Exit Before You Enter

Thursday 01st November 2018 05:46 EDT

Currently, we are trying to close a deal in an area called Barnes. This is not a location I am familiar with, so in order to get a feel of the area it’s best I enlist the help of local agents. After all, they are local, and a few have been in the area for decades. We are looking at purchasing a house in this location. The price is just over £1M. The resale is expected to be about £1.3M. Developed houses in this location go for around £1.8M. This means there is plenty of margin in this deal. However, there are two points which are of initial concern. One is the price point, and the second is the resellability.

The idea of the deal is not simply to enter it, that’s easy. The aim is to exit the deal prior to completion. In this market, this is something that needs to be looked at very carefully. The numbers, prima facie, look good. Transport is always a big consideration. The train station is only a 6 minute walk away, and then only 22 mins to Waterloo Station. In my experience recently, trains offer a far better journey than tubes. The fact it is so close to a station is a strong factor, properties near the station will always sell and rent well. This is a very up market location, full of wealthy middle class families. The agents whom I spoke to said categorically this price point is not sticky; not in this location. They cited examples of deals they had done recently.

Agents are agents at the end of the day, their business is to build confidence in the market and ensure the sales keep rolling in. However, a sale is set in stone. You have a price which will appear in the Land Registry very shortly. Therefore, the wriggle room is very limited. My research gave me confidence. This is a deal we are likely to exit, even in current market conditions. 

Ideally, we wish to exit this deal after exchange, which means only £120K will be in the deal and the return will be £170K. This is the best case scenario. The alternate is the whole amount will need to be put in cash, and the return will be the same £170K; not as attractive. But still a healthy profit, subject to the time period taken, obviously. The longer the time, the less the return. Ordinarily, in the event of completion this deal would attract a stamp duty of £90,650, enough to kill
the deal. However, we are able to engineer this deal so there is zero stamp duty. This is a key point as the last round of stamp duty changes has crippled developers buying deals such as this. Profits now go to the government and not the developer. 

Do get in touch if you are interested in this, or other property deals.

Agony Agent is here to help!
Q: My tenant is complaining that the neighbour is making too much noise at night. I’m not sure what I can do about this.
A: This is very different to the usual noise related question I get, i.e. what to do about a noisy tenant. However, in this case of a noisy neighbour, you are somewhat limited in the steps you can take.

The best first step would be for you to ask your tenant to speak to the person making the noise. People often do not realize how loud they are, or even that they can be heard by other people outside of their home. Remember, you are not there to shout or create tension, but to settle the issue in the best possible way. If the problem still carries on after this conversation it might be worth a visit from you as the owner. You may be in luck if they are renting, as then you could try contacting the lettings agent or the landlord as they will often be more responsive.

If nothing changes then you will need to speak to the council and report the noise complaint e.g. if they are making excessive noise after 10 pm or before a certain time of the morning. If you are experiencing issues regarding your Buy to Let property, please contact the office for some initial free advice.

Richard Bond

The Good Life

I am reading a book called "Man search for meaning" by Victor Frankl. He recounts his experiences as a Jew surviving the traumas of a concentration camp. The fundamental truism his experience taught him is how we cannot control what happens in our lives, but we can control our reactions. While, thank goodness, most of us do not experience such extremes of life as Mr Frankl, one's mind does not seem to calibrate suffering in a rational way. The mind can click into a negative mindset and then re-choose a positive mindset independent of events outside of it. Our mind can be our greatest enemy, or our best friend. It depends upon how we manage it and use it.

My experience of my mind is that it tends to be like a crystal in the way they take on the colour of their environment. In the same way my mind is calmer, sharper and more perceptive when I pay attention and regulate what I eat, speak about, read, listen to and exercise.  For example, my mind is far happier when I spend time and discuss matters with people who have a positive and generous outlook than others who are always criticising and seeing faults. We are very much creatures of the environment we help shape.

Abraham Goldberg

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