Soundbite: Bargain Hunting in the Festive Season Sales

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Happy New Year! I hope that you had a great Christmas and New Year break…now be honest, who was checking Rightmove on Boxing Day then? Apparently, it is one of the busiest days of the year for the site.

Well, when I recorded the final episode of 2017 in mid-December, I did say that the festive period is one of the better times of the year to go property shopping in the sales. So, I decided to share with you a quick update on my bargain-hunting over the festive season…did I pull a cracker or was it like a fully stuffed turkey? OK, so the jokes don’t get any better, so let’s focus on the real issues now and see what happened in my Yuletide shopping expedition then…

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Transcription of the show

Hello and welcome to another episode of The Property Voice podcast. My name is Richard Brown and, as always, it’s a pleasure to have you join me on the show again today.

Happy New Year! I hope that you had a great Christmas and New Year break…now be honest, who was checking Rightmove on Boxing Day then? Apparently, it is one of the busiest days of the year for the site.

Well, when I recorded the final episode of 2017 in mid-December, I did say that the festive period is one of the better times of the year to go property shopping in the sales. So, I decided to share with you a quick update on my bargain-hunting over the festive season…did I pull a cracker or was it like a fully stuffed turkey? OK, so the jokes don’t get any better, so let’s focus on the real issues now and see what happened in my Yuletide shopping expedition then…

Property Chatter

Talking Points

3 Deals closed over the Festive Period

2 UK Flips & 1 Overseas Buy & Hold

Deal 1 – East Sussex Lease Extension Flat

This was an interesting deal as it demonstrated the value of patience. This deal was offered to me at one price about a month before Christmas, but I felt the price was a bit too high. I made a counter-offer and was then told the vendor’s son, who was due to participate in the sale proceeds, objected to the extra discount implied.

However, the property is a fairly small converted flat with only 42 years remaining on the lease…so not terribly desirable as an asset for a homeowner buyer, as it would be unmortgagable. It was offered at £108k and I thought it was worth £100k, so that’s what I offered back then. It seemed to have gone away.

Then, I got a call from the sourcer about 10 days before Christmas saying the deal was back on again…presumably as the son realised a bird in the hand and all that. I reconfirmed my offer subject to a viewing, given that some photos were missing.

I had someone view the property for me and it became apparent that a) the original photos were very out of date and the condition of the property had deteriorated since they were taken, probably a couple of years ago and; b) the missing photos of the kitchen and bathroom revealed that more work was required than the vendor had let on.

Long story short, we agreed that a revised offer price of £95,500 was fair given the condition of the property and agreed to move forward. However, I was asked to complete before Christmas!

In this time, I had to organise a survey, undertake searches and validate all of the inquiries around the lease, etc. Surprisingly, my solicitor agreed to work to this timescale, on the proviso that the vendor’s solicitor released their papers within 1 working day. They didn’t of course!

However, this small detail did not stop the vendor and the sourcer from pushing for a pre-Christmas close. Another lng story short…we undertook a conditional exchange on the last working day before Christmas just before everyone went on their Christmas drink up! The sourcer described the exchange as the most efficient they had every seen…and I have to agree! My solicitor duly received a nice Christmas present from me as well, thoroughly deserved as well.

The lease extension has been pre-agreed and a condition of the exchange was for the Section 42 Notice to be issued by the vendor and assigned across to me prior to exchange, which will avoid me waiting 2 years before I can apply for the lease extension myself.

The project is being funded by one of my private finance backers, and the GDV is expected to be around £155,000 or more, so a tidy gross profit of £59.5k or 62%. Obviously, there are a bunch of fees and costs to come off that…perhaps more than some might expect, but all the same a tidy early Christmas present I felt.

Deal 2 – Copacabana Penthouse Apartment

You may know by now that my wife is Brazilian, so we do have a particular interest in her home city of Rio De Janeiro. We had recently completed a short-term rental conversion from a run-down apartment in prime Copa. However, it had taken us almost 2 years to find this particular property, as we are quite particular!

So, when we started looking for another project, we fully expected another long wait. But we were wrong! My wife was a little bored on a day between Christmas and New Year as I was doing a few odds and ends, so she booked to go and view 7 apartments, as you do. 6 of them were truly awful in her words, but the seventh stuck with her as having a lot of potential, so we both went on a second viewing this time. The apartment was listed as a one-bedroomed apartment at around $Bra 750,000, which in the current climate in Brazil is a bit high for an apartment needing a full refurbishment. The economy is not so strong at the moment you see.

However, this apartment was not correctly listed and whilst, in fact it was a one-bedroom in it’s current layout, it could easily accommodate a second bedroom and a second bathroom to make two ensuite-bedrooms in quite a large footprint. But it gets better, as it was also a penthouse apartment…not mentioned on the listing. And it gets better still as there is also a separate studio on the title that is rented out separately and covers all of the building service charge for both apartments on it’s own, again not mentioned on the listing.

