ON THE HOUSE Magazine - Issue 5

ON THE HOUSE MAGAZINE

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IN CASE YOU MISSED

A round-up of useful and actionable developments in the property investment world

GROUP GOINGS ON

A selection of the best and boldest posts from the last month on the Buy To Let Property Facebook Group

ONE TO WATCH

Sometimes you have to tune out the noise - that’s certainly what this investor did to great success during the recent global pandemic

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CASE STUDY – LAND PLANNING FLIP DEAL

There’s a lot to learn from in this unique London-commuter land development run-through. The high-returns will certainly whet your whistle!

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GIVING PROPS TO TECH

Streamline your business with these online options for management and finance

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HMOs

IN 2023

Our strategy focus weighs up the challenges and opportunities in the current market

BEGINNER’S CORNER

In the second outing of this ongoing starter series for new investors - Alex Daley takes the reader through how to zero in on their target area

COLUMN: MORTGAGES

The Buy To Let Property Group’s preferred broker partners pit product transfers against remortgaging to see which is best for you

COLUMN: TAX

Corporation tax - it’s time to get your head around the sums with the experts Astonia Associates

THE GLOW UP

The Buy To Let Property Group Founder walks the walk and we follow to check out his most recent holiday let conversion project

THE LIST

Our unapologetically subjective list of wonderfully useful resources and people to follow in the business

THE RANT - FINAL WORDS FROM WES

Wes De Leur gets something off his chest - DON’T BE POUND FOOLISH!

JULIAN@ONTHEHOUSEMAG.CO.UK

BUY TO LET PROPERTY GROUP

On The House magazine has made with constant care to ensure that its content is accurate on the date of publication. The views expressed in the articles reflect the author(s) opinions and do not necessarily reflect the views of the publisher and editor. The published material, adverts, editorials and all other content is published in a good faith. On The House magazine cannot guarantee and accepts no liability for any loss or damage of any kind caused by this website and errors and for the accuracy of claims made by the advertisers. All rights reserved and nothing can be partially or in whole be reprinted or reproduced without a written consent. On The House magazine is produced by Fired Up Media Ltd on behalf of The Buy To Let Property Group. Fired Up Media is an ICO registered company.

Editor’s Letter

One truism in property investing that stands up time and time again is that ‘you make your money when you buy’.

Buying with a buffer keeps you safe in the leaner times, helps you maintain a safe LTV by locking in equity or allows you to build your portfolio faster.

One element of nabbing that all important discount though is often glossed over or seldom covered in any depth in the property press. No not the latest shiny strategy or the ability to letter bomb your local area.

I am talking about the art of negotiation. Are you a negotiation ninja?

Negotiation is an artform as good practitioners read body language, adapt their tone, mirror, pivot, parry and carry out all sorts of psychological alchemy to get the deal across the line. Furthermore, it’s a science, for which the depth of research and quality of the questions you ask can yield phenomenal results. In fact, as someone who has spent two decades interviewing people for newspapers and magazines, negotiation is an element that drew me to property investing as negotiation feels something of a bedfellow to the humble interview as you wrestle with a subject for access to even more juicy information.

We view negotiation as so important to property negotiation that we have decided to seek access to the playbook of one of the foremost experts on the subject. In our cover feature on p19 writer Alex Daley learns techniques and tricks that are almost guaranteed to make you thousands! It’s a long read, but the ROI on your time could be substantial.

Not ready to negotiate just yet? No problem, our Beginner’s Corner series is back as we build on the last issue’s first step (highlighting the strategy for you) with this issue’s guide to zeroing in on your first investment area on p32 . ( Read the first Beginner’s Corner here).

Negotiation mastery was very much front and centre in the success of the fascinating London-commuter land flip case study which can be found on p29 and we are hoping to ignite somewhat of an internal negotiation with our strategy focus on p24 as we look at the pros, cons, challenges and opportunities of HMOs in the current market in the first in a two-part interview with one of the best in business Rick Gannon. Plus, there is our usual news, regulatory round up, The Glow Up and much more.

All this content entirely for free! Wow, maybe it’s you the reader who’s a negotiation ninja already!

Enjoy and happy investing.

With many thanks to our Issue 5 Sponsor

SUBSCRIBE: ON THE HOUSE Weekly Newsletter including a monthly mortgage update from Ramsay & White

JOIN: The Roundtable Mastermind Group – a selective and supportive group of investors run by Wes De Leur.

SAY THANKS: We admin the busy BTL Group and put out stacks of useful content for free –Why not shout us a coffee to say cheers?!

Julian PlettsEDITOR

IN CASE YOU MISSED

REGULATORY ROUND-UP

There is so much compliance in being a landlord nowadays, so here is our regulatory round-up - the latest main developments that you need to be aware of, along with the bestknown timetables of other proposed changes and regulations.

This is intended as a guide to help you stay on track, as always consult with experts such as accountants and financial advisors before making any

NEEDTOKNOWSCALE

DEADLINE LOOMS FOR ATED REVALUATIONS

Under the government’s Annual Tax on Enveloped Dwellings (ATED), companies must revalue UK residential properties every five years. The next deadline for this is April 1st, 2023, and companies must tell HMRC if they have a property that is worth more than £500,000. The valuation, which can be done by the owner or by a professional valuer,must be based on the value of the property on April 1st, 2022 and sets the rate for the annual payment until the next revaluation year. Properties worth between £500,000 and £1 million incur a charge of £4,150, which increases to £28,650 a year for properties valued between £2- to £5 million.

HOLIDAY LET BUSINESS RATES

From April, new eligibility rules for business rates will apply to self-catering properties in England and Wales. If your property does not match the new criteria you will be eligible for paying Council Tax, though depending on the rateable value, there may well be a benefit for holiday let owners who qualify for small business rates relief.

DEADLINE FOR SCOTTISH SHORT-TERM LET LICENSES

April 1st is the deadline for existing landlords of properties in Scotland to apply for short-term let licences. From October 2022 it has been mandatory for all new landlords renting out properties on a short-term basis in Scotland to apply for the licences.

EVICTION BAN EXTENDED, RENT CAP – SCOTLAND

The Emergency legislation brought forward in Scotland under the Cost of Living (Tenant Protection) Bill 2022 to freeze rents and establish an eviction ban until March 21st, 2023 was passed on October 6th and became an act on October 27th. The protections for tenants have been extended meaning (subject to parliamentary approval, at the time of writing) from April 1st capped rent rises to 3% (PRS) will be permitted.

WELSH RENTAL OVERHAUL NOW IN EFFECT

The Renting Homes (Wales) Act 2016 came into effect on December 1st. The grace period for compliance comes to an end on May 31st.

MAKING TAX DIGITAL

Previously coming into effect in April 2024 has now been punted back down the road for landlords until 2026. Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) previously would have required landlords earning more than £10,000 to use MTD-compatible software to keep records and make four quarterly submissions and a final one to HMRC a year.

RENT TO RENT RULING

A landmark Supreme Court Ruling at the start of March has set a legal precedent that should effectively ensure rent-to-rent operators, as opposed to property owners, are held responsible for compliance.

DAMP AND MOULD REGULATION

The government has tabled amendments to the Social Housing (Regulation) Bill to introduce ‘Awaab’s Law’, which will require landlords to fix reported health hazards within specified timeframes. A consultation will be launched later this year to set the timeframes. There have been calls for the proposed regulations to be extended to the PRS.

THE RENTER’S REFORM BILL

Michael Gove late last year reaffirmed his commitment to The Renter’s Reform Bill this year. The bill outlines wide-ranging changes to the private rental sector across England including the end of Section 21 evictions, the introduction of a privately rented ombudsman and the creation of a landlord register.

EPC CHANGES

Under proposals from the government all new tenancies will require an energy performance rating of C or above and existing tenancies from 2028.

REGISTRATION SCHEME FOR SHORT-TERM HOLIDAY LETS

In early December Prime Minister Rishi Sunak confirmed during PMQs that the government is committed to introducing a registration scheme for short-term holiday lets in England.

Wait? Can you do that?! We’re listening…

group

vibrant and supportive places for property investors on Facebook. On any given month there are thousands of joining requests, almost a thousand posts and hundreds of thousands of post views. Here are some of the most popular ones that got you talking in February.

busiest,

NOTE: If you want to find any of these posts – Head to the group and search the person’s name and a list should come up with their posts

Always an interesting debate. Answer ranges from ‘Don’t bother’ to ‘Flats for income, houses for growth’. All elements of the debate are there so check it out if this is a dilemma for you

You absolutely can ask that! It’s exactly the sort of question we welcome on Facebook’s most friendly UK property group. Alizon Jane Breen – a group expert and long-term landlord, as always, provided a comprehensive and well-measured introduction for Cristian to the world of property investing.

The Buy to Let Property

is one of the

most

Welcome to the group Jamie – reckon you could rustle up Sunday lunch for 48,000 of your new investor friends?!

The group’s official mortgage partner Paul Davies sets out to help as many members as possible with an AMA. Get involved as the thread is still going on the group…

Paul and Sy seemed to have other things on their mind than romance on Valentine’s Day as the cost of trades work continues to weigh on the minds of investors up and down the country. This post saw almost 200 comments last month as this one really fired up debate (see what we did there?!) Too many comments to boil it down (sorry) so you are best off checking it out on the group.

As a compassionate bunch of folk here in the BTL Group we are always happy to help. Claire let us know if we helped as we see that it is now (at the time of writing) listed as Sold Subject to Contract.

Does a prospect like this just get your juices flowing as much as it does ours here at OTH Magazine?

The BTL Group is a great place to share property news stories. We feel for this couple as many will be being hit hard by mortgage rises. It just goes to show though that nothing is certain in property that’s why stress tests (although the story references a personal mortgage) are vital!

