Q&A meeting with Serliana

The most important part of using a property club is being able to place a reasonable amount of trust in them. Neither Anne or I are used to dealing with the sort of money (or at least not our own!) that property investment involves. I spoke to Serliana and sent them various emails but I needed to meet them before taking this further. To this end Anne and I travelled to their London Offices and met with the portfolio manager Danny Kitchen we asked them as many questions as we could think of. Summary of the session below (note I have removed some of the specific finance questions)

Q1. Is our money held in an escrow account until completion?
A1. It is held in trust with the developer and is obtainable should the developer default.
Reservation Fees are non refundable Serliana Fee’s are refundable (or kept on account) should we or the developer default

Q2. You mentioned a 2 week void, what is the average void period across these type of properties (ie 1 or 2 bed apartments)
A2. . Allow 4 weeks per year. Tenantable property should never exceed this

Q3. You also mentioned that Serliana would look after the properties after they had been purchased but then you said it would be by an estate agent. Please can you clarify
A3. We will look after everything up until the first let, then the agreement is between you and the agent.

Q4. Have Serliana already purchased the properties in order to obtain the discount? So do we buy them off you or the developer?
A4. You will buy directly from the developer. On the odd occasion we might exchange on a small number of contracts to comply with the developers wishes, only to have the contract rescind once we have found a buyer.

Q5. Once we have purchased the property do we have ownership ie deeds etc
A5. Yes 100%

Q6. Are the properties freeholds or lease hold?
A6. Majority leasehold

Q7. Do the properties come with NHBC certificates?
A7. Yes all new builds. Refurbishments have a similar 10year Architectural Certificate

Q8. Can you confirm that you complete the snags list as a part of the Serliana service ie we are not charged extra for it.
A8. We don’t do snagging. You have 3 options.

1. Pay a snagging firm. 2. Do it yourself. 3. Get the tenant to do it and the agent will note it.

This last option is preferred as the tenant is liable for any future damages so they will do a thorough job and we can take that to the developer.

Q9. What percentage of your properties are let unfurnished? Are there any tax or legal implications of letting unfurnished?
A9. 90% are let unfurnished. We advise you speak to your accountant re Tax advice. Speak to http://www.rla.org.uk/ and http://www.nla.org.uk/ regarding your obligations.

Q10. Do you recommend short assured tenancies or another form?
Q10. Letting Agents and Serliana recommend an ‘Assured Shorthold Tenancy’ agreement.

Q11. We had an interesting discussion regarding Capital Gains Tax. Do you recommend getting an accountant?
Q11. At the start it is not necessary although initial advice could be beneficial. But certainly seek advice when you get 4-5 properties

Q12. What is your prediction for the rental market, do you see the increased number of Buy2let property depressing it further?
A12. Yes- in a macro economy, but with population growth demand will always be there, and capital growth will also prevail.

Q13. Based on your research what is you view of the UK property market over the next 3 to 5 years
A13. Without a crystal ball we cannot tell but we’re confident of growth in the next 3-5 years

Q14. What criteria do you use to select developers and letting agents
A14. Developers we look for NHBC certification and reputation past relationships, Lettings agents we base them on performance

Q15. We didn’t discuss overall strategy much, after reading the FAQ on the website I thought that there would be more emphasis on tailoring a strategy to our individual circumstances. Is this part of the service?
A15. Yes – once you are ready to go, we can look at deal structures and timelines that suits your situation, immediately and ongoing

Q16. As a further note to the last question we are concerned about becoming too highly geared, obviously this is dependant on the individuals attitude to risk, which presumably should form part of my personal strategy? We could do with some advice on this.
A16 We would only look at 85% loan to value on your home and investment properties, this is safe gearing for us. The 2 year cash flow will give you added security – you could cash flow for your properties for 3-5 years if you wanted to be extra cautious. Also our 89 point checklist will cover due diligence on all our property’s

Q17. Would it be possible to talk to or email questions to someone who has already invested through Serliana?
A17. Yes

Q18 Next steps?
A18 Keep the questions coming, Scrutinize our due diligence report on line, Go through cash flow with Jamie