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Righty ho.  Now I begin to see why property investment isn't easy money.  I just had my first day of viewing potential BTLs in Wolverhampton.

 

I'd found a short list of 12 which seemed to have good fundamentals.  They're all within 20 minutes walk of the city centre and I chose a range of houses and apartments (mostly 2 bed) to help me get my eye in, with a view to do single lets.

 

I started my morning by having a quick meeting with the very helpful and kind Lee, who made contact when I posted on the Introduce Yourself thread.  He warned me off one of the properties I'd thought of as a front runner because of his local knowledge.  So then there were 11 properties.

 

One viewing was cancelled. 10.

 

The next is at the top of my price range but needs a new bathroom and kitchen I hadn't known about (very clever photography...) 9.

 

The next one, I fell in love with. Like a newbie.  But it was right in the city centre, was in a lovely old airy building with charming round windows and lots of little extra, interesting things that had made it appeal to the super-hip couple who rented it.  Who want to stay.  And are already paying more rent than I'd have expected for the flat's size.  

 

I already rent out a leasehold property in London, which has a relatively high service charge, so I thought I was prepared for the extra expense to be factored in. But when the agent got back to me with the service charge cost I realised it'd completely eliminate any monthly profit I'd make.  So then there were 8.  And I was a little crestfallen.

 

Then came the one on contaminated land.  Which is a pity, it was really lovely. I'd already discounted it in my head, but didn't want to cancel the viewing with such short notice.

 

Next was a 2 bed apartment which is freehold (need to do some digging about this, suspect shared freehold but the agent didn't know).  It's 'second bedroom' is a tiny little sliver of a thing probably only suitable for a preschool child who doesn't need a full-sized bed.  Actually, this is my front runner for now. I'd make a £187 pre-tax profit per month.  If only it was also in an historic city centre building with well behaved, happy, ultra-cool tenants...my heart is never going to mend, I can totally tell.

 

Next was my on-paper favourite - a modern, tidy little 2 bed house that looked beautifully decorated.  God, how do these photographers do it? I work in the photographic industry, but if the photographers I work with could make me look as awesomely unlike myself as the estate agents of Wolverhampton are able to make their properties look, then I would be a very happy lady.  It was absolutely tiny, and deeply ugly.  Wow. 6.

 

And last thing, as I was starting to feel a little as though I was unravelling and had to keep checking my phone to check which property I was actually at cos my brain could no longer hold all the information, I viewed another reasonable choice.  It doesn't need much done to it and would make me a £177 per month pre-tax profit.

 

But now I realise what an awesome task it'll be to get an ROI above the 7.5-8.5% that I realise will be the best I can hope for with any of these deals.  

 

If anyone has any wisdom as to whether achieving an annual pre-tax profit of around £2000 for a property costing around £80,000 is a bit loony?  On paper it seemed fine to me (it just means I'll need to do this 10 times, successfully, to make myself the £20,000 annual income I'm aiming for) but now I'm actually here, looking at things, it feels a little overwhelming.  

 

I know that only an individual can decide if something's 'worth it' to them or not but a quick reality check would be so comforting, whether

it's to say 'God no, that's dangerously stupid' or 'yes, that's fairly standard for a single let if you only have a 25% deposit'.

 

Tomorrow I'm doing the last five properties on my list, and I shall update accordingly.

 

So my thoughts so far are 'WOW this is fun' 'God, this is awful' and 'wouldn't it be nice to have an extra £10,000'.  Which, I expect, always feels like the case.

 

Thanks for reading, and thanks in advance for any words of advice.  When I know more, I shall do my best to give back. 

 

Joceline :)

 

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Hi Joceline,

 

Keep going and don't be too disheartened! There are indeed plenty of terrible properties around and, sometimes, it does start to feel like the estate agents are wasting everyones time. For me in London, I feel there are more bad properties than usual at the moment due to Landlords selling up (licensing and future tax changes) and Homeowners moving out of their very tired properties to take profit,

You're going about things the correct way so my advice is just keep plodding on until you find a good one and if you do enough viewings, you eventually will.

 

Also keep an eye out for potential freebies included that you can use to force the value up in the future. E.g. the loft space and air above is included in the lease (for an loft extension) or a large garden that you could build an extension in to create an extra room at some point.

 

I would also consider looking at some properties where you feel the numbers don't stack up at the asking price and then making much lower offers so that they then do stack up.

 

If some are in a really bad state, would it be worth your time putting in a lower offer and getting the work done? You may make a few thousand £ or bring the house to a its true value and make no profit (however the advantage there would be that you have a newly refurbished house for market value).

 

All the best

 

James

Righty ho.  Now I begin to see why property investment isn't easy money.  I just had my first day of viewing potential BTLs in Wolverhampton.

 

I'd found a short list of 12 which seemed to have good fundamentals.  They're all within 20 minutes walk of the city centre and I chose a range of houses and apartments (mostly 2 bed) to help me get my eye in, with a view to do single lets.