A great question as sometimes you just don’t have the funds spare to refresh a rental. Some seriously good tips were offered up – a much-check for people in similar circumstances. Sometimes a little graft can go a long way!

ONE TO WATCH: CAMERON SCOTT

OTH: You were relatively young when you started off in the property investing world. What were the driving forces for you wanting to start investing in property?

I was 26 when I first got into the property game. I’ve always been interested in investing, ever since a kid I liked the idea of leaving a pound somewhere and watching it grow to two pounds over time. When I started generating solid levels of income through my business, I got super interested in the idea of property and began to consume as much knowledge as possible about the subject. Books like ‘Rich Dad Poor Dad’ and ‘The Intelligent Investor’ really helped to shape my philosophy around investing in general.

One of my favourite quotes from Warren Buffett is “Be fearful when others are greedy, and be greedy when others are fearful.” When Covid 19 hit, for better or worse

I noticed a brief window where there was a lot of panic and negative sentiment in the property market and remembering the wise words of Warren, managed to find a landlord that decided they wanted to get out of the game. I put in some cheeky offers on a few properties and to my surprise they were accepted without any negotiation.

Tenants were already in situ, and I got the properties well under market value. Today, similar properties on the same streets are being sold for around 30% more than my purchase price and were secured on mortgages at rock-bottom interest rates, so the timing was great, but it did take some balls to go for it because, at the time, people were quite concerned about what the market was going to do. Luckily, I had Warren on my shoulder whispering his timetested advice in my ear.

Sticking to a clear strategy and having the confidence to maintain focus when others are losing their heads can pay dividends. It certainly has for 20-something investor Cameron

Warren Buffet

OTH: What’s your investment strategy and how did you go about choosing to go down that route?

My investment strategy is relatively straightforward, purchase family homes at a good price and get solid, reliable tenants in place. That way I benefit from healthy cashflow and also the potential for capital growth, as the areas I invest in around Cheshire have seen good gains over the last few years and there is a lot of investment going into these areas too.

I decided to invest in the North West of England due to prices being much lower than where I’m based down south. I particularly like the North West because of the local proximity to major cities like Manchester and Liverpool, so there are a lot of people who live in neighbouring towns and cities who commute for work. It’s North, but not so North that it’s impractical to visit when I need to. I can be at my properties in around 2.5 hours, that being said I’ve hired an agent to manage the day-to-day.

OTH: Where do you see your portfolio going? Do you plan to diversify or rinse and repeat? Will you be making any big changes due to market changes, regulations, etc.

My strategy took a slight change early this year, as I had an offer accepted on a 4-unit commercial/residential property that I’m currently working through as a cash purchase. Again, due to various circumstances, the sellers want a quick and efficient sale and the yield is almost double what I receive on some of my current properties. I was an attractive buyer for them as I could move forward with a cash purchase to speed up the process. I saw this as an opportunity to completely diversify my portfolio with some business tenants in addition to having a more working professional style tenant in the flats above the shops. From here, I will likely go back to my strategy of purchasing family buy-to-lets.

OTH: What are your big learnings so far? What would you do differently if you started again

Keep a contingency fund. I’ve had boilers go, unexpected damp, windows leak, etc. I purposely kept a contingency in place for issues like this and that was key to being able to get the issues fixed as quickly as possible and tenants satisfied. In all honesty, while these issues are now fixed and the properties are up to a good standard, I would probably get more in-depth surveys done in the future for older properties. I’m also much more inclined to go for newer build properties at this point in my journey where I can be more confident that unexpected issues will not arise.

OTH: What systems and processes do you put in place that mean that you can balance your property company alongside a busy work schedule?

The key is to find a great agent. I’ve built a brilliant partnership with my current agent based on trust. I completely trust him to manage tenant relationships and keep me informed of any issues.

As I’m by no means a handyman, having access to a good network of tradespeople that I can rely on to maintain and repair any issues has also been key, and my agent has done a great job in building that network. So, perhaps the best system has been to outsource to an agent who already has those systems and networks in place.

MINI CASE-STUDY - 3 BED SEMI, LEIGHTON

This property was interesting to me as Leighton is known as one of the best areas in Cheshire East to live due to proximity to the countryside and a major employer, Leighton Hospital. It’s also easily accessible to Manchester, Liverpool, Chester and Crewe. In this case, the buyer was looking for a very quick and efficient sale, originally listing the property for £180k. After some back and forth, we negotiated a cash purchase of £151.5k providing I could get the deal done as quickly as possible.

As there was no mortgage needed, we were able to get the deal done and tenants were in place just a couple of weeks after completing on the property at £950 per month, a very attractive yield. The property was spacious, in great condition and a brilliant location, I’m very confident it will see nice capital growth in the coming years.

I recently took out a mortgage on the property to release funds for additional purchases. The monthly gross profit on the property currently sits at £454 per month after paying mortgage and management fees.

GIVING PROPS TO TECH

Invest

In the last issue we looked at scaling up and one of the key themes was having the right processes and systems in place. Making good use of technology is something which can make that monumentally easier. So let’s dive into a number of property technology platforms (proptech) that are currently on the market, as well asking a few landlords for their must-use tech and tools. This won’t serve as an exhaustive list, there are over 700 prop tech companies operating in the UK, we’d be here for years covering them all. It will though, act as a starter for 10 for you to figure out what you need in your techy arsenal and how to choose one that works for you. We’ll cover three different software options that sit in slightly different places in the market.

TECH FOR: SINGLE LETS AND DEAL STACKING MANAGEMENT

Lendlord is one of the go-tos when it comes to single let management and deal stacking software, mainly due to just how all-encompassing it is. It covers most of the stuff a landlord will need, all in one place. Oh and then there’s the fact it’s free, and who doesn’t like free stuff?

The free version allows you to input all the key information and dates from your portfolio, mortgage expiry dates, gas certificates, equity, info on tenants (including deposits & referencing) the list goes on. This serves to give you a great overview.

But it’s not just a general overview tool. You can document expenses, cash collection which will report on profit and loss throughout your portfolio as well as on an individual property basis.

When mortgages are coming up to fixed term expiry, they have a neat section which shows which lenders your properties meet the criteria for. It will even act as a digital online broker for you, should you wish to use them for this (both mortgage and bridging). This is partly where they make their money even as a free tool.

They have two other very handy tools, a rental deal analyser and a flip deal analyser. Allowing you to input all the key info and their system will work out your numbers. The detail here is great, including bits that many people forget about - for example holding costs (council tax, utilities etc), and also letting you project long term rental performance by including annual rent reviews in your calculations. We’re a big fan of this!

Upgrading to the paid version (£15 a month) gives you various benefits, including linking your bank account and automatically filing your tax return to HMRC.

a couple of hours of your time, plus little bit of money and technology solutions can be the pathway to streamlined profits and a more passive income. Alex Daley cherry picks a few tried and tested proptech options

BOOKKEEPING

Keeping track of the finances of any business is beyond key. Property, seen as much more of a passive side hustle sometimes than an actual business, is often an industry where business owners don’t have a true handle on their finances. It makes running the business harder and definitely raises your stress levels when tax season comes around.

Don’t worry, there’s a solution. For a dedicated bookkeeping and finance option, there’s Hammock which aims to provide all of your property finance items in one place. It connects with your bank and automates bookkeeping tasks and prepares tax statements, taking a whole load of hassle from your plate. Even down to tracking rental arrears and keeping an eye on those late or missing payments. It gives you a full overview of your key metrics, from profit and loss to yields and allows you to register each of your rentals.

Essentially, anything you need to know, track and have a handle on finance-wise with your business, it’s all handled in one place. Pricing starts at £4.99 so it’s not a huge investment to keep your books in order.

What we love about Hammock is that you can see it’s made by landlords. You know when you use software and it seems at times, out of touch with the property world? There’s none of that.

HMO MANAGEMENT

Many people love the cashflow that HMOs bring, but a lot less love the management aspect of the strategy. With numerous tenancies within one property, lots of comings and goings and room-specific maintenance, it can be a full-time job. COHO aims to make that aspect of HMOs easier.

COHO has a host of practical features, covering the lifecycle of your tenancies.

• The system will help advertise and manage leads and viewings from various sources all in one place.

• Once you’ve chosen your tenants, you can onboard them through COHO, customising application forms, automatically creating rent schedules, electronically signing tenancy agreements and keeping you compliant by sending compliance documents to the tenants (much of which is automated). It can even include room-specific welcome packs.

• Track maintenance requests, talking directly with tenants and scheduling repairs. Done on a room-by-room basis as well as house-by-house.

• Automatically notify when compliance renewals are due and store key documents such as warranties.

• Financial tools - helping you keep track of income, expenses and fees. Giving you a better fix on how each property is performing and where your areas of concern might be.

COHO is built both for HMO landlords and Rent2Rent operators, or those who do both, It allows you to detail what your ownership structure is with each property.

Pricing starts at £1.80 (inc VAT) per unit per month. A unit being a room, so a six-bed house = £10.80pm.

Of course, if your portfolio is mixed, with single lets and HMOs, you can add a single let property within COHO, just as one room. Meaning you don’t need a whole different software to run the management aspect of that

WHAT TECH DO BTL PROPERTY GROUP INVESTORS USE?

Cameron Scott: Good old spreadsheets are my main one. I use Google docs to stack up deals, track rental income and even project future capital growth. Honestly, I like to keep things simple and find this is more than enough for my needs. I do also have Quickbooks though to manage my accounting.

