bil8999 Posted January 10, 2019 Report Share Posted January 10, 2019 Hi to all This may have different answers. Been approached by a large property owning plc company to see if I am interested in selling a property I own adjacent to a building they have just purchased. It gives me a return of £16000 per year, now should I assess its value on a percentage return ( if so what is considered to be a healthy return) or estate agents property value. Thanks in advance Link to comment Share on other sites More sharing options...
Richlist Posted January 10, 2019 Report Share Posted January 10, 2019 This is one of those hypothetical questions that probably doesn't have a right or wrong answer. Your property is worth whatever it's market value says it is worth. It's worth will usually be based on it potential income. You don't say if it's residential or commercial......I'm assuming it's residential. If someone is prepared to pay more than its market valuation.....because of some special, unique reason......take it, move on and count your blessings. It's unlikely somebody else will be offering more. Across the country residential property value as a factor of rental income is an average of 20:1/21:1 So if you are getting £16K in gross income your property is worth somewhere in the region of £320K / £330K Link to comment Share on other sites More sharing options...
bil8999 Posted January 10, 2019 Author Report Share Posted January 10, 2019 1 hour ago, Richlist said: This is one of those hypothetical questions that probably doesn't have a right or wrong answer. Your property is worth whatever it's market value says it is worth. It's worth will usually be based on it potential income. You don't say if it's residential or commercial......I'm assuming it's residential. If someone is prepared to pay more than its market valuation.....because of some special, unique reason......take it, move on and count your blessings. It's unlikely somebody else will be offering more. Across the country residential property value as a factor of rental income is an average of 20:1/21:1 So if you are getting £16K in gross income your property is worth somewhere in the region of £320K / £330K Thanks RL , I was thinking they may offer me circa 200k, that would give them an 8% return. Link to comment Share on other sites More sharing options...
Richlist Posted January 11, 2019 Report Share Posted January 11, 2019 16 hours ago, bil8999 said: Thanks RL , I was thinking they may offer me circa 200k, that would give them an 8% return. Surely that would mean either: 1. Your property is undervalued. Or 2. Your rental income exceeds the average.Or 3. Your property is unique in some way. In my area of Essex it's unusual to achieve above 5% Link to comment Share on other sites More sharing options...
bil8999 Posted January 11, 2019 Author Report Share Posted January 11, 2019 2 hours ago, Richlist said: Surely that would mean either: 1. Your property is undervalued. Or 2. Your rental income exceeds the average.Or 3. Your property is unique in some way. In my area of Essex it's unusual to achieve above 5% Grade 2 listed building converted into 4 flats, 16k rent per year. Notts area. Would be very nice if they would offer 300k, but wont hold my breath. Must be big difference in property values between Notts and Essex Link to comment Share on other sites More sharing options...
Richlist Posted January 11, 2019 Report Share Posted January 11, 2019 4 hours ago, bil8999 said: Yes there is a big difference in property 'values' across the country. With the exception of London & a few other locations the gross rent vs property price factors remain the same. Wether a listed building makes any difference.....I don't know. But if each of you flats is worth £50K , then achieving a £4K gross income from each of them (£333 per calender month) beats anything I've seen anywhere. Why would you want to sell ? I should think almost any property investor would beat a £200K offer......unless there is something you're not telling us. Could it be a short lease length, high service charges or insurance, big ground rent, not mortgagable, bad/deprived area etc ? Link to comment Share on other sites More sharing options...
bil8999 Posted January 12, 2019 Author Report Share Posted January 12, 2019 11 hours ago, Richlist said: Hi RL None of the above apply. Areas not the best, but not the worst either. Town center location They approached me with a view to me selling as they own property next door. I have owned the property approx. 25 years, always been rented, not had many if any void periods. I have 41 properties rented, never had a mortgage on any of them, have seven plots of land undeveloped with planning permission. Still on the tools.(loads of private work ) Approaching 65 so thought now may be a good time to sell as they approached me. Link to comment Share on other sites More sharing options...
Richlist Posted January 12, 2019 Report Share Posted January 12, 2019 29 minutes ago, bil8999 said: Hi RL None of the above apply. Areas not the best, but not the worst either. Town center location They approached me with a view to me selling as they own property next door. I have owned the property approx. 25 years, always been rented, not had many if any void periods. I have 41 properties rented, never had a mortgage on any of them, have seven plots of land undeveloped with planning permission. Still on the tools.(loads of private work ) Approaching 65 so thought now may be a good time to sell as they approached me. In your shoes I'd get the building valued, perhaps get a few local agents to give you their opinion on what you might get. At £200K it sounds very, very cheap and sounds to be a fantastic investment at that price. I'd be surprised if it couldn't achieve more, there are always investors looking for a good deal and at that price someone will bite your arm off. If you have other property, surely the ones to sell are the worst performers, those that provide the worst returns and not one that delivers 8%. Link to comment Share on other sites More sharing options...
