Archive | June, 2011

How to not go crazy waiting for the property deal of the decade

23 Jun

Today I thought I would share my tips for not going stir crazy while you are trying to find a great property deal!

I get so many calls and emails from people who are desperate to get their portfolios producing enough income so that they can quit their jobs, or find the perfect development which will lead them to financial freedom – but the sad truth, is that property is not an overnight route to riches. It’s paved with hard work, perseverance and a bit of luck!

The key thing which you have to remember is that while you are desperate to do a deal – property is illiquid.  You only make money when you sell – but that takes time. If you buy a dud property it could end up losing you money rather than making it.

Being desperate to do a deal means you are more likely to make mistakes. In your bid to become a property millionaire, you could end up buying the wrong property at the wrong price. And then you’re screwed. Then you’re desperate!  Both time and money have opportunity costs attached to them – once you’ve invested your cash and your time, you’re going to have to sit and wait till you can turn your profit.  Your opportunity cost is that your money is invested in property A, however property B may come along which is a better deal – but you’ve used up all your funds buying property A, so property B can’t be done. That’s your opportunity cost.

Time also has an opportunity cost – while you’re focusing on property A, you may not even notice property C which could be a mammoth bargain, but you’re so busy spending time on property A, you don’t even recognise property C. Time, like money – needs to be spent wisely to make sure you get the most out of your property investments.

  • Get used to waiting. In the property game patience really is a virtue. Many so called “successful” property people have gone bust because they did not wait.  Waiting is boring – but it’s a fact of successful property investment. Think of it like this – buy a property, any property and just wait.  Wait long enough and it’ll be worth double what you paid for it. Now doesn’t that make waiting sound more attractive!
  • Remember the business objective of buying property. People invest in property to make money.  However, in the thrill of the chase and the process of trying to buy a property you can lose sight of the objective. Property as an investment is a means to an end. It is not the end itself.  The objective is to profit from property. It’s not about buying a gazillion houses. Who cares if you own 40 gazillion houses if you’re not making a profit. Be clear on your goals.
  • Learn a new skill. As you idly twiddle your thumbs while fretfully checking on Rightmove and the auction sites that a new amazing property has not cropped up you will have plenty of time to learn a new skill.  Being focused on finding a great property deal is great – when it happens – but while you’re waiting why not learn some new skills? How about a short course on plastering or decorating. Great skills to have and you may even meet some contacts!
  • Make some new friends. There’s nothing worse than only having friends in property. Somebody has always got a good deal and makes you feel as though you are missing out. If you had a normal office job would you really spend all your time with your colleagues? I didn’t think so! So get out, reconnect with friends who have different jobs and talk about different stuff.  There is a whole world outside of property (honestly!!).
  • Get a part time job. Okay so this sounds weird, but really at least if you have a part time job with some other income coming in you won’t feel so bad for not finding the world’s best property deal this week. It also gives you something else to do apart from stalking estate agents and eyeballing Rightmove 24/7.
  • Go on holiday. Counter intuitive I know – but really if there’s nothing doing why continue to push water uphill?  Everybody is allowed to take a break now and then and if there’s not much going on in the property market right now then why not?  If you still want to be kept in the loop while you’re away you can set up alerts on Rightmove for your property search.

Property investment is a business like any other – it takes time and money to grow.   Think of your property investment career like a career in a “normal” office job – it takes time and experience to get to certain levels. You have to have X amount of experience before you can jump to the next level. It’s just the same in property investment – you have to “earn your stripes” before you can start reaping the riches.  In the meantime, settle down for the ride 🙂

Power To The People – How A Couple Repossess A Bank!

10 Jun

Today I read a great story in Yahoo Finance which made me smile – and so I thought I would share.

The story goes that in 2009 Warren Nyerges — a retired policeman — and his wife Maureen Collier bought a house for £100,000 on the Golden Gates Estates development in Florida. They paid for the property in cash and did not take out a mortgage.  There was no debt on the property.

However, in February 2010 the Bank of America initiated repossession proceedings against them.  But, the couple never had a mortgage in the first place and so they won and proceedings were dropped.

