If you’re thinking of investing in a buy-to-let, then finding the right property is essential.

Here are my thoughts on what to ask yourself before committing to a property purchase…

1. Price check: “Am I paying the right price for this property?”

Getting the initial purchase price correct will have major financial implications throughout your time as a landlord – affecting both the annual yield and profit made on resale. Ensure you’re paying the right price by looking at the surrounding area and what purchase prices commonly are of comparable properties. It is also worth researching previous sales of that particular property and finding out what it has historically been sold for.

And, of course, if your research reveals that the asking price is too high, it is definitely worth trying to negotiate before deciding to walk away.

In the current climate it’s absolutely worth negotiating. Depending on how motivated the seller is to sell can determine the final price you agree on. Always start low and work your way up until you come to a win/win compromise that works for both of you. And, if you can’t secure the property at the right price, it’s certainly advisable to look at other options instead.

2. Costly mistakes: “What hidden costs do I need to calculate?”

There are many additional costs to the purchase price when buying a property, such as solicitor’s fees and mortgage product and admin fees. But, certain properties will have higher hidden costs than others, such as stamp duty and annual management fees. If the property you’re interested in is in a block of flats or an apartment development, it is likely that you will have to pay an annual fee to the management company who look after the exterior of the property and the grounds. Do your research before signing on the dotted line – be aware of hidden costs as they can prove to be an expensive mistake!

Similarly, additional costs can add up in terms of the Stamp Duty Land Tax (SDLT) you will have to pay on purchase. Properties bought for more than 125k will be subject to 1% stamp duty, while those over 250k will require you to pay a lump sum of 3% of the purchase price on completion. Buy a property over 500k and you’ll have to budget an additional whopping 4% on the purchase price.

3. Rental return: “Is the rental return going to cover my mortgage?”

Making sure your monthly rental return will cover your outgoings – including mortgage costs and landlord insurance – is vital. Calculate this by being informed about what rental figure you can realistically ask for.

After researching what similar properties are renting for in the vicinity landlords should be able to get an idea of what rental income they can expect.

And, while variable interest-only mortgages are often the cheapest short-term solutions, landlords must remember that they will not be paying back any of the capital on the property… and, of course, interest rates can go up as well as down.

If the rental return calculation doesn’t add up, then chances are your annual profits won’t either!

4. In demand: “What is the local demand for rental properties?”

In order to make the right choice of investment property, it’s vital to know what type of accommodation is in demand in your area… and what isn’t!

Look on the internet property portals and at the most prominent letting agents in the area and look at what they’ve got the majority of. For example, if you’re looking to buy a four-bed family home as an investment property and there are none available to rent they either all rent out very quickly or nobody really wants them. Monitoring the online activity and asking the advice of an agent will help you make an informed decision.

Prior to purchasing any property it is essential to gauge what the level of demand would be in the area for that type and size of property. Talking to a letting agent would be a good idea; the last thing they want is to be offered a property which will take a long time to let – buying something accurately focused would be a win/win for both the landlord and the agent. On our extensive 3 week training course, we teach our franchisees to become specialists in their town in Buy to Let. By doing that they can advise what is best for the landlord. Also, you find that by offering this service, landlords recommend them to other landlords – a win win situation.

5. Around and about: “Is the property in the right area?”

The old saying of ‘location, location, location’ is critical when investing in a buy-to-let property and can make a huge difference to your rental return. It’s always worth investing close to points of interest, such as schools, restaurants, roads and other amenities. If the location is desirable you’re likely to have a high demand for your property and it will ultimately increase the price that you can ask.”

Location and its amenities is an important consideration. Proximity to shops, transport links or other amenities can be vitally important to prospective tenants. It is also important to buy in relation to the predominant tenant group, e.g. 20-somethings, rather in an area that suits the purchaser’s tastes.

It is important to also consider amenity in terms of safety in the vicinity of the property, for example lighting, safe access routes, amenity value of the environment within a given radius of the property etc.

The old adage about the worst property in the best area being better than the best property in a bad (perhaps cheap) area applies.

6. Size matters: “Is the size of the property appropriate to the local market?”

Again research is the key. There’s no point buying a large house in an area where demand for smaller properties dominates. Similarly, buying a one-bed in a family-dominated environment would not be wise. Look at what properties are up for let in the local area – and see how long it takes for them to rent too.

