Is an Auction the right way to sell my Buy to Let Property?

You may not think auctions are the way forward if you are a landlord looking to offload properties bought in the Boom. However, they can be another sale type to explore as properties can potentially exceed their listing value, and they provide a much larger opportunity to achieve a timely sale. Auctions really can be a valid alternative in the current climate as they can generate interest from multiple parties which increases bidding.

Many first time property investors purchased city centre apartments during the ‘boom years’ initially as a short term investment to sell on at a profit. Many of these apartments were bought off plan at indicated below market values, however when prices faltered and began to decline the option of selling them on disappeared, forcing many would be shrewd investors to enter the lettings market. This happened to many property experts and novices alike with the greatest casualties being Manchester, Leeds, Birmingham, Liverpool, and Newcastle. The one exception to the rule being London where prices dropped although quickly recovered and continued to rise due to demand and affordability amongst London’s more affluent.

Whilst the market for rentals is very strong at present and rents continue to increase, many first time investors would still like to sell due to various reasons. If your mortgage rates have gone up and they are no longer at sustainable levels the only option may be to sell, if you are already achieving the best possible rental price (meaning you cannot increase income through the property).

Doesn’t selling at Auction mean selling for a lower price?

Not necessarily, whilst historically investors look to buy at Auction to pick up ‘cheap’ below market value properties, modern auctions specifically online auctions are much more accessible for private homeowners to sell and potential private buyers to purchase. As a direct result of this any type of property can be suitable for auction, not just repossessions or dilapidated properties in need of renovation.

Auctions are a potential avenue to overcome the obvious concerns with selling in the current market – being that the property isn’t worth what it was purchased for, it may not even sell, or you may receive very low offers.

How to make money through selling at Auction

Online auctions are becoming ever more popular as they are accessible to anyone both in terms of selling a property and also potential buyers. There are no restrictions on geographic locations and generally no entrance fees. There are a couple of ways to look at this, you can set a reserve price that you don’t want to go below, and if the reserve isn’t reached there is the option to re-invite further bids at close of auction. Alternatively if the property is tenanted you can potentially sell it as a tenanted property (which could mean you get more interest from investors although also may result in potential shrewd investors not offering up to the reserve price).

One strong consideration is that you have nothing to lose even if the property doesn’t sell at auction if you haven’t paid an entrance fee as you will still have the property up for sale by standard sale. So go on give it a go, who knows you may be pleasantly surprised by the outcome.

Planning on Selling Your Home?

Make Sure Your Home is as Appealing as Possible

Selling your home can be a rather daunting, and time consuming task, filled with showing potential home-buyers a home that they may not buy. Your house could end up on the market for much longer than you thought. However, there are ways to make your home much more appealing to potential home-buyers from, inside and out.

Naturally, the first thing potential home-buyers are going to see is the outside of your home. Therefore, enhancing the “curb appeal,” which is the aesthetic quality of your house from the street; essentially, the outside of the house, is important. There are a number of ways you can do this. If your vinyl siding is covered with any sort of dirt or grime, a pressure washer can do just the trick getting it off. Then you can move the pressure washer to the driveway, patio, and sidewalks around your home, removing any unsightly debris or stains. Furthermore, you could give your home a fresh coat of paint, new windows, new siding, or redo the roof. Anything that you think will make your home look better to potential prospects is acceptable; just do not do anything to drastic.

The outside of your home is just the beginning, the part of the process that will draw in the home-buyers; however, what about keeping them interested? Basically, this means that you need to show the inside of your home just as much attention as you showed the outside of the home.

Start with the walls, if there are any walls, holes, fading, etc., then you will need to remedy these problems, giving the walls a fresh coat of paint. Pay especially close attention to the kitchen as it is a focal point of your home; not to mention that quite a bit of time is spent in there. Naturally, cleaning and dusting is vital, but think a little more outside the box. Your appliances, for example, could be overdue for some maintenance. Whether your refrigerator, your dishwasher, or any other appliance, GE, Kenmore, Whirlpool, Electrolux, Cuisinart, and Maytag parts are all easy to get, and you might now have to  install them yourself. Aside from appliances, pay attention to the flooring, the back-splash, and the likes. Of course, fixing any leaky faucets or pipes should be at the top of the list.