 

I started my morning by having a quick meeting with the very helpful and kind Lee, who made contact when I posted on the Introduce Yourself thread.  He warned me off one of the properties I'd thought of as a front runner because of his local knowledge.  So then there were 11 properties.

 

One viewing was cancelled. 10.

 

The next is at the top of my price range but needs a new bathroom and kitchen I hadn't known about (very clever photography...) 9.

 

The next one, I fell in love with. Like a newbie.  But it was right in the city centre, was in a lovely old airy building with charming round windows and lots of little extra, interesting things that had made it appeal to the super-hip couple who rented it.  Who want to stay.  And are already paying more rent than I'd have expected for the flat's size.  

 

I already rent out a leasehold property in London, which has a relatively high service charge, so I thought I was prepared for the extra expense to be factored in. But when the agent got back to me with the service charge cost I realised it'd completely eliminate any monthly profit I'd make.  So then there were 8.  And I was a little crestfallen.

 

Then came the one on contaminated land.  Which is a pity, it was really lovely. I'd already discounted it in my head, but didn't want to cancel the viewing with such short notice.

 

Next was a 2 bed apartment which is freehold (need to do some digging about this, suspect shared freehold but the agent didn't know).  It's 'second bedroom' is a tiny little sliver of a thing probably only suitable for a preschool child who doesn't need a full-sized bed.  Actually, this is my front runner for now. I'd make a £187 pre-tax profit per month.  If only it was also in an historic city centre building with well behaved, happy, ultra-cool tenants...my heart is never going to mend, I can totally tell.

 

Next was my on-paper favourite - a modern, tidy little 2 bed house that looked beautifully decorated.  God, how do these photographers do it? I work in the photographic industry, but if the photographers I work with could make me look as awesomely unlike myself as the estate agents of Wolverhampton are able to make their properties look, then I would be a very happy lady.  It was absolutely tiny, and deeply ugly.  Wow. 6.

 

And last thing, as I was starting to feel a little as though I was unravelling and had to keep checking my phone to check which property I was actually at cos my brain could no longer hold all the information, I viewed another reasonable choice.  It doesn't need much done to it and would make me a £177 per month pre-tax profit.

 

But now I realise what an awesome task it'll be to get an ROI above the 7.5-8.5% that I realise will be the best I can hope for with any of these deals.  

 

If anyone has any wisdom as to whether achieving an annual pre-tax profit of around £2000 for a property costing around £80,000 is a bit loony?  On paper it seemed fine to me (it just means I'll need to do this 10 times, successfully, to make myself the £20,000 annual income I'm aiming for) but now I'm actually here, looking at things, it feels a little overwhelming.  

 

I know that only an individual can decide if something's 'worth it' to them or not but a quick reality check would be so comforting, whether

it's to say 'God no, that's dangerously stupid' or 'yes, that's fairly standard for a single let if you only have a 25% deposit'.

 

Tomorrow I'm doing the last five properties on my list, and I shall update accordingly.

 

So my thoughts so far are 'WOW this is fun' 'God, this is awful' and 'wouldn't it be nice to have an extra £10,000'.  Which, I expect, always feels like the case.

 

Thanks for reading, and thanks in advance for any words of advice.  When I know more, I shall do my best to give back. 

 

Joceline :)

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HI James,

 

Thanks so much for your speedy response, that was really helpful, and it hadn't actually occurred to me to even think of adding value in terms of space - it sounds so obvious now you say it; that will change the way I consider viewings today.  Also, it's made me re-think one of the properties I saw yesterday.

 

And you're right, if I do some good negotiating I can make the numbers stack up a lot more comfortably. Thanks so much again, mega-useful advice.

 

All the best,

 

Joceline

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Hi Joceline

 

I must admit we did have a little knowing laugh to ourselves when we read this here at TPH - we hear you! 

 

Hope the next batch are more promising or some deals can be done to get the price down on some that aren't quite adding up.

 

Look forward to the update.  :)

vicky2.jpg

 

I am the Community Manager at The Property Hub, and PA to Rob & Rob, drop me a line if you'd like to say hello. :)

 

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Hi Joceline

 

Wow - what a story!

 

I think this is fairly reminiscent of how many 'newbies' start out - full of enthusiasm only to be worn down on the treadmill of fruitless viewings let alone failed offers and purchases), which is one of the reasons why I don't do that many ;)

 

Personally, I adopt a 'peel the onion' type of screening approach myself...although in fairness this could also filter out the odd gem on the added value front at times too - but the time investment payoff is well worth it I find.

 

Here is what I might do when not adopting a value-adding approach...

 

Have set criteria to begin with - you mention net monthly cashflow and ROI in your summary above and I think these are very good first screens for BTL. Does any particular property get over your minimum 'hurdle rates'?

