There’s more to investment then a fantastic yield!

Recently I was scanning through properties for sale and I came across a little flat that I thought was too good to be true.

It had so many positives in terms of investment potential:

• Guide price of just £175,000 – tick!
• 2 bedrooms – always popular – tick!
• Long lease – tick!
• Existing tenancy in place for another year – earning money from day 1 – tick!
• Current rent £20,700 per annum – tick!

£175,000 with rent of £20,700 that’s a yield of nearly 12%! That’s the sort of yield that people dream about!

Now this flat is in N9 just off Montague Road and above a fast food restaurant, so not exactly ideal and I could understand the low guide price but….. £20,700 per annum rent. Really??

That rent works out to £1,725 per month for which you could get 4 bedroom house in Enfield Town. So what’s so special about this flat? The answer is of course nothing, in fact quite the opposite.

I suspect this was once a decent size one-bedroom flat that has been chopped about into a not very nice two bedroom flat, everything is just too small and the layout doesn’t really make sense.

The reception room would fit a sofa and chair, the bedrooms (one single and one double) would fit beds but not much else,  the shower room has been newly fitted as has the kitchen, but it was the kitchen that really did it for me. You have to walk through the kitchen to get to the shower room and, as the photos show, it’s very, very small the sort of size you would expect to see in a studio or bedsit. On one side there is a cooker and washing machine and on the other a sink and some units.

 

So how is the rent so high? Well it seems it is being let for use as temporary/ emergency housing and as we know this type of housing is always in high demand and short supply.

However anyone buying this flat now would do well to consider whether they could secure the same rent in future. I suspect that with it’s current layout emergency housing is the best (or only) option. Renting this flat out privately could have all sorts of issues including the kitchen, size of the bedrooms and lack of bath.

 

With all of this and the fact that the flat is above a fast food restaurant and therefore likely to be even more difficult to sell on later, I didn’t think there would be a huge amount of interest when this flat went to auction with McHugh’s on 4th October. Sure enough it didn’t sell and is currently available at £190,000.

Despite my initial excitement at the yield, this isn’t a property that I would be interested in. For me it’s just been squeezed too much and the layout needs a rethink, all of which costs money and reduces any investment potential. Maybe someone else will see it differently, I’ll keep watching.

 

 

 

 

 

Useful Guide For Enfield Landlords

Generally, when the Government publish anything I sigh, reach for the thesaurus and get ready to stick pins in my legs to stop me from drifting off.

However they’ve produced two ‘How To’ guides that are actually pretty good. One is for tenants – ‘How to Rent‘ and one for landlords ‘How to Let‘.

The How To Rent Guide

Now most people have heard of the How to Rent Guide or to give it it’s proper name ‘How to rent: the checklist for renting in England‘, which helps tenants understand their rights and what they can expect from their landlords and rental property.

It’s very top level but the only real criticism I have, is that it would be a more useful read when you start thinking about renting a property rather than just before moving in!

All landlords should be aware that since the Deregulation Act 2015, they’ve had to issue this guide and other specific documents to tenants at the start of their tenancy and at renewal, and that not doing so (or serving the wrong version) can be an expensive mistake!

How to Let Guide

However, last week I was having a conversation with a friend who’s been managing her own properties in Enfield for several years. She’d served notice on one of her tenants but the notice period was almost up and she hadn’t heard from him.

‘What do I do if he doesn’t leave?‘ she asked.

After about 20 minutes of carefully explaining the process from establishing whether the tenant has left or not, to bailiffs arriving at the door, I thought I’d better double check……..

‘Did you give him all the deregulation documents when he moved in?‘

‘All the what?‘ she replied.

Oh dear! Basically she’d given him some but not others (including the How To Rent Guide) and she had no proof that she’d given him any of them.

Now I know many of you will be thinking that she should have known what was required, but I suspect there are lots of landlords out there who are basically good people with nice properties who treat their tenants well and are just not up to date with all the regulations.

So the real point of this blog is to point those landlords towards another useful Government publication – The How To Let Guide.

This guide was published in June this year and again it’s pretty top level but it does contain the basics so is worth a quick read for all landlords, particularly new landlords and those just starting to think about renting out a property.

And if it gets updated regularly then it will be a big help for people like my friend who think they’re doing the right thing but don’t give as much time as they should do to being a self-managing landlord.

