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Selling an inherited house can be often a tragic and emotionally challenging time for most beneficiaries. The estate agent will have no doubt promised the Executor that they will sell the property within a week at over asking price, and it has been an almost a year, and the property is still up for sale. This is the most likely scenario.
Unfortunately some estate agents still think that buyers will over paying for properties that require work. Landlords used to snap up probate properties in a heartbeat. But that market has now changed with clause 24 that has kicked in on 6th April 2017. This means a much higher tax bills for landlords who hold properties in their personal names.
Landlords are facing the biggest overall in property market for last 30 years. Recent anecdote evidence suggests that landlord fit into one of the following categories:
· Landlords are exiting the property market.
· Those who are staying in are busy transferring their buy-to-let properties from their personal names into their Limited Companies.
· Some landlords are also busy renovating their existing properties and selling them to first time buyers.
· Carrying on regardless and worry about it when the tax bill comes.
· Wait and see how BREXIT, new election in 2017 and Clause 24 play out.
First time buyers have never had so good particular up North where average property prices are an affordable 4 times the income ratio and some even cheaper!
The challenge that most estate agent face is that first time buyers are expecting a “ready to move in” house that they have seen with new build show homes. So naturally they are not terribly excited to see a property with structural issues, require full on renovating with a new roof, kitchen, bathrooms, floor joists that are rotten with wood worms. Even if the price tag is low, they won’t be able to get a mortgage on that property because a mortgage surveyor believes that this is not a habitable property!
Faced a huge over promise and under delivery, there may be a number of reasons why beneficiaries may be looking to sell a probate property. These may set-backs such as:
· Property requiring a degree of modernisation or requires an extensive refurbishment. Beneficiaries are not property people and not looking to renovate the property as they may not have funds, time or inclination.
· Derelict property that has been vandalised, had squatters move in or used as a drugs-den! A neglected property perhaps because relatives live too far away.
· The property is nice but the price is unrealistic given cosmetics works that need to be completed.
· There is no grant of probate and property is not registered. It can sometimes take month to get a grant of probate and requires a real perseverance. Often an estate agent will find a buyer then worry about legal sides of things, and buyer’s mortgage offer expires by the time grant of probate is finally issued!
What vendor requires is guidance to obtain a grant of probate, and any challenges that a government department may present them with, a probate property buyer with extensive experience of dealing with probate property matters and genuine ability and means to buy probate properties for cash.
This is where Property Saviour can assist. We have bought probate properties before and can deal with most complex probate matters and even legal disputes between beneficiaries! We can conclude the purchase of properties in a few days. Our solicitor will verify our ability to buy properties quickly. We are genuine cash buyers and as such as are able to Exchange Contracts within 72 hours of receiving your instructions.
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3 Howgill Lane, Sedburgh, Cumbria LA10 5DE.
At first this seemed too good to be true, but I don’t believe in TGTBT so I looked into it. It starts as a desperately sad story but has a kinda happy ending. The owner never lived in the house but his mother in law did. He suffered a double bereavement (wife & brother) in two separate RTAs. Then he lost his commercial diving business due to an investigation when one of his divers falsified his own health status from his doc and died underwater. As a result he had been on IVA for 2 years, a family of 4 living on £450 a month. To top it all off he had developed Sudden Death Syndrome where his heart can suddenly stop beating, so has a heart defib fitted. I would almost have thought it was too BAD to be true, that he was making it up, except I saw the shape of the defib fitted under his skin. It was quite a big triangular lump. Just when you'd think it couldn't get any worse for him, there was a partial collapse of the basement at the house and the council placed scaffolding against the side of it under the Dangerous Structures Act, and a charge on the house for the cost. It blocked the entrance to the car park of the large pub next door. Then the pub owner then threatened to sue for loss of trade. The poor vendor had no money to solve the problem, and was having anxiety attacks over it and everything else. He was an awful situation.
I knew what to do about the basement (fill it with concrete - job done!) But
I commissioned a structural engineer's report anyway to tell me what I already knew, as belt-and-braces. Engineers must carry Public Indemnity Insurance, so if we both get it wrong I could claim on his insurance. Also I could put the report in the Legal Pack to reassure prospective buyers. Then I agreed to buy it for 22k, minus any costs due to the pub.