The sellers were beneficiaries of the will of an aunt who had passed away and just wanted a quick sale, so much so that they were looking for a cash buyer. Time was again of the essence and we agreed to exchange contracts within 48 hours, which was a bit tight but we managed it.

Part of the process in Brazil is that when you sell a property you have to prove legal ownership, which of course is no different to the UK. However, part of the process of proving legal ownership in Brazil is to have a formal appraisal of the property undertaken if the last one is out of date, which this one was. The valuation came in at $Bra1.7m, which is down to its size and location, the fact that it is a penthouse and of course has the added benefit of the studio too. We bagged it for around 40% of this valuation, which to be fair we believe is it’s correct value after works rather than before, but hey!

Wow, what a result! My wife did a great jo in identifying this property and my brother-in-law also helped with some of the negotiations to make it a family affair. I could say that my ego was dented that wife managed to find an apartment that was below market value, has added-value potential and also a stand-alone income stream, but I have decided to take it that she has picked up a thing or two from hearing me bang on about such things every time I do a deal lol. She is a very smart woman that’s for sure, so whichever way the deal came about it’s a bit of a gem for sure.

Given the vendor’s position, we are paying cash for this one, will refurb the main apartment, adding a second bedroom, ensuite a solarium as I think it’s called, then will upgrade the studio later on. We will probably let the main apartment out on a short-term rental basis and the studio could either be a long-term rental as it is now, or it could be a second rentable space for short-term stayers too.

So, I guess that was my wife’s Christmas present really…

Deal 3 – Yorkshire Semi to Flip

As if that was not enough, I also spotted a deal that came through our Property Deal Tips service that caught my attention. To be honest, it’s nothing spectacular and is rather ordinary really. It’s a 3-bed semi-detached house in South Yorkshire.

The property was previously rented out and was a little tired and in need of a bit of TLC, but that’s all really. The listed price was showing as Offers Over £80,000 but that was already a significant reduction in price below equivalent properties in the area.

I moved quickly and managed to secure the property for £76,000 without even viewing, with a take-it-or leave it offer before I went on holiday just before the New Year. Of course, the agent said they would not accept an offer from someone that had not viewed the property, but I can be quite persuasive when I want to be!

It needs a cosmetic refurb and a little work in the garden to achieve the highest end-valuation of £125k to £130k, so that represents around £50k in gross profit before costs are taken into consideration, so not bad for a desktop review and a few phone calls and emails is it?

This is another project that will be funded by a different private investor, so my personal cash outlay on the 2 UK projects is also kept to a minimum, which is the way I like to do flips if I can.

A friend of mine, who is local to the property and so is helping me out a bit with some local contacts said: ‘who on earth sells their house over Christmas?’. My answer, people who need to! In this case, the couple who owned the property were divorcing, it was empty and it needs a little bit of money spending on it…that’s leverage and motivation right there for you!

I have a fourth offer pending, which I am less confident on securing as there are a few other investors sniffing around that now…perhaps that’s now too far after the Christmas period for me to be able to bag that one at the price I want. This brings me on to the conclusion for today, in case you haven’t worked it out already. There are often good deals to be had around Christmas, and I have found around August as well. The main reason is that the market is quieter, as ‘normal people’ are busy chilling out. But, I’m not a normal person and I do like to go shopping in the January and Summer Sales I can tell you!

What else can we deduce from these three deals, besides the timing then? Well, all of them had motivated sellers in some shape or form. Deal one had a problem with a short-lease and a hungry son looking for funds, deal two was an inheritance with the nephew and niece eager to cash in and the third was an asset sale due to divorce. All of the properties were less than desirable to the regular homeowner buyer as well, so when we add all of these things up together, the proposition to do a good deal, which is still a win for the seller was there. Of course, we can find these seller and property circumstances all year round…and in fact, that’s exactly what we do with out Property Deal Tips Service too!

But add in a sprinkling of seasonal quiet time and it does tend to bring more opportunities to the fore I often find.

So, mark your calendars for August and December this year, and instead of winding down, I strongly suggest that you keep your eyes peeled instead…there are bargains to be had in the sales after all!

Right, I just wanted to kick off the New Year with a quick recap on some of my own activity over the past few weeks. Next week, we will begin our new series on Property Technology I promise you. In fact, I am interviewing two heavyweights in a few hours’s time for this series, which I am quite excited about, as it’s not something you hear all that much about in the property community really. So, make sure you stay tuned to hear more about what’s coming and what’s here right now to improve our profits and productivity in property through technological advances.

That’s all for this week, and as usual, you can email me podcast@thepropertyvoice.net if you want to talk about anything from today’s show or more generally in property investing. Also, the show notes will be over at the website www.thepropertyvoice.net

But for now, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao ciao.

The post Soundbite: Bargain Hunting in the Festive Season Sales appeared first on The Property Voice.

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