 

For me, £200 per month would be my min net monthly cashflow requirement for a single let, for others maybe less or more. The main issue to consider is providing for all costs (including providing for voids, repairs, maintenance, indirect costs and a sinking fund for longer term upgrades if possible...although this latter item could be funded in a different way), provide for potential interest rate rises over the next 2-5 years (or go for a long-term fixed rate mortgage instead) and then consider what you will do with the cashflow surplus (save it, live on in, reinvest it, etc. note: if you need to live on it, then be ultra conservative).

 

Based on my experience for a property such as those you are looking at £200 per month net of all the above costs would be my personal minimum. ROI at c8% is a reasonable (modest even) target to aim at too. I would run my numbers based on 95%, 90% and 85% of asking price perhaps...more if you see a reason to negotiate the price down (long time on the market, poor condition, short lease, etc.). If it passes the hurdle test move on to the next stage, which may be to view but do factor in any estimated costs of works and fees into your analysis too beforehand.

 

If I was adopting a value-adding strategy, I would vary the above by looking closely at images and floorplans etc to find my adding value opportunity. Add in a rough assessment of the approximate cost of undertaking the works and adopt a similar approach to the above analysis to begin with.

 

This response is based on a fairly standard long-term buy and hold type of single BTL model...it would vary if a different strategy was favoured (e.g. flips, HMOs, etc.).

 

However, doing the viewings as you have will make you battle hardened as well, so do a few and then you will start to get a hunch as to what will work and what will not.

 

I would say this - aiming at decent cashflow and / or ROI returns usually means buying property at a discount and / or in a premium rental return / low capital value location when not adding much in the way of value to a property...so I would start looking for properties where this is more probable...motivated sellers, problem properties and high demand rental areas outside of the 'des res' postcodes are some such triggers to look for I would say.

 

Keep at it though, nobody said it would be easy...but it is still worth it :)

 

Best

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

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Thank you Vicky, thank you Richard!

 

Richard, your breakdown of what you'd be looking for as a return from a single let was extremely helpful - thanks for giving me something to aim for. And running the numbers based on various potential offers I could make is a really useful tip.  Thanks for your detailed reply.

 

So, dear reader, this is how my story continued...

 

I started the day with breakfast in a city centre cafe.  A very trendy one.  Which seems a good sign for the area.  And, what do you know, the cafe owner was a property developer.  So he told me lots about the local area, and lent me a property magazine to read.  

 

With five properties to view, I started out for the day.

 

Whilst outside the first property (a just-completed refurb of a Victorian terrace) waiting for the agent, I noticed a large, horizontal crack running from around the damp course mark on the house next door,  continuing across the property for sale.  Hmmm, I thought.  And realised it's really great to be early, to look at the property from outside with no distraction.  I did a bit of weeding while I waited, and discovered that the crack extended about a third of the way across the front of the house.

 

Immediately inside the house was an area of floor that felt just like a trampoline.  Fun and all that, especially for a young family.  But possibly means that the floor boards need some attention.  The house was beautiful and light though, with a gorgeous new kitchen and bathroom.  Under the stairs, which ran between the front and back reception rooms, was a large, useful cupboard.  Which had damp rising from floor level to halfway up one wall.  It was clearly visible from the back reception room too.  What on earth makes damp rise from an interior wall of a house? Nothing good, I don't suppose.  From upstairs, a view into next door's garden revealed what looked like a bonfire of mattresses. An exercise bike sprung, three-quarters hidden, from the waist high grass.  It was a strangely poetic site.  So I was down to four properties.

 

And as soon as I saw the next property, I realised that my sniping had been unkind.  All was forgiven of the trampoline-floored, exercise-themed previous house.  This one was derelict.  The estate agent and I became rather hysterical whilst looking around it - there were a bunch of mannequins standing, reproachfully headless, in one of the uncarpeted, saggy-ceilinged bedrooms.  And if they weren't spooky enough, an empty (maybe empty...) child's car seat menaced us silently from outside the bay window.  And when the agent opened the garden door, it became apparent that there wasn't a garden any more.  You couldn't have even stepped outside; some sort of Triffid had sprinted through the yard and garden, spreading everywhere and climbing taller than me.  The agent, suspecting Japanese Knotweed, started taking photographs.  The poor neighbours.  Except one of the houses next door was empty - or I hope it was.  If someone's living there, they're living with smashed front windows and a mattress-bonfire in the back garden (who knew they were so popular? I found yet another one later).  So then there were three.

 

Number three was actually pretty nice.  Its service charge ended up ruling it out, but I regretted not being able to consider it.  It needs total redecoration but it was all stuff I could have done. However, it's on a busy road with fierce parking restrictions and no parking spaces, just a tiny little garage that I'd have struggled to manoeuvre a real car into, despite three point turns being one of my hobbies.  So then there were two.