However, the couple were still left with a legal bill of  £1,500 and so they requested the bank compensate them.  They asked repeatedly.  But the bank still didn’t respond and so the couple went to the courts to get their compensation. The courts agreed, and told the bank to pay them their due.

After yet 5 more months and still no money, despite phone calls and letters, the couple took the next logical step and got a foreclosure order against the bank.

And so the couple’s lawyer, two policemen, along with a moving van, then reported to the bank to collect desks, chairs computers and anything else of value — even the cash from the tellers’ drawers — to compensate the wronged couple.

And if you want to see the tables turned — you can view TV news reports of the event httpv://www.youtube.com/watch?v=5N5HorB57YE

It is reported that under this pressure from the law and the media, it only took about an hour for the bank manager to produce a cheque for £3,515.11 to cover the bills the couple had built up.

The bank’s written statement reads:  “We apologise to Mr Nyerges that there was a delay in receiving the funds…The original request went to an outside attorney who is no longer in business”

How original to pass the buck to someone who is no longer in business 🙂

Would You Buy A Property At Auction Without Reading The Legals?

8 Jun

Today I am annoyed!

Monday morning the property auctioneer calls me and gives me one hours notice to see a flat being sold in Middlesex which is going to auction on Wednesday (today). The property was a 120 mile round trip – but it looked like it would be a good buy. So I drop everything, leg it to the car and raz down the motorway.

Having narrowly avoided the speed cameras on the way – I am there at the appointment. Then it turns out the locks have been mysteriously changed over the weekend and they have now called out a locksmith. And so I have to sit and wait for almost 2 hours while they break into the property and change the locks (honestly, I swear I could have done a quicker job with a chocolate fork!)

Anyway so I get into the property and I like it – it needs work, but it’s in a popular area for both owner occupiers and renters.  However, my concern is that it looks like it’s been converted without building regulations or planning permission – but these are all obstacles that can be overcome (with time and money!) but they need to be factored in.

My major concern was with the extension at the rear which had been built in single brick and with a flat roof. While I felt planning permission should be able to be got retrospectively I wanted to check the legals to see what the lease said so that I could compare what it should have been to what it was. I had an inkling it should have been a studio rather than a 1 bedroom flat. However, the legals weren’t available.

Despite my constant calls to the auctioneer, they still didn’t have them – the seller’s solicitor (mortgagees) had not provided them – despite the auctioneer’s constant chasing. Without the legals it meant I had no idea how long the lease was, what the actual layout of the flat should have been, no office entries from the council which would have shown planning history and building regulation approval.  I knew nothing of what I would actually be buying.

To make matters worse, I had also found out the top 2 flats (one of which really looked like it didn’t conform to any regulations at all from the size of the skinny smurf doorway) had also been repossessed, but by a different bank. This could end up a potential minefield in terms of leasehold and freehold issues and who owned what.  There was also then the small matter of 3 flats, but only 1 gas supply and 2 electrical supplies. Hmm – again – issues, but these can be sorted at a cost (as long as they’re factored in to your purchase price).

So close of business Tuesday night – the auctioneer tells me the property will be withdrawn from the auction as they do not have the legals.  They tell me it will be entered into the next property auction.

Wednesday 9.30am (just 1.5 hours before auction) they email to say they have some of the legals and the property will still go to auction. They admit they don’t have all the legals and they don’t know what they will have prior to the sale.

I am flummoxed – I want to be able to bid for the flat, but with only some of the legals available I just don’t know what is going to be missing.  I already know there will be legal issues surrounding the leaseholds, the planning and building regs – not to mention the utilities issue.  And so I decide to do the (un)brave thing and leave it.  It’s too risky – even if I buy it cash I am opening myself out to a potential legal minefield.

So I have just had an email from the auctioneer. The flat sold for £30k less than my budget. I am royally miffed. I don’t know if it was a bargain, as I never saw the legals. But I have to say at £30k less that what I was willing to pay it sounds too good to be true – and you know how that saying ends!