I was asked today, by someone who read my blog post recently about the ease at which I found 2 new tenants, how you can be sure that you are going to get good tenants?
The person was asking me from a point of view of assuming that even if conventional references and checks appear fine - what other factors help you to determine if you feel a potential tenant will be a good one - or not.
My answer was that you can never be 100% sure that any tenant will be a good one.
Credit checks, employer references etc all help, but in my experience there are other indicators that often give you clues about the type of people you are dealing with.
In one of the 2 houses we recently let, there was a classic situation of many 'give-away' indicators to me that the potential tenants were probably going to be ok. Their credit checks etc came back fine - but it was the other 'clues' that were just as important to me in deciding to give them the tenancy.
Firstly, they had no quibble about finding all the first months rent and the bond immediately. They both had solid employment histories with very established local companies too.
Explaining that they wanted to stay in the property a long time, they discussed with me their plans for redecoration and landscaping of the garden - all improvements to the house - at their expense.
They also had no problems withthe notion of supplying a family member (mother)as a guarantor for the rent. I took this opportunity to use it as an excuse to visit the mother and it gave me a good insight into the way the house was kept - which was immaculate. I also couldn't help but notice that the potential tenants car was clean and immaculate inside, and their young duaghter was dressed immaculately.
They absolutely loved the house, and I could see that they were psychologically 'moving in' already as we did the viewing. They asked if they could do a second viewing and bring some family members along. This was no problem to me - in fact it indicated that they had strong local family ties. When I met the family, who all loved the house, it turned out that I was acquainted with one of them already - this certainly made the relationship seem even firmer.
Overall, after years of experience vetting potential tenats, I simply used my instinct, experience and common sense to conclude that these people would be as good a tenant as any.
Now, time may prove my instincts to be wrong - but I somehow doubt it.
Experience has taught me that even if formal checks and references are fine, it pays to use instinct and common sense in finalising your decuisions.
Wednesday, 21 October 2009
Monday, 19 October 2009
Rental market appears to surge
Finding myself with 2 void properties to fill recently, I researched my local area to gauge the level of demand for rental houses. Nine months ago it was a tough market - with only the most presentable properties moving relatively quickly. I have always found that by presenting properties well, and not being greedy on the rents asked it is pretty easy to fill empty houses even in 'bad' times.
However, as I say, a few months ago it was harder than normal.
How times appear to have changed - certainly where I live - and I suspect in a lot more places too. Both properties rented out in one week. I could have let them go after just one day. However, when I realsied the extend of the demand currently i realised that I could build up a frenzy amongst potetnial tenants - and cherry pick the best tenants. One property had 19 enquiries (and apparently dozens of 'drive by' viewers - according to next door neighbours), the other property had 14 enquiries.
I managed to get 2 decent families in them - with great references and guarantors for the rent.
Speaking to one established letting agent in particular - she informed me that out of 132 properties on her books - only 6 remained! She explained that if she was given 100 extra properties now - then she could move them all in 3 - 4 weeks time!
Why is this? I asked her this question and she explained its simply because many reluctant landlords who were forced to rent their properties because they couldn't sell 12 months ago have now left the market. Also, many people are choosing to rent because of the fiasco in the loan markets and this has apparently put many people off home owning for the foreseeable future.
There are also apparently, less tenants moving around from house to house as they seek stability in troubled times.
All this is good news for landlords who need to fill a void. However, it shouldn't be a charter for landlords to let their standards slip because its easier to to rent houses out currently. One day this will surely change again - and that's when your marketing and presentation and people skills will allow you to outperform the many landlords who just don't care.
However, as I say, a few months ago it was harder than normal.
How times appear to have changed - certainly where I live - and I suspect in a lot more places too. Both properties rented out in one week. I could have let them go after just one day. However, when I realsied the extend of the demand currently i realised that I could build up a frenzy amongst potetnial tenants - and cherry pick the best tenants. One property had 19 enquiries (and apparently dozens of 'drive by' viewers - according to next door neighbours), the other property had 14 enquiries.
I managed to get 2 decent families in them - with great references and guarantors for the rent.
Speaking to one established letting agent in particular - she informed me that out of 132 properties on her books - only 6 remained! She explained that if she was given 100 extra properties now - then she could move them all in 3 - 4 weeks time!
