There are three types of motivated sellers in the market. The distressed, the divorced, and the dead. People in these categories must sell, due to their circumstances. They do not have the luxury of choice.
In a market such as this one, comparables cannot be relied upon with the same confidence they once used to command. The market is in a flux. There’s a perception out there that if you purchase a property now at retail value, it may be worth even less in 12 months’ time. This environment, coupled with the three categories mentioned above, is the perfect combination for the shrewd investor. We are closing on our second probate property this week. Probate is a legal document which grants authority to deal with a deceased person’s assets.
Most probate properties have certain symptoms that come with them, for example there’s that musty smell. They often come with the benefit of old well-made furniture. These properties usually require a total gut out; and it can be assumed they do not confirm to any of the current regulations. You can forget looking at the energy efficiency readings. Almost always they have short leases. The more variables you have in a deal the more chance it is a deal. Sometimes you also have a seller(s) who often wish to cash in on their new found wealth. Their need to have the money in their bank account outweighs the need to achieve maximum price.
Being a property with a short lease, as well as requiring full refurbishment means most lenders will not touch this type of deal. The short lease effects the security for the lender. Most people don’t appreciate a BTL mortgage is given on the basis the property is in a lettable condition. If this is not the case the mortgage will not be granted. There are a few lenders who do refurbishment products, they, however, require a minimum lease length.
There is the option of a bridge, however, this needs to be used carefully, as it could destroy the deal, if the exit is not lined up in advance. The aim of a bridge by its very definition is to take you from one place to another, across a difficult terrain. You are not supposed to stay on the bridge! In conclusion, by the very word probate on a property, the chances are you might be staring a deal in the face.
A short lease, these days, this is relatively easily quantifiable in advance. It needs work, again not a massive issue. Having this much cash tied up in one deal may be tough for certain buyers. Yes, bridging is there, however, you need to ensure you have your ducks lined up and the exit in place prior to entering these types of arrangements.
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Agony Agent is here to help!
Q: Do I have to give my tenant(s) the How To Rent booklet?
A: Yes! You or your agent will need to supply this at the start of each new tenancy. Serving the booklet is not a legal requirement, so you will not get prosecuted for not doing it; however, it now forms part of the new Section 21 regulations (notice to tenants). This means that if you ever wish to serve notice on your tenants to leave the property you would not be able to.
Being stopped from serving a Section 21 would make it close to impossible for you to efficiently repossess your property; unless by some miracle your tenant is willing to surrender the tenancy. Now, if things are going well it might be a walk in the park getting them to leave but on the other hand if your tenant breaches their tenancy or falls into a month’s rent arrears, then possession via a Section 21 would be impossible. The only other option would be to proceed down the Section 8 route and evict them on grounds for possession, but they would need to be in arrears for a minimum of two months.
So, make sure you serve the booklet at the beginning of the tenancy and follow all the other Section 21 requirements.
Richard Bond
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The Power of Dharma
A few years ago, I got involved in a medical business. It was a good idea on paper. If I am honest, however, the business never really convinced me. It all looked good in the business plan. However, I couldn’t feel any connection to it. Needless to say, this adventure bore little fruit, drained my energy and, most importantly, did not help me express my true nature. It cost me time, money and energy.
In the Bhagavad-Gita 18.47 it says:
“It is better to engage in one's own occupation, even though one may perform it imperfectly, than to accept another's occupation and perform it perfectly.”
This verse is talking about one’s “dharma”.
“Dharma” is an ancient and oft-used word. It can mean “duty”, “religion” or “function”. I like the word “function” because there is an implication that we have a responsibility to find, understand and fulfil our function. A lion is good at being a lion. A tortoise is an excellent tortoise. A tree fulfils the function of a tree. If we try to pursue a function that is not our nature we will not be happy.
We all thrive when we know our role and perform it fully. It is a solemn human responsibility to search for our true function, reject what is unfavourable and shape our activities around our nature.
Abraham Goldberg
