Welcome to the November edition of Your Property Network We have had a busy month putting together this bumper edition of YPN for you packed with even more editorial from the UK’s experts in buy-to-let, development, refurbishment and property trading. This month we were pleased to see a return of the Property Investor Show that took place in ExCel. The event was well attended and we were delighted to see so many of our regular guest writers so busy talking on their stands. It was fantastic to see so much interest in investing, presumably as many people realise that when undertaken correctly property can yield such amazing returns when compared to money in the bank! YPN would like to thank all of our readers that we have met at different property events across the UK over the past weeks. Many thanks for all your kind comments regarding our magazine – we are delighted to receive so much positive feedback. Once again we urge you to let us know what YOU want to read about – remember YPN is YOUR property magazine, tells us what you want to read about and we’ll make sure we write about it! Email us at editor@yourpropertynetwork.co.uk More news of rising house prices in the mainstream media this month with reported rises from both Nationwide and Halifax ,lets hope all this positive news does not prevent us as investors snagging some pre-Christmas bargains!
In this month’s YPN
Ant Lyons
Education Pages 4-5 Kate Faulkner considers the challenges we have faced as investors and how it’s still possible to trade, develop and invest for profit. Pages 6-9 Mentor Pages. Check out how these leading experts are making money from property right now. Page 11 How to profit from plots of land without buying or owning. Page 17 Lease Options Continued
Finance Page 33 Ask the Broker, YPN’s resident broker considers how to finance HMO purchases. Page 35 TAX Insider, YPN’s expert in tax mitigation tells all. Page 39 We’re all doomed, YPN’s resident gloom monger considers why the proverbial may be about to hit the fan for many BTL investors!
Managing Your Property Page 27 Lettings Clinic, Your lettings questions answered. Page 29 Tenants from hell! Dealing with your problem tenants Page 31 Your investing questions answered Pages 18-19 When property investing goes wrong! Page 21 Property project – buy to sell. Page 23 Buy and sell for profit in today’s market.
Refurb & RENNOVATION Page 41 Adding value through loft conversions.
Buying Pages 42-43 Auction Update Pages 44-45 Investor profile
NOT YET REGISTERED TO RECEIVE YOUR COPY OF YOUR PROPERTY NETWORK MAGAZINE? SUBSCRIBE NOW AT www.yourpropertynetwork.co.uk
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ISSUE 17 - NOVEMBER 09
Kate Faulkner is Managing Director of www.designsonproperty.co.uk and is recognised as one of the UK’s leading, independent property experts and regularly features in the national press, on BBC Radio stations and TV tackling property issues. She is also one of Channel 4 Homes property experts and has written six property books including the Which? Essential Guides to Renting and Letting, Develop your Property and the Property Investment Handbook. Kate has an unusual property background having spent her first 10 years growing businesses in the retail sector while renovating old properties and the next 10 years helping to grow property businesses from self build through to letting, relocation and the new build sector. Kate now runs Designs on Property a PR, Marketing and Sales consulting and writing business and answers property questions via www.designsonproperty.co.uk for property investors and anyone carrying out a property project.
Property Investing used to be so easy Buying and selling for a profit used to be ‘easy’. Through the millennium you could buy a property and be guaranteed it would make money in a few years and in some cases, a few months. Some people (and mortgage lenders!) seemed to think house prices would continue to rise, others warned of a housing bubble, but didn’t seem to be able to accurately predict when it would burst. However, burst it did, starting in the States and hitting the UK very hard. The recession appeared to start in the property sector and within months we saw sales drop by 50% prices fall by 20% from a 2007 peak. Rental income which normally rises when house prices fall, has suffered with year on year falls of 5% or more, voids have increased as have tenant rent arrears. At the moment we seem to be in a strange state of flux. No-one seems to know what’s going to happen next. No-one can quite believe that such a sharp recession, within less than 12 months, can appear to be ‘over’. Yet, reports of green shoots in the property market and the wider economy seem to be talked about daily. The private sector is claiming their order books are growing again and recent figures even suggest unemployment is slowing. But are things really starting to turn around? What about the huge debt we owe as a country, estimated at £13,000 per head of our population*? It is true that business has taken the brunt of the credit crunch and the public sector has yet to be heavily squeezed? If this is true, what effect would public sector job cuts and pay being frozen (or cut) have on our economy – and the property market – next year? More importantly, as property investors, what does this mean for you? What’s the good news? What’s the bad news? And most importantly, if you have money to invest, are there any properties that are ‘safe’ to invest in? Are short term profits from property possible, or is it only possible to make money out of property in the long term?
were buying properties up to 50% below their true value.
The bad news The credit crunch however meant that investing in these bargains was only for cash rich buyers as buy to let, commercial and development finance became difficult and in some cases impossible to secure. The return of 25% deposit requirements, higher finance costs and recently a dramatic fall in the supply of property in many areas has made even ‘below market value’ deals have, in the last few months been difficult to fund and find. Added to the financing difficulties is the six month re-mortgage rule which stops an investor buying a property ‘below market value’ and then re-mortgaging it immediately to take cash out to invest in the next property.
So, if you can access cash, is this a good time to invest? Currently there are two schools of thought. The first believes that we are in an ‘artificial’ state of recovery. Interest rates are artificially low, help from the government is currently stopping repossessions and we have yet to see the effect of reducing public sector costs. As a result one school of thought continues to predict property prices falling further and staying low for some years as the impact of unemployment and a return to normal interest rates continue to depress
the economy. The second school of thought is that although low demand and supply is causing the current signs of ‘green shoots’, the likelihood of lots of properties coming back onto the market is small. Some predict that interest rates will stay low for many years (CEBR estimate interest rates will only increase to 2% by 2014). As a result, their predictions are that property prices will remain stable, and in areas where there is a shortage of supply such as the South East and London prices may even show small rises. Whichever of these scenarios you believe will happen, one thing is for sure, that spotting the ‘bottom of the market’ is impossible. You will only know it’s been reached AFTER it’s been recorded! For example, for those hoping to pick up repossession bargains, latest statistics from David Sandeman at www.eigroup.co.uk show that the ‘bottom’ of the repossessions market (ie when repossessions sold through auction houses were at their highest) was Quarter 4 2008 – nearly a year ago! However, good investors will always be able to make money – in good and bad markets. And, although you may have missed some of the bargains that have been around in the 12 months, there are still plenty of areas and properties that are worth considering investing in, as long as you’ve:1. 2.
The good news
3.
Many investors who had pulled out of the market back in 2006 (or before) have been buying heavily since October 2008. Those that bought within the first six months of the crash benefited by snapping up bargains from the huge over supply of property for sale and a massive rise in repossessions. Buying ‘below market value’ became the ‘favourite phrase’ of the property investment industry and canny investors
4.
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Carried out extensive research Considered different ways of making money from property Accurately valued the property you are buying Identified potential future capital growth
Research, Research, Research In my view few people carry out enough research when buying an investment property, especially in unfamiliar areas. Those that don’t visit a property before they buy shouldn’t be investing at all, unless they have previously tried, tested and trusted
ISSUE 17- NOVEMBER 09
independent people who carry out valuations independent of any property clubs or sourcing businesses.
Understand what is happening in the local market
When researching an area or property it is essential to:-
Use www.hometrack.co.uk and then visit local estate agents that have been selling similar properties. Hometrack will show you how many weeks and how many viewings properties require to sell, as well as what the average offer price is versus asking price. Use this information to check with local agents how accurate it is and what their experience of the market is currently. Identify previously ‘sold property prices’:-
1.
2.
3.
4.
5.
6.
7.
8.
Visit the street and surrounding areas, research current supply and demand from a buyers/tenants perspective. If the property requires updating, make sure you have accurate quotes, and refurbishing the property will deliver a 20% return. If you are planning to rent the property out, check the rental value from an agent that specialises in rentals, rather than an estate agent/letting agent that may have a conflict of interest or have only just started a lettings business to help survive the recession. Check what properties are in short supply now for buying or renting. Areas that seem to be recovering from property price and rental falls already are likely to be the ones that will deliver good capital growth in the future. Secure feedback on potential sales value from estate agents and an independent RICS surveyor who is acting on YOUR behalf. Check out the future supply of other properties that might affect demand for your property. If you are buying a two bedroomed flat, what if another 1,000 are planned to be built? What planning permission has the local authority already given? Find out about the future population changes. If you are buying a large property to rent out to students, will there be enough families who can afford to buy a big property when you want to sell? If you are buying a three bedroomed property and are planning to turn it into a five bed, make sure the cost of the additional space will be covered by a real rise in the value of the property.
Consider different ways of making money from property Many people just look to buy to let or renovation to make money from property. However, you can also invest in:1. 2. 3.
4. 5.
Buying land and build to let or sell. Commercial as opposed to residential property. Develop mixed use property, for example buying a shop and a flat above and renovating to then sell or rent at a profit. Property funds and syndicates. Working with developers to buy properties below market value via a ‘part exchange’ scheme.
Accurately Valuing Property When we used to value properties at a professional part exchange business, we used to spend approximately three full days and use five professionals to help value the property accurately. And we had to. To make money from part exchange you have to buy a property at a discount of between 10-20% and then sell the property (typically via agents) within a three month period, or you’re likely to start losing money. To value a property you need to:-
1. 2. 3. 4. 5. 6. 7. 8.
Go to a property portal for example www.rightmove.co.uk and click on ‘sold prices’. Put in the property’s postcode. Select a distance first time of 1 mile, then if few or no results select up to 3 miles. Put in your type of property. Put in 10% below the minimum price of the property valuations you currently have. Put in 10% above for the maximum price of the property you have. Then tick the box that says ‘include sold, under offer, subject to contract’ Find properties that have just gone under offer/sold and then follow up with the agent who sold the property.
Find comparables of similar properties which have recently been sold. A recent comparable is vital in understanding a property’s likely value, and is defined as a property that has sold recently in a similar location, ideally in the same road or a very similar property in a nearby street eg 1930’s semi, detached or Victorian terrace.
Other Valuation Methods
So, if you want to buy property now and sell it at a profit in the future, you’ll need to start predicting which property types in your area are likely to sell in the future and appeal to as many buyers as possible. It’s unlikely that there will be a ‘magic’ answer to this. It’ll depend on local property supply, demand (which will vary according to the population and availability of finance) as well as how well the local economy recovers. To help you do this you’ll need to search for information on:1. 2. 3. 4.
Likely population changes. Planned increased supply of new builds and social housing. Transport changes that shorten or ease the time it takes to get to towns and cities. Areas and property types that will remain in short supply now and in the future.
For example if the area you are investing in has an ageing population, then maybe there is a shortage of bungalows with manageable gardens. If another area has a shortage of two bedroom apartments within easy reach of a train station, shops and work and a relatively young population, then this type of property may be the best to invest in. In summary there are ‘no short cuts’ to make money out of property in the future. You’ll need to have cash for deposits and financial fees and carry out extensive research about the viability of an investment property now and in the future. Finally, with the government wanting to find lots of ways of paying of their debt, you will also need to ensure you secure good legal and tax advice so you buy the properties in the right way and minimise any tax bills that may be due now and in the future! *Totally Money
You can use the ‘on-line’ automated systems, such as www.zoopla.com but be warned, these are never as accurate as carrying out your own research and their figures are typically based on ‘past’ not future prices. Finally if you are sure you have a property that is worth investing in, and especially if it’s in a terrible state and difficult to value, call in a local RICS surveyor to give a professional valuation which includes the likely costs of works and check these costs with local tradesmen.
Identify potential future capital growth Up until the credit crunch, terraced houses have outperformed other types of residential investments from a capital perspective for the last ten years. Both investors and first time buyers competed to buy this property type and it led to an increase in the value of these typically two bed properties. Over the next five years, with a large public debt and recovering from a recession may mean people’s income doesn’t increase much and with a fall in the number of people able to invest, property prices are unlikely to increase much. In fact some reports (such as Knight Frank) suggest it will take until 2014 for prices to recover to their 2007 levels.
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MEET THE MENTORS
Glenn Armstrong www.glennarmstrong.com
Telephone
01908 423700 I have been attending networking events and running our own events for some years now and it often staggers me that in a room of 100 people only a small number of those will really put into action what they have learnt. Unfortunately many of the people in the room may remain spectators spending many hundreds of pounds and many, many hours increasing their knowledge but failing to put what they have learnt into practice. When I see those that take action making significant profits from property I wonder what is stopping everyone else doing the same. Perhaps it’s fear, or a perceived lack of time or maybe its just life getting in the way. On balance it’s probably a bit of everything and these can only be overcome by having someone else push you to succeed. I am often approached at events by investors that have an idea of what they should be doing but need more help and support in mapping out exactly what they need to do be doing. The one question I am asked more than any other is: “Is there a way to guarantee the ownership or control of a profitable portfolio with no real capital behind you and with no experience in property investment?”
The answer is yes! The answer is fast-track.... Fast-Track is the combination of all our knowledge, experience, contacts and products in one guaranteed programme. Sign up to and follow the Fast-Track program and we will guarantee that you secure your first deal within a year or we will refund your money. Typically we expect you to do your first deal in 3-6 months. The Fast-Track program consists of: • • • • •
My acclaimed BMV property day A comprehensive mentoring programme An Estate Agent program focussed on getting the most from the right agents for your business plan in your area Access to Glenn and the team throughout the program A comprehensive mindset program to guarantee success
This program comes with a full money back guarantee, this is how confident we are that you will succeed.As part of the Fast-Track programme you will also get access to our Think Yourself Rich events. I know that success is not only about the knowledge and understanding you have, it’s also about having the correct mindset for success. At our monthly events you will be given exact targets to ensure you achieve your goals, each month you have to report back to the group on your progress to date. This simple format ensures that those in attendance take action on a proven road map for succeeding. We ensure that we are at the very cutting edge of investing so that you can be sure that you have all of the tools and knowledge to achieve your property goals. As we are actively continuing to buy many properties you can be sure that the systems that we use are the very latest, up to date and proven to work. For more information visit us at www.glennarmstrong.com or email Darren@glennarmstrong.com YPN special bring along your partner for FREE to our acclaimed Think Yourself Rich events. Two places for the price of one (just £69) when you quote reference YPN.