Once you are satisfied with any cleaning, renovating, repairs, etc., then be prepared to clean up after yourself. While the outside of your home may look wonderful, a shovel and other eyesores sitting on your lawn can drive away any potential home-buyers. Therefore, the last thing you need to do before debuting your home on the marked is to do a visual spot check. Simply walk around the outside and inside of your home, making sure to stow away anything that does not belong. Unruly wires, that clutter in the corner, the mess in the closet, tools, and anything else that does not belong, needs to be stored out of sight or completely removed.

Selling your home can be as easy and as quick as possible just by simply performing the tasks listed above. Think of it as a three-step project. Enhancing the curb appeal of your home is step one, drawing in the home-buyer. Step two is fixing up the inside, which retains the buyer. Lastly, step three, closing the deal. Before you know it, your home will be on and off the market, and you will be a much happier person.

Invest In Dubai Property Now To Make Money In Future

For those, who always had a dream to own property abroad, Dubai offers the best investment opportunities in its real estate sector at the moment.

Dubai, often called an Arab city where East meets West, is known throughout the world for its luxurious residences, skyscrapers, magnificent malls, sandy beaches and azure waters. All of these factors have helped Dubai become a hotspot for tourists. In addition to this, Dubai also provides the best business opportunities for companies targeting multicultural customers. Because of these and many other reasons, Dubai has often been at the top of the list for real estate investors.

Investing In Dubai Can Be The Perfect Investment

If is thought that prices of Dubai properties are now touching rock bottom, which is good news for small investors and buyers. Dubai real estate prices have never been as low as they are now which is enough of a temptation in itself for all kinds of buyers.

Kuwaiti and Qatari buyers especially are looking forward to purchase their second homes in Dubai due to closer proximity, lower prices, and attractive mortgage rates.

The condition of the Dubai real estate market is currently uncertain, but it is expected to have a promising future because Dubai government has doubled its efforts to help it get back on track.

If you invest in Dubai property now, there is a very good chance that you will may make a good return on it in future. This is because the Dubai government is taking steps to boost the demand of properties by slashing mortgage rates and introducing new and unique schemes that favour buyers from every aspect.

If you buy commercial property in Dubai, you can rent it to any company. The rentals can cover your original cost of investment within no time. On the other hand, if you plan to invest in the residential sector, you have a number of options to invest in which range from private villas to condos. These properties not only draw tenants but can also be doubled in value in a relatively short time. All sounds too good to be true but it is not.

There is only one problem though and that is finding the right property. It can be difficult in the current situation especially if you are unfamiliar with the dynamics of the local real estate market. Hiring a consultant can provide expert advice on good or bad properties and can prevent your investments from turning into losses. Investment in areas and types of properties, which are showing recovery in prices, can be more fruitful at this point of time.  

If and when all of the efforts of the government and the private sector pay off, Dubai will re-emerge as a haven for international investors. Nobody can predict the future accurately but hidden potential in Dubai real estate is enough to say that you might make a fortune in the not to distant future, if you choose to invest in Dubai real estate right now.

First Time Buyers Are Being Forced to Rent

The Facts About Why First Time Buyers Are Being Forced to Rent

As the price of homes are rising and it is getting harder for hopeful first time home buyers to purchase homes, rental opportunities are increasing. If you are a real estate investor, one of the hottest places in the market today is in rental properties.

At the current time it is easier for a person to rent a home, than to buy their first home, being the housing market has halted. It is forecasted that by the year 2016 one in five households will rent instead of own their homes.

Some believe the rental sector is going to play a large role in providing homes for the community, and in doing this the relationship that goes on between the owner and the renter will make a difference in every community.

Demand For Rentals – Drive Up the Price

At the current time the demand for a place to live is so high, once a flat is available, it disappears quickly, in some cases the same day. Being rentals are so hard to find, they are rented quickly and as a property owner providing rentals, one thing you would not have to worry about is finding tenants to occupy the property.

