Buying now, selling later?

[GhostWKD]

Keep the flat, rent it out. You skip all the grief associated with selling and possibly on to a nice earner eventually.

Because there is never any grief with renting properties

Just be careful you can afford to go without the rental income from the flat if needs be. My ex and I had a tenant who didn't pay beyond the first month upfront with the deposit. Took 12 months to evict her with practically 0 rental income to show for it.

Edit: Psycho Sonny worded it better, no idea how I missed his reply...

 

[tom_nieto]

It really depends on what the OP wants to do time wise. You might speculate on getting a better offer in 6-12 months and look to rent it out rather than dumping 15% off the current asking price. There are a number of factors including what the rental market is like (speak to EA about this). The lower risk option is to sell up now, but this takes time, potentially loses you your ideal property and might make you worse off. A single rental property is a pain in the arse and I would not recommend keeping it with investment in mind unless you're living in a really up and coming London postcode and speculating on capital gain.

The key factor for me is that there is an ideal property right now. If it's on probate they will take a lower, chain free offer. In fact, they might not even consider an offer from someone in a chain. The OP describes low suitable housing stock for where they want to relocate to. This makes the decision less straightforward as they might not actually be able to relocate even once the flat has sold.

Act now!

 

[Psycho Sonny]

If they aren't getting offers or many people viewing it's clear their flat is overpriced.

I know homes in my area sell within a a week or two of going up for sale. The ones that don't are grossly overpriced.

 

[tom_nieto]

If they aren't getting offers or many people viewing it's clear their flat is overpriced.

I know homes in my area sell within a a week or two of going up for sale. The ones that don't are grossly overpriced.

Price is a big factor, but not everything. Slashing the price will of course help shift a property, but it’s a balance between the seller’s and the buyer’s/market finances. The price adjustment required to make a rapid sale might grossly undervalue a property. Timing is the major factor here. Time does equal money in this case. I can see one option where the OP might gain in time which is a short term let of the current property.

The other consideration which hasn’t been mentioned - if the property that the OP wants to offer on is sold, and the current flat is subsequently sold, how much money would be spent (or could afford to be spent) on rent whilst waiting for the right property to come up with a limited supply?

 

[Psycho Sonny]

Price is a big factor, but not everything. Slashing the price will of course help shift a property, but it’s a balance between the seller’s and the buyer’s/market finances. The price adjustment required to make a rapid sale might grossly undervalue a property. Timing is the major factor here. Time does equal money in this case. I can see one option where the OP might gain in time which is a short term let of the current property.

The other consideration which hasn’t been mentioned - if the property that the OP wants to offer on is sold, and the current flat is subsequently sold, how much money would be spent (or could afford to be spent) on rent whilst waiting for the right property to come up with a limited supply?

Its why he would only sell if he could buy the other one. So if he gets an offer he accepts with the stipulation his offer is accepted on the other property.

 

[tom_nieto]

Its why he would only sell if he could buy the other one. So if he gets an offer he accepts with the stipulation his offer is accepted on the other property.

This is the definition of a chain which might render their offer unacceptable or unlikely to be successful in a probate situation.

Also their property is currently on the market without having found a new place to move into.

 

[toshj]

Thanks for all your input.

I'm off to view the property again today with the intention of making an offer in the next day or so.

I've spoken to the mortgage advisor and we're able to port (and add to) our current mortgage to the new property and get a new let to buy mortgage on our current flat given the equity in there. I'm hoping to push pretty hard on us being immediate buyers in order to lower the acceptance price, but we'll see.

The new mortgage on the flat would have to be interest only for the first couple of years, but then can move to a more favourable rate when we've got a couple of years renting behind us. I'm not thrilled about IO but it's a way to get this done. Although I'd rather be done with it, I am quite happy to have this flat sit there for the next 30 years. Don't need to make an annual income off it, but will continually pay it off whenever. That said, I anticipate aggressively marketing it to sell for the next month or so. A flat in the same development was on the market at a decent level but attracted no offers, given the lack of buyers at present, so they opted to rent it out and received a very acceptable, immediate rental offer.

We'd have to drum up a fair bit in cash to get the sale over the line (the stamp + 3% is not an insignificant figure), which would impact when we'd be able to start renovating it but it would get us in there and the place is in good knick, if a little tired. My business had a decent year last year, with this year also looking good, so it seems wide to strike while the iron is hot. I've got the next 30 years in mind with this move, so happy to take a hit for a couple of years in order to secure it.

 

[Slade2]

Thanks for all your input.

I'm off to view the property again today with the intention of making an offer in the next day or so.

I've spoken to the mortgage advisor and we're able to port (and add to) our current mortgage to the new property and get a new let to buy mortgage on our current flat given the equity in there. I'm hoping to push pretty hard on us being immediate buyers in order to lower the acceptance price, but we'll see.

The new mortgage on the flat would have to be interest only for the first couple of years, but then can move to a more favourable rate when we've got a couple of years renting behind us. I'm not thrilled about IO but it's a way to get this done. Although I'd rather be done with it, I am quite happy to have this flat sit there for the next 30 years. Don't need to make an annual income off it, but will continually pay it off whenever. That said, I anticipate aggressively marketing it to sell for the next month or so. A flat in the same development was on the market at a decent level but attracted no offers, given the lack of buyers at present, so they opted to rent it out and received a very acceptable, immediate rental offer.

