Tag Archives: Property investment strategies

Barry’s story – it could have been you! Financial Advice, Landlord News, Latest Articles, Property News

Barry’s story was written by the Mark Alexander back in December 2010. It has since been updated and re-published several times. The dates, times and people are fictional but the story is based on real life events.

It’s a modern update of the classic “A Widow’s story”, this time written as a cautionary tale for landlords and their families.

Barry is 53 years old and married to Sharon. They have three teenage children; twin girls aged 15 and a 13 year old son. Barry worked as a self employed salesman in the plant hire business. Sharon had a part time secretarial job in a local school.

Barry and Sharon purchased their first investment property in 1996.

As property values have risen they have continuously remortgaged and used a proportion of the equity released as deposits to purchase additional rental properties. They also saved a proportion of the equity released for a rainy day. To accelerate the growth of their portfolio Barry and Sharon raised extra cash for deposits by remortgaging their home. The profits from Barry’s plant hire business covered the family’s commitments comfortably.

They had accumulated a portfolio of 23 properties with a combined valuation of £1,650,000, against which they had mortgages of £1,400,000.  The portfolio produces rental income of £87,000 per annum. Their rainy day fund amounted to just over £64,000. By having all of the above in place you might be forgiven for thinking that they had set themselves up with a very safe future.

On Sunday 21st December Barry had a bad day. He was on the way home that evening having just been out to fix a tenants leaking shower tray when the traffic on the M6 came to a grinding halt. Barry managed to stop his car, avoiding the lorry in front of him, but the car behind him ploughed into the back of him, wedging his car under the back of the lorry.

The emergency services managed to free Barry from the wreck and his only damage was shock, whiplash and major bruising to his legs. However, two days later Barry collapsed whilst out shopping for last minute Christmas presents. He was rushed to hospital where it was discovered that a blood clot in Barry’s leg had passed to his brain. Barry had suffered a major stroke.

He lost his speech and most of the use of one side of his body. The family were in tatters. Sharon had to give up work to care for him.

Up until having a stroke Barry had managed the property portfolio and taken care of most of the maintenance himself. Could Sharon care for her husband, her family and the management and maintenance of the property portfolio too?

They considered putting the properties on the market but soon realised that after deducting selling costs and CGT there wouldn’t be much money left over. They would also lose their income and they would be leaving their tenants in a difficult predicament too. Sharon has had to employ a lettings agent to manage the portfolio. Since then it has cost the family an average circa £3,000 a month to pay for ongoing maintenance and management.

Fortunately there has been some good news, at least financially. First, low interest rates have meant that Barry and Sharon’s mortgages have got much cheaper than when they started their property rental business. Many of their mortgages have reverted to tracker products due to their fixed rates coming to an end. They are focussing on Barry’s recovery. What will happen when interest rates go back up again though? How will the restrictions on finance cost relief for individual landlords affect them?

The real saviour for the family has been insurance. Fortunately, Barry and Sharon were astute enough to insure against these eventualities. They took out life assurance policies that pay out a regular monthly income right up to Barry’s 65th birthday. These policies were written on the basis that they also pay out in the event of a critical illness. The family are therefore confident that these provisions will see them through these troubled times and out the other side. They will then revert to plan A, which was to live off surplus rental income over and above the mortgage payments on their portfolio or to sell the properties and live off their gains.

What insurance provisions have you made for your family?

How are you investing the windfall of increased cashflow that record low interest rates have produced for your family?

Have you made similar provisions to Barry and Sharon?  If you haven’t it may not be too late, we want to help.  If you have already taken advice and put insurances into place we would like to introduce you to one of our recommended advisers to review your policies and ensure they are competitive. Most important of all, to ensure that the right person gets the right money at the right time.

Perfect tenant of 6 years turns heroin addicted prostitute – EVICTED! Buy to Let News, Cautionary Tales, Landlord News, Landlords Stories, Latest Articles, Lettings & Management, Property Investment News, Property Investment Strategies, Property News

I first let to these tenants in 2003. They already had a daughter and later gave birth to a second. She was an accountant, I forget now what he did. They were model tenants but in 2008 I received a call to tell me that he’d left her for another woman. These things happen and as she had been such a wonderful tenant I had no issues whatsoever in granting a new tenancy in her name, no guarantor! Seriously, would you ask for a guarantor under these circumstances?