However, you would have to manage the people in your units. Many are pulling resources together and sharing flats, so they can afford to pay the rent. While these accommodations can be difficult for the tenants, as new investors you will want to keep your tenants complying with your terms, especially in the hostile real estate market. They may feel because they were unable to buy a home, and have to rent they are not following their dreams, so there are things you as a landlord can do to make your tenants rental experience more enjoyable.

Ease Rental Anxiety With Good Relationships

There are several ways you can have good relationships with your renters.

1. Landlords, as you screen your renters, make sure they are the right ones for your specific property. Doing proper background checks, checking references, and spending a little time with them can accomplish this. If you do not pick the right tenants, more than likely either you or the tenants will be unhappy.
2. After you screen your tenants, view the rental together, make sure the tenant will be satisfied with the flat, make sure he or she understands any information regarding the property, any rules, regulations, and make sure the tenant understands the price of the apartment, and the time the payment is due, and any late fees.
3. Let the renter know how to contact you, let them know what you will maintain and what they will maintain, and how any repairs should be handled. Keep communication thorough and open.

Renting properties can be a great way to create revenue, increase your portfolio and if you enjoy this type of work, you will also enjoy some of the projects you will get to work on when upgrading your rentals.

Remember to keep it a positive win-win for all parties, keep communication open and clear. When you begin the application process on the right foot, the entire renting experiences for everyone involved will be better, and most of the time happy rentals make happy landlords.

The Facts About Claiming Back VAT

Claiming back VAT when converting buildings into homes

When you convert a building that was not originally designed as a home so that it can be put to domestic use, there is a chance that you will be able to get back the VAT on some building materials and/or conversion services used.

Converting Buildings Can Be Very Lucrative

This does not apply in every situation though, and there is strict criteria governing who qualifies and for what. If supplies or services used are already zero rated (or VAT free) or supplied at a reduced 5% rate, then you may not save much more than you already have.

If you are constructing new homes, completing partially constructed new homes or repurposing/converting non-residential property then you may qualify for some level of VAT refund under the scheme.

Repurposing a building means that the original structure must not have been used as a home (for at least ten years prior to the repurposing); this means that the property cannot have been occupied on any basis, including part-time, partial or occasional use. Squatting in the property illegally will not count as occupancy, and once building work has begun the premises may be occupied on a full-time basis.

A building being “finished” might include a property that has been purchased as just an empty shell, and you either fit it out yourself or employ someone to do this on your behalf. Buildings that are already complete at point of purchase, where you merely carryout additional work on it (like adding an extension or conservatory), will not qualify for the scheme.

If the building is new, then it must be entirely self-contained and purpose built as residential property if it is to be eligible for the scheme, which means that granny annexes are not suitable. Buildings developed expressly for business use are unlikely to be eligible, unless they are communal residential premises (like a charity building or care home).

There are a number of excluded parties that are not able to benefit from the scheme. These include speculative developers, landlords, B&B owners, schools or care homes that charge fees, as well as membership based clubs and societies. A person working from home might still be eligible for the scheme; provided that the main purpose of the property is residential (e.g. the occupant might use one room to work from as an office). If you are not in the categories of ineligibility, then you should be able to qualify for the VAT back scheme (regardless of whether you undertake the construction work yourself or employ builders to do some or all of the work on your behalf).

Any goods claimed for under the scheme must be definable as “building materials” in accordance with HM Revenue and Customs’ definitions, so they must be integrated into the building/conversion in such a way as they cannot be removed (without using tools and/or damaging the materials or building in the process).

Items like fitted furniture, utilities installations and floor coverings are not covered by the definition. Materials obtained overseas must come with evidence of VAT being paid in addition to the documentation required to show importation procedure has been met.

ARE YOU CASHING IN ON THE RECESSION?

How To Make Money From Property During A Recession

It might seem like a daft thought, but cashing in on the recession should be at the forefront of every landlord’s mind – and the great thing is there is more than one way in which you can cash in on the economic downturn. Don’t think of it as being heartless or immoral – cashing in on the recession isn’t a bad thing, if you’re providing a service that people need then there’s nothing to feel bad about, essentially you’re helping them.

Are Your Tenants Making You Money During The Recession?

