Before you start looking for property, be it investment, buy to let or residential, you need to be very very realistic with yourself.
- How much can you afford
- How much DIY can you do yourself
- What is the purpose of the property?
Most people will be asking just this and this is WRONG! The reason is many people will look at whats cheap, hope they might make some money over a few years and just leave out the rest. That is were you going to get nailed with a LEMON! Of course property prices historical increase in value, Fixtures and fittings and building materials also increase due to inflation but in some cases they might lower.
First you should really be thinking what makes “YOU” happy or what is going to make your tenants happy. Look lets face it, if you are buying property, be it a business or for yourself you need to be 100% sure what you getting is going to be suitable for your needs or that of your customers. You need to think of other things like.
- Safety
- Curb Appeal
- A decent place to live in (Modern Rooms no mold extra)
- Nice Neighbors and area
- Transport and Shops
- And lower priced than most homes in the same street.
You need to look at the basic HUMAN needs too, No one can explain this better than Maslow’s hierarchy or Human Needs (What makes people happy). Once you understand what people want and what you want, You will understand what your needs are, when you understand them you know what your looking for. If you’re a landlord and you FAIL on this, you will have problems. High turnover of tenants extra extra.I once had a apprtment with old orange tiles, people would come and go Ohh and Ahh and gone, simpley replacing the tiles with new white tiles had the people putting in offers, People who rent want some quality in life and they want to invite friends over extra, if they cannot invision this, they will look for it else were and you may end up with some DIE HARDS and DESPERADOS. Watch this Video below, When people basic needs are not met, they will seek it some place else. If you fail to maintain your properties, people will RUN, if you’re selling and potential buyers sense problems for their own basic needs, they will run. Of course not all properties can be perfect .. BUT THE PRICE WILL REFLECT THIS and worth trying to give them the idea and build their dreams if your selling.
Once you understand your property basic needs or those for others what makes them happy, how does one go about getting the right property.
Getting a bargain property.
Finding Distressed properties are gold, these are properties were the owner has to sell due to some kind of emergency, Debt, death, divorce. The three D’s, They normally very negotiable, sometimes in good areas and under priced. Sometimes they end up on auction (but be careful here as at auctions you also find Lemons, bad homes for sale)
Sorting the Lemons from the Gems
To get a good deal you need to look at the following
Desire (Is there desire for the property and area, do people want to live in this area, who are living in this area)
Quality (If the property built with quality goods, watch out for things to replace like asbestos, poor retaining walls, flooding from neighbors or you to them, old plumbing what needs to be replaced, heating systems, metal framed properties who you cant get a loan for or future buyers, and other bad things what may be costly down the line, are the windows good, No cracks, mold, damp, rotting extra, outside power lines what put people off)
Value (If the property of value, is the price correct, are the market trends showing an increase in price projections, do other people see it as value)
Culture and Demographics (Buying a property for rent or yourself may not always be a good idea if example you purchased one across a church, Some people may not like it at all, some people of different religions may completely hate the idea of seeing worshipers of another faith every Sunday outside their front door! The same applies to Schools and certain shops and business and even poor or rich neighbor hoods. You have to target the area and location what will be most attractive to most people. If your demographics only target a small percentage of the population, your desire for your property will be much less to a lower number of people. Always try and find a neutral position of one where there is allot more people of a particular group or type of people. Working class and non working class, Crime and decay and neglected areas will also hepper your winning purchase. Is there employment in the area, or good transport links to employment area’s? Choose wisely, many councils in the UK release statistics to the public and research is a finger click away. Also choosing the type of property may effect what people really want, if you choose a studio flat, it may only appeal to some people, perhaps students or poor families or single people. A 1 bed room, two bedroom extra may attract small families. You have to consider who you targeting, Most people at some age and stage will want to buy their own property, those who have not been successful may be struggling, hence they rent. Getting the right property is important to who you attract, also perhaps the property you buy might add another room, so your original demographic may change if you upgrade. Close to a university may attract students, some students may want 9 month contract or just leave without paying, you may need to charge in advance, or change tenants yearly. These are all things to consider.
Environment (Are there risks of flooding, moving ground, sinking, mines? Or even pests or the famous destructive knot weeds about? What is the impact of the environment on this property, even some coastal/waterfront homes may be subject to rust.)
Planning (Are there more good quality homes been built in the are, will new homes be leased or sold, more leased been competition for rent, have a look and see the ratio or homes for sale to those for rent. Are there positive planning or negative ones like industrial plans for the are or even wind mills, power lines/plants. What can put people off living there or scare them to buy in the area, the more homes sold/rented quickly means an area of interest and prices are bound to go up. )
Rental/Buying ( Does the area rent well and are snapped up quick can mean a good area or is everyone selling in this area with a low pickup meaning it could a bad area. Is the property priced well where you already making some money if you buy or do you loose allot of money if you buy compared to other properties in the area.Supply and demand, are there more empty homes for sale taking long or stale on the market? Of few selling quickly, Check Rightmove what has sold and what is selling and renting, check the dates and count the numbers of a period of a few months)
Potential (Can the property be more than what on show, example can you make another room, add a conservatory, split into two or more flat, loft conversions, things what at some stage can increase its value, or has or can have planning permission)
Once you ask yourself some of these basic question you will find what makes a good property to a bad property, You can watch the local websites to see what is selling and what is not to get a good idea, These include rental. If you make to many compromises on the options above (saying, Its OK I can live with that) you may end up with a LEMON! (Bad home buy) If you’re not honest with yourself you may end up doing more than you expected to buy a home. And this is what makes a person unhappy.
