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News Bites October 2012

Future Auctions News Bites Vol. 1, Issue 1: October 2012

Note From The Editor…

 

[dropcap style=”font-size: 60px; color: #2bbe22;”] W [/dropcap]elcome to this our first edition of our new monthly newsletter for all property investors. Our goal is to bring you “Bites” of value information each month that will help you run a profitable property investment business.Each month we will cover such areas as:

– Finding the Right Properties

– Increase Your Earning Potential

– Maximising Your Profitability

– Legal Obligations

– Renovation

– Deals and Offers

Our goal is take our advice as Property Investors, managing a profitable property portfolio, and share this with you each month to help you become a successful, or a more successful property investor.

Each month we will also endeavor to bring you insight and perspective from industry “gurus”, that’s other like minded people with experience in this business who can offer valuable advice and tips.

Property, from our experience, is still the best investment option. With property markets in a significantly deflated position, it’s the best time to be buying property to make great capital gains over the longer term.

So enjoy this first edition of our newsletter and please feel free to email me with your thoughts and feedback.

Alicia Cousins, Future Auctions

IN THIS ISSUE

Does Furnishing a Property Significantly Increase Your Yield and Profitability?

How to Finance Your First Steps in Buy-to-Let and Save a Fortune in Fees.

Avoid Massive Legal Fees From Innocent Landlord Malpractice


TOP TIP for Freshening Up Your Property

 

Does Furnishing a Property Significantly Increase Your Yield and Profitability?

[dropcap style=”font-size: 60px; color: #2bbe22;”] T [/dropcap]here are many debates about whether furnishing a rental property is a good thing or not. In this “Bite” I’m going to look at one of the main benefits of furnishing to help you make an informed decision as to whether this approach is right for you.The main obstacle to furnishing a property is the initial expense. When you’ve already spent so much money purchasing the property and then often another pile of cash refurbishing it, digging deeper into your pocket for more money to populate it with furniture can seem quite daunting. But there are some clear benefits of doing so, but there are some questions you must ask of yourself first.

Let me give you an example of 2 properties we own to demonstrate some of the benefits of fully furnishing your properties. We have 2 apartments in the same small apartment block. Both are of a similar size and specification. We chose to furnish one and leave the other unfurnished to empirically test the benefit of furnishing. The furnished apartment takes in £400 per month more rent. The original furniture package cost us about £5,000, which was a high spec. fit out.

Although it took us 12 months to recover our investment, the furnished apartment is now significantly more profitable than the unfurnished apartment, generating an additional £4,800 per year profit.

So don’t dismiss full furnished, it can prove to be very profitable.

So there’s 3 questions you need to ask:

1.  What’s the market differential for Furnished vs Non-Furnished in terms of rent?

2.  How much will it cost to fit out the property?

3.  How long do you intend to keep property (to realise the return)?

These 3 questions will give you the facts you need to make a decision on whether to furnish or not and whether you’ll realise a return or not.

Brian Conway, SC Properties

 

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How to Finance Your First Steps in Buy-to-Let and Save a Fortune in Fees

[dropcap style=”font-size: 60px; color: #2bbe22;”] I [/dropcap]f you want to take advantage of low property prices at auction you need to have some money to invest. There’s never been a better time to start. House prices are low and there are plenty of repossessed properties going for a song. At the same time the rental market is booming. If you just came into some money the get down to the property auctions and start buying. But what are your options if you don’t have cash?

Well, you can try borrowing some money from a bank to fund the purchase but you’ll need a lot of luck, and stamina! We’ve just remortgaged two buy-to-let (BTL) properties. It was a real pain and cost a lot of money and time. Basically, the banks are still making it incredibly difficult for everyone. We found the typical cost of arranging a BTL loan is £1000-2000 per property based on a minimum 70% Loan to Value (LTV) ratio. The interest rate was 3.99% over base, about the best we could find.

Our first attempt at a remortgage resulted in artificially low valuations by the bank’s appointed surveyors. This meant they would only lend the money if we stumped up more equity. If you’re planning to get into property investment the best and cheapest way to finance it is by remortgaging your own home. This has a number of advantages over trying to organise other types of loan.

Banks are happy to release equity from your principal property.

You can remortgage your property and release cash before you decide what and where to buy so you can start bidding knowing the finance is in place.

The costs of remortgaging your house are much, much lower than getting a BTL loan.

Here’s a comparison:

BTL on £100,000 loan:

£1500 Fee

£100,000 at 4.49% = £374 per month

Total cost over 3 years = £14,964

Releasing £100,000 from your principal residence:

No fee

£100,000 at 2.99% = £249 per month

Total cost over 3 years = £8,970

Difference over 3 years = £5994

The possible downside is that you’re putting your own personal property at risk so you need to balance this against the money you save.

Mike Willshare, SC Properties

 

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Avoid Massive Legal Fees From Innocent Landlord Malpractice

[dropcap style=”font-size: 60px; color: #2bbe22;”] I [/dropcap]f you are buying property at auction as a long term investment you’ll be planning to get tenants in as soon as possible so you can start collecting rent. The laws about renting property out are constantly changing and there are many pitfalls, even for the most experienced landlords. Tenants are in a position to take legal action against landlords for a wide variety of things.

[box type=”warning”] Here’s one, most crucial piece of advice you must adhere to when letting your property from auction out to tenants…[/box]

Make sure you take the tenants’ deposits and get them into a recognised deposit scheme such as the Deposit Protection Service http://www.depositprotection.com.

It is the landlord’s responsibility to lodge the deposit within 30 days of receipt. If the landlord fails to do this the tenant can claim a penalty of three times the value of the deposit from the landlord. So if you take a deposit of £600 and fail to lodge it with an approved service the tenant can claim £1800 from you. Plus, they can get their deposit back, leaving you exposed to the risk of damage, without any financial protection in place.

Mike Willshare, SC Properties

 

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TOP TIP for Freshening Up Your Property

[quote type=”center”] Nobody Likes a Property That Smells! [/quote][dropcap style=”font-size: 60px; color: #2bbe22;”] I [/dropcap]f trying to sell or let a property, there is nothing more off putting to a potential tenant or buyer than house smells. Even the overpowering smell of fresh paint can put people off. A great way to freshen up your pad is to wipe the radiators with fabric conditioner, then turn on the central heating. This creates a fresh smell throughout the property.

Why does this work?

You should Remember that the manufacturers of fabric conditioner and similar products, spend millions in research to find the smells that people like. So we can take advantage of their “Investment Dollars” by getting them to work for us.

DIY Dave

 

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