If you remember a couple of weeks back I wrote about my experience with friends who own properties, some of whom self manage their portfolio. The response I experienced was well received and as promised an update.
In the last blog I asked my friends to answer the following. Why they wanted to own buy to let properties? and collect all information available on each of those properties.
Although I am sure they wouldn’t mind if I used their real names I will however use an “Alias” for them here. The most pro active Landlord was Katerina, calling within 48 hours to meet. Curious to find out more!
So I met Katerina back at Millsy’s, this time in a more relaxed formal fashion. Some great speciality coffees on offer, so thought, why not, after getting our favourite drinks we sat down, the first thing I needed to know was the most important part of the review, WHY did Katerina want to own property that see will not live in?
Katerina explained that when she first came to the UK from Poland almost 8 years ago she first rented a property, she explained it wasn’t in her eyes the best but it was just ok. She then decided renting wasn’t for her and she was in a position to work harder and save with a view to buy a property to live in, this took nearly 3 years to achieve. Katerina’s work was going well and a promotion at work meant she would have to relocate. After speaking with friends and family she had an offer for a couple of friends to rent the house on a short term basis and the rental amount made the move worthwhile. Second home was found quite quick and in a whirlwind she was now the owner of 2 properties. Work life was improving dramatically and within a few years Katerina found herself being a portfolio Landlord with 4 rented properties and the house in which she now lived.
As I asked more question on her plans and concerns It became clear that although she was a successful business person she had not been able to devote time to manage and appreciate how the dynamics of a property portfolio worked. She knew that she had profit from them and this was her only measure of success when it came to her properties. We went through each property and studied each one on the following points. Market rent vs current rent, mortgage payments, mortgage term and type, Insurance, maintenance and finally costs and funds.
We started with market rent and Katerina said she hadn’t thought of putting up the rent for at least 3 years as they were overall good tenants and only a few instance of late rent payments coming throughout that time period. I broke out my laptop and using her post code of the properties I showed her that 1 of her properties was now over the market value, which may suggest that area was less popular and we may have to dig deeper to find out why. Of the other 3 they were all under the current market value. One by as much as £125 pcm. This would equal a possible £1200 per annum figure being lost. The other two properties were around £60 pcm adrift each. Another £1440 of missed income.
With a lot to think about with the income generated from those properties we decided to meet up again in the office this time where I would invite a mortgage advisor along to see if the income from the properties can be maximised by evaluating the current arrangements.
Stay tuned for an update to this Landlords property journey.
If you are a Landlord who is interested in the Coventry Property Market or investment then please get in touch and have a review of your position and possible journey.
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