Grampa Posted January 22, 2016 Report Share Posted January 22, 2016 Trying to buy properties to add to my letting empire is getting harder and harder to buy at what I consider a good price. I have always avoided age restricted properties because they have high service charges and ground rent but you can get them for a good price in comparison to non age restricted. But it appears you can get the odd one with normal service charge amounts. I know there can be certain restrictions on buying such as the buyer HAS to be over 55 or 60 which I'm not and also some have restrictions not allowing to rent it out to a 3rd party. But if it is possible to get one at the right price other than a limited market am I missing something? Link to comment Share on other sites More sharing options...
Richlist Posted January 23, 2016 Report Share Posted January 23, 2016 Yes you missing something very important. A friend of mine inherited one of these properties when his father died. He then spent the next 4 years trying to sell it. During all that time it was empty he had to pay service charges, ground rents, insurance, heating costs etc. He eventually sold it for considerably less than agents originally valued it at and ever since I have given them a very wide berth. Yes, you can buy them for a very attractive price but disposing of them may be more of a problem. Link to comment Share on other sites More sharing options...
Melboy Posted January 23, 2016 Report Share Posted January 23, 2016 I have depressing experience of this. My Aunt had to move into a Nursing Home in 2007 and we had to sell her McCarthy & Stone retirement flat and it was a real bu$$er of a job to sell. So many clauses and conditions of sale attached for the prospective buyer and me the seller. In the end after 4 months and me spending a lot of time and money in renovating to a very high standard just to shift it, it eventually sold at near original asking price but I am convinced it was only because it was like moving into a brand new shiney flat for the elderly buyer and they had just sold an expensive property so it was loose change to them. I would NEVER buy one of these properties and NEVER deal with Mc Carthy & Stone. Link to comment Share on other sites More sharing options...
Mortitia Posted January 24, 2016 Report Share Posted January 24, 2016 There are hundreds of these properties in my area - a lot owned by McCarthy and Stone and selling them on for a reasonable price is a nightmare. The fees, charges and other costs soon tot up and don't make buying them as an investment worthwhile. In fact I would go as far as to say they are a planning blight in my area as new starter homes for younger couples/families are very hard to come by as there are so many of these 'old git' flats taking up available residential development land. An ex-tenant of mine aged 63 crowed loudly about how she was moving to one of these nearby bought by an investment buyer. I was not unhappy to see her go as she was very labour intensive. Within 6 weeks she was on the phone asking if I had let her old home - I had. Seemed the investment buyer refused to do any works on the flat due to costs and the 'guest room' she was hoping to make use often of had a waiting list of 3 months! Her new landlord had told her he would install GCH when there was no gas to the site and it was all electric - how stupid can investors be! Link to comment Share on other sites More sharing options...
Grampa Posted January 24, 2016 Author Report Share Posted January 24, 2016 The only reason I was considering it, was that this particular flat was in good order, had a share of the freehold and the service charges 200 quid less per year than I am paying on 2 of my other flats. Only 1k pa and it would rent at 550-600 pa with a 70-75k cost. I take on board what you are all saying so I have to decide is it worth taking a punt and put a cheeky offer in or not? I don't think you get much capital growth on these type of properties though. Link to comment Share on other sites More sharing options...
Richlist Posted January 24, 2016 Report Share Posted January 24, 2016 Bare in mind that at some point in the future you could end up in a situation where a large portion of your meager capital growth will be swallowed up by running costs (heating, service charges, ground rents, council taxes etc) whilst the property sits empty waiting for the ever elusive buyer. Surely intelligent property investment is about both rental income and capital growth. The only time it isn't is when one of those elements provides an unusually higher return which cancels out the others low return. I don't see how buying one of these properties necessarily makes that business case. Based on your figures the gross yield looks comparitively attractive but that needs to be balanced against the small market for this type of property. Irrespective of the higher profits that you think this property may deliver, there will be a time when you will need to sell. Don't dismiss the risks. Link to comment Share on other sites More sharing options...
Grampa Posted January 24, 2016 Author Report Share Posted January 24, 2016 50 minutes ago, Richlist said: Surely intelligent property investment is about both rental income and capital growth. The only time it isn't is when one of those elements provides an unusually higher return which cancels out the others low return. I don't see how buying one of these properties necessarily makes that business case. You are quite right and my previous buys have ticked both those boxes with also the added bonus of getting a very good buying price. The trouble is with the property prices increasing in my target area I am looking at spending 20% more to get similar type property (1 bed flats) as previously but rents have increased by about 7-8%. I could look at other areas but I am not overly keen on doing that but maybe I should bite the bullet. Link to comment Share on other sites More sharing options...
Melboy Posted January 25, 2016 Report Share Posted January 25, 2016 15 hours ago, Mortitia said: Her new landlord had told her he would install GCH when there was no gas to the site and it was all electric - how stupid can investors be! I think I am correct in saying that Mc Carthy & Stone never install GCH in any of their developments or at least the 3 sites I have been involved with have never had GCH........all electric. Link to comment Share on other sites More sharing options...
Richlist Posted January 25, 2016 Report Share Posted January 25, 2016 The majority of modern purpose built flats do not have gas installed, they opt for electric and only operate on economy 7 or economy 10 tariffs. Link to comment Share on other sites More sharing options...
Grampa Posted January 25, 2016 Author Report Share Posted January 25, 2016 Now having looked at the property which isn't bad, and taking in all your comments which is much appreciated I have decided against going for it though it was border line. It would have given a half decent return and I have no doubt I would have found a tenant but it didn't tick the box for the exit strategy if ever needed or capital growth. Link to comment Share on other sites More sharing options...
Melboy Posted January 25, 2016 Report Share Posted January 25, 2016 We tipped you over the edge Grampa Wise decision though I have to say. In the M&S development my Aunt was in renting out to a 3rd party was not permitted. Link to comment Share on other sites More sharing options...
Mortitia Posted January 26, 2016 Report Share Posted January 26, 2016 The 'share of freehold' might have won me over Grampa. I'm going past a few M & S type developments this morning and I'll be on the lookout for gas boiler vents! I suppose not supplying gas CH reduces build costs considerably along with the need for safety certificates annually. Link to comment Share on other sites More sharing options...
Grampa Posted January 26, 2016 Author Report Share Posted January 26, 2016 This one had GCH Mortitia and if you want the details let me know. It isn't a 100 miles away from you.(I think) its on the south coast. Link to comment Share on other sites More sharing options...
Melboy Posted January 27, 2016 Report Share Posted January 27, 2016 21 hours ago, Grampa said: This one had GCH Mortitia and if you want the details let me know. It isn't a 100 miles away from you.(I think) its on the south coast. Bognor? or Eastbourne? Link to comment Share on other sites More sharing options...
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