You’ve Had Your Offer Accepted on an Investment Property, Now What!?
You’ve spent time researching your search area, viewed lots of properties, and you’ve finally had an offer accepted on an investment property. But, what comes next!?
It can be easy to panic, but there is no need. Instead, put a bottle of champagne on ice so that you can celebrate this huge milestone! It’s easy to race into getting everything sorted and forget to celebrate, but you’ve worked hard to get here, so take a moment to pat yourself on the back. Once you’ve done that, collect yourself, make a cuppa and look ahead to what’s next.
1) Proof of Funds
You’ll have likely had a call from the estate agent handling the sale requesting your solicitor’s details and proof of funds. These are the first things to focus on because the property will likely remain on the market without these. Ideally, you’ll have these ready to share, but we know that this isn’t always the case. What we would recommend, however, is that you ask the agent to stop any further viewings on the property to give you a chance to get this information prepared.
For your proof of funds, there is no need to have every penny in your bank account and a mortgage offer approved. At the very least, you will need to have proof of your deposit and where that money has come from. That could be from:
- Savings
- Sale of a previous property
- Revaluation money from a previous property; or
- A letter from your mortgage broker confirming that you are eligible to be lent the mortgage amount required.
Once you’ve provided your proof of funds, that should be enough for the agent to take the property off the market. But what comes next?
Well, it’s time to engage your ‘power team’ to start the legal process and get the mortgage offer arranged.
2) Find a Solicitor
Finding a solicitor can be a difficult task. We always recommend asking around for recommendations from other investors. It can help to use a solicitor you might have used for a residential house sale (if you thought they were good). However, the team that deals with the sale of investment properties will likely be different to the team that handles residential sales.
When asking for recommendations, make sure to ask:
- How quickly was the sale completed?
- How well did the firm communicate?
- Were they thorough?
- How much did they charge for their time and services?
Tip: Sometimes, it pays to have a solicitor who works quickly and thoroughly, even if they are a little more expensive.
Your chosen solicitor will likely require some money upfront to open a file for the property and commence the legal process. The money required may include the costs for the searches on the property. It’s best to get the searches started as soon as possible. This is all normal, so be prepared to send this money over. Also, make sure to agree on a timeframe for how often you’ll receive updates from your solicitor so that you know what to expect from the beginning.
3) Speak to Your Mortgage Broker
Like your solicitor, your mortgage broker will also need to be given the go-ahead. However, your broker’s fee will usually be payable once the mortgage in principle is obtained.
If you haven’t completed one already, your broker will ask you to complete a fact finder questionnaire so that they can learn more about you and your financial situation*.
Your broker will now need the details of the property you are purchasing and the amount you are looking to obtain a mortgage for. This is often 75% of the agreed purchase price (the LTV – loan to value).
Your broker will send over a few mortgage products from either one lender or different lenders. They should provide details of the mortgage term, amount, LTV and any fees or charges that come with each. They will also outline any fixed-rate terms (usually 2-5 years). If you are renting the property as a buy-to-let or HMO, then you will need a specific mortgage product for those. You’ll need to provide this information to your broker when sharing the property details so that your broker can find the best product for you.
*You’ll have already done this if the broker has provided a letter to confirm how much money you can lend.
4) Instruct a Building Surveyor
Something that not everyone will do but is something we highly recommend is instructing a building surveyor. Mortgage companies will do a survey regardless, but they can be very vague. Some surveys simply confirm that the property exists and hasn’t been knocked down!
So, what do you get from a complete building survey? First, a building surveyor will visit the property and search for any potential issues that need to be rectified. They will look at everything from the decoration (scuffed or chipped paint) right down to structural issues, roof condition and possible damp issues. Building surveyors cover every basis in enough detail to decide if you want to complete any further surveys from specialists, such as damp surveys, electrical surveys, asbestos surveys etc.
The survey should also provide you with a list of recommended work to do the property (some may even provide estimates for the work).
5) Meet with Your Design & Build Team
Now that things are rolling regarding the sale, it’s time to start planning the renovation! If you are converting the property into an HMO, engaging with a design & build team (wink, wink) as early as possible is a great idea.
We like to help clients and investors with design early on so that we can help to assess the builders’ survey and work with you or your architect to create new layouts for the property. The earlier we can support making these decisions, the more prepared we can be to get cracking as soon as you complete the property sale!
Getting your build team ready is equally as important as they will likely have a lead time of at least a few months. Getting them to quote for the work required early on means you can decide if you’re happy to work with them and get them started for when you expect to complete on the property. If you’re unsure where to begin hiring a build team, we can help with this, so drop us a line.
So, is that everything?
With a standard buy and renovation, yes! That is everything.
But, you might need to consider employing an architect if planning permission is required. You can begin planning permission even if you don’t yet own the property, which is something to keep in mind if time is tight. You will also need a contact in Building Control with your local authority and, potentially, a structural engineer, too. However, your build team or us can help check if that will be needed.
So, there you have it. It’s not too complicated after all! Now, get the ball rolling. If you have any questions that we haven’t answered here, then get in touch with us.
