Following all the things we have covered so far, the next thing to consider is the style of property you would like to invest in.
Apartments tend to be easy to maintain, nicely laid out, desirable for tenants and often they are to be found in great locations like a city centre.
However, there are always downsides to any type of investment.
For instance, most apartments are leasehold and this can be a tricky area of property law, where investors can and do get stung.
If you are thinking of investing in an apartment it is important to get good, legal advice and you can also check out the Leasehold Advisory Service.
You might also find that there is a managing agent who runs the building, who might cost you more than you would think, for their services.
So, before you invest you need to consider the following:
How long is the lease?
How much is the ground rent?
What are the management charges for the building?
What are the maintenance costs?
Where is the apartment located in the building and what impact might that have?
These are the main things you need to consider, on top of the investment fundamentals, already discussed, before buying an apartment.
Investing in Terraced Houses
For many areas of the UK, terraced houses are the main housing stock.
And terraces are often the main style of property that investors look at because they provide a good space for most types of tenant.
Terraced houses can vary in their design, room sizes and size of garden (or yard).
They do tend to be a good option for investors but there are things to look out for such as damp proofing.
Because a lot of terraced housing is quite old and there could be age-related issues, including problems that are not immediately obvious.
The last thing you want is an unexpected refurbishment project.
So, make sure when you are looking for houses on the property portals you actually visit the property too.
And with terraces, if you see a property advertised as a 3-bed, you will want to check the size of the third bedroom as these are often too small to be a practical bedroom for a tenant.
But with all that in mind, terraced housing can be fantastic for investors, especially for beginners.
So, while research and due care are always essential, they are certainly worth considering.
Investing in Semi-Detached Houses
Semi-detached houses are more limited in stock than terraced housing and they can cost a bit more.
However, if the location is right, they can be fantastic, long-term, family homes and that means you will be able to attract tenants who will stay in the property, for longer.
But if you are interested in the ‘family’ tenant profile then you need to realise that with this type of property, the maintenance costs are going to be a little higher.
Plus, the initial investment is usually higher, too.
These additional costs aren’t necessarily a bad thing but you need to have a good understanding of the costs involved before you commit to anything.
Semi-detached housing is usually easy to sell, as well.
And there are normally plenty of ways to ‘add value’ meaning an exit with a higher profit margin.
It all comes down to your strategy and what your overall aims are for the property.
Investing in Detached Houses
Detached houses are great, typically, for investors with a long-term strategy and tenants in such houses will usually pay a bit more in rent.
Of course, up-front, these houses usually cost more than the other property styles, so despite a higher rent, your rental yield may be the same or lower, than with a cheaper property.
You will want to check the potential for capital growth, as well.
(Values can go down, as well as up.)
With detached houses, being more expensive, you really need to do your homework because in a falling market, the more you have invested, the more you stand to lose.
Finding Properties that Have Been on the Market for a Long Time
By now you should have an idea about whether your property search is going to be local or national and you may have decided what kind of property you are looking for.
Next, you will need to shortlist some properties to look at in more detail, later on.
And one of the things you could be looking for, are properties that have been listed for sale, for a long time.
Because when properties don’t sell, this doesn’t mean there is anything wrong with them.
However, it could mean a homeowner who is willing to drop the price, to finally achieve a sale (a motivated seller).
So, in this lesson, we are going to look at how you can find properties that have been on the market for a long time and create a shortlist of possible options.
We’re going to use Rightmove, so first-thing-first you will need a Rightmove account (so you can save what you find in a list).
The steps to follow are:
Create your Rightmove account.
Search for your desired location.
Use the filters to narrow down your preferences (cost, property type, location etc).
Look at the results that appear after the ‘featured property’ at the top.
Filter the list by ‘oldest listed’.
Use the ‘heart’ shape next to the property to add search results to your shortlist, to review later.
When you look at the properties that appear on the page, you will notice that you can see the ‘date posted’ by the agent.
This tells you how long a property has been on the market.
When a property is struggling to sell, this is generally because it has been misrepresented or mismarketed.
Sometimes the price is too high or sometimes the descriptions have been a bit off.
Whatever the reason, such properties can make for good investment opportunities. Opportunities that others have missed.
We will be looking at how to further assess these properties, in upcoming videos.
But for now, just remember that properties which have been on the market for a long time are worth your attention.
How to Find Properties that have Recently Dropped in Price
Similar to finding properties that have been on the market for a long time, recent price drops on a listing could be an indicator that the homeowner is very keen to sell (is motivated).
In our experience, the best property portal for finding these price drops is Zoopla.
