The ‘Landlord Advice Guide’ has been put together to hopefully assist both Investors and Landlords in all areas of property investment and we are confident you will find many informative and helpful tips in this section. CXG are happy to share their extensive knowledge of all areas of the property investment market providing you with the tools required to reach your personal financial objectives. The knowledge we share does not attract a cost or push you on to a gateway to buy a course and often, the best advice is free of charge.
CXG believe in the law of attraction; good deeds will attract good people which, in turn, will attract good opportunities in which we all share.
Top ten things for an investor to consider
Buy for cash flow.
When I started property investment I bought properties I knew would generate good cash flow. When the financial crisis hit my portfolio remained robust and once interest rates were dramatically cut my income increased substantially, therefore always look for price points enabling you to generate attractive returns.
Invest for the long term.
Do not be drawn into expensive courses telling you how to become a property millionaire overnight with just £1 in your back pocket. Financial freedom goals can be reached if you create a long term strategy of between five and ten years.
Be realistic about maintenance costs.
Do not underestimate the funds which will be required to maintain and improve your properties. Have an emergency fund for an example: boiler breakdowns. Have a refurbishment plan to enhance the value of your property and to generate increased rental income.
Negotiate a discount.
Hone your negotiating skills and walk away if your minimum price cannot be agreed. Other deals will always come along.
Research the location.
What is the capital growth potential in the area you have chosen to invest in? Paying market value in an area which, due to regeneration, is set to grow by 20% per annum is a better investment than negotiating a 10% discount in an area where growth has a 3 year static period.
Look for a property you can add value to.
You can often enhance the value of your property by simple refurbishment i.e. new bathroom, new kitchen, new carpets and neutral finish will create an immediate uplift in value if you have targeted the right property in the right area.
Remember, you are creating a business.
Many investors, unlike the tax man, do not understand as soon as an investment property is purchased a business is created. You should therefore treat the business with the respect and investment required to generate the income to reach your financial goals.
Have a passion for what you are doing.
Property investment can be challenging and you will face many hurdles. Having a passion for what you do will enable you to have the perseverance to overcome the challenges you will inevitably face.
Put a value on your time – can you outsource to someone?
Many property investors cause themselves a lot of stress by believing they can become experts in all areas of property investment, they fail to value their time and inevitably cost themselves thousands of pounds by not having strong strategic alliances with the relevant experts in their field e.g. property sourcers, mortgage brokers, solicitors, and accountants.
The best and last tip
I believe the best tip I can give you and therefore my last (not entirely tongue in cheek) is to partner with CXG to assist you in building your personal high cash flowing property portfolio. I believe we are the best at what we do.
Investing in new build developments
New builds can prove to be attractive investments for CXG clients, as we have built an excellent relationship with a major investor developer. This can result in genuine market discounts of up to 25% in areas in the country with good capital appreciation potential. For added comfort, an attractive yield is offered for the first year. For added value maintenance issues should be minimal and the builds are backed by 10 year building warranty. There is a higher rental demand for this type of property due to immaculate modern condition and location.
Investing in student accommodation
The student rental market is something not many people think of when talking about property investment. However with low entry points and guaranteed high returns, purchasing a student let can be the way forward for landlords looking for a good cash investment.
These blocks of studio flats provide the students of city universities a top quality facility. Often complete with gymnasiums, entertainment rooms and 24 hour CCTV it is no surprise there is a high demand coming from foreign students who are willing to pay the price for this type of accommodation. Best of all, these apartments come as a total armchair product, with many of the developments providing their own concierge service. The yields are very attractive and often guaranteed for the first year.
Student lets are great high yielding investments for current or new landlords seeking a fully managed investment with an above average return on capital. Investors looking for potential funding may liaise with Shawbrook through CXG.
CXG sources suitable properties using our considerable knowledge of the market to negotiate on your behalf a genuine discount either directly with the vendor or developer. Our unique armchair products have helped us win 12 awards over the last 5 years including: 3 of the most prestigious awards in the industry from The Times Property Awards 2013/2014, Customer Service from Landlords and Lettings Awards 2012, Most Loved Letting Agent in the UK 2013 and we are proud to say we are still the current holders of Property Sourcer of the Year. We were recently voted ‘Suffolk Business of the Year’ by the Chamber of Commerce and also ‘Agent of the Year 2014/15’.