Unfortunately the pub owner wouldn't communicate properly or give me a settlement figure, only threaten, so the amount outstanding was unquantifiable and much as I felt sorry for the owner, the only sensible thing I could do was stay away until the pub owner became more communicative or the house owner sorted it out with the pub himself. The pub owner saw me as a money pit, unlike the homeowner who was skint, so he was trying to make it my problem and make me pay. I told both of them that it was THEIR problem until we exchanged contracts, not mine. I felt very sorry for the owner and apologised for having to withdraw, but it had to remain business and I had to try not to get emotionally involved, however much I wanted to help him. I was less sympathetic to the pub owner who wasn’t exactly helping himself by stymying the sale. It merely prolonged his own problem with the blocked car park. I told him that the scaffolding could be there till kingdom come, because no normal sane buyer would buy that house with a partial basement collapse AND an unquantifiable financial claim against it.
Things finally moved when the owner offered to GIVE me the house for nothing just to take the stress and the pain away. It seemed unlikely that my financial exposure would be greater than 22k even for the entire period the scaffolding had been up, so I agreed, but it would have been like taking candy from a baby so I insisted on keeping as close to our original agreement as possible. You have to know when something is a deal and when not to milk it. It’s about treating people fairly and being able to respect yourself and be deserving of the respect of others.
I'd already given him £500 in cash on a no strings basis so he could enjoy Christmas with his new family (he had re-married), so I gave him another 8k to settle the £5.5k charge the council had placed on the house for the scaffolding (which needed settling anyway), and the rest for his conveyancing bill and about 2k to be going on with. Eventually I paid him the entire £22k, minus an agreed sum of £6,750 to settle with the pub. I’d offered for him to wait for the full settlement but he just wanted out ASAP. I had no legally binding contract with him, we had nothing but a gentlemen's agreement and a handshake, but as I say he’d already offered me the house for nothing so he was happy with that and he trusted me. It isn't just about the money. Money comes easier than happiness. In so doing I hoped to restore his faith in humanity a bit as it's had a real kicking over the years with things going disasterously wrong and to make it worse, people treating him badly. Of course by doing so I'm helping myself too. If you want to feel happy, the best thing you can do is help someone else, especially when you don't have to. It really works you know! Try it!
Then I offered (without prejudice – that is VERY IMPORTANT to avoid legally committing to anything) to settle the damages claim from the pub owner for the entire period of car-park blockage, to clear it completely for my vendor, as with his recurrent anxiety problems he wasn't in any condition to negotiate it for himself. Eventually after a lot of persistence I got an approximate settlement figure, just under 6k so not nearly as bad as it could have been, and I'm contesting some of the items anyway. I'm hoping to get it down to 3.26k. This has still not been settled, and it turned out that the “pub owner” wasn’t the real owner after all so the dispute is still open and could go either way.
The outcome? I bought it for £22k (minus £6,750 for an ongoing dispute) and did no physical work on the property at all. I never even went back in the house. Then I put it in Auction House Cumbria and it sold for £42k! Obviously I had costs, including 2 lots of legal fees, auctioneer fees, and £3k finders fee. Still, it was a nice little profit. This is it, Lot 56, you will have to scroll down to see it
Colin the auctioneer assured me it would be very popular, in fact he said they had so many requests for viewings they had to do block viewings 2 x weekly!
If for some strange reason it didn’t sell at auction I needed more exit strategies, so exit 2 would have been to do the works and sell on with an agent. This is how the numbers looked. Working backwards:
Nicely finished it should value up at 100k with the yard opened up for parking. But the real value in a slow market is the 90 day val, and that was only 80k
The costs of the works was an allowance of up to 10k for the structural work, shuttering against the basement collapse and filling in the shuttering with concrete. Steel rods through the floors and ceilings to bind the back and front walls together, they are adrift currently. Then a fairly big refurb, 25k. So a total of £35k. Then £3k finders fee to David Clouter and his mentee who brought me the deal. Then conveyancing costs x 2, insurance, utility bills and council tax, and all the other costs associated with the sale such as estate agency fees, perhaps another £4-5k. My finance was my own cash so the only cost there would be opportunity cost. Money in £65k, money out 80k so not a brilliant deal but OK if I got stuck. Exits 3 and 4 would have been to let it on an AST, or as a holiday let. It was in an excellent location for the latter.
The new buyer's purchase price was 42k + 35k works = 77k so there's no money in it. Add in + conveyancing, auctioneer premium, finance, insurance, and agent fees if they are selling and it even looks like a loss. But some small builders just buy to keep themselves in work – I know it because I was one of those guys once. Others are hobbyists following I the mode of HUTH, which is a great program for advertising auction flips by the way! Auctions are a great place to sell really crappy knackered old houses :-)
Anyway it was a very interesting deal, and I think I found the best possible outcome. I was very happy with the result for both myself and the vendor, who was delighted.