(Although it is best to be aware that there are fewer properties listed on Zoopla, than on other platforms.)
As is similar to Rightmove, when you search the Zoopla portal you can use search filters to find the kinds of property and locations you are interested in.
In this case, however, when you have your search results, you will want to use the filter that says, ‘Most Reduced’, to show you both the dates when those properties have seen a price drop and the amount they have dropped by (since they were first listed), as a percentage.
Bear in mind, a 50% reduction does not mean that the property price was dropped by 50% in one go. The difference is between the current date and the date that the property was first listed.
The next step is simply to read the descriptions and think. Can you make any guesses about why the price reduction occurred?
When you do this, there will always be one-or-two properties that stand out, meriting further investigation
Remember, at this point, you are only building your shortlist. If you have a feeling that a price change could indicate a motivated seller, then that property is worth saving, for now.
Finding Properties where Sales have Fallen Through
This is one of our favourite ways of finding properties, where sellers are likely to be highly motivated.
As we hope we’ve made clear, this is an important aspect of looking for investment opportunities and a great way of procuring property at a discount.
When you are looking for properties where a sale has fallen through, in our experience, Rightmove is the best platform to use.
NB If you’ve already built a shortlist from the previous lesson on finding properties that have been on the market for a long time, we advise that you create an entirely new Rightmove account for the shortlist we will create in this lesson.
That way you can keep your lists separate.
The process is as follows:
Search for your desired location.
Use the filters to narrow down results so they are relevant to you.
Keep scrolling through the results until you find ones which have for example ‘Sold Subject To Contract (STC)’ or ‘Under Offer’ within the property details
Click on the heart icon to add them to saved properties.
Revisit these properties over the following days and weeks.
All the properties, now saved in your account will have an ‘under offer’ or ‘sold STC’ tag next to them.
But if you spot that a tag has been removed from a listing, then you know that the sale has (likely) fallen through.
Not only would this likely mean a frustrated seller but it also gives you the means to investigate further.
By picking up the phone and speaking to the agent or the seller and asking what happened to the sale you may glean important information about the property.
Should you then go on and negotiate a price, this information could end up being very useful.
How to Find Properties that have been Wrongly Priced
Finding properties that are on the market at the ‘wrong’ price is a great way of discovering those below market value deals.
For this, we recommend using Rightmove.
As in previous lessons, you will need to go to Rightmove and filter for your desired property type and location.
However, don’t select a price range, yet.
To do this, we will be using the map listing to examine the opportunities as they present themselves.
It is helpful if you are already familiar with the area you are looking at. If not, then it isn’t a problem but it will take you longer to understand the data.
What you are looking for, on the map, are similar properties that are close together, that are very different in price.
In the video above, Rob has found two similar properties for sale, with a price difference of £17,000 – an amount, not to be sniffed at.
As a rule of thumb, a difference of 5%, is probably worth further investigation.
But of course, a large price difference between properties that are close to each other, would not necessarily mean that one is wrongly priced.
And this is why it is important to build up a mental picture of the area and really get to grips with how it is put together in terms of amenities, culture and ultimately house values.
Keep at it and you will start to spot mismatched properties which you can save to a shortlist, giving you a good starting point from which to take things to the next stage.
When You Are Out Viewing Property
When you are out viewing a property for the first time, the trick is not to be overwhelmed.
Remember, you don’t have to check everything, there and then. You can arrange second or third viewings to make sure your ‘I’s are dotted and your ‘T’s are crossed.
We would recommend that you don’t really use the first viewing as a way to check the property, as such, but as an opportunity to build a rapport with the agent or homeowner.
This rapport will stand you in good stead, later on.
Breaking it Down
You don’t need to do everything in the first viewing – It is best just to focus on building a good rapport with the agent or homeowner.
Now that you’ve built a good rapport it gives you a great opportunity to have a second viewing where you can look at things in a bit more detail. If required, this is a great time for you to bring someone along with you from your refurbishment team.
Some other tips to use during your first viewing include:
Letting the agent/homeowner know what your buying position is.
Letting them know how quickly you want to (and can) buy the property.
Letting them know about any other properties you are considering.
One thing, you really want to avoid, is getting into a discussion about price, while you are at the property.
When you are viewing a property there are going to be many thoughts rushing through your mind and the last thing you want to do is weaken your position by saying something you may later regret.
The best thing to do is to take your time and when at home gather your thoughts and do more research.
That way, when you finally put in your offer, it is something that you have properly considered.
Download Our Condition Report For Your Use
>>> Download this condition report to use on your viewings <<<
This document is designed to help you make notes when you are viewing a property and can be especially useful if you are viewing several properties in a short period of time.