Kev Dendy: There is lots of data you can find on properties from a variety of useful and credible sites that can filter your search right down to the exact types of property you want. It also gives you an edge knowing what those market rates are for those areas you want to purchase in all over the UK so you can gather a picture of the actual sold prices not just the price the agents give you (helps you barter a better deal). We get in first hand with the agents calling them every week even if they don’t have anything available it’s relationship building but we can talk to them on their level knowing what’s sold with their competitors too in the area. Technology gives you an edge, try PropertyData, Rightmove (with Chrome Plugin), and Nimbus Maps.

Wes De Leur: We use Hammock for property management and certainly could not do without Xero. There is no such thing as a free dinner and if tech makes life easier and more efficient, why would you not want to use it?

Tech done right can take a lot of the hassle away from managing your business, and ultimately, no landlord here will want to do more than is necessary. Some systems, for the less tech-savvy, will take time to get used to. It’s an investment though, whilst old school may be what we’re used to, a couple of hours on each system, getting used to its capabilities and inputting all of your data can save you countless hours as you continue taking over the world, one brick at a time. This list was never going to be the full list, no one has the time for that, but hopefully, it’s got you thinking about where you might start looking as you take things away from running your business in a ring-binder.

PROPERTY TAX

Astonia Associates are one of the country’s leading Accountancy & Tax specialists and advisors in Land and Property related strategies and techniques including:

• Rent to Rent (R2R)

• Rent to SA (Rent to Serviced Accommodation)

• Buy to Lets (BTL)

• No Money Down Strategies (NMD)

• Build to Rent (BTR)

• Build to Sell (BTS)

• Serviced Accommodation (SA)

• Lease Options (LO)

• Property Development (PD)

• Land Acquisition and New Build (NB)

• Analysis of Additional Tax on Enveloped Dwellings (ATED)

• Ad Hoc Scenarios

We have created a unique team of tax specialists that provide all Property Investment and Property Development tax and accountancy services under one roof. We are now one of the most highly regarded and frequently referred professional tax specialists in many of the popular property specific social media platforms.

Our CEO Paul Weller is also a seasoned and active property investor/developer himself.

Our operational experience allows us to offer our clients a more comprehensive service as we personally invest in of all the property strategies . Tax rules and tax laws are constantly changing and we ensure that our clients are structured tax efficiently for today and into the future.

Negotiation is vital to success in property investment. It so often gets overlooked however, as we focus on strategy, stacking and sourcing. Alex Daley seeks the tutelage of a real-life business Sensei to earn his blackbelt in the art of negotiation

As investors, a lot of our learning and education is around different strategies, how to raise value and how to recycle our money. There are dozens of weird and wonderful strategies out there, and just as many very straightforward strategies, but what do they all have in common? The need to be able to negotiate. In fact many times how well the deal stacks will depend on how well you negotiate.

Some property deals, let’s take a very common Buy Refurbish Refinance Rent single let, will include numerous stages at which being a dab hand at negotiation would see your deal stacking spreadsheet looking more attractive than the prospect of Arsenal winning the premier league this year.

Negotiation 1: The purchase

Negotiation 2: The renovation (which could be over multiple trades)

Negotiation 3: Rental agreement

Some would say that you could even add a 4th negotiation, the valuation, however, this is something we have less ability to influence so let’s stick with the three.

It’s important to keep in mind, whilst we will often focus on the financial aspect of a negotiation and the wins we make there, that’s only one aspect. Negotiation wins can take many forms. It may be persuading the seller to go with your offer despite it being the same as a competing offer. It may be persuading the vendor to provide the house with vacant possession or for your build team to bring their start date forward a few weeks.

Let’s say you negotiate an offer just £3,000 below the true market value for a tenanted rental, then you also persuade the landlord to sell with vacant possession despite them initially saying they’d sell with tenants in situ. Then you managed to get £1,000 off your initial £15,000 renovation and twist your builder’s arm to start (and thus finish) your project two weeks earlier and you negotiate a rental amount at £25pm extra.

None of those are crazy. But that saved bridging finance costs from the two weeks early start and not having to serve notice, alongside the other savings and the higher rent mean your deal could look significantly different. Suddenly, you’re £5,500 better off, from a number of quick wins.

UNLOCKING THE SECRET ART

Weirdly, negotiation is not something that is really spoken about in the property world. Maybe it’s because no one feels qualified to talk about it, who knows? All we know is that ON THE HOUSE Magazine is going to change that. We’ve asked the questions and heard from one of the best in the business to help you sharpen your negotiation abilities, win those three negotiations and send your deals skyward. If you pick up just one thing in this article, with deal sizes as large as they are in property, it’s likely that one thing will be worth thousands. So, limber up, it’s time to get training…

Let’s first introduce who we’ve enlisted to spearhead such a topic.

Horace McDonald, CEO of the UK division of Scotwork, one of the world’s leading negotiation training companies with clients as big as Facebook, FIFA & Cisco - you might have heard of one or two of those. Scotwork run courses on negotiation both in person and virtually.

Let’s be very clear about what we’re aiming to do here, we’re not going to give you four magic words to say to get £4,000 off your next deal or bag that date with Margot Robbie or Hugh Jackman. The objective is to instill a set of principles that will allow you to have an edge in your negotiations, a consistent edge.

McDonald explains: “Negotiation is everywhere, often we don’t realise it. Our job is to equip people with a set of skills to enable them to better understand how a negotiation works and the skills that are most appropriate for that. We take a very clear view that negotiation is predominantly a learned skill rather than an innate skill. That’s black and white, clearly, there are shades of grey.

“The skills that we teach are relevant universally, through different

cultures, and nationalities, deep down we’re all the same and so the frameworks are universal. How it’s interpreted can change but the map applies around the world,” he notes.

“We have an eight-step framework that encompasses anything you’ll do within a negotiation, there are three that are most critical.”

PREPARATION

This isn’t a section that’s going to excite anyone, but skip it at your peril.

McDonald explains that the art of a predictable, successful negotiation starts way before you even open your mouth. It starts in the prep stage.

“The first mistake people make is lack of preparation,” he warns. “You have to be very clear from the beginning about what you want. In property that could be outlining what you want from a property, you need to know what your deal-breakers are and what your musthaves are. This could be the number of bedrooms, transport links might be important.”

“The challenge often is people write a list and then realise they aren’t truly must-haves. Must haves need to be things that if you don’t have, the deal can’t go ahead. Then, of course, you have the things you would like to get.”

So, how does spending time on your ‘must-have’ list set up your negotiation? McDonald explained it’s all about understanding what your position is like in the market. If you have a list as long as your arm, which means there are only two properties on the market in your area that meet your criteria, you aren’t exactly in the driving seat. If your list means that 20 properties are potential options for you, the balance starts to swing.

“You’ll reduce your opportunity if you have a long list of must-haves” he explains. “You’re more likely to overpay, and not feel you can walk away from a deal, this is where people lose their cool. Options are everything!”

“You’ve got a list of resources to hand to research what similar properties have gone for and get a much better understanding of what the market looks like.”

So the work you do at home and talking to estate agents is half the battle.

ARGUE

Though argue is a strong verb and suggests butting heads with a vendor, McDonald says this stage is not as harsh as it sounds. “The argue stage is all about constructive dialogue… you’ve found your property and now need to do a deal.”

This stage is a natural follow-on from the prep stage. “You need to have a number of questions to really understand what you’re buying.”

This means both about the property but also the seller. It is vital to understand their position and ask the questions to build a picture of how much wiggle room might be on the price, how desperate they are to sell, that kind of thing.

“This could be about subsidence, how old is the wiring? Now some of this information will be online but you need to ask the questions and get a very clear understanding of what you’re buying.”

Going into detail like this can help establish your credibility and underline the thinking behind your offer later in the negotiation.

The key thing here McDonald explains is to “Dig into that information and scratch well beneath the surface. All of the issues, and concerns, you have to get clear answers around.”

You’re looking to uncover information that may give you an edge, as well as information that might mean you rethink things.

Key questions you should be asking an estate agent: How quickly does the other party want to sell? Are they under time

pressure? Or happy to take their time?

What’s their family set-up? How many decision-makers?

How many other buyers are at the table?

What number do I need to be at to be competitive?

Everyone asks what the reason for selling is, and this isn’t to say avoid asking that, but it can be used as a set-up question to dive

“What’s most important to the vendor in this sale? Money? Time? Or something else?”

Generally speaking, there are three main drivers, money, time and certainty.

Now money is a straightforward - ‘this is what I’m offering’. Time is also quantitative, but with a bit more wiggle room and certainty, well, that’s a real opportunity to strengthen your offer.

Playing to your strengths is the key here, if your offer is likely less than the seller was expecting and/or less than other offers, you need to make a big point about your strength in the other two departments.

If you’re looking to close quickly through bridging finance or cash, make that the focus, especially if you know that’s important to the seller. If you’ve worked with the agency before and have bought from them, they know you’re a serious buyer, don’t let them forget that and make it a focus.

With a reported 31% of purchases falling through, the certainty of completing, due to being known to the agent and the impression you give is a huge competitive advantage. The three things that sellers want, money, time and certainty are exactly the same for the agent. They don’t get paid without the deal crossing the line so certainty for them is really high on their agenda. Sure, agents want to get the best price for their sellers, but their commission difference between a £200,000 sale and £205,000 is likely very insignificant. When they’re relaying the offers to their seller, if they think you provide greater certainty, you’ve won an ally there.

PROPOSAL

That brings us to McDonald’s discussion around the two types of negotiations.

“There are two types of ways you can negotiate, you can negotiate competitively or you can negotiate collaboratively,” he explains. Now transactional negotiations (where you buy and move on) can lead to a degree of competitive behaviour. You likely won’t have a relationship with that person moving forward. It is predominately driven by price and therefore many would suggest it’s good to be very aggressive with your pricing.”