For further information and advice please contact the Belvoir Enfield office on 020 8364 5418

Avoiding Rental Scams – Tenants

This morning I switched to Twitter to find that 10 people I follow had retweeted the below article from Property Industry Eye:

Renters Warned of Scam Which Asks For Viewing Deposits by Fake Landlords

Hmm, snappy title but you know exactly what the article is about. In a nutshell it’s about fake landlords asking renters for deposits to secure viewings.

Yes money upfront just to view a property, not once you’ve seen the property and decided you want it but money just to have a look around! Wow!

Now there are all sorts of scams around and some of them are pretty clever so you can only feel sorry for the people who fall for them, but on this occasion I scratched my head and part of me agreed with ArthurHouse02 who left the first comment on the article:

I’m not being funny, but how thick do you have to be to fall for this scam?

A little harsh maybe but…………. paying money online to a stranger before you’ve even seen the property? Really?!

At the bottom of the PropertyIndustryEye article is a link to this video of Joe Lycett:

Scamming a Gumtree Scammer – It’s very, very funny! But it also makes a few good points and highlights that the fake landlord reported in the article is not the only one running this scam – the video is a year old, so obviously people are falling for it.

The moral of the story is be careful with your money!

Don’t give anybody anything until you’ve seen a property. Sites like Gumtree and SpareRoom are great for finding rooms and smaller properties but anyone can create an advert and say they’re a landlord or agent, so do a bit more homework. Here are a few examples of the precautions you can take:

– Check that the ‘landlord’ is the real owner of the property (Land Registry),

– Check that the agency really exists and that this person works for them (Google, call the office, get a landline not mobile)

– Ask for an invoice and a receipt,

– Don’t deal in cash,

And, if in doubt be ready to walk away!

The camera never lies…….. but when did you take that photo?

It makes sense to use the best photos possible to advertise your property but how far can you stretch things and is it worth it?

A chat with a contractor

Last week one of my favourite contractors dropped by the office to say ‘Hello’. We had a coffee and catch-up and then just as he was leaving he picked up one of my business cards which has a picture of me on it.

He looked from card to me and back again, and laughed hard as he announced that I should be ‘…..done by Trade Descriptions!’ <Ouch!> he continued to laugh, ‘I hardly recognise you’ <Double ouch!!>

Granted the picture is 4 years old but I haven’t changed that much…… have I?

The flat that won’t budge

A couple of days later I went to meet a landlord to appraise his flat. I’d seen the flat online and he’d told me that while he’d had a number of viewings nobody had made an offer and he couldn’t understand why. Looking online I couldn’t see why either.

The flat was advertised at a premium rent but that seemed justified by the photos and description, plus it’s in a great location very close to Enfield Chase Station, so what was the issue?

Walking through the front door it suddenly became clear!

The flat had been tenanted for three years and several repairs had been carried out during that time but the standard of the work was poor and thoughtless, this included something I’ve only ever seen once before – doorstops screwed to the wall at handle height rather than on the floor!! <Who does that?!>

There was very clear wear and tear to carpets and walls, a broken window blind and a missing toilet seat, the flat also needed a thorough clean.
There was no way the pictures were new so I asked him when they were taken, ‘Oh just before the last tenants moved in’ he said ‘you can see how they treated the place’.
Indeed I could but he couldn’t see the point I was trying to make, so I told him the story of the contractor and my business cards.

The happy ending

Now much as I didn’t want to compare my face to a damaged and poorly maintained flat, he could now see what I was getting at which was – the viewers were expecting to see the flat they’d seen online but the reality was very different. (Additionally anyone looking to pay a premium price is looking for a premium product!)
We discussed the options – 1) reduce the price or 2) repair the flat, but either way take new photos.

Fortunately he went for the latter option and today without advertising and with the works only just started, I think we have a very suitable tenant secured completely on the basis that the work is underway and is being done to a good standard.

As for my business cards….. they’re being updated too!

The Pain of Arrears (Part 2)

In The Pain Caused by Arrears (Part 1) I related the story of Edith who was struggling with arrears, desperate to get her house back and visibly feeling the stress and strain.

Landlords react in different ways and a couple of months before meeting Edith I met another landlord, Marsha, who had a similar experience but reacted very differently. Her tenant had stopped paying rent and after 6 months she ignored the advice of her agents and took matters into her own hands…….

