A question about making an offer to buy.

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    A question about making an offer to buy.

    So tomorrow, my wife and I are viewing an 1950s ex-council 3 bed end terrace, that is actually 2 doors from our first BTL (around the corner) with a view to this being our second BTL. The difference compared to all the others that we have seen, is that this is advertised by an agent in the next town, and this viewing is with the vendor.

    I'm inclined to believe that it's a touch overpriced, (based on what's sold nearby recently, and how much work they needed, but also what hasn't sold, and why) but as a long term investment it would still work at the asking price.

    My wife thinks a bit more short term and thinks house prices and rents will both drop when Brexit kicks in. Given that it's been on the market just over a week, I'd imagine that they are not likely to be open to move far yet.

    Now I'd quite like to suggest a price after the viewing to the vendor, and explain my reasoning. But if I put myself in the vendor's shoes the whole thing is irrelevant.

    What's relevant is that we have a mortgage approved in principle, and we have no chain, so it all depends on how quickly and without hassle they need / want to sell.

    What's also relevant is that all the other properties we've viewed would need some work before they could be let out and looking at the pictures this is good to go (doesn't always pan out like the pictures - what software do agents use to remove the "detritus" ?)

    Anyway, thoughts as to the best way to approach it?

    Am I over thinking again ?

    #2
    I think it's a mistake to buy rentals too close together. Tenants will inevitably cotton on.

    Suppose you get £700 pcm in rent for your new place, then your other one falls vacant. Due to the market & time of year, you can only get £650.

    Tenant in your new place will feel aggrieved at paying £50 more than his neighbour, and it will ruin your relationship.

    Comment


      #3


      my approach would be go and view and discuss as little as possible with the vendor, wait til the estate agent calls you for feedback and tell them youll get back to them as youre working the numbers out on all the properties youve viewed, call them back next day with an offer around 10% under asking price and advise that youre a cash buyer and are purchasing within the next week so could they put offer to vendor and get back to you

      if they knock you back you can always increase your offer, i tend not to, i believe a cash buyer is worth at least a 10% discount on someone who has to sell a property and/or has to arrange a mortgage

      the other consideration however is that you may be happy with the cost of your mortgage v the rent chargeable in which case paying a slight premium on a property thats ready to go wouldnt be catastrophic, also are there plenty of other properties to choose from, my policy of bidding low works as theres plenty to choose from, if it was a one off id be more inclined to offer 5% under with a view to paying asking price if the vendor didnt accept

      good luck

      Comment


        #4
        Depends on where it is and what the market is like - take a look at other properties in the area and whether they are selling quickly or not. London prices for council flats have dropped a lot, houses less so. Brexit will affect some areas more, and sooner, than others but is probably discouraging many purchases right now.

        So I'd offer 10% less and say the offer is open for 7 days or less if I find another property. Definitely go through the agent, they want their cut and 10% less makes little difference to that. It may be too early but you can always go up a bit later if you want.

        Comment


          #5
          Originally posted by JK0 View Post
          I think it's a mistake to buy rentals too close together. Tenants will inevitably cotton on.

          Suppose you get £700 pcm in rent for your new place, then your other one falls vacant. Due to the market & time of year, you can only get £650.

          Tenant in your new place will feel aggrieved at paying £50 more than his neighbour, and it will ruin your relationship.
          That's interesting. You have experience of that ?

          Comment


            #6
            Originally posted by buzzard1994 View Post
            Depends on where it is and what the market is like - take a look at other properties in the area and whether they are selling quickly or not. London prices for council flats have dropped a lot, houses less so. Brexit will affect some areas more, and sooner, than others but is probably discouraging many purchases right now.

            So I'd offer 10% less and say the offer is open for 7 days or less if I find another property. Definitely go through the agent, they want their cut and 10% less makes little difference to that. It may be too early but you can always go up a bit later if you want.
            That's interesting.

            On the face of it we have set ourselves an impossible task. There's 1000 plus 3 bed houses within 10 miles in our price range, but we are focused on 2/3rds of L23, and 1/3 of L22. Which limits what comes up. It also limits the return on investment.

            Comment


              #7
              Originally posted by BROOSE View Post

              my approach would be go and view and discuss as little as possible with the vendor, wait til the estate agent calls you for feedback and tell them youll get back to them as youre working the numbers out on all the properties youve viewed, call them back next day with an offer around 10% under asking price and advise that youre a cash buyer and are purchasing within the next week so could they put offer to vendor and get back to you

              if they knock you back you can always increase your offer, i tend not to, i believe a cash buyer is worth at least a 10% discount on someone who has to sell a property and/or has to arrange a mortgage

              the other consideration however is that you may be happy with the cost of your mortgage v the rent chargeable in which case paying a slight premium on a property thats ready to go wouldnt be catastrophic, also are there plenty of other properties to choose from, my policy of bidding low works as theres plenty to choose from, if it was a one off id be more inclined to offer 5% under with a view to paying asking price if the vendor didnt accept

              good luck
              Unfortunately NOT a cash buyer but have got a Decision in principle from the lender on the other property.

