3D Deals

Tuesday 23rd May 2017 17:25 EDT
 

There are three categories, which if a seller is in, you are likely to get a good deal done: death, divorce and distress.

Only yesterday I met a couple of vendors, one after the other, who are desperate to sell and get out of a hole they are in. One is desperate financially, the other is desperate following a divorce. Divorce and distress, are close friends and usually go together.

One of them was honest about his situation, the other was not. The one who was not, made a point of telling me he lived in a £20m house and drove a Ferrari. It was so thick you could smell it. It was obvious from his demeaner, and talk, he needed to sell.

He was equity rich, meaning he was in a fortunate position of owning several freeholds in a very strong location. However, there are only two ways to get money out, either sell or refinance.

Nowadays, loans from high street banks are hard to come by if your paper work is not in order. The only option is to approach a non-status lender, in other words a bridger, which can mean you’re digging yourself into an even deeper hole. The purpose of a bridge is to take you from one place to another, to help you cross a rough terrain; it starts to get dangerous if you do not get off in time.

In short he needs to sell, despite his cheap charade.

It seems he wants to start selling in small chunks. Starting with a flat, which is a duplex, and I would estimate it is about 1,000 sq. ft. The interesting chink in the deal is there is no proper planning, it’s a cross between an office and a residential. This is good, this means he will need to sell this cheap, as it will require 100% cash as no main stream lender will lend and there are not many buyers who will be able to get their head around this deal. All these factors can be used to drive the price down. So we will be monitoring this situation very carefully. When it’s ready to drop, it needs to come into our lap. It’s rare to get a deal land in your lap, which is ready made. Often there are variables which need to be worked on.

A deal we did a while ago, a property consisting of 23 flats, on Kilburn Road, had a similar scenario, where there was illegal planning, injunctions against the property; issues which meant the only form of finance was a bridge. However, the investors came away with a 40% net return per annum over a two year period.

The other vendor was honest, not totally, as everyone is under the illusion that their property is worth more than it is; and they seek flimsy evidence to support this construct. But he appeared to be honest about what he owed, there are three charges on the property which means he is leveraged up to the hilt. There is barely any equity left in the deal.

A deal might even be carved up in this situation, perhaps by coming to an agreement with the second and third charge holder; they may even be willing to be paid say 25pence in the pound or less, as their position ranks after the first charge holder, and if the property is repossessed they may end up getting nothing.  This one may take longer to work through. We have had our finger on this deal for about a year.  It’s worth keeping a watch as you never know when the deal will pop. 

Agony Agent

Each week, we answer a reader’s rental property question, from first-time landlords to experienced owners. Agony Agent, is here to help!

Q: Is letting my property to students worth the hassle?

A: Letting out a property to students is a lucrative business IF you own the right property.

Letting out a larger property to students has long been seen as a profitable way to turn a larger house into a good income. But during the summer months when many of these student properties are empty, you could face costly damage. Student tenants may go back home for a few weeks, leaving the property empty and therefore posing a security risk. Criminals will be well aware of which properties are vacant and crime statistics for domestic break-ins are far higher from July to September.

Often students leave expensive equipment and possessions in the property for long periods and if a break in occurs not only do laptops, stereos and other equipment go missing, but anything of value belonging to the landlord is at risk too.

A student might also sublet his or her room for the time they are away. This is a common problem, for example, recently there was a five bedroom student let, where a friend of a tenant was given a key to stay in the property while the tenants were away. Unfortunately, the guest also brought his dog along for the holidays resulting in the tenants coming home to find stained carpets, scratched door frames and fur on the furniture and carpets. Landlords should make sure that they inspect the property regularly. If a property is vacant for long periods it will usually be necessary for a weekly inspection to comply with the terms of your landlord’s insurance policy.

TIPS to help landlords protect their properties during the summer void periods:

l Ensure the property has a burglar alarm system and that all windows and doors have safety locks.

l Ensure that the property has working fire alarms, extinguishers and fire blankets. There must also be clearly marked emergency exits.

l Switch off all electrical appliances, unplug them from the wall and also check that wall sockets are safe and secure.

l Switch off the water from the mains and look out for damp patches or possible leaks.

l Furnishing and Fittings: A nice leather sofa might be the selling point, but it might not be there come summer time. Be aware that landlords must provide each tenant with a suitable desk and chair. If possible, check bed mattresses for broken springs which become dangerous over time.

l Infestations: Another big problem in student houses are common pests including mice, slugs, fruit flies, pigeons and sometimes even rats. Some students are messy and leave food lying about for days. Check your property for droppings and slug trails.

Although there are many issues you need to take into consideration, the student market is definitely a profitable one. We are more than happy to assist with the set-up, marketing and management of any student property, so please contact me today if you need my help.


comments powered by Disqus



to the free, weekly Asian Voice email newsletter