You should always do your homework before buying any property. Here, we discuss various things you need to consider before and during your property purchase.
Firstly, if you have little time to run around yourself, you may want to hire property agents and finders to do all the research for you. A finder will scout for properties that suit your needs both in terms of price and any specific details of the property, for example size, style, location of the property etc.
A finder can save the property investor a lot of time especially, if they are looking for property in unfamiliar territory. When I use finders, I usually state a minimum of 15% below market value (bmv). However, in today’s market, I would prefer a minimum of 25% bmv as the market is depressed. In depressed markets, there are more deals available; however, financing those deals has become more difficult.
To get the best deals, your relationship with your property finders needs to be a good one – this you can develop over several months. Once you’ve bought one property via your property sourcer and in accordance with agreed terms, you will find them wanting to deal with you further.
This will save you time, money and effort in the long run. Property finders can also offer advice when it comes to financing and conveyancing your purchase – a lot of finders and deal packagers will prefer you to use their team as a condition of the purchase.
It is sometimes advisable to be armed with an option to purchase the property. This will offer you security that the property will be on hold by virtue of the option contract. An option agreement binds the seller to you; however, you are not obliged to exercise the option, i.e. you may pull out of the purchase for whatever reason further down the line.
There is a lot of noise around property options and buying a house for a pound at present – however, please note that you don’t actually purchase the property for a pound – you are merely buying controlling rights to that property which could lead to purchase at a later date if you choose to.
If you are buying the property using external finance, it is always wise to have a financial adviser run through the numbers for you. You need to do this before the purchase, not during or after you’ve bought the property! Please note that property investing is a business – buying a bmv property which is not cash flow positive could become a financial strain on you especially in today’s market when it may be more difficult to sell.
In the property business you can either do very well and live off the profits for life, or end up bankrupt if you don’t follow some basic rules and principles.
When you start investing in property you need to learn how to do at least four things very well:
1. You must be able to find property deals which will make you money. You need to be able to distinguish between more profitable property and less profitable property, know your locations and learn to distinguish between less profitable and more profitable neighbourhoods.
2. You need to learn how to raise finance. You will not be able to buy property if you do not have access to suitable funding.
3. You need to learn how to distinguish between a property that can be repaired for very little money and quickly resold, and a property which could become a builder’s nightmare. Never get emotionally involved in a property purchase. Always look at the numbers and only buy if the numbers work for you.
When dealing with builders and employees always ensure that you are on the right side of the law. Complete the correct paperwork including planning consents and building regulations where applicable.
4. You need to learn how to flip property. Ensure that you have other investors in place that may be interested in your deals. Also, have several estate agents who you can count on to re-sell your projects for you.
The every day role of an active property investor involves at least the following:
o Finding new lenders, tenants and home buyers.
o Locating and buying new properties.
o Dealing with solicitors, accountants, architects, builders, financiers
o Collecting rents.
o Dealing with staff and employees.
o Dealing with local and national newspapers when advertising your services either as a property investor looking for property to buy or as a landlord looking for tenants to fill your property.
Don’t underestimate the amount of time it will take you to set up a successful property business. Property investing is a real business and if you shirk your responsibilities especially earlier on, you will not last very long in what is in fact a very competitive marketplace.
Learn from other property investors especially those that have been active through several economic cycles. Try to spend time with others who are more successful than you and emulate their techniques and strategies to ensure that you too become successful in what can be a very lucrative business for you.
One of the most important jobs of a successful property investor is to find a good property investment deal and structure it to make the most money from that deal. It is important to note that a property investor is not a solicitor, a property management expert or even a maintenance guy. These jobs although essential should always be outsourced to the appropriate professionals.
In addition to deal structuring, a property investor needs to be able to conduct a proper valuation of any property to decide whether a deal is worth pursuing or not. Estate agents and surveyors value property every day. By using similar techniques of monitoring sold prices and market conditions, there is no reason why any lay person can’t value properties himself.
A good property investor will always make money regardless of what the market is doing. By making a list of comparable prices of properties which have recently sold in your area and by speaking to estate agents who are very close to the market you will be able to make a better investment decision.
We all know that it is more difficult to find a bargain in a rising market than it is if the market is falling. However, in a rising market the probability of selling the property immediately for a larger profit also increases. Hence, your investment strategy for property investing in a rising market might be to flip property. If the value of properties is generally decreasing then there are more opportunities to bargain and hence obtain some great property deals. These properties should be kept as rental investments. Henceforth, you can make money whether the market is rising or falling.
Any good property investor should consider the following when investing in property:
– limit your risk by doing your homework. Determine key factors such as the average length of time properties have been on the market this month versus last month to help gauge market condition.
– leverage your finances. The less of your own money you invest in property, the more properties you can buy and you will also risk less of your capital should things go wrong.
– assess the tax situation: Taxes are an important part of successful property investing and this can make a difference between positive and negative cash flow. Always know your tax situation and use it to your advantage. Hire a good tax accountant to advise you.
– know your likely expenses before any property purchase. This will allow you to budget for any development work that may be necessary.
