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Beginning of September - Spent the last few weeks preparing for a trip up to Nottingham, Leeds and Liverpool. In search of a more ambitious project. With the goal at buying a property with the view to refurbishing it.
Having spent a long time going through all the different postcode districts across the country, I was looking for the best balance of capital growth, decent yield, good quality tenants and rental yield.
Obviously there is no perfect area. If you want decent capital growth and good quality tenants you'll have to sacrifice yield etc.
I tried my best to find that balance and settled for....NG3, NG5, NG6, NG7, NG8, LS6, LS16, LS27 and L9.
Tues/Wed 18-19 Sep - Took 2 days up to Nottingham to cram in as many viewings as I could around the NG3,NG5,NG6,NG7,NG8 area.
Attended a Pin Meeting up in Nottingham and met some useful contacts there.
Thu 20 Sep - Was darting up and down the west side of Leeds trying to find any decent properties there.
Fri 21 Sep - Had some viewings in the morning around the L9 area of Liverpool. Got put off when I was told by 1 agent that 80% of tenants were on benefits in the area and that he would threaten them and change the locks if I made him the agent. When I asked him whether it's legal, he said "well it's not, but they rarely complain and it gets results!" He talked the spiel also about spending £5k doing up the house, he had his own builders who could do the work and would add 25k value to it! Luckily I googled the agents afterwards and that was that. Luckily, I'm vigilant.
Sat 22 Sep - Fri 28 Sep - Started getting a bit frustrated. I had done so much research, pre-trip however I realised I didn't know anywhere near enough about renovations and how much it would cost to do one. I can't even bang a nail in straight, HOWEVER, I was hoping to just project manage a build from afar and be able to price up works. It's not that easy and there is a steep learning curve. I spotted one property which was in auction. https://www.rightmove.co.uk/property-for-sale/property-67468036.html
Listed for £90,000. I felt it could be worth £130,000 to do it up, but it had no searches, sold as seen and I didn't know how to price up work! I would have loved to have given it a go, but it's too risky. What if I bought a dud property? It had a really dark and dingey basement, which had £8k worth of damp proofing done to it according to the agent. Far too scary for me. But a shame because my heart was saying go for it, but my head took the sensible approach and walked away. It ended up selling in auction for £98,000.
There was another property which was a 4 bed which was turned down for a HMO licence but could potentially be turned into 2, 2 bed flats subject to planning. I spoke to an architect whom I met at the Pin Meeting. Listed for £140k. Would be worth £170k once converted into 2 flats. and the property has been on the market for a year so I put in a low offer and haven't heard anything.
7 Oct - I put in about 9 offers over the last 2 weeks. Unfortunately all of which were rejected apart from the possible conversion (no response from vendor). Currently assessing some properties now that are coming up on an online auction.
These ones have searches on them but I need to research to know whether the things flagged are concerns or just 'facts'. Currently still awaiting the local searches from properties 2 and 3.
Property 1 end of terrace and has a big garden with a tree in it and a public path around the back and side of it. Possibly scuppering any chance of development to it. Also possibly a risk of it lifting the house up? It is possibly around 30 metres from the house I'd say. Already tenanted. They're on benefits which I'm not so happy about but looks like a decent solid property.
Property 2 is mid terrace. Tenanted by working professional who has been there 6 years. Nicest house on the block and well maintained.
Property 3 is in the best location. Slight concern that it's on a hill with a slope that it could be a flood risk. But really well maintained again.
I've never bought in auction before but hopeful I can win at least one of them.
Auction is near the end of this week!
======================================================PROPERTY 1 - Local and Water searches======================================================PLANNING CHARGES----------------Article 4 Direction under the Town and Country Planning (General Permitted Development) Order 1995. Restriction toPermitted Development, Planning Permission is now needed for Change of Use from C3 (Dwelling) to C4 (Houses inMultiple Occupation). Effective from 11th March 2012.
Tree Preservation Order Broxtowe Lane (No.1), Town and Country Planning Act 1990, date confirmed 06/04/1978.
MISCELANEOUS CHARGES--------------------Smoke Control Order under the Clean Air Act 1956.This Property is affected by one of the various Smoke Control Orders made in the City of Nottingham between 1stDecember 1960 and 1st October 1991
ANY BUILDING REGULATIONS CERTIFICATE OR NOTICE ISSUED IN RESPECT OF WORK CARRIED OUT UNDER A COMPETENT PERSON SCHEME?------------------------------Rewire of all Circuits, Upgrade or Alteration to Means of Earthing.Dated: 18/05/2011
Install a Replacement Consumer Unit.Dated: 19/11/2016
Installed a Gas-Fired Boiler.Dated: 23/03/2018
LOCAL PLAN/LOCAL DEVELOPMENT FRAMEWORK---------------------------------Development Plan Proposal - Nottingham Local Plan 2018: -Within Mineral Safeguarding Area,This property is within 200metres of the following designations: -Open Space Network & Centre of Neighbourhood Importance.
