1. What is Buy-to-Let property?
In the UK there is a massive demand and a large number of investors who buy property to lease out. If the property is bought well in terms of position and area, then cash flow will happen. It is a fundamental right to own real estate in the UK, so it is part of the culture here.
2. What type of return are we getting?
This depends on many factors. The first is that London is a great market for capital growth but not for yields. We have a few developments that can be bought into that will not cost anything to run but with no cash flow. In other cities, like Liverpool, we are hitting 7%+ net returns on cash. The reason is due to low property cost and strong tenant demand.
3. Are there many people doing Buy-to-Let?
In the UK the investors are always buying. They have a massive buy-to-let culture. Property meetings are held all over the UK where like-minded investors discuss opportunities.
If an area is yielding a decent return, then the competition is steep. For example in Liverpool, we look at many properties but sometimes cannot buy even one as none are viable. The cost is too high and the yields do not stack.
4. What type of property do you look for?
In Liverpool, we look for property that is going to yield at 7% plus. We prefer mid terraced Victorian homes, studios and one bedroom apartments that we can renovate and add value. They are built to last and normally what people like living in being close to transport links like undergrounds and bus routes. This could be a standalone home that we can split into two apartments and sometimes is a property we can split into a number of one or two bedroom units.
We look at each property and decide what is going to be the best plan of action. Every property we look at requires a different approach.
In London, we work with good developers to bring as much value to the property. Regeneration areas are key as well as properties going up around a new station. Also in London, the Crossrail is currently under construction so we look around the new stations scattered across London.
5. What areas do you work in?
Our main focus is Greater London and Liverpool. London we do the bread and butter property. These properties start at around £290 000 for a one bedroom.
In Liverpool, we look at the normal everyday property that people want to live in. These start at around £50 000 for a large studio flat upwards to larger two bedrooms at £59 000.
6. Do you work with many banks?
We work with whoever will give you the finance. We have a few preferred lenders that we will introduce you to. We have established a relationship with them over the years but this also changes over time. Banks will only lend on purchases of over £75 000 (and a maximum 60% loan to value) to non-resident investors. Having a UK or EU passport but not living here still classifies you as non-resident.
7.How long do we hold onto the property for?
We suggest never selling. We look at our portfolio cash flow as our retirement fund.
The greatest way to build up a portfolio is slowly and carefully. If it does not show a minimum gross yield of 5%+ then we do not invest.
8.Why are the yields so high in Liverpool?
Low property prices mean higher yields. One issue is that the banks are not lending to first-time buyers without a large deposit of up to 40% in many cases.
This drives the rental market and makes it a perfect time for the buy-to-let investor.
9.How long will this last?
This is a difficult question. In the short to medium term perhaps more depending on the world economy. However, while we continue to find great yielding property we are continuing to buy.
10.Who looks after finding the tenant?
We have a team in place that will interview and make sure they get the best person for your property. They will do the checks and collect the rent as well. If you own property you will know that tenants differ and a bad tenant can slip through occasionally.
11. Do you buy old and renovate or new builds?
We have two approaches. In London, the days of renovating and finding value for buy-to-let are difficult so we focus on capital growth and new builds.
In Liverpool, we try and find old and run down properties so we can add value. When we do, we go in and do a complete refurb. Our team will refit kitchens, rewire, install new central heating etc.
12. Do you do new builds?
We do new builds in London. Once again we look for the up and coming areas and we only go with large companies. Currently, we deal with Berkeley Homes on some really fantastic value developments in London.
13. How do I know that the area is good for tenants?
We do extensive research in the areas and will not suggest the property if you are going to battle to get a tenant. We invest a lot of our time looking at areas and identifying them. This is part of the due diligence and the absolute key to the success of the buy-to-let property.
14. Are tenants scarce and how long does it take to find tenants?
It depends mainly on the development. In London, there is a huge demand for tenants. In our north London development, we place tenants within a couple of days to a few weeks. In Liverpool, within a month to six weeks but these tenants tend to stay for many years.
The agents do extensive background checks as well. Rather wait for a good tenant than take the first person that comes along.
15. Why are you not buying all the apartments you see?
It is simply not possible. Once again the banks have clamped down on lending so we can only lend according to their criteria. Also, we cannot buy everything we see, and that is how this business came about.
16. Are you Buy-To-Let t investors?
This is the core of what we do and how PropWealth came about. We are continually searching for property deals. We either buy them ourselves or try to package and sell them onto other like minded property investors.
17. Why one bedroom flats?
We prefer one bedroom and studios as the demand for tenants is strong plus the yield is good.
18. Do you always need to add value?
We like to add value by simply doing marginal refurbishments. Painting, cleaning gardens, taking down a dry wall to make it more open plan, etc. The best is to be able to add an additional room. This can be done in many cases but once again needs to be approved by local councils. We seldom find units that we can simply take over and move tenants into.