– always conduct a thorough inspection of your property before you buy it. Never buy a property without examining it. Consider hiring a builder or surveyor if you are unsure about anything.
– compare property values before purchase. Always compare your property value with a similar property in that area before buying it.
– learn how to negotiate with estate agents and vendors. The less you pay for your property, the greater the profit. Never pay asking price for property.
– always have an exit strategy in place. Why are you buying this property, how much will you spend and what do you want to do with the property once any works have been completed.
The property business like any business will require you to do your homework. Follow these simple tips and your success as a property investor will be greatly heightened.
A well designed kitchen can greatly enhance the appeal and hence value of your property. When developing a property, you need to have a good plan in place. Each room in your property needs to have its own work schedule and budget. This is especially true for the kitchen which in a lot of properties is the most popular room in the house.
When designing your kitchen, you must consider:
1. storage space
How many cabinets are needed for the size of the room? How many shelves are required in the cabinets? What will be the locations of these cabinets?
You must also decide how these cabinets will fit around essential appliances in the kitchen.
2. lighting
The kitchen needs to be bright and airy. A dark and musty kitchen is not only unattractive but can also be unhygienic.
Kitchens need specific lighting for the purposes of food preparation. Ambient lighting serves as general lightning that gives the overall kitchen illumination. The best thing to use here is some sort of fluorescent tubing arrangement.
You can obtain direct lighting, for example aimed at the cooker and kitchen sink, by using conventional recessed lights, surface lights or light fixtures that are on a pendant or chain.
3. appliance space
In addition to the major appliances such as cookers and refrigerators, you also need to design in the locations of microwaves, televisions, telephones etc. These additional items can increase the beauty of your kitchen and help you to sell a lifestyle aimed at the upper end of the market.
4. the work triangle
This connects the three major points of a kitchen: the cooker, refrigerator, and the sink. The longer the distance between these points, the greater the effort required by the potential user.
There are 5 basic shapes to any kitchen design:
1. Single wall
The one-wall or single wall kitchen has all the work centres along one wall, which gives the least efficient plan. This type of kitchen is best for small homes and apartments.
2. L-shaped
The L-shaped kitchen gives a huge amount of continuous counter top space. In this style of kitchen, the work centre is on two adjacent walls, a natural triangle is formed and the traffic bypasses the work area. Space permitting, this design allows for the inclusion of a dining area.
3. U-shaped
In a U-shaped kitchen, a continuous countertop and storage system surrounds the cooker on three sides providing maximum efficiency. Traffic flows around the work area not through it and simplifies the cooking process.
4. G-shaped
This is generally a modification of the U-shape but adds an extra wall of cabinets and appliances as a peninsula or fourth partial wall.
5. Corridor/Galley
This plan offers a single cook-efficient workspace with closely grouped work centres on parallel walls.
When designing your kitchen, you should consider the above as a minimum to ensure a quality final product that not only provides a great working environment but also adds value to your property.
This has been expected for some time now. I just picked this up from the lovemoney website so you can read directly here.
Last week, Housing and Planning Minister John Healey announced that, from April, it will require any landlords who want to provide Houses In Multiple Occupation (HMO) to apply for planning permission first, before they build or convert a home.
This costly and time-consuming measure will put many off, and even those who jump through the hoops could be denied permission. There are fears that NIMBYs (people who say Not In My Back Yard) will oppose each and every HMO planning application to stop students, migrants or those on low incomes moving into their neighbourhood.
What exactly are the new rules?
Landlords will need to obtain planning permission where a material change of use will occur – which will now include renting a property to three or more occupants who are not members of the same family.
Healey also outlined proposals to give councils the right to introduce licensing schemes without seeking permission from central Government in so-called ‘hotspot areas’.
Local Authorities currently have to seek approval to introduce HMO licensing schemes, which require all private landlords with properties within the area to get a license.
The councils can also decide if the landlord is a ‘fit and proper’ person to manage their properties, impose conditions and standards on licenses and charge landlords a fee at their discretion.
Why the crack-down on houses in multiple occupation?
The Government says that a cluster of too many shared houses can cause problems, especially if let to short-term residents with little stake in the local community. It also claims tenants can also suffer from poor conditions and management of the properties by landlords.
The new rules are intended to help ‘stem the growth of large pockets of shared homes – which can change the balance and nature of communities.’ They will also aim to tackle these ‘pockets of unsafe and substandard accommodation’.
The Minister claimed that many towns and cities across the country have suffered the effects of a concentration of HMOs. Market, coastal and university towns have reported problems due to large student populations and HMOs.
And the reaction to the changes?
The National Landlords Association (NLA) condemned the changes saying they will reduce the supply of essential shared housing.
It claims that by making it more difficult and costly for landlords to provide this type of accommodation, the measures will reduce choice for tenants and increase pressure on local authority housing lists.
Plus it notes that last year’s Rugg Review, an independent review of the private-rented sector commissioned by the Government, dismissed these changes as an ‘extreme response’ which local authorities are ‘ill-equipped to handle.’