A few months went by without problems but then a rent payment was missed. I followed my procedures and wasn’t too concerned at first. After three weeks I called her at work and I was told she was off sick. I eventually tracked her down at home and she explained she’d been off for a few months and was really sorry about the rent. Apparently the stress of the separation was getting to her. Under the circumstances I agreed that she could miss another months rent payment (due at the end of the following week) and then catch up over the next 12 months when she get’s back to work. She didn’t go back though, not for long anyway, she’d hit the bottle and got fired for being drunk at work. I tried to help her but she ignored my calls and left me with no choice other than to serve a section 21 notice giving her two months to vacate. She was already four months in arrears so I could have served a section 8 giving her two weeks notice but I guess I’m just a softie. She’d been a good tenant for years so two months notice wasn’t too bad and I thought she’d get better and being an accountant she wouldn’t want debts hanging over her. I was wrong 🙁

No rent was paid and the notice period had expired but she was still there. I’d never been in this position before. What would I do? At this point I also found out that the children had been taken into care. This was getting nasty.

It turns out that she had also got into drugs, heroin to be exact, and was funding her habit through prostitution.

To cut a long story short we had to go all the way through the court process. It was my first time. It was only on the third attempt that the baliffs actually managed to get her out of the property. There were a ton of excuses for the first two times which I will not go into.

She knew she was going to be evicted and had completely trashed the property. My suspicion is that she got all the local druggies to collect all the bin bags off the estate and tip the rubbish in the house. The stench was over-whelming, three of the clean up team literally threw up, one refused to go back into the house. 23 skips were filled in all and I was down 18 months on rent. OK, I might have got away with a few less if I’d have been a bit tougher but seriously, would you have done anything different than I did as these events unfolded?

I learned two lessons from this:-

  1. You can never be 100% sure about any tenant
  2. You need a rainy day fund as you never know when a scenario like this could befall you. I’d been a landlord for 17 years and owned a massive portfolio before this happened to me but it could just as easily have been my first tenant in my first property.
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My BuyToLet Portfolio “Vintage 2003” – part 8 of my latest series Landlord News, Landlords Stories, Latest Articles, Personal Development & Motivation, Property Investment Strategies, Property News

My vintage year was 2003. I was followed for 24 hours by a camera crew to make a TV program about young entrepreneurs. By then I had 100 people working for me selling buy to let mortgages and turnover from mortgage sales was £7 million a year. In 2003 I also purchased my first built to order super-car, a Ferrari 360 Spider. I visited the worlds best hotel and had a suite with a butler at the Burj al-Arab in Dubai. In 2003 my property portfolio made me an extra £1 million in 2003 without lifting a finger. It was a bitter sweet year though as I also lost one of my dearest friends in a car crash at the end of 2002. My friend David was one of the first people to start working with us, he lived with my wife and I for three days every other week and the same with my business partner on the alternate weeks for several years. That all started whilst he was going through a messy divorce. He continued commuting between Norwich and Halifax for work even after getting re-married until the saddest day of my life. I received a call telling me that David’s his car had left the road and flipped several times killing him instantly. He’d left our office only a few hours before and was on the way home to see his new wife and new born baby. It was that which changed my outlook on life forever and was also the reason I started to enjoy my wealth. We never know how long we’ve got left. As they say, there are no rehearsals in life. Continue reading My BuyToLet Portfolio “Vintage 2003” – part 8 of my latest series

Lawnmowers – do landlords have to provide them? Cautionary Tales, Landlord News, Landlords Stories, Latest Articles, Lettings & Management, Property Investment News, Property Investment Strategies, Property Maintenance, Property News, Property Sales & Sourcing, Property Sourcing

“I need to use grass cutting machine” said my Polish tenant when he called me one Saturday afternoon. You mean a lawnmower I said, don’t you have one?

“My friend say that you must provide” he replied.

Was he right? I’d let the house unfurnished, surely he should buy his own lawnmower? None of my other tenants with gardens had ever asked me to buy them a lawnmower. What a cheek I thought. I told him I’d look into it and to be honest I forgot. Continue reading Lawnmowers – do landlords have to provide them?

