It’s all falling apart and I could do with some advice please

by Readers Question

5 years ago

It’s all falling apart and I could do with some advice please

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It’s all falling apart and I could do with some advice please

Our first flat was bought at auction and cost 33k, spent 7k on a refurb and was valued at 55k, it rents out for £335 pcm. I re-mortgaged for 30k and bought another one bedroom flat for 23k also at auction. It has just become vacant after 2 years during which time it rented for £350 pcm.

My third investment property I bought for 25k, spent 17k on refurb and was valued at 90k. It currently rents for £450 pcm.

The tenant in the flat which cost 23k (my second purchase) has moved out and conveniently forgot to tell me. The council informed me the rent had been stopped so I realised she had gone. She had taken the cooker, my fireplace and there were two smashed windows, she was also fiddling the electric, VERY DANGEROUS.

All her belongings were still in the property but I have since had them all removed, the windows fixed and the locks changed. Nightmare!!

The block of 9 flats have deteriorated greatly in the past two years to my horror and I am going to try and sell at auction.

I am scared that if it does not sell it wont rent out either. Out of the 9 flats there are only two being rented, not good and the other flats are falling into disrepair. This is why I have decided to sell, all the other landlords in the block don’t want to know?

I am living through a nightmare at the moment, not eating, sleeping, worrying etc etc.

I applied for a re-mortgage of the cottage before this all started and the offer has just come through of £67,500.

I have suddenly become more fearful about taking on more debt because of what is happening at the moment.

I would like some advice as to which is the best way forward.

My confidence is at an all time low and some good advice would be greatly appreciated.

I hope all this makes sense.

I have just got back from the nightmare flat so my nerves are a bit shot and I thought a post on Property 118 might just ease the pain.

Regards

Mark LancasterIt's all falling apart and I could do with some advice please



Comments

Mark Alexander

5 years ago

Hi Mark

I would describe your scenario as a "set-back", all businesses have this. This might be your first but you are not alone.

Based on what you have said you have done very well up until now.

Selling the problem property at auction makes sense to me. Every property has a value at auction, you may need to take a "hit" and it might put a dent in your profits but put that into context of your achievements so far, suck it up, learn from it and move on.

I suspect the lessons you've learned from the absconding tenant are to always insure contacts for malicious damage and theft by tenants. Report the thefts and get a crime number, then contact your insurers to see whether you were covered. The second lesson you have learned is that when you are letting to tenants on benefits, always get a guarantee from a financially stable guarantor. There are always people out there. If needs be, advertise your properties for less to increase interest and then cherry pick the best tenant. If you get a few good ones competing for the property explain that to them and tell them you have realised that you have under-priced the property and that you will accept the best offer.

In any business there are going to be things you make good money on and other that you lose money on. Learn from both sets of experiences to increase profits, reduce the risks, build the business and move forward.

I hope that helps and good luck 🙂
.

5 years ago

I have to say as a flat owning LL I now have an innate prejudice against FLATS.
If I could I would convert my portfolio into 2 bed terraced properties!!

FLATS are so much aggro unless they are high end like in the West End of London.
SC and GR on my flats are £1500 per year.....................................for not a lot.
You would struggle to expend £1500 per year on the upkeep of a 2 bed terrace property!!?
ROI and ROC is far better on normal housing; I heartily regret purchasing FLATS as investment properties.

Scott Scott

5 years ago

Hi Mark,

You don't give a timeline of your investments, but even if they are years apart your doing well for yourself. As Mark A says "you have done very well up until now". I have not yet bought at auction but from your story I am more tempted to pop my auction cherry.
Mark A is right, just cut your losses, reflect on the situation and learn from it. Onwards and upwards 🙂

You could try social media networking to find a buyer, this will save any auction fees and could get it off your hands quicker. I won't hurt to try.

Personally, I do not invest in leasehold properties or anything with a SC or GR. Paul has the right idea.

Ian Ringrose

5 years ago

Talk to the owners of the other flats, I expect combine value of them if all the empty flats were sold gather may be more then selling one at a time. A social landlord may even be willing to buy all of them and sort out the block.

Jason Holden

5 years ago

Like has been said, try to get the other landlords in the block of 9 together and see if it can be sold as a whole or get a 'fighting' fund together to renovate it.

Here is my take on your position, it's not bad at all, you have property costs of £105,000 including refurb. and the values are all higher than the costs by quite some way, apart from the vacant one as that is the only bit that has stalled, but that can be fixed either by full block renovation or sale at auction with a low reserve.

The thing to remember about property and if you are going to play in that arena it is a medium to long term not short term investment.

So without sounding harsh, pick yourself up and dust yourself down this is not a bad position you are in.

As for taking on more debt, well only you can decide on that.

Good luck.

Jason

Neil Patterson

5 years ago

If you borrow with the ability to pay it back easily the extra debt could just give you the time you need to take the stress out of the situation, but it would be wrong of anyone to give you advice in isolation of all the facts as Jason said.

Best of Luck


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