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Simon Zutshi
www.propertyinvestorsnetwork.co.uk
Telephone
0121 377 2470 info@propertyinvestorsnetwork.co.uk
How close are you to financial freedom? How would you feel if you did not have to work because you had a passive income coming in every month that was enough to cover all of your living expenses? What would you do with your time if you did not have to work? How different would life be for you and your loved ones? This is often the dream and the reason why many people invest in property. The challenge is that most people believe they need 50+ properties to generate sufficient profit from their portfolio to replace their income. The thought of buying this many properties is so daunting that most people fail to take action and so never achieve their dream. I have some good news for you! You are probably closer to financial freedom than you think. The average income in the UK is about £2500 per month. How many properties would you need to generate this kind of income? That very much depends on the kind of property you purchase. A property on a single AST may make you anything from £50 to £200 profit a month, but a multi let property could generate anywhere between £400 and £800 profit per month. So how many of these would you need to cover current living costs. I suggest it may be as few as 3 to 7 properties and you could be financially free. How does that compare to 50 properties? Does that sound and feel much more achievable? Now I know what some of you may be thinking. “Simon, Multi lets require a lot more work than single lets!” Well yes they do require more management but you get paid very well for it. Owning 5 multi lets is far from a full time job and yet you are happy to put all of your time into a full time JOB paying you about the same amount of money. Besides, you don’t have to do all of the management you could get someone to do it for you as I do, so that your income is truly passive. Most letting agents won’t manage multi lets but there are some that do. A number of them come to our monthly pin meetings. If you would like to find out the correct way to profit from multi-let properties then we have a special event in London on 27th and 28th November. Full details on this website: www.MultiLetQuickStart.com
MEET THE MENTORS
ISSUE 17- NOVEMBER 09
Matthew Moody Richard Shepherd
www.yourhmoexpert.com
Telephone
01933 460270 Extracting Extra Cash From Your Property Business I’d like to discuss a topic that is little discussed in property investing. This concerns the underlying aim of a particular transaction. Whether you’re doing a Sale & Rent Back deal, a Below Market Value deal or a Lease Option, you – the investor – will make profit on each deal. But it is also important to understand how your seller benefits. Let’s look at 3 types of transactions:1.SARB: You’re helping a seller stay in their home. We’ve done these where we’ve been able reduce the seller’s £1,200 monthly payments to just £550 per month. We’ve stopped their repossession, and sustainably reduced their monthly payments. The underlying aim of this transaction was true and just. 2.BMV: Your seller needs to move quickly. We’ve done deals where the seller’s been able to move out in days (even though the property’s been on the market for over a year). They’ve taken a drop in the price of the property but the underlying aim has been to help the person move on with their lives. 3.Lease Option: Although the lease option is a little more complex in nature, we’ve done deals where the idea was to see out the Early Redemption Charge and other charges levied on the property and this has left much more money in the pockets of the seller – and also more for us. Here the underlying aim was to help the sellers. Like you, I’m sure I am faced with a myriad of property investment opportunities all the time. Some are for me and others I don’t get a good feeling from. In Australia for example the mortgage market is very different and the monthly payments to get a mortgage are significantly higher than just paying rent. Because of this the chances of a tenant buyer ever exercising their right to buy are much lower. Some investors don’t care – their aim is just for the tenant buyer to ‘finance’ the property and for the investor to win back the property eventually. There is something fundamentally wrong with this. If the deal is structured so that it is very difficult to see how the seller benefitted there is something fundamentally wrong. These deals are difficult to justify and it is easy to see why the FSA are looking to clamp down on a whole variety of these type of transactions. The investor should always (if at all possible) leave something in the deal for somebody else to benefit from. These instruments can be used for good – and it’s a very simple test. If the underlying aim is firstly to help someone AND secondly to profit out of the deal – then this lays the foundations for a sound business transaction. Richard constructs property investment portfolios for investors and also well known for his highly regarded dynamic workshops. He teaches an intensive 1-day workshop on Below Market Value Property Investment and a 12-Month Programme for Advanced Investors.
10 Underground Cashflow Secrets Making money from every-day property Learn the cashflow secrets that keep putting money in your pocket every month through our exclusive quickstart guide.
Secret #1: MYOB Simply put; its “mind your own business”! And this refers to the principle eschewed by Robert Kiyosaki that you need to put your business interests first before anything else. You need to have a primary aim of where you want to go in property which is backed up by a master plan. Implement goals that meet your master plan and remain focused upon it.
Secret #2: Numbers are boring: but essential Its all about the numbers and how you interpret them. The essential items include a deal analyser which shows you the true yield once you’ve taken into account the bills that you will experience. If you don’t truly understand what you’re going to be bringing in, then how can you manage your business?
Secret #3: Portfolio Strength From Day 1 Get it wrong in the beginning and it can cost you thousands over the years. Focus on the loan-to-value, the cashflow you generate from Day 1 and make sure you are adding value and investing for cashflow not capital appreciation. Just a small miscalculation on a refurb cost on 20 houses could cost you at least £100,000!
Secret #4: Beauty is in the eye of the beholder Its all about kerb-appeal and location. What appeals to one market sector may not appeal to another. But what is apparent is that tenants are becoming more picky and expecting the best – so give it to them. Find out where you need to be located so that you get the best rents.
Secret #5: Occupancy Needs Focus If you have a void, you have a problem. Voids are just not acceptable and if you’ve bought in the right location, you should rarely have them. But if you do, then your focus needs to be upon filling these units. Your plan needs to be a pro-active one so that you are calling tenants, not waiting for them to contact you. Remember, for every week of voids, you are eating into your yearly profits and cashflow. I can only share a very very brief overview of the cashflow secrets we use but you can receive the full 30-page plus report by going to www.stanfordknight.com/cashflowsecrets.html
You can reach him at richard@yourpropertytutor.com.
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ISSUE 17- NOVEMBER 09
MEET THE MENTORS
Vincent Wong & John Lee www.wealthdragons.co.uk
Telephone
Ben Rogers www.BuyaHouse4aPound.com info@optimusproperty.co.uk www.facebook.com/BenRogersUK www.twitter.com/BenRogersUK
01908 698879
01634 579 575
Back to Basics
The Power of Education
With so many advanced techniques being taught to investors these days (lease options, rent to own, part now part later, etc), we sometimes need to go back to the beginning and remember the most basic rules in property investment.
“Good stuff in = Good stuff out”
So here are our top five basic rules:
Rule #1 - Only Deal with Motivated Sellers If someone is not in a hurry to sell or inflexible with the price or terms, then move on. The seller is not motivated.
Rule #2 - Make Your Money When You Buy If you pay full price for a property and wait for the price to go up, this is not an investment but speculation. Investment is putting money down to buy an asset that gives you instant value. In property, it is the equity. Warren Buffet would tell you the same in value investing in equity. If a property is worth £100,000 and you can acquire it for £80,000, you’ve created an instant equity value of £20,000. If you can release the £20,000 equity when the price goes up, the cash is totally TAX FREE!
Rule #3 - Don’t Buy Too Many Too Fast Investing in property is not about how many properties you own, but about net worth and cash flow. Most people would have heard the saying “cash is king”. If cash is “king”, then cash flow is “King Kong”! Let me give you an example. If one of your properties gives you £200 of cash flow a month, a broken down boiler that needs a replacement could easily wipe out six months worth of profit.
Rule #4 - Don’t Do Nothing When You Can’t Borrow Home ownership is an illusion. You don’t own a property when you have a mortgage on it. You own the debt and the bank owns the asset. Is getting a mortgage the only way for you to invest? Of course not. Successful investors always find a way around problems. Not doing anything by blaming on mortgage shortages is just an excuse for inaction. There are many ways you can make money in property without actually buying property. Here are just a few: • • • • • • •
Lease options Joint venture partnership Sourcing and flipping property deals Selling excess leads Helping sellers and investors offload their properties Rent to own Negotiating for investors for a fee
We can go on... The point is that by doing nothing because you can’t get a mortgage, you forego the ample opportunities to make money in property. If you’re lacking some of these skills, then it’s time you leant them. There is so much money to be made so, what are you waiting for?If you want to know how Wealth Dragons can help you become a competent property investor from beginner’s to advanced stages, visit www.WealthDragons.co.uk
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Turn off the TV, don’t read the paper. Would it be fair to say that most of the stuff being reported is fairly negative?! I learnt fairly early on in my property investing career (and you have probably heard this in different ways from other speakers) that “who you associate with, is who you will become”. I also realised that I didn’t need to read the paper every day because “good news does not sell, bad news does”. Also, if something really important happens, someone is bound to let you know..! Therefore go out and network with likeminded people. Go on seminars where you will get fed positive stuff. Invest in your education so that you are constantly topping up your mind with creative ways to do things. I added up recently what I have spent on “educating myself” in property over the last 10 years. I have done courses with Whitney UK, Glenn Armstrong, Richard Shepherd, Parmdeep Vadesha, Ranjan Bhattacharya, Simon Zutshi , Rich Dad, etc, etc. I have been on seminars, attended exhibitions, joined teleseminars, been on webinars, have countless books on my bookshelf about property and positive mental attitude... I reckon that I have spent over £120,000 over the last 10 years. On average that is £12k a year..! Now, do you think that I have made a lot more than I have spent on this education? Of course I have. Could I have learnt it all by other means, without going on the courses? Yes, probably. But it would have taken a lot longer and I would have earned less, without meeting the great friends and business partners that I have on the way! Rick Otton has an amazing Home Study Course that includes the “Rent to Own Pack” and the “How to buy a house for a pound” Pack. It includes manuals, cd’s, software, legal’s and basically everything that you need to go out there and start making money from property with options. It is the definitive reference library to what you need to know about options (and do profitable deals) and nothing else on the market comes close to it. Amazingly we have just persuaded him to drop the price of this pack by £500 to only £1,497. You can find out more about it and get it on our website www.BuyaHouse4aPound.com To give you an idea of the “power of good education”, one of our students that attended Rick Otton’s “Live Event” in October, has bought 32 properties, made £120k in cash, and has 76 in the pipeline! How much do you think you could do in your first month after learning the strategies that we taught him..? If you haven’t done so already, link up with me on Facebook and Twitter and join our Facebook group (http://tinyurl.com/RickBenFaceGroup) about options where you can join some great discussion, see some great videos, and keep up to date on the exciting world of creative property options from Rick Otton, who is THE world expert with 22 years knowledge on the matter!
ISSUE 17 - NOVEMBER 09
Rhett Lewis www.rhettlewis.com
Rob Moore & Mark Homer
Telephone
robmoore@progressiveproperty.co.uk
0115 982 7160 This month, I’ve had many requests for answers regarding lettings and tenants, I thought I would share the answers with the readers of Your Property Network. Question: Can I alter the term of an assured or short-hold tenancy? Answer: If the lease is a fixed term or contractual periodic tenancy you can only make changes if the tenant agrees. It is best to put any alterations in writing. If the fixed term has ended, the agreement reverts to a statutory periodic tenancy, but it will continue on the same terms, unless either party proposes a change. You or your tenant may suggest new terms and any subsequent change to the rent within a year of the statutory periodic tenancy starting. If you cannot agree new terms, you both have the right to apply for an independent decision to be made by a rent assessment committee. Question: How do I go about making the changes? Answer: You are your tenant must set out new terms and any consequent change to the rent on a form called a ‘Notice proposing different terms for a statutory periodic tenancy’. If you both accept the changes, they can be included in your agreement. If there is a dispute, you or your tenant must apply to a rent assessment committee, using another form called an ‘Application referring a notice proposing differing terms for a statutory periodic tenancy to a rent assessment committee.’ This must be done within three months of receiving notice of the changes. Question: How does the rent assessment committee decide the terms? Answer: The committee judges whether the proposed changes are reasonable or if other terms would be more appropriate. They may adjust the amount paid by the tenant to reflect the terms, even if neither of you has proposed new rent. Once the committee has made a decision, the new terms and if necessary, the new rent, will apply from the date given. Question: If the rent assessment committee set new terms, can I propose further changes? Answer: You can only make additional changes if the tenant agrees. You can, of course, propose a new fixed term or contractual periodic agreement at any time.
0845 1309505
www.progressiveproperty.co.uk/book
Property Investment Tips for New Investors & Beginners Below are the 8 things every New Property Investor should do to ensure Property Investing Success [& avoid financial & emotional pain 1. Your Goals: Full time or part time? Hands-on or Hands-free. We see so many people come and go in Property because of unrealistic expectations. Whatever your journey & pace, you can reach your desired goals as long as you play to win. Be honest with yourself. If you have time, desire & low funds, jump straight in & consider part/full time hands-on investment. If you are busy, can leverage some funds and like ‘the baby but not the labour pains’ leverage an expert to get your desired results because you just won’t have the time or inclination to do it yourself. 2. Research: High Yielding areas within areas. Stay local. Whatever your choice for Q.1, you must still make sure you set yourself up for success. High yielding, cashflowing properties in a local proximity will get you far better results [more money, less pain] that properties scattered across the country [or the world] bought on discount alone. 3. Learn from other people’s mistakes: Leverage. There’s not much that hasn’t been done, so educate yourself & grill experts. Find out mistakes others have made as quick as you can so you don’t make them. Leverage the time, knowledge & experience of successful investors & give yourself a big headstart over what we had when we started. This can be in the form of meetings, courses, 1to1’s, conversations, books & internet resources. This should never stop, it will just become more focused over time. 4. Take Action: Make some mistakes; we all pay our ‘Entrance Fee’ Fear & a lack of confidence can paralyse. We all start without knowledge, experience & with a little fear: it’s natural & you can’t bypass it. So take it on the chin, enjoy it & understand it is an important part of your journey, where you get the lessons & you make the money. Keep a good network around you to support you through this. 5. Educate Yourself constantly & Continually Improve. This is Vital. The Property market evolves & moves quickly [especially in a *Crash*]. Continually improve your skills, knowledge & network & your finances will follow. You will never be the finished article, but you should never give up trying to be! 6. Think BIG & Be Creative. Yes Property is a business & it is numbers driven. This being said there are so many creative ways to make money in Property in today’s market, the limits are only what you limit yourself to by decision. Structuring a deal can make you profit in so many ways, so stay creative and open-minded. 7. Network: Online & Offline. You net-work is your net worth. We wrote a recent post here. Enjoy 8. Smile & Enjoy Yourself. If it’s not fun, or you’re not at least trying to enjoy yourself, do something else. The process of investing & making money is exciting, & you’ll attract all the right people to you with this attitude [many of whom you’ll end up doing Joint Ventures with….or becoming good friends…. or marrying! For over 100 more articles from Beginner to Professional Property Investor, including Videos and Free Resources, go here: www.progressiveproperty.co.uk/blog We hope to meet you personally soon
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ISSUE 17 - NOVEMBER 09
MEET THE MENTORS Yvonne Emery
www.YvonneEmeryCoaching.co.uk
Telephone 0845 094 6628
Have you been to all the seminars yet? Are you someone who has already made that all important decision to invest in yourself and your education? You know that you want to make the most of the property prices at the moment, right? So what’s stopping you? It’s a well known fact that about 90% of all those sitting with you and working with you at a seminar will go home and put the papers away and then not do a single thing about what they have just learned. This is not only the property seminars, but all seminars, so why is that? Have you listened, learned and understood? Or have you just listened and taken some notes? However experienced you are there is always more to learn and understand. Every time I attend a networking event there is something to take away and take action on. New initiatives or even old ideas regurgitated could create thousands of savings in tax or a fresh approach to structure deals – let’s face it the financing of deals is changing on a weekly basis at the moment. Think about it – anyone who claims they know everything can only be right for 6 days max. Don’t be part of the ‘YES BUT’ brigade – make sure you’re making things happen for you right now. Keep your But’s behind you and the Yes’s in front. If you are not acting and investing at the moment, then the chances are you just haven’t found the right investment formula to suit your personality. You must work in a way to suit your personality because you can’t have failed to notice that we’re all different. Take a look at those who have been successful with the BMV system and using leafleting as one of the main advertising modes – what are their similarities?