Marsha’s Story

‘I went round there Rachel’ she said ‘I knocked on the door, he wasn’t in, so I phoned him. I said –

“Are you going to pay me this month? No? Then you’re not living in MY flat anymore!”’.

She let herself in, bundled all his things into black bags and piled them in the front garden. <Yes, really!>

My colleague Samantha and I looked at each other amazed, our mouths opening and closing like goldfish – had this petite unassuming lady really done something so extreme?! ‘Yes I did!’ she declared indignantly ‘He was in my flat and he wasn’t paying! He had a job! He was getting money from the Council and he was keeping it! KEEPING IT!’ By now her arms were waving around wildly as she was clearly reliving the nightmare.

Now I’ve met a few landlords who have felt like hurling their tenant’s belongings into the street and who’ve had to be persuaded that ‘maybe that’s not the best thing to do in the long run’ but I’d never met one who’d actually done it and Marsha just seemed so unlikely!

She composed herself and continued ‘I called him again – “Come and get your things from my garden” and then I phoned the police’.

The long arm of the law

Wow! Now obviously Marsha had broken the law, so not only did this not solve her problems it actually made them worse. However, when she told me the full story I could understand her desperation. She’d bought the flat earlier that year specifically to let out as a long term investment. It was a stretch, she’d used all her savings to pay the deposit and while her job paid for the mortgage on her home it didn’t cover the mortgage on the flat.

When the rent stopped coming in, she couldn’t pay the mortgage. The bank were on her back, she was heavily in debt, her agent kept telling her that there was a procedure to follow (although I’m not sure what was taking 6 months!!), and she, like Edith, just wanted the whole thing to be over.

Happy ending?

The tenant was rehoused and Marsha ended up in court. There was no happy ending for her, she was fined nearly £4,000 and voluntarily handed the keys to the bank. I didn’t ask how much they sold the flat for or whether she ended up owing them even more money but somehow several years later she’s trying again and renting out her own home, this time with rent guarantee cover!

The Pain of arrears (part 1)

I won’t rent my house out without a Rent Guarantee, it just won’t happen. I’ve got a mortgage to pay and if the rent stops coming in I’ll have a problem.

You can reference your tenants until the cows come home but things change and bad things happen to good people. I always say that we’re all just a P45 away from not being able to pay the bills. But if bad things happen to my tenants then I want to make sure I’ll still get the rent.

Over the years I’ve met a lot of landlords who have been affected by arrears. For some it’s a calculated risk, they rent to a particular sector where the risk of arrears and damages are higher but overall they come out on top. For others the impact both financially and emotionally can be huge.

Earlier this week I met with a landlord who fell into the latter category and below is a summary of her situation. In ‘The pain caused by arrears (Part 2)’ there’s a brief story of another completely different landlord experience.

If you’re about to rent out a property please give a lot of thought as to how you will protect your rental income, just in case.

Edith’s story………

About eighteen months ago I got a call from a lady called Edith asking for advice about her tenant who had fallen into arrears. I’ve probably spoken to her six times in total and each time she’s sounded slightly more desperate. Yesterday, though she came in to say ‘Hello’.

I knew it had to be good news and it was, Edith had finally served her tenant notice – yay! But…… she knew it could still take a few months to go through the courts and get her property back. Her tenant however, had made her an offer and she wasn’t sure if she should accept it so she wanted my opinion.

Now this I had to hear, everything I’d been told before indicated that this tenant is a very bad, bad person – thousands of pounds of arrears, damage, neglect and the removal of furniture. I perched on the edge of my seat ‘Go on, hit me with it’ I thought ‘He’ll give you all the money back if you let him stay? He’s got a payment plan idea? What can it be?’

Well apparently the offer was this – ‘Give me £1,000 now and I’ll be gone by the weekend.’

I almost roared out loud with laughter and then <Thud!> my jaw hit the ground as  I realised she was actualy considering this!! Wow, if she’d been a friend I’d have flicked her forehead and shouted ‘HELLO?! Are you crazy?!’ but when I looked at her I saw a tired, emotionally drained lady, at her whit’s end, who just wanted the whole thing to be over with.

Going for a slightly softer approach I asked ‘Do you trust him?’ There was an unexpectedly long pause and I began to panic! Yikes! What if she says ‘Yes, yes this time I trust him’?