Why is this? I asked her this question and she explained its simply because many reluctant landlords who were forced to rent their properties because they couldn't sell 12 months ago have now left the market. Also, many people are choosing to rent because of the fiasco in the loan markets and this has apparently put many people off home owning for the foreseeable future.
There are also apparently, less tenants moving around from house to house as they seek stability in troubled times.
All this is good news for landlords who need to fill a void. However, it shouldn't be a charter for landlords to let their standards slip because its easier to to rent houses out currently. One day this will surely change again - and that's when your marketing and presentation and people skills will allow you to outperform the many landlords who just don't care.
Thursday, 1 October 2009
House prices 'bouncing back'?
Ive just read a report today saying that the Bank of England are astounded at the property market rebound. The Banks Chief Economist, Spencer Dale, admits to 'being surprised in the strength of property values'.
There are most certainly lots of signs of confidence returning to the market. For example, The Halifax report that the average house price now stands at £161,000 - this is the same level as ten months ago in December 2008 - and its rising now month-on-month - this certainly isn't a 'blip'.
Home loans are increasing month-on-month currently. HSBC today announced that they consider the housing crash to be over - and promptly made half a BILLION pounds available for a new 90% loan product. It's enough finance for about 3,500 typical, average priced, property purchases.
This means that those people who sign up for this product only then have to find a 10% deposit. This for me, is a, massive, sure sign of confidence returning. OK - the bank gets some headlines by making this move - however they wouldn't earmark for lending £500m just so they could get some free headlines - especially after what has happened in the last 12 months!
It's a public announcement that they're 'back in business; and are ready to lend at very generous loan to value ratios.
This is the type of move that will give HSBC a 'slug' of easy market share - market share that has been going begging for over 12 months. The banks have had to stand back and watch the game from the sidelines whilst they got their confidence and funds back in place.
People will be flocking to sign up to this product. The product will steal business from their banking rivals. This type of activity puts pressure on other banks - who also will feed off the confidence that HSBC are openly displaying - to copy them in retaliation. This is nothing more than basic economic theory coming into play, in practice, as we come out of the recession - and the banks (who are very greedy - remember?) want (have) to make money.
Other recent economic indicators show that economic output fell less than had been predicted - meaning that, quite simply, things have not got as bad as was previously feared. This is also a strong indicator that the nation's economy is improving.
Unemployment is still rising - but on the other hand, for every person out of work - there are around another 9 who aren't! Many of these people are paying their lowest mortgages ever as tracker rates and low standard variable rates work very much in their favour.
This means that they have more disposable income. Incidentally, at the end of any recession, historically, unemployment continues to rise for about 18 months from the point of the slump ending - its obvioulsy simply a natural economic phenomenon that just 'happens'.
However, it appears that this windfall money that individuals are gaining each month isn't being spent - yet!
Another report by the Office of National Statistics, (ONS) says that personal savings are increasing rapidly as fearful individuals 'feather their nest' following the recent gloom and doom. The 'savings rate' - the % rate of what people save as a proportion of their disposable income is at its highest rate for nearly 7 years.
Historically, Britain doesn't appear to be a nation of savers - certainly not in the last few years. I think that much of this hoarded cash will soon be spent- when confidence returns totally. People will have the confidence to spend this hoarded money - as they feel a little more confident and finally decide to treat themselves with some luxury purchase or other.
Whats the point of all of this from a property angle?
Well, to me, in my humble opinion, it simply appears as if a combination of more lending (at better LTVs and rates), increased consumer confidence, along with people realising (because the media is now telling them!) that the property market has fallen as low as it will - make those who have been sitting on their hands, waiting for matters generally to improve - to take the plunge into the market.
In some parts of the country, housebuilders are saying they are being caught out and running short of completed stock to sell as a result of winding up their operations on many sites in the last 18 months. It will take them a while to 'gear up' again. These shortfalls in supply help to fuel property price increases too.
The fact that the population constantly increase by at least 400,000 people each YEAR means that housing stock is going to be under constant pressure - literally for ever. Remember, as a nation, we don't have enough properties now - so imagine the impact of a growing population - compounding over time!