We are pleased to announce, subsequent to our success in the South East, we now also have a number of exclusive opportunities in the North West of England following our agreement with a major investor developer which has given us the ability to offer properties from £30k to over £10million. These properties will be fully managed either by the developer or CXG, with guaranteed returns between 7% and 12% net and genuine discounts of up to 20%.
Co-owner Robin Pilley said “I am very excited by the investment prospect for both ourselves and our investors over the coming year. The North West as a region is still 40% below the 2007 peak in property prices demonstrating the capital appreciation opportunity available whereas London is 40% above the 2007 high point in prices. This is why astute investors are concerned about a ‘London bubble’ which is also reducing the yields available in the south of the UK. Investors need to be aware that Manchester, for example, outperformed London last year for the first time in many years with a growth rate of 18%. It is apparent that the North West with genuine discounts available, offers high yields and excellent capital growth potential and is thus the ideal place for investment”.
The CXG management service
At CXG we are proud to offer what we believe is the very best Property Management Service available. So what does that actually mean?
Well, whether you have purchased your property through our Investment Division or you already have a property or properties for rental, you will receive the same caring and highly professional service. Here at a glance are some of the main features of our service:-
Finding suitable tenants. Like many letting agents we use all the conventional channels such as Rightmove, Zoopla and social media sites like Facebook to attract tenants. But we go much further. We have developed our own database which means that once a potential tenant has registered with us and all necessary checks have been made, our sophisticated computer software can instantly match their requirements to suitable available properties. And because tenant vetting and the checking procedures have already been carried out, there is no delay in dealing with the paperwork and getting the tenant installed in the property. This means that you get rental income faster, and that’s essential. Empty properties do not earn money, so we make it our priority to get them let out to trusted, reliable tenants as soon as possible.
Managing the finances. This is the most important part of the process. Without good financial management in place your investment can be wasted. CXG are equipped with the best client accounting software available today and our highly trained staff can deal with every aspect of property management. We take and hold tenant’s deposits in a totally secure, legally approved separate client account. We ensure that rents are paid correctly and keep you, the landlord, updated on a weekly basis. We are registered with HMRC to deal with overseas landlords too, and can advise on any issues concerning tax matters. And every year all our landlords receive, at no charge, a complete income and expenditure breakdown to help with their tax returns. We also offer various optional items such as Rent Guarantee Insurance which can offer further peace of mind if required.
Managing the Property. From first inspection to end of tenancy, we take care of it. When you entrust your property to us for management, we always begin with a personal inspection. We then create a complete profile of your property with an inventory, a condition report covering all fixtures and fittings, carpets, wall coverings and fitted equipment and also a comprehensive photographic record. This dossier is then available to both the landlord and the tenant so that everyone is clear as to what the property contains and its condition. Of course we also read the meters and inform the council of a change of occupant.
Once the tenant is in residence we will regularly inspect the property and resolve any issues which may arise. We have a close working partnership with a local building and maintenance firm. This means that if something needs fixing we are straight on to it. All necessary trades including fully qualified Gas Safe Registered engineers are available to us and at a preferential prices due to our partnership arrangement. No problem remains unresolved for long when we’re in charge!
The legal bit. There are many legal complexities involved in being a landlord. We know, as we are landlords ourselves and are well aware of all the issues involved. And we are experienced in dealing with them. Insurance of buildings and contents, energy insurance certificates, gas safety issues, smoke alarms, deposits; we will take care of these things on your behalf. As your managing agent we know what to do so that you don’t have to. It’s part of our job.
So, in conclusion, we offer you, the landlord, a complete property management service. CXG are an award winning company with a fantastic reputation of which we are justly proud and we would be delighted to deal with your property and assist in obtaining the maximum stress-free return on your investment.
Why not phone, email or call into our head office now for an informal chat and we’ll explain further as to how we can help. We look forward to seeing you!
The benefits & considerations of HMOs
HMOs (Houses of Multiple Occupancy) can prove to be a great investment for landlords, dramatically increasing the profit a property is bringing in. However, it isn’t quite as simple as renting out each room individually. There are many rules and regulations that come with this type of let – all of which should be considered before converting your property, as it can be costly.
By choosing to let your property as an HMO we would highly recommend handing it over to a management company as the time and effort that is spent on managing both the standard of the property and the tenants will increase from that of the average family let, especially if you don’t get it right from the outset. But get this right and the reward will be great!