              Comment


                #8
                Originally posted by Logical.Lean View Post

                That's interesting. You have experience of that ?
                Yeah. A long time ago.

                Comment


                  #9
                  Originally posted by Logical.Lean View Post
                  Unfortunately NOT a cash buyer but have got a Decision in principle from the lender on the other property.
                  I'd still tell them you are a BTL buyer with no chain.
                  The mortgage approval decision will take less time than the searches anyway.

                  For most sellers (i.e. anyone who's ever sold a property previously) no chain and a funded buyer is pretty appealing.
                  If you're extra lucky and the property being sold is part of a deceased person's estate or the seller has found their next property it's almost too good to be true for them.
                  They almost expect the price to be lower because the other upsides are so good.

                  Tell them you''ll complete as fast as their conveyancer will allow.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    sorry for the confusion, jpkeates sums it up succinctly , i would view your position as on par with a cash buyer

                    Comment

                    Latest Activity

                    Collapse

                    • Pay off residential with buy to let
                      2buytolet
                      Hello,

                      First poster here looking for advice, this is our situation. We have one buy to let property mortgaged at £40000 and worth around £130000 and our home with a £65000 mortgage worth around £190000. We are looking to move house but keep both properties. Would it be wise to paid...
                      15-10-2019, 19:42 PM
                    • Reply to Pay off residential with buy to let
                      loanarranger
                      Hi Boletus, before I responded to your reply I thought I would seek legal opinion since your view on Non Recourse Lending was slightly at variance to my understanding and I am detailing the majority of the response, I would add that he is also a director of a Buy to Let lender.
                      Given that the...
                      16-10-2019, 21:54 PM
                    • Reply to Pay off residential with buy to let
                      boletus
                      I'm sure loanarranger is well aware but just to point out to others reading, UK BTL mortgages are not non-recourse lending.
                      i.e if you default on a BTL loan, it doesn't end with the lender repossessing the BTL property, they can still come after your main residence or other assets.

                      ...
                      16-10-2019, 13:09 PM
                    • Reply to Pay off residential with buy to let
                      loanarranger
                      Boletus , you make an interesting observation , however I have always taken a “ conservative” approach to such matters believing that having one’s main residence unencumbered is a safety net should financial difficulties ensue and adversely affect the financials of investment properties . Others...
                      16-10-2019, 11:52 AM
                    • Reply to Pay off residential with buy to let
                      boletus
                      That is the cleanest solution but not the best financially once the new S24 tax rules are fully implemented.

                      There is quite a lot to this but the crux is that residential mortgages are cheaper than BTL.

                      e.g
                      interest on £100,000 BTL mortgage at 2.5% - 20% tax 'relief'
                      ...
                      16-10-2019, 10:03 AM
                    • Reply to Pay off residential with buy to let
                      loanarranger
                      If the figures stack up I would always recommend paying off the residential mortgage given that there are no tax benefits to be used against the mortgage interest element of the loan; whereas there still remains a slight advantage in the tax regime for residential property investments.
                      Given that...
                      15-10-2019, 20:51 PM
                    • £25K personal income criteria for re-mortgaging BTL
                      hospitality
                      Recently read in propertygeek about remortgage: <quote> most mortgage lenders want to see personal income of at least £25,000 that isn't derived from rents. Even if you buy all the properties while you're still working, as soon as you quit that income is gone – so you might struggle when the...
                      14-10-2019, 21:51 PM
                    • Reply to £25K personal income criteria for re-mortgaging BTL
                      loanarranger
                      May I add a degree of caution, there are very few underwriters who understand the legitimacy of offsetting carried forward losses incurred in previous years and which allow the profits to be adjusted which in a number of instances will either show a continued loss or a much reduced net profit. In such...
                      15-10-2019, 18:45 PM
                    • Reply to £25K personal income criteria for re-mortgaging BTL
                      topshelf
                      Thank you Hospitality, was just about to post the same question tonight, in two month time I can take early retirement, receive a pension of 14k per year (+ lump sum) and a income of 42k gross on my rentals, per year I have 14 months before my next rate change and was starting to get concerned a...
                      15-10-2019, 17:41 PM
                    • Reply to £25K personal income criteria for re-mortgaging BTL
                      loanarranger
                      Not all lenders have the requirement of a minimum independent income of £25000 so please don’t lose heart if presently one’s income, excluding rental income, falls below the minimum.
                      In the event that one “retires” from main stream employment or self employment and have a property portfolio...
                      15-10-2019, 07:48 AM
                    Working...
                    X