McDonald warns however: “People buy from people they like and people sell to people they like. If you go in too aggressively it can put you on the back foot, but yes, clearly, you don’t want to overpay.”

He advises to keep to the collaborative model unless you know a competitive style will work.

And this is where we come back to the previous steps, prep work and our constructive dialogue.

“You have to use as much information about the marketplace as you can. If you go in too low, there’s a chance of you losing your seat at the table with others much higher, you put yourself at greater risk. Understanding who’s at the table from the agent and the vendor is key.”

This helps us see how strong your position is, McDonald emphasises that a large part of the negotiation is understanding your position, how strong of a position you’re in and how

strong the other parties are. He reminds us that half the battle is in the prep and dialogue stage, it’s those that allow the final stages to move smoothly.

Remember, this conversation is only the beginning, “If you’re buying something of course you’re going to want to pay as little as possible, but also recognise that the negotiation doesn’t start and stop at agreeing on the price, you then have subsequent interventions, survey, fixtures and fittings etc, which could involve additional negotiations.”

If you can forge a collaborative relationship with the agent and seller through these initial stages, it sets you up to get the most out of the following stages until you sign on that dotted line, often many months after this initial conversation.

Using the estate agent as your secret weapon:

This is perhaps one of the most important components to success in negotiation when it comes to purchasing (which may have the biggest wins and losses from how you negotiate in terms of £ amount).

Property transactions are unlike many others, you’re often negotiating through a third party (the estate agent) so you have to alter your approach from what you may do when you’re trying to haggle on that brand-new Ferrari that the media would have everyone believe you’re buying each year.

“The estate agent is the market maker,” McDonald explains. “This is a very clear argument to turn the estate agent into a collaborative relationship rather than a competitive one. A very competitive strategy will only be the best route when you know the other party’s position so well that you know you can get away with it… It’s a one-off transaction with the person selling it, but you may be wanting to invest in the area for a long time. There’s a ‘piss off factor’ here with the agents.”

Burn bridges at your peril. Instead, you have the ability to turn agents into salespeople for you. With often no contact with the seller, how the estate agents communicate your offer can separate you from the competition.

This sort of strategy is often referred to as creating an internal champion, in the wider world. Strictly speaking, an internal champion would be an employee within a business you’re trying to win work with, but you get the similarities. If the estate agent is pushing your offer as a really strong option due to the certainty of sale, you have the advantage.

“There’s a point of trust with the estate agent, collaborative relationships tend to build trust, it’s hard to build but you can break it in an instant. It will only work if there’s trust… And this will be different depending on what kind of investor you are. Are you wanting to buy a lot in an area or is it one-and-done? Where you might care less about a relationship.”

When asked about terminology and how to get the most out of the conversation with the estate agent, McDonald said: “No estates agent will say things aren’t going well, but often how they answer your questions will give you an inclination as to what’s really happening behind the scenes. If they use quite a lot of qualifying language and aren’t clear, confident and direct with their answers, then that’s an indication. These are called signals.”

DEMANDS, CONCESSIONS AND LISTS

Property transactions are complex, you don’t just walk in, set a price, sign and leave - unless of course, you’re buying at auction. In most transactions, there are numerous points of negotiation, from the initial purchase price, fixtures and fittings, changes of price due to survey, dates, etc. With refurbs, you have a price, timelines, and amount of work done.

McDonald discussed one of life’s biggest frustrations, timelines with refurbs. Reminding us again that negotiations don’t have to be financial.

“It could be timelines with builders, asking them to commit to a certain timeline and if they overrun, negotiating in that they do a piece of extra work for free.”

This opened up the conversation around wish and concession lists. McDonald explained that “in a transaction, as contexts change, are there things you can get that you haven’t already thought about? If there are additional things, you might want to consider what you can concede as a result of it.”

In the context of building work, that concession could be time. In your purchase, that might be allowing the seller to sell with tenants in situ rather than vacant possession.

Remember - “Where you are in the negotiation process has a very clear impact on your ability to use any kind of tactic in a negotiation. Right at the start of the purchase, with numerous others vying to have their offer accepted, you have less scope to push the boat. Later as you go, once it’s just you and the seller, you have more ability.”

McDonald spoke about lists: “If you have a list of demands, it gives you the ability to trade away demands that aren’t important to you and keep the ones that are.”

It is all about “getting the things you want, that are valuable to you and trading away things that aren’t as valuable for you but might be to the other side”.

NEGOTIATIONS THE DOS AND

WE WANTED TO GET A FEW QUICK-FIRE THINGS TO AVOID NEGOTIATIONS ARE DIFFERENT, HAVE DIFFERENT DYNAMICS, TIMELINE, BUT THE THINGS TO AVOID WILL REMAIN THE

THE DOS:

Mirroring - in any collaborative negotiation, likability is key. And psychologists suggest one of the best ways to be liked by someone is to be similar to them. You’re not going to be able to change whether you’ve got three poodles called Rocky, Thor and Homer like the estate agent, but there’s something else you can do. Mirror. This is both physical and verbal. If they cross their arms, you might cross yours too, if they lean against a wall, you can do the same. Although with elements that are seen as negative, for example rolling your eyes, frowns, etc, it’s usually best to avoid those.

Create a sense of urgency - we’ve all seen those property events where the speaker says the offer is only for the first 10 people and suddenly three people run to the back of the room to sign up. Those same people happen to do it night after night and may even be seen in the bar afterwards with their boss. Sorry. The speaker. Well, that’s to create a sense of urgency (as well as social proof). We see it all the time, limited-time offers and of course, countdowns on webpages to lock in your price. The reality is, businesses do that because it works. It’s one of the most battle-tested strategies in deal closing. The more you can convince the other party that the offer will only be there for a short period of time, or perhaps that you’re offering on other properties and if they don’t get back to you with an acceptance first, you’ll pull your offer - the more success you’ll likely have. One of our greatest fears is missing out. Position your offer well, you can instil that fear.

Use data - using data (gathered from your prep stage) to support your negotiation will help to keep the emotion of lowering the price out of it for the seller. It also supports your wider credibility as someone who’s serious. But keep things succinct, you don’t need to bombard them here.

Don’t be afraid to leave the table - this is business

You’ve set your limit and you need to hold yourself accountable. You need to be prepared to walk away if the deal doesn’t work. Being honest with yourself here and accepting that can also give you an edge. If the seller gets the impression you’re prepared to walk away, that’s when they will start to make concessions they might not have previously made.

Follow up, follow up. Follow up!

Sometimes deals don’t work and you need to walk away. That doesn’t mean they’re completely over. Get in the habit of following up. Check-in with agents and sellers. Ask them how things are going. Maybe the property hasn’t sold. Maybe the buyer they went with instead of you is being slow. Maybe the builder has had a project pull out and needs to fill the days.

NEGOTIATIONSAND DON’TS

AVOID IN A NEGOTIATION. THE REALITY IS, ALL DYNAMICS, AND ARE AT DIFFERENT PLACES ON THE THE SAME.

THE DON’TS

No one-way giveaways - “Avoid giving things away without getting something in return. It’s one of the biggest mistakes people make in negotiations, they don’t understand how important something is to the other person,” says McDonald. “It might not be important to you, so you might think you can concede on it and it not cost you much. What you can do is trade something back in return for it.”

This feeds off the questions you ask, the information you gather before from online sources and your read of the room.

Tactical info-share - “People tend to not want to give away too much information. Sure, you only want to give information away that helps you get to your objective, but a lot of people hold onto this information.”

This could be building credibility with the estate agent to help tick that certainty box they want ticking. Whilst price and speed are more quantitive, certainty is much less of a quantitive thing, and something you can elude to when you speak. Maybe you mention that you have a house two roads over, maybe you mention you are currently in the market for two properties and that this isn’t your first rodeo. Whatever you have to your advantage, this is your time to subtly let that out, and let it work for you.

“Avoid uncertain language”, says McDonald. Make sure you’re clear about the signals you’re putting out to set the impression you want to set.

Be precise - research shows that those who present more precise offers are more likely to see success than those who present round number offers. Maybe it makes you sound more like you know what you’re doing, maybe it makes it sound like that’s a well-considered best offer. Whatever the reason, the science shows framing your offer with precise figures gives you the edge.

Make multiple offers - Max H. Bazerman, professor at Harvard Business school suggests that by making multiple offers, you can gain a much greater insight into what the other person is thinking. By asking which offer the seller preferred, even if they reject them both, you can start to craft your next offer to better align with what they want and create a win-win. This can also create a scenario where the other side starts weighing up which they should accept out of your two offers, rather than whether they should take them at all. For example, on a house with an asking price of £160,000, you might offer £150,000 with tenants in situ or £153,000 with vacant possession. Suddenly the seller is debating whether they want to evict their tenant for the extra £3000 or sell to you as is. Rather than their whole focus being on where that £7,000 has gone. Sneaky.

PERSONAL STORY: DID WE SAY FOLLOW UP?

ON THE HOUSE Writer Alex Daley shares a negotiation win because he likes a good humble brag… And to show these tips really do work!

Alex puts the nabbing of his first investment property down to the habit of following up.

He writes: “After buying a number of investments I decided it was time to buy my first home to live in myself. I found a great project, viewed it, and put in my first offer. It wasn’t my highest offer but it was a good starting point. There was another party interested who had offered more. After a bit of back and forth and they offered more than my limit and got their offer accepted. I kept an eye on the listing every few days and noticed it hadn’t been marked ‘SSTC’, so I phoned up the agents who I’d built a decent relationship with from our back and forth and just checked in with them. Turns out the purchaser hadn’t got their paperwork, proof of funds or their decision in principle over.

