Hi guys,

I have been struggling since the recession hit us and have now run out of funds.

I have been trying to sell a property that I own in a nice very popular area, in immaculate condition, for the market price, which I reduced twice in 4 months and was still unable to get an offer.

I have been living in a rented house and have recently had to move out as I could not afford the rent, and have now moved into the house I was trying to sell.

I am now tryng to sell a 2 bed flat for £179k which is rented out to tenants at £700 pcm.

Again its in a prime location with lovely views, a share of freehold and a 998 year lease.

4 years ago, when it had a lease of only 56 years left it was valued by the surveyor at 165k and we paid 18k for the share of freehold and the new lease, so I think our asking price is reasonable.

I cannot afford to sell at a massive discount as I have debts to pay out of the proceeds so whilst I can reduce the price a bit I cant go too far..

Its been on the market for 5 weeks now and several viewings later, still no offers.

I HAVE TO SELL THIS SOON, anyone got any ideas or advice as to what I can do, It will rent out any time within days of going on the market as its in a very popular place and £775pcm is certainly obtainable,
( It is let to a friend at the moment at a cheaper rent )

This property is in Shoreham by sea, West Sussex

ANY ideas very welcome,

thank you,

paul

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Hi Paul,
the first thing you need to do is stop being a charity provider to your friend. Ask him to pay you market rent, or find another tenant. This sounds harsh, but if you are in financial trouble, you need to obtain market rent for your properties.

You have not said if you have any other source of income (like a job) but if your gross rent is about 4.7% of value, it's not sustainable as a BTL investment, even at today's low mortgage rates. It will definitely not be sustainable when rates rise.

We all know since 3 years ago that we cannot exit from our investments until such time as the market values exceed our debt levels, unless we can cash flow our way out of them and take a loss. If you do not find a way to flow more cash (by either increasing your rents or finding an alternate source of income that nets more than your outgoings on the properties) you will be repossessed.

Sorry to say this in a harsh way, but I have been working on my cash plan for 2 1/2 years since property prices hit the fan. If you really have no other way out, speak to a debt advisor and go through IVA or bankruptcy, depending on the amounts you owe.

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Ok

Paul you mention what you think its worth and that you cannot afford to drop the price too much, but how much debt do you have on the property? ie. how much equity is there? and then how much of that do you NEED (not want) straight away to keep yourself on your feet!

I agree with gerry that your yield is not sustainable for a long term investment (which is why a lot of people focus on the ugly but cashflowing little properties in the not so lovely areas for BTL). But depending on the answers to the above there may be a way out!

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