As far as finances go, though, size is all relative. Anything smaller is going to be cheaper to buy but command a lower rental income. You could buy a five-bed 500k property but the rent received divided by the monthly outgoings will be the same percentage. The thing to think about is how much it’s going to cost you if the property is empty – a void on a more expensive property is going to be more painful on the purse than having a smaller property left vacant between tenancies.

7. Long-term planning: “Is the property sellable?”

Don’t buy an investment property without having a plan. How long you’re going to hold on to the property, whether or not it’s sellable and how much it will rise in value are all questions you should ask yourself…

It is what it is: it’s an investment property – and, as such, it should be seen as an investment. Many landlords don’t see the rent as an income to live off, they see that as just paying the bills and covering the overheads. It’s the property itself that will eventually rise in value and release a profit.

Yes it’s important to buy the correct house in the right area, but it is also important to buy at the correct price. The rise in capital is essentially where the money is. You don’t want to buy a property for 50k, keep it for ten years and then sell it for 50k. The resale value is where the ‘investment’ part of the property is. Always look for something that will be easy to sell and hasn’t already achieved its ceiling price for the area.

8. Critical condition: “Will the property be expensive to maintain?”

All investors should weigh up the condition of the property with the costs of necessary renovation and on-going maintenance.

While renovation projects can often be bought at a fraction of the price of properties already modernised, investors need to factor in the renovation costs and the amount of rental revenue that will be lost during the time renovations are taking place.

9. Buying cheap – if the property needs an expensive upgrade – can be a false economy.

The problem with buying a renovation property is that you’ve got to be prepared that your property will not give you a return straight away. If you buy a property at auction, for example, you’ve got 28 days to complete then you’ve got to start work on it before you can start renting it out – so it could be a good two or three months before you get a return on your property.

And it’s likely you’ll have the odd teething problem with a house you’ve renovated too, as there’s always a leak here, a drip there or something doesn’t fit quite right. We do have some landlords that do it very successfully but I wouldn’t advise it for a first-time investor – renovating properties is for the more experienced landlord who knows builders and has got tenants waiting to move straight in on completion.

It’s definitely worth looking at new property developments in your area, as we’re increasingly finding that new properties rent out very very quickly. We do find a lot of our investors buy new properties (not necessarily off-plan but as soon as they’re finished) and these get snapped up by professional tenants in the area.

Always check the age and condition of the property and look at similar properties nearby. Go in daylight and look at the external components starting with the roof, gutters, downpipes and windows. Next look at the heating (age and type), plus make a risk assessment of any bathroom and kitchen leaks. Look for evidence of condensation too. And also find out if there are any maintenance obligations on the owner, plus hidden costs etc.

10. Room for improvement: “Will there be scope for me to improve my investment?”

Before investing it’s certainly worth thinking about whether there will be any scope for building on your investment at a future time – some properties lend themselves to ‘home improvements’, while others don’t.

Adding a conservatory, extension or en-suite bathrooms at a later date will add value for your tenants and inevitably increase the property’s resale value too.

Think about the plot of land that the property sits within and the property’s versatility in terms of long-term vision. Find out what planning laws apply in that area and check that there are no restrictions on work that can be carried out – listed buildings and those in a conservation area will have limitations on the changes you can make.

Finally, ask the experts: “Should I get a second opinion?”

If you’re in any doubt as to the quality of the investment you’re thinking about, it’s definitely worth getting a second opinion from someone in the ‘know’.

We teach our franchisees to become that buy to let specialist so you can ask the advice of a letting agent before investing. We can give an idea of rental income in that area and by we also drive around to the house and have a look at it from the outside before giving feedback to the landlord.

Ringing up an agent and asking how much you’d get for a property and how long it’d take to rent out is definitely a good indication of whether it would make a good investment.

There is no point in buying property types, of a certain age and in specific locations, that aren’t in demand – an agent will be able to guide you. Also, ask about lengths of tenancy, levels of turnover and comparative times to let.

Christopher Watkin

Belvoir Lettings

Weblink .. http://www.belvoirfranchise.com/Home

- GRAND Prize –

1 hour phone consultation with Sarah Beeny, from Tepilo and Property Ladder:

“Sarah set up her own property development and investment companies at the age of 24 along with her brother and her husband.  With her business a success, Sarah was approached to be the presenter of Channel 4’s prime time show ‘Property Ladder’.  Sarah has now launched www.tepilo.com, already a market leading private property sales website which aims to bring a change to the way we buy, sell and let houses. “

To be drawn in December 2011.
Value: £1,500!

