You eventually find a cracking buy to let after months of lack of stock. The potential income is ideal, a real hot spot for tenants and you have chatted up the estate agent near to marriage proposal. You walk down the communal stairs smiling sweetly at your new best friend, pretty Clara, the 26 year old estate agent. You leave her with very clear instructions on your interest, position, offer and promising fervently that her letting department will get the rental. She assures you that she will do the best she can for you.
However, as you leave, bidding goodbye to Clara, she appears to be hanging around and not skipping back into her smart little Mini? “Oh, I have back-to-back viewings here all day!” she mumbled not quite looking you in the eye. Dread fills your heart as you have recently lost out in sealed bids on two other properties and feel another one slipping through your fingers.
Being an investor, purchase price is crucial. A small 5% rise can mean the difference between a perfect investment or a costly chain around your neck.
But how do you win against cashed-up owner occupiers who buy with emotion and are happy to pay more to get their dream home?
Stephen, an expat investment client of ours living in Shanghai, recently lost out in three sealed bids in Islington last month. He wanted a period conversion flat up to £850,000 in Central London which would provide him with strong capital growth over the next few years until he return home from abroad. Historically, this type of flat has provided excellent capital growth for our past clients but this was prime owner occupier territory and competition was hot.
So why had we lost out in so many sealed bids? Did we not offer high enough? No, on one occasion Stephen’s bid was the highest by £3,000. Was our relationship with the agent poor? No again, clients of ours had bought three times this year with this agent and had automatically given them the rental instruction – they loved us! So what was going wrong?
The simple answer is that we were bidding against cash-wielding owner occupiers and vendors were very nervous hearing stories about mortgage applications being rejected at the 11th hour.
So we had a fed up client sitting at his desk in China instructing us to offer whatever was needed to secure the flat. This is a typical mistake made by virgin investors pushed into positions like this when it becomes personal, and it is so difficult for it to not become personal.
Expats like Stephen’s primary investment motive is capital growth. They need to ensure that when they return home, they have not been priced out of the market in London whilst it continues to rise as it has been doing against all odds and the ‘double-dip recession’.
The market has shown time and time again that period homes are the best long-term investment for capital growth. This is simply because owner occupiers prefer this type of home.
An owner occupier, who is making an emotional purchase, is more likely to pay over the odds for a property and less so with their head unlike savvy seasoned investors.
Going back to Stephen, last week he exchanged contracts on a cracking Georgian conversion. Yes, we had to go into sealed bids again but this time we won and were not even the highest bid! A very strong agent relationship (good property finders are worth their weight in gold at times like these), complete flexibility on timescales, and a professionally considered, smartly written bid, backed up with enough paperwork to convince even a sceptic on his mortgage ability, was submitted. All this eventually won over a vendor.
So keep your spirits up if you have lost out a few times, your property finder (if you are sensible enough to employ one) will battle on, and like Stephen, the right investment will be secured.
Lucy Richardson Limited is a privately owned completely independent Property Search Company with an extensive client list who have successfully invested very profitably in Central London. Contact us for further information on
Phone : +44 7795 242300
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Website : www.lucyrichardson.co.uk
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