30 second guide when buying your first investment property
What are you looking for in your first investment property? Having a clear idea from the start will save the amount of time you spend searching on the net and staring at estate agency windows.
Here are some things to tick off on your mental checklist:
Location
How far are your tenants willing to travel to get to work?
How good are the local schools, shopping centres and other public facilities like parks and sporting grounds?
How convenient is public transport?
If you’re prepared to renovate, think about that other estate agent cliché that’s stood the test of time: “Pick the worst house in the best street”.
Make a list
How many bedrooms and bathrooms do you want do tenants want
What are the essentials: balcony, laundry, garage, views etc
Do your homework
Check out recent home sale prices and auctions in your preferred areas. Look at market trends, houses for sale and suburb statistics.
Get home loan pre-approval
It can be heartbreaking to find the perfect investment property only to learn that you can’t afford it. Even worse is losing your deposit because you won at an auction but couldn’t secure finance for the balance of the purchase price. Don’t risk it.
Take notes and use checklists
Turn your priorities into a personalised investment-shopping checklist and use it to track the features of each home.
Good luck with your search.
Thursday, October 22, 2009
Monday, October 19, 2009
The Nationwide’s numbers showed a 0.9% rise in September, to an average house price of £161,816. On a seasonally adjusted basis, prices are up by 7.2% on February and by 4.1% on December last year, so are on course for a 2009 rise. They are still 13.5% below their peak, which was reached in October 2007, before the mortgage taps were abruptly turned off.
What does this tell us about the outlook? All the usual health warnings apply about limited housing supply and the impact of rising unemployment. I have noted before, however, that markets were thin when prices were going down. It would be unusual, moreover, to have another big bout of falls when the economy is recovering.
Despite the small dip in August, approvals remain well above earlier lows; up by 63% on a year earlier and by 91% on their low point last November. Although the number of approvals edged lower, their value rose, from £7.1 billion to £7.2 billion in August. Meanwhile, the same Bank of England survey that showed mortgage availability had tightened over the past three months suggested that more loans would be available over the next three.
House prices will not carry on rising at their recent rate, but last week’s news was significant. Consumer confidence, according to the latest survey by GfK NOP, is at its highest since January 2008. As long as people feel better about themselves and the economy, they will feel better about buying houses.”
So encouraging news for those with properties!
What this also shows is it will be harder to get as strong level of discounts as whe have got used to in the past – I mean the pool of sellers who will give away a quarter of the value of their property which is what we aim for, is not surprisingly getting smaller! I would imagine in another 6 months it will be hard to get 15-20% discounts, never mind 30%+. Take advantage of the discounts that we are currently getting, to read more, go to http://www.rhettlewis.com/profitgenerator/portfolio_build.php
What does this tell us about the outlook? All the usual health warnings apply about limited housing supply and the impact of rising unemployment. I have noted before, however, that markets were thin when prices were going down. It would be unusual, moreover, to have another big bout of falls when the economy is recovering.
Despite the small dip in August, approvals remain well above earlier lows; up by 63% on a year earlier and by 91% on their low point last November. Although the number of approvals edged lower, their value rose, from £7.1 billion to £7.2 billion in August. Meanwhile, the same Bank of England survey that showed mortgage availability had tightened over the past three months suggested that more loans would be available over the next three.
House prices will not carry on rising at their recent rate, but last week’s news was significant. Consumer confidence, according to the latest survey by GfK NOP, is at its highest since January 2008. As long as people feel better about themselves and the economy, they will feel better about buying houses.”
So encouraging news for those with properties!
What this also shows is it will be harder to get as strong level of discounts as whe have got used to in the past – I mean the pool of sellers who will give away a quarter of the value of their property which is what we aim for, is not surprisingly getting smaller! I would imagine in another 6 months it will be hard to get 15-20% discounts, never mind 30%+. Take advantage of the discounts that we are currently getting, to read more, go to http://www.rhettlewis.com/profitgenerator/portfolio_build.php
After months of weak demand, the market for buy-to-let investors is beginning to stabilise thanks to new tenants taking up the excess of privately rented properties.
Figures from the Association of Residential Letting Agents showed that one third of its members felt the supply and demand of such property was now in balance, up from 19 per cent last quarter.