All subscribers of Just Do Property are already entered into the 2011 Competition.  But you can gain more entries by recommending friends to subscribe to our site.  The more friends who subscribe the more entries you will get.

It’s easy to subscribe for free, just click here:

http://www.justdoproperty.co.uk/2011_prize_competition

All subscribers of Just Do Property are already entered into the 2011 Competition.  But you can gain more entries by recommending friends to subscribe to our site.  The more friends who subscribe the more entries you will get.

http://www.justdoproperty.co.uk/2011_prize_competition

We have 8 amazing prizes to win in the competition.

Our 8th prize, to be drawn in July is a signed copy of Sarah Beeny’s book “Property Ladder: The Developers Bible”

If you’re a fan of Sarah Beeny then surely this is a ‘must have’.   Enter our competition by subscribing now, or recommend more friends:

http://www.justdoproperty.co.uk/2011_prize_competition

Have you decorated your home from top to bottom and are looking for something more – a real purpose and point to renovation? Have you ever wondered how you can really invest in a property to make the maximum profit? Have you caught the property bug and think you might have what it takes to becomes a successful property developer?

Accompanying the popular Channel Four television series, Property Ladder provides answers to many of the questions you may have about developing property.

Sarah Beeny shares her hard-earned knowledge and presents some of the hard facts – from budgeting to building – to help you through the confusing and occasionally daunting world of property development.

Sarah Beeny talks about how to find the perfect Property Development in this video.

Sarah’s tips are to know the location, as one street can be dramatically different to another street, so it’s great to know the area, local knowledge is really important.  If you’re developing for investment you need to understand who the buyer is – understand your target market. A family may want more space but a single couple or a group of friends would prefer to be closer to local restaurants and bars.

How to add value to a development should come with your gut instinct, but if it doesn’t then the main way to add value is to add square footage.    In order to get a figure on how much you should pay for it, you need to work backwards.  Get a realistic selling price for the end development.  That’s REALISTIC…  not a hope value!    Then work out how much you’ll spend on the development, build in a 20% profit (for example), then you know you can pay x for the property or land.

It’s a great video to watch if you have 4 minutes to spare.

If you’re into developing or want to get into it, there’s a great new FREE ebook by Lyndon Forshaw.   It’s definitely worth a look:

I’d love to hear your feedback about this blog.  If you are a developer it would be great to hear your experiences. If you’ve started Lyndon’s course I’d love to know what you think.  Please leave a comment or any feedback below.

For sometime now, I’ve been following the blog of UK Property Expert, Lyndon Forshaw, with interest – especially his approach to new build developing. In his latest free download, he reveals that the transition from BTL investing to new build developing is not as much of a leap as you may think… 

As you’ve probably noticed, making genuine regular profits from buy-to-let is far, far harder than it used to be! That’s why it’s more important than ever to supplement your long-term investment strategies. 

Of course, BTL is a great long-term investment strategy. Although, the value of our portfolio can be considerable… after finance and maintenance costs, it can be hard to yield regular income… In fact, sometimes we can be lucky if we make any! 

Though of course, with BTL that isn’t really the point. The aim is to enjoy the fruits of our labour a few years down the line. Hopefully your portfolio will allow you to enjoy a long and carefree retirement… but what about today? Does your monthly BTL income really deliver the standard of living and financial freedom you deserve? 

Well, in his latest free download, Lyndon offers all BTL investors a way to supplement their income by at least £50,000 per year. 

Better still, you already have the skills required to generate an additional FIVE or SIX figure annual income – around your existing commitments, relying on other people to do most of the “hard graft” on your behalf… 

Sounds stupidly unrealistic, doesn’t it? 

Well to be honest, I thought so too. In fact, it was at this point that I expected Lyndon to introduce some new and farfetched “passive income generating system”… another one of those ridiculous get rich quick schemes. 

Well, I don’t mind telling you, I was completely wrong. 

What Lyndon is talking about is new build developing… which simply means securing some land and building something new on it. 

Now the best thing about this for us BTL investors is that developing for profit is strikingly similar to BTL investing… just on a larger scale. As Lyndon points out, you already possess many of the skills you will need to become a successful property developer. 

He describes how you don’t need ANY construction knowledge and, to get started, you needn’t invest any more capital than a typical BTL project. 