My first intentional property investment part 5 Landlord News, Landlords Stories, Latest Articles, Lettings & Management, Property Investment Strategies, Property News

By 1999 I had realised that I needed to put money aside for maintenance. Tenants were moving in and out all the time and I was bleeding money on carpet cleaning, magnolia paint and replacement carpets at an unbelievable rate. I’d started investing into bigger houses and renting them to people with children and groups of professionals so the wear and tear was much higher. Remember, I’d also been furnishing my properties with cream carpets. When they got shabby it was difficult to find new tenants without replacing the carpets. Continue reading My first intentional property investment part 5

Property Management Checklist Cautionary Tales, Landlord News, landlord's log, Landlords Stories, Latest Articles, Lettings & Management, Property Investment Strategies, Property News

My first intentional property investment part 4 – “My first Property Management Checklist

In the last instalment of the story of my first intentional property investment I promised to share with you the first property management check list I put together, it wasn’t perfect but it was a lot better than nothing. If you want to catch up on the other stories in this series please see my Landlords Log.

OK, here goes with my first property management checklist:- Continue reading Property Management Checklist

My first intentional property investment part 3 Landlord News, Landlords Stories, Latest Articles, Property Investment Strategies, Property News

Just two years after buying my first intentional property investment I owned 9 more. Buying that first one was like finding a magic lantern for my buy to let mortgage business. The Genie that popped out to grant me my wish gave me the confidence I needed to share with other prospective landlords how I got into the business and how I had overcome my nagging doubts. I was still relatively wet behind the ears but I knew more than most, especially the newbies who were starting to get interested in this new “buy to let” phenomenon. You see, when I purchased my little flat nobody had heard of the phrase “buy to let” as it hadn’t been invented. When ARLA created that phrase in late 1996 the media really grasped onto it and buy to let was in pretty much every newspaper every day. Continue reading My first intentional property investment part 3

Do property investments have a golden lining? Landlord News, Latest Articles, Property Investment News, Property Investment Strategies, Property News

Property investors often have a key question – is my money better off in property or in some other form of investment?

Many companies try and answer the question – mainly because they want to relieve property investors of their hard-earned cash in return for selling something. Continue reading Do property investments have a golden lining?

Part two of the story of my first intentional property investment Landlord News, Latest Articles, Property News

Having agreed to buy my first intentional property investment I soon realised that it’s a bit like a visit to the loo, paperwork is important!

I’d purchased my first home a few years before but to be honest I’d forgotten about all the paperwork I’d done at that time. All of a sudden it all came flooding back to me. I wonder if women go through something similar when they give birth to their second child? Never say never again!!! Continue reading Part two of the story of my first intentional property investment

My first intentional property investment – part 1 How I got started, Landlord News, Landlords Stories, Latest Articles, Property News

The story began in 1989 when I purchased a property which I soon realised I couldn’t afford to live in. I suppose that was my first property investment and many landlords get started that way. I rented that property out when interest rates shot up and property values crashed leaving me in negative equity. I muddled through and I still have that property now. With that baptism of fire into property investment I’d probably have been forgiven for never wanting to buy another one but that’s not how life worked out. Mark Alexander

If only I had waited a few years I thought, I could have purchased the same property for 40% less than I paid for it. Then it dawned on me, properties would go back up in value at some point, that was one of the reasons I didn’t want to sell. I wished I could have purchased some more property at that time but I had no money so there was only one choice.

Step one – saving up the deposit

I had to work smart and save hard so that I could buy another property before they started going up in value again. I remember watching my bank balance grow, my target was to save £10,000. It seemed like a fortune at the time, when I set the goal I could barely make ends meet, never mind save any money. Nevertheless, I took an hour out every Saturday morning to document my goals and my progress. In April 1996 I had the magic £10,000. Having saved all that money I can tell you it still took a lot of courage to take it out of the safe hands of the building society and invest it into a property, despite the fact that’s exactly what I’d been planning for several years. Remember, properties didn’t really start to recover from the late 80’s / early 90’s crash until the middle of 1996. I only had a gut feeling at the time that they would go back up in value, I just didn’t know when and to be honest I didn’t really know why either. I just thought it was likely that history would repeat itself.