They had promised it that day, so I said I’d call back in two days to see how they were getting on. Two days later (now about nine days after the offer had been accepted) I phoned, and still not in. Less than 10 minutes later I’d sent a slightly increased offer (albeit still under the original purchaser’s), attached my proof of funds, DIP, ID, proof of address, broker’s contact details, solicitor’s details - everything I knew they’d need. I did everything I could to show them that there was certainty with my offer and it worked. Offer accepted.”

So, there you have it - all you need to bag that date with Margot (or Hugh). Sorry. To see a consistent edge in your negotiations, I mean, ahem.

Everyone will develop their own negotiation style. You’ll learn to read the room, where the boundaries are, when to put on pressure and when to play it cool. The key thing is you roll up your sleeves and put this into practice. It may feel awkward, impolite or uncomfortable, but you’ll soon get over that when you’re saving yourself thousands.

So stop reading. Start negotiating.

Suggested further reading Or if you do want to do a little more digging here are some great resources:

• Never Split the Difference, Negotiating as if Your Life Depended on It - Chris Voss

• Influence - The Psychology of Pursuation - Robert B Cialini PH.D

• How to Win Friends and Influence People - Dale Carnegie

STRATEGY FOCUSHMOS IN 2023

Are HMOs a licence to print money or is there more to it than that? And how have times changed for the HMO investor. In the first of a two-part special Alex Daley sits down with HMO heavyhitter, Rick Gannon, to find out if they are still worth the effort and what’s key to HMO success in the current market…

Houses of multiple occupation (HMOs) are a route some investors go down to achieve higher cashflow. You only have to look through a few landlord Facebook groups to see people showing off some seriously high cash-flowing, incredibly good-looking HMOs, where the numbers seem to trump anything you could do with 10 BTLs combined. But they can’t be a simple licence to print money, it can’t be that simple, right?

Right.

OTH Magazine decided the only way to really get into what HMOs are and get to grips with the strategy in today’s market was by bringing in arguably the biggest name in the HMO world, Rick Gannon. Rick both teaches and does, with a portfolio of over 50 properties and having been in the business since 1997 he’s certainly lived and breathe it. He’s a well-known content creator both on social media but also with five books having been published!

Let’s start right at the top and explain what an HMO is.

“The definition is three or more people forming more than one household with shared facilities, so we might liken them to student lets and to coliving etc. Essentially it’s when a group of people who aren’t related, live together.” Gannon explained.

That’s what an HMO is, but we should quickly explain what this article is not - it’s not a how to set up an HMO step-by-step walkthrough. We thought it would be more useful to help you decide whether it is the right strategy to pursue in the current market with the reality investors face in 2023. If you are already convinced HMOs are for you though we suggest you check out Gannon’s YouTube Channel, the ‘Further reading’ panel at the end of this article or stay tuned for the next issue where we will look at building your HMOs from the ground up. OK, maybe not literally the ground.

Back to it - Why HMOs?

As with everything, there are pros and cons. The pros are the things that people will shout about on Facebook, but really, when weighing up if it’s a strategy for you, the question is can you live with the cons?

“HMOs have always been very popular in terms of strategy because we could take one property that might usually rent out for around about £900pm, the average rental in the UK, if we turned that property into a four or five bed HMO we could almost double that cash flow and net profit because we’ve now got five streams of income, not one. So it’s always been very good for high cashflow.” Five incomes also means, in theory, you’re more insulated from struggling with cash from tenants having payment issues, which is never a bad thing.”

Gannon continues: “It also comes with other benefits. HMOs are easier to get your money back out of on the other end of the deal, because they cashflow a lot more, so if you’ve got a commercial valuation which is based on the gross annual rent divided by the commercial yield for the area, then the property could potentially be worth much more than it would be at a bricks and mortar valuation. So you could buy a house, pay bricks and mortar price, turn it into an HMO then refinance and get a big chunk or even all of your money back to go again for your next one.

“Commercial valuation isn’t a one size fits all, there are hybrids too where you might get bricks and mortar and a bit added to it because its an HMO, but generally commercial valuations are going to be in Article 4 areas where you can’t simply buy a house and convert it without planning permission.”

Of course though, you do have to make sure your portfolio can handle that and you’ve fully assessed the risk. He says “This comes with a warning, if you’re buying a house on a street and that house is the same as every other house and you’re going to turn it into an HMO and get a commercial valuation which could be considerably more, and then the bottom falls out of the HMO market and you’re forced to sell it as a house, then you’re going to be over-leveraged and possibly in negative equity. So it’s very important when looking at equity release, you do it for the right reason and don’t over-leverage your portfolio.”

And much like every other strategy, there are cons.

“Like everything, there’s always going to be a balance, HMOs are busier houses, so the traffic is high, there’s a huge amount of legislation, we’ve got things like mandatory licensing, additional licensing, housing acts, etc. The legislation is there to make sure landlords are compliant and put their tenants’ safety as the number one. There will always be people trying to fly below the radar, but with all the legislation it makes for a much nicer and happier experience for the tenants, they know they’re safe.”

And that’s probably the scariest thing for prospective HMO investors, it’s knowing there are hundreds of elements to an HMO, and legislation coming out of your ears. If you’re not on top of that, it’s your head on the chopping block- figuratively, of course, the government are yet to bring in a special beheading division to their landlord hunting department.

It’s not all sunshine and rainbows, there are challenges in the market and Gannon was able to help us understand how you might combat them.

UTILITIES

“We used to work on £14pppw, that’s how we used to stack our deals, sadly now that’s gone up to £22.50pppw, so we are having to push that back down to the tenant. Of course, we can only put rents up when they’re outside their fixed term, once a year. So there might be a bit of a pain that we need to swallow at times, but there’s nothing we can do about that,” explains Gannon.

“What we have to do then is future-proof. That £22.50pppw may even go up to £25pppw by the end of the year until things settle down. We can’t subsidise the tenants’ utility costs, we simply can’t. We also can’t restrict it, tenants need to be able to have full control to heat their bedrooms to 18 degrees and communal areas to 21 degrees at any hour of the day. But what we can do is put devices in, like Time-o-stat, Nest, and Inspire, that enable us to monitor and control. These can make sure the house never drops below 18 degrees but also that you can bring it down if they get over 21. If the tenant wants to boost, they can press the boost button.”

“There are a number of new gadgets coming onto the market right now that will monitor the moisture in the air, whether the windows are being left open when the heating’s on, or even when rooms are left empty. Big tip - when you’re doing utilities, there are some [wholesale companies] that will entice people in by saying it’s a budget scheme, you only have to pay say £500pm and you can budget and it looks a lot less than their other competitors, which is all good and well, but at the end of the year, they’ll work out the actuals vs the budget and you’ll pay the difference, which is often a huge amount of money, so my big tip would be - always pay on actual bill readings submitted to your supplier.”

ROOM BANDINGS

Individual banding of rooms for council tax: “On the Valuation Office Agency’s (VOA) website it says they can use their discretion to single band a room with any alterations, which could be as small as putting a door lock on, it doesn’t have to be en-suite. Start with the end in

mind, always have a clause in your contract that the tenant agrees that if the VOA singularly band their room, it’ll be their responsibility to pay your council tax at the rate set.”

SATURATION

One of the biggest concerns for HMO investors coming into the market right now is likely to be, has the shipped sailed. Is there a danger that the rich pickings are past tense and the market is oversaturated with HMOS?

“There’s always saturation and competition in any market. What you have to do is shine and adapt to survive. So if you’re going to be that landlord with wood chip walls, and old furniture, you’ll get swallowed up. You need to aspire to be in the top 15%, there’s no saturation there. It may look like everyone’s doing that from the Facebook groups but it actually represents a small slice of the market. Get out of that saturation point and get into that niche point, tenants will stay longer, occupy quicker and you can charge more.”

MANAGEMENT

Rick recommends landlords who have the capacity to do so, manage their own properties. If you do go down the agent route, remember: “They’re not the same as single lets, always ask an agent how many HMOs they manage, ask them about how quick it takes them to fill their voids on average, test them, ask the right questions on standards like room sizes etc. If they can’t tell you, they’re probably not the right people for you. And of course, testimonials, check the contract, know what your notice periods are.”

And so there you have it, our overview on HMOs, we’ve covered what they are, why you might look at them but equally why you might decide against them.

Next month we’ll dive into how to develop your own HMOs, pulling knowledge from one of the best in the business.

Are they going anywhere?

“I don’t think HMOs will ever go away, it’s a really good, affordable option for tenants who want a transient lifestyle, they can budget, live with other people and get that communal living. It’s such a strong strategy,” says Gannon.

“My number one piece of advice - do as much education as you can,” says Gannon.

“If you make a mistake and it’s too late it can cost you massively. A lot of people think they can make it on their own and they come back afterwards with a hugely expensive mistake. Read books, listen to podcasts, join a good Facebook group, find someone who has been doing it

successfully, who understands the legislation, and ask to be taken under their wing. Whether that’s free, whether that’s paid.”

LAND PLOT FLIPHAZELWOOD COURT, SURBITON

OTH: You started your career in Westminster as a political aide and then went into management consulting, before carving out a niche in change management, something you are still involved in today. When, though, did property investing cross your radar?

It all started with a daydream when I was at work one day, in between client projects, sitting on the fourth floor of 20, Old Bailey. I found myself imagining, if the head of our practice area – organisational change - came over and said, ‘Right, your new client is you. I want you to use all the facilities here and just decide what project it is that you yourself would like to do next.’

I was captivated by this idea and the sense of freedom was compelling. I went onto Google to help brainstorm this idea, I can’t remember exactly what I first typed, but I remember at some point coming across the exciting phrase; ‘passive income’.