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How are they different from you (if you’re not using leafleting of course). How about those who are making real headway with options – what do you notice about them? Perhaps you aren’t using these methods because you fear having your neighbours or friends laugh at you. •
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If leafleting doesn’t feel right then build relationships with Estate Agents and use the traditional method of buying property. If you’re holding off making offers, or dare I say it, holding off from viewing properties, then you seriously need to ask yourself what is stopping you. If owner occupiers are pipping you to the post with your offers and paying the asking price, you may well be looking in an area that is very desirable for residential purchases. In which case you will need to find another area near you (or even not so near you) that will fit your purchasing criteria. If you are using the lack of financing opportunities as an excuse... come on guys (and girls) get a grip. There are so many opportunities to control properties without the need for a mortgage that this shouldn’t be an excuse any more. If you don’t know how to structure deals to the level that gives you confidence to get on with it, then get alongside others who do know. Read all you can, attend all the seminars you can and most importantly of all get
a great broker who knows what they’re doing. They’ll help give you the confidence to get all the background in place and to really make progress. So, are you a jump in and do it kind of person? Or are you a researcher who likes to make sure all the I’s are dotted and the T’s crossed before you start anything? Perhaps it would be better if you had a partner to accompany you and encourage you along the way? Or are you the director type who would rather someone did the hard work for you? Whichever you are, you will find different groups who can answer your queries and help with your preferred method of investing. If you’re uncertain as to which road to take then visit my website www.YvonneEmeryCoaching.co.uk. Maybe one to one work could springboard your portfolio more quickly. On the basis that each of you is different then your road to investing and the methods that suit your personality are different too. Call me to see if I can help you to move forward. I offer both one to one sessions and small group sessions (maximum 6 people) which would allow you to explore your own situation more specifically. You can own (or have an option to own) your next property by Christmas if you want to. Email: Yvonne@YvonneEmeryCoaching.co.uk and quote YPN in your subject title. Happy Investing Yvonne
ISSUE 15 - SEPTEMBER 09
UK Property Expert reveals one of the industry’s best kept secrets:
How you can make a life-changing income from land without purchase or ownership... Since my interview in the August edition of Your Property Network, I’ve been inundated with enquiries about my multi-faceted approach to property. There’s far more to the world of property than buy-to-let and it seems that a lot of people are eager to find out more. As regular readers of my blog will be aware, I encourage anyone seeking substantial income to explore a broader, more rounded approach to property. It’s an approach I’ve adopted personally and which delivers a regular, life-changing income, allowing me to experience true financial freedom. It’s provided a quality of life I could never have achieved through buy-to-let investing alone.
How to generate profits from a plot of land without buying or owning it Land trading is the most effective method I’ve found to generate quick five and six figure profits. It’s also relatively easy, requiring minimum time and effort. Once you know how to go about it, trading in development land is actually a very simple process. In fact, it’s so simple that even a novice can put together two or three deals a year to generate exceptional profits, fitting the ‘work’ around their existing commitments. Best of all, it can be done part-time, with hardly any capital or previous experience. Strangely enough, you don’t even have to buy or own any land – which is why it’s particularly useful in today’s climate...
An approach to success – even in today’s market
income using these little known property secrets, you’ll also learn how to do it part-time, around existing commitments, laying down very little capital... if any!
to £50,000 per site and how to repeat that success over and over again. I’ll also reveal how I myself go about generating hundreds of thousands of pounds in profits from a single deal.
The report details just how easily you can source simple development opportunities on your doorstep and turn them into deals worth tens – or even hundreds – of thousands. The report also reveals:
Sound too good to be true? It really isn’t.
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What an ‘Option Agreement’ is and how it will transform the way you think about land ownership. How you can take control of profitable land without actually owning a centimetre of it. How to sell that control onto developers for profits ranging from £20,000 to £Millions. Where and how to look for lucrative development sites on your very own doorstep. The skills you need to assess the potential of a piece of land and how you can work out what it is worth. The online resources and tools you’ll need to conduct your searches. How to tap into the ready-made market of eager developers desperate to secure quality sites.
We’re all aware of just how tough the housing market has been over the last couple of years. However, as far as development land is concerned, the tide is turning and there’s once again huge demand for quality sites. Luckily, the credit freeze needn’t prevent you from making healthy profits as land trading requires next to no capital.
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I wish I could go into more detail about the exact methods I use but I’m limited for space within this short article. So instead, I’ve decided to reveal all the secrets within a free report: “Land Finder Fortunes - How you can make life-changing profits from land without purchase or ownership”. Available to download from my website, www.ukpropertyexpert.com, it reveals the very same techniques I myself use to secure successful land deals throughout the UK. You’ll not only discover how you can make substantial regular
Good question. Really, the sky is the limit. Why? Well, residential site finding enables you to take a range of profits from a single piece of land, depending on your level of involvement. For example, a profit of £50k could be generated from a single site in return for a few hours work. However, the same piece of land could bring you triple that amount should you choose to invest more time and effort. However, as with all new ventures, it’s best to start small. I’ll show how to start taking relatively modest profits of £20,000
So how much profit can you expect to generate?
As you’ll see, it’s simply the application of sound principles. I’ll show you how to spot good development potential and how to turn that potential into profit. This report aims to furnish you with the skills to set you on your way to financial freedom. All you have to do is follow the method carefully and, with a little effort, you could be enjoying the same levels of profit that I’ve achieved using the very same techniques.
To find out more, download your free report and discover how to make consistent and regular life-changing profits. Visit www.ukpropertyexpert.com today!
Examples of my recent land trading deals include: Former public house:
£70,000 profit Former tyre and exhaust garage:
£300,000 profit Former petrol station:
£185,000 profit One-acre field:
£140,000 profit Haulage depot:
£350,000 profit
Lyndon Forshaw has been actively involved in property for over 15 years. He’s built a wealth of experience in all sectors: from a buy-to-let portfolio of over 80 properties to new build developing – including retail and residential, barn conversions and land trading. He is involved in several property ventures such as LandLounge.com, Hamilton Black Development Ltd, Forshaw Land & Planning Ltd and Primo Developments Ltd. He also acts as a consultant and is dedicated to helping people find financial freedom through property via his website www.ukpropertyexpert.com.
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Debt Recovery and Tracing
Brand New Opportunity – Set up your Own Business! Why run a lettings business? This is a growing market with no sign of slowing down! Over 2.4 million houses are rented in the UK, and two-thirds of these are owned by private landlords. This represents a 50% increase over the past ten years and with finance tougher to get for many, we expect this to continue to grow by at least 5-10% per annum for the foreseeable – so this is a growing market!
Why partner with us? By far the best value around! Full training A proven successful business model – copy our successful model
Why has lettings prospered? While estate agents have suffered due to the credit crunch, letting businesses have expanded and continue to do well – they are recession proof and will continue to grow regardless of the overall economy. When starting up a new business this is vital – i.e. start a business in a growing market! Even if people lose their jobs, they need somewhere to live!
Use our successful software and accounting packages
The population in the UK is continuing to grow, and this population is more transient than ever moving around the country with employment opportunities more flexible and many people renting until later in their lives. More people choose to live alone as well putting further pressure on housing and the rental markets.
Advice on marketing and attracting tenants and landlords
An exclusive territory A 1, 3 and 5 year business plan to suit you
On going advice and support
Who will this suit? Anyone looking for a career change with a passion for property! Anyone who may have recently lost their job that would like to be their own boss
Why partner with Acorn Lettings?
Husband and wife team looking to build up a business, which can provide financial freedom
Proven business model
Anyone looking to build up their own business over 3-5 year plan
Over 250 properties under management within 18 months of starting up
Anyone looking to start part time and keep their current job for a while!
Market leading software and accounting and reporting systems
What does it cost? In simple terms a fraction of what many other companies are charging. We are looking for highly motivated individuals who are prepared to commit to an investment of just £8950+VAT in order to participate in this exciting and potentially very rewarding opportunity. And what’s more as an opening offer we are discounting the price to £6950+VAT for the first 5 people who are prepared to join us and take the first step towards running your own business. For this you will get: An exclusive territory • Free training course • Free Stationery • Free Website • Our exclusive software programmes that are leading edge • First starter boards! • Access to us and our Lettings Manager who has been there and done it! • Ongoing support
Full training provided and on going support Less than a quarter of equivalent cost of similar opportunities It has been shown that you are far more likely to succeed with anything in life if you copy those that have already succeeded – and for a small price we can show you what works, what doesn’t work, and how you can grow a successful business very quickly!
So for as little as £6950+VAT you can be up and running with your own business, complete with website and all marketing materials.
How do you put a value on what we are offering when you partner with us? State of the art website - £1200 value Market leading software and accounting software with text and email alerts - £1000 Free stationery starter pack with lettings boards - £500 Marketing templates to maximise returns on investment - £400 One week’s training with a company that has already been there and done it – with 300 properties under management after 2 years – Value £3000+ Legal hotline - £300 Insight into how to grow business without wasting thousands marketing to get landlords and tenants queueing up to move into your properties - £5000+ Ongoing support – including a day every 3 months in first year on your territory, and ongoing telephone support - £3000+ Opportunity to increase your revenue and profits three fold by working with a team that proven itself and will continue to do so over time – Priceless So the value is hard to quantify – I would suggest is worth at least £15,000 immediately and well over £100,000 over the first 5 years
What next? So in summary what we are offering is the chance to run your own business with the added advantage of on going support from a highly experienced team for very little money! Places will be strictly limited and we envisage a lot of interest with 3 of the first 5 places already snapped up, and as such we would encourage you to call us on 0115 9853969 or email us at lettings@property-investmentdeals.com and register your interest today!
Stop Press..... We have already had our first sign ups....which is great news with the Leeds, Stoke on Trent, South Wales and Horsham areas snapped up...! Quote from after last Friday’s Open day... “Hi Alan, seriously enjoyed yesterday, don’t think I needed the car to get home, think I could have flown I was buzzing that much! ......things were flying around in my head till about 5 30, Anyway been for a recce this morning and have changed my area already” We have had people looking for a career change, those already with some property experience and some who were looking to set up on their own who have realised will do far better partnering up with us....!
We expect to have 20 partners by the end of 2010 - and we have already agreed the first 6 - to find out more, and attend an informal open day, contact us at lettings@property-investment-deals.com and take the first steps to a very exciting future!
LEASE OPTIONS IN PRACTICE people who sense they have something in common. Rapport creates a warm feeling and a safe environment, ideal for talking openly. When you visit the house, thank the seller for inviting you round. If they are keen for you to view straight away, do so. Ask tactfully about their family, work and hobbies. Pat the dog (unless it’s dangerous or flea infested). Notice photographs and ornaments, and comment. Show genuine interest without prying.
The Crock of Gold at the end of the Rainbow is just a fairytale. But the Rainbow itself is real. You must have seen one glowing brightly after a summer storm. Set against black clouds the effect is dramatic and stunning! When air-borne droplets bend and reflect light from the sun after a downpour the message is clear and reassuring; storms tire and pass. We can learn much from a rainbow. Consider the process of negotiating an Option Agreement. This can be done clearly and in a way that gives reassurance. Since Options are more about people than property, offers made by phone often fail. A rainbow lives only in the mind of the beholder, so to enjoy its beauty you must be in the right place. We established during our initial telephone conversation that the Seller is motivated to consider an offer and that the situation lends itself to an Option Agreement. For more information on how to do this visit www.PropertyOptionExpert.co.uk We have developed trust (remember strong flour from the previous article?) which will help your offer to be accepted. More is involved, though. A rainbow glows only when light, water, air and the eye of an observer work together in a special way. For the Seller to sense that your offer is not too good to be true, but is a real solution, you need to negotiate skilfully. The Rainbow (Seven Step) System We see seven distinct layers to a well-defined rainbow. There are seven stages to negotiating a well-defined Option Agreement. If you work through them one by one when you visit potential Sellers you will have great success. Let’s look at each stage in turn, starting with red;
1. Rapport (Red) Rapport is that ready connection between
2. Frame (Orange) Ask the Seller where you can sit down to discuss things. Arrange a frame for your negotiation to ensure you get a decision before you leave. With rapport already in place, this follows naturally. Keep it light and upbeat, vibrant. Establish that you may offer a range of suggestions; a Yes or No in response is fine, but a Maybe is not. You want to reach an agreement today. Ask permission to tell them if what they need is beyond what you can offer.
3. Denial (Yellow) Yellow is the colour of denial. For many sellers, especially when a sale is forced, being open is tough. It takes courage to face reality; to enjoy a rainbow one must look at the clouds. If denial is not worked through, any agreement will be short lived. Gently draw out the needs of the person. Engage with them on an emotional level. Be sure they describe the difficulties they face, not you, or there will be resistance. Ask warmly - “What were you hoping I could do to help today?” Listen to hear and not to answer.
4. Go (Green) Only when you understand where the person needs to be can you show them the green light. People sell to avoid pain or make a gain. It’s rarely about the money. So, having discovered what is driving your Seller, point them in the best direction. The owner may have three choices: letting, selling or waiting. Eliminate the alternative routes open to them, leaving the one you are signposting. Do this by asking them how they would feel about renting out to tenants themselves or selling through an agent within 6 – 12 months.
5. Deadline (Blue) Few things play on mind and mood more than a deadline and overcoming the blues can be a real challenge for someone pressured by time. Ask “When would you like to have this problem gone, in 6 months... 12 months? In an ideal world how quickly would you like me to take this away?” The usual answer I get is “within a
month”. Reassure the seller that if you are able to rent now and buy later you can do something today! Where there is no deadline, there is little motivation.
