In this section, we answer some of the most commonly asked questions about investment in property.
How much money do I need to invest in property?The properties we purchase range in price from £100,000 to £150,000 and as a result, the funds required range from approximately £50,000 to £60,000 per property.
Our 3 and 5 property packages help clients diversify their portfolio and create an insurance policy where the rent on 1 property typically covers the mortgage payments on all 3 properties.
The funds required for investing in the 3-property package are circa £150,000 to £165,000.
The funds required for investing in the 5-property package are circa £250,000 to £300,000.
What kind of properties do you source?We source properties based on our clients’ specific requirements, and as such, source different types of residential property to fit their needs. Based on current investment criteria, most have tended to be 2 or 3-bedroom freehold properties, with double glazing and gas central heating.
We primarily purchase properties in areas where families buy, rather than areas where investors typically own the majority of housing stock. It is our experience that these areas increase in value much faster, as families are happy to pay more to secure a property that they like and where the schools are good, in contrast to investors that typically work to a strict budget.
The properties that we purchase are all existing properties between 40-80 years old, i.e. not new builds or off plan properties.
Who owns the property?We can purchase the properties in your name(s) or the name of a limited company.
Please note: we do NOT pre-purchase properties and then on-sell them for a profit. Similarly, we are NOT a ‘Property Club’ or ‘Property Syndicate’.
Why should I pay you to find me a property?The answer to this question is quite simple – Expertise and Time.
Why else would you pay anyone to do anything for you? If you have an issues, or if something goes wrong after our service is complete, we are on hand to help you resolve it – even if it is years later.
The key question to ask yourself is: Is it worth the risk of getting it wrong?
Find out more here
Why invest in the North?When we started the business, we were looking for a cities that could give us a great rental return, as well as the potential for above average capital returns over a 20-year investment period.
Northern cities, such as Leeds and Sheffield, offer just that.
Click here to find out more about why we invest in the North.
Is the rent guaranteed?We always have our pulse on the market, and so we guarantee the amount at which we expect the property to be initially rented for.
Our management partner is excellent at collecting rent and offer a full management service to ease the burden on our clients.
They also offer Rent Guarantee Insurance for £20 per month, which is very good value should you wish to further de-risk your investment.
Do I get to choose the property?As part of our process, we spend a lot of time understanding what our client is trying to achieve, and then map that onto a property criteria to source from after they have been onboarded.
Once we find a property that matches their specific criteria, we discuss the property and its potential as a good investment, with the client and then send out the Property Appraisal for their perusal.
Our clients always have the final say on whether they wish to go ahead with the purchase of any property.
Please note: we do not send out multiple deals to multiple clients, as we source to match your specific criteria.
Do I need to/Can I visit the property?It is not a requirement to visit the property throughout the property investment process, and many of our clients may not have the time to make the journey once the property is tenanted. They consider the distance to be an asset, rather than an issue, as they can then consider the financial viability of the property investment without getting emotionally attached to it. That ultimately makes for a better, more hands-free investment.
If you decide to visit, you can take advantage of 2 options:
1. We regularly run city tours to help potential clients feel comfortable with the area and understand the types of properties we are purchasing. The cost is £595 per person including VAT. We show our clients a selection of properties that we are currently purchasing for clients or that are currently being marketed for sale.
2. The second option is for people who would like to see what they have agreed to purchase. Once clients have been onboarded and agreed to proceed with the purchase of a particular property, we are happy to accommodate a viewing of their property before exchange of contracts.
Unfortunately, it is rarely possible to view the property before agreeing the sale as good properties don’t tend to stay on the market long. In getting the best deal, speed is of the essence, hence we collect all the purchase documentation during the onboarding phase.
Do all properties require refurbishment works?All our properties require some level of refurbishment.
As we typically purchase in family areas, the properties may not be up to rental standards, e.g. smoke alarms, handrails, or any other necessary safety measures and certificates.
The works we undertake serve 2 key purposes:
1. They cover our client’s safety obligations as a landlord;
2. They bring the property up to an above average rental standard, so it can be let quickly and result in a longer tenancy term.
Refurbishments usually range from £2,000 to £10,000, with an average refurbishment costing approximately £6,000. We aim to make your property the most desirable house on the street’, so you don’t have to worry about works, or tenants for a number of years.
What if the property doesn't rent out?Although nothing is guaranteed in the world, we have purchased over 150 properties and every single one has rented out. Having done the research, there is far more demand than supply in the areas that we cover and since we refurbish our properties to a great standard, they are usually tenanted within a couple of weeks.