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It's a common saying especially with salesmen that "Property prices double every 10 years".
This is not true for a few reasons:
- there is no guarantee for capital appreciation.
- you may buy at the peak.
- regional anomalies.
Although it is true, that using house price data from 1975 to 2015 (attached spreadsheet) that on average house prices do double every 10-to-15 years.
If you buy at a peak and house prices fall, the data suggests it may be wise to gamble on history and hold on to the property until house prices restore in about 10-to-15 years.
The data does not show that if you buy at a peak, than in 10 years a new peak will be double the size of that peak.
The problem is we are working on nationwide averages. Is it true that house prices double "up north"? or that London and the South East are skewing the nationwide statistics. Local issues may cause the value of a property to keep low despite a national increase.
In addition whilst we can use history as a guidance, capital appreciation is never guaranteed - past performance is not a guaranteed indicator of future growth.
Statistics may also mislead us on property types - perhaps a over saturation of Flats in a city will see those values flat line whilst houses in the area may rally.
The mantra of house prices double every 10 years is one adopted by long-term property investors that use leveraging. It is justification for their business model that even if house prices fall (and their equity is eaten away) in 10-15 years the value will be restored or greater. Whilst they in the meantime enjoy the rental yield.
A little-forgotten thing called Inflation will also eat into the value. Is the £1 today worth the same as £1 will be in 10-to-15 years time. Foreign buyers will also have the exchange rate to deal with.
It comes down to WHERE, WHEN, WHICH, if you OVERPAID and LUCK.
Enjoy the data, timing is everything. One could even say if you bought in 1997, 1996 you could have tripled house prices!
TL;DR: Data shows the mantra is true but the data may not be that great for you specificly. Plus past performance is good for due diligence it is not a guaranteed indicator of future growth.
Welcome! Please feel free to Register and Comment, tell me im wrong! or help me prove a point - we love a good property debate.
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Landlords share your Money Saving Tips, help us make our property business more profitable by cutting expenditure as the new Tax Regime starts to take its first bite.
1. BUY QUALITY FIXTURES, NOT CHEAP
When it comes to light fittings, sockets, doors and bathroom fittings - you want to buy for longevity. Buying cheap goods that break easily can be a false economy, having to keep replacing them during the tenancy.
Tenants are unlikely to tip toe around fragile fittings.
2. Hard Flooring or Dark Carpets
Your light or typical creme carpets are going to need tough cleaning or replacing at an end of a tenancy which is "fair wear and tear" so it is coming out of your pockets. Hard flooring needs replacing far less often than any carpets. Dark carpets don't "age" as badly as light carpets.
Personally id go opt for hard flooring in hard warn areas (entrance & living room), Laminate or Tiles in the Kitchen and Dark Carpets in the bedrooms.
New Tenants like welcoming homes and ex-tenants do have mucky shoes.
3. Offer Free Picture Hanging Service
As silly as it sounds fixing big holes in walls after tenants failed attempts to hang a picture on a wall and not using proper fittings can add up! and require a paint job where not required. Doing it properly can avoid tenant drilling into gas or water pipes and avoid plastering. Although you can put "no holes in walls" in a tenancy contract and deduct it from the deposit; if you take one.
Tenants like to make the place a home, that involves pictures.
4. Best Rate does not mean lowest cost
The "best rate" mortgage may not mean you will pay the least over the lifetime of the finance. This can be because of high fees added to the loan or if you stick with them after the "introductory rate" a high Standard Variable Rate (SVR). Talk to your mortgage about the best mortgage over x years.
Don't get confused with Introductory rate term, or mortgage term, we're talking about your broker using a calculator to add up all the costs up to the time that you think you will want to refinance.
- Bespoke Finance are Buy to Let Specialists.
5. Ask about Product Switch or Fee Free Remortgages
When your introductory term comes to an end, maybe you had a fixed for 2 years? ask your mortgage broker about "product switch" with your current lender. Without a new valuation or other costs your lender may offer you a new "introductory term" at low or little cost. Alternatively your broker can compare "fee free" remortgages with other lenders.
As you do with energy bills, talk to your broker regularly about changing providers or just rates.
- Bespoke Finance are Buy to Let Specialists, happy to compare Product Switch, Remortgages and Fee Free Remortgages.
