The house scouts who do all the leg work
Buy-to-let investors don’t always have the time and the knowledge to find the perfect property.
It is still possible to make a living out of buy to-let — by setting up a business that helps others find and run the right investments. Buy-to-let support staff are multiplying fast in a property market which seems unable to shake off its slumber. So if you think you can help investors find undervalued properties that others have overlooked, can offer low- cost management, painless interior design or even help with landlords’ tax bills and legal difficulties, then you can get a slice of the action. But existing property professionals say you will need to prove yourself to survive.
Sam Morrison is one of the capital’s most experienced buy-to-let managers. She finds investment properties for FTSE 100 chief executives and other time-poor workers and says demand for her services has risen ever since confidence in the housing market fell.
“A few years ago when it felt as if anyone could buy anything and make money on it then you didn’t always need professional help with buy-to-let,” says Sam, who set up SJM Property Investments after nearly a decade at Lurot Brand, the London mews specialist. “But in reality back then people were often wasting huge amounts of time buying the wrong sort of properties, which only generated a fraction of what better homes were achieving. In today’s market people recognise that the right properties are harder to find and are prepared to pay someone else to track them down.”
One FTSE 100 boss is so certain that there is still long-term value in the right residential properties that he has just allocated £10m for Sam to invest in prime west London locations. And she is taking a forensic attitude to the type of properties he should buy. “I have learned not just to focus on specific areas but to focus on specific streets. In the current market investors really can’t afford to make mistakes because the difference between a lucrative and a loss-making property can hinge on very simple factors that basic research should have uncovered.”
Scouting out properties takes a lot of legwork and dealing with hard-working clients means Sam has a lot of early-morning and late-night meetings. “The job isn’t easy but if you love property and thrive on the challenge of finding and then running the best buildings then it’s a fantastic opportunity,” she says. “I spotted the niche for what I do when I was working for my previous agency. I saw how many people were trying to sell what had turned out to be bad investments because they had refurbished or decorated them badly or simply failed to work out what sort of tenants might demand them. It was clear people needed more help buying, refurbishing and running the right properties first time around and I knew I could do it.”
Others who now make a living supporting buy-to-letters say they too leapt in after spotting gaps in the market. Amer Siddiq is one of them. Having bought several property investments in his native Warrington he realised there was precious little freely available information about the tax issues he might face if he sold up. “Obviously your tax situation will vary widely depending on your personal circumstances, but I was amazed there was so little generic advice and I started talking about this with other landlords at property shows and in chatrooms,” says Amer.
When a handful of accountants came forward saying they had the experience but didn’t have a shop window to get their message across, Amer decided to provide one. He set up www.property-tax-portal.co.uk as a one-stop information centre and is producing a series of paid for software to help property investors with tax calculations.
Up in Norwich someone else has recently taken advantage of the internet to help reach a growing client base of buy-to-let investors. Tessa Shepperson, a property lawyer, started to get more and more questions from landlords unsure about their rights and responsibilities in dealing with tenants — not least when it came to non-payment of rent and evictions.
“Often I was being asked almost exactly the same question in a host of different guises and I realised that there was a huge knowledge gap in the buy-to let world,” says Tessa. She formed www.landlordlaw.co.uk to try to plug it — and it has taken over as her fulltime occupation.
Investment Scams
Warning bells are being rung over one part of the buy-to-let support industry — the high-cost courses and investment schemes that promise anyone can make millions out of property.
Adverts for property seminars are commonplace, with delegates told they can learn the professionals’ secrets over a weekend, normally at a city centre or airport hotel. But many experts say that at best you will be told nothing more than basic advice that is freely available elsewhere, while at worst the whole operation will be a front for a form of property pyramid selling.
The government has started to clamp down on the worst of these offenders. In May it closed down the first three cowboy operations it had been examining and it is continuing to investigate and pull the plug on several more. The worst offenders take big upfront fees from clients and promise them outright ownership or a share of a selection of “specially approved” investment properties. If clients get anything at all, however, it is likely to be the kind of properties no one else would buy and few people would choose to rent. Selling up or getting your money back can prove impossible.
Experts say that common sense should warn people against taking part in the scams. “When a property investment scheme or training course is offering easy access to vast riches you should look for the catch,” says Graham Chase, vice president of the Royal Institution of Chartered Surveyors.
Finding the right deal
The right mortgage broker can be a buy-to-let investor’s most important ally — especially when tenants seem thin on the ground and rents may need to be cut.
“The difference between the best and worst mortgage deals on buy-to-let can be even greater than on ordinary residential loans and if you’ve got a £150,000 investment mortgage you can easily be paying £200 a month more interest than you need if you pick the wrong one,” says David Hollingworth of fee-free broker London & Country Mortgages.
And with new players such as Alliance & Leicester preparing to re-enter the buy-to-let mortgage market, competition for borrowers is expected to intensify, with the best deals getting better and the worst being left even further adrift.
Picking the right mortgage broker is important if you want to cut your outgoings to the bone. If you choose one charging high fees — some charge up to 1.5 per cent of the loan amount — then the monthly savings you can make on a new mortgage can be outweighed by the cost of the change.
Low or no-fee alternatives such as L&C, Landlord Mortgages and Purely Mortgages can make a switch more cost effective.