We'd have to drum up a fair bit in cash to get the sale over the line (the stamp + 3% is not an insignificant figure), which would impact when we'd be able to start renovating it but it would get us in there and the place is in good knick, if a little tired. My business had a decent year last year, with this year also looking good, so it seems wide to strike while the iron is hot. I've got the next 30 years in mind with this move, so happy to take a hit for a couple of years in order to secure it.

Decent result then! holding on to the flat for a while is never a bad idea. I know a couple of people that have interest only mortgages on a couple of flats they have now had for a couple of years. Every few years he pays off a chunk of the BTL mortgage from the rent he gets on both the flats which is easily enough to cover the interest and pay some towards the principal of the mortgage after any money needed for repairs. I think the plan is to sell them in the future and use the cash when he retires. I know some people who have no mortgage on properties costing upwards of one million and they are not interested in taking on the risk to make money from leveraging their own property!

 

[fastwunz]

Just do a let to buy and go for it. Loads of people do this.

 

[toshj]

"Oh right, yes, sorry... I forgot to mention that it's under offer at asking price already, with one party immediately proceedable"

I'd asked the estate agent to keep me updated as soon as a bid came in...

We're still going to go for it, but may take a bit of aggression to get it through.

 

[tom_nieto]

"Oh right, yes, sorry... I forgot to mention that it's under offer at asking price already, with one party immediately proceedable"

I'd asked the estate agent to keep me updated as soon as a bid came in...

We're still going to go for it, but may take a bit of aggression to get it through.

Give the EA both barrels. Don’t get too carried away trying to go way above asking in the first instance. The EA could well be embellishing the truth to try to get a higher offer from you.

Only you can decide how much you want to pay. Stick to your guns!

 

[toshj]

Give the EA both barrels. Don’t get too carried away trying to go way above asking in the first instance. The EA could well be embellishing the truth to try to get a higher offer from you.

Only you can decide how much you want to pay. Stick to your guns!

We've gone around 5% over the asking price, which is probably as far as I'm willing to go. We're still going to actively market our flat to sell in the meantime.

The 5% over fits well within our original budget (if we were selling our place) but is now right at the limit (if we rent).

Each time we've gone to view it there have been other viewers looking around the place, so it's obviously a popular listing. The house two doors down was listed at 10%-15% above this one despite offering significantly less in potential. Didn't sell in the end, but was in crap condition for the price.

 

[tom_nieto]

We've gone around 5% over the asking price, which is probably as far as I'm willing to go. We're still going to actively market our flat to sell in the meantime.

The 5% over fits well within our original budget (if we were selling our place) but is now right at the limit (if we rent).

Each time we've gone to view it there have been other viewers looking around the place, so it's obviously a popular listing. The house two doors down was listed at 10%-15% above this one despite offering significantly less in potential. Didn't sell in the end, but was in crap condition for the price.

Good luck with it! Hope you manage to make some progress.

 

[toshj]

Does anyone know how much it costs to tank a basement? 700 sq ft.

Whilst the estate agent was not "incorect" when stating that the basement hadn't flooded in recent years, they've just told us that the basement did in fact "get wet". It's on a flood plain close to the Thames and the basement sits about 2 foot underground. Apparently the water was just a couple of inches deep...

If we get it properly tanked then it's a great space to convert. Going to be costly.

 

[toshj]

Offer accepted... now the fun starts

 

[tom_nieto]

Offer accepted... now the fun starts

Well done. Hope you kept your cool with the price!

What are you doing with regards to financing out of interest? If you’ve got a good deal on a property in E1 London then it’ll be worth some short term pain.

Basements are expensive (to do correctly)! I’d also check planning rules - think you’re ok as long as you’re not digging them out.

 

[toshj]

Well done. Hope you kept your cool with the price!

What are you doing with regards to financing out of interest? If you’ve got a good deal on a property in E1 London then it’ll be worth some short term pain.

Basements are expensive (to do correctly)! I’d also check planning rules - think you’re ok as long as you’re not digging them out.

Ta - we bid over, but enough that we're comfortable with it. I've had a good year at work, so instead of buying the mid-sized house and staying there for 5-10 years, we've gone for the big house with potential.

Our flat is being shifted over to Let-to-Buy, and we're taking £100k outas there's plenty of equity left in there. Two year fixed, interest only. I need to get some advice on this but our mortgage advisor indicated that with two years of renting behind you, you tend to get much better mortgage offers than as a newbie. We're then porting our mortgage across to the new place and borrowing more. I'm then having to cobble together a large cash portion as a final step.

This would mean not being able to renovate few a few yeas until I get either build some cash up, or sell the flat. In the meantime we're dropping the price on the flat and marketing it aggressively. The house is still in probate for another month, which buys us a bit of time.

As I run my own firm, I'm capable of putting in serious amounts of effort for short bursts in order to bring in additional fees. I've calculated it that if I bring in the same amount of business as I did in my lowest ever year, it would still be affordable.