Securing a tenant may take a little longer around Christmas and the New Year, though we have a process in place to time our completions well, and ensure the financial impact to our clients is minimised.
What if the refurb goes over budget?The refurbishment budget is initially estimated on a 15 minute property viewing, so is bound to change. While we do a lot of due diligence to ensure that the most costly works are scoped out prior to purchasing the property, refurb projects can go over budget. Once the previous occupier moves out, there may be additional items that need to be repaired or replaced that we could not have foreseen.
We do build in some contingency to cover for unexpected works, but if that is not enough, we will call you and discuss the options before going ahead with any works. Rest assured we have done this many times and have never left a client disappointed.
What if the sale falls through?If you have opted for the End to End Service and the vendor pulls out of the sale, through no fault of your own, we will source another property at no additional cost to you.
If you have opted to go ahead with our Source Only option, then once the sale has been agreed, we hand the responsibility to complete the purchase over to you.
Do you manage the property?We use a management partner to let and manage the majority of our own, as well as our clients’ investment properties. They have been in the industry for a number of years and have a proven track record of achieving the best rents, finding quality tenants, and ensuring a hassle-free experience for our clients.
We have vetted and trialled over 20 managing agents in Leeds since we began investing, and intimately understand the value they add to ensuring both yours and our property investments are safe and profitable.
However, for your peace of mind, we conduct an annual review to make sure they are the best match for our clients’ needs, and are always on hand to help if there are any issues after our service has completed.
Do I have to use your letting agent?Although we are very fond of our partnership with our management agent, our clients are not tied into using them. However, we have experience of working with a number of management agents in Leeds and know that our agents are the best in the industry and offer their full management services at a very reasonable price.
We would definitely be hesitant moving away from them, knowing that the value of the investment is determined by the quality of the managing agent and the service they provide.
Are the properties already tenanted?As our investment stock is typically in family areas, the properties are sold with vacant possession.
Occasionally, we do purchase properties that are already tenanted. Our managing agent can do all the necessary due diligence during the purchase phase to ensure our clients’ interests are secured.
How long before I start receiving rent?Although our process has been thoroughly mapped, there are many moving parts that all have to coordinate to ensure a smooth purchase – agents, solicitor, vendors, mortgage lenders and valuers to name a few. As a result, the timescales may vary quite a bit.
Typically, from the moment you decide to proceed with the investment to your first rent payment could take 6-8 months.
Click here for a breakdown of the stages involved.
Can I use my own mortgage broker?Our End to End service is delivered using our trusted team of partners. We already have established working relationships with them, and this enables us to make the service hassle free for our clients. If a client wishes to use their own professional team, we offer a Source Only service, which may be more suited to their needs.
All ‘whole of market’ Mortgage Brokers use the same system and ultimately have access to the same lenders and the same products. Our Mortgage partner goes the extra mile as they look at the most cost-effective option over the mortgage term, including all fees and charges – so you can rest assured they will be able to get the best possible mortgage deal for you.
If you prefer to use your own Mortgage Broker, we are happy to accommodate. A fee of £500 covers our additional cost of administration.
Should I purchase the property with a mortgage or cash?The answer to this question does come down to personal preference and your attitude to borrowing. Buying using a mortgage allows you to put in much less of your own funds per property – £60,000 compared to £160,000. As a result, you could end up purchasing multiple properties and while the annual profit will be lower per property (because you have to pay interest on the borrowing), the overall profit across all 3 properties is likely to be high.
As well as that, over time, all 3 properties will be appreciating in value instead of just one, so using a mortgage to leverage your funds increases your overall return %. Of course, it is prudent to take advice from an appropriately trained professional.
Should I buy a property in my personal name or in a limited company?There is a lot to consider when deciding which structure to purchase your property in. It’s not just about trying to limit your tax, but also considering the long-term rationale for investing and extraction of the rental profits.
As part of our onboarding process, you have the opportunity to speak to our Accountant who can offer free individualised advice on this and set up a limited company if this is required.
Should I choose a repayment mortgage?Many people have been conditioned to believe that a repayment mortgage is the correct option, but with interest rates as low as they are, it may make sense for you to go down the interest-only route and reinvest the additional funds.
This decision is usually based on a number of factors including your age and ability to repay, but we recommend you seek professional advice from our Mortgage Advisor.
What are your fees?Our service management fees vary depending on the service you choose and the number of properties you purchase.
The 3 Property, Full-Service package is our most popular, as it allows our clients to have a well-diversified mini portfolio, where typically, the rent on a single property covers the mortgages on 3 properties.
