Thursday 31 March 2016

Tenanted Farringdon 2 Bedroom Flat - Auction Sale (11.6% Gross Yield)

Another Barnard Marcus Auction property - again in the 12th April auction but this one seems less of a risk

It's a 2 bedroom flat on Allendale Road, Farringdon - we know these are popular as we manage a number of similar flats round there



The Guide Price is £40k and based on paying no more than 10% on top of this and getting £425pcm rent (they say there's a tenancy in place) it will return 11.6% gross Yield

One thing to note is that there's less than 75 years left on the lease - this may be reflected in the price as it might affect your ability to get a mortgage 

Click here for details http://www.rightmove.co.uk/property-for-sale/property-53567875.html

If you'd like to find out more about this prior to the auction give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Wednesday 30 March 2016

Risky Repo - Guide Price Of £40k For A 3 Bed In SR4 But No Internal Viewings!


This 3 bedroom end terrace on the popular Burnaby Street near Chester Road is due to be auctioned on April 12th but you need to have balls of steel (or money to burn) if you bid as they aren't allowing any internal viewings...


Click here to see the shabby looking outside again http://www.zoopla.co.uk/for-sale/details/39926835

I can see from the picture that it's No 2 and have therefore been able to identify it was bought in 1998 for £42,000

Clearly you'll need to budget for a full refurb, rewire, new roof etc and keep everything crossed...but even so this may stack up as a bit of a punt given I can see that a similar sized 2 bed mid-terrace at No 14 was bought for £75,000 in 2011 and sold last year for 108,000 - a 44% increase which has clearly come about from buying a wreck and doing it up

As for the rent, you'd be wise to budget on £495pcm post-refurb

Give me a call if you'd like to have a chat about this in more depth to weigh up the pro's and con's and I'd be very keen to hear from you if you do decide to go for it!!

Tuesday 29 March 2016

Avoid This Silksworth Auction 'Bargain'

I won't dwell too much on this one but I've seen this 3 bed in Somerset Cottages with a Guide Price of £55k...Avoid. At. All. Costs 

It doesn't say when the auction is but that's no shame as you should avoid this like the plague - it's the worst street in Sunderland, in my opinion


They reckon you'll get £475pcm rent. You won't.

http://www.zoopla.co.uk/for-sale/details/39828589


How Will Consumer Buy To Let Regulation Affect The Sunderland Property Market?

The new Mortgage Credit Directive which came into effect on 21st March creates a new category of mortgage called the Consumer Buy-to-Let (CBTL)

It affects those becoming Landlords for the first time

Advice, services and products will be ‘regulated’ (covered by the Financial Services Ombudsman and financial Services Compensation schemes) in a similar way to how residential mortgages have been regulated following the Mortgage Market Review (MMR)

Image result for fca logo

Mortgage applications will be defined as CBTL in the following scenarios;
  • Moving home, purchasing a residence with a mortgage and renting out their old home
  • Inheriting a property and not selling it and re-mortgaging it as a rental investment property
  • Buying a rental investment property where the investor has not owned a rental investment property before or has only owned existing rental investment properties for less than 12 months
A ‘sophisticated’ or ‘experienced’ property investor will continue with unregulated BTL and commercial financial products and they will be deemed to understand the risks of this type of investment

CBTL lending will face tougher affordability calculations than BTL mortgage products, with stress testing against personal income as well as rental income - previously BTL mortgages were granted solely based on the rental income

The much publicised increase in BTL stamp duty and the reduction in mortgage interest relief may force many existing Landlords to sell and the new CBTL regulation (with its potential risk of higher interest rates combined with higher costs of entry to this market) seems designed to slow down the number of new entrants coming into the BTL market to take their place

So how will this affect the Sunderland property market?