This led me to question, ‘how can I establish an independent income?’ The main things that came up were e-commerce, financial trading and property. Out of those three, property was easily the least comfortable for me. At that point I’d just purchased my first property in Wimbledon - a one bedroom flat just to live in. I’d never thought of properties as anything other than that and I literally didn’t even know how to put a picture up on a wall. At that time my belief was that if you did property, you were either a large company like CBRE or someone you would see on ‘Homes Under The Hammer’ – with tools in a van, a pencil behind the ears and I was neither.

Land development plays can be delicate balancing acts between many competing interests. Investor Felix Ghauri has learned to deftly walk the line with an approach that mixes both quantitative and qualitative elements with an intricate understanding of policy. There’s a lot to learn from this highly profitable and award-winning London commuter-belt land flip case study, not least that research pays…

OTH: So where did you start?

Very soon, I had realised that deals needed to stack up against certain metrics: you need to be buying so many thousand pounds per lettable room, securing fixed finance at certain rates, getting clarity on fixed and variable costs. I went all over the Southeast - from Brighton to Surrey – looking for where these economic variables worked best.

The thing is, at this point I lived in and loved central London. I loved being there amongst the architecture, history, commerce, people from all over the world and the general bustle. Everyone said ‘you can’t make it work in London as the economics don’t stack up - you need houses with garages to convert and extensions to add’. What I ended up doing was something slightly different.

In the end, I just really wanted to make it work in Central London. I was looking for how to make my blueprint work in Kensington and Chelsea and the City of Westminster Boroughs so I ended up using the same formulas but recalibrating them to the economics of these areas. I worked out the price per square foot, cost per lettable room, lending variables, typical remodeling opportunities, likely refurbishment costs and so on.

There was a free ads paper called ‘Loot’, and almost everything was online. There were still a few people that were only advertising in Loot and I found this amazing three- bed property marketed for an unusually attractive price. Fewer people went to view it because it was only advertised in print in Loot – there was no picture of the property in there, it’s just a line of text. I thought, that’s probably an ex-local authority property but it turned out to be a period property, perfectly located in a superb part of prime London. I offered the asking price of £375K having spoken to literally every estate agent in the area. None of them said that they would get less than £500K for it.

Well, that’s golden rule number one, isn’t it? Buy with a discount built in, then that is your buffer if anything goes wrong.

So, in the years that followed you expanded your central London and then Canary Wharf-focused property investment business alongside fulltime consulting work. Fast forward to recent years. How did you source the Hazelwood Court project - a land development deal?

With this particular deal, it was part of a very methodological approach because I wanted to get a bit more serious on the land and development side of things. It’s one thing buying a flat where properties are in excess of £1,000 per sq/ ft but buying land in

that same location is a completely different game. The approach I used was as follows: First, start with the likely capital-raise and then work backwards to a land value that worked for the size and type of sites we would be looking for, which turned out to be around the £650 sq/ft mark. The second filter was to look at available data on how planning friendly or hostile different planning authorities were in terms of refusals, time-to-decisions, size and types of sites applications consented and refused. This is publicly available data. And then the third element was a bit more qualitative - areas that I knew and have a bit of a head start in terms of having that micro understanding. All of this led me to Kingston and Surbiton, which, critically, I knew very well. I had local associates and contacts I could call on to, for instance, walk past prospect plots and take pictures. I used a professional mapping tool from the company LandInsight, now called LandTech, to methodically work through the maps, one sector at a time, to identify sites of potential interest and value.

A key factor throughout all of this was the ability to draw on advice and mentoring support from Paul Higgs of the Millbank Group. Paul has over 30 years of successful planning and development experience, is a former lecturer in land and planning at London South Bank University and is also a founding investor of LandInsight. He taught me the mechanics of how to find a site, evaluate it, work out the land value, the most valuable reconfiguration of the space, the cost to build-out those plans and the likely end Gross Development Value (GDV).

For each site, you then access the Land Registry record which you can do quite easily within LandInsight. You can then create a database and send a carefully worded letter to the owner inviting them to discuss how we could work with them to maximise the value of their land. These letters would go off and the responses would then get filtered through a virtual assistant. Anyone who wasn’t just ringing up to say ‘no thanks’, we would then telephone and schedule a meeting to discuss our proposals.

OTH: What was the first contact with the vendor of this deal like? What was interesting is that I used to walk past this site every morning when I was living in the area. When I was researching this site on LandInsight, I was looking for how constrained the site was in terms of: ‘Does it have trees on it? Is it overlooked? Does it have

pedestrian access, car parking, etc?’ Of all of these traits, sunlight and daylight is a big factor. The more constrained it is, the less likely you are going to be able to achieve any significant planning permission.

This site appeared heavily constrained but because I knew the location and its merits so well, I fired off a letter. As it turned out, I got a note to say that the owner had responded. When I phoned him, he said, ‘This is interesting, but you know, it’s too late. It’s already on with an agent.’ I immediately checked Rightmove and couldn’t find it so asked him which agent it was on with. He said; ‘Uh, well, I haven’t actually signed it yet but the agreement is sitting on my kitchen table.’ I immediately got on a train and went down to see him.

He was an older gentleman, interesting, somewhat cynical and cantankerous. He said that the agent was going to put it on for £650K with a view to getting £625K. We worked out that we could offer him £1.1 million, on the basis of the planning scheme we had envisaged. This would clearly be a win-win for him and for us.

OTH: I understand there was an issue with the conveyancing?

A lot of the conveyancing issues were down to the poor relationship between the vendor and his solicitor. We circumvented these issues by finding and proposing a different solicitor for him alongside offering him funding to move to a new solicitor that he was happy to work with. Something I have learned through various projects is that it can be wise to invest in a project in ways that nurture your longterm goal, even if it wasn’t in the original costing.

OTH: How did you finance the deal?

Our money-in was just under £25,000 which was paid, over a number of months, through existing cashflow so no external financing was required.

OTH: So, the plan was to tidy up the site and then take it through planning and hopefully achieve permission for the building of two semi-detached properties. One a three-bed and the other a two-bed. Were there any roadblocks?

Yes, there were. During the planning stage - we had a daylight and sunlight report that came back and the conclusion from them was that we needed to lose a whole floor, which would have killed the deal. We had to sit down with the daylight and sunlight experts and the architects and actually work out whether the scheme was salvageable. As you can see, from the artist renderings, we were able to reduce an angle on one side of the building to make it compliant without losing a floor.

THE NUMBERS

CASE STUDY

OTH: Can you do anything to help prepare for these sorts of issues?

We strategized the situation as a ‘negative-inclined planning officer’ and put ourselves in his or her shoes. Even the most negative-inclined planning officer must be able to justify their decisions in relation to current and emerging planning policy.

You also have to keep in mind that Planning Authorities need to comply with a legislative timetable for decision making. They are also often understaffed with a high turnover of planning officers which may sometimes give rise to a natural tendency to refuse where time pressure is a consideration.

OTH: So, when the planning was approved you sold the plot of land rather than choosing to develop it yourself?

Yes, we flipped it. We had a £1 option which we initially secured the site on the basis of a future, possible purchase of £1.1 million. Following successful planning application, we split the title allowing a sub-sale of the main house for £725,000 which effectively left us the development site for £375,000. The site achieved a residual land value and sale of £550,000 leaving us with a profit of £150,245.

Total Project Cost £24,755

Option Consideration £1 Sale of Residual Land £550,000 Profit £150,245 31 ON THE HOUSE

Welcome to beginner’s corner - Each month in this special section of ON THE HOUSE Magazine we will deep dive into an important step that will help newbie investors on their way to being fully-fledged property investors.

HOW TO CHOOSE A TARGET AREA

With the whole of the UK to choose from how do you hone in on the best property investment area for you? ON THE HOUSE Writer and investor Alex Daley unfolds his map to find out more…

In last month’s issue, we covered choosing the right strategy - you can read that here. In this month’s second edition of the Beginner’s Corner, we’re going to look at the key decision of how to choose a target area. With many investors having an ‘exit strategy’ of death, or at least, looking at it as a long-term investment, getting this right kind of helps a bit. Don’t worry, we’ll talk you through it all. Let’s start off with - What are our key considerations?

1. Where you live and what you appetite is for travel.

2. How much money you have to invest

3. Your goals

WHERE YOU LIVE

Ultimately if you live in a market that suits your investment criteria well, there’s very little reason to look further afield. The list of downsides is limited to just the prospect of your tenants overhearing you arguing with your family in Aldi about whether to get the pepperoni or goats cheese and spinach pizza for dinner that evening - that’s something you can likely work with (oh and, choose the goats cheese). Being close gives you the ease of getting to viewings and to your eventual purchase, if you go down the self-managing route, you’re able to get to site quickly and your big advantage - local knowledge. You know what areas are like, you know the distances to key places, desirable areas, the works. That said, your advantage can create bias - be careful not to exclude areas that are less desirable than where you live just because you wouldn’t live there. Keep your target tenant in mind.

It is possible for many (especially down south) that your local market isn’t somewhere you will invest. So the question then is how far are you prepared to travel? 45 mins? 90 mins? This is a question only you can answer.

HOW MUCH DO YOU HAVE TO INVEST

Depending on where you live, your answer to this question may force you to rethink your above answers. The super general rule of

thumb of course is, the south is more expensive than the north. And Midlands is often a middle ground. There are places in the north you can pick up terrace houses for £40-50k and them not be in bad shape. In the south, no chance.

Having budget limitations will remove certain areas from your potential search. Of course, make this appropriate to your chosen strategy. If you’re going down the route of HMOs, it doesn’t really matter what the price of 2-bed terraces is.

If you have a modest starting pot, it may make the most sense to start looking in the midlands & north. This is a position many find themselves in, they live down south but can’t afford prices in their local area. And for many who can afford it, they might not want to, as yields are often (albeit not exclusively) much lower than in the midlands or the north.

