My search for my next rental has taken me all over. I have been to seminars both locally and as far as London. Viewing after viewing and I have still failed to find a decent property.
The latest search has been to look at on-line investment opportunities. A particular investment agency recently caught my eye.
One of the property deals they were offering was of interest:
3-bed house ADVERTISED.
Key investment facts
- Purchase price £45,000
- Rental figure p.a. £6,000
- Rental figure pcm £500
- Management fee p.a. (8%) £480
- Net profit p.a. £5,520
Now all that sounds amazing. But what really pulled me in was that the property is ADVERISED as having a 5-year rental guarantee. The rent of £500 pcm is guaranteed until March 2024.
My inner chimp was getting excited and was ready to send over the money to secure the deal. I needed to stop, calm myself down and look further into this ‘to good to be true’ deal.
When I got in touch with the agent, not only was it a different house in a different street (similar area), it was a different deal.
2-bed house – the house they ACTUALLY have available.
Key investment facts
- Purchase price £39,000
- Rental figure p.a. £5100
- Rental figure pcm £425
- Management fee p.a. (8%) £408
- Reservation fee £2,700 including VAT – why not just fucking say the ACTUAL fee of £3240
In addition to the small factor of it being a different deal, the reservation fee is excessive compared to the purchase price. It means you are paying over 8% of the purchase price for someone else to find you a deal. I wasn’t really a fan of packaged deals anyway but is this southern fairy having a laugh!!!
At this point I am half way out of the exit door but I plough on and do some research.
The area is very poor and I also find that similar properties are on the market for 25-30k. The figures still look good but when you see how poor this particular street is, the price is high in comparison to other available properties. The £3240 finders fee is pissing me off at this point.
I am very skeptical about packaged deals at this stage and this has only added fuel to the fire. Packaged deals might work for others but not for me. To charge £3240 for a couple of hours work is laughable.
This wasn’t a complete waste of time as it has made me aware of a local authority that guarantee rent for a period of 5 years. It is a local authority that I am going to be speaking to over the next few weeks as I very much like the idea of guaranteed rent for 5 years. This type of passive investment is right up my street.