PAIN AND GAIN FOR LANDLORDS

An old hand takes landlords through the opportunities and pitfalls of buy-to-let investing
I’m sitting in my front room in front of my laptop surveying a glorious summers morning and watching others race off to join the growing traffic jams. At moments like this I do not regret for one moment the hard work I put in during the 1990’s to build up my buy to let property portfolio which has enabled me to leave that 9 to 5 world behind.

Mornings are always a good time for a landlord & property investor to hunt out a property bargain. With the event of the internet it is now easier than ever to do the initial work without even leaving the comfort of your own home.

However, despite the internet being a good tool I would never ever think of buying without several visits to the investment property and making sure that the figures checked out following a thorough investment appraisal.

Landlords dazzled by the lights
Too many newbie buy-to-let property investors have been dazzled by the marketing patter of the salesman and were tempted into becoming a landlord by buying their buy-to-let investment without even visiting the area. I have been warning landlords about these property investment schemes for some time
and I am now seeing the results come through on the floors of the property auction houses and for many it is investment carnage.

One particular example is the investment property I found on one of my favourite auction websites

Tales of woe & opportunity
This is the sad tale of 49 Trading House in Nottingham lot 143 or. This one bed ‘luxury’ apartment was originally sold in March 2003 for £149,500 no doubt by a sharp suited sales type. Since then it has obviously been repossessed and subsequently found its way to the auction rooms where in failed to sell in December 2006 having being available after the auction at £110,000. It is now going to auction with Erinaceous Auctions with a guide price of £75,000.

Clearly, one failed auction result will mean the mortgagees will be keen to get rid. The realities are that with the annual rent probably being a little over £5000 pa but with property management charges probably taking a £1000 of that, then it’s gross yield is probably still only a little over 5%, still hardly a bargain.

It all reinforces the point that landlords and property investors need to ignore the ‘hype’ and concentrate on the realities and the investment figures.

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Rate rises inject realism & through up buy-to-let opportunities
The one good thing about the recent interest rate rises is that it has injected some sanity into the residential property market and in particular the residential investment market.

After several years of buy-to-let mania where cheap money has skewed asset values and priced many serious investors out of the market, I perceive that the residential investment market is starting to return to some sort of sanity. Many professional landlords have been scratching their heads over the last few years at some of the prices being paid. These same property investors are now hunting the floors of the auction rooms for forced property sales or residential repossessions which have resulted from poor residential investment decisions by novice buy-to-let investors.

For more details on how to hunt out a residential investment bargain at auction have a look at this excellent article featured on Property Hawk.

Where do professional residential investors go for their buy-to-let insurance?

The reality is that from my experience as a professional investor you know that one property investor’s gain is another ones pain. My advice to Property Hawk landlords is that they should make sure that they are the ones making the gains and leave the pain to property investors less well informed and less prepared than they are.

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