6.Financials (Indigo) Dig in deep and review the financial situation. What is the asking price, the secured (and unsecured) debt, (you need to see some statements) and monthly payments? What is the lowest price they will accept? To contrast wanted price with lowest price ask; “What do you realistically expect to get for the house?”
7. Supposing (Violet) This is where it all comes together. Don’t vie - let your ideas gently float, like droplets in air, and allow the light to play with them. Keep the Seller with you, moving one step at a time until you find the right angle and she sees the rainbow you’ve created. So only make your offer when you agree that you have found a solution. That way no one gets offended and a “No” won’t kill the process. Negotiation is an art which can create a powerful message, like a rainbow. Negotiating for Option agreements is rewarding. Often the vendor is amazed at their simplicity and grateful for the reassurance. Against the dark backdrop of heavy clouds the effect can be stunning. The message is clear; storms tire and pass...and for those skilled at helping others... even the pot of gold is real!
Besides distributing a regular newsletter with Option Expert tips for investors in the UK, Mark Jackson and his team conduct regular workshops and offer personal mentoring. For more information please visit www.PropertyOptionExpert.co.uk or write to Enquiries@PropertyOptionExpert.co.uk
ISSUE 17 - NOVEMBER 09
WHEN PROPERTY INVESTING GOES WRONG
MY NEW BUILD NIGHTMARE YPN is a firm believer that when undertaken correctly property investing can be extremely profitable and is a great way to build your long-term wealth. It is, however, a sad fact that for many investors their property dream can quickly turn into a nightmare and there are plenty of companies out there that will happily unburden naive investors of their hard earned cash. The following interview with Parmi Janagle serves to highlight exactly how things can go wrong even when you have undertaken due diligence and feel you are happy with the proposed deal.
With the season for Property Shows upon us we hope the following story serves as a useful reminder that it is best to be very wary of organisations that may not have your best interests at heart.
Recently at YPN we have seen a return to the market of a number of property clubs and whilst there are a number of reputable companies out there it is important to understand the property deal to ensure you don’t end up with an early Christmas turkey!
What first attracted you to property? Having a young family & a full time hectic career in Sales & Marketing for a Pharmaceutical Company for 15 years, I wanted to spend more quality time with my growing family. Although I had a successful career, being rewarded with various promotions, bonuses, given a brand new company car each year (in fact the last one was a E Class Mercedes with all the extras), 5 star holidays to swanky places like Miami, I realised that the long hours & weekly 2.5 hour commute from my home in the Midlands down to Head Office in Basingstoke meant I was missing out on my family. I had climbed to the top of the corporate ladder & found out that it was leaning against the wrong building - in fact I had been shackled by the ‘golden handcuffs’ of corporate success at the sacrifice of my family. Like many property investors, I saw Property as a sound investment strategy towards getting a monthly income from the rentals & future financial security as a pension pot for my family as the properties increased in value. It seemed like the right solution to my current dilemma, in fact many individuals I met had rental properties; work colleagues and even the taxi drivers had a few buy-to-lets!
What model of investment were you following? My investment strategy was to simply to purchase as many properties at a discount in areas of regeneration with minimum investment in order to build a portfolio that would give me good instant equity with potential for long-term growth and a good monthly rental income. As I didn’t have the time to find the properties myself and let them out, I went to several property seminars & eventually trusted a
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Property Club who claimed to provide New build, off-plan properties in areas of regeneration with up to 20% discount. This would give me instant equity & growth as the property was being built over the next 12 months. They would take care of arranging the finance, legals & lettings in order to purchase & rent the property. They provided a compelling prospectus for each new development, which included artist’s impressions of the development, proposed regeneration plans, valuations by chartered Surveyors & expected rentals from recognised Letting agents. I was even offered a ‘gifted’ deposit, which meant that they arranged an 85% BTL mortgage on property that was offered at 80% of its value. This gave me 5% cash-back at the end. All I had to do was pay £1000 reservation fee & around £5000 Finders Fee to the Property Club. They seemed to have the biggest discounts on new city centre apartments where they claimed demand for rentals would be high with good equity growth. This sounded ideal & the numbers seemed to stack-up, so I decided to invest in 12 properties over a period of a 6 months, mainly apartments in areas like Hartlepool, Hull, Grimsby, Scunthorpe, Leeds, Halifax, Sheffield & Solihull.
Do you think you were mis-sold to? Yes - as I wasn’t given the whole picture. They over-promised & undelivered. I trusted the so-called ‘experts’ and based my buying decision on their findings. I had no reason to doubt the valuation reports instructed by the B2L mortgage companies or the Letting agent’s forecasts on the expected rentals. In fact I spoke to a few valuers & letting agents to confirm their findings. I also trusted the Property Club in the deals they provided and actually took time to visit their London Head office each month to find out more about the regeneration information stated in the property prospectus amongst other enquiries. Finally, I actually visited the ‘building’ site for most of the developments just to check how my
ISSUE 17- NOVEMBER 09
property was coming along and deal with any final snagging upon completion.
At what point did you realise that things were going wrong? As soon as my first apartment completed in Scunthorpe, following several long delays. I realised that my 2 bed apartment was one of 40 in that development sold to investors and I was advised by the letting agent provided by the Property Club to reduce my rent from the expected £600pcm to £550 in order to undercut other Property Investors who were also looking for tenants and get my apartment rented quickly. In reality I had to reduce it to £400 in the end as the property remained empty for 3 months despite the Property Club having instructed a further 2 letting agents to market the properties. The problem was that not only were there these 40 new apartments coming onto the market at the same time BUT also apartments on another 3 new developments less than 1/4 mile away were also empty. Not only had I had 3 months void, drastically lower than expected rent, unexpected high Service charge for the apartment - I had to pay £175 to cover this shortfall each month. As each of my other properties completed, it was a similar situation with long voids, low rents, high service charges & lettings agents who never seemed to pay me the amount of rent I expected as there always seemed to be various deductions for property expense or Fees? In Jan 2008 I was losing almost £4000 each month to cover the rental shortfalls on my 12 properties and was in serious financial difficulty, having released equity in my own home to help make these payments & was now at risk of losing my own home. I even tried to sell the properties, however because the developer sold the ‘Show’ home at a lower price than mine & it was much bigger - I was unable to sell mine. What a new build nightmare. This was definitely NOT what I had signed up for. It was very difficult to find a way out - I felt trapped & ashamed that I had put my family at risk of losing everything we had worked so hard to build. Everyone I asked for help either
pointed the finger of blame or were unable to offer any solutions. There is very little pity for struggling Landlords.
Guaranteed rent payments with ‘Rent on Time’ which ensure I get the rent payments on a nominated day (even if tenant is late paying or doesn’t pay with all legal costs of eviction covered)
How did you turn your portfolio around? In order to turn my portfolio around I had to turn my mind around.
Property maintenance for just £70 (tenants can call themselves for any major repairs & guaranteed for 3 years)
I was introduced to Gill Fielding from the Wealth Intelligence Academy- a very successful businesswoman & self-made millionaire, who had just appeared on Channel 4’s ‘Secret Millionaire’ series. She simply stated that ‘Wealth was a state of mind’ which was the last thing I wanted to hear - however she was right! She advised me to spend a couple of days with a Life coach Brian Mayne of Lift International, where I adopted a very powerful technique known as ‘Goal Mapping’.
Boiler breakdown repair for just £2 per month (this covers all your properties including your friends & family under a single policy not per property without the need for boiler pre-inspection check) Additional 5% monthly income from the Utility bills from my tenants for Gas Electricity, Telephone & Broadband Low cost Gas Safety Certificates & EPC’s for just £40 each
This allowed me to take a step back from my Property nightmare & come up with creative solutions to turn the portfolio around from one that was making a monthly loss of £4000 into one that makes me an income of over £2000 each month.
How?
What would you have done differently?
I had to find out exactly how much money I was losing each month per property, so I devised a simple Portfolio Health Checker to track the monthly cash-flow of expenses & income and colour coded each property with the Traffic Light colours of RED, Amber & Green to signify the levels of cash-flow. This allowed me to know exactly how bad things were & more importantly where to focus my efforts to get the greatest returns This allowed me to reduce my expenses significantly & better manage my cash flow by getting the outstanding apartment Service charges to be added to the mortgages & set up monthly direct debits for future payments. In addition I got rid of all my Letting agents & developed Smart Marketing to find much higher rental tenants. Over 6 months I had managed to significantly increase my income from the rents on average by a staggering 61%!! I currently also use a number of smart policies which safeguard Portfolio’s Profits such as:
Definitely not bought from a Property Club and believed the so-called ‘experts’ and sales prospectus. I would do my own research & educate myself by learning from Professional Investors. Goal Mapping has made a tremendous positive difference to my life both on a business & personal level, even though it has nothing to do with property it has given me the time to spend doing the really important things in life both with my family & the wider community. The Property Club has since gone into
Properties improved for Free using government funding for making them more energy efficient (Loft/Cavity wall insulation, new central heating systems)
liquidation & set-up under another name. It has left a trail of victims whose property dreams have turned into nightmares. I consider myself one of the lucky ones who have managed to succeed and I’m fortunate to help others with their property challenges. I currently work with Kate Faulkner who is the Property author for the Which? consumer organisation and we offer free advice.
Please feel free to contact me via email at www.mypropertyclinic.com or call me on Freephone helpline 0800 988 5928
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ISSUE 17 - NOVEMBER 09
PROJECT PROFILE
1 BED FLAT RENOVATION It’s always important to have more than 1 exit strategy in place when you are investing, will you buy to sell or buy to rent out and what will you do if the market changes. Here is an example of a deal that one of the YPN team did recently that shows how you can have more than 1 plan for your property purchase. Plymouth 1 bed flat in reasonable condition, property was being sold by a couple who were to keen to move into a house and had found a home to buy. Property Marketed at £72,000, the price agreed was £52k, less than the £65k the vendor was looking for but they simply lowered their offer on the property they were buying by £10K. Achieved valuation figure of £72,000 Estimated rental figure of £425 per month by renting to local housing allowance.
Refurb costs We spent a total of £3,000 tidying up this property, replacing the boiler, freshening up the kitchen and bathroom and generally making more attractive to the rental market. 1 month after completion all works had been completed and we began marketing for a tenant when we received a phone call from the agent that we purchased the property from. He had a first time buyer with finance approved that he thought would be interested in buying. What the hell, she might as well have a look. 5 days later we agreed the sale of the property at £68,000.
WHY WE LIKE THIS DEAL PROFIT After all refurbishment, financing and legal costs this deal made us a profit of just under £10,000. The £3,000 we spent on the property made it attractive to a qualified first time buyer. We were in and out of this deal pretty quickly with £10,000 to show for our efforts.
ALTERNATIVE EXIT STRATEGY This project was originally undertaken as a buy-to-let, we were looking to refinance at 75% of market value (total borrowing of £55,000) to recoup our initial investment. As a buy to let this property would have rented for £425 per month yielding a 9.8% return on purchase price or 9.3% of total borrowing. It was only when we were offered the opportunity to make a quick profit that we decided to switch exit strategy. Tell us about your property project at editor@yourpropertynetwork.co.uk
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ISSUE 17 - NOVEMBER 09
Rich Kid Smart Kid Robert Kiyosaki, ISBN 0-9643856-5-1 (264 Pages) Reviewed by Dr Rohan Weerasinghe (www.rohanlive.com & www.thepropertyclinic.org)
“When people ask me what they can do to begin improving their financial position in life I say the first step is to add financial words to their vocabulary. In other words if you want to get rich, start enriching your vocabulary� Robert Kiyosaki Whether you have children or not, this is a book that should be read by anyone interested in creating wealth. From an adult perspective, this book will give you a great insight into what you are likely to have missed when you were younger. It also provides you with great tools to use with your own children or to recommend to family or friends who have children. As many of you know I work very closely
with the Rich Dad Education group, presenting seminars for them all over the world. What I think the Rich Dad brand does very well is to provide a breadth of knowledge, and creates a desire in the reader to then develop their depth of knowledge. In Rich Kid Smart Kid the reader (adult and/or kid) is provided with some fantastic tools to help create a much bigger perspective about the journey to wealth. Robert talks about developing financial IQ rather than academic IQ. He addresses the question of what is intelligence and then explores the different forms of genius that exist.
for money. The minute a child (or an adult) becomes desperate or focuses purely on making money, then money has total control over them, rather than the other way around.
A fantastic principle that is taught relates to giving your child power before giving them money. In simple terms, it is important to help a child develop power over their money, rather than them having a desperate need
A fascinating read is Chapter 6 particularly to those of you not reached 30 years of age! My recommendation is that you put this book as a Christmas gift in your children’s stockings this year.
The reason I also believe this is such a powerful book for adults is that in the process of reading this book we as adults can learn to unlearn some of the old rules and beliefs that we have been brought up with. It is these rules and beliefs that through our early years can keep us from truly achieving the wealth we desire in our adult years.
ISSUE 17 - NOVEMBER 09
Buy & Sell Property In An ever Changing Landscape The first thing to be aware of if looking at any kind of development opportunity in this tough market is the finance. After all, it’s no use getting all fired up over a great project only to find you can’t finance it. So, get the finance agreed up front with your proposed source before you go looking for the perfect deal, otherwise you will just waste loads of time, money and effort. Of course, you could always consider an option agreement, assuming you understand the legalities of using them. Secondly, this market is not for the faint hearted or dabblers. You have to do as much due diligence as you can. Lenders are challenging all sorts of things on applications for finance now, it’s imperative you know your numbers and your market inside out. Even in a stable or rising market developments can eat into your cash reserves, and, they almost always cost more than you think. If your strategy is dependent on extracting the funds straight away you may be in for a nasty shock. The key to developing property is to know the variables at the onset. You should check out other ways of dealing with the tax implications of developing, so that your end result nets more profit. Profit margins are likely to be squeezed in the current market and you might not be able to attain the sales figure you expect. Paying less tax gives a greater margin.
Speaking of exit strategies, it is absolutely essential that you have more than one lined up from the start. The banks have a rather worrying habit of pulling the rug from under developers at the present time, so you must be sure to figure out if you can rent the property for a time if this happens on your project, or, if you have to comply with new mortgage rules of owning for 6 months before further options are available. Commercial development finance can be expensive with rates around 9-11% with 2-3% arrangement fees. You may have to pay 3 months interest up front out of the amount borrowed. i.e. if its 10% on 200k they will actually lend you 100k minus £2,500 from day one. Be aware too, that trying to finance an HMO project can be very tricky indeed.
