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richard brown

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  1. Hi Eamon Nope, not exactly but the nature of the facts raises quite a lot of suspicion in itself. Good call on the 'safe and well' check Ben by the way. If not a safety issue, this could potentially be avoiding financial action, criminal activity, immigration control or even terrorist-related instead. Did you meet her in person, check original IDs and undertake thorough background rent checks? Given that the tenancy has not technically started, you can probably void it (put in writing to last known address) and set the money aside until you hear back from them, if at all. If you don't hear back from them, then you may need to put it down to experience and re-advertise the property. I would also not spend the money either...could be laundered or deemed to be theft if not too careful. The police might also be interested... Tread carefully and when people look to pay large sums up front, there is often a degree of risk in their background anyway. Sorry if sounds like a bit of egg-sucking, also writing for other readers of this to some extent. Good luck! Richard
  2. Only a 1%er can really think like a 1%er, although we can learn a lot about 1%ers by studying them as well Strange that you cannot reach me here, although my inbox was nearing storage capacity as I recall (will check into that, so thanks for alerting me). Meanwhile, you can try admin@thepropertyvoice.net as the first port of call...please reference our various threads and it will find it's way to me...
  3. Hi Rockwood OK, so as a husband and wife, you can choose to split your rental income as you wish simply by notifying HMRC, so if you want/need it all (or most of it) to boost your personal income, that's an easy fix. Now, I am going to say something that many will disagree with...and this is completely to be expected when you read it. To be a 1%er, you need to listen to 1%ers and not 99%ers. I want you to think about that a LOT... So, for example...to the 1%, they tend to go all-in...at least, to begin with. Personally, until fairly recently, I did not have a home that I owned, but now I have three! I sacrificed the comfort and security of 'owning' my own home and rented instead, using 'geo-arbitrage' in my favour and also using my capital and equity as investment capital for my property business. Anyway, that's just a 1% thought for you, as said. The 99%ers will tell you not to do this...and it can all go horribly wrong to be fair, so choose wisely If you really want to attract a JV partner, consider merging your own-home-to-BTL idea with raising funds and providing security in doing so at the same time. You could offer a fixed rate of return, first-charge security on an income-producing asset and then potentially also a profit share on top (not necessarily 50%) based on a new project. There should be plenty of takers with that sort of 'hybrid, secured approach' I expect, as long as you and the project you invest in also make sense. Message me if you want some suggestions as to where to find such people and how to go about it but you could start with friends and family, business acquaintances and then 'the property circuit'. Remember, it's all about positioning yourself: http://www.thepropertyvoice.net/soundbite-6-things-to-consider-when-it-comes-to-joint-venture-discussions-in-property/ and http://www.thepropertyvoice.net/soundbite-10-of-the-more-unexpected-places-to-find-property-deals-and-investment-partners/ Best Richard
  4. Hi Rockwool Do you have a 'burning platform' here? In other words, is there a desperate rush that requires a drastic solution? The answer to that will make a big difference to what you do. Also, as Matt has said...what is the context...what are your goals and by when for example? If it were me, I would be considering the additional points: 1. Rental affordability - you raised affordability with your mortgage, but it also applies with renting. Typically, a landlord/agent will consider a max rent of 40% of your net pay. 2. Opportunity cost - what you have to give up to get the funds; you already mention capital growth. There is also a 'cost of financing' equivalent with your option 1 as you will pay £660 in incremental housing costs (rent) in return for c£210k in funds raised. That's an effective cost of financing at 3.8%. That's cheap compared to bridging finance, just over par compared to a BTL mortgage and possibly a reasonable amount above par compared to a resi mortgage. The resi mortgage route seems closed though anyway, so compared to BTL it comparable BUT you lose the capital growth, which makes it expensive and compared to bridging it is cheap but you also lose the capital growth, which makes it closer. A similar argument applies to the convert to BTL and rent, which I am sure you can work through. 