Selling a property portfolio

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

    Selling a property portfolio

    I've been asked by a colleugue who is not on landlord zone. Does anyone know anything about selling a reasonably sized, long running property portfolio. I've adviced against selling all in one go because of the tax implications, but I'm quite unsure about these matters. Are there companies out there who speacialize in this? is it a waste of time? Would be grateful of any advice to pass on. Thanks

    #2
    I would seriously suggest that one follows the trials and tribulations of Fergus Wilson and his wife who are "Biggest Landlords in UK" and who because of a variety of reasons attempting to sell their entire portfolio in Kent: he often claims that he has had discussions with Overseas Investors but surprise surprise nothing is happening.

    Your advice is sound to sell the properties in small blocks , there is then an element of control over the pricing and the degree of incentive to Investors but to sell wholesale sends out the wrong message into the locality and could undermine any chance of getting fair value.

    To my mind the moment the tenants know their properties are being sold is a signal to get out and that could prove to be very costly until suitable purchasers are found.

    Comment


      #3
      Yes funnily enough, I have been watching the trials and tribulations of the Wilsons with bated breath (nice position to be in mind). It does seem that large portfolio's are hard to sell on for decent money. It's a really interesting subject as I'm sure lots of us on landlord zone, will not want to be renting at 86 years of age.Yet when is the right time to sell, how many to sell and to whom. Very tricky indeed.Suprisingly there's not a lot of advice on this matter out there.

      Comment


        #4
        I get the feeling it's like selling any other business, prospective buyers need to think that they can buy it and massively improve the income/profit.
        The housing associations being bought by US pension funds spring to mind.
        An nice UK property portfolio doesn't offer the return on purchase that most companies would want to see - so it's only appealing to people in the business already who want to expand in that particular market at that particular time.

        The Wilsons are in a bad place.
        They're massively financed and people with money don't like buying companies loaded with debt unless they can switch it out easily.
        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


          #5
          Originally posted by Izzycam View Post
          Does anyone know anything about selling a reasonably sized, long running property portfolio.
          What does "reasonably-sized" mean? Depending on who's saying it, to me that could mean anything from 5 properties to 500!

          I'd have thought that just selling them individually through local estate agents would be the most obvious choice to maximise profits, obviously taking care to stagger the sales of similar nearby properties in order to avoid single-handedly depressing the area's property market! If you sell in bulk, the buyer will expect a bulk discount (and anyone with the financial wherewithal to buy such a portfolio in a one-er will probably be quite a shrewd haggler!).

          Comment


            #6
            Selling a batch of property as a portfolio , means selling to another portfolio investor who thinks in terms of portfolio yield and return on capital investment. i.e someone expecting 8-10% return. Any capital gain from sale of portfolio will arise in one year and this capital gains tax has to be considered.

            Selling one or 2 properties per year , may help to realise higher prices ( especially if in good condition ) from buyers for self occupation. Also also it allows the taxable gain to be reduced by the personal capital gains allowance now at 11,600.

            Comment


              #7
              A lot will depend on whether the properties are owned personally or through a company.

              If the former, and they have been re-mortgaged to the hilt, the CGT could be greater than the sale proceeds.

              Comment


                #8
                Yes, I agree with all the above, a property developer would need a really good discount, (as would myself if I was buying).It's a tricky one this, he'd be better off selling 1/2 a year. Getting them up to a really good standard and putting them out there into the first time buyers market. But the guys not well and needs to think of a quicker outcome. Very tricky indeed, considering tax. It's even made me think about my portfolio in terms of a getting out stage. It seems to me this is a long drawn out process. Out of interest the guy has a yield of 10/12% overall on his properties and has paid of 60% of his debt. so I guess from his point of view all is not lost. He's just going to get clobbered by the tax man.I wish there was some kind of book or advice on the internet to pass on to him about this. Hey someone should write this, I''m sure lots would be sold. "Property portfolio exit strategies" I can see it on amazon now Ha! Ha!

                Comment


                  #9
                  The problem with exit strategies is that at some point you have to decide how long you're going to live and whether you're going to be ill or not.

                  However, you definitely need to have (at least) a plan A and B.
                  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
                    Ha! Ha! yes, I don't know about you but I'm planning to live forever!, but in the meantime myself amd my friend will plan for other eventualities.

                    Comment


                      #11
                      When you consider "selling early" as an "exit strategy" , the capital gain will charged at 28 % rate tax but you can enjoy the spending of original investment sum and 72% of the profit.

                      When you consider " never selling and never paying capital gains tax" as an alternative "exit strategy", the tax cost will be paid by the beneficiaries of your estate at 40% of the excess over 325K. But as custodian of the assets , you will never enjoy the spending of the original investment.

                      So whats your choice of exit strategy ?

                      Comment


                        #12
                        My choice is to sit tight as long as I can stand the hassle. My friend doesn't have a choice he will have to sell. So I guess he will have to knock them out.It's something to think about when buying houses guys , you never know when the big C , or some other tragedy will strike. Plan your exit strategy..............and anyone out there with any other good ideas on this, write a book or start a website with specific advice on this matter, there's lots of people in the same boat and will be a lot more when older people buy more buy to let properties with their pension fund.

                        Comment


                          #13
                          I have seen a number of portfolio sales and surprisingly some do go for good money, possibly even more than you get individually. This can be very area dependant. Most are repossessed and are sold cheaply but some in better areas can attract a lot of interest from significant players such as housing associations or portfolio investors, it really does depend where and what they are - Newish build portfolios are usually better.

                          You have to realise that some serious players are just actually looking for investments, if they are very cash rich and like the property market then paying more makes sense. For most of us mere mortals though we are looking to maximise our returns! Speak to a commercial agent in the area who will know the market. Another important point is that yes you may very well achieve more splitting it up but to get the best price it is usually a case of evicting tenant (costs), having property empty for a few months and carrying improvement works (cost), then leaving it empty again whilst the agent does viewings (cost). You will also pay more in agent fees, legal costs etc... for doing multiple deals.

                          If you sell as a portfolio you get rent up until exchange, arrears can sometimes also be passed on so you receive this sum. There are pros and cons both ways. Also you get the quick sale, some people just want out of the market and want to invest funds elsewhere - you must weigh up your other opportunities and what you think is happening in the current market your invested in. Hope this helps

                          Comment


                            #14
                            Thanks I'll pass that on. Where would he find the portfolio investors or commercial agent.He is based in Wales.I can't see any advertised, or speacialising in this kind of thing.

                            Comment


                              #15
                              Take a look at Allsops website.

                              Comment

                              Latest Activity

                              Collapse

                              Working...
                              X