them. The landlord agreed to give them their deposit back without deductions for the mould.

The example I have given illustrates the need for more information and guidance for tenants. They are unaware of their rights because there isn’t much information out there for them, which is why the governments checklist is so important.


The 10 minute rule


No, I’m not talking about the procedure that MPs need to follow in order to introduce a bill. The 10 minute rule that I am talking about is the rule that you should follow when purchasing an investment property. 

When you decide that you want to invest in a property, you are obviously going to keep a few factors in mind, such as price, age of the property and location. We’ve all heard the saying ‘location, location, location’, which has been made ever more popular after the Channel 4 programme. But what exactly about location do you need to keep it in mind?

This is where the 10 minute rule applies. Let’s think about it in more detail. You are purchasing a property as an investment, and what drives your investment? Tenants. 

When tenants are searching for a property to rent, it is temporary and usually short term. Properties that carry the most value are those that offer it’s residence the most convenience. We are beginning to see a trend where new developments are increasingly beginning to include a gym and a concierge for this particular purpose. 

So what is the 10 minute rule? 

This is relating to the location of the property. I strongly advise that if you are investing in a property, take a walk from the building to the nearest station. If it is within 10 minutes, this is ideal for investment purposes. You should also apply the 10 minute rule to the property’s proximity to local amenities such as schools, shopping malls, parks etc. 

The more local amenities fall within 10 minutes walk to the property, the better it will be for the value of the property over time. If at time of seeing a property, there isn’t many local amenities within a 10 minute walk, do a little research to find it what could be there in the future. You’d be amazed at how the value of a property can increase because of future regeneration in the area. 

So there you have it. A quick rule to keep in mind when you are searching for a property to drive your investment. 


Rogue landlords: my thoughts

imageI previously wrote a post about rogue agents, or ‘sharks’ as I like to call them. I guess it would be fair to also talk about other types of ‘rogues’ in the property industry. I have come across an interesting article posted on The Guardian’s website which I thought would be a good read as it gives an example of sharks in other forms. Click here to read the article.

The link I have shared basically discusses why landlords should receive higher fines for letting a property to tenants which is deemed dangerous or uninhabitable, or by profiting from exploiting tenants. The government is proposing an unlimited fine to those landlords, which could be a considerable increase compared to the paltry £5,000 fine they can currently receive as a maximum.

This is great news, especially for tenants. Too much is highlighted by the media on bad agents, but in all fairness, I believe that most agents have a hard time satisfying landlord’s needs. It’s understandable that the landlord would want to generate the most income on their investment by trying to reduce their cost but they should also realise that by dealing with any issues quickly can prevent major, potentially expensive costs in the future. So if you own a property and there are issues, get it fixed!

Reading the article made me think about a situation I had with a new client a few months ago. He instructed us to let his properties, which we did at a higher price than the landlord had ever achieved in the past. As you can imagine, he was extremely pleased with us and gave us some excellent feedback. However, after the contracts had been signed, he had started to call me for general advice. This then turned to conversations on ways in which he could extract money from his outgoing tenants. He explained to me that one of the tenants in his property was abroad, and she had asked him if it would be ok if her boyfriend stayed in the property from time to time, to which he agreed. As long as the rent was paid in full and on time he had no problem. Over time, the boyfriend eventually moved in full-time but no amendment had been made to include the boyfriend’s name into the tenancy agreement. The landlord suspected that the so-called boyfriend was not actually the original tenant’s partner, but actually someone the original tenant was sub-letting the property to, but the landlord had no problem with this as he was still receiving rental payments. Furthermore, the landlord actually lived in the same building as the flat he was renting out so he had often bumped into the ‘boyfriend’ and they also had general conversations and got on well together. I believe he found out from the boyfriend that he was paying the original tenant a rental amount which was greater than what the landlord was receiving. The ‘boyfriend’ remained in the property for approximately 6 months.

I gathered from my conversations with the landlord that he may be struggling financially. In discussions, he mentioned he was currently unemployed and relied on his properties to generate his income, which he completely depended on. He told me that he was thinking of asking the outgoing tenant for a large sum of money or he would take action against her for breaching a term of the agreement, where a clause had been added restricting the tenant from sub-letting the property. I advised him that legally, the most the landlord can do in this instance is evict the tenant through the courts. He wasn’t happy with this information as the tenant was leaving anyway and he became visibly angry, not at me but at the tenant. He was swearing and shouting about how this was unfair for landlords. I pointed out to him that he was aware that the actual tenant was not living in the property for months so the argument against him would be why he hadn’t taken action earlier. His only response was that he would try his luck with the tenant with the hope that she wouldn’t know her rights and would hand over the requested amount of money without any fuss to avoid any further action. I urged him not to do this as he could put himself in an even worse situation, if the tenant decides to report the landlord for harassment or blackmail. After a very long conversation with the landlord, and after what seemed like hours of advising him against his intentions, he finally agreed not to ask the tenant for an extra payment. The situation had been settled with no issues, which was a relief for me.

The landlord only instructed me to let the property on an ‘introduction only’ service. I had no obligation to provide any advice whatsoever, but I genuinely think I saved him from a lot of trouble and a potentially difficult situation that he could have got himself in to. We now speak quite regularly, sometimes just for a general chat and a catch up, and I feel that he genuinely respects me and the company for going above and beyond our contractual obligations to him to prevent him getting into any potential legal troubles.