Step two – overcoming my fears

My biggest worry was that, in the short term, interest rates could go back up again and property values could go down even further. There was no way that I could afford to pay two big mortgages if everything went wrong. It wasn’t just interest rates that were worrying me either, what if I couldn’t rent the property, what if my tenants didn’t pay, what if I got an unexpected maintenance bill? I realised that I just couldn’t take the risk of investing 100% of my savings, I needed to keep some money aside for the unexpected, but how much?

Step three – what to buy and how to stay safe

The cheapest properties at the time were around £15,000 in my area. They were in grotty locations though and the letting agents I spoke to said they would be hard to let and even if I did I wouldn’t be dealing with a particularly friendly demographic of people. I realised that I couldn’t really afford a house, not a modern one anyway, and not being much of a handyman the thought on ongoing maintenance of an old terraced property was very off-putting. Therefore, flat’s were my target. Would I go for an upstairs flat or a downstairs flat though? There were advantages to both. Old people would be more likely to rent a downstairs flat, so too would people with babies. Flat’s with lifts were not common place back in 1996 and any that had them were way outside my budget. However, when I started looking at ground floor flats and talking to other landlords I realised that damp was often an issue, so was security. The reason for this was that people don’t leave windows open in ground floor flats. Therefore, I decided to go for a first floor flat.

Step four – location and price

Having decided to go for a first floor flat I realised that I was probably targeting a young working couple as my tenants. I’d also worked out that my budget was around £20,000 based on the fact that I needed a 25% deposit (£5,000) and could borrow the other 75% (£15,000). That left me with £5,000 of which I budgeted £1,500 to decorate and to pay all the fees associated with buying. I knew that I needed to buy on a decent bus route into the city and the industrial estates and having visited every estate agent in town (there was no Rightmove to check in those days) I narrowed it down to three properties. All of them were above my budget but only by a few thousand. I put in an offer on all three for £19,000 and they were all refused. I was gutted and resigned myself to search again in a few months time when hopefully I’d saved a bit more. I could have gone ahead and left myself with a smaller liquidity fund but I didn’t dare. Then, after a few days one of the estate agents called me back. Their vendors had had a re-think, they would accept an offer of £19,500. I was so tempted but I stuck to my guns and I’m glad I did. I was a property investor, no chain, I could move as quickly or as slowly as they wanted. I got lucky, they accepted, I was in business! I was well on my way to owning my first intentional property investment.

Please leave me a comment below if you’ve enjoyed reading this.


YOU ARE HERE >>> Part one – My first intentional buy to let property investment

Part two – Tips on becoming a buy to let property investor

Part three – Lessons learned whilst building my buy to let portfolio

Part four – My first property management checklist

Part five – Buy to Let Maintenance Budgets

Part six – Do landlords have to provide lawnmowers?

Part seven – Landlord, Tenants, Dogs, Pets

Part eight – Vintage 2003

BONUS ARTICLE >>> My relationship with Leathes Prior Solicitors and Property118

Part nine – Perfect tenant of 6 years turns heroin addicted prostitute – EVICTED! 

Part ten – Online Letting Agents Review

Top 5 signposts to a holiday let with year round occupancy potential Guest Columns, Lettings & Management, Property Investment Strategies

Down here in sunny East Sussex, certain aspects of property investment are thriving, despite the economic downturn.

Holiday lets are enjoying increased occupancy, spreading far beyond the “peak” season, and out into the shoulder months, producing some significant cash flow for investors. Continue reading Top 5 signposts to a holiday let with year round occupancy potential

Are you a property trader or investor? Buy to Let News, Latest Articles, Property Investment Strategies

The state of the housing markets has led to many property people changing strategy to avoid losing money on sales.

Property investors come in two types – buy to let investors and buy to sell traders. Both have a different set of rules to deal with the tax on selling a property.

Developer is a term that can fall in to either category as both refurbish homes. Continue reading Are you a property trader or investor?

MPs urge ministers to open pensions to buy to let Buy to Let News, Latest Articles, Property Investment News, Property Investment Strategies

Calls to boost buy to let by upgrading pensions to include residential property are gathering momentum in Parliament.

An influential select committee of MPs is urging the government to streamline pension and tax laws for landlords to stimulate investment in private rented housing. Continue reading MPs urge ministers to open pensions to buy to let

Property business pre-nups can stop family feuds Buy to Let News, Financial Advice, Latest Articles, Property Investment Strategies

Money and blood often don’t mix – which is why so many families go to war over their ‘fair share’ of cash.