You don’t want to forget about something important, after all!
This sheet will help you take notes on the:
Windows & doors
Roofs & gutters
Hall and Stairs
Each of the rooms and elements above could have numerous issues that you will need to take a note of and consider.
These might include room sizes or noticeable damage.
The most important thing is to write everything down during your viewing. That way, once you are home, you can look back over your notes.
Because memory is a fickle thing and we forget the things that, at the time, we were certain we would remember.
But, even if you miss something in your notes, don’t worry.
If you have a good enough rapport with the agent/seller, there is not going any problem with you popping back and checking something over again.
In this lesson, we will be looking at how to asses the potential value of a property.
Of course, when you have a specific property in mind, a surveyor will provide you with a lot of information and nothing here can replace the value that a surveyor can bring to the table.
However, the method here can give you a pretty good starting point for a valuation.
We will be using Rightmove again.
You’ll need to set a wide price range and search properties in the area.
Then, using the map feature, click on other properties and see what they are selling for.
From this, you will be able to get an average price for houses in the area (there will be outliers but all you want is a starting point).
Afterwards, you will need to navigate to ‘sold house prices’ to see the properties that have sold in the area and for what price.
Then combine your two averages and you will have a complete picture of house prices in the area.
By doing this you will have a decent understanding of house prices, which will help you when you are preparing your offer.
A Comparison of Local Rents
In this lesson, we will be looking at how to make comparisons on rental prices, in a given area.
Doing this will help you calculate average local rents, from which you can build the forecasting you’ll need for your property project.
Again, we’ll be using Rightmove.
Using the maps feature, search the area you’re looking to invest in and then find the rental cost of properties nearby.
This will help you understand the lower, upper and average rental costs for properties in the area.
However, forecasting your potential for rental income is very important.
So, you can’t just want to rely on what Rightmove is telling you, especially if you don’t see many results.
Make sure you’ve done your homework and speak to local estate agents. You need to make sure that you understand the bigger picture.
>>> Download the document here <<<
This has been created purely to help you build a bigger picture of the numbers that you can achieve in properties that are listed.
Please note: We can’t stress this enough. You need to make sure that you do your research and speak to the relevant professionals. This document is only intended to help you lay some foundations for your research.
However, using this document you will be able to calculate the figures for your buy-to-let, accounting for the income and expenses associated with it.
And once you have those figures, you will be able to get a fair idea whether any given investment property is the right one for you!
Key Team Members – Mortgage Brokers
Choosing the right mortgage broker is going to be key to helping you find the best deal possible.
Banks and lenders typically won’t be able to get access to as many mortgage packages as a mortgage broker.
And a good mortgage broker will take the time to talk you through all the available options.
With more choice, you are more likely to get a deal that best suits your circumstances.
When you approach a mortgage broker you need to consider the following:
Are they an independent?
Are there good reasons not to go to a broker? (For, instance because of a pre-existing relationship between an estate agent and a particular lender.)
Are the broker’s clients mainly investors and landlords?
In terms of finding the best mortgage broker for you, nothing beats a personal referral or recommendation.
However, you can also have a look for brokers who are members of trade bodies and associations.
Financial advisors may also be able to point you in the right direction.
Things you should find out and questions to ask:
Do they cover the whole market?
Where do they earn your fees?
If they charge, during what stage of the process do they do so?
Do they have experience of commercial finance?
What products would they recommend for a buy-and-hold investment strategy?
Do they have many investor and landlord clients?
Key Team Members – Conveyancers and Solicitors
In property, there are two main functions that a solicitor serves.
Firstly, a solicitor will help you ensure that your contracts have been set up correctly. The last thing you want to experience is the discovery that the contracts between you and your tenants are void or not what you expected.
Secondly, there are solicitors who carry out conveyancing – the legal process surrounding the purchase of a property.
For all legal matters, whilst it may seem like a cheaper and more convenient approach, we strongly recommend that you don’t use any free, contract templates that you find online.
You get what you pay for and if your legal position is compromised, you may live to regret it.
Make sure, when picking a solicitor, that they have the background and experience in the area in which you need them to help you.
This means your legal advice has to match your strategy. If it’s buy-to-let, ideally, a solicitor should have the necessary experience, in that area. If you are looking at investing in an HMO, then a different solicitor may be required.
By doing this you will, likely, have to pay the solicitor a greater hourly rate but in the long run, it will be worth it.
NB – It is, generally, not a good idea to employ the services of a solicitor who is tied to an estate agent.
We try to pick solicitors who are local to the property because they will be more aware of the quirks of that area.