Our fees are:
1. Inclusive of VAT – there are no additional taxes to add
2. Fixed – they will not increase even if you get a better return than we expected
3. One-off – we do not take an ongoing fee from our clients
4. Included in the calculation of return – the higher the fee, the harder we have to negotiate to get you a good deal
Click here to get a full breakdown of all the costs involved.
When do I need to pay the fees?We source properties to help specific clients achieve their financial goals. As a result, our fees are due up front before we start the onboarding process to ensure that our clients are fully committed to the process before we start working on their behalf.
When does the service complete?Our service to clients completes after the property has been tenanted, the rent has been received, and there have been no teething issues with the property or the tenant over the first month. We then do a formal close-off of the project and hand it over to our managing agent to look after for you.
We are always available if there are any issues down the line and are happy to help where we can.
Why should I choose Lifestyle Property People?We offer an End to End service for remote investors, using our years of experience in the market to source the perfect property and then manage the process of purchasing, refurbishing and renting the property out. Our focus is on delivering an exceptional service and making the process as hassle free as possible.
But what really makes us different is that we believe that we are all connected in this world. For that reason, we try to dig a little deeper to understand your story, what you are trying to achieve and why that is important to you. With Lifestyle Property People, you are not just a number, you are one of our valued clients and friends.
Although profit is necessary in creating a sustainable business, we don’t believe it is our end goal. Instead, we seek to play the long game – to serve our clients and educate our market, helping you create long term wealth for yourself and your family.
When do I need to have the funds ready?While you need to pay our fees upfront and show proof of funds of approximately £35,000 to enable us to secure a property on your behalf, most of the funds are not required until exchange of contracts, which usually take place around the end of month 5.
Click this link here for a breakdown of the funds required per property.
Do I have to pay the additional 3% stamp duty?In 2016, the rules around stamp duty were changed to introduce an additional amount where the purchaser already owns a property. This was to make first time buyers more competitive in the market.
As a result, if you are already a homeowner, you will have to pay the additional 3% stamp duty whether you are purchasing in your personal name or in a limited company structure.
For the purposes of our investment model, we have assumed that our clients already own their own home and as a result have included this 3% additional charge in our calculations. If this is your first purchase, you will not have to pay this, and the funds required will be reduced by that amount.
What's the difference between yield and return?There are many valid ways of assessing property investments against each other, but professional property investors tend to use the return on investment (ROI) as the standard.
The ROI measures the net annual return (before tax) against the funds employed to achieve that return.
The Yield is typically a gross calculation and doesn’t take into account mortgage interest costs or any other fees.
The Capital Return measures the growth of the property value year on year.
At Lifestyle Property People, we work to maximise overall return, which combines the Rental Return and the expected Capital Growth. This tends to give a more holistic picture of return but is based on an estimated number.
Why should I invest in property instead of the stock market?Although we are not financial advisors, our honest answer is you should diversify your investments to ensure you benefit from the upsides of all of them. Of course, it does depend on a number of factors – e.g. your age and your ability to recover from losses and we suggest speaking to a suitably qualifies individual.
Many people like property because it is far less volatile than the stock market and one can receive double returns – rental income and capital growth.
With property, there is also no specific price, so the price is determined by the ability of the buyer and the seller to negotiate. That’s where a company like ours can really help to swing the odds in your favour.
Do you source HMOs?We own some HMOs ourselves and know the pros and cons, and particularly the risks and efforts involved in managing them. We believe that BTL properties make for a much more solid investment, with a lower risk profile, and lower management fees.
Click here to see the difference.
Do you rent to students?We don’t rent to students as we believe the market for individual student houses is diminishing as larger purpose-built student accommodation complexes become more popular. This is certainly the case in Leeds.
In addition, students are more likely to be untidy, less responsible and typically only rent for 9/12 months of the year.
Our preferred tenant type is family units, as they make for more responsible tenants. Family incomes are usually more stable, especially if both parents are working, and often families stay for longer. For example, if the property is located near a school, families with kids in that school will want to minimise any disruption to their education and are therefore less likely to move away until their child has finished at that school.
Why not invest in Birmingham or Manchester?We believe that both Birmingham or Manchester were great investment locations but have now passed their maturity, so the potential for significant upside in prices and rents is somewhat muted.
Leeds only started on the growth curve in 2018 and is therefore ripe for regeneration over the next 2 decades. As well as that, the house prices in Leeds are considerably lower, whereas the rents are still similar, meaning the returns are better.