Looking at each of the three scenarios in turn;
  • For those who need to rent out their old property to move on to a new one, the key will be how rigorous the new stress tests turn out to be (no-one knows at present), as if they cause similar rejection levels to residential mortgages post-MMR (where recent statistics show nearly 50% of applications are failing due to their inability to satisfy the criteria) then it may mean that those rejected for a CBTL will have little choice but to sell at 'firesale' prices - this could force prices down and could cause a general slowdown in the market as chains are broken
  • It may be a similar tale for those inheriting a property, however as in many cases the inherited property is mortgage-free the beneficiary could still rent it out but it may prevent them from remortgaging to release equity 
  • Inevitably the new regulation will make obtaining a CBTL more difficult for First Time Landlords, however given the returns from property investment (with it possible to achieve Gross Yields in Sunderland from 6 - 10%) still stand up well against other investments it may turn out to be a further annoyance/irritant rather than a deal-breaker
  • My other thought is that for those looking to invest in property long term it could be a further reason to consider doing so using a Ltd Company from day 1, as they would not face this CBTL regulation (however BTL lending for companies has traditionally been more limited in choice and availability than standard BTL lending to individuals used to be)
Unfortunately it's hard to tell the impact that this change will have on the Sunderland property market, as the impact will be determined by the stress tests applied to CBTL lending, and it will take some time to assess the impact

If you'd like to know more about any aspect of the Sunderland property market feel free to give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com



Monday 28 March 2016

Sarah Beeny's Ugly 6 Bedroom + Land Development Opportunity

This is a bit of an unusual one for the developers courtesy of Sarah Beeny's Tepilo site

It's in the sought after area of Seaburn and is a really quite ugly 6 bedroom property (see below, it's no better on the inside!) ripe for converting into an HMO or flats with outline planning permission for a separate 3/4 bedroom house 


In addition to the 2nd plot there's plenty of land to extend or consider a further planning application for a 3rd building (apologies for the quality of the plots screengrab)


It's on at £850,000 and I wouldn't want to start thinking about what the return could be as there are so many permutations - you'll need to check this out and do the sums for yourself!



Click here for details http://www.rightmove.co.uk/property-for-sale/property-58278587.html then give Tepilo a call and ask to speak to Sarah...bet she doesn't take your call!

If you want to have a chat about the many options for this opportunity or any aspect of property investment in Sunderland then call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Monday 21 March 2016

Sunderland Purchase Option Diary

Following my post in November about how investors can profit from property without needing deposits by using Lease & Purchase Options I thought it may be of interest to show a real-life example of how such a deal may come about and how it can work for both the vendor and investor

To refresh your memory about Options please click the link to see the blog post from November 2015 http://www.sunderlandpropertyblog.co.uk/2015/11/how-to-profit-from-property-in.html

With this particular case, we're working closely with the person brokering the deal as I thought it may be that our Landlords/Investors may be interested in learning more about this aspect of property investment

Purchase Options like this don't tend to come up through Estate Agents and are more often than not the result of a property sourcer going direct to vendors

Property sourcers are typically looking for those vendors whose circumstances lend themselves to accepting a significantly Below-Market-Value offer in exchange for a fast & guaranteed sale or to solve their property problem creatively with a Lease or Purchase Option, which gives a buyer the option to purchase a property at a later date and gives control of the property to the buyer in the meantime

The sourcer will then act as buyer and keep the property themselves or sell on as a 'deal' to investors

In this case the vendor Gordon (not his real name) has had the property on the market For Sale for over 4 years and despite a couple of offers and steadily lowering the price, he hasn't sold it and doesn't look likely to soon

It's being advertised For Sale at just under £90,000 and his outstanding (interest only) mortgage is very close to that at just over £87,000...so even if he sold it at the full asking price there would be little if anything left over after solicitors fees & estate agent costs - he may end up owing them money

Unfortunately, Gordon bought the property with his wife in 2006 near the peak of the market and they divorced shortly afterwards - he now wants to move on with his life and move to a new property with his fiance (they are due to get married later this year)

Options do lend themselves to such a situation where there is negative or very little equity left in the property and also where the vendor is happy to relinquish control of the property to allow them to move on with their lives

In this instance the sourcer has gained agreement from Gordon and his ex-wife that they agree to sell the property for the outstanding mortgage amount (approx £87k) at the end of the mortgage term (approx 7 years)

In the meantime the buyer will be responsible for paying the mortgage and buildings insurance and maintaining the property - they will essentially act as Owner/Landlord for the duration of the option term

