Important property dates and your cashflow
Brett Alegre-WoodChairman, YPC Group
Hey guys,
Imagine you had an unlimited supply of money you would not need to worry about the various important dates associated with each purchase you would just write a cheque and be done with it, now come back to reality and l think you realise that when you need to pay the amounts associated with a property purchase does matter.
Let's consider one property you have just decided to purchase and the important dates applicable.
Reservation date
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Most often you will be required to pay a non refundable deposit which varies between £250 and £2500. The property will normally be taken off the market for a 28 day period while you prepare to exchange.
Exchange date
This normally takes place 28 days after reservation. At this point you are likely to have to pay 5-10% deposit less the amount you paid at reservation.
Interim payments
In some cases and with a long lead time to completion a developer may ask you to pay a further deposit amount, normally 5%. This is only if you paid less at exchange.
Completion date less 1 month
At this point you should be speaking with agents, organising furniture, flooring and curtains. On some of these you may have to pay 50% upfront.
Completion date less 3 days
At this time you should have recieved a completion statement and you will need to pay all fees and remaining deposit monies.
Completion date plus 1 week
You should have the furniture, flooring completed and the letting can begin in earnest. You will need to pay the remaining amounts owing on furniture, flooring and curtains.
First mortgage payment
Let the fun begin, hopefully you will have a tenant by now and can offset your mortgage payment.
3 months after completion
You or the agent will need to undertake the first of your quarterly inspections.
6 months after completion
Now is the time to do an assessment of how much the property has changed. You may be able to get a refinance and pull out more cash.
18 months after completion
Now is the time to arrange any repairs that need doing as your 2 years cover will be running out and you don't want to leave it too late.
2 years after completion
Your extended builders warranties will have run out now so you can choose a full management agent to look after any problems you may have with your property.
7-10 years after exchange
By this time your property should have doubled in value and you therefore should have refinanced in perhaps 2-3 times and perhaps even more.
Now consider all these dates with 6 or 10 properties in your portfolio
Now that you have considered one property consider what would happen if you had six all completing in the space of six weeks as l recently did. One property might be fine to manage but try 6 and then you understand the need for a simple cashflow manager to ease this task. That's why once my clients have purchased two or more properties I will sit down with them and enter their portfolio onto Ezytrac, my portfolio management software. It's a simple design that l have put together to track, your property, its growth and most importantly your cashflow, it even has a section for important dates.
I cannot say enough about the importance of protecting your cashflow, without it you are heading for a lot of financial stress, guard it well and it will assist you build a fantastic lifestyle for you and your family.
Live with passion,
Brett Wood
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