Finally with a visible slump of her shoulders and drop of her head she said ‘No’. Phew! Note to self – Don’t ask stupid questions! All I’d really needed to do was point out that if she gave him the money there’d be no guarantee she’d get her house back and she’d just be another £1,000 out of pocket.

The stress Edith was under was obvious and I really wanted to help however, because the case is potentially quite complicated the best I could do was point her in the direction of a good solicitor and sadly more expense!

She asked me how she should avoid this situation next time (if she doesn’t sell up). My answer, as always – Rent Guarantee insurance. It costs around £200 per year and is worth every penny in stress relief alone even if your tenant never falls into arrears.

Good luck Edith, I hope there’s a happy ending for you.

 

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£2 T-Shirt, £25 MOT and 5% Full Management, bargains or best avoided?

In the case of the £2 T-Shirt we all know that far, far away there’s a little person slaving over a faulty sewing machine for next to nothing when they should be at school, and we should probably put the T-Shirt back. But a £25 MOT and 5% FM fees, they’re bargains right?

A couple of weeks ago I got a text from a local garage <Ping>

‘Special offer MOT just £25, use code xxxxx’.

Wow, was it MOT time already? £25, that’s fantastic! ‘Book me in now, please’

An hour later the car’s in the garage and I’m in the gym. ‘This is so easy! What fantastic service, so proactive, God bless a good customer database!’ I could almost hear birds singing as I pounded the treadmill.

Another <Ping>. It’s the garage again –

‘Please call us about your car’.

Hmmm that doesn’t sound good, I was expecting ‘All done, you can come and collect your car’. So I call them, I know he’s saying a lot of mechanical stuff to me but all I remember is ‘Fail’ and ‘£420′.

£420 for a 3 year old car with 30,000 on the clock, service history, one careful lady driver, really? ‘Would I like you to go ahead with the works now? No I absolutely would not, step away from my car!’

I go to see a friend who owns a body shop and so knows a bit more than me about cars. With great indignation and arms flying all over the place I explain what’s happened, he starts laughing! Laughing?! I squint at him – ‘May bad things happen to you soon’.

‘What did you expect Rach?’ he chortles ‘it’s an hours work, he’s got to pay the mechanic, machinery, VAT, overheads…… They tell you £25 to get you in and then they pile it on’. More laughter.

Then it hits me ‘Oh wow, didn’t I say just the same thing to a landlord last week?’ He was trying to haggle me down to a 5% FM fee because that was what he’d been quoted by someone else.
‘B,b,b,but…….. 5% of £1150 is just £57.50 per month’ I babbled ‘take off VAT and that’s about £46’. Landlord looks at me impassively so I continue ‘We have to process rent, produce invoices, receipts, statements, carry out property visits, manage maintenance issues and tenancy issues, handle emergencies, manage contractors, ensure you’re compliant, pay staff, overheads etc’. Still nothing so I hit harder ‘For 5% you’re either not getting the service you think you are or there will be lots of hidden charges.’

Bingo. The little black cloud is now a great big thunderous beast as I realise there’s probably very little wrong with my car and I’ve just been had, I should have known better.

I drive to garage number 2 and MOT number 2, this time it’s £40 and the only things that need replacing are the windscreen wipers!

I call my friend to let him know. He’s still laughing. I hang up.

Halloween – all pumpkins, ghouls and….. conkers?!

Oooh I do like Halloween and I don’t care if the whole thing has been Americanised.

I love it! Carving out pumpkins to create fabulous lights (have to borrow children to do this!), eating toasted marshmallows, small people wearing sheets with cut out eyes demanding sweets on the doorstep – fabulous.

The one thing I can’t cope with though is SPIDERS!!!!
Scariest Halloween story I’ve heard so far this year was a gentleman in Surrey who found 26(?) venomous spiders in his house. OMG! The video of these huge black spiders attacking his stick as he prodded at them was terrifying – leave the house, sell up, don’t go back, why would you be prodding at them??? Although if he was to sell or rent out his house I would not want to be the agent showing people round.

A couple of weeks ago I walked into a spiders web while opening the door to a cottage in Crews Hill, you’d think I’d had an electric shock the way I shot back from the door, almost knocking this poor guy flying.

On another occasion I spotted a really big spider while I was showing a couple round a house. I tried not to react…. Keep calm Rachel, focus, focus but the next thing I know I open the bathroom door and point at the shower cubicle – ‘Here we have a fantastic double-size walk-in spider’…. oh yes, very cool Rachel!!

