All Forum Posts by: Andrew R.

Hi,

I think I'd agree with @Will Fraser. From a cashflow perspective Option 1 would almost certainly be the better choice.

Would the cost of the land under the option agreement be the same as the purchase price in Option 2? I'd personally say that even with a (reasonable) premium on the purchase price the option-agreement would be favourable unless you had a plan to develop the unused land immediately. 

It may help your thinking to do a cashflow analysis for 5/12/20 years to model the various scenarios.

Hi,

Naturally most post here are US-focused, but I hope there are others here with an interest in the UK. This is a brief post for anybody who is interested with a little snapshot of changes to the UK market this week.

• 1. During this weeks budget it was announced that the stamp duty holiday would be extended. Stamp Duty is a government tax payable on land and property purchases. The rate of this tax is banded based on purchase price (tax rate increases with purchase price) and can vary in England, Scotland, Wales and Northern Ireland (the name of the tax changes slightly also). To keep the property market buoyant this tax was removed for cheaper properties and originally due to end on 31 March. This has now been extended to 31 May 2021, with a step up until 31 August 2021. From 1 Sept 2021 the stamp duty rate will return to normal.
• 2. With the announcement of the above measure, Rightmove (the UK's largest portal) reported a record number of views. This would suggest that the lure of reduced stamp duty is giving the market much needed confidence to take advantage of the additional affordability.
• 3. The government have also announced that they will be guaranteeing residential mortgages of 95% LTV. This will help those with a smaller deposit get onto the property ladder. Such high LTV products have been very thin on the ground, so hopefully this will allow those with a smaller deposit to get into the market. I have my doubts as to the wisdom of this, those of us who lived through the credit crunch saw the danger of high LTV loans with respect to loans going underwater and the knock-on affects. Hopefully the government guarantee will help avoid the problems we saw last time.

This is only a brief snapshot with only a small amount of commentary. If anybody is interested in the UK market I'd be happy to chat directly or add some more detail to this or another post, including how this will affect landlords and property investors. I just want to test the water to see if there's any mileage in this type of post.

Andrew

Hi,

This will depend on the extent of the problem, but have you tried an ultrasonic repellent? They worked on a property of mine a few years ago.

It's quite cheap to try, you can pick them up on Amazon. You'll need to block up any entry points once they've left to stop them returning, but it may be worth a try as a first (cheap) option. 

Good luck!

Andrew

Hi,

I'm in the UK and I/we would call this a cash-flow forecast. 

Good luck!

Andrew

I say this from the perspective of an investor from the UK, but I think the principle is the same.

I would think of this in terms of how to spend £100k / $100k - the actual amount is less important than the idea here.

As a very simple example of my thoughts:

I could buy a 100k property in cash, which would return 8%pa (net rental income) so $8000pa and grow at a rate of 5%pa so $5000pa (ie appreciate in value). In one year my net worth would be $100k +8k + $5k = $113k.

OR

I could buy 2 * 100k properties with 50% down. This would still return 8% pa per property, so $16k. They would also grow at the same rate, 5%, so $10k.  The borrowing would cost me 3% (mortgage) per property so $3kpa. In one year my net worth would be $100k + $16k + $10k - $3k = $123k.

Clearly there will be other expenses, and there is always an element of risk when taking debt finance but as investors it is one of our jobs to mitigate these risks by buying well. You could extrapolate out those figures for 5 and 10 years and watch as the two figures diverge. You could also do a similar exercise with higher mortgages (3 properties for example). 

The compounding effect shouldn't be discounted and there would be nothing to stop you combining strategies by paying off one or more properties to 'cash in' the gain in asset price to reduce your borrowing on one or more of the remaining.

It would seem that @Jerel Ehlert has posted a clear answer from a legal perspective. Knowing almost nothing about U.S. law I'm convinced!

From a practical point of view if a tenant gives me a cheque (check) on the day the rent is due I'd consider the rent paid on time, even though it would take a number of days for the funds to show in my account (presuming I get to the bank on time). If they posted my the same cheque (check) on the day the rent was due and it arrived several days later I'd consider the rent late.

I'd expect bank transfers etc to arrive into my account the same day the rent was due.

Again, thinking purely practically if I received notification each month the rent was paid on the due date and it arrived in my account the next working day I wouldn't be inclined to make an issue out of it. 3 days or more is a problem, less is a transactional delay I can live with, especially if it's routine and reliable.

There seems to be a consensus.

You paid for the heaters, albeit indirectly via a discount from the rent. I would be clear (in writing) that either they are welcome to keep the space heaters and repay the missing rent, or they need to make arrangements for you or your husband to collect them. 

You may also want to ask for a receipt, especially if you're striking off the cost of the heaters against the rent so you know that they've deducted the correct amount.

I take the view that as landlords/investors we have a set of responsibilities, and our customers/tenants have their responsibilities. We still have a duty to behave as professionals irrespective of whether our tenants comply or not - fulfilling our obligations should not be contingent upon another party fulfilling theirs.

You don't want to give a bad-tenant the excuse to say they have withheld rent because repairs and maintenance haven't been kept up, nor do you want to get into a dispute as to who breached their obligation first.

That being said whilst I wouldn't go over and above the basics with a non-performing tenant. As Joe says (above) it's still in your interest to make sure the property is maintained to a certain standard but you don't need to offer a bad tenant any 'extras' you may offer a good tenant. 

In my experience it's best to chalk it up to experience and move-on. If there's no realistic prospect of success (i.e. you still won't get your money) then all you're doing is trying to make yourself feel better by punishing them which seldom works. As the oft quoted phrase goes 'revenge is like drinking poison and waiting for the other person to die'.

HI Nathan,

Thanks for that quick reply, I didn't think about other individual members, only the forums.

Is there a non-US forum specifically or is it a case of networking with the individuals here on a one-to-one basis?

Thanks

Andrew