Shortfall Case Study - Rescue My Properties


Shortfall Case Study


12 Property Portfolio in Negative Equity

During the boom of the market, a client of ours had left his full-time employment to become a buy to let landlord, building a portfolio of 12 units. As property values began to crash in 2008, he was left with a negative equity portfolio and variable cash flows. With outstanding mortgage debt of £1.3 million and values of only £900,000, the writing was on the wall – as soon as interest rates began to rise, he would have been forced to sell, and the various lenders would have chased him for the shortfall.

During a free 1 hour independent buy-to-let health check, it became apparent that he had no real strategy to deal with the situation. After being referred to Rescue My Properties, we had to negotiate hard with the various lenders to sell the portfolio below the outstanding mortgage balance, ensuring a write off of the shortfall. With the portfolio now taken care of, seeing that he needed urgent employment to replace the income, we managed to help by placing him in one of our client’s businesses as a Senior IT Manager, more than doubling his annual income, which is now £45,000.


Residential home – stop repossession

Another client of ours worked a 9 to 5 in the South West of England. Due to a drop in demand for some of the products sold by her employer she was made redundant. She was under a great deal of pressure, as she had no savings to fall back on.

RMP helped her re-locate to a new property at a lower rent and whilst renting out her existing property, allowing her to meet her monthly cash-flow requirements to survive her financial burdens. Due to a negative equity situation, negotiation was necessary to eventually sell the property below the mortgage balance, ensuring that the lender did not chase her for any shortfall. Her gratitude is felt through all of us, as this is the third year running that we have received a Christmas card!


Portfolio Health Check and consolidation

A recent client of ours had 200 properties, which he had acquired over a number of years as a developer. Despite what he considered to be a healthy portfolio, an in-depth buy-to-let property portfolio health check revealed that after all costs had been considered, 40% of the units were actually negative cash flow, and two of the tenants had not paid rent for 12 months! Further appraisal revealed that at least two banks were trying to push the client into default, so that they could appoint LPA receivers.

Not only did we help our client to reduce costs, including management, insurance, and general maintenance, we managed to restructure him in such a way that he would have a game-plan for future interest rate rises, increasing his cash flow in the medium term, with the ability to sell and negotiate with lenders as interest rates kick off. He now spends less of his time managing his residential portfolio, and continues to work on larger projects across the UK.

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