This is attractive to the buyer as they will hope to gain from capital growth in the interim 7 year period (if they exercise the option to buy it for the agreed £87,000 in 7 years time then they would hope to be able to immediately sell on for a profit or if they are planning to keep it, they could arrange finance based on a percentage of the the higher 2013 value)

Given capital growth cannot ever be guaranteed, the key immediate benefit to a buyer is their ability to profit from renting the property out during the Option Period without the significant downpayment of a 25% BTL mortgage deposit

It also means that it is available to those who wouldn't ordinarily qualify for a BTL mortgage, such as those who may fail a credit check or who may not already own a residential property (therefore making obtaining a BTL mortgage more difficult)

In this case the interest only mortgage payment and buildings insurance combined will come to less than £150pcm and following a light refurb the property will realistically achieve £495pcm, giving a very healthy cashflow of over £300pcm

It would be down to the buyer to fund the light refurb (as well as any ongoing maintenance) however given the potential profit from the rent alone (not factoring in any capital growth) could be over £25,000 many consider this an attractive way of profiting from property without the need to tie up significant chunks of cash with deposits

The only upfront costs (other than the work required to get the property to a lettable standard) would be the fee to the sourcer (which is typically £3,000 - £5,000 depending on the deal) plus legal expenses

This would give a Return on Capital Invested of over 40% per anum

We're at the stage where the sourcer has just gained written agreement from Gordon and his ex-wife that they are happy to proceed - the next stage for them is for them to receive specialist legal advice regarding the Option Agreement prior to signing it 

In the meantime as the sourcer has decided that he wishes to trade this deal on rather than keep it, the deal is being marketed to his investor database and the to property investment communities online

If you'd like to learn more about this deal click the image below for more details and give me call if having done so you're interested in discussing this investment further and would like to request the full Marketing Pack  



Hope you found this interesting - I'll be sure to keep you posted via the blog on how things progress for both the vendor and the eventual buyer

If you would like to learn more about Lease / Purchase Options or any aspect of property investment in Sunderland, please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Thursday 10 March 2016

What Will The Proposed Chapelgarth Development Mean For The Sunderland Property Market?


Regular readers will know that I am constantly complaining about the lack of 3 & 4 bedroom properties in Sunderland, so the news that a development of 750 houses is being planned in Chapelgarth (SR3) should be seen as Good News!

The Sunderland Echo reported this in the following article this week http://www.sunderlandecho.com/news/business/revealed-plans-for-massive-new-housing-estate-in-sunderland-1-7785432


Siglion, who are also tasked with the long-overdue redevelopment of the Vaux site have submitted plans to Sunderland City Council for a development of 2, 3, 4 and 5 bedroom homes near Doxford Park

But how will this affect the Sunderland property market?

My first question is how affordable will these properties be to the average Sunderland resident?

Sunderland typically has a much lower proportion of owner-occupiers than the national average (59% compared to 65% nationally, which itself is down from a peak of 73% in 2007) 

This is despite the fact that Sunderland properties are some of the most affordable in the UK (based on average Full Time salary in Sunderland of £25,012 and and average sold price of £133,862 Sunderland has an affordability ratio of 5.35 compared to 7.26 nationally)

Given 42% of properties currently for sale in Sunderland are priced at under £100k and a further 40% are priced between £100 and £200k it is vital that for this development to attract any buyers the price must reflect what local Sunderland buyers are willing & able to pay 

I'd also suggest that these New Build properties are unlikely to appeal to investors unless heavily discounted (typically better returns be achieved elsewhere with older properties) and there may even be restrictions preventing them from being rented out for a certain period - so this also means that initially at least, the 13.5% of Sunderland residents who are private renters are unlikely to benefit from this development at all

Without getting all political, everyone who doesn't really know the way the housing market works assumes that renters are only renting under extreme duress - however this is so often not the case! 

