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richard brown

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  1. Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.” This statement is somewhat of a contrarian view on stock markets and relates directly to the price of an asset: when others are greedy, prices typically boil over, and one should be cautious lest they overpay for an asset that subsequently leads to anemic returns. When others are fearful, it may present a good value buying opportunity. Market frenzied collapses offer buying opportunities....having cash on hand right now could offer some very good opportunities this year. Periods of market rises offer the long-term investor stable returns when applying pound-cost averaging...this is akin to saying 'Keep calm and carry on' in other words.
  2. Hi Ronaldo Not a site for me but I can introduce you to someone that could assist if your discussions with the local developer prove fruitless. Best Richard
  3. Hi Ronaldo The golden rule is to secure your position first. Here there are two positions to try and secure...the property through the vendor and then the developer that will take the deal. Ideally, you would want to secure the deal with the vendor with some sort of purchase or option agreement. Then agree some Heads of Terms with the developer before sharing exact property details (Hot can be worded as finder or JV partner). If you know the developer well, then you may get away with just securing your position with them via a HoT first and let them help to shape the deal...after all, they may see the price differently to you and be able to negotiate better with their experience potentially. If you want to JV, you need to ask yourself this question: what value am I bringing to the JV and what is this worth to my partner? Answering this question should tell you how equitable your stake in any arrangement might be. As a developer looking for sites, I might be interested in looking at this one depending on what, where, how much, etc... Best Richard
  4. Conrad explains this really well and I totally agree with his stance...a constant remortgaging 'strategy' that simply releases more and more debt is fundamentally flawed IMHO. These podcasts & transcripts might help pad that out a bit more: https://www.thepropertyvoice.net/soundbite-refinancing-risks/ & https://www.thepropertyvoice.net/optimum-tax-free-cash-property-investment-strategys/ Sorry to poo-poo the idea but it is very, very risky and having recently read The Black Swan, I dare say any number of unforeseen events could get added to the list of negatives as well. Nice idea but flawed in my personal opinion. Best Richard
  5. This is nothing to do with me, but I was quite taken aback by the push back on the cost of this event to be honest. As a fellow property content sharer and event organiser myself (and I hasten to add, not affiliated to Rob & Rob besides some on and off friendly conversations over the years), I can assure you that £100 for a full-day event is very good value indeed. That said, people will have their price point sensitivities and their own idea of what constitutes good value too. To illustrate, my last event was a 2.5 hour evening event in London at £35 and that barely broke even on just the venue hire and subsistence, not including anything for speaker's time, promotion, the back office support required, etc. By the way...I have tried to run my own events in Manchester and Birmingham but the numbers were simply not there to make it sustainable...if there is demand for such regionally-based events now, then perhaps it is worth reconsidering Perhaps the loss of the monthly meetups and then a London-only event, followed by another in Manchester later in the year could potentially leave a hole out in the regions but at the same time, you can't get the economies of scale with local events sufficient to deliver high quality content at a low price either. It's tough at times to come up with all of this content, trust me! So, fair play to Rob & Rob for all that they have done and continue to do in the industry with all the free content, training and other resources put forward by TPH around 5-6 years now I believe it is. Nothing is truly for free and we all have to monetise our content in one way or another (even the so-called free forums). No particular axe to grind here, just putting forward a view on the cost of being a content creator and event organiser that's all. I hope the event goes well and attendees get value from it.
  6. Hi Michael Some very good points made above. I would also be checking the true motivation and indeed the true expectations of your mentor here. Are you sure that all they want is their mortgage cost covered or do they also want to share in the returns that the £70k would generate? How do they plan to secure their position with the money? If this is a wealthy uncle or aunt, it could be a different scenario (e.g. early inheritance, etc.) but if they are unrelated to you and are taking on a significant debt for minimal return (2.5% pa) and potentially no or limited security, then there is a question or two to answer before you dive in head first. In terms of the strategy, I would probably be inclined to look at 'value adding strategies' such as flips or possibly a BRR. A flip would allow you to repay the debt after each project...assuming it goes to plan that is! A BRR would still mean leaving some of the cash in the deal most likely, so consider how you would plan to repay your mentor/lender. If you can do a project for £70k all in, then you would not need any external lending anyway, although £70k for a 'value-adding project' is not a huge amount in most parts of the country but is possible if you know what you are doing. Message me if you want to follow up on the 'due diligence' side of things here. Best Richard
  7. Yes, there are around 50% less of them around that meet decent criteria and that's been the case for at least 6 months or so now. One way of looking at it is that if the cost of acquisition is rising, so too should the selling price...even if that has not yet fed into actual sales comps. Looking at asking price relative selling price trends offers a few clues to this. Beware of valuations however, as without sufficient comparable evidence, lender-appointed valuers are likely to trim back a value that appears not to be justified with a recent local sales comp. I've had that a couple of times in the past year or so as well! That said, we are still finding the odd one or two still..eventually!