Of course you’d expect the NLA to be peeved at the measures, but it’s not just them. The British Property Federation, Residential Landlords Association, and National Union of Students have all rubbished the rules.
Many of the objections point to the fact that the Government seems to have bowed to a small number of people who have shouted very loudly about anti-social behaviour in areas with a high level of HMOs. The NIMBYs have won.
But by making it harder for landlords to offer these properties they will have to raise rents, which will drive students and migrants in to ghetto-style communities, a far cry from the Government’s stated policy of social integration.
Shared housing accounts for 20% of the private rented sector and plays a vital role in provided low cost housing for students, young professionals and those on low incomes.
The British Property Federation argues that a tiny fraction of places suffer from a high concentrations of HMOs and that using a broad brush approach to deal with different issues relating to anti-social behaviour makes no sense.
The NUS added that students contribute hugely to their local areas, not least by giving the local economy a massive boost. Indeed, small businesses in new HMO no-go areas would be likely to suffer.
Defending the Government
A massive 94% per cent of respondents to a Government consultation on this issue last year said they’d experienced problems of the effects of HMOs, including anti-social behaviour, litter, noise, and problems with parking. A whopping 84% of respondents agreed with the proposal that planning legislation should be amended to deal with the problems associated with high concentrations of HMOs.
Of course, this could well be a small minority of people punching above their weight. Perhaps there wasn’t enough landlord representation during the consultation process, for which they, and their trade bodies, only have themselves to blame.
Bound by red tape
However, the Government has a pretty good track record of being heavy handed with landlords over the last few years. They are already regulated with an estimated 50 Acts of Parliament and 70 sets of regulations governing the sector, and more on the on the way, according to Paragon Mortgages.
Just when they have got to grips with the tenancy deposit protection scheme, introduction of HMO rules, and the need to provide Energy Performance Certificates, more rules are proposed. These include a National Landlords Register, licensing all letting agents and statutory regulation of buy-to-let mortgage lending and advice, on top of the new regulations above.
On the one hand the Government says it wants to develop a vibrant rental market, but its approach of using a sledgehammer to crack a nut when it comes to regulation doesn’t support this aim, in my view.
Of course, protection is essential for tenants and affected homeowners, but landlords are being ever more tightly bound by red tape. A survey published last week showed that 60% are worried about the level of regulation.
The housing market needs a healthy private rented sector to help fill the enormous gap caused by insufficient housebuilding and the growing population.
The bedroom is a very important room that needs to be considered when developing property.
One of the most important aspects of good bedroom design is the colour. For a small room or one that doesn’t receive much natural light, the use of light colours such as white or magnolia is a must. Such colours create a sense of space.
If you are new to property developing, I would recommend you try experimenting with different colours in rooms of differing sizes. For example, for a short room where the room is very wide but not long, you could try a cool colour on the end wall and dark colours on all the sidewalls. This will cause the room to appear much deeper than it actually is.
Conversely, where the room is longer than it is wide, you could try painting the end wall with a dark colour and side walls with lighter colours. The net effect is a room that appears larger and squarer than it actually is.
For those property developers who are more adventurous, you could introduce some design and style into your bedrooms. Horizontal patterns with a light coloured back wall will make any room look spacious and long. Vertical patterns will create height, especially useful if your property has low ceilings for example as in period cottages.
Prior to putting your newly developed property on the market, you should consider furnishing the property. Unfortunately a lot of potential buyers have difficulty in picturing how empty property will look when furnished. Well furnished property thus achieves higher prices than their unfurnished counterparts.
When furnishing your newly renovated bedrooms, always use good quality furniture. For example, teak tables, teak chairs, deep plush seating and good quality beds which would match your potential market’s taste. If you do not own such furniture, you should definitely consider hiring something for the period during which the property is on the market.
If you are unsure of the type of furniture to use, you should visit other similar size properties in equivalent areas as your target market will already have furnished these properties to their own tastes.
Finally, when developing bedrooms, never lose sight of your budget. It’s easy to go overboard when it comes to expenditure, so you need to keep a strong grip on all expenses throughout the development.
Successful bedroom design and modelling is an art that takes experience to perfect. It is not as easy as randomly placing furniture in the room and hoping for the best. Furthermore, expensive designs don’t always work best. What is more important is for you to know who your target market is, and to design your bedroom according to their tastes, not yours.
When developing property, you should always try to make your house stand out from all the other newly developed properties of the same size and in similar locations. For example, you could have a teen bedroom in the house. You could try experimenting with colours too, for example pink for girls and blue for boys.
You may also want to stage a bedroom as an office by adorning it with high-end computer peripherals, and other modern technological equipment. Obviously, how far you go will depend on the size of your property. Having an office in the only bedroom of a one bed flat will not work!
Clever bedroom design and staging is definitely an art any good property developer needs to learn. Bedrooms designed and furnished according to the target market of that property can help you achieve a far higher price than you would otherwise have obtained.
You should always do your homework before buying any property. Here, we discuss various things you need to consider before and during your property purchase.
