New Build Buy To Let and the dead game
‘Back to Back’ was never sophisticated, never based on knowledge, never based on skill; it was merely based on a gamble. The beginner may not know what the phrase ‘back to back’ means so we start with the basics.
Property Investors use the term ‘back to back’ to describe how they ‘flip’ or ‘turn’ property. This involves agreeing to buy an off plan property from a new build developer with no intention of keeping the property for buy to let.
These are the steps:-
1.) The buyer will sign a contract with the developer to buy the property at a set price.
2.) The buyer will be told of the likely date that the development will be ready to be occupied.
3.) The buyer will pay a 10% deposit to secure his/her purchase.
4.) The buyer will seek out a Third Party (another buyer) for the property prior to the property being ready for occupation.
5.) The buyer will gamble on house prices; he or she will hope that the significant lead-time between paying the 10% deposit and completing will lead to an appreciation in the value of his or her property.
6.) He/she will sell on the right to purchase to a third party (Exchanging contracts with both the Developer and Third Party Buyer prior to completion).
7.) On the day of completion the Buyer will simultaneously purchase from the developer and sell to the Third Party Buyer. The Buyer will retain any surplus funds (profit).
In an ever increasing rising property market, landlords can do very well by ‘flipping’ contracts. Over the last decade some landlords have gambled on ‘flipping’ and ended up with significant fortunes, but today is not the day for being ‘flippant’ (excuse the pun).
As I have said time and time again, buying new build properties is a high risk/high reward/high loss strategy. You have no opportunity to add value to the property; the properties are finished to high standards and arranged in a desirable fashion. New properties are often sold at a premium solely because they are new. The owner occupier, such as a first time buyer, may be prepared to a pay a premium for ‘spanking new’ but the tenant has a different set of priorities that are driven from the fact that the property is not his or hers. It is highly unlikely that the premium purchase price will be reflected in the rent obtained.
If you do decide to ‘flip’ Buy To Let properties then the following tips may help: -
It seems that Developers are reluctant to allow this practice. Some Developers may think that the practice undermines their pricing structure. Developers have been known to apply the following restrictions in order to deter ‘flipping’:-
A clause in the Developer’s contract may state that you cannot ‘sell on’ the property until a certain period has passed. This might be the date when the Developer intends to close the Sales Office (The Sales Office will close when most, if not all, of the units have been sold).
A clause in the contract may prohibit buyers from showing other parties around the unit and/or the development. Other parties can include Estate Agents and prospective buyers.
You are unlikely to be able to market the product by the use of a ‘for sale’ sign. Also the Developer’s marketing material will have a copyright.
Some Developers will require that you obtain their written approval prior to selling on the property.
Just in case the third party buyer ‘pulls out’ prior to completion you may wish to arrange a Buy To Let mortgage. Buy To Let mortgages can be arranged for off plan properties but do watch the mortgage offer expiry date i.e. most mortgage offers are valid for up to 6 months.
Normally a mortgage offers can be extended but it is important to note the following:-
If your circumstances change the lender has a right to refuse to extend your mortgage offer. Most common reasons include; a subsequent credit check shows adverse credit and/or the cost of borrowing has increased significantly since the original mortgage offer, the mortgage lender declines to offer the same mortgage rate on the new mortgage offer.
It is possible that you would still make a profit it you failed to complete. The third party buyer would have failed to complete with you and would lose the deposit fee. You would also lose your deposit fee but the figure would be lower than the third parties. Your time and transaction fees may still make the deal a loss making deal.
