It wasn’t the purchase that we’d planned but it seems too good to be true. How do we go about making an offer on the next property?
Making an offer on the next property
The last 2 days have been very strange for us. We’ve gone from trying to make an offer on one flat, to seriously considering buying 2 flats at once. This was not in the plan at all! But our road map tells us that we should be buying at least 3 properties this year. So buying 2 at once isn’t necessarily a bad thing.
Are they a viable purchase?
Because the 2 flats are in the street we’re interested in, we know that the area is OK. There is no need to research tenants, the shops the transport, etc. They are all acceptable. We also know from the agent what the rent of each of these flats in. We put the purchase price and rents for the 2 flats through our opportunity model. They more than met our expected ROI threshold. The gross yield and net yield are definitely higher than our thresholds too.
What’s the catch?
The only wrinkle in the whole thing came about when we called the agent to make an offer of the asking price. It turns out that the vendor has only put these 2 flats back on the market because previous buyers have pulled out due to not being able to get a mortgage on the properties. EEEK!
Apparently, this was because they were working with lenders who didn’t like lending to flats held on Tyneside leases.
- Step one we need to figure out what Tyneside leases are
- Step 2 we need to go and get a mortgage in place before we can call the vendor back. Or at least call the agent back with a serious offer which has paperwork to back it up.
Making a decision
The only thing that we have to agree between ourselves is what we are going to offer. We saw in the paperwork that it is an offers over scenario and the agent confirmed that the asking price is slightly too low to be accepted. We figure that we’ll still be able to get a mortgage on an offer slightly over the asking price.
So lets go and talk to a mortgage broker about getting a mortgage for a limited company on a pair of flats which are free held under a Tyneside lease.