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  • Buy-to-Let

    Buy to let in Stoke on Trent - good deal?

    Hello tribe members

    I am thinking of buying a BTL property in Stoke-on-Trent, which will be fully managed by a letting agent.

    It's a 2 bed with an attic room which can be used as a bedroom.

    This property is selling for £75K + £1500 finder's fee.

    I went to view it last Saturday and these were my observations:

    - £75K figure seems a bit high compared to the properties around the area although this one has got an extra attic room.

    - £1500 for finders fee seems too high as the property is currently managed by the same letting agent who is selling it on behalf of Vendor.

    - The kitchen and bathroom are in good condition although not modern.

    Plus points:

    - The property is at an area with a high rental demand(although not much in capital growth)It's in ST4 4AT, Stoke-on-Trent.

    - It is near Stoke-on-Trent train station and Staffordshire University

    - There are few new build houses nearby which replaced the old ones but built in the same style.

    - It is sold with a current tenant in situ who is paying £475 per month and willing to remain.

    I am targeting small families and my goal is to buy, hold then refinance later to build a property portfolio.

    As the capital growth is not very high in the area, my worry is maybe there won't be enough equity to pull out the money for further projects when I refinance the property in 2 years time.Is my worry justified or am I being overly cautious?

    Is it a good buy?

    Looking forward to hearing from you and apologies for the long message.

    Thanks
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    Property Investor from Surrey

    Have you factored in 3% stamp duty into you calculations (£2250) + Legal costs?

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    Yes I have factored in.

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    Property Investor from Surrey

    Finders fee- looks like the seller is trying to sell without paying any commission and instead getting his letting agent to front it. I would be double cautious to make sure the price is appropriate for the property, check out fully the current tenants agreement , make sure you are not locked into any kind of letting agreement, and make sure its not a sitting tenant.

    Don't go by the letting agents say so see the evidence otherwise you could be getting into a heap of problems. At least with a estate agent these points should be covered as a matter of course.

    You can take any capital growth out of the equation for at least 2-5 years , as we have moved on with property which is  now entering the next downward move.

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    It's a freehold house.

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    Property Investor from Surrey

    Oops sorry - could have sworn I read flat in there Smile

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    Thanks Douglas for your advice.

    I have seen the tenant's rental account covering rents for 30 months.Tenant's contract is finishing in 3 months time but he has agreed to a new AST contract IF I am to buy the property.

    Tenant is in full time employment and I have requested to see documentation for other tenant's checks.

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    Property Investor from Surrey

    Hi Prideha,

    i live inTelford so I’m familiar with the area. The price seems high given the area and the age / condition of the housing stock near the University. 

    If your plan is to leverage the house in a few years I think you will struggle. Stoke is an area with little capital growth generally. If you pay over the odds then equity may not be available to utilise.

    If you would like to discuss it in more detail, please feel free to contact me.

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    John Baker

    Property Tribes Financial Services

    You can contact me via Direct Message, or 07979 365467 or call the team on 01206 654444 for a personalised quote and advice

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