6. Compare the Mortgage Market
Use a Whole of Market Mortgage broker for Comprehensive Advice, walking directly into a bank will provide you "Limited Advice". That often means less mortgage products available to you and perhaps you don't fit their criteria and "computer says no".
A good mortgage broker has access to more products, a wider criteria, broker only lenders and some exclusives from the big banks not available elsewhere.
- Bespoke Finance are Buy to Let Specialists.
7. Compare the Conveyancing Market
Some prefer a trusted and fast solicitor, whilst others are happy with the lowest cost. Your mortgage broker has tools from eConveyancer which lets them provide your transaction details and compare prices of several conveyancing firms. Conveyancers with capacity for more business often lower their prices! giving you some great savings.
8. Compare the Insurance Market
Your mortgage broker has tools from The Source or uInsure that allows them to provide your details to several insurers at once and come back to you with the best price. Add in your own Compare the Market quote and you can often choose the lowest price insurer.
Do remember to check the risks, comparison site quality insurance often omits necessities such as "track and trace" or have unreasonable terms.
9. Ditch your Letting Agent
Today's tools allow you to market the property yourself and use software to remind you to complete the necessary tasks. You could save between 10%-15% of your rental income by opting to do the job in-house.
10. Find a good Letting Agent
Just the opposite to No.9. If your time is more valuable generating income from your employment elsewhere. Then delegate and outsource the task of managing properties. You want to maximize your general income if not just your property income.
You can still negotiate with letting agents, especially if you have a portfolio. The "best" agent may not be the cheapest if we want to ensure maximum visibility of your property and prompt response to tenants. Tenants do leave if your agent ignores their calls! that will cost you but generate the agent more money in "tenant finder fees".
11. Find a good Accountant
With the new tax regime fast approaching your bog standard accountant may not cut it any longer. Talk to other landlords about recommendations of conveyancers that are knowledgeable in the lettings area to implement tax saving measures into your business.
12. Insurance: Rent Guarantee Insurance
This is an added monthly expenditure to your lettings! but it can give you some savings in the event that a tenant fails to pay there rent and included in some policies in legal costs. Protect against tenants that are unable or unwilling to pay their rent by obtaining Rent Guarantee Insurance.
13. Insurance: Emergency Landlord Cover
This is an added monthly expenditure, that is not a replacement for buildings or contents insurance. This insurance can cover broken boilers, leaks, lost keys and blocked drains. Protect against emergency breakdown by obtaining Emergency Landlord Cover. The alternative is to "self insure" and put a % of all rent into a pot for the unexpected costs.
14. Shop Around for Trades
Your mate down the pub may offer you a good day rate but it can cost you if they are slow or do a crap job. You can use services like Rated People to obtain quotes from tradesmen for doing jobs around the property.
15. Learn your DIY weaknesses
You can learn how to tile on YouTube! but if it takes you a week or two. That is a week or two of a rental void periods! Where a professional tradesman could do the job in a few hours.
16. Go Second Hand
Ikea can be good for furnishings and eBay is the "go to website" but you can often find bargains at auction or on websites like Freecycle. Providing the items are of good quality - there can be savings to made compared to New.
17. Do Not Increase the Rent
If you ask your tenant for more rent, then they may leave! that means costs making the property as welcoming as it was when they first moved in plus letting agency costs and void periods. Think twice about increasing rent and if you decide not to - why not let the tenant know.
18. Renovate Fast
The time between a property becoming vacant and to when it is rented out, means you paying the mortgage with no rental income coming in. It also means you paying Council Tax as most councils have scrapped or reduced Council Tax Exemption.
If a tenant gives you notice, arrange to go around and start making a "To Do List" and book in the trades for shortly after the tenant vacates.
19. Respond to Maintenance requests Fast and Affirmatively
Tenants will leave bad landlords, value your tenants, recognise their importance to your business. The customer is always right and you should respond fast and affirmatively that you will fix problems.
That does not mean they are always right about maintinance issues "electrics gone" when
20. Extended Warranty
You know the usual deal, the salesperson offers extended warranty and you say no. Look at the Terms and Conditions to consider if a tenant may treat the appliance less delicate than you would. Extended Warranty may be value for money.
21. Share your Tips
Come on now, you all have your own landlord life hacks. Share your money saving tips and get them added to the list.
I obviously ran out of ideas! Extended Warranty! ha.
Welcome! Please feel free to Register and Comment, Tell me im wrong or help landlords save money in other words - We love a good property debate.
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