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dan breen

2 Bed Terrace - Scotland

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Hi all,

Looking for some critique/reassurance on what may be my first investment.

It's an off-market two bed terraced house in Penicuik - a town just south of Edinburgh. It's on a major bus route in to the city as well as the major employers in the area. It's an ex-council house and prior to survey, the only aspects that require attention are replacing the 10 year old bathroom and a redecoration throughout. The seller has indicated that they are looking to achieve £125k. The latest house to sell on the same street was £7.5k below the current asking price, but I cannot find any details regarding the state of that property when it was sold late 2018. Due to it being a private sell, there is no home report yet, however we do intend to request one prior to making an offer.

Speaking to a number of different letting agents in the area, they expect that something of this standard and location will rent for £700-£725pcm, which will result in a gross yield of ~7%. There is high demand for rentals in the area and all the agents consulted expect that it will let in no time at all. ROI is 11%.

My initial 2yr goals are income related, but I do need to consider how to repay my investor (mum) within 5yrs. A 'perfect' investment (which I know do not exist) would be buying BMV, adding value, refinancing to pay mum back, then renting and thus providing myself with an infinite ROI. As perfect investments do not exist, this deal I think is a 'good' investment, and if I need to pay mum back in 5yrs I can always transfer the property into her name?

Are there any other questions I should be asking myself regarding this deal?

Thanks in advance.

Dan

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Hi, I didn't go through with this purchase. I made an offer of £118k coupled with a target 28-day completion. However, that wasn't enough for the seller to agree to. They eventually put it on the market and achieved £132k. Not a deal, but I've learnt a few things in the process:

  • Discuss purchase price earlier rather than later. It will save a lot of your time. If you know the seller won't come near your offer, walk away. Put your effort in elsewhere.
  • Have all the pre-work done before making an offer - if they had accepted my offer I wouldn't have been able to get things rolling right from that day. It would have taken me a few extra days to line up broker and solicitor with all the paperwork and ID checks etc.
  • I learnt a huge amount regarding the local property market.
  • It's hard work.
  • There are deals out there.

It's been a while since I was pursuing my property investment plans, but I'm back on it now and aim to have my first property before 2020.

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Hi Dan,

Perfect! 

You tried...you failed....BUT YOU LEARNT!

And you came back here and told us all about it. It's hard...I agree, but if you enjoy it...its not work!

Well done buddy...keep looking and we wish you well in the future.

Conrad


Conrad Paton

+44 7957 959851

conradpaton@yahoo.co.uk

https://www.linkedin.com/in/conrad-paton-424446110

 

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