 

Ha ha! Two sort of entertained me - firstly for the third mattress-bonfire of the day, but secondly for the fact that it had double glazing, but only for the windows that were visible from the street.  Which seemed strangely vain - I'd have thought of double glazing as being there primarily for heat, in which case you need all the windows done.  It made me imagine wearing clothes with no back.  Anyway, it was large, but at the top of my price bracket which means that I wouldn't be able to afford to make it nice enough for me to be happy taking peoples's money for living there.  The agent assured me that it'd rent out with the kitchen and bathroom as they were, but I'd feel guilty about that, so I'd rather not.  I know that buying something you'd want to live in isn't the way to do BTL really, but I'd be actively unhappy if I was living in those conditions, and so I decided against this one.  So there was only one left to view.

 

And it was really nice, but again, the service charge made it unviable for me.  I'd asked all the agents ahead of time about leases lengths and ground rent/service charges but they had failed to get answers by the time the viewings came round.  So that's been a useful lesson; I could have saved a lot of time if I'd been firmer about getting that information before committing to a viewing.

 

Having run numbers, I know which property makes the most sense (the 'freehold' apartment, which turns out to actually be leasehold but on a long lease with tiny service charge) but haven't yet decided whether it makes enough sense to actually offer on.  But I feel a lot more positive than I did yesterday, and realise that I've learned so much in the last two days, and will be ready to approach it far more efficiently and sensibly next time I do viewings.  

 

Thanks for reading, and hope my experiences might help someone setting up their first viewings :)

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I think you should start a career as a writer. These updates are great! 

 

I'd echo what Richard said about the £200pcm minimum, however I tend to use capital repayment mortgages and still keep the £200pcm minimum target. Makes it slightly harder to find, or rather it limits the areas you can look for them. 

 

You've said about a few properties that the numbers don't stack up, so you've discounted it. If you've got a set target monthly net profit, or % ROI to aim for, then what offer to you have to make for it to stack up? 

 

Work it out, and make that your offer. 

 

Pretty much any house is worth buying at the right price. Even your trampoline-mattress fired properties. If you could get it for a fiver I'd have it! 

 

 

Don't be discouraged, it's all just a game at the end of the day. :-) Keep plugging away and start making offers! 

Damien Fogg
MRICS CeMAP CeFA

Email: damien@theepinvestor.com

Web: www.theEPinvestor.com

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I think you should start a career as a writer. These updates are great! 

 

I'd echo what Richard said about the £200pcm minimum, however I tend to use capital repayment mortgages and still keep the £200pcm minimum target. Makes it slightly harder to find, or rather it limits the areas you can look for them. 

 

You've said about a few properties that the numbers don't stack up, so you've discounted it. If you've got a set target monthly net profit, or % ROI to aim for, then what offer to you have to make for it to stack up? 

 

Work it out, and make that your offer. 

 

Pretty much any house is worth buying at the right price. Even your trampoline-mattress fired properties. If you could get it for a fiver I'd have it! 

 

 

Don't be discouraged, it's all just a game at the end of the day. :-) Keep plugging away and start making offers! 

Thank you very much for your response, Damien; it seems very impressive to me to get a monthly return of £200+ on a repayment mortgage.  I shall hope to get better at spotting those properties and negotiating hard in the future.  So that was very helpful to me.

 

In my story continued, my favourite of the estate agents I met (lovely, articulate and enthusiastic young lady who offered to stay behind after work to make sure that I could view a property she wanted me to see) telephoned me for feedback on one of the properties I'd viewed.  I told her I wasn't interested in it, but that I'd liked another of the properties she'd shown me.  Sadly, it had just had an offer accepted on it so I decided it wasn't meant to be.  I drove back to Wales, wondering if any of the properties on my list were worth making offers on, even if only to practice doing so without feeling too much in the way of shame and social embarrassment.

 

The next morning, I started to compose an email to one of the agents, making an offer on an apartment, at 15% under the asking price.  I felt all sweaty and guilty even typing it out.  I'd just finished (but not hit 'send' thank goodness) when Favourite Agent Lady called.  The person offering on the 2 bedroomed Victorian terrace I'd liked turned out not to have spoken to a mortgage company yet.  So the agent, knowing that I already had, asked if I'd like to make an offer.

 

'How much did they agree to pay?' I asked, suspicious that she wouldn't tell me.  Indeed, she said that she wasn't allowed to disclose that information.  Because I'd been about to make an offer on a cheaper property than this one, I decided to flex my muscles-of-audacity a little, and make the same offer for this one.  Which sounds kind of tough and impressive, I think.  Except, dear reader, that I did it by email because I'm too cowardly to be so obnoxious over the phone.

 

It wasn't accepted, which made me pleased because, as Rob Dix says, if they accept your first offer you'll never know if you could have gone lower.  I raised the offer, but not by much, with the justification that it was more than I'd been about to spend on the property I'd been in the process of making an offer on.  That's a rubbish justification, isn't it? But I felt as though I needed some kind of excuse for my new-found miserliness. 

 

That was turned down too.  So I felt like a proper haggler.  For some reason I couldn't get the picture out of my head; myself as some kind of super tough, glamorous hostage negotiator lady (Emily Blunt maybe) doing some life and death deal with a bad guy, whilst training a sniper's rifle (do they have rifles? I'm afraid I don't know) on him without his knowledge.... Is it normal to feel like that? Wouldn't have thought so, I'm generally prone to grandiosity.  But I hope I'm not the only investor ever to feel a tiny bit important and grand during this part of the process, because it's a nice feeling. I imagine it'll be very short lived.