Buy, buy, buy while prices are low

It’s no secret that property prices are fairly low at the moment in comparison to how they where 3-4 years ago. It seems bizarre then that so many people can’t afford to buy a property – there really are a plethora of reasons for this. If you’re in the position to be able to buy up one, two, three, four or more properties then now is absolutely the time to do it.

Should you decide your investment was a bad idea a few years down the line, then chances are good that you will be able to sell your property for more than you bought it for. Mortgages might not get much cheaper than they are at the moment, interest rates are right down at the moment in an effort to stimulate the economy and entice would-be buyers and investors into purchasing property.

Prices are low and demand is high

It’s rare that property is so cheap and demand for rentals is so high. The results of recent research by the National Landlords Association (NLA) showed that 49 percent of landlords saw an increase in demand during the first three months of 2011 – 49 percent of the landlords questioned expect this figure to further increase.

Nationally there are shortages being reported, this presents a massive opportunity for landlords who can quickly snap up new properties to let out. The possibility of having properties sitting empty for months or years on end is usually enough to send shivers down the spine of any landlord, but the signs are that in the current climate there simply isn’t enough rental property available out there.

What are the risks?

Of course every investment brings with it some risk – even property investment. The thing to remember is that the British population is booming year on year, this population will always need somewhere to live. Hopefully the worst of the recession we’re enduring has passed – meaning that property prices will slowly start to creep up again – as will the price of borrowing. The general thought is that the price of property simply can’t go much lower and the chances are that it will start rising steadily – so, if this is the case, there’s very little risk involved with your investment.

Whether you’re just starting out as a landlord, or you’ve already got an impressive portfolio and you’re looking to bolster it to quell demand in your area – now is definitely the time to start investing. The longer you leave it the more expensive property will become – and remember, there are people out there now waiting for rentals – don’t waste any time, the sooner you invest, the sooner you can start turning over some money from your new property.

There are a number of natural cavities distributed unevenly throughout the English Countryside. Most have been created over vast periods of time by groundwater as it permeates through different types of geology. Permeation usually takes place at the upper levels of soluble rock types (such as limestone, chalk, and rock salt or gypsum bearing rocks) but has been known to occur at greater depths as well.

In salt and gypsum bearing rock water usually wears away the upper levels first, working downwards toward fresh layers. Where rigid surface rocks bend on the crest of slopes (as the result of historic climate conditions) to cause rock cambering, fissures can be created. Marine erosion of coastal areas creates sea-caves, often occurring along joints, bedding planes and fault lines.

The subsidence of the ground above and around a natural cavity could result from two principle causes. The first is where material moves to fill the empty space within the cavity; the second could be attributed to the collapse of surrounding host rock.

Infill is more common than collapse, and subsidence takes place when the material underneath building foundations slips away. Subsidence can be particularly rapid when large voids, filled with nothing but air, suddenly become unstable. Such instability triggers a chain reaction as roof fall progresses upwards toward surface level, and each layer of fill topples into the space vacated by the layers below.

Should mine workings intersect with a natural cavity, infill deposits can flow extremely quickly into the void and create cave-ins of tremendous proportions. This type of cave-in is prone to become even more catastrophic, should the infill continue to pour into the man-made cavities as well.

This isn’t just bad news for any unfortunate miners caught in the maelstrom, but for property on the surface as well. Loose cavity infill that becomes compacted over time could also be a problem, though it takes longer to have an effect, but can be equally devastating in the long run.

Natural cavities are often vulnerable to the very water sources that originally created them. An alteration in the water table can trigger a subsidence event, where groundwater is expended at a higher than normal rate and flowing water percolates through rock layers that were formerly saturated. Another trigger could be surface loading, where human development at surface level causes a previously unknown natural cavity to collapse without warning (though this is a less likely scenario).

From the government Review of instability due to natural underground cavities in Great Britain, we know that the most significant concentration of chalk deposit cavities can be found stretching from Wiltshire to Norfolk and Dorset to Kent. Cavities in limestone are typically found in mountainous regions, like the Mendip Hills (Somerset), the Peak District (Derbyshire), and the north Pennines (Yorkshire, Cumbria and Durham). Localised cases of natural cavity occurrence have been noted in various other places across the country. In Essex; as an example, the largest threat of subsidence comes from the high concentrations of clay in our soil.

