Any experienced property investors comment on these?
Discussion
Can anyone give me any advice on these?
http://tinyurl.com/yfo4dke
The properties on Japan Street. There's 10 in all, the guide prices have been removed because they are going into the May auction but were around £35,000 so the gross yields look to be around 10%+
Can any experienced property investors see if tell me if they would buy these outright if they had the cash?
The area itself doesn't look too prosperous but the tenants seem to be long term and not DSS. £30,000 per annum in rental income and a guesstimate that the properties would be worth double what they are now in 10-15 years seems to make this a good buy if you had £350,000 cash.
Anyone have any counter-opinions not to buy?
http://tinyurl.com/yfo4dke
The properties on Japan Street. There's 10 in all, the guide prices have been removed because they are going into the May auction but were around £35,000 so the gross yields look to be around 10%+
Can any experienced property investors see if tell me if they would buy these outright if they had the cash?
The area itself doesn't look too prosperous but the tenants seem to be long term and not DSS. £30,000 per annum in rental income and a guesstimate that the properties would be worth double what they are now in 10-15 years seems to make this a good buy if you had £350,000 cash.
Anyone have any counter-opinions not to buy?
I wouldn't turn away properties that may have DSS tenants. Although some are a bit rough they tend to found on the 'council' estates rather the more private sector. In my experience DSS in houses like these tend to be decent and have fallen on hard times etc.
Downside to DSS tenants is you can't go after unpaid rent for a couple of months. They to have arrears of several months before you act.
With regard to financing them, I would say it depends on how much cash you have and if you're close to your limit, have you got enough to pay council tax and rates etc if the houses suddenly became empty?
Downside to DSS tenants is you can't go after unpaid rent for a couple of months. They to have arrears of several months before you act.
With regard to financing them, I would say it depends on how much cash you have and if you're close to your limit, have you got enough to pay council tax and rates etc if the houses suddenly became empty?
Are you buying them unseen? Or do you know the area? I definitely wouldn't bid if you haven't physically inspected the properties.
They could need more work than you've anticipated or alot better than you think (and therefore maybe they are undervalued and a greater yield could be achieved at the price you pay). Until you look you can't make that decision.
Some of the clients I work with have DHSS in their accommo and often times the tenant is able to add a bit on to the rent that the council pay. Don't be to put off by DHSS. Also - if the units are furnished - the council sometimes have a 'property bond' fund to help with the tenants paying a bond. Usually equivalent to one month's rent.
Also - try and have a look at the agreements. Are they paying every 4 weeks or every month. If it's every 4 weeks that's 13 payments a year not 12 and therefore you can amend your calculations. Edited to add - I've had a proper look at each prop description now and they are all on AST's on a weekly basis. So forget this piece of advice.....!
There's approximately £40,000 in rent being achieved. No prices but something in the region of £280,000-£325,000 for the lot? They look like they might need some work. Plus the mortgage company will want some equity in there or at least 130% of the rent role achieved covered.
No doubt my post will be shot down by someone shortly but these are my thoughts initially.
They could need more work than you've anticipated or alot better than you think (and therefore maybe they are undervalued and a greater yield could be achieved at the price you pay). Until you look you can't make that decision.
Some of the clients I work with have DHSS in their accommo and often times the tenant is able to add a bit on to the rent that the council pay. Don't be to put off by DHSS. Also - if the units are furnished - the council sometimes have a 'property bond' fund to help with the tenants paying a bond. Usually equivalent to one month's rent.
Also - try and have a look at the agreements. Are they paying every 4 weeks or every month. If it's every 4 weeks that's 13 payments a year not 12 and therefore you can amend your calculations. Edited to add - I've had a proper look at each prop description now and they are all on AST's on a weekly basis. So forget this piece of advice.....!
There's approximately £40,000 in rent being achieved. No prices but something in the region of £280,000-£325,000 for the lot? They look like they might need some work. Plus the mortgage company will want some equity in there or at least 130% of the rent role achieved covered.
No doubt my post will be shot down by someone shortly but these are my thoughts initially.
Edited by Oi_Oi_Savaloy on Saturday 27th March 09:16
Could you get more if they were done up and let to students perhaps? Not the area for it (I don't know Manchester at all).
It's just that some (haven't checked all of the descriptions in detail) seem to have separate dining rooms. They could make another bedroom and then perhaps you could let each room out at £50 a week(? - could you get more?). That would make £200 a week from the bedrooms and even over the holidays I think the students have to pay a lower rent to hold them.
Just another thought.
It's just that some (haven't checked all of the descriptions in detail) seem to have separate dining rooms. They could make another bedroom and then perhaps you could let each room out at £50 a week(? - could you get more?). That would make £200 a week from the bedrooms and even over the holidays I think the students have to pay a lower rent to hold them.
Just another thought.
Edited by Oi_Oi_Savaloy on Saturday 27th March 09:45
Oi_Oi_Savaloy said:
Are you buying them unseen? Or do you know the area? I definitely wouldn't bid if you haven't physically inspected the properties.
There's approximately £40,000 in rent being achieved. No prices but something in the region of £280,000-£325,000 for the lot? They look like they might need some work. Plus the mortgage company will want some equity in there or at least 130% of the rent role achieved covered.
No I definitely wouldn't bid if I hadn't seen the properties. Would also want to check the crime stats in the area and to drive around the local area at various times of the day to see if it is in a violent area. Salford seems like an up and coming area with a lot of regeneration planned but still has bad areasThere's approximately £40,000 in rent being achieved. No prices but something in the region of £280,000-£325,000 for the lot? They look like they might need some work. Plus the mortgage company will want some equity in there or at least 130% of the rent role achieved covered.
Edited by Oi_Oi_Savaloy on Saturday 27th March 09:16
I don't know much about DSS tenants but I'm told that if they have falsely claimed benefit then YOU are liable to pay the council back the housing benefit. also there's a clause that the housing benefit has to be paid to the tenant first and then the landlord and the only way you will get paid directly is if it's 2 months in arrears.
Student lettings seems better, but means the houses have to be refurbed a lot more frequently.
I wasn't thinking it terms of mortgages for the properties, just paying cash outright for the £350,000 with the view of making it a long-term investment or pension provision.
I don't know - £350,000 sounds alot at this stage judging by the covenant issues (all DHSS?) and that £40,000 income doesn't take into account any arrears or voids. To be honest I'd want more than a straight 10% yield for the risk factor alone.
Do we know why they were repossessed at all? Probably not I guess but would be interesting to find out.
Cash is absolutely king right now. I realise you're buying for the long term and if Salford's on it's way up that's great but even so - it feels like you're potentially buying alot of aggro with the current tenants (they might be brilliant but then again they might be difficult).
What are the houses going for around there? Could you perhaps sell 3 or 4 immediately to pay down some of the debt on the other 6? Or use the proceeds to do up the other 6? Would that be feasible/worth while?
Do we know why they were repossessed at all? Probably not I guess but would be interesting to find out.
Cash is absolutely king right now. I realise you're buying for the long term and if Salford's on it's way up that's great but even so - it feels like you're potentially buying alot of aggro with the current tenants (they might be brilliant but then again they might be difficult).
What are the houses going for around there? Could you perhaps sell 3 or 4 immediately to pay down some of the debt on the other 6? Or use the proceeds to do up the other 6? Would that be feasible/worth while?
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