YOUR GOALS

Some investors are all about the returns, for them, higher returns will make it worthwhile travelling further to their properties. Some investors will want a much easier investment life. How important is a higher cashflow to you? Would you sacrifice more time travelling and doing more research into areas further away for higher cashflow?

When looking at property profits, we can break them into two categories - rental cashflow and capital appreciation. There are plenty of sources (such as Zoopla, which is a godsend when it comes to property and area stats - dive into their monthly and quarterly property reports) outlining average yields, and historic property capital appreciation.

(Property yield is property price compared to rental income (annual). Expressed as a percentage. The calculation is - rental income (annual) / property price x 100)

There’s often an idea that the midlands/north is for cashflow and the south is for capital appreciation. The data wouldn’t suggest that is the case. With areas of the north (such as Manchester) and midlands (such as Birmingham) right at the top of the capital appreciation rankings over the last five years.

His passion for property led him to specialise in brokering finance for property investors and it is this 20 + years brokering background that makes his fully-fledged, well established training business, unique in that it is designed to educate investors to play that bigger game in property - but with their current resources.

Kevin Wright has been described as ‘outrageously positive’ – partly

approach to property finance, but in 2016 he applied his positive strategies and took just two months to beat cancer.

START THE HUNT

Stage one: block out some time and make yourself a large coffee with your choice of biscuits, science says this helps with property searching.

As mentioned above, get stuck into online sources such as Zoopla to get a rough overview of how general areas perform. You’ll quickly start to get a feel for areas. Get on maps and see how far they are from your home and start to create a shortlist.

Once you have your list, jump into online property search engines (Rightmove, Zoopla, etc) and get a feel for what’s within your budget, within your chosen strategy. It may be this cuts a few places from your list, it may be that it doesn’t.

Once you’ve started to get a feel for how well each area will yield, you may find yourself narrowing down your list to a few places. If you can, try to get it down to one main area (often a city, but not exclusively) and then that gives you something to work with.

FUNDAMENTAL THINKING

In order to be sure that the area offers good investment potential you also want to look for a number of key fundamentals in the areathough finding an areathat hits them all is unlikely.

First and foremost is rental demand which you will be able to guage by talking to local estate agents as mentioned below.

Next, you want to look at local transport links. Good connections are vital for attracting tenants - a short hop to a major motorway or walking distance to a train station hub and you will be maximising your potential tenants. You may want to live in the sticks, but fewer tenants are going to be revved up about a long-distance rural commute.

On top of this, for traditional buy-to-lets it is important to consider schools in the locale - are they at least of a ‘Good’ offstead rating and within reasonable proximity. Plus consider if the area has good amenities - are supermarkets nearby, are there leisure centres, bars, restaurants or takeaways in the vicinity. More amenities mean more selling points to potential tenants.

You can also look at crime statistics - by looking at sites such as Crime Statistics (https://www.crime-statistics.co.uk/postcode). Be sure to compare this, not just look at one place, otherwise that place will almost certainly look like a war zone.

Lastly, but certainly not least, work - are their good local employment opportunities. A good way to consider this is looking for large local employers such as hospitals. Is Amazon opening up a distribution centre close by? That will create jobs and thus tenant demand.

ASK AN AGENT - OR THREE

Next, get on the rental section of your chosen property website, put in the type of property that you’re looking at renting out, check the ‘let agreed’ box and start to look through which agent’s names keep popping up as renting places out.

Then pick up the phone, tell them you’re looking at their area as a potential place to invest, you’ve seen they’re doing some great work letting out properties (because who doesn’t like being buttered up a bit), and ask them what sort of areas they’d recommend, what sort of tenants those areas attract. Which areas they’d avoid and super generally, what they’d advise with investing in the area? They’re on

the ground with this stuff. At the same time, head over to The Buy To Let Facebook page and see if you can connect with investor already operating in your target area (Try the search function). Get their feel, asking the same questions. This is what online communities are all about!

VIEWINGS, VIEWINGS, VIEWINGS

Then we’ve got to get on the ground, once you’ve shortlisted a bunch of potential properties, book a date in where you’ll go up, and schedule your viewings. Viewing slots are usually 15 minutes long, if you organise well (and have a bit of luck with agents’ diaries) you can get numerous in within a day, in various different areas, with time in between you have to change areas, to walk around and get a feel for the area. There’s no exact science here, do you feel horribly unsafe? Is there a pile of needles near enough on the doorstep?

The question you’re trying to answer is - will your target tenants want to live there? Not necessarily, would you want to live there?

Every area has good and bad patches, get to grips with where those are in your target area. This could mean you’re back to the drawing board looking at another place on your shortlist, but that’s not necessarily a bad thing. Do the work at the start to make sure your long-term investments work out.

And soon, you’ll have your trusty target area on your journey to world domination!

Demand Transport links

Schools

Amenities

Job options

PRODUCT TRANSFERS VS

Remortgaging is essential for homeowners and investors that want to stay on the most competitive rates and term to meet their needs and circumstances.

But when the time comes to refinancing a property, is it best to stick with your current lender and switch to a different product or remortgage with a new provider?

In this guide, we look at the differences, advantages and disadvantages between a product transfer and a remortgage.

WHAT IS A REMORTGAGE?

Remortgaging is when you replace your existing mortgage with one from another lender. This is typically done if borrowers are:

• Coming to the end of an existing mortgage rate

• Looking for a better deal than the current lender can offer

• Planning to borrow more money against the property (often to carry out renovations, pay off debts or for further investments).

WHAT IS A PRODUCT TRANSFER?

A product transfer mortgage is a remortgage with your existing mortgage lender but involves switching to a new mortgage product, typically with a better interest rate where possible and a revised term. Product transfers are offered by lenders as a way to keep their clients rather than lose them to a different lender.

In the past, many borrowers would stay with a lender for years and years. But as competition has increased in recent years, homeowners now have more choices and can generally move from lender to lender quite easily – making remortgaging a popular choice for homeowners – especially if their circumstances have changed.

By offering product transfers, lenders can try and keep clients by offering them a more favourable product instead of going to another lender to remortgage.

Product transfers are typically used if the borrower’s circumstances have changed. For example, if you’ve moved from employment to becoming self-employed, or maybe something on your credit file means you can’t get a mortgage from another lender.

With 1,4 million mortgages due to come out of fix terms this year it is well worth getting to know what options might be available to you. Joel White, Ramsay and White’s MD looks at the differences, advantages and disadvantages of product transfers and remortgaging

REMORTGAGES VS

If you want to move house but are tied into a mortgage, you can simply port your current mortgage to a new property (provided the lender allows you to). Instead of paying early repayment charges, you can ‘port’ the existing mortgage to a new property. With a product transfer, the mortgage is for the same property –whether that be the home you live in or a property you rent out as a buy-to-let landlord.

WHAT ARE THE KEY DIFFERENCES? RATES AND TERMS

With a product transfer, you stay with the same lender and just change your interest rate. For example, if your two-year fixed rate deal is coming to an end, you might want to look for a five-year fixed rate. This means the mortgage amount and term generally stay the same; you just change the rate with your current lender. Alternatively, with a remortgage, you might change your rate, your term and the mortgage amount – so there is a bit more flexibility.

THE PROCESS

A remortgage often requires more information than a product transfer because you are essentially a new customer to the lender, and they don’t know anything about you. While the criteria will vary from lender to lender, most will need to see your payslips and bank statements to assess your income and outgoings. They will also do a new credit check on you.

Conversely, as a product transfer is with your current lender, there’s no credit check, and the application process is a lot quicker. They know you have been paying your mortgage for years, so they will trust that you can continue to do so. This also means you won’t usually need to provide payslips and bank statements.

FEES

Generally, fees do apply for a remortgage and a product transfer, and these will vary from lender to lender. Choosing what’s best for you is a case of looking at what products are available, comparing the rates, fees and criteria and then weighing up whether it’s worth remortgaging or transferring to a different product with your current lender.

ADVANTAGES: REMORTGAGING

The main benefit of remortgaging is that it offers more flexibility. You can generally borrow more money and extend or shorten your term especially relevant in the current climate as rate have climbed considerably over the last six months.

ADVANTAGES: PRODUCT TRANSFER

A product transfer means you are just changing the interest rate, so there’s less documentation involved, meaning the process is completed quicker and easier.

SHOULD I REMORTGAGE OR TRANSFER?

Whether you choose to remortgage or transfer to a new product will depend on your circumstances.

Sometimes, a product transfer is the best thing to do – as it is generally quicker and easier than a remortgage and, in some cases, is your only option. But with a remortgage, you may be able to find a more favourable deal that makes your monthly payments lower thus increasing your cashflow – again very relevant in today’s higher interest environment.

It’s best to do your own research and also speak to an experienced mortgage advisor who can help you find the best solution.

GET YOUR SUMS RIGHT CORPORATION TAX

Corporation tax is the tax that a company pays on the profits it generates.

Generally, whilst a corporation tax return has to be submitted within 12 months of the company’s year-end, any corporation tax needs to be paid within nine months and one day of the company year-end.

The current Corporation Tax rate of 19% generally applies to all companies whatever their size.

From April 1st, 2023, the rates are changing and will be replaced by variable rates ranging from 19% to 25%:

• A small profits company rate of 19% will apply to companies whose profits are equal to or less than £50,000

• The main Corporation Tax rate is increased to 25% and will apply to companies with profits in excess of £250,000.

Where companies have profits between £50,000 and £250,000 a new Marginal Relief will apply. Read more here.

Companies will pay tax at the main rate of 25% reduced by marginal relief which acts as a mechanism to adjust the rate of tax paid, gradually increasing the tax liability from 19% to 25%.