Many renters prefer to rent long term due to the flexibility it brings, because they prefer not to tie up their disposable income saving for a deposit or because our broken property market means they can rent where they really want to live or buy where they can afford to live (rarely the same thing)

Should it come to fruition this development will benefit the Sunderland property market by removing a bottleneck caused by a lack of larger (+3 bed) properties, meaning there is likely to be a knock on effect across the whole market as it allows those in a position to move up from 2 bed properties are more likely to be able do so in the future (assuming they want a New Build, but that's a separate discussion point entirely)

How such a significant increase in the supply of properties (granted this is likely to be phased over time) impacts on the price of existing Sunderland properties is an entirely different point altogether... 

So without question if this development comes off it must be seen as Good News, not least from a jobs creation point of view, but also because it will have a positive effect on the Sunderland property market - that said it is not likely to be a miracle cure or totally transform the Sunderland property market overnight!

If you'd like to chat about any aspect of the Sunderland property market give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com


Ready To Let 3 Bedroom Semi In Town End Farm (7.3% Gross Yield)

This immaculate looking 3 bedroom semi in Town End Farm is conveniently located next to the local shops and should attract good interest from working families

It's priced at £89,950 and based on paying this and achieving a realistic £550pcm rent it will return 7.3% Gross Yield



I've recorded a video blog about Town End Farm, featuring this property today - click below to view


If you'd like to arrange a viewing click here for details http://www.rightmove.co.uk/property-for-sale/property-53219926.html and call Good Life estate agents to arrange a viewing

If you'd like to chat to me about this property, investing in Town End Farm or any other part of Sunderland please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Tuesday 8 March 2016

'Needs Work' 2 Bedroom Semi Near Academy 360 School (7.9% Gross Yield)

This 2 bedroom semi in Pennywell is close to the Academy 360 school so should attract families with children

Its being offered with vacant possession and most recently it looks to have had elderly occupiers so realistically to attract a Good Tenant it will need a new kitchen and bathroom, new flooring and redecoration - I'd budget on £10 - 15k to do this to a decent standard



It's being offered for sale at £64,950 so negotiate on the price and spend no more than £75,000 in total and it will deliver 7.9% Gross Yield based on a very realistic £495pcm 

It's on the market with Emily Charles so click here https://www.onthemarket.com/details/1856330/ for details and contact Emily Charles to arrange a viewing

Call me if you'd like to know anything about this property or any aspect of property investment in Sunderland - call 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Monday 7 March 2016

Look Behind The Conifers To See A Decent 2 Bed Semi In A Sought After Area (7.3% Gross Yield)

This 2 bedroom semi is in the Hall Farm area of SR3 - Hall Farm doesn't get too many houses like available to rent, meaning any that do come onto the rental market are likely to be very popular

Internally it looks to be in a good condition, requiring a lick of neutral paint in a few rooms at most - externally I'd suggest the conifers need to be removed before they overshadow the entire property!


It's being marketed for £90,000 and based on a conservative £550pcm (it may be possible to get £575 or even £595) it will return 7.3% Gross Yield

Click here for details http://www.zoopla.co.uk/for-sale/details/39626669 and contact British Homesellers (online agent based in St Albans) to arrange a viewing (most likely direct with the vendor)

If you'd like to chat about this investment or any aspect of the property market in Sunderland call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

Thursday 3 March 2016

Ready To Let 2 Bedroom Ground Floor Flat (7.9% Gross Yield)

This 2 bedroom ground floor flat looks to be in a great condition that can be let without any significant expense - it's in a popular area a couple of miles out of town (but close to the Doxford International Business Park) that in our experience can attract long term tenants

It's priced at £59,950 and based on a conservative £395pcm rent (we have achieved £425 or even £450 in recent years for similar flats) it will return 7.9% Gross Yield


There have been lower priced bargains in the area being offered for much less but they needed a lot of work - the benefit with this one is that it is immediately lettable

It's being marketed by Michael Hodgson so click here for details https://www.onthemarket.com/details/2477838 and call them to arrange a viewing

Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com for more information on this opportunity or any aspect of the Sunderland property market 

Wednesday 2 March 2016

Does The 'Doom & Gloom' Mean It's Now Time To Buy or Time To Sell Sunderland Property?

One of my Landlords contacted me last week as he wanted to calculate how the forthcoming tax changes would affect him & his portfolio. He was unsure if the imminent changes meant it was time for him to sell up or conversely use it as an opportunity to buy more property!

