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Over the past couple of months, I've been faced with some significant bills and I felt really fed up about it. But now I am feeling better. We spent circa £1250.00 on a lodger room in our own home and we have now secured a tenant at £725.00 per month.The previous tenant paid £675.00 per month, so a monthly increase of £50.00.On a 4 bed house in Manchester, due to tenant damage and wear and tear, I have been faced with bills of nearly £5K (which included a weird size of integrated fridge/freeze that only NEF made, so had to cough up £1500.00 for those two items alone).The previous tenant was paying £750.00 per month and was there for 5 years. Now I am marketing it at £895.00 per month, and have got a lot of interest, so confident it will achieve that rent. It has been re-decorated, with new carpets, and bathrooms re-furbed (grouting etc).So while opening the old wallet can grate a bit, it has a number of advantages:1. It improves/maintains your asset and ensures a robust capital value.2. It means you can likely achieve a higher rent which will pay back the improvement costs over time.3. It will likely mean less void periods in the future, as the accommodation is of a high standard.4. It's all tax deductible and a good way to soften the impact of Section 24 (if you are affected).In future, I will feel good about paying bills for re-furbishment!My second change of mind came after having lunch with experienced property investor John Howard.We were talking about diversifying against risk and he mentioned that, sometimes, purchasing away from your local area is diversifying against risk, as it might mean that you can grow your portfolio further, whereas if you stayed in your own area, that might not be possible.I am well-known for always advising to start out near to home, but, I've changed my mind. If investing further afield is the difference between being able to start and not being able to start, then I now think it is a viable idea - provided that you get support from a reputable local agent and/or perhaps consider buying a tenanted property.
If you are a more experienced investor and can no longer achieve yields in your own area, then I now agree that you could look further afield, provided that you spend time in the area, walk the streets, and fully understand it.As Nick stated in his important thread - The importance of listening to skeptics - taking on board contrarian views is one of the best possible ways to learn and grow as a business person and mitigate risk.It is very easy to become entrenched in one view point - indeed, I have been guilty of that myself on occasion - but by talking to other people, especially those more experienced than ourselves, we can take on new understanding and that will ultimately benefit our business.Just thought I would share with you my change of perspective!I would also be interested to learn if you have ever changed your mind on an entrenched property view you held? What was it and what provoked you into changing your mind?SEE ALSO - Low budget room refurbishmentUP NEXT - 10 reasons to buy investment property within a 10 mile radius of where you live.DON'T MISS - Recommended property training - John HowardNOW WATCH:
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**
Repairs ... I spend a lot of time planning repairs.
I have two sorts :
1. Is a call out repair such as boiler problem etc? I call them "A Repairs"
2. I run a program of repairs such as roofs up-grades etc. I call them "B Repairs".
The plus points are tenants can see you are quick at call outs etc and then they can see you're spending money to make their homes better and of course its all tax deductible ... so it's a Win Win Win !
Your second point has never really effected me. I buy on yield and I can get the yield close to home so I have never had the urge to invest away from the area I know well.
Again we can see a major difference - the North South divide raises it head again.
But if something works for others and it's profitable, bash on ...
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
One point about risk is if an 'earthquake' is possible in your area.
eg Up there what happens if Nissan went away?
I am also diversifying sideways into eg investing in a couple of startup businesses, and longer term in developments.
Do you know I think NISSAN will close
The NE is well used to major Industrys going
has all happened before so the NE is used to it ?
we survived and moved on The NE never wins ?
Only two men ever helped the NE and they were Germans ??? Hitler & Kiesir ?
what we have never had we dont miss and thats wealth
I've changed my property mind on most issues!
I've also invested away from where I live.
I've babbled enough elsewhere on my strategies, but sufficient to say there are many options available to landlords.
Some decisions are a matter of the head, others are a matter of the heart. Its important though to understand which is which.
I have just spent £7k on a 3 bed property in Ashton-under-Lyne after getting rid of a tenant who had not been paying for 6 months, It had been refurbed just before he moved in almost 3 years ago, I am not certain what caused the hole in the garage roof.. It was let for £625pm and has just been relet at £750pm. I am remortgaging it for more than I originally paid for it.
My change of mind was that I wasn't planning to buy another property this year, but with the price rise being more than expected I am using the remortgage to provide most of the deposit for another.
Hi Peter I'm in the process of buying a new build in Ashton, could you recommend a good LA or EA in the area that I can speak to for some information
Slowly working towards financial freedom
Now I will overpay for the “right investment “ I realise that at 58 yrs of age time is passing - so if the investment ticks the boxes then so what if I overpay - I will never sell it so if I overpay by £20k then it’s the investment return of say 6.5% on that £20k I have “lost” - my mind was changed after hearing Warren Buffett advancing that argument over purchase of a controlling shareholder - I want quality stock free of stress and for that I rightly expect a lower return
another matter which is on my mind that at 58 yrs of age I really become rather angry about “investment problems” I am now prepared to pay to get them to go away and if I dispose of it I am only crystallising a loss I already had - the assets had diminished because of the loss not because I sell the asset - say I have 15-20 good years left a year is some 5-7% of the time remaining - why have the edge taken off these golden years with an irritating tenant/problem - get rid of it - look forward not back and enjoy
Vanessas problem with the integrated fridge and freezer is why I am now moving away from Fridge Freezers and on to separate fridges and freezers, as under counter units.
For the rent that place is pulling in Vanessa I would have ditched the integrated - they're more hassle than they're worth imho.
I have had too many problems with one part going (usually the freezer) which then makes the other redundant.
I am currently looking at Zanussi units as the freezer still has the cooling bars on some models, so is easier to visually see if there's a build-up rather than wait for the tenant to get in touch with the bottom all iced up and the cooler hidden behind plastic panels - I'm looking at you Beko!
I’m surprised you guys even fit fridge freezers .
in all my Properties I leave a space for the tenant to put their own in situ.
With a £1500 Neff fridge freezer being required I would of reconfigured the layout and left a space .
I'm just pricing up 3x under counter fridges and 3x under counter freezers and even with 5yr guarantees they'll come in cheaper than £1500!
I wonder what Vanessa will do if they go kaput in 3 years time?
Spending nearly 2 months rent on a fridge and a freezer is crazy. Sounds like a ex-new-build stitch up to me. Hope the replacements are gold plated!
I'd have cleared the space and put a £200 each fridge and freezer there and job done.