Welcome to the landlords blog of Mark Alexander, founder of Property118.com. Here I share my experiences as a landlord since 1989 and updates on my goal to create “The Best Property Website Ever”. I also review products and services used by my fellow landlords.
“Live Long and Prosper”
What is the minimum amount of Landlords Life Insurance we really ought to purchase?
I suspect the reason most property investors choose not to purchase Landlords Life Insurance is cost. For example, if you are 40+ years of age and your buy to let mortgages balances are £1 million plus the premiums can appear to be very scary if you ask for a quote for enough life insurance to repay all of your mortgages in the event of death.
For borrowers without family and/or business partners whose finances could be affected adversely by death during a mortgage term, the risk of having no Landlords Life Insurance is perhaps an acceptable one for them. However, for people who have borrowed jointly or would like to leave their properties to loved ones the risks are far higher.
In the event of the death of a borrower, even if it’s a joint mortgage, it is usually well within the rights of a mortgage lender to call in their loans. This is more likely to happen post credit crunch as several lenders have closed their doors to buy to let lending and want to recover as much money as possible. Lenders which are still actively in the market can now lend money at far higher profit margins so there is every incentive for them to call in their loans in the event of death too.
I am not a financial adviser and the following should not be construed as financial advice. It’s just my opinion as a landlord on what the minimum amount of Landlords Life Insurance should be purchased.
If I were to die tomorrow my wife would have two or three choices:-
1) Sell the property portfolio and pay off the loans
3) Do nothing and force the mortgage lender to call in the loans, eventually reposes the properties and sell them. This would cost a lot more than options 1) and 2) above. The reason is that substantial fees and penalties would be incurred and the mortgage lenders primary incentive would be to recover as much money as possible. Now I know that mortgage lenders have a duty to sell the properties for as much as possible, however, is that really what you think happens?
In my case, I want my wife to continue to receive rental income as I genuinely believe that property is the best form of investment. Therefore options 1) and 3) are out of the window for me.
On that basis, refinancing is her only viable option. However, to get a decent deal and retain the same level of cashflow she will need to be borrowing around 50% LTV. This is because it will cost her a lot of money to refinance and the interest rates she will be paying are far higher these days than when I arranged my tracker mortgages at bank base rate plus 1% to 2%.
I have concluded that the minimum amount of Landlords Life Insurance I should buy is the difference between my outstanding loans and the amount those loan balances would need to be to get 50% lending. As a simple example, if I were to own one property worth £100,000 with an £85,000 mortgage, I reckon I would need to purchase £35,000 of life insurance to enable my wife to be able to pay £35,000 off the mortgage and take a new mortgage for £50,000 (which is likely to have a higher interest rate) in order to maintain the status quo in cashflow terms. Now that’s very much a rough estimate as everybody’s circumstances are different but I hope you will find it a useful rule of thumb. The other reason I think the minimum amount of Landlords Life Insurance should be enough to reduce loans to 50% LTV is because at that level of lending, most mortgage lenders would be falling over themselves to offer decent interest rates, pretty much regardless of any market conditions I can realistically imagine.
To help you to work out the minimum amount of landlords life insurance you would need based on the strategy I have outlined above I have created a very simple calculator, see below …….
40% of landlords visiting Property118 use Firefox as their favourite browser according to our analytics.
I was quite surprised at this as I’m a massive fan of Google Chrome but only 9.9% of our visitors seem to agree.
In second place was Internet Explorer and to be honest I thought that would come up number one as it was the default for most Windows based computers for several years.
3.8% of our readers are now using iPads and a further 5.7% are using the Safari browser via other devices such as iPhone etc. read on
We appointed Justin Selig to advise thousands of landlords and residential mortgage borrowers across the UK on the day that news broke of the Bank of Ireland intentions to increase the differential on tracker rate mortgages to 4.49%. For some borrowers this means an increase in monthly payments of over 200% starting from today.