  8. OK, so before everyone gets too carried away... Buying a company rather than a single property involves more due diligence, risk and hence cost on the part of the buyer. For example, the buyer's legal adviser would need to satisfy themselves against known and also unknown or contingent liabilities, legal claims and so on. Legal fees are therefore going to be higher. Also, a buyer may not want to acquire another company as there are a bunch of operating costs linked directly to that, such as accounting, insurance, compliance fees (licenses, ICO, etc.). It also closes the market down to 'corporate investors' only. From a financing point of view, there could be a 'change of ownership and control clause' within the mortgage, which essentially would mean that the loan would need to be repaid, unless the new application was acceptable, which includes an assessment of the shareholders and directors. So, no absolutes in that sense either. It has some advantages, clearly, but don't overlook the downsides either. R
  9. We trialed Howsy with an HMO in Liverpool...truly awful tbh! Fitted a key safe to the wrong house, lots of fees per tenant (in an HMO these add up), incorrectly advertised the property, no viewings in around 6 weeks, failed to respond. Really not a great experience unfortunately and it's such a shame as they could have been a great halfway house between full agent management and self-management. It could have been a one-off or teething issues I suppose but with so many issues, you can't help but wonder about their internal processes and systems, quality control and general ethos after this catalogue of errors. Sorry that I couldn't be more encouraging, it's just our direct experience Best Richard
  10. Hi Ron Spot on! Simon M illustrates the point within this article, 3 items from the bottom: https://www.optimiseaccountants.co.uk/knwbase/stamp-duty-land-tax-costs-for-property-investors/#sdlt-comparison-buying-a-property-against-buying-a-company R
  11. I might have misread your OP there (NOT off-plan). I did a quick search in L1 & L2 on Rightmove and there are over 500 units for sale. Both Zoopla and On The Market have a new homes search feature as well. I would start there and simply get registered with a number of agents to receive alerts that meet your requirements. If these are selling fast, then trying to develop a relationship with city centre agents that carry this sort of stock could also be handy. R
  12. Hi Janieb This might come as a shock, but my advice is don't do it! In my opinion, it's far safer (and often more profitable) to buy nearly new or older stock rather than off-plan. Here is the longer explanation behind my rationale: https://www.thepropertyvoice.net/soundbite-episode-10-reasons-i-dont-like-off-plan-property-investment/ Best Richard
  13. Hi DrT I do this all the time with investments very geographically spread out. I would suggest 3 steps: 1. Feet on the street - ideally have some local contacts where you wish to invest that can help you. This could be a good letting agent or deal sourcer for example. 2. Use services like Viewber to undertake a viewing, which is independent. You can get photo, video and written reports. 3. Always get a Homebuyers or Building Survey done (not a basic valuation), which will highlight any concerns with the property. I would lean to a HB report unless you have some specific concerns over the structure of the property revealed in step 1 or 2. Note, with flats this can be trickier; so speak to a surveyor and ask what they can do to support you around the building structure, lease and management of the flat (if at all). Using these 3 steps you should have most of the bases covered. I should mention that none of this avoids you doing your own due diligence on the property, area, etc. You can do that from the desktop though. Interesting that your children are at Uni...you could probably utilise their first time buyer status and use parental guarantee mortgages to lower the barriers to entry there Best Richard
  14. OK, let's take a look at some of these specific comments in turn... Income versus capital growth - I wish I had a pound for each time someone said they are looking for both! Looking for income is investing, whereas looking for capital growth is speculating. It's extremely difficult to straddle two horses, so it's usually better to pick one. The income requirements you state don't look like a true income strategy as Haf has also said. The capital growth statements appear to be more like hope and expectation than anything else. If you want income, then you need to look at the fundamentals along with an accurate and realistic net income position after allowing for all reasonable deductions. Fundamentals include rental supply and demand factors, tenant profile, transportation links, jobs, local amenities, crime stats, etc. A few people, including me, have commented on your net income position and cost assumptions. I have 75 rental units accumulated over 10 years, so I do know a thing or two about the running costs of a BTL portfolio. 