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I'm new to the forum and new to property investing as a whole.
I have been looking around for the best value for money in terms of yield and this seems to be a good approach.
My queries are:
Any advice on the above would be greatly appreciated!!
Blocks of flats tend to come up at auction.I would not advise this strategy for a newbie though.I would suggest you go to a developer and ask to speak to the Sales Manager to buy a bulk purchase of 3 freehold houses. You should be able to get a significant discount if you do.Then you don't have to worry about leaseholds and all the expenses of running a management co. etc.It's always best and low risk to keep things simple until you've gained some experience imho.Hope that helps?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thank you for your response.
Thats an interesting suggestion in terms of buying bulk off a developer I will look into that, as I am london based and that has not been an option over the past few years as everything has sold for list or above!
I'll start another thread with some more questions
As Vanessa notes, starting out by buying blocks of flats is perhaps quite a step into the deep end…so if you are fixed on taking it forwards get some experienced people in your circle who have been there and done it and can help guide you through some of the pitfalls.
Auction buying has its own challenges and all may not be what it seems with the opportunity…for instance auctioneer-provided legal packs may lack key information.
Freeholds can be turned into leaseholds…and it can be a profitable strategy…but you need the right specialists in place to help (a suitably experienced leasehold expert for one).
What is the condition of the building? What is the condition of the individual units? How much will need spending on it over the coming years? What is the rental roll and occupancy rate on the property? Is the tenancy documentation in good order? What is the demand for flats in that location and at the current specification/condition? When was the building converted into flats or was it built as flats? Was the build/conversion done correctly according to building control? Are you fully aware of all the costs in buying a large property, and similarly in splitting titles if that is the way you go, holding costs if you sell units, and management costs and implications of being a block owner?
In some towns/cities there are huge numbers of flats being added in large blocks and there is a temporary(?) degree of supply outstripping demand, so prices could dip…so it’s worth being aware of demand levels and whether the flats you are buying offer a quality that is still in demand.
Are you buying cash or looking to purchase with commercial lending? If the latter then the majority of commercial lenders would want to see a track record for lending on a project like this. If buying at auction then you may be able to get bridging finance (but it can take time to sort out)…but you also need to think about how you are going to exit from the bridge at the end of the period.
* New build residential developments and flat conversions in the Home Counties* High end HMOs in Reading and Bracknell