An Investment

How easy will these apartments be to manage?

To be honest, it would be quite difficult for you to manage these apartments if you live a distance away wihout using Managing Agents. I have always used the same Managing Agents and I am more than happy to recommend them to you. Alternatively, you can find your own Managing Agent or you may have a friend or relative living locally who would be willing to deal with such matters.

What does a Managing Agent do?

They will deal with all the local issues for you such as collecting rent and forwarding it to your bank account, finding new tenants when required, setting up tenancy agreements and dealing with inventories.

Can I keep all the rent as profit?

You will need to pay for general maintenance on the building and for insurance. In addition, if you use a Management Agent you will have to pay them a small percentage. But the majority will definitely be yours to keep. Click on "The Numbers" page to see what has been paid out in the last year as an example. But don't forget your investment also increases in value due to capital growth and it is quite normal for this to be greater than the rental income collected.

Will I have to find my own tenants?

There is currently a tenant living in each flat and paying rent on a regular basis. They will not be asked to leave, but the rental income will switch to you after the sale.

What happens when the tenants leave?

I would guess that you would want to find new tenants and this has never been a problem. These are purpose built apartments and not part of a converted house. This makes them far more attractive to potential tenants. Such features as the large rooms, fitted kitchen and laminated floor help to make these apartments more appealing than most of the other flats and apartments you will be competing with.

How much capital growth can I expect?

I can not predict what property prices will do in the future. However, most pundits expect a slow and steady recovery in the coming years. For example, if property prices rise by just 0.5% (one half of one percent) per month then the growth from the capital will be around £7,000 per year. You may well be aware from discussions in the media that property inflation can well be twice this or even more! Since I have owned these apartments, the capital growth has been significantly greater than the rental income and I see no reason for that to change

Are you prepared to sell one apartment by itself?

Sorry, but this is really not practical. It takes virtually the same input to manage two properties as it does one.

Why are you selling these apartments now?

I have a portfolio of rental properties in both Kent and the M1 corridor. However, I have decided to concentrate on Kent as a location as this will allow me to use my own Management Agency. I have some new investment projects planned and this sale will provide the necessary funds.

If you have any other questions, please use the “contact” box below.

If you want to know how the finances are likely to work out, then here are some of the numbers you will need to know.

The current rent is £310 per calendar month per flat. For a 12 month period that would give you a gross income of £7,440.00.

But there are expenses which you need to take into account:

Firstly, as the flats are leasehold, there is a management company which looks after the insurance and maintenance for the whole block. The costs in the last year were £392.69 for the insurance and £604.19 for the maintenance costs, including external building repairs, general upkeep, management fees and any other bits and pieces (which work out at just £25.18 per flat per month).

Secondly, as a landlord you would be responsible for anything to do with the gas, water and electrical services in the flats. The tenants are responsible for everything else inside the flats such as decorations and the upkeep of the fabric. The landlord’s costs in the last year were £130.00 for two gas safety certificates (£65.00 per flat) which is a legal requirement, £275.00 for upkeep of the boilers in both flats and £138 for a couple of visits from a local builder to sort out a number of minor matters.

The total cost for the last year adds up to £1,539.88, and this has been typical of past years.

Finally, if you choose to use Managing Agents to look after the property for you and to deal with any day to day matters (leaving you to sit with your feet up), then this will be another cost. I am currently paying 9.5% (+ vat) of the rent collected. I have been very pleased with these agents and would willingly recommend them.

So, taking all of this into consideration, including the Agents fees, you will be looking at a return, (and please do check this for yourself) in excess of 4½%. PLUS this does not take into consideration (1) any future rent rises or (2) any capital growth.

Check this out against what your investments are currently doing!