So, if you intend looking for a development project and you have managed to sort out the funding, what kind of project should you seek out? Well, that largely depends on your experience to date. I personally would look for bread and butter 3+ bedroom houses with more than one reception room, or, larger flats that you can change the layout on which have multi let exit strategies as well as consistent sale value.
Now is the time to look at your potential investments and structure a business plan for each one ( if you don’t do so already.) This is a really great habit to get in to.
Developing at the moment has a much higher risk factor than in the last few years. In part, this is due to the finance problems. Also, if the market is flat in your area, then this will effect the eventual return and timescale of an exit strategy. You will also need to know the good rental areas and potential rental market.
There was a rather worrying trend for investors paying too much focus to the upfront discount NMD potential and not really paying enough attention to the exit when financing was easier. I’ve said this on many forums, blogs etc, the exit strategy is as important as the entry in most cases. Yes, you need to get a good discount going in to the deal, but you also need to know what the desired end result is, and, failing that a plan B needs to be in place. (And possibly a plan C!)
If you were to use private equity for example, it would be essential to you obtaining finance. To be honest, this is a great way to focus you too - is that deal really as good as you think?
You will need to be good at costing out a job in advance with realistic figures, not rough guesses.
It’s essential to do this accurately as this market is very unforgiving. A most recent deal we did involved a move to a different end result than we wanted initially-but we did still plan for it just in case, and the property still makes a large monthly profit. When the market was turning we were in the first throws of a renovation of a 4 bed 3 reception house. We picked up the property in Essex knowing that it was in a popular area for sale and rentals and close to all amenities. We also knew there was a strong potential for a multi-let. When we began renovating we had to make various design and layout decisions knowing the end result could be for rental and for sale. We intended to sell the property straight after the renovation and recoup or costs and profit. However, the market changed at such a blistering pace that we were forced to change our decision and rent as a multi-let. Long term this has proved to be very profitable venture with the rents coming in at in excess of £1000 over the outgoings. So on this deal we recouped our profit over the long term via rent, and we will wait out the market until a good sale level is available. Flexibility is key to good developing. Remain open minded at all times before, during and at the end of the project. On the project above we renovated in such a way as to allow the best of all outcomes, make sure you do the same. Contacts: Web; www.mypropertymentor.co.uk Email: admin@mypropertymentor.co.uk NEW: daily blog www.mypropertymentor.co.uk/blog
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INVESTORS DIARY
ISSUE 17 - NOVEMBER 2009
For those who haven’t the faintest idea who I am, my name is Peter Hassett; a Property Investor from Hampshire. I became involved in property in 2003, after turning my back on Clinical Psychology, and founding Freedom TGIM (Thank God It’s Monday! – cheesey, eh?). I found the idea of building wealth appealing, as it struck me as a much more attractive pass time than actually working for a living! Having applied what I learned during my academic career (Psychology is more about numbers than it is ‘mind-reading’), I identified the best performing region in the UK, and headed north with Tony Swift, my friend of 30 years and co-founder of Freedom TGIM. We had £19,000 each to invest, which we’d obtained by refinancing our homes. The objective was simple; to build passive income stream, sufficient to replace our salaries. In retrospect, I guess anyone could have succeeded within property investment at that time; market conditions were such that you could pick up a copy of the local ‘property rag’, close your eyes, wiggle your finger over a page, and subsequently acquire a property which would no doubt deliver the goods! By that of course, I mean that in the heart of the boom which followed the new Millenium, properties were exhibiting natural appreciation at a monumental rate, allowing anyone opting for a ‘buy and hold’ strategy to realise significant returns on their investments without expending much effort (or indeed demonstrating much expertise for that matter!) Now, I am not suggesting for a minute, that knowledge, experience, and technique didn’t come into it. Tony and I had attended a property training course (Whitney UK), and this, topped with continued doses of literary and audio ‘mind-feed’, and countless hours spent on our ‘patch’ (Sunderland, Tyne & Wear) with vendors, agents and tradespeople, ensured that we became equipped with the tools we needed to drive our business forward.
With my business partner Tony Swift and Dennis Coote of the Hampshire Property Club
With a combination of these tools, bouyant market conditions and the free and easy attitude of lenders, in less than 5 years, we built a property portfolio of around 300 rental units, which at the height of the boom, was valued at £25m. When the Credit Crunch hit the UK, it came as a massive blow to us, in fact to everyone opting for a NMD / BMV strategy. Fortunately, we had always utilised this approach in conjunction with refurbishment, and this meant that we were not completely stripped of our tools, the day Mortgage Express pulled the plug on Immediate Refinance. What was clear, was that the next few years would undoubtedly involve the Darwinian concept of ‘The Survival Of The Fittest. The ‘Growth’ years had well and truly departed us, and attentions (at least as far as we were concerned) turned very quickly to more traditional, (pre-buy-to-let) investment concepts; such as ‘net operating costs’, ‘debt coverage ratios’ ‘taking stock’, ‘consolidation’, ‘maximising returns’, ‘fire-walling’ and ‘future proofing’ to name but a few. In late 2007 I struck a deal on 22 student houses, all of which have been refurbished (at a cost of £261,000) and are now delivering a healthy profit!The impact this has had on the sustainability of the portfolio has been significant. So, a blend of significant monthly returns, all-time low interest rates, and an appreciation of the importance of fundamental investment concepts, (topped with a generous helping of delegation by out-sourcing the management of the portfolio to our own Property Management company; www.freedomlets.co.uk ), has resulted in things ‘ticking along rather nicely’, at least for the meantime, allowing Tony and I to turn attention to that area which we are much more passionate about, namely... doing the deals!
Two key inspirational quotes spring to mind at this point: “The more you learn, the more you earn.” – Brian Tracy “The only constant in ‘now’, is change.” – Author unknown (I read this on a billboard at Newcastle Airport!) In acknowledging these truths and seeking to promote the long-term sustainability of our business, Tony and I have gone ‘back to basics’, focussing on that which led to our initial success, namely; education. Over the last few months, we have re-trained ourselves; embracing the concepts of Creative Finance, and equipping ourselves with the knowledge, the skills and the techniques we’ll need to ‘cut the mustard’, irrespective of constraints such as financial climate or lack of liquidity in the market-place. We’ve spent valuable 1:1 time with John Corey, who, you’ll no doubt be familiar with, and more recently Rick Otton, having attended last months ‘How to buy a house for a pound’ event in London. From this we have effectively ‘re-stocked our toolboxes’, gained massive confidence and are ready to ‘go at it again’! Over the coming months then I will implement what I have learned and as you would expect, you are all invited! The more the merrier in fact! I have agreed with the editor, Ant, to share my experiences with YPN readers, so that between us we can see precisely what can be achieved by blending traditional and creative approaches to property investment. There are indeed exciting times ahead! I look forward to seeing you again next month!
Our latest development in the heart of Sunderlands regeneration area
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THE LETTINGS CLINIC YPN is pleased to welcome a new writer to our team Sam Collett who will be running this regular feature answering all of your questions regarding letting and managing your property. Sam is a successful property investor, landlord, managing agent and property portal owner. Over the years Sam has built up a large nationwide property portfolio, and owns and manages Gorgeous Homes, a successful property management company, and VirtualLetz.com, an online national matchmaking site where landlords can advertise and find tenants for free.
Question: Help my house isn’t renting and my next mortgage payment is due. Sam, what should I do? So you’ve got the property – now you need the tenants in to pay the rent. You need to check the following to get your property rented in double quick time. 1. Make your Ad look and sound inviting Critically assess your ad and what it says about the property. Have you got photos of the rooms? Tenants want to be able to imagine themselves living at a property and so pictures of the kitchen, bathroom and lounge are key. Consider your target market and write what will appeal to them. If the property is close to the hospital, bus routes [list actual routes i.e. 72 and 85], a 10 minute walk from town etc then say so. Tenants expect to be told why they should view a property. Remember you are selling a product and that means you have to sell the features and benefits. Ads that tell people what to expect, and show people what to expect have far higher conversion rates. 2. Check out the competition You need to be aware of what other properties are renting for in your area. It may be that your property is overpriced for current market conditions (rents have dropped in the last few months). As a rule of thumb, it is better to price yourself a fraction lower than the market average to attract a higher
number of potential tenants. This also works as a long term strategy because when you are a fraction lower than the market average your tenants tend to stay longer because other properties seem expensive by comparison. This makes it less attractive to move to another property and ensures you minimise void periods. 3. Listen to feedback If you have an agent you need to call them and get the feedback from people who have viewed the property. You need to be open and honest with them and don’t take the feedback personally. If you want to let your property you are going to have to listen to people’s opinions. If you are doing viewings yourself, reflect back on what people have said and make a list. This feedback should give you an idea what is putting people off and give you the chance to change it. For example, if people are put off by a dated kitchen but you do not have the funds to change it – consider ‘dressing’ it - strategically placed chopping boards, funky kettles, modern microwaves etc can make the space look more appealing. 4. Increase your advertising Where are you currently advertising? If you have an agent call them and ask them for the sites they are listed on. If they’re not on Rightmove or the big property portals you’re not being seen by the majority of potential customers. You can place an ad on these top sites through VirtualLetz.com for a special price of just £9.95 until the property is let. Being seen by as many potential customers as possible is key to getting your property let quickly. You also need to make sure you are using all the free advertising available – you can do this with VirtualLetz, Gumtree, Houseladder and many more. Don’t forget the local area as well – place an ad in the local newspaper, local shops which have postcard advertising.
5. Use supermarket tactics Supermarkets use discounts and BOGOF offers all the time to get customers in and as a landlord you can do the same. Consider offers such as rent-free periods, gifted deposits, free microwave or washing machine on signing. Think about your target audience and what may appeal to them. You have to think about renting your property like selling a product – what can you offer which makes you stand out from the crowd and will make your tenants want to sign up. Think it – then do it! 6. Smell clean and look clean It may sound obvious but so many landlords make this fundamental mistake. Potential tenants want to be able to view a property and feel they can move in and feel at home straightaway. They don’t want to spend time and money getting a property right for them – it has already got to tick the boxes. Tenants are looking for an easy option. That means they want properties which are freshly decorated, kitchens and bathrooms which are spotless (and that includes the oven!). Carpets should be thoroughly cleaned and any furniture or appliances should also be clean and ready to use. Keep the air smelling fresh and welcoming by using air fresheners. Think of your property like a hotel room – you would expect to have clean sheets and a spotless bathroom and the same goes for tenants and their expectations. Following these tips will help ensure your property is let quickly and effectively. The golden rule is always to put yourself in the shoes of the tenant. Think about it from their perspective and you won’t go far wrong.
Get in touch I am happy to answer any of your questions just drop me a line at sam@yourpropertynetwork.co.uk
www.VirtualLetz.com YOUR PROPERTY NETWORK - ISSUE 17 - NOVEMBER 2009
ISSUE 17 - NOVEMBER 2009
TAKING ACTION AGAINST PROBLEM TENANTS
There are a variety of reasons for landlords having to take action, with unemployment currently being at the forefront but there are others who, although can well afford to, have no intention of paying up – the professional rent dodger. It’s usually the same pattern the tenant looks genuine on paper, passes all the referencing, but knows the system well enough to move from one property to another, brazenly continuing to use and abuse the system without care for the effect it has on the landlords, their families and their agents. We have dealt with several cases in the South London area whereby the same gentleman signs a tenancy agreement, pays one month’s rent and then nothing. He ceases all communication with the landlord and the agent and has even claimed to be his own twin brother as well as identity theft as a reason for not paying the rent. By the terms of the contract, the landlord has to wait two months before they can act against him. During this time, this so called “professional” is organising his next tenancy which he signs to commence the day before his eviction date from the previous property” The landlords concerned were appalled at his behaviour and powerless to make an immediate eviction of a tenant who had no intention of paying the rent, with one commenting “this tenant has, in essence been stealing from me for the past 6 months, causing me considerable emotional stress and financial difficulties with my mortgage whilst I, as a law abiding citizen, follow the
Paul Shamplina, Director, Landlord Action
frustratingly long eviction process”. On further investigation, it was established that, for a 10 month period during the previous year, this same tenant had lived at another flat in the same development, again without paying the rent and, again managing to escape court proceedings, increasing the frustration. Under current data protection laws there is no bad tenant register, although private companies, such as Landlord Action, do hold their own list of rogue tenants. Although you can get a register of people with CCJ’s, unless a landlord has taken possession action in the past and actually enforced a money order, these don’t get registered at all leaving them free to rent again. There is another challenge that landlords face, tenants in private rental accommodation who are paid housing benefit direct under Local Housing Allowance rules, with many tenants not passing their rent money on to the landlord. We hear many stories surrounding this area such as the tenant who is withholding rent and sending it to his native country to fund the building of a house. Another where the landlord is aware his tenant has just bought a large plasma TV and a new laptop, but owes over £1,000 in rent even though she is receiving housing benefit. One of the most memorable cases was of a young mother of two who forged all application documents and then moved into the landlords flat without permission after using the guise of a bed delivery at which
she asked another tenant to open the communal door, used keys that had been left for the cleaner to collect, and took possession. The landlord, quite reasonably, was furious and told her to leave immediately. However, rather than getting the backing of the Leeds tenants housing centre, they told him they would take him to court if he illegally evicted her as that was a least costly option to them rather then re-house her. It got worse, as the landlord explains, “she wrecked my flat, took in a cat which defecated everywhere and caused untold misery to the neighbours causing me to lose another tenant due to the smell and noise. For at least a month before the eviction, the toilet was blocked but she carried on using it until it was full at which stage her and her children moved on to using the bath. “ She finally left after 8 months in the courts, owing over £3,000 plus £2,000 damages, £2,000 electricity charges as well as water, council tax and phone bills. Of course, there are cases of genuine hardship, when the tenant is in trouble through no fault of their own, and not because they are purposefully not paying the landlord and, although we have sympathy for them, we are a champion for the landlord and are there to defend their rights, something we are very proud of. Landlord Action has been in business exactly 10 years carrying out 250 evictions in its first year. Last year it handled 2,200 and this is looking on course to reach 2,800 by the end of 2009.
www.landordaction.co.uk
Landlord Action are a UK based tenant eviction and troubleshooting agency. Landlord Action was set up by landlords for landlords, offering landlords fixed fees to evict bad tenants nationwide, with a free advice line. Landlord Action have successfully evicted 13,000 bad tenants since the company started in 1999. Landlord Action website www.landlordaction.co.uk free advice line 0800 856 7878 to landlords
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ASK LISA
ISSUE 17 - NOVEMBER 2009
This month YPN asked me to reproduce an article I recently wrote for my monthly newsletter. To sign up to my newsletter then go to www.pipaforum.com/blog Dear Lisa, I am keen to give up my much despised day job in order to work full time in property, I have 6 buy-to-let properties at the moment and realise that I am a long way off having a portfolio that pays for my lifestyle - what advice would you give? Robert, Suffolk
Hi Robert, I think most property investors start out with much the same dream; the hope that buying rental properties will lead to replacing their income but as you rightly identify this is usually far from the truth. Generally speaking I would not advise anyone to expect their property portfolio to replace their income for many years. I’d be the first to admit that when we got into property we thought it would take around 10 years to achieve a suitable income to live off and while we have a massive income from our portfolio, with repairs, maintenance, fees, voids etc its not as much as we expected. Added to this is the fact that rents have barely budged in 10 years which again is something we never expected. So we’ve always lived off other things primarily property development and more recently our mortgage services. There will always be exceptions and these usually revolve around a high yielding, low maintenance portfolio. Such as if you were to buy only freehold properties, are able to take care of all maintenance yourself and usually let
properties on a per room basis to increase the income.
doing what you love. Here’s a few examples:-
Assuming you then have a very low standard of living then there is the slight possibility of being able to make a sufficient income from a decent sized portfolio. But getting all these factors in alignment isn’t usually achievable and I’ve only come across one or two people who have succeeded at this and even they would say it’s not exactly the jet set lifestyle they dreamed of! For the majority repairs, maintenance, voids, management fees, etc will wipe out your rental profits and probably mean you’re actually subsidising your portfolio for some years. In order to achieve an income from property you need to look at the options above to reduce outgoings and increase income or seek an alternative. Remember that taking on multi let properties will mean higher maintenance bills and certainly more work in terms of management so before deciding on this route make sure you can commit the time to it. You might replace your current income but are you equally happy to give up your evenings and weekends to achieve that?