Landmark Court Case
CXG took the local council to tribunal on behalf of 20 vulnerable tenants when the council halved their benefit. Tenants had been receiving what is known in LHA terms as the 1 bed self contained rate due to the fact each of them had exclusive use of 2 rooms in their tenancy agreement. The Council, on Christmas Eve 2009, decided to withdraw this benefit after a year of payments and replaced it with the shared room rate. This in effect halved the tenants benefit. It resulted in increased costs for the public purse due to the fact these vulnerable tenants had to be re-housed as they faced eviction during the coldest winter the country has suffered in 30 years! They were placed in a position where they could no longer meet the terms of their tenancy agreements.
The regulation in question was debated and agreed by parliament and was designed to assist single people over 25 years of age find suitable accommodation due to the lack of flats available. This law allowed landlords to find 1 premise i.e. a 4 bedroom property to house 2 tenants, thus increasing social housing stock which is so scarce. It also protected the public purse as the tenant could only claim the same amount of benefit.
CXG checked with its Council’s most senior housing benefits officer who confirmed its validity. Housing Benefit then paid the rate for over a year. Neither CXG nor the affected tenants were given any prior warning of the council’s decision to withdraw the rate – this was first communicated to CXG by a phone call on Christmas Eve.
It was important that CXG, on behalf of all Landlords and tenants, fought this case which turned into a year long ‘David vs. Goliath’ battle. The local press gave extensive coverage to CXG’s campaign, tenants organised demonstrations outside the council offices, CXG involved their local MP and the BBC featured the story on the local news programme ‘Look East’.
As a result meetings were arranged with CEO of the council but unfortunately the Council’s stance remained unaltered. The council then applied pressure to the tenants to withdraw their appeals, however 18 tenants continued with the process as a result of the support and assistance CXG gave them. The council’s internal appeals process then rejected the appeals. This meant the tenants had to refer the matter to a tribunal, as part of their submission, making it very clear how helpful CXG had been through the entire process and how the accommodation they were provided had a positive impact on their lives.
The tribunal was heard over 3 days, CXG were up against a council barrister who was paid over £20,000 from the public purse to make their case. Their submission ran over 600 pages whilst CXG were able to successfully argue that all accusations made by the local council were false and that the basis for this decision was erroneous in law.
As a result of this victory CXG’s tenants had their housing benefit reinstated. CXG will now be able to offer this benefit once again and the fact the council made it a test case means CXG are able to advise all UK landlords on how to apply this 2 bedroom rate in their local area. It was a tremendous triumph on behalf of all landlords and LHA tenants and has resulted in CXG’s local MP Matthew Hancock seeking and meeting with Ian Duncan-Smith to enable CXG to help in the welfare reforms.
Secrets to running a successful HMO business
Article from ‘Your Property Network Magazine’ in which it featured in the March 2011 issue
GETTING YOUR MUITI-LETS TO PAY
Hi – my name is Robin Pilley and I am the Co. Founder of CXG. The company has now been going for just over 5 years, and today manages 137 properties around Haverhill in Suffolk. our property base is currently rising by 5 a month.
During this period we have completed over 100 sales to property investors. We have recently established our own Estate Agency and developed our own associated maintenance company. CXG was developed from my brother Daniel and I finding that our retail business, of 10 years, was being severely affected by the internet as we were in the hi-tech computer world which was increasingly vulnerable to online competition and we could see our turnover beginning to decline.
I was therefore tasked with seeking a new business opportunity and started by acquiring a couple of properties initially to help our pension pot. I located potential in ex-local council 3 or 4 bed houses and placed a small advert in our local newsagents advertising rooms to rent for £75 per week. Within the first weekend we had over 30 calls! Clearly we had identified a market. We could’ve filled our first property 5 times over. The mortgage payments were approximately £300 per month, the cost of the 3 bed properties was under £100,000 and the rental income was £1,300 PA which generated a very attractive return. Here was our new business venture staring us in the face and CXG was born.
At this time I had no understanding of HMO’s, Housing Benefit, yields, fire and other regulations but I quickly recognised that property was a way in which our financial goals could be reached and I quickly developed a passion for property investment.
I therefore persuaded my brother to sell our retail business and put the proceeds into this new venture, which quickly enabled us to build up a joint property portfolio of 10 properties. Our mortgage broker at the time advised me that with the yields we were obtaining he had many investors who would be interested in the model that we were developing.
