After receiving a lot of feedback, we have decided to drop our policy of 'fastest response'.  Instead, anyone interested will have a window of 36 hours to email their interest  (Tuesday at 2pm).  After 36 hours have passed, we will decide on the most suitable.  We wish to cap the number of investors to a maximum of 40, and we will not give more than one property to any one investor until a deal has completed successfully.  This gives us a chance to get to know the investors better, and gives everyone a chance to get a bargain property investment.

This deal has a 3.5% Finder's Fee, half payable after successful valuation, half payable upon completion.

You must also pay a Deal Fee of £150, and the valuation fee (around £350), upfront.  Both of which are refundable if the valuation does not AT LEAST meet our predicted figures.

Do not forget that these are package deals, where you are paying for more than just the property and vendor details.  See below for more information.

Please feel free to call or email any questions you may have.

Market Value:
£85,000 (£83,000 without repairs).  This has been confirmed by our valuation, with a 2k retention due to need for DPC and timber inspection.  You could order your own surveys backed up by this valuation, or to 'retype' this one which would cost £150+.

Purchase Price:
£70,500 agreed price. 

Other Financial Details:
Landlord in financial difficulties - this is a tenanted property and needs to be sold now rather than wait until January when the current tenancy expires.

Rental Potential: 
It is currently tenanted and achieving 400pcm, tenancy ending January 2008.  The rent has not been raised during the last few years.  As the property could do with redecoration and new carpets/floorings, it could achieve 450-475 in the near future (supported by rental comparables).

Comparables:
Neighbouring properties on the same terrace (same age/style/size) are valued by HomeTrack as currently worth 114k, 88k, 86k, 89k, 90k.  One is currently on the market, with a third bedroom made from a converted loft (no planning permission sought for this however), and it is on the market for £99,950.  The loft conversion would be a relatively inexpensive way to improve the capital value and appeal of this property too.

Background:
Currently tenanted, due for renewal in January 2008.  As mentioned above the landlord needs to sell urgently due to financial difficulties.

The 2k retention refers to the surveyor's report, who stated that there was evidence of damp in the ground floor walls at ground level, and recommended a timber inspection due to contact of the timbers with the affected walls.  He also recommended an electrical inspection as some aspects of the electrical installations are aging.  All of this is consistent with a property that is 107 years old in need of some modernisation.  Comparables would suggest that after completing this work and cosmetically improving its appearance, it could be worth 90-95K.

One plan would be to purchase the property on a mortgage without no ERC, let the current tenancy run out, carry out the necessary works and then refinance the cost out (above the 2k retention).  This would improve the capital value above the amount spent on the work, ensure a higher rent is achievable, and protect the investment. 

-  Deal analysis template (MS Excel) available.

-  Photos of nearby comparable property for sale available.

Please Note:

In order to be able to purchase with little or no money done, using a remortgage based on the Market Value and not the Purchase Price, you will need to use an experienced team of mortgage broker, bridging financier and solicitors.

If you do not have such a team, please use ours.  We charge a one-off introduction fee, after which you are then their client.

Profit Potential

17% BMV

Market value:                  £ 85,000 (83k with retention)
Purchase price:              £ 70,500
Mortgage:                          £ 74,700 (plus set-up fees etc added to                                                 loan, based 90% LTV on 83k)

Equity:                                  £ 8,300 (minus costs as above note)
Cash Back Potential:  £ 4,200 (minus purchase costs)

Mortgage Payments:   £ 335 pcm on 90% LTV at 5.34% pay rate
Rentals:                                £ 400 pcm (but see above)

These are not exact figures above but a good baseline to work with, also note there will be an agreement fee for the mortgage which will be added on to the loan amount and this amount varies in each case, and will alter the monthly payment amount.   This also increases your loan amount and consequently reduces the equity.

It would be possible to arrange a low fixed rate, which would improve your positive cashflow every month to around £75+ , but consequently cost you higher in set-up fees.

In this example you would have a positive cashflow every month, but you would need to budget for potential void periods, minor maintenance, insurance, British Gas homecare, etc per month. 

Upfront costs:

Valuation:                   
£ 350 ish - to compensate for the Mortgage Valuation we have already paid for and received - this is then transferred into your name for mortgage purposes.  There may also be a survey report (which will be mentioned in the Basic Details property description above), if so add another £160. 

Deal Fee:                    
£ 150 - fee to secure the deal - non-refundable unless the vendor pulls out, the valuation comes in less than 83k (if you order a separate valuation), or the survey highlights a major problem beyond already stated here.

1st Part-Payment Finder's Fee: 
Half the Finders's Fee is payable after the successful valuation, the 'deal fee' is credited to this amount.  If you decide to pull out once solicitors have been instructed, then this is non-refundable.  The other half is due upon completion direct from your solicitor.          

Typical Costs:

Bridge/brokers Fee (0.75%)                     £ 560 for both 

Stamp Duty (0%)                                                0

Solicitors x2 + VAT + Disbursements   £ 1100

Valuation Fee                                                  £ 350

Finder's Fee (1% inc. deal fee)                   £ 2,115

TOTAL COSTS                                            £ 4125 ish

CASH BACK  POTENTIAL                +£ 75 ish (deposit, costs and all fees covered)            

In other words, you could have cash back now which would help reduce your buying costs (as above example) and a 'free' property with inbuilt equity confirmed by valuation, which is cashflow positive monthly.

To Secure the Deal:

Email Your Interest:
Simply reply to the email, with the subject line: "Yes Please" and make sure you attach this email as 'incline text' or alternatively, you include the 'Ref number' of the lead in your subject line. 

The deal will be open until Tuesday lunchtime at 2pm.  After receiving all interested bids, we will decide upon the most suitable investor to take this deal forward.  Please send all requests for further information, questions you wish to be answered, etc, during Sunday or Monday.

Pay Deal Fee:
By responding like this you commit to paying the Deal Fee within 12 hours of us accepting you as the winning bidder.  The reason for this is to ensure that only serious investors proceed, as if the investor is not serious there may be time to rescue the deal via another investor.

Remember we mainly deal with motivated sellers, often in dire need of help, who need speed and decisiveness in completing the deal as agreed.  This is the reason why you are getting an investment at a discount.  It harms our reputation if we cannot deliver that for them - and we certainly do not want to be responsible for worsening people's circumstances.

Valuation:
You agree to pay for the Mortgage Valuation already carried out within 2 days, and if one has not been carried out and you so desire, you may instruct a Homebuyer's Report or Building Survey.  Please note that you can only arrange to view the property after or during the valuation visit.  Before contacting the vendor you must allow us to introduce you to the vendor.  You must then pay the 1st Part-Payment Finder's Fee (half the finder's fee quoted, minus the Deal Fee), within a further 5 working days.  Upon paying this you have agreed that you have satisfied yourself regarding facts, figures and research, confirmed that you are able to raise finance on the property, and are fully committed to completing the purchase.  You can pay by PayPal or by direct bank transfer, details of both will be given as requested.

Finder's Fee:
The only accepted reasons for refund of the 1st Part-Payment Finder's Fee is if the vendor tries to pull out of the sale (which needs to be confirmed in writing from the vendor's solicitor), or is uncontactable up to 21 days.  The reason for this is that it is already very late into the process and you will have had enough time and information to proceed to completion.

No part of this email constitutes or forms part of a contract.  White & Co is not a licensed estate agency or licensed investment advisor.  White & Co is not authorised by the Financial Sevices Authority to give investment or financial advice.