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I'm taking my first look, with a couple of friends, at BTL investing in Liverpool. My dad is originally from the city and used to visit as a kid sometimes but I've never lived there and don't know much about the area other than my recent research.
I've narrowed down my preference to L6 and L7, within one kilometre or so of the university and hospital. I've been to view a few properties listed on agents websites but something screamed "rip off" in a couple of cases, especially when the agents barely knew anything about the properties and "were just the weekend guy". One was about 20 and literally didn't say a word or reply to any questions, weird.
Another was touting "14% return!" on repeat as if she was some kind of cult member. I got some feedback from some experienced property investors on that one and they said it was overpriced by about 40%. So seems like there are some sharks around.
I am thinking of approaching this like a business, I already founded a moderately successful ecommerce business down south, with a turnover of a bit less than £2m so I think I have my instincts relatively sharpened by that experience.
Seems like the numbers add up, but what are the pitfalls and things new BTL investors should look out for?
My view is that the best deals are likely to be at auction, based on what I've seen. As it seems limited to cash buyers only and pros who can sort mortgage finance fast.
I'm planning on heading to venmore auction in the City on the 12th, without bidding on anything just to get the lay of the land. Looks like there are some hidden (vague) sellers fees (searches etc) hidden in the legal pack - so i'm on the lookout but keen to give it a try.
Do any experienced BTL investors have any tips for auctions, Liverpool BTL, or general tips?
I would say read the auction pack like a hawk and make sure you understand why the property is up for auction and not being sold for some problem reason.Typical things to look out for are that there is a tenant with an agreement that makes it impossible to evict them or to raise the rent; there is some kind of overage or other legal clause that may restrict what you can do with the property or who can live in it; issues over legal ownership, and short leasehold.Structural issues, asbestos and japanese knotweed are other problems and these may have been 'accidentally' omitted from the legal pack so know how to identify those. Legitimate reasons for sale at auction include probate or bankruptcy but that does not mean they don't have any of the problems cited above.
That is great advice, I suspected as much. My "i'm a potential sucker" instincts went off quite strongly as I started looking into this, so I'll be reading the auction packs very carefully!
I have been seeing some excellent returns on BTL and HMO in Liverpool and Merseyside more widely. You are certainly looking in strong areas compared to national averages. Scoure widely to find your deal and think beyond the estate agents and the auctions - get connected everywhere you can, sourcers, other landlords, local groups etc
Interesting - I imagine there are a few sharks looking for new out of town investors to "help" there, but my ex-business partner who owns more than 100 units only buys "off market" and is friends with all the estate agents etc so I think that might be the way to go.
Like your dad I'm from Liverpool. I've invested in and around Liverpool since 2011. I manage my own units so have experience in the potential pitfalls.
Your experience with the EA. It was probably just the "guy" who do the viewing. They won't have the answers to your questions.
As for someone/anyone throwing 14% return. Ignore it without the all the facts on paper. And then ANYWAYS do your own DD. For example you will see a 2 bed B2L with net yields of >10%. Problem is other properties in the street may be void. Your target customer base will be limited. You or your EA management agent will have to work for your rent. The managing agent may not be too motivated to deal with issues certain tenants bring for an 8% management fee.
You are looking as L6, L7. Are you looking at HMO? This is a big project to start, I like many other PT subscribers recommend walking before you can run. And if you do go down the HMO model what are you going to do different from all the other HMO models.
I hope I don't come across negative. I would encourage you to invest. It's a great rode and you meet good people. Plus Liverpool and surrounding areas has great places to invest.
Doesn't sound negative, I think my suspicions about the pitfalls are already there, I just wanted some details from people who've done it...
I was thinking of going for student / professional lets in L6 and L7 as close as possible to the university and city centre, when I was up visiting it seemed like every 10th house had decorators and workmen painting and doing up properties (on a saturday!), so seems like plenty of people are thinking the same thing.
Some of the houses were visibly redeveloped with new painting and a few touches like shiny doors and house numbers with a mini backlight behind them, making them look much better.
In terms of what I want to do - I don't want to go down the "cram as many as you can" into a small house route and am not interested in trying to fit 6 people into HMOs etc, it seems like the council are clamping down on that anyway.
I'm looking at adding 1 bedroom to a 2 bed or 3 bed terraced house and renting the rooms individually. I dont know what I'll do differently but I think I want to treat it like a business, i.e. offer a good product and make the house look attractive from the outside, systemise the admin of the properties when I have enough and create "systems" to streamline rent collection and bad debt etc.
I used to run a company with about 250 removal men, removal companies as clients, who are terribly un creditworthy, so my instincts are probably well honed when dealing with bad debt and credit checking clients - but I've never rented property before and I figure rights and obligations are completely different as a landlord.
So I guess I dont think Ill be doing anything different, just looking to build in systems, expand, avoid bad debt with predictive creditworthiness checking (myself at first) and provide a decent product to my customers/tenants - add value to properties within whats affordable given the yields.
You are saying all the right things. Work the same way, having the right allocations and lettings, tenancy, Asset and income collection processes. It's far more interesting and the business will be much more successful.
I thinking making a product is totally the right way to go. I've been advising one of my clients to do the same with an SA business he is wanting to set up.
You want to create a living space that creates sustainable tenancies.
Good comments made re: autions. Though there will still be deals to be had. What o do know is social housing use these to get rid of unwanted stock.
There are a couple of postcodes in Liverpool where a lot of the hmo lenders won't lend because they believe the area to be saturated.
DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.
Do you know which postcodes they are?