If you read the newspapers and the Landlord forums on the internet, there is a good helping of ‘Doom & Gloom’, especially with changes in the taxation towards Landlords, new 'Right to Rent' legislation on checking tenants and the general uncertainty over the the world economic situation, the 'inevitable' housing crash, rising interest rates etc



I will admit that there are a proportion of Landlords in Sunderland who have over exposed themselves in the last few years with high percentage loan to value mortgages, buying properties that were never going to be the best investments in the first place

Many who bought prior to the most recent crash in 2008 are faced with negative equity but are just about covering costs, so they are keeping all fingers and toes crossed that they can keep their properties occupied and are holding onto them until the situation improves (which in reality isn't going to happen any time soon...)

Those Landlords, with their artificially low interest rate mortgages or ridiculously low SVR's, will start to suffer, as their modest monthly positive cash flow become negative when the tax and mortgage rates rise throughout 2017 and beyond

These are the people who should be seriously thinking about selling up

As I said to my Landlord (who thankfully is not in the desperate situation described above, due to well informed purchases based on a decent investment strategy), there will inevitably be those who want to get out of the game, but I see this as creating a fantastic opportunity for those committed Landlords/Investors who have a clear & well thought out strategy and who are willing to increase their portfolios by picking up properties that will deliver positive cash flow, perhaps at 'fire sale' prices

Since January 1995, the average price paid for a Sunderland property has risen from £79,880 to today’s current average of £133,862 - a modest rise of 68% compared to some parts of the UK

However, look back to 2005, and in that year, the average property was selling for £155,439, meaning the average Sunderland property owner would have seen a modest decrease of 10% between 2005 and 2015

This isn’t good news for people who bought in 2005, and it gets even worse when you take inflation into account

Since 2005, the rate of inflation has increased by 37.14%. That means to retain its value, a Sunderland property bought for £155,439 in 2005 would need to be worth £213,169 today!

Strange as it may sound but I can see a small positive that can be taken from this otherwise gloomy data

Landlords considering incorporating their properties into a Limited Company to avoid the changes to mortgage interest relief will be faced with a Capital Gains Tax bill based on the increase in the property value between the original purchase price and when the transfer to the Ltd Co takes place

But looking at the above, many Sunderland Landlords who bought between 2004 and 2012 will escape a CGT bill if their property is now valued at a lower price than when they originally bought it, so it may be the perfect time to consider this (please take expert legal and financial advice before doing so!)

You can still make money by buying the right Sunderland property at the right price and finding the right tenant - no one should base their Sunderland property purchases on the promise of capital growth!

A successful investment strategy is also about having a balanced property portfolio that will meet your investment goals – what is a balanced property portfolio? Well, if you give me a ring on 0191 567 8577 I'd be happy to have a chat about this and I may even discuss this on a future blog post...

Tuesday 1 March 2016

Two Bedroom Tenanted Flat Close to Hospital (8.3% Gross Yield?)

This 2 bedroom tenanted flat is being offered as "an excellent opportunity for buyers who are in a position to purchase quickly" which suggests to me that a cut price deal could be done

The sales particulars don't reveal the rent being paid, which is a pretty big oversight if they're looking to attract investors, but based on our local knowledge of renting similar 2 bed flats on this street I'd suggest they should be getting around £450pcm



The one photo on the listing looks to me like the vendor took it and the fact that there are no internal shots might indicate the tenants aren't keeping it in a great condition, it all suggests to me that the vendor may be a tired Landlord who is looking to get out...or that could just be me being cynical

Based on this and the 'Offers Over' £65k asking price it will return 8.3% Gross Yield but given the above and given that the owner is looking to sell it quickly when tenants are in place suggests that it may be worth a cheeky offer to increase the ROI

It's being offered by SelSimple of Croydon (!?) so get in touch with them to arrange the viewing, which is inevitably going to be conducted by either the vendor or the tenants (I'd go all out to push for the vendor if it was me, so I could speak to them direct to get an understanding of what his/her motivation to sell quickly is...) http://www.zoopla.co.uk/for-sale/details/39573502 

Give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com if you'd like to chat about this or any aspect of the Sunderland property market