I therefore made a presentation to Mr & Mrs X, introduced as potential investors, who were so impressed that they contracted CXG to source them 10 investment properties. We charged £5,000 which included a sourcing fee, a furniture package and a letting fee. CXG would also manage each property for an ongoing charge of 12% of the rental income.
CXG then developed a close working relationship with the mortgage broker in question, which meant that as soon as I found a suitable investment property, we already had sourced an investor, and thus we quickly built up our business to the point where we were managing 50 properties within our first 2 years.
As we are a Lettings company formed by investors (ourselves) for investors (our expanding list of clients)we have always obtained high yielding properties and have been very active in ensuring that we have very few void periods and very low arrears.
We have always had the philosophy that where there is a niche market that allows us to offer high positive cash flow properties to investors then we should target this market. For example, when the UK had an influx of immigration from Eastern Europe, especially Poland, we were the only Lettings Agency in our area that spotted an opportunity and by offering weekly cash payments for rent and providing a furniture package captured this market. We were flexible with our credit scores and accepted low deposits because we soon realised that the majority of this group were hard working, kept their properties clean and in good order, and saw the UK as an opportunity to improve their family living standards and were prepared to accept work in local factories. With high hourly rates we found that they paid their rent on time and coming from a culture of renting happily respected the terms of their tenancy. In fact many recommended CXG to other members of their growing community.
We also took on a Polish employee for Saturdays (rent day) who was able to communicate in their own language and helped translate and sort out bills and any other query that arose for tenants first establishing themselves in the UK. The fact that we also offered HMO rooms meant they could establish roots very quickly in their new Country and many of them did progress to renting houses as families followed at a later date.
We were often able to obtain a premium on rents for the services provided which meant that not only were the tenants happy but our investors were happy too.
There was the question of what would happen if these all returned to their homeland, and to some extent this has happened in the case of the Poles but thinking like investors means that you must always be reading the market to find new ways to maintain high yielding properties for investors.
An example of such an opportunity is that we are also the only Letting Agency in our area that offers properties to LHA tenants. We ensure that the rent is ring-fenced so that we do not have a problem with arrears. We assist and advise prospective tenants to complete their benefit forms and have established a good working relationship with our local council. There is a crying need for such social housing and again the yields can be very attractive. We also believe that in Bill Irvine, our consultant, we have the best LHA advocate on board. Government legislation is a complex area and Bill is well versed in handling any disputes that arise for tenants. This sort of expert back-up is essential to our continued success.
We have effective license agreements and also a reciprocal agreement with the police which means we can email them details of any prospective tenant and literally within a couple of hours they advise whether we should be wary of a prospective tenant. This is a powerful tool in our armoury and avoids a lot of the problems that other agencies and landlords have experienced when offering HMO properties, it is something we are proud to have negotiated at a local level and the police have been very pleased with the fact our lettings company can co-operate so successfully with them. It also helps to avoid the tenants from hell scenario, which is a big fear that tenants have when letting their properties.
More recently we have forged links with our local M.P and through him have met a number of senior ministers to enable the landlord’s voice to be heard before legislation is imposed upon them.
This year we also wish to launch CXG overseas properties as several companies have expressed interest in a joint venture with us. We now have a very active database of investors which we have built up by attending networking events, having stands at property shows, personal recommendations and by positive press coverage.
Despite the doom and gloom in the national press we have seen strong demand for high yielding bricks and mortar investments and we are therefore looking to expand into new areas to increase our available stock and are presently looking to employ agents to enable the company to reach the next level of its development. Our agents must subscribe to the company’s ethos of integrity, ethical standards and delivering on our promises.
The company’s reputation is growing to a wider area. CXG was featured in the Lloyds TSB magazine last year as one of their success stories. It explained how we were one of the few companies that continued to expand during the credit crunch.
The key to our success is that we enjoy what we do, and have a passion for property and are now looking at developing educational workshops so that we can share our knowledge and experience to existing and prospective landlords. CXG can help investors make informed investment decisions and avoid some of the pitfalls and mistakes that are made when getting started. Successful property investment is not as easy as some ‘marketers’ suggest, but once solid foundations are laid your aspirations and dreams can be realised.
Liverpool's Landlord Licensing Scheme
Liverpool’s Landlord Licensing Scheme means that from 1st April 2015 all private landlords in the city must apply for a five-year licence for each of their rented properties.
The scheme is being introduced in Liverpool under the government’s selective licensing laws and signing up for it is compulsory.