Over 16,000 people have read our forum page at the time of writing this article and press including the BBC have used the forum to make contact with affected borrowers.
Property118 used funds raised through The GOOD Landlords Campaign to underwrite the costs associated with Justin Selig obtaining legal opinion on the Bank of Ireland plans from a high profile banking barrister. Thanks to the number of borrowers who have signed up to obtain professional advice as a group from Justin Selig, our commitment to underwrite the costs of the legal advice has now been released. The GOOD Landlords Campaign funds can now be deployed elsewhere for the purpose of sharing best practice amongst landlords and letting agents. read on
Tenant Eviction is a process which several landlords under-estimate.
Some people will tell you that evicting tenants is simple, “oh just issue a section 21 notice or a section 8 notice” are words often spoken at landlords gatherings and on our internet forums.
Well, perhaps it is easy when you know how, and especially when you have the model tenant. However, I have been a landlord since 1989 and I know that tenants don’t always leave when you would like them to!
If you serve notice and your tenants don’t leave that’s when the problems really start.
Even after all these years the jargon still bamboozles me from time to time.
I still have to check which type of section 21 notice to serve depending on whether the tenancy is within the fixed term or has gone statutory periodic. I then need to check what the correct date of service is and make certain that I’ve served deposit protection certificates and prescribed information properly and that’s a minefield if ever there was one. Don’t even get me started on the varying grounds for service of section 8 notices! And all of that is before you can even apply for a possession order in Court!!!
Well it’s hardly surprising that so many tenancy evictions fail at Court. I could write war and peace here on all of the areas where things go wrong but I will leave that to the regulars on our property form.
The reality of the situation is that if you want to recover possession of your property quickly you are probably going to need some professional help.
Landlord Associations are very well meaning and there are thousands of companies advertising on the internet who will be pleased to help you complete the required forms for a small fee. The bottom line though is that it will still be YOU serving the papers and the well meaning souls advising you might not have thought to ask you every question to identify the areas which might catch you out.
There is only one company I know of which has successfully evicted over 20,000 tenants. They operate a fixed fee service and they handle the entire process. They even have in house solicitors to check every detail and process all of the Court papers for you. They have been in business since 1999 and over 210,000 calls have been received on their free landlords helpline.
Chances are, you will have great tenants and will never need to evict them. They will respect your property, pay the rent and respect their neighbours. However, very occasionally, things go wrong, no matter how diligent you have been in terms of referencing. Bad tenants often ignore or dispute whatever type of eviction notices you use. You might even be in that position now?
Some tenants need a little more persuasion to leave!
It’s not just bad tenants who need to be evicted in a timely manner either. You may want to sell your property or move back into it. The last thing you want is to lose a sale or be homeless yourself because your tenants refuse to move out when you want them to, and believe me, it does happen, and when it does some tenants will use every trick in the book to retain possession.
I learned all about tenant eviction the hard way, it took me 18 months of grief and no rent to get rid of my tenant from hell.
I wish I had known Landlord Action back then as their fixed fee service would have saved me thousands!
For an introduction and opportunity for a free confidential initial chat with one of their tenant eviction specialists please complete the short form below.
I just created the petition “Bank of Ireland – DO NOT change interest differentials on Tracker Mortgages” and wanted to ask if you could add your name too.
Paul McVeigh is a friend of mine, we share a lot in common including blogging, public speaking and of course being landlords. He’s just published a book called “The Stupid Footballer Is Dead” which provides an excellent insight into the mindset of the modern professional footballer, both on and off the field and post retirement.
Paul retired from professional football a few years ago after a 16 year career playing for clubs including Tottenham Hotspur, Luton Town, Burnley, Northern Ireland and, in my opinion most importantly, Norwich City which is where we were introduced via a mutual friend who is a sports lawyer.
If you are anything like me, the opportunity to understand how successful people think is extremely valuable. Obviously you will enjoy Paul’s book a lot more if you are into football but even if you are not, it’s worth reading. Remember, Paul is also a fellow landlord, as are several professional footballers these days.
