Hi all, have the foloowing deal in the pipeline but not sure which route to take. Any advice would be helpful.

Vendor has £250,000 debt secured on property and could purchase for this price. Have spoken to about a dozen local agents. After evaluating everything would suggest current OMV would be £310,000. Achievable rent £1300PCM. Vendor wants long term rent back & buy back option. If straight sale I wouldn't have a problem, would just buy it whatever method I could. What I can't work out is how to buy it NMD. If I put money in, and vendor excercises buy back option will have had money sitting there doing nothing. Cannot increase the rent as it will not be affordable. Ideally would like to buy house and rent back long term for affordable rent then whatever happens regarding the buy back I'll accept.
So the issue really is is how do I purchase this property and make the deal viable? Hope you can help.
Regards, Stewart.

Hi Stewart, one option would be to purchase at 250 put 15k in then 6 months later apply for a further advance to draw as much as you could out - this would assume that the rental goes up a bit - or you could get the rental assessed on a multi let basis if there is demand.

Check www.spareroom.co.uk

Regards

Jai

Jairaj, thanks for reply. Checked out spareroom and there were 12 properties offering rooms in that postcode (which are all within 5 mins of station.) so would say demand is there. Couple of things though, how would you approach surveyor when house clearly looks nothing like bedsits/HMO's and second the house is in a bit of a mess so not sure how much of an influence that would have. Thanks, Stewart.

Hi Stewart,

As I see it there isn't really a problem getting the NMD deal, the problem is getting the rent to stack. If you can get the OMV of £310,000 with a purchase price of £250,000 it will raise a mortgage of £263,000. To get this you will need a rent of £1,440. Could you not simply tell the surveyor that this is what you are achieving? Once you have completed you will need to carry the property to the tune of around £150 pm but with £13,000 in the bank, you could do that for 7 years if you need to. If the vendor were to buy back in 2 years it will have cost you £3,600 and you will be left with £9,000+. Of course if you could somehow get a higher rent then this figure would be more. Hope this helps.

Best regards John

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A walk of a thousand miles begins with the first step.

The second step is easier than the first.

Looking for BMV opportunities in and around CHESTERFIELD.

Buy at 250K Rent to stack with mx 85% Discounted 110% is £1338.14

So rent stacks and £162 Cash+ per month

After all costs, although I dont know your financial situation, they should be aroung 6K.

Cash Back 6K

Buy back option, only allow it at the end of the fixed deal, give him a 10% discount between year 3 & 5, thats 31K off = buy back at £279, upon sale you will make another £15.5K

Job done NMD

Hi,

Not forgetting legal fees £500? Stamp duty £7,500, bridge fees £1250.

Pete

Stamp Duty is 1% so £2,500.

If you can buy a 250K house with legals at only £500, please supply me your solicitors name.

John, I think you missed of a few figures, i.e Costs around 6-7K

If you have to bridge, it may well be 1/2 percent, but you will need to add on solicitor costs of around 350 and VAT of course

Adding the arrangement fee in - assuming the 5.54% deal - gives circa £90 +ve cashflow/month.

You say that the house is in a bit of a mess - do you think enough to cause a problem with the valuations you are stating?

Thanks everyone, looking at it completely diferently now, cheers.

OMV of £310 in current condition (tired looking)

Thanks once again.