- Whatever you do, don't buy this type of flat
as your next investment property.
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- Hi, my name's Tony Law from Your First Four Houses.
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So this video is all about which types of flats
you shouldn't be buying.
If you wanna click here, I've done another video
on which types of houses you shouldn't be buying,
so you might wanna check that out.
So the first type of flat I think you shouldn't be buying
is a flat that has no sinking fund.
So very quickly, if you're not aware of what that means,
most blocks of flats,
all of the people that actually own the flats in that block,
what they actually do is they put money into a sinking fund,
and that builds up over time,
and then it's used to pay for things
like repairs to the roof, maybe external decorating,
maybe decorating of the internal hallways,
maybe some maintenance and so on.
So if you find a flat that literally has no sinking fund,
and this is something that your solicitor
will be checking out for you, by the way,
I would struggle to go ahead with that,
because I see potential problems down the line.
I don't think you should buy a flat
that has less than 30 square metres as a floor area,
because probably this is going to be unmortgageable.
Now if you've got money in the bank
and you're just buying this for cash,
maybe that isn't an issue for you.
But think about when you want to sell it
maybe a few years down the line.
Obviously, the chances are that the next buyer
will of course need to get a mortgage,
or maybe they won't be able to get a mortgage
if it's less than 30 square metres,
so you've just massively reduced the number
of people that can buy it on from you,
even if you're buying it for cash.
I don't think you should buy a flat
that's got a defective lease.
Now if you've ever read a lease document,
it is possibly the most boringest document (chuckles)
in the world, but you won't have to read it.
Your solicitor needs to read it.
And you need to ask them to look out
for any issues with the lease.
They should be doing that anyway,
but make damn sure they're really looking closely
at that very boring document,
and if you detect anything defective in there,
anything that gonna be an issue,
I don't think you should be buying it.
Don't buy flats, in my opinion,
that have no management in place,
because then what you're doing is you're trying
to kind of liaise and arrange with the other owners
in the block about doing (chuckles) maintenance.
And I've had something very similar to this.
There has been a management agent in place,
but they've been very difficult to,
they've not been very good, to be perfectly honest with you.
The idea of actually dealing with other owners of flats
where there's no management in place, well,
I don't even wanna get my head 'round that,
so I would advise you to steer away from that type of flat.
Don't buy flats over certain types of shops.
Now I'm gonna ask you to go and speak
to your mortgage broker about this,
because I can't really give advice on mortgages
and lending in particular, because I'm not FCA-approved,
but over certain types of shops,
you are either going to struggle to get a mortgage at all,
or you'll only be able to get limited access to mortgages.
But more importantly, the circumstances surrounding
the types of mortgages that are available to you
over certain types of shops, well actually,
that may change over time.
And so I would strongly advise you to speak
to an independent mortgage broker and get their advice.
Tell 'em this is the type of property
that you're considering buying,
and it's over this type of shop.
And over certain shops, as I say,
I probably wouldn't buy it.
And last but not least, I would always say,
avoid high void areas with flats.
And certainly in some parts of the country,
there is an oversupply of flats,
which is why you think to yourself,
"Well actually, I can get that at a really good price!"
But there's an oversupply, and an under-demand,
and so of course, if you're wanting to keep this
for the long term as one of your rental flats,
well, you're gonna really struggle to rent it out,
or you're gonna get problems with the tenants,
or you're gonna get lots of voids.
So make sure you check out demand
before you actually buy that flat.
If you would like a 50-point checklist
that runs you through all the steps you need to take
before buying that next investment property,
simply click the link here or in the description box below,
and I'll send it straight out to you.
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