When asked whether they were more residential properties on the market than there were tenants, fewer than half of the members said there were, down from 70 per cent three months ago.
At the same time, the number of ARLA members signing up 10 or more tenancies has increased, as has the average number of new tenants, signalling more people are committing to rental agreements.
There is even evidence to suggest that the result of fewer new residences coming onto the market at a time when tenants are more confident is swinging the market in favour of the buyer.
Most notably this has been seen in South East, where three times as many ARLA members said there were now more tenants than properties than there were in the last quarter.
The findings, released last week, also showed that the average void period of a rental home has dropped for the first time in more than a year, indicating that properties are being rented more quickly.
In the winter of 2008 the average length of time for a property to remain empty was 3.8 weeks across the UK, yet by May 2009 this had risen to 4.3 weeks as homes became harder to rent.
Now however, the figure has dropped to an average 4 weeks indicating that the rental property market is “picking up”, ARLA said.
Group operations manager Ian Potter said: “This shift in the balance of supply and demand is extremely significant for the private rented sector. It gives further evidence to suggest that the property market as a whole is getting back on its feet.
“This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed. Equally, those who historically have shared a rental property seem happy to set out independently.”
Figures from the Association of Residential Letting Agents showed that one third of its members felt the supply and demand of such property was now in balance, up from 19 per cent last quarter.
When asked whether they were more residential properties on the market than there were tenants, fewer than half of the members said there were, down from 70 per cent three months ago.
At the same time, the number of ARLA members signing up 10 or more tenancies has increased, as has the average number of new tenants, signalling more people are committing to rental agreements.
There is even evidence to suggest that the result of fewer new residences coming onto the market at a time when tenants are more confident is swinging the market in favour of the buyer.
Most notably this has been seen in South East, where three times as many ARLA members said there were now more tenants than properties than there were in the last quarter.
The findings, released last week, also showed that the average void period of a rental home has dropped for the first time in more than a year, indicating that properties are being rented more quickly.
In the winter of 2008 the average length of time for a property to remain empty was 3.8 weeks across the UK, yet by May 2009 this had risen to 4.3 weeks as homes became harder to rent.
Now however, the figure has dropped to an average 4 weeks indicating that the rental property market is “picking up”, ARLA said.
Group operations manager Ian Potter said: “This shift in the balance of supply and demand is extremely significant for the private rented sector. It gives further evidence to suggest that the property market as a whole is getting back on its feet.
“This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed. Equally, those who historically have shared a rental property seem happy to set out independently.”
Wednesday, October 14, 2009
Recently, I've had a number of followers send me questions on Lettings. Instead of sharing the answers just with them, I thought it be a good idea to share with you all.
Question:
Can I alter the term of an assured or shorthold tenancy?
Answer:
If the lease is a fixed term or contractual periodic tenancy you can only make changes if the tenant agrees. It is best to put any alterations in writing. If the fixed term has ended, the agreement reverts to a statutory periodic tenancy, but it will continue on the same terms, unless either party proposes a change. You or your tenant may suggest new terms and any subsequent change to the rent within a year of the statutory periodic tenancy starting. If you cannot agree new terms, you both have the right to apply for an independent decision to be made by a rent assessment committee.
Question:
How do I go about making the changes?
Answer:
You are your tenant must set out new terms and any consequent change to the rent on a form called a ‘Notice proposing different terms for a statutory periodic tenancy’. If you both accept the changes, they can be included in your agreement. If there is a dispute, you or your tenant must apply to a rent assessment committee, using another form called an ‘Application referring a notice proposing differing terms for a statutory periodic tenancy to a rent assessment committee.’ This must be done within three months of receiving notice of the changes.
Question:
How does the rent assessment committee decided the terms?
Answer:
The committee judges whether the proposed changes are reasonable or if other terms would be more appropriate. They may adjust the amount paid by the tenant to reflect the terms, even if neither of you has proposed new rent. Once the committee has made a decision, the new terms and if necessary, the new rent, will apply from the date given.
Question:
If the rent assessment committee set new terms, can I propose further changes?
Answer:
You can only make additional changes if the tenant agrees. You can, of course, propose a new fixed term or contractual periodic agreement at any time.
Question:
Can more than one tenant hold an assured or shorthold lease?
