Apartment with high rent at a low price - what's the catch?

[Katy Craig]

Hi there

 

I've seen a 2 bed luxury apartment at 125k (West Yorkshire). It's pulling in rent of £1,250 per month. It sounds too good to be true. I queried the deal and was told "the current vendor owns the three other flats in the building. They are under discussion on final figures but are thinking around £50-70 pcm (rent/service charge). The 4 owners will effectively been the management company and own 25% share, on 999 year lease".

 

I'm new to property investment (and a little naive perhaps ) - I've read dozens of books on the subject of BTL and have learned a lot over the last few months.... but am a little stumped by this. Am I missing something? First of all - the rental has got to be a exaggerated (I know I won't get near that - but easily £800). Should the fact the rent has been exaggerated so much be enough to make me walk away? I am guessing the main risk is maintenance costs. So if, for example, if it needed a new roof at 10k - then I'd have to pay 25% of that. But with £1250pcm rent that wouldn't be an issue. (note at that rate it included stunning/stylish furniture that is "negotiable" so that will make a difference). There just has to be something glaring at me that I'm missing. I realise I would need to query past maintenance costs to get an idea of that. I asked why the vendor is selling and was told it's "surplus to requirements." The property has been up for sale for around 5 months. I am thinking of booking a viewing, but does anyone have any suggestions/advice? Is there a giant neon warning sign glaring at me that I've missed?

 

Thanks in advance

[EddieE]

Hi Kate,

 

I'm a total newbie when it comes to BTL, but I have a bit of experience running businesses. My advice from that angle is not to look too much into the paper, but into the real world. The property may have a 10% yield on paper, but can it rent? How many people can afford a rent of £1,250 and not afford buying it since the mortgage would be probably cheaper? Probably professional people with temporary accommodation?

 

See in Rightmove what other similar properties have let for and how long it took. I tend to do this for a few months on the same area before putting an offer. 

 

Re booking a viewing, go for it! What is the worst it can happen?  

[swati1006]

hello,
Seriously, rent of £1,250.

[Katy Craig]

On 10/7/2019 at 10:04 AM, swati1006 said:

hello,
Seriously, rent of £1,250.

This query was two years ago. I've got 6 properties since and haven't touched any apartments thankfully! Wish I'd saved the listing to see if it sold and watched it go up for rent (and at what amount)