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  • Refurbish/Develop

    Buy-Refurb-Rent - struggling to find deals

    Hi everyone

    Apologies if I'm covering old ground with this topic, I'm sure I am to a degree. I currently own a few BTLs and am keen to expand my portfolio but in a way that can either increase the yield or provide capital for further investments. It seems to be a tough market at the moment but I do feel there's an opportunity for buyers to capture some value.

    What I would hope to do is to find a property that's somewhat BMV and refurb it (nothing structural in mind) and then to let it, remortgaging in the process to release equity for the next purchase. I'm however stuck at the first hurdle as I just don't seem to be able to find much that is truly BMV. They either seem to be at or even above MV and in an ok condition or ni a terrible condition (and location) and needing more work than I would think to undertake on a first refurb project.

    Am I just being scared of a challenge? Is there anywhere in particular that I should be focussing to find the right properties? Perhaps there is a method to this which I've missed in the forums?

    Sorry for the rather vague post - hopefully my intent and questioning come through sufficiently! For reference, I'm based in Croydon and hoping to find something within a short travel distance so that I can be 'hands on' with any refurb. I'm currently off work (contractor) so want to make the most of my time off!

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    I'm in a similar position so looking to see responses but In Lincolnshire area thanks

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    Hi

    To try and find properties that need refurbishment I search on rightmove in the desired area and sort by lowest price.

    A crude quick search in Croydon shows a few properties around the 300K Mark that require a refurb and have a small margin. Remember that the asking price is not what you will be paying. I would view these properties and do the sums and come up with a figure you are happy with, That gives you sufficient margin, then offer that. In today's market you have a big chance of getting close to.your offer price.

    However if you are planing to refinance in 6 months to pull money back remember your lenders surveyor is likely side on caution and downvalue your house due to the current  market.

    I am in the process of doing just this but in Birmingham. Just got they keys and about to start the refurb this week. In case I do not get the valuation I would like I have planned to just rent it and refinance in 2 years, hopefully the market picks up then.

    Good luck.

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    Thank you for your reply, very useful. Out of interest, did you buy with a mortgage or would you suggest a bridging loan? I've read good/bad about both approaches in the context of refurb and refinance so just curious.

    Thanks again!

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    Hi, have you explored using sourcing agents at all.  It can be a minefield to find good, trusted and compliant ones, but the best of them will charge fees, but through local area knowledge and networks can source deals, potentially off market, that you might never be able to replicate yourself.  The good ones are gold and can find you deal economics that are well worth paying for!  Food for thought.

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    I hadn't previously considering using sourcing agents but thanks for the tip. I have seen them mentioned but categorised them as too 'professional' for a small timer like me! I'll have a search on PT to get more background and go from there.

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    Anyone can use a sourcing agent - we have clients who come on to do a single purchase for £30k - its not just for large portfolio builders or investors with deep pockets. Whoever you use make sure they are compliant - compliant with the estate agents act, GDPR, registered with a redress scheme, segregated client money account, PI insurance etc, and that they are long experienced and have lots of deals under their belt - not someone fresh from some property training course who has no money so became a sourcer five minutes ago!  Good luck

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    Finding deals is not an exact science and we have many threads that discuss how to find them, most threads being curated here:

    Top 10 Property Tribes resources to learn how to find property deals

    This themed week was also very useful:
     
    "Deal Sourcing Week" 2016:

    Monday -                 An overview of deal sourcing & the different channels

    Tuesday -                 Deal sourcing for newbies

    Wednesday  -           Looking for the angles

    Thursday -                Dispelling the myth about Below Market Value (BMV)

    Friday -                     Being efficient in sourcing discounted property deals

    Finding deals is a combination of relationships with estate agents, being a good networker, being a great researcher, and also putting in lots of offers.  It's a numbers game and eventually a vendor will say "yes"!

    Although obviously not Buy/Refurb/Rent, you can also approach developers direct for deals and secure a significant discount.  They will often discount "stock" units to get them off their books at their financial year end, or if they need to meet sales targets.  You can negotiate a larger discount if you buy more than one property, so it doesn't hurt to visit all the new build show homes/sales offices in your area, chat to the sales person and let them know that you are in a position to complete quickly if they can offer a discount and/or they have any sales that fall through. 

    The above worked well for me, and I once secured a 16% discount from market value when I put an offer in writing on a 4 bed new build house in Basingstoke.  The offer was rejected as someone offered the asking price and the sale started to proceed.  However, the sale fell through and around four months later, the developer called me and said that, if I could complete quickly, they would accept my offer.

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    Thanks Vanessa for the links!! And that's a very interesting point you mention about trying developers directly, especially with so many new builds going up in Croydon and remaining seemingly empty!

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    "remaining seemingly empty!"

    If those properties are sold then I wonder if they are being left empty by choice...

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    Morning I’m glad to know I’m not the only one struggling to find deals and I’ve been doing it for 40 years and sold over 3500 properties . And I’m sure it will continue to be a struggle to find the right margins that’s why you have to be so  carful about which feals you to do and who you work with

    I would personally consider if you haven’t done already purchasing at Auction  all the deals are in a catalogue there is always one bargain per auction at least you just need to try and find which one it is!

     If you’ve never been to an auction before go and get some experience of what it’s like goto view a few of the properties on the open days remember you need to know exactly why any property is in the auction .

    A lot will have problems you just need to pick the problems you’re able to sort out.

     Always then go on to the next door neighbour to find out the truth as to why it’s in the auction they will tell you everything you need to know

     Make sure you read the legal pack thoroughly and get your solicitor to do so also .  Make sure you do all you due diligence and you know exactly what it will cost to refurbish ETC

    Never bid at auction without having all the funds in place to complete . I hope this is of help

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