Earlier this year I had my worst spider moment which prompted my quest to find the ultimate spider deterrent:

Paul brought me my usual early morning coffee in bed (ah) but who is up and drinking coffee at 5.30am? Not me! Two hours later I reach out for this now cold cup and take a sip. ‘Urgh! What the hell is that?’ I pulled this scraggly lumpy thing from my mouth and put it on the bedside locker. What was it? A clump of hair? Grass? I grabbed a pen and started to gently spread the mystery clump apart, my morning eyes slowly began to focus – ‘Oh no, are those……. legs??!’

So this Halloween at casa Circus while there may be pumpkins, I expect little people and lots of sweets,  there will be no spiders!!

How will I achieve this spider-free feat? Well apparently spiders really like dark undisturbed areas (that’s why I haven’t been into my loft in 4 years, can you imagine what’s going on up there?!), so they tell me the best thing to do is to clean frequently and declutter – leave no stone unturned, hoover under every bed, move the sofa etc, etc. But,,,,, I am not a domestic goddess so this is not for me.

No, this year I have liberally scattered conkers around the house (yes conkers) and OK, so it might be an old wives’ tale that spiders don’t like conkers, but so far so good – not a single 8 legged beastie in sight. Two weeks and counting.

So if you want a spider free home this Halloween, head to the park, find some conkers and give it a go.
I’d love to hear whether it works for you too, or maybe you have some other fantastic spider deterrent?

Happy Halloween Everybody!!

There’s a cat on Rightmove! (Or why don’t people read descriptions?)

It’s a slow Friday afternoon in the office and I’m thinking about going home when the phone rings:

Me – Good afternoon, Belvoir Lettings Enfield, Rachel speaking.

Caller – Hello Rachel, it’s me Jason, how are you doing?

(Now Jason is a local estate agent. We don’t really know each other, but he recently sold a flat that I’d been renting out. We’ve never met and while I’m sure he’s lovely, I suspect he has more than one pair of shiny shoes.)

Me – I’m good thanks, you?

Jason – Great. I was just wondering why you’d started renting out cats?

Me – <thinks> It’s late, the lights are on but…. what is he talking about??

Jason – One of the guys just shouted out ‘There’s a cat on Rightmove!’ it’s been all round the office so I had to give you a call. What’s that all about?

Me – Well, erm, it’s erm, we have erm, a house share and there’s a cat at the house.

Jason – <Roars with laughter> You’ll be on one of those late night YouTube channels ‘Somewhere in North London times are so hard for estate agents they’re even letting out pets!’ <More laughter>

Great, public humiliation, I hadn’t thought of this. But it did seem very funny so I laughed along heartily despite the fact that he was clearly laughing at me rather than with me.

He hung up and oh wow, what had I done? I’d advertised a house on the biggest property portal in the UK with the lead picture of a cat! ‘Good job Rachel, people will think you’re crazy!’

I checked the stats – this cat had attracted 480% more views in 2 days than other house shares in the area. So I left the ad where it was and went home.

We had SOOOOOO many calls over the first weekend ‘Nice cat’ they’d say, ‘Thanks, are you interested in the house share?’ ‘No, its just a nice cat!’ Yep, that’s great, thanks for calling.

However, among the crazies were a few good ‘uns and I think we now have the perfect lady for this house so fingers crossed the cat will be coming down soon.

Some of the other interested callers  we had demonstrated exactly why I’d put the cat there to start with – People don’t read descriptions! They just look at pictures!

Both the long and short descriptions stated ‘professional female required’, and yet over half the callers were men!

Back in the early days of the agency this used to really upset me.  I would spend hours writing  beautiful, flowing, comprehensive descriptions, trying to avoid ‘estate agent speak’, and reading lots of books in a vain attempt to increase my vocabulary so I’d sound articulate.

Then I’d get a call ‘Is it furnished? Is there a downstairs toilet? Does it accept DSS??’ It’s all in the description………… ‘READ THE DESCRIPTION!!!’

Eventually I had to accept that people don’t read descriptions, so this month yes there is a cat on Rightmove, her name is Candy, she’s beautiful and she comes as part of a three bed house share in Enfield.

Now I’m looking for householders with slightly more out of the ordinary animals that I can put up to let…… maybe an iguana, chicken, pet rat…….. If you know someone please get them to give me a call!