Hello folks and good morning. im thinking of going for a bmv flat ive seen.i can get for 40k with a little light refurb needed .

new value will be 68k .it will rent for 425 pcm. the problem i have is im self employed and only showing around 10k profit last year

so im guessing it is going to be tough for me getting a btl mortgage ,

i.e. with the current sittuation with the banks.

ive got 25k of my own money ,i also can do a jv with a mate and buy it cash ,but our problem then would be after the 6 month rule getting out cash back out

again because im self employed . i spoke to a broker yesterday and he told me i would have to have around 25k going through my books to please the banks, any advice guys would be very greatful thank you. john

O.D.A.A.T.

Why don't you mortgage the place with a BTL mortgage.

The mortgage will be done on the rental income and not your income.

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Bobby Sidhu
Andrew Estates Ltd- Property lets, Management, Sales, Sourcing in West London. Let Only Fee-£500 Full Management Fee-£800 Sales Fee-0.5% www.andrewestates.co.uk
Always looking for BMV deals in London , so please get in touch.

Hi bobby well ive been told even now with a btl theywant to take your income into consideration too .ive thought about just doing at btl but i think things are getting really tough out there.buying the property is not really the problem its getting the cash back out .but if the worst comes to the worst ill just think a way around the problem ,cheers john

Hi John,

An investor I know is frequently buying properties, refurbing them and then selling to RESIDENTIAL buyers within 6 months. Lenders tend not to ask that many questions to resi buyers and its just the BTL'ers that they are suspicious of!

I'll seek clarification again tomorrow and ask what real life example he can give us all.

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Hi Guys

That would be interesting to know.

How do the Lenders find out that the property has been owned for less than 6 months. Are they advised by the surveyor who will likely check Land Reg or are there questions put to the vendor to disclose the details?

I was talking about this to another investor a couple of weeks ago and he said the same thing as Ramnik - he has no problem refurbing selling to residential buyers within 6 months.

I believe lenders get information about how long the property has been owned from the vendor's solicitor.

The investor I know does buying, refurbing and then reselling as his main core business. Typically he will ask about the mortgage being raised and ensures that its a RESIDENTIAL.

The worst question he ever gets is "why the big uplift in price" and this can be answered by stating the property has had a full refurb.

He sold two last month all within the 6 months that he purchased them for.

Hope that helps.

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Jon,

Did you go to your bank and ask for a 10 year repayment loan? £30K @ 7% per year is £356 per month. That used to be the way all property was bought until 1996 (BTL birth). If you get any interest on that score, make sure there are no early repayment penalties (or they are small) because after a year or two, any sane bank will convert you to a BTL mortgage. It's just a matter of track record. We asked Barclays and HSBC last month if they would increase our overdraft facility. both said no, but Barclays offered us a £25K business loan over 10 years "for any reason" if we wanted one. We don't, we were just testing the water, but it's worth asking.

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Just because you are not paranoid, it doesn't mean they are not all out to get you

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Jon,

TMW has a BTL product where you don't need to proof any income. Only problem is most of their products come with high arrangement fees and 5% ERC's if you want to sell after the refurb. But you CAN purchase if you intend to keep using one of these with your income.

Cheers,

Hi all

Just dug deep to bring this back up

Ramnik i saw your reply about the worst question your friend gets asked was "Why the uplift in price" which he covered with the refurb work.

I am wondering what issues with the survey / buyers lender / you can face if you have not done a refurb ?

EG
Value £100,000
Buy for cash £70,000
Sell to resi buyer for £90,000

Could hit the 6 month rule sounds a bit hit and miss even on resi so that is one issue.

Other issue is when your resi buyers lender does the survey,they can see you have purchased it for 70k so what's to stop them down valuing etc ?

If they ask "Why the uplift" you have not done any works ?

Any thoughts or certainly people doing this as their core business would be appreciated.

PS - I realise you can do Assisted Sales etc etc but this would be on cases where the seller needs the money fast so you have to buy for cash with the intention of flipping to a resi buyer.

Perhaps state that you bought the property cheaply due to a problem tenant (owner just wanted rid) and that was a fair market price for the issues you had inherited.

or ...

It was subject to a regulated tenancy hence the discounted price and they have now moved out.

Or alternate solutions could be:

Option 1
Sell to a genuine cash buyer for 80-85k. No mortgage issues then.

Option 2
Sell to your Resi / FTB at 90k and the lender will probably take a view. They may or may not issue a mortgage offer i.e. take a punt!

Hope that helps.

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Buy as if you are going to keep it or multi let it just in case it don't sell.I am only buying properties I can multilet even if I want to sell on unless at auction that is although a larger discount is required to sell on at auction..cover ya axx every time now a days.

Kim