Letting agent Estate agent HIP/EPC provider Surveyor Deal Finder Buy and sell Buy, refurb and sell Land finding/trading Mortgage broker Any of the trades; builder, electrician, plumber etc Or even create a company that offers services to others such as a web portal or property management software. You need to look at your current skills, speak to others doing similar and decide if its something you can ease into and as you make more money give up your current job.
Good luck! Rental property should be about long term buy and hold. Eventually you may sell a few and pay off the mortgages on the rest so your rental income is mostly profit or you may continue to gear on a regular basis and live off the equity (though I don’t recommend this route) or LOOKING FOR LEASE OPTION INFORMATION? you may simply sell up and live off the profits. I have finally decided to put pen to paper and create my own lease option manual. The two main differences will be the In the meantime, it’s fairly information is from someone who has actually been doing easy to make a living in them for a long time and secondly it will be FREE! property but not in owning rental property. So if you The reason for my doing this is because I have a UK exclusive to want to be in property offer the Cenoption Equity Protection Products on lease then look at other ways options and this will hopefully lead people to use the equity you can make money still protection products and other services which I provide and
Lisa
that’s my incentive for doing it for free. Read Lisa’s blog at The Property Place www.pipaforum.com/blog
Now that’s got to be refreshingly honest!
You can also obtain free information, downloads and documents for all things property and sign up for Lisa’s FREE monthly property newsletter.
The manual will be available as an e-book at the end of the month. To get a copy drop me an email to lisa@keys-property.com.
You can also contact Lisa’s company, Keys (UK) Limited, to arrange mortgages, finance, insurance and discuss a range of wealth management and Equity Protection Products. Check out her new website at www.keys-mortgages.com and www.protectyourequity.com If you have a question for Lisa please submit it to lisa@yourpropertynetwork.co.uk
Be rest assured you won’t get any spam and no follow up sales messages and I won’t be selling, renting or otherwise distributing your contact details in any way. If you want more info on the Equity Protection Products in the meantime go to www.protectyourequity.com
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ISSUE 17 - NOVEMBER 09
HMO FINANCE UPDATE What is a HMO? Under the Housing Act, a HMO is a converted house or a building or part of a building occupied by persons of more than one household. (For a full version of the definition of a HMO, you can read Housing Act 2004 or contact the council where you plan to invest for their definition) Generally speaking if you let a property to three or more unrelated tenants, the property is a House in Multiple Occupation and will need to meet HMO regulations. There is often confusion between HMO’s and HMO’s which require a mandatory licence. Finance is currently difficult to obtain for HMO properties, but some of the lenders will consider lending on multi-let as long as the property isn’t a licensed HMO and the tenants are all on one assured shorthold tenancy agreement.
What is a licensed HMO? If you let a property with five or more bedrooms, over three or more stories (including cellar or loft if this forms an integral part of the living space), in which two or more of the tenants are unrelated (i.e. form two or more ‘households’), generally this requires a mandatory licence.
Lender aims to ease HMO funding drought with a 8.99% fixed rate A lender has launched a three-year buy to let fixed rate facility available up to at 8.99% for HMO’s. The lender will offer 90% of purchase price, up to a maximum of 70% loan to value, this criteria is excellent if purchasing under-value. Potentially, this means in some cases only a 10% deposit is required, subject to valuation.
Here’s the product specification: • • • • • • • • • • • • • • • • • • •
First charge only Available for purchases and re-mortgages £100,000 minimum loan £750,000 maximum loan (higher subject to negotiation) 3-year maximum term Interest only 3% lender fee deducted on completion Introducer fee is subject to size of loan and negotiation £350 application fee £850 lender’s legal fee – not payable until after valuation and underwriting Serviceability rate is 8.99% X 110% Early repayment charges 6/4/0 i.e. nil after 2 years Maximum of 15 units (more by negotiation at lower ltv) Lender will visit the property themselves in all cases Applicant must have clean credit history Personal guarantees required on all limited company applications Property must be fully HMO licensed Property must have a bathroom per five rooms Applicant must be experienced landlords
The lender has identified that HMO funding has almost dried up and is hoping to take advantage of the market opportunity. Hopefully their vision will entice other lenders to see the benefits of offering this type of finance, where there is capacity for a much higher yield, and a secure investment return. This product could work really well for HMO’s that yield in excess of 15%, in this case the investor would benefit from good positive cash flow. I don’t feel the deal is that competitive, but it has its benefits and it is good to see that lenders are launching new products. In time, if other lenders re-enter the market, the rates may get better. Other commercial banks will also consider lending but typically the loan to purchase price
is restricted to a maximum of 65%.
My recent experience of HMO’s As well as being a mortgage broker, I also invest in property and the last month has been quite a hectic one. I have a few HMO properties myself, and the month has been busy because it was the start of the student year. I decided to take on the tasks of finding the tenants and also managing one of my student houses in Leeds. The job began with advertising, then interviewing and then moving in the tenants. I spent two consecutive weekends over in Leeds coordinating the process. By managing the property myself, I feel in good control of the tenants and the finances. I even decided to put a cleaner in each week to tidy up the communal areas, the tenants think this is great and I do too as all 8 of them are each paying a £15.00 weekly premium and I only have to pay the cleaner one lot of £18.00 per week, so that means that each month I am £442 cash flow positive from cleaner premium rent alone! Like any serious investor I am concentrating on cash-flow and focussing on being a good landlord to keep the tenants happy.
If you would like to discuss any type of property investment further, please call me on 07904 184424 or 0161 434 2299. I am pleased to announce that we have been appointed exclusive brokers to Your Property Network. Over the past 18 months we have written hundreds of mortgages for YPN readers and helped many many investors to finance their propertypurchases since YPN’s launch in July 2008. I now offer an advisory service available to all YPN readers if you are wondering how to finance your next purchase just email or call.
Catherine Crooks Senior Partner and Mortgage Adviser
Mobile 07904 184424 Email catherine@freshpartnershipbrokers.co.uk
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ISSUE 17 - NOVEMBER 09
Money, Money, Money Money is like manure. You have to spread it around or it smells.” -J. Paul Getty From giving you a few mental screw balls over the last few editions I am going to provide you with the framework to build on- When the Banks are being tight then something has to give or there is a few out there who will break the mould and take a new stance in the finance world- A New Beginning.
and the money goes to the company (which is you) who owns the shares- (think about it) WOW
With finance becoming scarce for a lot of people, investors are wondering where to turn to finance that was until now- interested? Read on- 100% mortgages are back on the menu people. This No Money Down (NMD) scheme is not like others, where you may have to look over your shoulder and have concerns about Mortgage defraud etc- this one has a Legal Barristers opinion, who has given the green light on this as there is full disclosure in the process. Great system for buying Below Market Value or Distressed Properties.
Self Cert/ Commercial/ Private Equity/ Trusts and Residential allowed.
Or what about this one- We have secured major Private Equity and Merchant Banking institutions with a potential UNLIMITED funding in Dollar’s/ Euro’s and Sterling that will lend up to <65% LTV as virtually guaranteed, whereas if you need finance higher than that then they will lend up to 80% depending on past experience in property (similar to a Dragon’s Den interview with business plans etc). So imagine having a Letter of Credit (L of C) of up to 70-80% LTV of your entire property portfolio not individual? What could you do with that? Could you negotiate an extra 5% or more off of a property deal? Would that give you better skills to get more discounts and better rates? IMAGINE THIS- Find a property (distressed) at 30% Below Market Value, be able to get an extra 5% off for a cash purchase (using the L of C) and then refinance it with a NMD deal and get the 5% back as cash. WOW- Buy a house and get cash back- How great is that?
How about buying it and avoiding Stamp Duty too? Or buying it through a Trust and mitigating CGT, IHT and Income Tax as well? This just gets better.
Or buy it through a company via a different sort of Trust- The Company then owns the asset. By investing into a SIPP (Self Invested Personal Pension) you get certain freedom of investment choice, so by investing the pension proceeds in the same company by buying its shares (that owns the asset, which happens to be your properties)that way you get tax relief on the premiums and build the pot tax efficiently. Absolutely Brilliant.
Or if your Company is Plus Market based on turnover and has floated on the market (one under an AIM listed company, which is one lower than a FTSE listed companies) then you can invest into your company via a SIPP and buy shares in your company- therefore you are getting tax relief on an investment
Foreign mortgages now available
Minimum £250,000 value upwards for Stamp Duty mitigation schemes.
NEW- Invest into a Capital Protected Investmente.g. invest £100,000 and get a capital guaranteed, achieve and average of 5-7% p.a. return over 5-6 years which goes towards the guarantee with an up lift on returns from a professional trader 25-30% returns were spoken about, interest can be taken and is a termed policy of 5-6 years (full details and Key Features available shortly or email me direct to discuss).
Also those that have taken on board the information about the Trade of the Decade- with unimaginable returns (it’s like buying shares in Microsoft for a penny before they built computers or EBay before they did on line bartering), Ms Q and Mr Mc, Ms D and Mr J meeting with the top guys and now having an investment that has achieved 479% over the last 18 months with no notice periods, no entry or exit costs and finally Mr R for taking the opportunity of achieving an average of 4-40% a month return on an immediate access investment that has not lost money in 5 years (Ms B is up 48% in under 8 months using the same system). OUTSTANDING EXCITED- WANT TO KNOW MORE? Then email us and we will kindly share my knowledge with youI don’t take vouchers by the way and payment in kind doesn’t pay bills, well the local energy company rep wasn’t having it, so neither am I. Knowledge is power my friends, but remember - it is absolutely useless unless it is shared and acted upon. Take Massive Action. (You can’t win the lottery if you never play) Take advantage of my knowledge and reap the potentially unlimited rewards it brings by having an educated opinion-
Worried about Capital Gains Tax- Got that sorted
Summary Worried about Inheritance Tax- Got that sorted
Worried about Income Tax- Got that one sorted
Use other peoples money to get what you want First rule of investing is don’t lose moneysecond rule- see first rule. Get rates of returns higher than that else where, save your cash and use OPM to buy an asset.
Corporation Tax- Guess what? Got that one sorted too. “If all bank loans were paid, there would not be a dollar of coin or currency in circulation. Someone has to borrow every dollar we have in circulation. We are absolutely without a permanent money system.” -Robert Hemphill, Federal Reserve Bank. Atlanta. As quoted in the foreword of 100% Money, by Irving Fisher For those who are 40% or 50% tax payers then why not use the Government to obtain an instant 66.66% return on your money, for those who are 20% tax payers then get a minimum of 25% return on your money from the Government. Don’t give away money that you are entitled toespecially from the Government. Here’s a sneaky one- use the free money you get from the Government (Tax Credit or Child Benefit etc) and put it into areas that achieve an instant 25% return on your money. That way you are in effect gaining 25% return on money you never had or earned- Use other people’s money to your advantage and getting a large return on it. Great News. Well done to the Mr D the City Trader saving £100,000 on Stamp duty on his £2.5million city pad (if you can call it a padthe lounge seemed the size of football pitch).
Don’t PAY Tax Get what you are rightfully allowed to receive from HMRC and get tax relief on it. Make it happen and don’t ask for an opinion, everyone can give you and opinion. Don’t forget my book; get an initial free one to one meeting with me or my team saving you over £500work the system to your advantage. Email me on the usual address and I will even send you a link to the Website address I have jumped on. TAKE MASSIVE ACTION - you could be a few clicks away from potentially unlimited knowledge and wealth as well as achieving tax breaks beyond imagination.
“Those who create and issue money and credit direct the policies of government hold in the hollow of their hands the destiny of the people.” -Sir Reginald McKenna, former President of the Midland Bank of England (Yes, these figures and facts are subject to change and status and your mortgage could be at risk if you don’t keep up payments- blah, blah- some investments go up, down and sideways and some could get you less than you put in- If in doubt- ask a professional- there said it. I don’t lend personally, but I do the investments and Trusts I promote personally so I can vouch for them first hand)
To make contact with the Tax Insider email taxinsider@yourpropertynetwork.co.uk
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We’re all doomed
ISSUE 17 - NOVEMBER 09
Here at YPN we firmly believe that when undertaken correctly investing in property can be extremely profitable and property can be a great way to create long-term wealth. However in the interest of balance YPN has asked our resident gloom monger Geoff Cooney of www.ratelock.co.uk to spell out some issues that he feels many investors do not think about in terms of safeguarding their investments. YPN hopes the following article will help stimulate thought and discussion among readers – so here it is, Geoff’s monthly dose of economic reality medicine – a bitter pill to swallow!