bil8999 Posted January 12, 2019 Author Report Share Posted January 12, 2019 3 hours ago, Richlist said: In your shoes I'd get the building valued, perhaps get a few local agents to give you their opinion on what you might get. At £200K it sounds very, very cheap and sounds to be a fantastic investment at that price. I'd be surprised if it couldn't achieve more, there are always investors looking for a good deal and at that price someone will bite your arm off. If you have other property, surely the ones to sell are the worst performers, those that provide the worst returns and not one that delivers 8%. Got a meet with them next week, will let you know the outcome. Link to comment Share on other sites More sharing options...
Richlist Posted January 12, 2019 Report Share Posted January 12, 2019 26 minutes ago, bil8999 said: Got a meet with them next week, will let you know the outcome. Grade 2 listing might negatively impact it's value. I'm guessing maintenance costs will be generally higher and potentially very high if you own the freehold. Link to comment Share on other sites More sharing options...
bil8999 Posted January 12, 2019 Author Report Share Posted January 12, 2019 3 hours ago, Richlist said: Grade 2 listing might negatively impact it's value. I'm guessing maintenance costs will be generally higher and potentially very high if you own the freehold. I don't spend any more on this property than I do on any of the others. If as I suspect they just value the property, not taking into account the rental return, then I wont sell. We shall see Link to comment Share on other sites More sharing options...
Carryon Regardless Posted January 14, 2019 Report Share Posted January 14, 2019 I'm surprised your rents are so low. In Prestatyn, 1 bed flats of approx £50k value fetch me £425 pcm, and I'm about to assess for this years increase. The year up to March 18 was an actual revenue of £25,551 for the 5. It's hard to image Notts is any less attractive. I'm not suggesting your not on the ball with your rents but have you considerd requesting one of the larger agencies to value as if they managed? Some years ago i did with genuine interest, didn't use their services and I just pitched a little lower. It could change your view of the sale value. Link to comment Share on other sites More sharing options...
bil8999 Posted January 14, 2019 Author Report Share Posted January 14, 2019 8 hours ago, Carryon Regardless said: I'm surprised your rents are so low. In Prestatyn, 1 bed flats of approx £50k value fetch me £425 pcm, and I'm about to assess for this years increase. The year up to March 18 was an actual revenue of £25,551 for the 5. It's hard to image Notts is any less attractive. I'm not suggesting your not on the ball with your rents but have you considerd requesting one of the larger agencies to value as if they managed? Some years ago i did with genuine interest, didn't use their services and I just pitched a little lower. It could change your view of the sale value. Hi I tend not to increase rents until people move out, I know that's not always the best policy, but it works for me, and while I am still working earning a crust, I don't rock the boat. I don't charge that for any of my flats, maybe that's why they are always full. I suppose its down to what you paid for the or its value , hence return Link to comment Share on other sites More sharing options...
bil8999 Posted February 6, 2019 Author Report Share Posted February 6, 2019 Hi Had meeting with investors, they are working on 10% so offered me £160k, are they being greedy, I thought 8% would be a good return, am I being unrealistic. Link to comment Share on other sites More sharing options...
Richlist Posted February 6, 2019 Report Share Posted February 6, 2019 Yes they are being greedy...... I sold a flat in my part of Essex last year (July 2018) for £183K that was achieving £9600 pa gross income (5.25%)........investors were queuing up to buy it. What do YOU think those same investors would say to being offered a property with an 8% or better return ??? Everything is pointing to you selling privately at more than £160K.......don't give it away. At the very least ramp up the deal by having them * pay your selling fees ( legal, agents, & any other costs). * pay extra for furnishings, fixtures & fittings. * reimburse you for any payments you have made to a sinking fund from service charges during your period of owneship. * Etc, etc In fact I'm thinking of making you a better offer than £160K myself. Link to comment Share on other sites More sharing options...
Grampa Posted February 6, 2019 Report Share Posted February 6, 2019 When buying commercial (i know its not the same) investors would expect 10% return so 160k would be about right but in this case the seller has the upper hand as they have been approached to sell so there has to be a premium on top. If it was me I would get 3 valuations by local agents pick the highest and add say 25-40% on top and use that as a starting negotiating point with all legal fees included. Link to comment Share on other sites More sharing options...
bil8999 Posted February 10, 2019 Author Report Share Posted February 10, 2019 They contacted me again and said they are crunching numbers to see if they can get me 190k. Watch this space Link to comment Share on other sites More sharing options...
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