Buy To Let Places
We have no data but have certainly had enquiries from landlords wanting to buy to let in SHILDON
We have no data but have certainly had enquiries from landlords wanting to buy to let in STOURPORTONSEVERN
We have no data but have certainly had enquiries from landlords wanting to buy to let in TOTNES
We have no data but have certainly had enquiries from landlords wanting to buy to let in WESTCLIFFONSEA
Buy To Let data is not available in ADDLESTONE
Buy To Let data is not available in BAMPTON
Buy To Let data is not available in BLACKPOOL
Buy To Let data is not available in BUCKNELL
Buy To Let flats can be found in CHESTER
Buy To Let Property data is not available in CROMARTY
Buy To Let Property data is not available in DUNSTABLE
Buy To Let Property data is not available in FRINTON-ON-SEA
Buy To Let Property data is not available in HAVANT
Buy To Let yields have dropped in IMMINGHAM
Flats for buy to let can be found in KIRKBY-IN-FURNESS
To find property can be difficult in some areas of LLANDUDNO
Property, especially flats can be found inMANSFIELD
Owner occupier market is good in NEWCASTLEUPONTYNE
Letting property can be easy in PENZANCE
Landlords do invest in RIPLEY
We have no data but have certainly had enquiries from landlords wanting to buy to let in SHIPLEY
We have no data but have certainly had enquiries from landlords wanting to buy to let in STOWMARKET
We have no data but have certainly had enquiries from landlords wanting to buy to let in TOWCESTER
We have no data but have certainly had enquiries from landlords wanting to buy to let in WESTDRAYTON
Buy To Let data is not available in ATHERSTONE
Buy To Let data is not available in BENFLEET
Buy To Let data is not available in BRIDLINGTON
Buy To Let can be a good opportunity in CARLUKE
Buy To Let Property data is not available in CONSETT
Buy To Let Property data is not available in DONCASTER
Buy To Let Property data is not available in FARINGDON
Buy To Let Property data is not available in GRIMSBY
Buy To Let Property data is not available in HOLYWELL
Expect many investment opportunities if prices soften in KEITH
I have heard that some Estate Agents are difficult to deal with. Watch out in LETCHWORTHGARDENCITY
Renting property out can be time consuming, ensure you buy right in LUTON
Property investment can be lucrative in MONMOUTH
Like many towns, flats yield best in ONGAR
Landlords try buy at under market value, you need to do your homework inPRUDHOE
Various pockets still offer good investment returns in SANQUHAR
We have no data but have certainly had enquiries from landlords wanting to buy to let in STANDREWS
We have no data but have certainly had enquiries from landlords wanting to buy to let in TENBURYWELLS
We have no data but have certainly had enquiries from landlords wanting to buy to let in WAREHAM
We have no data but have certainly had enquiries from landlords wanting to buy to let in WITNEY
We have no data but have certainly had enquiries from landlords wanting to buy to let in WREXHAM
Buy To Let data is not available in AMMANFORD
Buy To Let data is not available in BASINGSTOKE
Buy To Let data is not available in BORTH
Buy To Let data is not available in BUXTON
Buy To Let Property data is not available in CLEATORMOOR
Buy To Let Property data is not available in DARTFORD
Buy To Let Property data is not available in ELLESMERE
Buy To Let Property data is not available in GLOGUE
Buy To Let Property data is not available in HENLEY-ON-THAMES
Buying property can be difficult at times, given the competition from other landlords. Do your homework in ISLEOFGIGHA
Flats, Houses and all sorts of property can be found in LARBERT
Some young couples prefer to rent than buy in LLANWRTYDWELLS
Property investors can find various properties for letting in MELTONCONSTABLE
Not all property will make a good buy to let in NEWTOWNARDS
Lending will be based on rental income predictions so make the figures stack when buying in PONTYPRIDD
It is sometimes difficult to find good buy to let property in RUARDEAN
We have no data but have certainly had enquiries from landlords wanting to buy to let in SOUTHBRENT
We have no data but have certainly had enquiries from landlords wanting to buy to let in SWADLINCOTE
We have no data but have certainly had enquiries from landlords wanting to buy to let in UMBERLEIGH
We have no data but have certainly had enquiries from landlords wanting to buy to let in WICK
Buy To Let data is not available in ABINGDON
Buy To Let data is not available in BALLYCLARE
Buy To Let data is not available in BISHOPAUCKLAND
Buy To Let data is not available in BUCKFASTLEIGH
Buy To Let flats can be found in CHELTENHAM
Buy To Let Property data is not available in CREWKERNE
Buy To Let Property data is not available in DUNGANNON
Buy To Let Property data is not available in FORTROSE
Buy To Let Property data is not available in HARWICH
Buy To Let Property data is not available in ILFORD
Expectations are fair in KINGSWINFORD
To find property can be difficult in some areas of LLANBRYNMAIR
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