Beware! My estimation is that Base rate will be at 5% by December 2010 and 8% by December 2011. For the many of thousands of investors out there who have mortgages with with the likes of Mortgage Express and Paragon you may well be experiencing great cash flow right now but the vast majority of investors that we speak to would be losing cash every month on each with base rate at just 4%. If you own 1 or 2 properties then you may be able to tighten your belt and support the income shortfall. With anything over 5 properties unless you have a very high income then sustaining your portfolio is going to be very very difficult. Old school investors who bought property that is relatively low geared and yields a 10% + return understand the real costs of financing their portfolio. Those investors who purchased 10, 20 or 30 properties with low yield and are currently extremely highly geared (possibly into negative equity) are unlikely to fare so well. Indeed many who have re-mortgaged to recoup their initial investment are likely to find that even if they can find a buyer for the property to clear the debt they are likely to struggle in paying the capital gains tax on the transaction.
Why do I think Interest rates will rise? How far away are we from the halcyon days of 2007 with rising values, relaxed lending criteria, 85% LTV’s and boom and bust gone forever?
Recent news may give hope that we are close to recovery. • •
• • •
House prices rising and confidence returning CEBR forecasts interest rates will stay at 0.5% until 2011 and not rise to 2% until 2014 Rising residential LTV’s and easing mortgage rates Increased lending targets for state owned banks A booming FTSE
We are in a self-delusional phase and the publication of “good news” is blinding us to some harsh economic and political realities. Banks are broken, our public finances are shattered, hyper inflation and increased interest rates are around the corner, both civil disorder and international confrontation are very real short term possibilities. We all need to take action to protect our portfolios from financial Armageddon. As responsible investors we should be moving forward not with the assumption that things are going to get better but that they are going to get much much worse!
OUR BANKS ARE BROKEN We stand on the edge of a precipice, the second wave of the banking tsunami approaches! In the UK, banks also know what’s coming. They’ve taken some hits but still to come are good old fashioned recession write offs and repossessions on residential property loan books. This second wave of the banking crisis will have several key impacts for the property investor:
•
•
Credit will get tighter and lending margins will remain high. 70 to 75% LTV is the best we’re going to get. Indeed, a return to 66% maximum is my prediction. The securitisation market for BTL lending is closed and will remain so. No new lenders can or will come to our rescue
INFLATION IS WITH US AND INTEREST RATES WILL RISE •
•
• • •
inflation go hyper? 3 conditions need to be met. 1.
2. 3.
Government printing money to meet everyday expenses, unable to finance itself otherwise Lack of social mobility A perception in the majority that the cause of an economic disaster is the corrupt enrichment of a national elite
Ring any bells? Right now in the UK official interest rates are effectively at zero and the Bank of England has printed £175B of new money. That is money that hasn’t been created as a result of an increase in productive capacity, but by turning on a printing press. This has been done with the sole aim of warding off deflation and encouraging inflation. With spiralling inflation will come an increase in base rate.
We are up sh*t creek – (pass the paddle!) NO - It is possible to safeguard your investment for the long term without the need for remortgaing. “Capping” or fixing interest rates with third party lenders (effectively fixing base rate at a given % for the future by means of an insurance product) is possible. There are often some not inconsiderable costs involved but if you have a healthy portfolio these can often be financed from cashflow rather than as an upfront premium. To find out more more about how this works or for additional economic and political analysis please visit www.ratelock.co.uk or email me on geoff@yourpropertynetwork.co.uk
House prices have risen for 3 months despite being 6-7 x average income and the credit drought. This cannot be sustained. QE has led to the FTSE rising 50% in 6 months on nothing but redundancies and closures. This cannot be sustained. Industrial disputes are back! Royal Mail is just the beginning. Commodity and fuel prices are rising. So is VAT. This too is just the start. Sterling is in freefall and as a net importer, factory gate prices will creep inexorably up
The real question is will this
39
ISSUE 15 - SEPTEMBER 09
The Heady Heights of Loft Conversions or How to Add up to 15% to the Value of your Home!! In these times when below market value properties are hard to come by and you as a property investor has to think how to get the edge on your particular deal, why not consider a loft conversion? The name of the game is to enhance your property and add value so that it has more to offer now than when you first bought it, whether it be more bedrooms, an extension or loft conversion. The beauty of this is also quite often it won’t need planning permission Your loft conversion which should invariably incorporate at least a bedroom and en-suite bathroom can add between 10% to 15% to the value of your home.
what they are made of (from softwood to oak), whether they need to be bespoke or a kit can be bought in or whether you would want spiral. Prices start from around £1,000
Each loft conversion is unique however the following is a rough guide to loft conversion prices you could expect to pay to give you an idea of how much to budget for.
Roof lights. Approx £200 per velux
Storage loft conversion – to include flooring, lighting and loft ladder approx £2,000-£3,000 + VAT Small loft conversion (approx 40 cubic metres) - to include strengthening joists, 2 roof lights and stairs, insulated and plaster boarded and electrics approx £15-£19,000 + VAT Medium loft conversion (approx 60 cubic metres) to include strengthening joists, 2 roof lights and stairs, insulated and plaster boarded and electrics approx £20-£29,000 + VAT Large loft conversions (approx 100 cubic metres) to include strengthening joists, 2 roof lights and stairs, insulated and plaster boarded and electrics approx £30-£45,000 + VAT The various components in converting lofts are as follows: Scaffolding. The price varies depending on the amount needed and the length of time needed. You need to budget around £1,000. Loft stairs. The price on these depends on
Dormers can really add space and light to your loft. Budget for approx £400-£500 per cubic metre to build the dormer. The price fluctuation depends on whether you want the dormer to be built out of brick or timber with tile cladding. If you want a sloping roof rather than a flat roof add £150 per cubic metre to the cost. Windows cost typically £250 per sqm. Loft plans drawn up by an architect to be submitted as part of a building regulations application can cost between £400 - £1,500 depending on the complexity of the project.
Finding the right building contractor to do all of this and more With over 19 years in property investing
and 9 years in the renovating and building business Home from Home Property Services is a building company with a difference because it is run by an investor who understands the needs and requirements of fine tuning your investment cost effectively and efficiently. Whether it be maintaining your investment or completely refurbishment we have the full range of skills to suit all requirements. Pick up the phone and call Christina on 07961441050 or email her at christinak123@hotmail.com. Once the scope of the job has been agreed and you are happy with the price, you leave the rest to Home from Home Property Services Ltd. We do the work whilst you carry on doing what you need to do. We have clients who give us the keys to their investment properties and come back when the job is done and is ready to be rented or sold. Job done! Come and inspect your investment. You won’t believe how good it looks. You are now ready to let or sell your fabulous investment and reap the financial rewards. We deal with ALL aspects of building and renovation work and cover all the trades. Home from Home Property Services Ltd is THE building company for all property investors so don’t miss out and give us a call! You won’t be disappointed. Call us on 07961441050 or email christinak123@hotmail.com.
41
Auction Focus Here at YPN we have been guilty of concentrating our editorial pieces on buying from estate agents or direct from motivated sellers. It’s a fact that many professional investors purchase property from auctions that are happening all the time across the UK. YPN readers have been reporting that they are now starting to see increased activity at property auctions so we thought it was about time we investigated exactly what’s going on. Here Andrew Binstock of leading Auctioneers Sutton Kersh Binstock tells YPN readers how they see the current market.
YPN: What is the current level of activity at your auctions now, compared to a year ago. Andrew: We are much busier. That’s not to say that it’s any easier to sell non-prime stock. It isn’t. But there is much more competition now for well located, well priced properties in good areas. In 2008 there were one or two people interested in the better stock and virtually zero enquiries on the rest. Now, all properties get enquiries but the ones with sensible guide prices and located in the more desirable areas are receiving dozens of enquiries and multiple offers prior to auction. We are nowhere near the pre-summer-of-2007 good times again but there are certainly signs of improvement.
YPN: What sort of properties do your regular buyers typically look for and do they achieve a higher discount than buying through an estate agent.
Andrew: There is no such thing as a typical auction property any more. It used to be that auction properties had to be “problem” properties – i.e. short leases, needing extensive works, suitable for redevelopment etc – and while these still do well at auction, nowadays we get just as many enquiries for fully renovated properties suitable only for the end user market. In fact one of the most popular properties in our October auction is a 3 bed terraced house in Clapham that is ready to live in. We’ve had several end users fighting over it. It is being sold at the same price a local agent would expect to achieve. So while there are certainly bargains to be had at auction – it is not necessarily the case that ALL the properties will sell at way below market value. It all depends on the vendor’s personal situation and how good the property is.
typically you will have to complete 28 days later. So buyers will need to have their deposit available in cleared funds on the auction day and they will at the very least need to have their finance agreed in principle for the balance.
YPN: What advice can you give our readers on how to buy properties at auction.
YPN: Can investors really expect to pick up a bargain with 300 hungry investors in the room?
Andrew: It is important that buyers understand the basic principles of buying at auction. If you are the highest bidder on the day, you will need to put down a 10% deposit there and then and
Andrew: Of course. Not all those people will be bidding on the same property as you. And it’s quite feasible that you may be the only person there bidding on a particular property. In which case you will probably buy it on reserve – which is the cheapest price possible that you can win it for at the auction itself. There are other ways of picking up auction properties – either before the auction, or after the auction. And sometimes it is possible to negotiate even better deals than the reserve price in certain circumstances.
Although they do not necessarily have to have a mortgage fully approved on the property in question. Obviously there is a risk that the bank may not lend on it, but I’ve yet to see that be the reason why there has been a failure to complete. If you are the winning bidder at auction, it is very unlikely that a bank will refuse you finance based on the price you’ve paid. We are always happy to talk inexperienced auction buyers through the process in as much detail as required. In essence, buying at auction is as simple and as basic as it gets once you understand it.
Sutton Kersh Binstock hold 13 auctions a year in Liverpool and London, for more information, to see upcoming auctions or to view properties to be auctioned visit www.skbauctions.co.uk
Your Property Network • Issue 17 • November 2009
Forthcoming auction dates from 15th November to 15th December 2009, for full details visit www.yourpropertynetwork.co.uk/propertyauctions.html 16/11/2009 Barnard Marcus 10:30, Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
03/12/2009 Allsop Commercial Park Lane Hotel, Piccadilly, London, W1J 7BX
09/12/2009 Brendons Auctioneers Danubius Hotel, 18 Lodge Road, London, NW8 7JT
17/11/2009 John Earle & Son 18:30, Henley Golf & Country Club, Birmingham Road, Henley-in-Arden, B95 5QA
03/12/2009 Romans 14:30Blue Mountain Golf Club & Conference Centre, Wood Lane, Binfield, Bracknell, RG42 4EX
09/12/2009 Pennycuick Collins 11:00, Birmingham City FC, St. Andrews Stadium, Bordesley, Birmingham, B9 4NH
18/11/2009 Auction House Manning Stainton 12:00, Leeds United Football Club, Elland Road, Leeds, LS11 0ES
03/12/2009 Countrywide Property Auctions 14:00, Haydock Park Racecourse, Warrington Road, Newton-le-Willows, WA12 0HG
09/12/2009 Sutton Kersh Binstock 12:00, Danubius Hotel, 18 Lodge Road, London, NW8 7JT
18/11/2009 Wilbys Chartered Surveyors 14:00, The Bluebell Inn, Elmhirst Lane, Dodstone, Barnsley, S75 4LD
03/12/2009 Cottons 11:00, Aston Villa Football Club, Trinity Road, Birmingham, B6 6HE
10/12/2009 Barnett Ross, Radisson S A S Portman Hotel, 22 Portman Square, London, W1H 7BG
19/11/2009 Auction House Tees Valley 14:00, Middlesbrough Football Club, Middlehaven Way, Middlesbrough, TS3 6RS
03/12/2009 Pugh & Company Commercial 12:00, Manchester United Football Club, Sir Matt Busby Way, Manchester, M16 0RA
10/12/2009 Bigwood 11:00, Aston Villa Football Club, Trinity Road, Birmingham, B6 6HE
23/11/2009 Salter McGuinness 13:30, Plaza Hotel, Empire Way, Wembley, HA9 8DS
03/12/2009 Graham Penny 11:30, Pride Park Stadium, Derby, DE24 8XL
10/12/2009 Harman Healy 12:00, Kensington Town Hall, Hornton Street, London, W8 7NX
24/11/2009 Pattinson Property Auctions 17:00, Newcastle Falcons Rugby Football Club, Brunton Road, Newcastle upon Tyne, NE13 8AF
03/12/2009 All Wales Auction 15:00, The Carreg Mon Hotel (formerly Carreg Bran Hotel), Ffordd Caergybi, Llanfairpwllgwyngyll, LL61 5YH
10/12/2009 Fox & Sons (Brighton) 11:00, Coral Greyhound Stadium, Nevill Road, Hove, BN3 7BZ
24/11/2009 Maggs & Allen 18:30, The Bristol Golf Club, St. Swithins Farm, Blackhorse Hill, Bristol, BS10 7TP
03/12/2009 Eddisons Leeds 12:00, Leeds United Football Club, Elland Road, Leeds, LS11 0ES
10/12/2009 Countrywide Property Auctions 12:00, The Park Inn Hotel (Formerly The Moat House), Birmingham Road, West Bromwich, B70 6RS
24/11/2009 Merseyside Property Auctions 12:00, Crowne Plaza Hotel (Formerly The Marriott), 6 The Aerodrome, Speke Road, Liverpool, L24 8QD
04/12/2009 Countrywide Property Auctions 12:00, The John Charles Centre for Sport, Middleton Grove, Leeds, LS11 5DJ
24/11/2009 Goldings 14:15, Holiday Inn, London Road, Ipswich, IP2 0UA
04/12/2009 Ward & Partners 12:00, Ramada Hotel, Ashford Road, Hollingbourne, Maidstone, ME17 1RE
25/11/2009 Auction House Dee Atkinson & Harrison 18:30, Beverley Racecourse, York Road, Beverley, HU17 8QZ
07/12/2009 Mustbesold.com, Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
25/11/2009 Auction House Smith & Sons 14:00, Village Leisure Hotel, Pool Lane, Bromborough Pool, Wirral, CH62 4UE
07/12/2009 Colliers CRE, Radisson S A S Portman Hotel, 22 Portman Square, London, W1H 7BG
25/11/2009 Greenslade Taylor Hunt Burnham-on-Sea 19:00, Batch Country Hotel, Batch Lane, Lympsham, BS24 0EX
07/12/2009 Savills Residential, Royal Garden Hotel, 2 Kensington High Street, London, W8 4PT
26/11/2009 Robinson & Hall (Bedford) 14:30 Holiday Inn Milton Keynes East, London Road, Newport Pagnell, MK16 0JA
08/12/2009 Mark Jenkinson & Son, Sheffield United F C, Bramall Lane, Cherry Street, Sheffield, S2 4SU
26/11/2009 All Wales Auction 17:00, Copthorne Hotel, Copthorne Way, Cardiff, CF5 6DH
08/12/2009 Athawes Son & Co, Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
26/11/2009 Aldreds 12:00, Great Yarmouth Race Course, Jellicoe Road, Great Yarmouth, NR30 4AU
08/12/2009 Savills Commercial 14:00, Claridges Hotel, Brook Street, London, W1K 4HR
30/11/2009 Butters John Bee 19:00, Stoke-on-Trent Moat House Hotel, Festival Way, Stoke-on-Trent, ST1 5BQ
08/12/2009 Countrywide Property Auctions 12:00, Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
December 2009
08/12/2009 Fox & Sons (Southampton), 11:00Southampton Park Hotel, 12-13 Cumberland Place, Southampton, SO15 2WY
01/12/2009 King Sturge LLP ,Le Meridien Piccadilly Hotel, 21 Piccadilly, London, W1J 0BH 01/12/2009 Auction House Blundells 14:00, Sheffield Park Hotel, Chesterfield Road South, Sheffield, S8 8BW 02/12/2009 Auction House Humphreys 14:00, Ramada Hotel, Whitchurch Road, Chester, CH3 5QL 02/12/2009 Parsons Son & Basley 15:00, Hove Town Hall, Norton Road, Hove, BN3 4AH 02/12/2009 McHugh & Co 12:00, BAFTA, 195 Piccadilly, London, W1J 9LN 02/12/2009 Parsons Son & Basley 15:00, Hove Town Hall, Norton Road, Hove, BN3 4AH
08/12/2009 Eddisons Leeds 14:30, Fairways Lodge & Leisure Club, George Street, Manchester, M25 9WS 08/12/2009 Sutton Kersh Auctions 12:00, Crowne Plaza Liverpool, 2 St. Nicholas Place, Liverpool, L3 1QW 08/12/2009 Equity & Law 13:15 (Not yet known) 09/12/2009 Andrews & Robertson Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA 09/12/2009 Jones Lang LaSalle Cumberland Hotel, Great Cumberland Place, London, W1H 7DL
10/12/2009 Auction House Norfolk & North Suffolk 11:00, De Vere Dunston Hall Hotel, Ipswich Road, Dunston, Norwich, NR14 8PQ 10/12/2009 Auction House Cumbria 18:30, Carlisle Racecourse, Durdar Road, Carlisle, CA2 4TS 11/12/2009 Countrywide Property Auctions 12:00, Bristol Zoo, College Road, Bristol, BS8 3HH 14/12/2009 Cushman & Wakefield, BAFTA, 195 Piccadilly, London, W1J 9LN 14/12/2009 Barnard Marcus 10:30, Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA 14/12/2009 Clive Emson Sussex 11:00, Hilton Brighton Metropole, 106-121 Kings Road, Brighton, BN1 2FU 14/12/2009 Charrison Properties, 17:00, Novotel Heathrow, Cherry Lane, West Drayton, UB7 9HJ 15/12/2009 Allsop Residential, Cumberland Hotel, Great Cumberland Place, London, W1H 7DL 15/12/2009 Clive Emson Hampshire 11:00, The Rose Bowl, Botley Road, West End, Southampton, SO30 3XH
15/12/2009 Drivers & Norris 12:00, Danubius Hotel, 18 Lodge Road, London, NW8 7JT 15/12/2009 Equity & Law 13:00 (Not yet known)
INVESTOR PROFILE YPN interview with Farai Ncube
systemise the management of your portfolio. Once the systems are created you can then start adding key people to work the systems while you concentrate on growing your business. I personally did not have a property system and struggled for months because I was working almost all the time. Now that we have systemised the business I only spend a couple of hours on my property business. Just to give you the scenario, initially, Pam (my wife) and I would look after everything. We would do leaflet dropping while answering the phones. During breaks we would do our research on the laptops and call a few estate agents and letting agents for comparables. I would then go and negotiate the deals, chase the solicitors and brokers then find a tenant for the property and manage it. As the business grew we built our system and added key team members based on knowing what our time was really worth.