 

Then Favourite Agent Lady told me her manager had said she was allowed to disclose the other bidder's offer.  It was £75,000, for a house on the market at £80,000.  I'd already offered £73500 , so I got all excited and said I'd be happy to go for that price.

 

Yay!

 

I'm aware, of course, that I haven't got anywhere near below market value.  Because the house had only gone onto Rightmove 10 days or so before, and because it was in good decorative order and appliances/furniture were being included in the sale, I thought a first time buyer would probably have happily paid the asking price.  And I got all full-of-adreneline and didn't want to miss out.  Clever Favourite Agent Lady, I can see she did a great job of making me feel like I had to make a quick decison.  I'm very impressed with her.  Possibly less so with myself, I don't think I kept the cool headed detachment I'd expected to.  However...

 

...I work away from home a lot and spend several months a year abroad.  So my viewing opportunities are extremely limited, probably in single figures for the rest of 2016.  So to make a purchase this year, I felt the need to be fairly speedy and decisive.  I like the house, I think the agent will be good to deal with, I like the location, and I like the furniture that I'll be getting as part of the sale, because I'd budgeted £2000 for that, which I now won't have to spend.  I get to do a bit of work on it (because the garden's a mess) so I'll feel as though I've put a little of myself into it.  And assuming, dangerously, that I've got my sums right, I'll get an ROI of 9.6% and a monthly profit of over £200.

 

So it's not the deal of the century, but I think it should work out ok assuming no disasters along the way.  I've learned loads, not least from peoples' kind responses in this thread.  And I'm excited about getting through the legal stuff, and onto the next stage of the process - finding tenants who'll appreciate the fruit trees in the garden.  Priority.

 

I know this is a pretty small deal but I hoped that by sharing the numbers and details of the process so far, it might help another wobbly little investor taking their first steps.  Thanks for reading, I love the Property Hub and am so grateful for all I've learned so far, and all I'll learn in the future.  Shall continue to update :)

 

FRUIT TREES.  I think that's the main reason I'm buying this house.  Maybe I need a JV partner next time.  A sane and rational one who doesn't engage in mad fantasies about happy, rosy cheeked tenants making apple pies.  For Heaven's sake.

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  • 2 weeks later...

Hi Joceline,

 

great read so far. Out of interest why did you decide on Wolverhampton as your area for properties? I'm about to dip my toe back into the market myself and am undecided on whether to stick with local or venture farther afield.

 

cheers

George

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Hi George,

 

Thank you! Well, my choice of Wolverhampton was a bit of a mixture of totally unscientific and relatively carefully researched.

 

Firstly, it's my nearest city if I drive East, which is what I do a lot on my way to work.  So with really limited opportunities to view property, it seemed like it'd make things a little simpler.

 

I wanted to invest in a city, and from my experience of living in London, York and Birmingham, it's lovely (and valuable) to be near to the centre of things as a tenant.  There's no way I could afford to buy in prime London, Manchester or Birmingham, so rather than buying something further out, I thought I'd try to make my properties 'big fish in small ponds' rather than small fish in big ones if that makes sense?  Wolverhampton fitted what I was looking for, and I enjoyed staying in the city centre for a couple of nights, so I decided to start there.

 

I did also do some statistical comparisons of other areas I'd briefly considered - Dudley and Walsall.  My (admittedly strange and muddled) maths ended up showing me that the rental yields were better in Wolverhampton than in either of those places.

 

And then, I ran out of time, decided to commit to Wolverhampton rather than paralyse myself trying to check my figures over and over again, and went for it.

 

I wonder if the above description will be of any help to anyone. Hope so.  I do think of most investors being rather more methodical and clear-headed than me, so maybe it'll be of comfort to some that I'm really not, and nothing's actually gone catastrophically wrong.

 

Yet.

 

My mortgage was just approved though!

 

All the best, everyone :)

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Thank you Paul!

 

Onwards...

 

So. Brexit happened. Not ideal in the middle of a purchase, but I'm going ahead without panicking or trying to renegotiate the price. Cos I think that'd be a way to help start a recession, possibly.

 

And on the same day, my lender's surveyor's report arrived.  I'm guessing that for a Victorian terrace, the list of things that need attention is not particularly freakish or alarming.  It includes;-

 

'attention to plumbing installation'

'attention to electrical installation'

'chimney stack repair'

'gutter repair'

'inadequate sub floor ventilation'

'damp in ground floor walls'

 

Now, I'm guessing that the plumbing and electrical stuff could be anything from a tiny job to a rewiring/new boiler drama.

 

And I'm guessing that none of this is insurmountable.

 

I've put adverts up on 'My Builder' to obtain quotes.