Answer:
Joint agreements can be made with two or more people. Each tenant is responsible for meeting the terms in full, which includes paying the rent. If one joint tenant leaves the property before the end of the agreement and the landlord cannot recover the rent, the remaining tenants will be responsible for paying it.
Question:
Can a person living in a house rental by someone else succeed the current tenant?
Answer:
If someone who is part of a joint tenancy dies, the remaining tenants have an automatic right to stay in the property. If a sole tenant dies, the right to succession will depend on the agreement. In the case of a fixed term that has not expired, the lease will pass to the tenant’s beneficiary. If it was a contractual or statutory periodic agreement, a spouse or person who has lived with the tenant as husband or wife has an automatic right to succeed unless the deceased was already a successor to the tenancy. Should someone be living in the house that does not have a right to the tenancy, you can seek possession under the Housing Act 1988, provided proceedings are started within a year of the tenant’s death.
Question:
Can the tenant give away or sub-let the lease to someone else?
Answer:
A fixed term tenant must seek the landlord’s permission before sub-letting the property. If you do not want this to happen, you should say so clearly in your agreement. Tenants with contractual or statutory agreements that have arisen out of a fixed term cannot give or sub-let the lease with-out the landlord’s permission. However, if the tenant has paid a premium for the property i.e. a sum that is additional to the rent or deposit, they can pass the lease to someone else, unless it is prevented in the tenancy agreement.
Question:
Can I alter the term of an assured or shorthold tenancy?
Answer:
If the lease is a fixed term or contractual periodic tenancy you can only make changes if the tenant agrees. It is best to put any alterations in writing. If the fixed term has ended, the agreement reverts to a statutory periodic tenancy, but it will continue on the same terms, unless either party proposes a change. You or your tenant may suggest new terms and any subsequent change to the rent within a year of the statutory periodic tenancy starting. If you cannot agree new terms, you both have the right to apply for an independent decision to be made by a rent assessment committee.
Question:
How do I go about making the changes?
Answer:
You are your tenant must set out new terms and any consequent change to the rent on a form called a ‘Notice proposing different terms for a statutory periodic tenancy’. If you both accept the changes, they can be included in your agreement. If there is a dispute, you or your tenant must apply to a rent assessment committee, using another form called an ‘Application referring a notice proposing differing terms for a statutory periodic tenancy to a rent assessment committee.’ This must be done within three months of receiving notice of the changes.
Question:
How does the rent assessment committee decided the terms?
Answer:
The committee judges whether the proposed changes are reasonable or if other terms would be more appropriate. They may adjust the amount paid by the tenant to reflect the terms, even if neither of you has proposed new rent. Once the committee has made a decision, the new terms and if necessary, the new rent, will apply from the date given.
Question:
If the rent assessment committee set new terms, can I propose further changes?
Answer:
You can only make additional changes if the tenant agrees. You can, of course, propose a new fixed term or contractual periodic agreement at any time.
Question:
Can more than one tenant hold an assured or shorthold lease?
Answer:
Joint agreements can be made with two or more people. Each tenant is responsible for meeting the terms in full, which includes paying the rent. If one joint tenant leaves the property before the end of the agreement and the landlord cannot recover the rent, the remaining tenants will be responsible for paying it.
Question:
Can a person living in a house rental by someone else succeed the current tenant?
Answer:
If someone who is part of a joint tenancy dies, the remaining tenants have an automatic right to stay in the property. If a sole tenant dies, the right to succession will depend on the agreement. In the case of a fixed term that has not expired, the lease will pass to the tenant’s beneficiary. If it was a contractual or statutory periodic agreement, a spouse or person who has lived with the tenant as husband or wife has an automatic right to succeed unless the deceased was already a successor to the tenancy. Should someone be living in the house that does not have a right to the tenancy, you can seek possession under the Housing Act 1988, provided proceedings are started within a year of the tenant’s death.
Question:
Can the tenant give away or sub-let the lease to someone else?
Answer:
A fixed term tenant must seek the landlord’s permission before sub-letting the property. If you do not want this to happen, you should say so clearly in your agreement. Tenants with contractual or statutory agreements that have arisen out of a fixed term cannot give or sub-let the lease with-out the landlord’s permission. However, if the tenant has paid a premium for the property i.e. a sum that is additional to the rent or deposit, they can pass the lease to someone else, unless it is prevented in the tenancy agreement.
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