When and how did you get started in property? It was five years ago when I bought my first property. I then started watching every TV programme and reading every property book that I would find. It was around 2007 I found ways to buy properties at discounts and how to do ‘no money down’ deals so that I and my wife decided to do it full time. It was an easy decision as we both really had nothing to lose and we were in low income jobs and our salaries easy to replace.
How many properties? This is the most commonly asked question but ironically it is the least important metric of the property business. To answer, I have been buying an average of 3-4 properties per month for almost 3 years consistently for myself and lately for other investors.
The real key metrics in our property business are loan to value, net yields and ROI (return on investment) in both time and money. Example if someone is taking a refurbishment project for 6 months full time making a profit of 24k. It looks like a good figure initially but if you think about putting in six months of hard work it’s a different picture.
WHY SYSTEMISE? Systems are sets of procedures to manage a business. In property investment you will have to have multiple systems in place as your property business grows. If you are marketing for motivated sellers as your lead flow increases you will need to ensure that you systems are in place to pre-qualify leads. Unless you are looking to spend the majority of your time dealing with tenant and property issues you will also need to
0151 2542692 Tony White
Farai Ncube
Time spent working in the business was time taken away from working on the business. This meant that it was very difficult to keep an eye on the bigger picture. I had created a job and forgot why l had started the property business in the first place which was to create more money and time for myself. The opportunity cost was that I spent my time on small things which were adding little or no revenue instead of concentrating on key areas of my business. I would have spotted this earlier if l was not caught up in doing mundane tasks. Setting up a property management system and getting a person to manage the properties was probably one thing that I did a year too late. It was a liberating decision since my personality type is not suited for this role.
Analysis Paralysis Whilst education is hugely important it is all too possible to get bogged down in the
analytical details and fail to take action. Tony White, my business partner often talks about this. He has over two decades of experience in accounting and was involved with clients who he sourced development finance and mortgages for in his private accounting practice. He attended every course available before starting to build his own portfolio. He has now amassed a large portfolio and is doing millions of pounds worth of development projects at the moment. Like many he took some time to take action so it’s important to balance your education with practical experience.
Key Performance Indicators of our business. Funny enough for me, the most important metric is the property leads and deals that I have walked away from for two important reasons. If you just take on any deal even if it does not fit own strategy it will cost you, I guess the keywords are no thank you, as it will determine your success. One of my key rules was to buy properties within a 15 mile of radius of where I lived. I have seen investors with twice the portfolio go out of business because they had bought properties all over. The second reason is that we lost out on earning a substantial income as we initially did not think to pass on the property deals that we did not fit our own strategy to other investors. I was so caught up in what I was doing that I missed the big picture. Simply because the property is not right for me did not mean it did not fit other investors’ criteria. I rectified this mistake when I systemised my business and had more time to look at the big picture.
Lead generation We are generating a lot of leads. We get leads mainly from search engines, plus our current pilot franchises also do local advertising. We have a full time SEO (search Engine Optimisation) team which includes SEO experts and a Google certified adwords expert. We have a large budget for lead generation as it is key to success in our
business. The franchise model also has an advantage as the combined budget of our members is far greater than an individuals budget would be.
About the franchise www.fps-property-franchises.co.uk It is a system that we have devised from 1000s of hours of real life experience and education. We have done some successful pilot cases and these can be accessed on our website. It is a proven system that takes the guess work out of property investing and is results focused. You only pay us when you start getting success. This model was mainly designed from our own success in investing.
Investment strategy Investment strategies are better left to individual investors to decide. Some people are just property traders, that is, they find bargain properties and resell them at wholesale price. While others like to buy and hold. Personally, I am a full time property investor and trader. I strictly do single let, no lease options, no HMO; though I have a few of these, which I did a year ago. I use no money down and no money left in strategies for financing.
Finance We use various financing options from ‘no money down’ to ‘no money left in’. We leave the final choice to the individual franchise owner but we highlight the advantages and disadvantages of all these methods. We also use other advanced techniques like options agreements, joint ventures, lease options and deeds of trust for investors that cannot get a mortgage.
Credit Crunch I am continuing to buy to meet the goals that I have set despite the credit crunch. We are having to be more creative in how we purchase properties and currently I sturucture our own purchases through deeds of trust because I have reached the ceiling for most lenders in the market. If there is a positive to the credit it is that I am buying cheaper properties and the purchases we
make now are stronger investments than those we made when lending was strict. Also the business is not as competitive as it was a couple of years ago so we are not competing with dozens of investors on deals.
Can you briefly describe the advantages of being part of a franchise? Being part of a franchise has got many advantages. Mainly the franchise benefits from our established business models, tools and strategies that come from years of experience and knowledge. This removes the costly guesswork from the property investing business. Plus, there are advantages like ongoing training and advice, administrative support, access to power teams of industry and technical experts, The principal advantages of being part of a franchise operation are the economies of scale in marketing for motivated sellers. The marketing operation is carried out by people with relevant skills, this produces substantially better results with much reduced costs. The expertise in negotiating and closing deals is Provided as part of the franchise operation. The property investor is therefore experiencing the benefits of Being part of a mastermind group, however in this case the mastermind group is helping the Investor to physically develop a property portfolio and Related investment income instead of just providing the theory Please visit our website for other advantages and to claim your YPN free bonuses www.fps-property-franchises.co.uk/ypn
CLAIM YOUR
FREE DEAL ANALYSER FREE DEAL ANALYSER + REPORT ON HOW TO SYSTEMISE YOUR PROPERTY BUSINESS Visit www.fps-property-franchises.co.uk/ypn
ISSUE 17 - NOVEMBER 09
Procedures for Moving a Property Lead from Enquiry to Completion, over the Telephone. Rapid Property Investment have evolved clear procedures for negotiation of leads and case progression of deals. I realised the other day what a great help it would have been to me, if I had this information in the early days. With this in mind I would like to share our procedures with you, in the hope that it will help you to feel more confident when negotiating and will help your vendors efficiently complete their sales. 1. We use a Research and Qualification Procedure. The purpose of this is to predict the value and rental figure that a cautious RICS surveyor may put on the property. There are a number of websites that you can visit and Richard Shepherd’s www.TheMastermindUniversity.com/ValuationsToolbarClassic.html brings them all together in one place. Try to call your vendors back quickly even if you have no information, as once you have rapport, you can explain that you need to check with your colleagues and call them back. 2. We make an Offer in principle. After understanding a vendors position, don’t offend them by making a low offer, just ask the following question “Taking into account the current state of the property market and your own plans for the future, what’s the lowest price you can accept for your property?”If the Vendor needs more than you can pay try to find another investor or a creative solution by posting the deal on www.Tycoons-Forum.com, www.SingingPig.co.uk and other forums. Do not discard the lead or write it off because motivation will increase over time if unsold, it is a good idea to diarise a regular follow up with the Vendor in a supportive manner, ensuring that no pressure is applied. 3.If you have an offer accepted, put your Offer in Writing and ask for an informal signed commitment from the vendor and a few photographs, they will relax more and usually you can start incurring expenses if appropriate. 4.If we are not visiting we contact a local letting agent and ask them to do a “Pre-Completion Letting Assessment”. This assesses whether the property is ready to let and if not how much it would cost for their contractors to bring up to a lettable standard. The agents will also advise us how much they expect to let it for and how long it may take to let. It is an invaluable service that almost all agents will do free of charge, you can then decide whether you want to keep the property deal or sell it via a site such as www.RapidPropertyInvestment.com.
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5. Only if there are no recent and strong comparables, arrange for a private RICS Survey as this saves wasted searches on your credit file if the property is not going to value up. This is Level 1 from Colleys 08456 022222 at www.colleys.co.uk. We require this survey to confirm the Market Value and Market Rent figures. The surveyor should be accompanied to avoid him downvaluing or making incorrect assumptions about the deal, you may consider using a professional service like www.MeetTheSurveyor.com to save you time and stress. 6. Instruct a broker, we are currently using www.ResidentBroker.com and www.Investaco.co.uk who in our opinion offer the best service for Buy To Let Mortgages. You will need a mortgage survey, so in some cases this will be a second survey, but vendors don’t mind as long as they are kept well informed of progress. 7. Instruct Solicitors for buyer and seller using a Memorandum of Sale, this simply lists out the full details of the buyer, the seller, their respective solicitors and the sale price. 8. Complete solicitors paperwork, if your vendor needs help with their paperwork you could arrange for someone to help them. Completion will happen shortly after (Make sure you have key arrangements in place). 9. Gas Safety and Energy Performance Certificates are essential and must be in place before you let the property. Your Agent if you are using one, can handle these on your behalf. 10.Property Management is important and so is our time so we leverage letting agents effectively via a Letting Agent Management Procedure. This lists out your efficient requirements including arrears management, dealing with voids, inspection etc. I am very happy to share all or some of our procedures (The Purple Text), please email Anne Benson, our Business Development Manager, Anne@RapidPropertyGroup.com with those you would like and we will send them to you free of charge.
If you would like us to case manage any of your deals from the minute you agree it with the vendor, we can handle the finance, legals, survey organising, 2 phone calls a week to your vendor and regular updates to you. The fee for this service is only £500, please email full case details to casemanager@rapidpropertygroup.com leaving you free to focus on other things in your life. This is not a negotiation service, if you would like help with negotiation, please contact my friend Ramnik Singh who operates www.ConvertMyDeal.com I have been invited to speak about how property investing can change your life, in Leeds at www.propertyinvestorsnetwork. co.uk/monthlymeetings/leeds.html on 25th November and Milton Keynes at www.networkingpink.com/mkevent.php on 30th November, it will be great to meet you if you are available. I hope this article is helpful to you and wish you the very best of success in property, In total support, Phil (I’ve got a friend) Martin Phil@RapidPropertyInvestment.com
About Phil Martin, Rapid Property Group and Mortgage Rescue Network. Phil and Wendy Martin are blessed with 5 daughters aged 2 - 13 & enjoy being full-time parents. Phil’s focus in property has been to support and help distressed vendors as well as to grow his own portfolio sustainably. His brand Mortgage Rescue Network was featured in The Telegraph as an example of an ethical sale & rent back provider. E: Help@MortgageRescueNetwork.com Phil recently bought Rapid Property Buyers Ltd and is developing the Rapid Property Group Brands to better serve their investors, including a Portfolio Builder Service. Rapid Property Group currently work with 23 associates who help to promote the brands, serve clients and support vendors. www.RapidPropertyInvestment.com
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