 

I've contacted the estate agent to let them know my intentions to get quotes and then look at how to move forward.

 

I wonder if there's anything else I should be doing?  

 

And any wisdom as to whether this list of defects constitutes a relatively normal survey or a freakish mess of a survey would be very gratefully received.   Once I know more (from the independent survey I already commissioned for next week) I will of course update.

 

Once I have quotes I wonder whether it's kinder to ask the vendor to fix important stuff at their expense, or to do it myself and try renegotiating the purchase price before doing so.  Any thoughts on what's more normal/ethical would be much appreciated.

 

How very interesting this process is though.  Highs and lows, feelings of massive excitement and hope at taking steps to provide for my future self, followed by obsessive thoughts about owning a damp, chimneyless shell with nothing but a few spiders as tenants, and a wicked vendor who makes off with all my money whilst cackling like a maniac.

 

I'm really beginning to form the impression that I might be too highly strung and imaginative for this game.  And I really don't care because I love it, it makes me feel properly alive :)

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I'd use the survey as a negotiation tool, see what your independent survey says.

Let us know if there are any points you are stuck with.

Surveyors nearly always recommend the gas and electrics are checked by the relevant trade. The surveyor will always cover themselves in case of a claim.

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Hi Paul,

 

Thanks for your take on things, that's really helpful.

 

I'm currently waiting for the results of a more in-depth, independent survey; whereupon I'll be able to get quotes for work.

 

Actually if anyone knows whether 'the electrical installation needs attention' is a standard way for a surveyor to say 'I didn't look' or whether it means it actually needs attention, that would be incredibly helpful.  I don't want to call out electricians to discover that the electrics are perfectly normal and there's no money in it for them..

 

Thank you!

 

So things have ground to a halt.  Boo.  The survey has been rather slow in coming.  All rather boring really, hoping for all the giddy exciting bits to start again soon.  In the meantime I'm working really hard in order to save enough money to do this all again before too long.

 

Actually (and I'm sure I'm not alone in this) I'm finding that having specific goals (buying another house with a £25,000 deposit in 2 years' time) is making me make much smarter choices in my day job, and consequently earn more.  I feel rather ridiculous about not having bothered with self development before.  It's really fun, and hasn't involved working that much harder than normal - I've just been working in a more organised, intelligent way.  So thank you, Rob and Rob!

 

Thanks to everyone who's reading :)

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Joceline, it's been fun reading your posts, as I'm in the position of having to start my investing career at rather a late stage in my life - but with the kids' future in mind, rather than my own.

 

Personally, I wouldn't be worried about anything on your survey report - it looks pretty standard stuff to me.

 

Let's look at point by point:

 

  • 'attention to plumbing installation' - the surveyor would not have inspected every pipe and joint in the property and would not be qualified to do so anyway. The recommendation would probably be to have a competent person take a look. Are there pools of water anywhere? That's a good clue to possible problems! I wouldn't be too worried unless a specific defect has been identified.
  • 'attention to electrical installation' - guess what? The surveyor is no more qualified to comment on an electrical installation than he (or she) is to comment on the plumbing. That said, if the wiring is more than 10 years old, it's a good idea as a landlord, to have an electrician take a look. Yes, it's another survey, but it will actually identify problems if any exist and provide your prospective tenants (and your insurers) that you have performed some due diligence.
  • 'chimney stack repair' - If it's obvious from the outside or in the loft that the pointing is crumbling away, it's a good idea to have this looked at - biggest cost will be scaffold if necessary. If the chimneys are in use, an internal liner might be necessary. Depending on what liner is used, that can be a few hundred pounds to a couple of thousand.
  • 'gutter repair' - any roofer can sort this withe relative ease and plastic gutters aren't expensive. Most are only problematic at the joints, unless they're sagging badly due to broken brackets, which again, isn't an expensive fix.
  • 'inadequate sub floor ventilation' - older terraced properties have clay (or similar) vents below damp course level, at the front and rear of the property. On older properties like this, the vent holes can become blocked with soil or even buried over time by over zealous gardeners. Changing the vents to modern plastic types will usually overcome any issues. 
  • 'damp in ground floor walls' - a timber and dam survey will be useful, but the dampness might be solved by improving the ventilation (see above), otherwise you may need a chemical damp course.

Personally, I wouldn't be too concerned if those were the only things highlighted in the survey, but if the survey was only a home buyers report for mortgage purposes, then perhaps I'd be looking for a more detailed and independent survey for my own peace of mind. Then I'd probably consider the cost and rule it out!

 

In any event, your survey will contain photographs identifying the issues referred to and should give you a better idea of the scale of the problems.

 

Good luck!

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Hi Joceline, 

 

Depends what type of survey you had commissioned initially, but 'needs attention' probably means they looked at the circuit board and plug sockets and decided it looked old. Surveyors, especially valuation ones, aren't M&E professionals (mechanical and electrical) so tend to steer clear of giving too much detail about electrical systems. 

