Last week, I took the trouble to go down to Battersea to check the local environment of a small deal we are about to do, on behalf of our client. You can do a lot of research without stepping foot in the locality. However, we are in a market which is in a state of flux, and therefore, it’s not so easy to unearth what’s going on at ground level from the comfort of one’s chair.
Coincidentally, the first agent I walked into was the one who was previously involved in selling the same apartment we are purchasing. Initially, one always approaches such meetings with a healthy dose of caution. So, initially I acted as if I was looking to invest.
Very quickly, we got to the real point of the conversation, and pulled the cat out of the bag. It transpired that the deal I was interested in had a high offer initially, but then the deal went sour once the buyers couldn’t get their head around the issues surrounding the freehold.
Given the situation, the agent advised he could get £415k for this property, as is, with the issue of the lease extension. This gave me the right fuel to go back and ‘chip’ my seller, as he put it. Though this was never the intention, sometimes, as a deal progresses, more information comes out of the woodwork, and the price needs to be revised accordingly.
There were two main issues which popped out. One, was the local market and the information we gathered; and the second, was that our lawyers advised us the company which owns the freehold could not simply be reinstated. This is what we were hoping to do. The idea was to acquire the freehold for a couple of thousand pounds.
Now, we will need to purchase the freehold from The Crown, at market value. This dampens the deal. Dampens, but still doesn’t break it. And, I’m quietly confident this will be a lucrative deal given time.
The location is enviable. It’s surrounded by the green spaces of Clapham Common and Battersea Park. It’s surrounded by several stations, which means there will be little issue in terms of rental.
Although the price was lowered with the sellers, they made up for it by pushing back in terms of time, i.e. the deal has to be exchanged today (at the time of writing), and completed within 28 days. This doesn’t cause any downside for us.
We will need a complete refurb on this property, in order to rent or resell. Our immediate reaction is to prepare it for rentals, rather than resell, given the soft market conditions.
Agony Agent is here to help!
You may have just bought your first buy to let property, you may be giving an existing property a face lift or you may even be just trying to attract a different kind of tenant; whatever your reasons for decorating are, here are some points you should take into account.
Audience & budget
Before you start to plan decorating, or even your budget, have a think about the area your property is in, the rent you’re going to charge, and what kind of tenants you’re looking to attract. This way, you can consider what your prospective or ideal tenants will be looking for in a property and plan accordingly. For example, a family of four may want somewhere comfortable, durable and easy to keep clean. On the other hand, a young professional may just ask for the basics, but would want it to look moderately stylish and be able to put their own stamp on it. When budgeting, think about the rent you hope to be receiving and make sure you don’t overspend, it’s easy to forget about the return on investment.
The less you need to redecorate between tenancies, the better. Everything you buy for this project should have some aspect of durability. Larger items, such as flooring (including carpet), appliances/white goods and furniture should be bought in a slightly better quality, with warranties where possible. These items will be used time and time again and will show signs of wear faster than anything else. Replacing a carpet every two years may start to become expensive!
Look & feel
A mistake many landlords make is decorating to their own tastes. Keep it neutral, long-lasting and as high quality as your budget allows, and you’ll attract tenants much more easily than if everything were purple and lime green. It’s easy to get carried away with making the place look amazing but, remember, you’re not going to be living there. If it’s neutral enough for your tenants to make it look like home, they’re more likely to stay.
Make sure you give yourself enough time to complete the project. Every month the project takes, is another month where you’re paying the mortgage without rent coming in to offset it. Concentrate on correcting damage, safety issues and structural problems first, as well as getting rid of any mould. This is far more important in the long run than the way your property looks. Prioritise decorating on what will make the biggest differences to the look and feel of the space. It’s amazing what a lick of paint and a new carpet can do.