How am I going to manage the property?

Managing your property is probably your largest ongoing undertaking. When you live abroad it is doubly wise to only use a property management company who knows the chosen investment area. We only work with specialist management companies in their areas. Additionally we remain as an ongoing link between clients and the appointed managing agent.

What is the likelihood of capital growth?

Capital growth is perhaps the hardest to estimate but if the region is being regenerated along with other economic factors such as new or existing industries investing or expanding in the area then these are good indicators of a general economic upturn. When choosing your investment property, you should look at several factors, including local amenities, schools, shops and the ratio of owner occupier to rental properties in any street. The greater the ratio of owner occupier usually indicates where people want to live. Similarly the more expensive the property, the easier it is to rent.

What if I want to buy several properties initially?

Opportunities to build a portfolio of high yielding residential properties start from GBP50,000 including purchase costs, refurbishment and initial professional fees. Bespoke portfolios can be assembled for investors wishing to invest larger sums and draw a potentially significant monthly income at the same time. Initially building a portfolio with 5 or 10 properties and still use the same leveraging principles to build an even bigger portfolio more quickly is perfectly possible.

What about the Legal work - conveyancing and tenancy agreements?

You are welcome to use your own solicitor in the UK. However we have an arrangement with the London firm of Lawrence Stephens who understand not only the needs of expatriate clients in general, and crucially the speed required to complete the purchase - typically 7-10 days to outright ownership, but also the individual nature of conveyancing practices and property types found in these geographical areas. Partner Gregory Palos is also a frequent visitor to our offices in Hong Kong and throughout Asia and is able to answer at first hand any queries investors might have regarding any aspect of UK law.

What does it cost?

A one-off fee of GBP500 pounds or currency equivalent is all that is needed to retain our services and allow us to start working on your behalf to get the right property for you and help you with the entire process. A property finding fee of 1.75% + vat of the contract price & refurbishment costs is charged for each property found. Fees for assembling larger portfolios are by individual negotiation and we would be delighted to discuss your particular requirements.

Mortgage Finance

Mortgage finance is arranged via our sister company Expatriate Mortgage Solutions Limited of Hong Kong & London who have negotiated a number of exclusive mortgage products with UK expatriates in mind. Our fee is nought point seven five % of the loan amount with no initial charge in our attempt to obtain an Agreement in Principle from a suitable lender. Once this has been confirmed an initial fee of GBP350 or currency equivalent is all that is required to begin processing your application. The remainder of the fee is payable when the loan is drawn down.

Why do I need to buy the first property outright?

Each property is individually sourced for investors and offers are made on a number of properties below their current market value. Sellers consider these offers seriously because a very quick exchange and completion is offered. Typically the purchase is affected within 7 to 10 days and some deals are concluded within a few days.

How can property be purchased below market value?

There many number of reasons why property is sold below market value. The two main ones are the speed with which money can be realised by a seller and the physical condition of the property. Examples of sellers needing to realise funds quickly can include banks and building societies through repossession proceedings, probate cases where executors need to raise funds for inheritance tax or to apportion inheritances to beneficiaries, or normal home owners who need a way of breaking a deadlock in a chain of purchases. Properties needing refurbishment are typically out of the reach of first time buyers in their original condition. This is because many lenders may hold back a proportion of the mortgage funds until the remedial works are carried out. Most sellers will not accept such a situation so buyers are unable to proceed with their purchase. Many buyers also lack the imagination to either see beyond a property in need of cosmetic work or dramatically over estimate the amount of work needed to refurbish a property. Others simply don't have the time, inclination or capabilities to carry out improvements. In either event it provides opportunities for those with cash to purchase at keener prices.

What sort of refurbishment can be achieved with GBP4,000 and 6,000?

These properties have a total floor area of some 900 square feet and they generally require more in the way of cosmetic improvements rather than more extensive repairs. New kitchen and bathroom units, carpeting and internal and external redecoration dramatically improve the appearance of a property. Upgrading of gas or electrical systems to legal requirements for letting often complete the work required. Both material and labour costs are significantly cheaper in these regions than in London & the South East. Investors gain the advantage of both buying in bulk and at wholesale prices as part of a much larger refurbishment programme and in this way improvement works can be carried out quickly, to a good standard and economically.

What sort of tenants will occupy the property?

These are regular working people employed typically in local manufacturing industry, call centres, administrative work and retail shops. For many, the relatively low income levels mean that buying is not necessarily an option that they can choose. There is still a strong sense of community in these areas and many choose to stay close to extended family groups. Coupled with the option to live in improved property stock it is easy to see why there is currently strong demand for quality rental housing stock. All tenancies are effected on an Assured Shorthold basis.

Will the properties be furnished or unfurnished?

This varies between the regions and the managing agents. Some like the idea of tenants bringing some material gods with them whilst others believe it makes no difference when interviewing prospective tenants. In either case this will be explained at the outset of choosing a suitable property and budgeted accordingly.

What about Letting & Management Fees?

Similarly this varies between managing agents. You should budget initially on a full letting and management fee of between 12.5% and 15% + vat. However economies of scale apply in this model and you can expect fees to reduce as the size of the portfolio increases, typically with reductions for portfolios of five or more and ten or more properties to nearer 15% + vat.

I've seen other opportunities to buy at cheaper prices with higher yields, why don't you mention these?

Investing in a property portfolio can start from as little as GBP25,000 and sometimes less, but in our view the quality of both the housing stock and the tenant types are compromised, and the portfolio building concept of refinancing each property cannot be followed. This is due to the fact that lenders are scarce where a property has a value at under GBP30,000 and indeed lenders tend to flit in and out of these market segments. Interest rates are also usually one or more percentage points higher than regular finance rates. Housing stock at these levels often attracts the very worst kinds of tenants, often a younger and more transitory type of tenant, so exposing landlords to more frequent void periods and higher potential maintenance costs. In our view the hypothetical claims of higher rental yields do not materialise in practice and are to be avoided.