 

A building surveyor (like me, cos we're great!) should be able to give you a more accurate description. Does it have a MCB, are there RCDs in place, etc. It's all very boring, but basically from your perspective all you need to know is will it pass an electrical test. So instead of worrying about getting someone in to quote for no work. You could get someone in to test the system, but ask if they think from a visual inspection it will fail, if they can quote for a full rewire instead. 

 

That way you aren't wasting their time, and if you get a certificate out of it, happy days!

 

If you need any help deciphering the survey report, just ask. Probably easier to email as I'm rubbish at keeping up to date on here :-) 

 

Me 

Damien Fogg
MRICS CeMAP CeFA

Email: damien@theepinvestor.com

Web: www.theEPinvestor.com

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  • 3 weeks later...

Good heavens! thank you Fiona, I got a notification that you'd posted, and discovered posts from Damien Fogg and D Carter that I'd missed.  So sorry everyone, I didn't mean to ignore your very kind advice.

 

D Carter, that's incredibly helpful, thank you.  That all makes so much sense now.  And Damien, I didn't even know that building surveyors existed.  Which is shameful, because I just found out that one of my friends does this for a living and I'd just never listened properly when he talked about work.   God.  Thank you! Now that I know that, I will hire them! Brilliant.

 

Updating the story...

 

So this is the boring bit.  And the bit that makes people say that moving house is stressful, I guess.

 

I decided to allow the vendors to see the survey.  Maybe this is a terrible rookie error, but it does seem utterly mad to start renegotiating prices, or asking for repairs, without sharing the details of the survey with them.

 

And, since the damp was the scariest bit of the survey for me, I found a damp specialist, who will do a survey of their own (at £190 rather than free, cos I don't own the property yet, so am less likely to end up hiring them than if I did.  Seems fair to me).  The estate agent lady (who I still love) started trying to contact the vendors for access.  This has taken THREE WEEKS!!!! They don't live at the property, and weren't replying to phone messages.

 

Finally, I said I was going to pull out and start looking at alternative properties.  Whereupon (magically) they did reply, and granted access.  Phew.  I'm suspicious that I'm going to maybe have to threaten this every time a contractor needs access, so have spoken to the estate agent who says that she can organise it without the vendor's authorisation from now on.  I hate being so high handed - I really did mean it about pulling out; I want to get this property bought this year and a three week wait to just allow someone to survey the place seems stupid.  But I don't want to have to keep being an ass about it.

 

So the survey is happening today.

 

After that, I'll see what it says, get some quotes for the roof and electrics, and then make a revised offer.

 

Actually, if anyone clever is reading, I'd really appreciate a bit of advice here.

 

If, for example, the cost of repairs comes to £10,000, I can try to renegotiate the price, which was originally £75,000.  The survey said that it wasn't worth that, so I guess I'm in a good bargaining position.  However, if I got the price down to £65,000, my BTL mortgage which is 75% LTV will obviously lend me less than for the original price.   I'll be able to put in a smaller deposit, of course, but will still have to find a considerable sum of extra cash to pay for the repairs.  I can probably do this, but it'll be a bit of a stretch and will eat into my contingency fund, which I'll need if I can't rent the place out immediately, while building work happens.

 

The alternative is, I suppose, to ask the vendors to fix any serious problems.  The problems I see with this approach are a) they might not have the money - there's no reason to believe they'll have £10,000 just sloshing around, waiting to be spent to fix a high handed stranger's problems (ok, I know it's not really just my problem, it's theirs, but still).  B) they might get their uncle to spread a bit of cement around, spray an air freshener on the carpets, and forge an invoice from some imaginary contractors.  I suppose that I can always check that stuff by calling the companies concerned though, so that's probably not a real issue.

 

And I'm not sure which of those is a more sensible, ethical choice.  Maybe giving the vendors the choice? Though that won't help me to find extra money for the repairs.  But I can probably cross that bridge later.

 

Are either of these options a complete no-no, do you think?

 

It's been ages since I've seen the property now, and it's started to feel as though it's imaginary.  I'm suspicious that the garden will have sprouted mattress bonfires and Japanese Knotweed.  Maybe I should request a second viewing, actually.  I wonder if the vendors have a responsibility to stop the garden going absolutely crazy - I know that I've always made sure people inherit a mowed lawn etc when I've sold houses before, but that might not be a given...

 

Sorry, such a boring update!  When interesting stuff happens, I shall write more, maybe with pictures if it's really interesting, like a family of refugee unicorns moving into the first floor.

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Hi Joceline,

 

Enjoying the updates! :-)

 

I'm no expert as I've never been in the position of having to renegotiate a deal following a survey which highlights problems, but my feeling would be that I'd rather just negotiate the price down and get the work done myself, rather than trust the vendor to do it. They might take ages to organise it and, as you mention above, they might not do it to a good standard. I would be wary of that personally.