Back to the point of rogue landlords. The story I have shared with you is a personal one. Looking deeper in to it, if the landlord hadn’t taken my advice, I can’t help but think he would’ve had legal action taken against him rather than the other way round. It’s impossible for landlords to know all the legislation relating to renting a property, especially as it is not their full-time occupation or profession. This is why agents exist – to give advice and guidance, to help the landlord avoid any legal action taken against them, to educate the landlord on their rights and the tenant’s rights. Even if agents are instructed on a ‘let only’ basis, I believe they still have a duty of care to landlords.

The question I want to ask is this. Do rogue landlords exist because of incorrect or inadequate information from agents? I, for one, cannot imagine rogue landlords would exist unless the legal consequences of certain actions by landlords haven’t been explained to them properly. At the end of the day, landlords must have been in touch with an agent at some point in their lives if they have managed to purchase a property. A standard agent will usually tell the landlord what they want to hear. A good agent will tell the landlord what they should be hearing, whether the landlord likes it or not.

A shark’s tale: shocking story of estate agent’s scam

imageSo, this happened about a year ago and it still bothers me to this day. The shocking story below is true, but the names are not for confidentiality reasons.

I had arranged to meet a potential tenant for a luxurious property I had been instructed on by an existing client of mine, and as part of the service we provide, I encourage small talk. Non-business related discussion. Small talk leads to big talk and the conversation I had with this applicant led to a shocking revelation.

This applicant (I will call her Jenny) had a great tenants profile. Prior to any viewings I conduct, I take the time to ask plenty of qualifying questions and I had found out she is employed by a large investment firm, had rental history and we had a property that matched her rather specific criteria and taste. We met at the concierge and we travelled up to the 32nd floor of the building.

As we entered, I watched her reaction to gauge her initial thoughts. After all, first impressions count. She had a look of awe as we entered through the hallway towards the living room and she was visibly taken aback as we walked towards the window. The view was absolutely amazing. The city skyline was so imposing, so beautiful, and the River Thames snaked around London landmarks adding to the perfect, picturesque view from the flat. I glanced at her from the corner of my eye. Her eyes were fixated on the City buildings, and the only word she uttered, almost whispered, was ‘wow’. Yep. She liked it.

We viewed the other rooms and her reaction was the same but she appeared to be less surprised. The initial awe had worn off for her, I told myself. We then sat on the large L-shape sofa and she informed me she loves it and wants to place an offer. Great news for the landlord as the property had been empty for just over a week.

Through our conversation, I found out that she had actually placed an offer on another property which unfortunately fell through and as a result, she was living with her sister until she could secure a place of her own. Rather curiously, I asked her why the offer fell through and she didnt hesitate to tell me what happened.

She placed an offer with an agent (Agent X) who asked her to show her commitment by paying a deposit of £500. Pretty standard in the industry. Jenny then went through references after her offer had been accepted and signed the tenancy agreement and paid the move-in monies (1st months rent in advance, 6 weeks rent as security deposit, and an admin fee to the agency, costing her approximately £6,000) ready to move in a week later. The day before her check-in, she called Agent X to ask what time she should meet them but there was no response. She called again and again throughout the day but nobody picked up, nor did they reply to her email.

Stressed already from organising her move, she decided she would visit the office in person so she made the hour long journey to their base only to find to her astonishment that the agency was not there. The place looked abandoned. There was no signage with the company logo or name which had previously stood out. It suddenly dawned on her that she had been swindled and the £6,000 she had paid was lost.

The weeks after this incident, she reported them to the police to no avail, and had begun her own investigation. She managed to contact others via the Internet and found that she wasn’t the only one. Some tenants had paid 6 or 12 months rent in advance which vanished along with the agent, and landlords were waiting for rent payments paid by the tenants to the agency which was not passed over. It was a large scale scam which financially hurt a lot of people.

I couldn’t believe what I was hearing! The agent had disappeared completely and those at a loss were unable to do anything to get their money back!

Looking at Jenny’s face, I could tell she was still disturbed by it. I felt the need to assure her that my company is a member of the Property Ombudsman and we follow their codes of practice. I could tell she trusted me. She placed an offer which was accepted and has since moved in. She hasn’t received her £6,000 back and the agency is untraceable. They got away with theft.

Why does it still bother me to this day? It is agents like this that have tarnished the reputation of professionals in the industry. From what I have read, there have been other companies which have done the same thing. Some have gotten away with it and others haven’t. Can companies be that hungry that they would actually steal from customers? It’s absolutely disgraceful! Don’t get me wrong, there’s nothing wrong with being hungry. But theft?

I guess Jenny learnt the hard way not to trust every agent. It is always best to make sure that whoever you are dealing with is reputable and trustworthy. Ask your friends for recommendations. Do a little research. Are the negotiators who you have been in touch with been too pushy? The industry is very target-driven so ensure that if the agency promises you something, get it in writing from them. From Jenny’s story, I have learnt to ask everyone to provide written confirmation of any promises made just to be on the safe side and I would strongly advise that consumers do the same thing.