You see, just like a BTL investor, the job of a property developer is really that of a facilitator. They source the opportunity, organise finance, structure the deal and concentrate on sales and marketing. Lyndon explains that all the specialist tasks and “dirty work” are left to other people – solicitors, finance brokers, builders/construction companies, etc. – just as with BTL. 

­ 

Plus, one big advantage of new build developing is that there are no nasty surprises. By using a fixed-price contract with a single main contractor your developments are always delivered on time and on budget. 

download your FREE guide  

If you’re interested in new build developing but don’t know where to begin, then you’ll find his FREE guide that’s available to download from his website a useful place to start. It’s an extract from his new course “Developing Profits: from beginner to pro, the ultimate guide to profitable new build developing”. You’ll discover: 

• Exactly what new build developing is.
• Why it’s a great time to start learning developing skills right now.
• Why developing is relatively easy for you to do.
• How you can learn the inside knowledge and develop the necessary skills to generate life changing profits from one or two deals a year.
• How one small project can generate more profits than working full-time.
• Why you don’t actually need to know very much about construction to become a successful property developer.
• How you can leverage the skills of other property professionals to make

substantial profits. 

• Whether it’s possible to develop as a part-time hobby or a full-time career.

In this FREE download, Lyndon describes exactly how you can furnish yourself with the knowledge, skills and confidence to move from novice developer right through to co-coordinating multi-million pound projects just like a pro… 

If you’ve ever wanted to find out how successful developers go about generating SIX and SEVEN FIGURE PROFITS – per deal – then you’ll find this is well worth a read. 

I did. In fact, I found it so intriguing that I’m seriously considering following his advice and taking my first steps into the world of property development. And seeing as I knew absolutely nothing about developing before I read his report that really is quite an achievement! 

To find out more, download your FREE guide and discover how you could start a lucrative new hobby – or career – in property developing! 

Roofing

I start with roofing because if the roof is unsound and letting in water, the rest of the house will soon become an expensive proposition to develop. One small leak in a roof, which is not dealt with promptly, can result in hundreds or even thousands of pounds.

There are many kinds of roofing in the British Isles and I will detail those that are commonplace (and therefore cheaper to put right) and those that are expensive.

Slates

Many houses have slate roofs, originally constructed of Welsh slates. A slate roof has a life expectancy of up to 100 years.

A good slate roof, see picture, will be complete, no missing slates, no slates hanging off, or cracked.

A roof that needs repair will vary from a few missing or damaged slates, to huge holes in the roof itself, which obviously let in rain. Minor repairs are inexpensive but roofs with extensive damage can be time and money consuming.At this stage watch for defects such as:

• Lamination where the slate separates rather like flaky pastry
• Slates where the nail holes elongate and the slate slips
• Broken slates
• Slipped slates

• Badly repaired slates

  

  An original slate roof in Dorset

Cement Asbestos Slates

This is a very popular roof covering in many parts of the country. The ‘slates’ are made from cement-asbestos, now correctly called fibre-cement. The slates have square edges and are very easy to lay. The life expectancy is less than genuine Welsh slates but nevertheless they are a good alternative. They also weigh less than genuine slates.

They look well and if the roof is covered with these, they are very satisfactory. They are also much cheaper than genuine slates if a large area is to be covered.

They cannot be mixed with genuine Welsh slates however – it’s all or nothing!

A roof covered with Fibre-cement slates

Thatch

Thatchers at work on a cottage

A thatched roof is picturesque, as well as warm in winter and cool in summer. However, unless the thatch has recently been replaced and there is a good guarantee, you would be well advised to avoid buying a thatched house.

The cost of re-thatching a property is prohibitive as there are very few professional thatchers in the country, most originating from Norfolk, where the best thatching reeds come from.

Clay Tiles

These are the most common type of tiles used on roofs in Britain.

There are many patterns, from the simple plain tile (or Rosemary as it is called in some parts of the country and is slightly different to a plain tile) to pan tiles and Double Roman. Visitors to Italy will have seen clay pan tiles on almost every roof in that country. The design dates back to Roman times.

Samples of Rosemary Plain Tiles (Courtesy Redland tiles Ltd)

A property with Rosemary tiles and ornamental bullnose tiles on the upper walls; All of these are easily available from Builders Merchants. See the full range at: http://www.lafarge-roofing.co.uk

An example of Pan tiles (Courtesy Jim Woods Roofing Contractor)

Rosemary plain tiles are also often used vertically on walls and look most attractive. Individual ones are fairly easy to replace, as well as being easy to purchase.