There will therefore be an effective 26.5% corporation tax rate for profits between £50,000 and £250,000.

The rates of £50,000 and £250,000 are reduced if a company has associated companies or an accounting period of less than 12 months.

Again generally, a company is associated with another company at a particular time if, at that time or at any other time within the preceding 12 months:

• One company has control of the other

• Both companies are under the control of the same person or group of persons

STAY STRONG AND CARRY ON

Whilst there is doom and gloom in the media regarding the exodus of landlords from the private rental sector, we have seen the exact opposite with our clients.

Don’t believe everything you read! (Apart from ON THE HOUSE Magazine of course – it’s made by investors for investors after all!)

More purchasing opportunities are becoming available and whilst you have to navigate the mortgage interest position, rents are continuing to increase to help maintain healthy profit margins.

Property investment is for the long term and with the continuing position looking very unlikely to change - demand is outstripping the supply - simple economic rules will dictate the market.

If you are involved in property investment, property development, property management etc then it may be more beneficial for you to operate through a group structure as opposed to operating companies separately.

This can give great opportunities in the areas of moving properties around the group companies without SDLT, opportunities to more easily loan cash around the group and importantly being able to offset profits and losses against the various companies.

This requires very careful planning so bespoke tax advice is required.

The introduction of section 24 has seen a sky-rocketing in the number of buy to let limited companies formed. In case you weren’t aware though there are changes coming which are going to affect each and every one. Paul Weller of preferred partner tax experts Astonia Associates gives us an overview

THE GLOW UP

This month we thought we would shine a light on a tidy little deal done by BTL Group Founder Wes De Leur – see we’re not all talk!

BTL Group Founder Wes De Leur

About the deal

“I watched this one for a while. This semi commercial to SA/ commercial conversion was originally listed at £200. We offered £125K. The vendor accepted another offer of £140K. Deal fell through. They came back to me. I wanted to take it through full planning for change of use, however they wanted a quick sale. We negotiated a further discount due to risk of £115K.”

The Numbers

Purchase Price - £115,000

ARV - £215,000

Cash out after refi - £33,363

Rental - SA apartment - £2,900 pcm (@65% occupancy), £650 - retail unit

Mortgage - £845

Utilities/cleaning - £1,050

Maintenance - £290

Net profit - £1,365

THE LIST

You could Google it but you’re already here… This is by no means an extensive listing but it is our personally-curated list of useful contacts, services and resources for property investing and beyond.

INSURANCE SERVICES

Falcon Insurance

LIMITED COMPANY SERVICES

GetGround

TAXES AND ACCOUNTANCY SERVICES

Astonia Associates

MAINTENANCE SERVICES

Ark

MORTGAGE SERVICES

Ramsey and White

FINANCES AND PORTFOLIO TRACKING

Hammock

PROPERTY FINANCE TRAINING

Kevin Wright – Recycle your cash

DEPOSIT PROTECTION SCHEMES

Tenancy Deposit Scheme

My Deposits

DPS

ZeroDeposit

UTILITIES

Gas Safe National Grid Energy Ombudsman

EPC SERVICES

tenancydepositscheme.com mydeposits.co.uk depositprotection.com zerodeposit.com

Rich Dad, Poor Dad – Robert Kiyosaki. The book that so many people chart as their epiphany moment and that started them down the path to property investing.

What financial advice could you possibly glean from a civilisation 4,000 years ago? Turns out a heck of a lot as the parables of Arkad reveal universal wealthbuilding truths along the way.

Think and Grow Rich – Napoleon Hill. The all-time best seller that through extensive research on wealthy folk aims to coach you to

The Complete Guide to Property Investing A solid overview of the property investment game although readers should look to supplement with current information.

Property Magic – Simon Zutshi. Now in its 6th edition Zutchi’s book takes readers through many different strategies that if applied correctly will help accelerate your investing

House Arrest – Rick Gannon. The subhead ‘A Practical Guide on How to Replace Your Income Through Property Investing’ say it all, with the addition of noting a focus on HMOs. So, if you are considering entering the competitive world of HMOs give this a read. Never Split the Difference – Chris Voss. Sharpen up your negotiation skills with an exFBI hostage negotiator in your corner.

How to Win Friends and Influence People – Dale Carnegie. A time-honoured tome that will boost everything from you vendor interactions to your offer writing skills.

BLOGS

MrMoneyMustache – Pete Adney writing in his alter-ego as Mr Money Mustache. The FIRE movement and extreme frugality might not be for everyone but Pete’s logic, contrarian perspective and entertaining style of writing are a boon for anyone interested in personal finance. Pinch of salt required for US-centric advice.

National Network of Accredited Assessors

Swindon Energy – Paul Crovella

Eco4 grant applications

EPC Experts

NETWORKING

gassaferegister.co.uk nationalgrid.com ombudsman-services.org theepcman.co.uk heatinggrants.io epcexperts.org

Partners in Property (PIP) – Comprehensive paid for networking and education full day sessions with a promise of zero hard sell.

The Motley Fool – Long-running investment and market commentator website that focuses on stocks and shares investing and believes ‘individuals can beat the market’ with a long-term overview and a hands-on financial management approach.

BTL Group Preffered Partner

PODCASTS

Inside Property Investing – HMO Focused investing experience advice from Mike and Victoria Stenhouse, somehow unpretentiously dispensed from their yacht in sunnier shores.

The Property Podcast – The Robs have been dispensing free property wisdom for almost a decade. Impartial and in-depth advice garnered through years of experience and research.

Wealth Builders – A rounded approach to all things money making, keeping and financial fortress building from Kevin Wheelan and Christian Wheelan.

The Side Hustle Show – Inspiration for all those who are looking to make a little extra deposit dough on the side. American but features plenty of universal tips, ideas and concepts that can be within and without a property business.

The Property Jam – A light-hearted and quirky panel show around all things landlording that also reveals plenty of useful and actionable info along the way.

Naked Money – The Naked Trader takes us through stock market fundamentals and his own hard won rules to investing which feature in his award-winning book.

YOUTUBE CHANNELS

Jamie York – No nonsense, plain speaking advice from an investor who favours in his own words, plain and boring, bog standard buy to lets.

Rentals to Wealth – Infectiously positive pairing who sprung off a Bigger Pockets featurette and take you behind the scene of their house hacking and renovation efforts. US-centric but great for motivation.

New2Property – Perma-paint-splashed hands on investor Dan Coachafer gets into the sort of seriously granular detail that only that is perfect for true property fans and also for educating yourself on pitfalls a you go about portfolio building.

Ali Abdaal – Ali covers everything from selfdevelopment to business and investment in a millennial friendly-fashion. For those who adopt an always be learning check out Ali’s best hits.

AS FEATURED IN ON THE HOUSE MAGAZINE

Martin Baker – Founder of the EPC Man Network

Kev Dendy – Action-taking new investor and member of the RoundTable Mastermind Group

Suzi Carter – Commercial Property Investment advisor, creator of the Commercial Property Academy and chartered surveyor.

Sue Simms – Social Housing investment expert, long-term investor, agency owner and partner in Partners in Property.

Kevin Wright – Property Finance Expert who has been investing in property for four decades

Danny Inman – Experienced developer, investor, business person and co-founder of Prosperity Network

Sean Thomson – South African investor who founded WealthTrek to help fellow countrypersons invest in the UK property market.

Stephen Kempt – North West ambitious investor with plans for property-funded animal rescue sanctuary

Ross Harper – Glasgow investor and businessman founder of Auction House Scotland

Debbie Dorans – North East Property investment expert, strategist and mentor. Founder of Vigeo Property Hub

Adam Lawrence – Investor with over 500 deals under his belt, co-founder or Partners in Property Network and Co-Founder at Boardroom Club Consulting

David Williams – HMO Investor and founder of Beelief Property

Lee Scott – Long-term single let property investor

Jackie Gammage – Rent to rent investor

Nick Gordon – Eviction specialist, investor and founder of Evict My Tenant

Dave Cordner – Author - ‘Serviced Accommodation 5 Star Fundamentals’, serviced accommodation coach and Founder of Central Belfast Apartments

Alfie Best – Sunday Times Rich lister, gypsy businessman and property investor.

Jamie Greaves – Serviced accommodation investor

CONSIDERING THE COST TO MY SANITY

We consider ourselves cautious optimists as investors and producers of this mag. So for balance, instead of finishing on a positive note as so many magazines do, we like to get things off our chest. Wes De Leur (BTL Property Group Founder) –you’re up, just let it all out…

Ihear it all the time from people new to property who do not take into account or understand all of the associated costs. They really want to get into property but do not understand the full extent of the costs of the shiny new strategy they want to pursue with fervour.

I get it, you need to keep costs under control when you start out (and we love newbies in the BTL Property Group) but you also have to be realistic. Being too cost-conscious leads to the common questions of who is the cheapest broker/solicitor/insurance provider?

However, if you are a newbie and you are squabbling over a couple of hundred pounds then I strongly suggest that you consider if property is, in fact, the right investment for you.

Yes, I am all for saving money however if you are dodging, ducking and diving on professional fees when works costs could over run by £1000s – you are pointing your money-saving microscope in the wrong direction!

If you are a newbie and do not yet have a reliable network, I would certainly recommend having a healthy cash reserve for those unforeseen issues which may arise.

Most deals don’t fall apart due to professional fees. Most fall apart due to unforeseen spend on the build/renovations.

Make sure you have considered the bulk of the major cost items and ensure you have a good, trustworthy, reliable builder who you can lean on should you need to cover the knowledge/skill gap.

Remember, you can never get everything right, however, make sure you have the resources available should you trip yourself up, or better still, have a good team in place (who you may have to pay slightly more) who will be happy to point out the trip ropes as you go.

Happy investing all!!