To surmise never compromise on the main elements of a good deal or bargain in short. DEVQ
D = Desire
E = Environment
V = Value
Q = Quality
Estate Agents and Property selection
Not every home what hits the market if for the general public immediately. With what we learned above most properties do end up for the general market, but not all. Most people cannot look past all the compromises or are very unrealistic to what needs to be done. Hence forth cometh the DIY or Property Developer. Building relationships with the Solo DIYer and Professional Property Developer is key to sales. In the estate agents eye there are three kind of properties.
- Ready for the market (no added value, priced to market)
- Potential for developer or DIYer (Priced cheap and money to be make after alterations)
- Total Disaster (Best to avoid or refer or sell at below market pricing in the hope of a sale, remember time = money)
Here is were the estate agent looks to his A list, People who are currently looking for property (Public) wanting to be notify for the READY FOR THE MARKET. For the developers you send the Potentials too look over. The reason been you will almost certainly have a sale from a developer. In fact many developers like to have good relations with estate agents to be notified of these good properties they can develop, so when meeting a developer its always good to make a connection and expand your leads. Once you run out of developer contacts you move on to the DIYer and then the general market.
The reason we don’t go strait and market to the public on the word GO is that homes what need allot of work is not always their cup of tea and can become stale on the market as a wreck, but one mans garbage is another mans treasure is a fact in real estate. This way estate agents broaden their sales strategy and move the market to better quality homes and increased house prices not to mention more sales, this is a positive contribution to the country GDP and increasing population demands of decent homes in the 21st century. Also if you are able to sell the house before doing any marketing at all, this will save you time, money and effort.
Distressed Selling and Assisted Sellers.
Not all estate agents will see some distressed properties as a win win. Partly because some property owners might come to your door looking to sell their property while its in the final stages of been repossessed. Most Agents might not see this as a valuable resource as it really limits the time of the sale, thus all the effort of the sale might be lost, and instead will rather wait for the bank to come forward and sell the property for them. In some cases the bank might not allow the owner to sell anymore. There may be too much debt and they no longer want to wait.
But Advise is free and there are ways to counter this and still profit from the sale. Either way!
In some cases the seller could seek an friend to take an option to buy the property from the bank without committing to the sale at all, thus it delays the bank / mortgage possession of the property, this gives the seller/friend the option to remarked the property and sell it and recuperate any equity in the property in the limited time they have (one last ditch effort). If the seller does not feel comfortable with this option there are companies who do offer this service and of course take a large stake in the equity, here the estate agent could try and negotiate a stake in the profit or referral cost.
In some cases a property might just be stale and the estate agent might want to scrap the property from it’s books, again some business look for these opportunities, were they go in and either auction the property for the seller or repair update the property at their own cost to make a profit, again the estate again can gain some referral costs.
Selling at Auction
Selling at Auction should be a last ditch effort and you really need to do your homework. There are costs involved and when the hammer drops, THATS IT! The sale is binding.
Some Estate Agents may offer this service, while other may totally avoid it and refer you to an agent, of course with referral fee. Always do your home work and be sure what you doing, seek expert advice.
http://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-to-sell-your-house-at-auction/
https://housebuyfast.co.uk/selling-at-auction/
http://www.propertyauctionaction.co.uk/
http://www.countrywidepropertyauctions.co.uk/
Selling with Tenants on Assured Agreements and Life Tenancies.
In some cases the seller might want to sell the property but still remain in the property. in most cases you need to be aware some sellers do this when they are in financial trouble and in other cases wanting to free up the equity to give to their kids. The pit falls come in the form of how long they going to stay, before you buy a property like this you need to check the agreement, especially how its handled when rent is not paid and how often you can legally increase the rent and by how much. In some cases you cannot evict the tenant at all and in Life tenancies you can only reclaim the property when the tenant dies. Often there may be more than one tenant! Also things to consider is the upkeep of the property. You may be liable to do repairs, or in some cases there may be already repairs waiting for you. You should also be aware of property Lease Agreements, if the property lease expires or if the tenant leaves after 50 years the value of the property may suffer and you will need to renew the lease, what could devalue your profit margin. Consider all the pro and cons. and make sure your solicitor gives you access to the property and have the document drawn up to put you in favor in any case, scenario or pitfall.
UK Real Estate Agent Broker 