Is the mindset of a successful landlord and that of a successful footballer that different? Well read his book and draw your own conclusions on that one
The Stupid Footballer Is Dead – cover page image below
I’m often asked whether I think it’s a good idea to let properties on a furnished or unfurnished basis. A friend of mine recently said that he was surprised I had not written an article about this and, in particular, about furniture packs.
Unless you buy properties to let as holiday homes, short term lets, student lets or own modern city centre apartments targeting overseas business visitors or short term contractors the thought of letting a property furnished, let alone buying furniture packs, may well be an alien concept to you. read on
If you had told me this time last year that I would soon be adding Buy to Let Estate Agent to my CV I would not have had a clue what you were talking about.
However, that’s exactly what we have become as a result of selling buy to let developments.
We have no plans to become a conventional estate agency where you can buy or sell your next home, however, estate agents is what we now are according to a law known as the Estate Agency Act 1979.
It’s all come about as a result of wanting to let you know about properties which could make ideal buy to let investments.
We didn’t want to charge fees to property investors but we often get the “heads up” on developments which make ideal buy to lets. Given that we have ‘filled our boots’ with deals personally (we’ve built our portfolio’s to a point we are comfortable) we decided to share the deals we would buy ourselves if were will still building our portfolio’s.
Clearly we can’t do this for nothing so we have started negotiating commissions with vendors (typically developers and insolvency practitioners) in return for referrals leading to sales.
To help ease the burden we have also teamed up with Kelvin Kingsley and we’ve created a new brand called “Your Property Concierge”.
To keep ourselves compliant we have registered the Trading Name “Your Property Concierge” with the ICO and also become a member of The Property Ombudsman redress scheme (membership number – D8072).
If you would like to be kept informed of properties we are marketing please complete the form below.
My friend Kelvin Kingsley has discovered some more repossession bargains, the difference being these are already let
They are modern two bed flats in Greater Manchester, built just a few years ago. Most of them are sold but there are a few remaining and they will soon be snapped up by investors at the current asking price of just under £70,000. They are let to hospital staff for £475 a month which equates to a gross yield of 8.1%.
There are several comparable sales listed on HM Land Registry and if you go back to the peak in 2007 you will see that these units were selling between the range of £108,000 to £145,000. To download a full copy of Kelvin’s “due diligence” please complete the form below.
We are now working exclusively with Kelvin who, as you will be aware if you are a regular reader of my articles, does not charge fees to investors as he is retained as an agent by vendors who are typically developers or insolvency practitioners. According to the Estate Agency Act 1979 this now makes us estate agents. Therefore, to keep ourselves compliant we have registered the Trading Name “Your Property Concierge” with the ICO and also become a member of The Property Ombudsman redress scheme (membership number – D8072)
I don’t think landlords should allow tenants to get away with not paying rent or making good any damages, do you?
Well the good news is that the “no win no fee” Debt Collection for Landlords service I wrote about last week is now up and running.
You can download the claim form and full details of the scheme simply by completing the short form at the bottom of this article. read on
Buy to let investors in Cambridge can see between 12 to 15% pre tax income on capital employed.
Cambridge – an expensive, highly sought after area and a market place often not understood by investors. There are six key housing drivers in the Cambridge market – a) 28,000 students b) 8,000 involved in work with Addenbrooks Hospital quarter c) over 5,000 above average pay working in the IT and Science Park area d) thousands living in Cambridge enjoying the theatre and arts lifestyle with an easy commute to London plus e) the normal employed market and f) the normal unemployed market.
In many parts of the city there is high demand for quality multi let rooms with en-suites showers and shared kitchens. Professional investors converting residential property, former office buildings or guest houses or pubs can expect to see pre tax income of 12% or more on capital employed.
An ebook explaining in detail why Cambridge is an excellent place to invest is being made available to Property118 readers free of charge by Belvoir Lettings who are are experts in this field and assist investors with selection, preparation and management.