We just managed to close a deal last week, in a purpose built block called Donnington Court. The property is a three bedroom flat on the first floor of an ex council building.
It was purchased at £560k, which works out to be £630 per sq. ft.
This is a bargain given it’s in Camden. This is an area which I have seen rising over the last twenty years.
The area of Camden is rising fast, attracting billions of pounds of investment.
This is due, in part, to the Israeli billionaire, Teddy Saggi, who has invested billions in purchasing Camden market stalls and then after floating his company on the AIM market. Not that he needed the money, but as a vehicle for future investment should he need it.
Our investor who done the deal, fair play to him, exchanged on the deal within two days from cold start.
He didn’t see the investment, he bought blind on faith. Extra blind, given a recent deal he’d done with us hadn’t gone quite to plan to say the least. However, he understands that this is the nature with all investments.
Once the deal had completed, he did drive past the area and then called me and told me it was a real dump. I reminded him he shouldn’t even be using his eyes to look at the area. What he should be looking at is the comparables, which are properties which have been sold in the area and the generous yield of eight percent which he can get from this property on a room let basis. The major demand for this property will come from overseas students who attend many of the universities scattered around this location.
This is not the first time an investor has given this response in regards to an investment.
This is an investment, not a marriage. Therefore, how the property looks to you is not important, the main objective for the investment is for it to make money, preferably on day one. Conversely getting married should not be based on a secondary income coming into the household!
May Good Triumph Over Evil
Even if you run your investment property like a well-oiled machine, the odds are that you will run into a tenant from hell. They are the ones who don’t pay rent, make your property smell like a rubbish tip, or damage your furniture and perfect paint work; or perhaps all of the above! A bad tenant can potentially cost you £1000s. This is why seasoned property investors stay away from tenants completely, and leave it to the professionals.
When you bought your first investment property gleefully, all you thought about was the monthly rentals that you will be collecting and the fun you will have doing up the place up as if it were your own home, thinking how much the new tenants would appreciate it. Little did you know that around the corner was a nightmare tenant, waiting to test you. How you handle this test will determine how far you travel in property investment.
From an investment standpoint, once you accept a bad tenant, it is almost certain that you are going to take a loss. When tenancy contracts are breached, you have to go through a proper process to evict them. During this time, you can expect the unhappy tenant to erect their horns and treat your apartment like a war zone. Using force is not an option.
You can typically group bad tenants into four categories.
1) Elusive. They are the ones that never pay. You also have a hard time getting hold of them. Every time you reach them on the phone, they have an excuse and hang up immediately.
2) Demanding. These tenants call you all the time asking for repairs, upgrades, maintenance etc. They are actually the best of the lot, you just have to manage their extra high expectations.
3) Inconsiderate. These tenants drive everyone crazy with loud music, late parties and loud arguments. It seems that the world revolves around them and their problems are the only problems in the world. Many of these types aren’t event aware that they are being inconsiderate.
4) Destructive. There will always be tenants who break things. They don’t own the apartment, and they don’t care for it. Some of these types punch holes in your feature walls.
Once a tenant clearly breaches the tenancy agreement you can pursue damages from the tenant, that is if you have done all your paperwork correctly. For example, if you haven’t done an inventory then you won’t be able to claim costs against the sofa they break. At the end of the day, after tallying up your losses, you will be just grateful that you have rid yourself of the Trojan virus in your investment.
Evil tenants have no respect or accountability, so unless you have gone to great lengths to deliberately attract bad tenants from hell, you need to contact our lettings team!