With so many wealthy business people and celebrities drawing up marriage pre-nups, perhaps the time has come for property business partners to consider the same deal. Continue reading Property business pre-nups can stop family feuds

Get into High Gear with Gearing Guest Columns, Property Investment Strategies

Using Finance to Increase your Returns

After recently attending local property networking events it still amazes me that investors think it’s a good idea to buy properties for cash. Firstly, the financial returns are less when a property is purchased for cash. Secondly, it means a large amount of cash is tied up for six months as no remortgaging can take place until a period of six months has elapsed. This means if a bargain property opportunity comes along within that six month period you will miss out, unless you have more cash to hand. So start as you mean to go on i.e. gear the property on purchase with a mortgage, ideally 75% to 80% loan to value mortgage. Continue reading Get into High Gear with Gearing

Introducing The LHA Expert for Landlords – @TheLHAexpert LHA Expert

-By Guest Columnist John Paul- Part 1 of an 8 part series

Welcome to the first in a series of eight articles giving you top tips for renting your property to tenants in receipt of Local Housing Allowance (LHA).

I have personally built a successful portfolio by letting to LHA Tenants and the profits and cash flow exceed those I could have achieved with working tenants. In some areas rents are as much as 30% higher than market rents in the private rented sector. I think you’ll agree that’s a premium that makes some additional administration worth the effort. Continue reading Introducing The LHA Expert for Landlords – @TheLHAexpert

The Most Powerful Property an Investor Can Own Is… Guest Columns

… an unencumbered one.

Should finances allow, I commonly suggest that investors obtain or keep an unencumbered property (no loan of mortgage secured on it) as quickly as possible as it’s an incredibly powerful tool to have at your disposal and here’s why.

Firstly it’s always there to fall back on; no matter how low lenders reduce LTVs you’ll nearly always be able to raise cash on it in an emergency. You never know when you may need some quick cash and if your portfolio is geared up and lenders move the goal posts you may find yourself unable to lay your hands on some urgently needed cash. This may be for the deal of a lifetime, it may be to help a friend or relative or it may be for an unexpected bill! Continue reading The Most Powerful Property an Investor Can Own Is…

Putting it all together – The what, the why part 2 Guest Columns

Read part one of the what the why

Armed with your investment budget you are ready to go in search of property bargains. You must look for areas of value where price corrections have been overdone, areas where prices have been dragged down by a greater number of bank repossession properties. Today such areas mainly occur in greater numbers in the North.

Property value is best illustrated by looking at The Nationwide first time buyer gross house price to earnings ratios. Continue reading Putting it all together – The what, the why part 2

HMRC Loses Key Holiday Let Tax Case Financial Advice, Latest Articles, Lettings & Management, Property Investment News, Property Investment Strategies, Property Market News

The tax man has lost a key case that allows holiday let owners claim business property relief against inheritance tax.

HM Revenue & Customs has argued for many years that holiday lets are an investment, not a business, and as such are not allowed to claim the relief unless the owner was ‘substantially’ involved with holidaymakers.

This was generally believed to exclude furnished holiday lets as they were grouped with buy to let and other rental property income by the tax man. Continue reading HMRC Loses Key Holiday Let Tax Case

Top 6 strategies for improving your cash-flow Guest Columns, Property Investment Strategies

As all Landlords should appreciate, property investment is a business.

It’s not something you should ever attempt to do “as a hobby”, “reluctantly”, “on the side”, “accidentally” …. .  There’s too much at stake for that, up to and including the wellbeing of your tenants, who you are responsible for in the eyes of the law.

Like any business, cash-flow is king. Without it, you don’t have a business! Continue reading Top 6 strategies for improving your cash-flow

Stand Out in Rental Market Guest Columns

If you have purchased a property “off plan”, and intend to let it out, the chances are that so have many others.

Or maybe you have had your property for a number of years and have often found yourself in competition to rent your unit out with others in the same development.

The obvious way to make your property stand out is via the photography. A picture is worth a thousand words and all that. A letting agent is usually good at capturing the space, and a wide angled zoom lens helps. Do submit your own photographs though as you might have a perspective, a view, something interesting that will help rent your property out over others. Continue reading Stand Out in Rental Market

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