To conclude, from an investment point of view, I am confident, based on external factors, that prices are rising again - and therefore property will be more expensive for collectors (investors)to 'collect' - the longer an individual leaves it to buy now.
OK - if you buy a property in 12 months time - as opposed to buying it at today's price, you're going to more than likely pay considerably more - but - wait ten years and you will still be a winner anyway. However, buy it now at today's price and you'll win even more!
There are very few times in the property price cycle that one can call a peak or trough - but I feel that we are probably in a point in time now where that is possible.
There are most certainly lots of signs of confidence returning to the market. For example, The Halifax report that the average house price now stands at £161,000 - this is the same level as ten months ago in December 2008 - and its rising now month-on-month - this certainly isn't a 'blip'.
Home loans are increasing month-on-month currently. HSBC today announced that they consider the housing crash to be over - and promptly made half a BILLION pounds available for a new 90% loan product. It's enough finance for about 3,500 typical, average priced, property purchases.
This means that those people who sign up for this product only then have to find a 10% deposit. This for me, is a, massive, sure sign of confidence returning. OK - the bank gets some headlines by making this move - however they wouldn't earmark for lending £500m just so they could get some free headlines - especially after what has happened in the last 12 months!
It's a public announcement that they're 'back in business; and are ready to lend at very generous loan to value ratios.
This is the type of move that will give HSBC a 'slug' of easy market share - market share that has been going begging for over 12 months. The banks have had to stand back and watch the game from the sidelines whilst they got their confidence and funds back in place.
People will be flocking to sign up to this product. The product will steal business from their banking rivals. This type of activity puts pressure on other banks - who also will feed off the confidence that HSBC are openly displaying - to copy them in retaliation. This is nothing more than basic economic theory coming into play, in practice, as we come out of the recession - and the banks (who are very greedy - remember?) want (have) to make money.
Other recent economic indicators show that economic output fell less than had been predicted - meaning that, quite simply, things have not got as bad as was previously feared. This is also a strong indicator that the nation's economy is improving.
Unemployment is still rising - but on the other hand, for every person out of work - there are around another 9 who aren't! Many of these people are paying their lowest mortgages ever as tracker rates and low standard variable rates work very much in their favour.
This means that they have more disposable income. Incidentally, at the end of any recession, historically, unemployment continues to rise for about 18 months from the point of the slump ending - its obvioulsy simply a natural economic phenomenon that just 'happens'.
However, it appears that this windfall money that individuals are gaining each month isn't being spent - yet!
Another report by the Office of National Statistics, (ONS) says that personal savings are increasing rapidly as fearful individuals 'feather their nest' following the recent gloom and doom. The 'savings rate' - the % rate of what people save as a proportion of their disposable income is at its highest rate for nearly 7 years.
Historically, Britain doesn't appear to be a nation of savers - certainly not in the last few years. I think that much of this hoarded cash will soon be spent- when confidence returns totally. People will have the confidence to spend this hoarded money - as they feel a little more confident and finally decide to treat themselves with some luxury purchase or other.
Whats the point of all of this from a property angle?
Well, to me, in my humble opinion, it simply appears as if a combination of more lending (at better LTVs and rates), increased consumer confidence, along with people realising (because the media is now telling them!) that the property market has fallen as low as it will - make those who have been sitting on their hands, waiting for matters generally to improve - to take the plunge into the market.
In some parts of the country, housebuilders are saying they are being caught out and running short of completed stock to sell as a result of winding up their operations on many sites in the last 18 months. It will take them a while to 'gear up' again. These shortfalls in supply help to fuel property price increases too.
The fact that the population constantly increase by at least 400,000 people each YEAR means that housing stock is going to be under constant pressure - literally for ever. Remember, as a nation, we don't have enough properties now - so imagine the impact of a growing population - compounding over time!
To conclude, from an investment point of view, I am confident, based on external factors, that prices are rising again - and therefore property will be more expensive for collectors (investors)to 'collect' - the longer an individual leaves it to buy now.
OK - if you buy a property in 12 months time - as opposed to buying it at today's price, you're going to more than likely pay considerably more - but - wait ten years and you will still be a winner anyway. However, buy it now at today's price and you'll win even more!
There are very few times in the property price cycle that one can call a peak or trough - but I feel that we are probably in a point in time now where that is possible.
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