25% rental deductions over the long-term when using agents is a reasonable assumption as is aiming at a decent net profit each year that can absorb the occasional and inevitable blip, along with the necessary light and heavy refurbishment, repair, renewal, etc. If it were me, I would aim at 8% return on your cash investment and £200 per month net cashflow pre-tax as minimums to aim at, using the revised cost assumption. It is possible to specialise in low income/benefits tenants but if you do so, I would get yourself clued up on the rules and future trends in this niche area. Then, speak to local agents that specialise in this tenant profile to gain better insights on the ground. Ask them about arrears, evictions, tenant damage, anti-social behaviour, benefit level versus top-ups, no-go areas, etc. As for capital growth, this is about looking at the drivers of long-term house prices and can be simplified down to predicting inward investment into an area (i.e. following the money...and the population growth). Think of Hull with the sustainable energy industry, Liverpool and Manchester with urban regeneration (note not city-wide!), Slough with Crossrail and East London with the Olympics as some examples (the latter also benefited from the ripple effect of housing affordability in by far the biggest city with the biggest economy and international appeal in the country). 'My original idea still sounds good' - check for possible investment biases here (in particular overconfidence & confirmation bias): https://www.thepropertyvoice.net/4-investor-personality-types-12-investment-biases-understand-invest/ 'it's like zone 2 London in the 70s' - what is the corroborative data that underpins that point of view, especially with regard to what you expect to happen next (i.e. new transport links, job creation, public/private investment/regeneration, etc.? There are lots of places that resemble zone 2 in the 70s but there was usually a catalyst or a series of catalysts that triggered any positive change...and some places across the country still have not seem such a change. But as said earlier, this is a speculator position to hold rather than an investor position. You can be at the extremes of this investor-speculator spectrum and sacrifice short-term income for long-term capital gain (or vice versa), or you can sit somewhere in the middle and go for decent fundamentals with some clues of future inward investment...arriving at more of a hedged or average result. Overall, I would decide what investment strategy you really want to follow, then do the research and legwork, make a start and then re-evaluate as you proceed to test your assumptions and fine-tune as you go. Honestly, trying to help. Good luck!
  15. Most people wouldn't even think about this but it's a good thing that you do! I suggest you make a plan that includes as many of the following steps as possible: 1. Fix long - if you plan to hold for a long time, then aim at a long-term fix of 5 years or more. This will allow some time for prices to rise and cushion any fall and/or to push the renewal down the line so you need not worry about the scenario you describe too much (but see next point). 2. Have a buffer or contingency plan. It's important to be able to access funds in a time of crisis or the so-called 'Black Swan event'. Lots of people failed to spot the Global Financial Crisis (and associated property crash) in 08/09 but things tend to go in cycles, so there will be another Black Swan coming along sometime. So, have access to cash or highly liquidatable assets in this event (including setting aside your rental profits if you can). Keep in mind that many lenders have a minimum LTV provision in their terms as well. This means that even if you are in a fixed rate mortgage, they can insist that you top up your equity cash position on a property should the market value fall and the LTV breach their threshold. Watch out for this, check your mortgage terms and conditions...this is what took a lot of people out in the GFC (note: some lenders might not have a clause and those that do MIGHT not enforce it BUT ask anyone with a Mortgage Express / Northern Rock loan back in 2008 and you might appreciate what I am talking about!). 3. Don't over-leverage. Leverage magnifies profits, which is why we all love it. However, it also magnifies losses too! Imagine your entire portfolio is at 75% LTV or higher and we have a repeat of 2008, which saw a 15% house price drop (on average) in a single year. That could be the scenario I describe above across the entire portfolio, leaving you needing to find cash or sell up at a loss if you could not sweat it out. So, try and manage your LTV down. It's difficult to start with as that implies more cash, but there are other ways, such as with overpayments/repayment mortgages, allowing house price growth to dilute the LTV without remortgaging, or forcing the appreciation (see next point). 4. Force the appreciation. Or add value to the property in other words. Do a refurb or add value to the property in other ways to increase the property value. The temptation is to extract this value from the property, which I also do at the start of my ownership. However, I rarely repeat this step later, whilst still adding value during my ownership and allow my equity to grow over time. 5. Don't let fear stop you! Finally, having said all of this, please don't automatically think the worst case will happen and then let it stop you from moving forward. As I said, if you consider the potential downsides, no matter how remote, then make a plan to avoid or mitigate them, then you should be in decent shape. Keep calm and carry on! Richard
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