A solicitor who lives on the opposite side of the country might not be as aware of issues, that are specific to a particular region, than one who lives and works there.
When you are looking for a solicitor, there are websites that can be useful, including:-
Questions to ask a solicitor before hiring them could include:
Do you work with many investors or landlords?
Can you recommend any local estate agents?
What is your caseload like at the moment?
Have you dealt with repossessions before?
Who will be the main contact if we work together?
Key Team Members – Letting Agents
Unlike solicitors, letting agents are optional. You can manage your tenants and the upkeep of the property, yourself.
However, in our experience, a letting agent is going to save you a lot of time and by using them, beginners can avoid making a few, potentially expensive, mistakes.
And if your goal is to grow your property portfolio as fast as possible then using letting agents is going to help you achieve that end, much quicker.
Simply, by clearing the day-to-day management of your properties from your schedule, you will have more time to focus on your end-goals and ambitions, more completely.
There are two main things to think about when you are choosing a letting agent:
Do they have specialist experience, in-line with your investment strategy?
How far away are their offices from your target area?
There isn’t a right or wrong answer to these questions.
Cards-on-the-table, we’ve always found small, local agents, closeby to our properties, to generally deliver a better service.
And yet, this is only an anecdote. The trick is to find a company, with whom you feel comfortable, whatever their size and (to an extent), whatever their location.
But how do you go about finding a good letting agent?
It can be difficult, for sure.
The best advice is to try and get personal referrals and recommendations. Don’t be afraid to pick up the phone and talk to people about their experiences.
But failing that, we recommend looking at associations and regulated bodies such as:
When you are considering a letting agent, you should always ask questions, including, the following:
What areas do you mainly cover?
Do you deal with housing benefit? Working tenants? Students?
Do you specialise in any type of tenant profile?
Do you manage any HMO properties?
What are your let-only and management fees for single and multi lets?
What are your tenant application fees?
Do you change tenant renewal fees during their tenancy?
How do you manage tenants, are they all under one tenancy agreement?
How long have you been running, as a letting agent?
How many properties do you manage, how many staff do you have?
If a tenant doesn’t pay their rent on time what process do you follow?
Who do you register your deposits with?
Are you a member of ARLA?
Key Team Members – Refurbishment Teams
You are going to have to find a trusted refurbishment team.
Even if you don’t need to refurbish your property, right at the beginning, maintenance work will still need doing, at some point.
When you’re starting out it can be difficult to find the best people.
But once you do find the right team, they will help save you money and free up your time, to spend on growing your business.
The main points to consider are:
Whether you would prefer to work with a one-man-band or full-service company?
Whether you want to manage the works yourself or leave them to it?
How skilled (and qualified) do they need to be?
As always, personal recommendations are a great way to find your refurbishment and maintenance team.
Failing that you can refer to professional associations and trade bodies, such as:
And then, the final tried and tested way to find traders, nowadays, is online.
You can use review-sites like Trustpilot to give you an idea of who could be a good fit, for your properties.
Questions to ask of a prospective refurbishment team could include:
Are you a member of any trade body associations?
What trades/jobs do you do?
Can you provide any referrals from clients, you have recently work with?
Do you do emergency call-outs?
What is your current work schedule like at the moment?
What are your payment terms?
Do you charge a set hourly-rate or per job?
Do you work for any other landlords?
In this, penultimate lesson, we will be looking at the sales process, itself.
The process of buying a property is driven, first-and-foremost, by conveyancing solicitors and most of it goes on behind the scenes.
But it is helpful, for investors, to know what is going on, when it comes to conveyancing, which is, ultimately, the legal process, underpinning the process of buying a house.
For a breakdown of the stages that make up the conveyancing process we recommend this article:
The conveyancing process can be slow but there are things you can do, as an investor, to speed it up.
And speeding it up can be important. The last thing you want is to have a property sale fall through because your solicitors are taking too long.
Things to think about, include:
Solicitors like to send letters – Phone them to make sure you understand what is happening and if there is anything yoy can do to help them.
Always keep in touch with your vendor.
Give your solicitor a target date to aim for (an average sale takes 8-12 weeks to complete).
The truth is, If you are on top of everything, you can shave 3-6 weeks from the sales process.
Don’t get overwhelmed, as with all things, there’s a learning curve involved in mastering the art of speeding up a sale.
And that’s why having the right team around can help you.
If you’re buying with cash, rather than with a mortgage, then you should still consider a survey.
You still want to ensure that the property has been valued, correctly.
There are different types of surveys, to consider, depending on the situation.
A survey can help minimise your risks by:
Helping you value the property, correctly
Saving you money, spotting any significant issues with the property, early on.