 

Another point just occurred to me: you say the agreed price was £75,000 but your survey said it wasn't worth that - so I'd agree that you're in a strong bargaining position, and you wouldn't want to pay more than the survey says it's worth. Also, has your mortgage company done a valuation? Because surely they will only lend you 75% of the property's value based on their own valuation? So if the property is only worth £65, 000 mabye they'll only lend you 75% of that anyway? Also, I would make sure to consider how much the property will be worth once the works are completed, in addition to the actual refurb costs, when deciding on what revised offer to make.

 

Someone else is bound to have been in the same situation and will hopefully give advice. I'll be interested to hear what happens as my husband and I would like to do a refurb ourselves at some point!

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  • 2 weeks later...

Thanks Fiona - I started to compose a reply to you, and then all changed with my purchase so shall update momentarily...

 

Hi Carol, Very best of luck to you - it's exciting isn't it? But also it feels pretty high stakes to me; I don't mind if my first investment is only mediocre, but I don't want it to be awful.  I do hope you find something super and shall look forward to reading about it.

 

Here is my update.  I'm not unduly downhearted by this so please don't read it as a bid for sympathy.  

 

Urgh, so I've had to withdraw my offer for the happy little Victorian terrace with fruit trees.

 

It turns out that the estate agent was overly optimistic about being able to arrange access for my damp specialists to assess the property.  A week after being told that the damp survey was going ahead, I contacted the damp specialists to ask what their findings were.  They reported that they still hadn't managed to get a response from either the vendors or the estate agent, so hadn't been able to go ahead with the survey after all.

 

Wow, I never knew anyone could be selling a house whilst being simultaneously so disinterested in actually umm, selling a house.  I don't know why the estate agent told me that it was going ahead; putting myself in her place I guess it was wishful thinking.  I've learned a really useful lesson in maintaining contact with anyone who's meant to be doing anything for you, at every stage- I thought I was being respectful and polite by not chasing everyone up earlier, but I'll make more phone calls in the future.

 

Anyway, I can envisage this situation playing out until the End of Days, or at least until Brexit, with the vendors cleverly using evasive tactics in the manner of the SAS, denying everyone access to the property until I completely give up, purchase the place anyway, and then discover that in the meantime the miniature fruit trees in the garden have turned into giant redwoods feasting from the moisture pouring forth from the property's ground floor walls, and have had tree preservation orders applied to them.

 

I'm pretty sure this could happen.  So I've withdrawn my offer, and have learned that next time I plan to make an offer on a property, I need to ask more nosy questions about how motivated/willing to answer the phone/crazy the vendors are.  I could have avoided all this waste of time and money if I'd been less worried about being polite, and more curious about the vendor's situation.

 

Anyway, it's cost me about £1500 to learn all this, and honestly, that doesn't feel too bad.  I've learned so much from going through it, and I'll probably be able to get something like that amount back by bargaining harder next time I make an offer.  It feels as though I've put myself through a little training course, and have come out the other side armed with more knowledge.

 

Also, I've learned that taking out a policy to insure me against the sale falling through so that I don't have to pay my solicitors anyway, is a GREAT idea. I'll never miss that step out - I'm normally quite suspicious about insurance and I'm so glad that I paid for it this time around.

 

Furthermore, I've decided I'll never skip getting an independent survey - I don't want to rely on the one that the lender arranges because I learned so much more from arranging my own.

 

The property market seems to have softened a little in Wolverhampton since I made my offer (pre referendum) so I'm likely to be able to find a better deal by starting again in any case.  And as it happens, one of the properties I was interested in before is still on the market, along with several other properties that I'd be interested in viewing.

 

Ha! Ha! So I get to go back to the fun bit;  looking round houses and imagining decor.  Oh dear.  I really shouldn't be so jolly about losing the money and the time, and having to disappoint people, but I did enjoy viewing properties.  I know that the eventual aim does have to be to actually buy one, not just keep surveyors in work.  But in the meantime, I'm going to maybe have a quick little look around Rightmove before bed.  

 

Thanks for reading, to all those who've posted advice, and many hopes that some of what I've written might help someone else to avoid expensive mistakes of their own :)

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  • 3 weeks later...

Hi Joceline

 

I've just found Property Hub last week and just read your introductory posts and updates today. I just wanted to say how well written and entertaining I thought they were. They've inspired me to try and make my own posts in a similiar vein!

 

All the best with the property investment career.

 

Richard

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Hi Joceline,

I've Just found this thread, sat here and read it all from start to finish (while I should be sleeping), but your detailed updates just made me carry on reading! Not to mention everyone's detailed responses too.

I'm looking forward to keeping up with you on this thread. I'm looking to start in property investing myself but I'm at the early (almost prehistoric) stage of saving up.

Side note...I have dabbled with the spreadsheet for running the numbers on this website as I was curious about properties in my area. Turns out the ROCI of some of the random ones I picked are negligible at best. I'm getting more in my ISA (>.<)

Anyway, enough rambling from me. Just wanted to poke my nose in and say I'm really enjoying reading this thread and good luck in getting your first property under your belt in the months to come!

Scott

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