ROADS,FOOTWAYS & FOOTPATHS--------------------------Footpath fronting property - Not adoptedFootpath to Side & Rear of Property - Not adopted
PROPOSALS FOR A RAILWAY, TRAMWAY, LIGHT RAILWAY OR MONORAIL WITHIN THE LOCAL AUTHORITY'S BOUNDARY--------------------------------------Yes - The Secretary of State for Transport has announced Phase Two of a possible new high speed railway line (HS2) -Proposed Planned Consultation Route.For further information you are advised to go to;
RADON GAS---------Property is shown within an area that could be above the Action Level for Radon Gas on the Radon Atlas produced bythe Health Protection Agency. Please refer to your Environmental Search for further information.https://www.gov.uk/government/organisatio...-transport
IS ANY SEWER SERVING OR WHICH IS PROPOSED TO SERVE THE PROPERTY SUBJECT OF A CURRENT STATUTORY ADOPTION AGREEMENT OR AN APPLICATION FOR SUCH AN AGREEMENT?---------NO - The water company's records indicate that the sewers serving the development of which this property forms part are not the subjectof an application for adoption under Section 104 of the Water Industry Act 1991. Where the property is part of an established development it would not normally be subject to an adoption agreement under Section 104 of the Water Industry Act 1991.
DOES THE PUBLIC SEWER MAP SHOW ANY PUBLIC SEWER WITHIN THE BOUNDARY OF THE PROPERTY?----------------YES - The public sewer map does show public sewers within the boundary of the property. It has not been a requirement for all public sewers to be recorded on the public sewer map. It is therefore possible for unidentified public sewers to exist within the boundary of the property.
IS THERE A CURRENT STATUTORY AGREEMENT OR CONSENT TO ERECT A BUILDING OR EXTENSION ON THE PROPERTY OVER OR IN THE VICINITY OF A PUBLIC SEWER OR DISPOSAL MAIN?-------------------NO - The water company's records indicate that there is not a statutory agreement or consent in respect of the building over a publicsewer at this property. For historical reasons the water company may not be aware of some agreements or consents which have been entered into by the local authority.
DOES THE MAP OF WATERWORKS SHOW ANY VESTED WATER MAINS OR ASSETS WITHIN THE BOUNDARY OF THE PROPERTY?------------------SEE ANSWER - We are not aware of any vested water mains within the boundary of the property.======================================================PROPERTY 2 - Water search======================================================IS ANY SEWER SERVING OR WHICH IS PROPOSED TO SERVE THE PROPERTY SUBJECT OF A CURRENT STATUTORY ADOPTION AGREEMENT OR AN APPLICATION FOR SUCH AN AGREEMENT?---------NO - The water company's records indicate that the sewers serving the development of which this property forms part are not the subject of an application for adoption under Section 104 of the Water Industry Act 1991. Where the property is part of an established development it would not normally be subject to an adoption agreement under Section 104 of the Water Industry Act 1991.
DOES THE MAP OF WATERWORKS SHOW ANY VESTED WATER MAINS OR ASSETS WITHIN THE BOUNDARY OF THE PROPERTY?------------------SEE ANSWER - We are not aware of any vested water mains within the boundary of the property.======================================================PROPERTY 3 - Water search======================================================IS ANY SEWER SERVING OR WHICH IS PROPOSED TO SERVE THE PROPERTY SUBJECT OF A CURRENT STATUTORY ADOPTION AGREEMENT OR AN APPLICATION FOR SUCH AN AGREEMENT?---------NO - The water company's records indicate that the sewers serving the development of which this property forms part are not the subject of an application for adoption under Section 104 of the Water Industry Act 1991. Where the property is part of an established development it would not normally be subject to an adoption agreement under Section 104 of the Water Industry Act 1991.
DOES THE MAP OF WATERWORKS SHOW ANY VESTED WATER MAINS OR ASSETS WITHIN THE BOUNDARY OF THE PROPERTY?------------------SEE ANSWER - We are not aware of any vested water mains within the boundary of the property.
It's great to hear your story Steven. You seem to be having a lot of hurdles put in your way, what would you say is the biggest to date?
Obviously, my journey has only really started as I've only started about 1 year ago and it's been a pretty fast paced year so far.
