Experience 2: The Weoley Castle Property

Index

• Experience 1: The apartment
• Experience 2: The Weoley Castle Property
• Experience 3: The Willenhall Property
• Experience 4: The Crewe Property
• Analysis of the Property Market 2010 
• Analysis Update  
• The one that got away
• Repossession Report 2010: 36,400 
• The Dangers of Investing Abroad  

After the nightmare of the apartment, I decided to wait until the the property market had stabilised. Since October 2007 (when I eventually got a tenant) I had been reading a lot of news which made feel that I had made the wrong decision by entering the market at the wrong time. In March 2008, I felt that it was way too early to renter the market and decided to wait another 6 months.

In September 2008, Lehman Brothers collapsed and with it the financial system went down as well. This forced me to lay low a while longer. I still looked at properties but never made any offers. Despite all this, I noticed that some properties were being snapped up quickly but others remained on the market for months on end.

But in January 2009, all 12 properties that I viewed were sold. I was convinced we had reached the bottom of the market and I started looking at property more seriously. In February, I put an offer on a repossessed property in Weoley Castle, Birmingham UK. Unfortunately, my father died that month and it delayed my purchase for 2 months. I thought I had lost that property but the Estate Agent phoned me about it and I told her that I still wanted it. If it didn't get sold in the previous 2 months, it could mean that the market quietened down. So after a survey claimed that it was a high maintenance property, I lowered my offer but they couldn't accept it so I increased it by £1000 and they said they'll let it go for an extra £500 to which I agreed.

The purchase price was £71,500 and I spent a further £13,500 refurbishing it. When I applied for the mortgage, the lender said that it's only available to experienced landlords and asked me to send an AST (Assured Shorthold Tenancy) agreement. Although the mortgage was only £54,000 with a payment of £236 pcm, I had to pay another £317 pcm for a personal loan I took out to pay the deposit and costs. The refurb was from savings, after all, I had saved around £18,000 while I was waiting for the market to stabilise. Because I was a novice, the refurb took 6 months to complete for which I paid over £3000 in interest payments. I completed in May 2009 and got a tenant in November.

I refurbed the house to the same standard as my new-build apartment which meant that I got a high paying tenant quickly - I gave the letting agent the keys on a Saturday, he advertised it on the Monday and he got a deposit on it on Tuesday i.e. the following day. They were long-term tenants i.e. they signed a 12-month tenancy agreement.

In May 2010, the tenants said that they were being harassed by the neighbours and wanted to leave. I said OK provided they they give me a month's notice and that they'll lose their deposit as they're in  breach of contract. They eventually agreed as they've found an alternative place which will become available in July. This effectively gave me 2 months notice. The relatives of the tenants tried to get their deposit back so I asked them to give me a written account of the harassment they were subjected to so that I can make an official complaint to Birmingham City Council. I have a duty to protect my future tenants. They refused to give me such an account which led my wife to suspect that it was an excuse to be released from tenancy agreement.

As far as I'm concerned, Weoley Castle is a friendly and quiet place of high demand and high rental values. It had a notorious reputation in the 70s and 80s but Birmingham City Council had cleaned it up since then. There are some rough necks around but you'll find them in most neighbourhoods To be honest, I was worried but my wife wasn't as she's been there and didn't witness any alleged activities and we're Asians in a white community.

I was lazy, I didn't ask the letting agent to market it for me until 10 days before the previous tenants left. The agent was very good, he found one within a few days but they didn't move in until 3 days after the previous tenants had left. Still these 3 days gave me enough time to tidy the place up. To be fair to the previous tenants, they left it in a spotless condition. However, they left a sofa, an armchair, and a broken cupboard in the drive; but Birmingham City Council moved it before the new tenants moved in. I took the opportunity to raise the rent to £575 pcm and the tenants didn't negotiate - I felt that I didn't charge them enough.

This property was a happy investment for me and it sort of compensated me for the fiasco with the apartment. However, the fact that the lender asked me for an AST, means that the fiasco had a uses - it enabled me to get a mortgage and take advantage of the low prices in the market place. Experienced landlords are seen as a lower risk than others.