Low Level of House Purchases Continues to Depress the Property Market

UK Property Facts

The amount of homes being bought by first-time buyers and movers alike has dropped to less than half the level of purchases recorded prior to the economic downturn. While first time buyers continue to struggle to get a foot on the ladder, fewer home-owners have moved house in the last year than in the previous fifteen years.

The English Housing Report, a government survey which garnered public opinion on housing in England, reported that the number of people moving house in 2009-2010 was 63% less than in the previous two years.

Depressed market

A Depressed Property Market Can Have Us All Feeling Low

The Council of Mortgage Lenders (CML) recent figures showed that house purchases increased by only 700 from April to May this year. The figure of 41,500 purchases is the second lowest for May since the CML started to record data, and is 60% below the average for the month.

Stabilising at a low level

The CML believes that the property market is stabilising, but is doing so at a consistently low level. The Director General of the CML, Michael Coogan, said,

“Over the coming months seasonal factors are likely to push up lending for house purchase. There is no evidence of any drastic changes on the horizon or any significant shifts in direction for the mortgage market. These stable conditions are expected to continue for the rest of the year.”

Cost of buying prohibitive

The CML statistics show quite clearly why so many people are struggling to buy a house, or neglecting to move from their current home. First-time buyer’s typical deposit is 20%, an average of £25,700; while home movers are putting down an average deposit of 31%, equivalent to an astonishing average of £57,750.

Desire for home ownership

The desire amongst people in this country to own their own home has not been diminished however, as the data from the English Housing Report shows. 86% of people surveyed would buy their home if they had a free choice; yet 49% believed that house prices were too high in their area, reinforcing the idea that many are simply unable to find their way onto the property market.

Fewer mortgages

This is also recognised in the figures relating to the type of home owner, as there more outright owners and fewer people buying with a mortgage. In the last ten years the number of houses owned outright increased from 5.6 million in 1999 to 6.8 million in 2010; an increase of 20%. In the same period the number of houses bought using a mortgage reduced from 8.5 million to 7.9 million; a drop of 7%.

Mortgage market conditions

While CML don’t expect any significant change to the mortgage market, Michael Coogan did add,

“Funding market conditions appear a little more positive; for example, recent securitisation deals suggest confidence has returned as investors regain their appetite to invest in bonds backed by mortgage assets. Overall this is a positive influence on mortgage market conditions.”

Falling prices aid recovery

As house prices continue to fall, more purchases are being recorded in areas that are subject to the biggest drop in price, suggesting that in these regions buyers are being tempted back into the market. While in areas such as London, where prices have increased by 5% since June 2010, growth of purchases has been much slower.

The English Housing Survey shows that there is still a clear aspiration among people in this country to own their own property; but it also provides a stark reminder that the issues surrounding affordability and access to the market for first-time buyers are as prominent as ever.

Managing Your Property Cash flow

The Key To Success Involves The Management of Your Cash flow

No Not Johnny Cash! Real Cold Hard Cash

Cash flow is crucial to any business – many people with little or no experience of business tend to spend big, then when it comes round to paying creditors there are few pennies left in the tin to satisfy them with. Cash flow can make or break a business – whether it’s a shop, a services company or a property rentals firm.

Knowing how to maintain a healthy cash flow is essential to the survival of your business – failing to do so can have dire consequences.

The going is good, for now

Cash flow for many landlords at present is likely to be pretty good – recently the Guardian have reported a 0.7% rise in rents over the last month, throughout England and Wales. High occupancy rates and low mortgage repayments could be seen to be luring landlords into a false sense of security. Those splashing the cash erratically now may be in for a shock in the months to come as the economy recovers.

As things start to brighten up and interest rates start to increase, landlords and their cash flow will face a serious test. Those with the smallest portfolios could be the hardest hit – the first time landlords who have popped up thanks to the low price of property and borrowing over the last year or so. Inexperience will really start to become apparent, and a number of landlords will find themselves locked in a cash flow struggle – knowing how to get out of that struggle is vitally important.

How do I fix my poor cash flow?