These tiles are modestly priced and even if you have to replace the whole roof, which is unlikely, you will not find the cost astronomical.

Concrete Tiles

Nowadays, modern tiles are made from concrete and coloured in a variety of shades. In many cases they imitate the shape of the earlier clay tiles, such as pan tiles, double-roman and so on. It is important to remember that although they look similar they are not a replacement for the clay versions. The profile is slightly different so they are not interchangeable.

The above examples of concrete tiles are just two from a large range made by Redland Tiles for the UK market. You can see the full range at:

http://www.lafarge-roofing.co.uk

A roof over a horse's stable completed with Clay double Roman tiles: very attractive and reasonable in price.

Types of Roofing to Avoid

Here are a few examples of roofs to be avoided.

Surveyors are knowledgeable about difficult roof coverings and the mortgage valuation will probably be reduced by a substantial margin.

These bright blue tiles are, in my own opinion, ugly and would not be allowed on a modern roof. It would be very expensive to buy any new ones.

This is another slate that is virtually impossible to purchase, at least in my part of the country (if anyone knows better, please let me know!) These are called Red Diamonds and were popular in the thirties. Avoid them like the plague! They are made of asbestos and painted with red oxide.

You will almost certainly need to replace these slates with something more popular, such as the black cement asbestos ones mentioned on page 38.

Do remember, the old phrase ‘out of sight, out of mind’. Ignore roof leaks at your peril.

Best wishes,

Dennis

If you would like to ask Dennis a question click here

Grand Designs Live returns to Excel London from 1- 9 May 2010 and is based on the hugely successful Channel 4 TV Show presented by design guru Kevin McCloud. Voted Consumer Show of the Year, the event combines 7 shows under one roof and offers innovative ideas for homes, interiors and beyond! It’s a fantastic day out and a great chance to explore full-size eco houses, see demos of the latest sustainable build techniques and products, hear talks from industry experts, get a free one-to-one consultation with an architect, mortgage expert or surveyor and pick up fabulous designer pieces for your home.

For more information visit www.granddesingslive.com

 Save £16* when you book tickets now

We’ve teamed up with Grand Designs Live to offer you an exclusive ticket offer. Book quoting OPG10 at www.granddesignslive.com or call 0844 581 0771 and get two tickets for just £20 (saving up to £16*) PLUS – kids 15 years and under go free!

 *Transaction fee applies. See website for details. Saving off the weekend door rate.

The course is great value at £67 as I got a 30% off discount voucher for Just Do Property members. With 148 pages in the E Course and several bonus books it’s a great deal. The bonus books include selling without an estate agent, negotiation, kitchens, bathrooms and legals.

Dennis also gives 3 months free consultancy when you purchase the E Course.

It’s an easy to read document as it’s interspersed with pictures so it brings life to the words.  He advises on what sort of houses to purchase initially when you are just starting out and gives details of lots of useful websites.  There are also exercises to do which helps to cement the learning.  Once you’re out and about checking out houses, Dennis has included an excellent checklist to review each property.

There’s a section that covers how to get the best deals from Estate Agents and how to find distressed sellers. It’s stressed that location, location, location is the number 1 priority and it’s important to remember that you make your profit when you buy the house not when you sell!

Dennis has obviously got a great knowledge of renovation and this is shown throughout the E-Course.  He gives full details of building materials used on properties and what to avoid at all costs.   He reminds us that we’re not looking for the perfect house, but one that can be brought up to standard for minimum cost.

Personally, I wasn’t keen on the type of suspended ceiling shown, which was suggested to be used to cover up Victorian features if it doesn’t fit the decorating plan.  I agree though that they shouldn’t be destroyed though as original features are beautiful and are in great demand now. 

The course also gives details of infestation as this covers a number of problems that can seriously affect the property and at the same time SERIOUSLY affect the profit you will make.

The next section discusses how to actually purchase the property and plan the refurbishment. It goes through these things in great detail and is an excellent resource.  An example of how to do a project plan is also included and he stresses that you must have a proper plan if you want to make lots of money out of your development.

All in all it’s a great E Course which covers many areas with regards to finding the right property to buy, spotting any defects with the property, negotiating the purchase, renovating then finally selling the property. 

I’d definitely recommend the course if you are planning to purchase and renovate property for profit.  Click here for more information.