I would say so far was the mortgage issue. I was really stressed when I thought that I could lose the property because of something stupid, trivial and incorrect on my credit report, but I learnt a key skill from the experience. Sometimes you have to complain to get somewhere. That doesn't come naturally to me as I'm relaxed and easy going by nature, but I'm learning that sometimes you have to put your foot down or you won't get anywhere
Fri 12 Oct - I placed bids on 3 properties on an online auction which I had been following for a month since I viewed them when I travelled up last month to Nottingham. All of which were owned by the same landlady.
I took the morning off work so I was ready to snipe them at the last minute. It was my first experience with any property auction but I had been watching other properties in the days leading up to the auction to get a feeling in how it worked.
In the days leading up to it, I'd spoken to the letting agent as the properties were all rented and managed by the same letting agent and asked about the tenants. What was their status, were they good tenants etc.
Local and water searches had come in and looked relatively fine and given that I'd had no luck with the offers I'd put in on the properties I was expecting the prices to take off and just hoping to get a good price.
In case you are not aware, Nottingham is booming right now and prices are skyrocketing and properties are going really quickly. Trying to obtain a great price in a booming market started to feel like it was impossible.
Property 1 - Listed for £74,000. I valued this at £101,000 and was the best of the three. It was a terraced 3 bed house rented out at £550/month. Very well maintained. V low flood risk. Low proportion of council tenants in the area. Great schools around. I was happy to pay up to around £87,000. Based on the starting price it had an 8.9% gross yield / 6.1% ROI on my criteria.
Property 2 - Listed for £65,000. I valued this at £82,000 and was the weakest of the three as the yield and area weren't quite as good. It was a terraced 3 bed house rented out at £450/month. V low flood risk. A quite low proportion of council tenants in the area. It did have a really homely feel. The tenant had been living there for 6 years. A dog owner, which I'm less keen on but she had really looked after the place. I was happy to pay up to £70,000. Based on the starting price it had an 8.8 % gross yield / 5.3% ROI on my criteria.
Property 3 - Listed for £79,000. I valued this at £99,000 and had the biggest wow factor, mainly because of a fantastic sized garden. It was a semi-detached 3-bed house rented out at £575/month. The estate agents had told me the wrong day when I viewed it so the tenants weren't expecting me. In fact, it was the first property I viewed on my road trip that week. The tenant is on benefits, which I was planning on staying away from. They're also a dog owner. Possibly the weakest of the 3 in terms of access to good local schools but it wasn't horrendous. It did, however, seem to have a lot of expensive detached homes all selling recently in the area, so it seemed the most affluent. It boasts a double driveway but has a slight risk of flooding and has a tree preservation order in the tree in the large garden. I was happy to pay up to £85,000. Based on the starting price it had a 9.1 % gross yield / 6.8% ROI on my criteria.
My plan was to get 2 out of the 3 by bidding at the last moment. The goal was to either bridge them and then get a mortgage after 6 months or to mortgage them both asap. I had quite a lot of leeway in terms of pricing as I was willing to leave up to 50% of my cash left in the deals with the hope that they would increase in value and I could refinance some of my money out of the deals to reinvest either into the next deal or possibly fund a purchase of our own home. Property 1 was the best investment in my eyes and that one was my priority.
The end result. Bids were placed on all 3 properties by others and with 20 mins to go, I bid on properties 1 and 2. I get outbid on both, and then bid again on both in the last minute. I focus my attention on property 1 and with 20 seconds to go I get outbid, but I place a last-second bid and snag property 1 meeting the reserve! Result!
Shortly after I get a call from the auction team and congratulate me on winning property 1 and let me know I didn't meet the reserve on property 3. He asked if I wanted to still put forward my offer to the vendor. I told him to go ahead. He asked if that was my offer. I said that was as high as I was willing to go (mainly just to test the water) and I got a call a couple of hours later that it was accepted! The landlady was a motivated seller whom just wanted to give it all up as she was living abroad. Possibly the combination of Brexit uncertainty and the recent tax changes but I wasn't complaining. When he called me back he said the agents were arguing as they felt she had sold it far too cheap. He asked if I was ready to pay the auction fee and secure it, so I wasted no time and secured property no.3 and my 3rd property!
So I've now secured 2 auction properties 21% and 18% below market value. I then got an email from the auctioneer asking if I wanted to take the other property too as she wants to sell up! (I work this out to be 18% BMV, so if you're interested PM me!) If I wasn't stretching myself so thin as it is, I would have gone for that too.
I'm now waiting on my mortgage broker to see how best to finance these deals but I'm hoping to fund one them and then bridge the other and then after 6 months, pull the majority of my cash out by mortgaging them at their market value as opposed to the price I paid.
I'll keep you posted on how things progress.
Great thread Steven. I'm starting out on my property journey as well but I haven't got my first one yet. All the best.