Depending on the size of your portfolio perhaps the most obvious way to ease cash flow problems is to think about selling off a property or two. The equity released could be enough to keep the creditors at bay whilst you sort things out – turning your loss making enterprise into a profitable venture once again. Those with property sitting empty for prolonged periods of time will want to seriously consider whether or not their assets really are “assets” in the true sense of the word. If empty properties in your portfolio are hemorrhaging cash it’s time to say good bye to them.

Although record numbers of tenants are currently looking for properties to live in at present, it won’t always be the case. As lending begins to gain some momentum again and the stigma associated with obtaining a mortgage is eased, many first time buyers will successfully get their feet on those first rungs of the housing ladder. Demand for rentals is high now; however, there are no garanteeds that it will remain that way.

Think wisely before splashing the cash

Landlords are enjoying a very profitable stint – but all businesses have cycles, and it is those that recognize this that will survive. Just because you’ve got some spare cash sitting in an account somewhere doesn’t mean that investing in new property is a good idea.

Planning for the worst case scenario is always a good idea; what happens if 50% of your tenants up and leave? Can you still meet the repayments? If not, it’s a good idea to sit on a pile of cash somewhere, enough cash to buy you some time, 6 months perhaps – that’s 6 months for you to offload some of your portfolio so you’re turning a profit again.

Don’t be naïve or lured into a false sense of security. The going is good now, but who’s to say that in two, three or even four years time the rental market will still be booming.

Decline in Home-Ownership Leads to Buoyant Rental Market

Now Could Be the Time To Become A Landlord!

The private rental market is undergoing intense growth as the lack of available mortgages and affordable homes is preventing people from getting onto the property ladder.

It Can Be Difficult Getting On The Property Ladder

Home ownership has fallen 4% in the last five years, having previously risen steadily for twenty-five years. This is despite house prices dropping 12% overall since 2007.

Ownership patterns

Figures recently published by the Department for Communities and Local Government reported that 14.5 million homes were owner-occupied, equivalent to 67%. While in 2005, 14.8 million houses, some 71%, were owned by the occupants.

The cost of buying a house

Many potential property owners, particularly first time buyers, are finding that homes are simply out of reach as lenders look for large deposits of 25-30%. The difficulty obtaining a mortgage has seen many people turn to the private rental sector, and current demand is quickly outstripping supply.

A Lack of Buyers

Recent data shows that a mere 4% of owner-occupiers were first-time buyers, having bought their property within the last three years, whilst the housing price crash is still affecting confidence in the market. While first-time buyers are unable to get a foot on the ladder, and other potential purchasers are uncertain, the rental market is reaping the rewards.

Boom in the number of private renters

Since 2005 the number of households privately renting has increased by one million to over 3 million in total; which has brought the figure to a similar level of the number of households in the social rental sector. Of the new households formed between 2008 and 2010, 68% were privately renting.

Private Landlords Are In Demand

Matched by sharp rise in monthly rental fees

The increase in the number of renters has been readily greeted by private landlords, and has served to increase monthly fees to an average of £701. This represents an annual increase of 4.1%, on average £28.

These figures, from the LSL property services buy-to-let index, reflect the demand for rental properties in the current market. In London the monthly rental fee has reached an average of £1,000 per month, and properties are being taken off the market within a day, such is the competition.

More security for landlords

The amount of tenants on the market for rental property has given landlords a greater sense of security, and many are becoming less lenient on tenants who fall behind on their rent. Arrears figures decreased for the second month in a row in June, with total arrears standing at £257 million, compared to £315 million in May.

Stability for the short term

Many people who are unable to buy are renting property while they save for a deposit, but the rising cost of renting and the size of deposit required is impacting on the amount of money people can put away. This is forcing many people into much longer term rental arrangements than they originally anticipated.

While the downward trend in home ownership continues the rental market will only increase, and as things stand there are not enough properties on the market to satisfy that demand.

Investment opportunity

House prices continue to fall, and Rightmove research shows that prices dipped by 1.6% on average prices in July, a drop of £3,797. As property becomes cheaper, and the number of people able or willing to purchase continues to decrease, many investors have spotted the potential for profit in the private rental sector.

The opportunity is there for investors to take advantage of high yields on rental property with more security and stability, supported by the ever increasing number of private renters and the demand for property.