3. Using your equity as security - you have c£210k in equity, which you could use as security to a lender. There are some institutional lenders that will advance on your home for a property project on a short-term bridging basis (it is a regulated transaction, so not that many can). Alternatively, a private lender might do likewise. This means you can offer second charge security if the existing resi loan is left in place or even a first charge if the resi loan is paid off at the same time. 4. Lending options - put simply, you have fewer lenders open to you when you don't own your own home. However, there are still quite a lot open to you, especially when you own at least 1 rental property, so it's not a killer. 5. Taxation - this is a consideration as you have identified. Interest inside a company is a business-deductible expense, whereas individually it gets more complex as you identify. If you are lower rate taxpayers, it won't change too much. Equally, PPR relief and your annual capital gains exemptions are a way to improve your net after-tax position 6. Transaction costs - the more 'transactions' you do e.g. buy, sell, finance, refinance, etc. the higher your transactions costs. In property, transaction costs are relatively high at 2% to 5% depending, so keep this in mind too. If it costs 5% to raise the funds, then factor this into your numbers on the other end. So, more to consider (sorry), but what you do needs to be in context to what you are looking to achieve and by when and whether you do have the 'burning platform' or not. Best Richard
  5. You will likely need lender permission (if applicable) and you should also notify/check with your insurer to void invalidating either terms/policies. Best Richard
  6. Heavy refurbs and genuine value-adds are usually better to split into two clear transactions anyway I believe: cash/bridging and then if retaining a BTL mortgage. Sure, that's two sets of fees but if you read the small print of the bridge-to-let type of products, they place a restriction on how much you can release when refinancing. There are some providers that will do heavy refurb or development bridge-to-let though if you still fancied that route. Valuations are so unpredictable is what Dennis and I are both saying really, so if you are 'at peace' with the prospect of having to leave equity in the property, then you will still do OK in the long run. I might be inclined to speak to another broker, given two clear alarm bells in the responses you have had there...maybe try Simon Allen, who is a member here and knows the market inside-out.
  7. Hi, again Rockwood I am attaching a couple of recent articles that will give some general pointers of managing projects and a property business remotely. Obviously, there is a LOT of devil in the detail, so feel free to reach out if you want to. better understand how I go about things Best Richard YPN-Dec-2018-Issue USA.pdf Living A Location Independent Lifestyle.pdf
  8. Hi Ivan Well, you probably need to do two things then. Shop around, which you are already doing, and getting proper advice on the implications of Sharia Law, which I cannot advise you on. The latter will have an impact on the cost of the legal conveyancing though for sure. Sorry that I can't offer more than that...a very specialised area. Best Richard
  9. Hi Ivan Here are two 'lost-cost conveyancing solicitors' that I have either used myself or referred others to ttps://www.lambertpugh.co.uk/ & https://www.samhawking.co.uk/ I don't have any formal or even informal arrangement with either, so nothing in it for me in suggesting them BUT do make your own independent inquiries. Now then, my personal position is not to use a 'low-cost conveyancer' myself, as I want more than a cheap service offers. That said, my needs are not exactly normal, undertaking 8-12 varied and complex projects under tight deadlines a year. So, if you plan to do several projects, then my advice is not to go 'cheap' and try to find a good fit for your longer-term needs instead. In fact, your situation also sounds somewhat complex...two buyers (unmarried by the sound?), expats (harder to do KYC & AML checks), non-mainstream lender (new processes) and if the BTL is a leasehold this will also add to the cost. Then, does the £1,900 include VAT and expected disbursements? If it does, the net cost is likely to be around £1,250 plus VAT, which is upper-mid-range and could be lower-mid-range if leasehold. If this is before VAT and disbursements, then by standard BTL standards it would be high yes. Good luck! Richard
  10. 44.8% ROI on your cash left invested with a void-free and presumably a maintenance-free property for 5 years as well. Remember, this was purely circumstantial in that you could effectively acquire a BTL property for 8% of the purchase price when typically you would need 30% at least (excluding any refurb costs). The council doing the refurb for you is another bonus - how much is it worth now and so try and work out your equity gain as a result...you seem to have a reasonable grip on the numbers from what you have shown here at least? In summary: yep, I would take this deal all day long We sometimes have a 'bluebird deal' such as this, especially when we are starting out...low/gifted deposits, arbitraging the works, secured/guaranteed income streams and some financial engineering are all visible in this deal...the trick is how we follow it up and take away the elements to apply them to other deals... Best Richard
  11. Hi Rockwood That's quite a few follow-up questions you have there! As with all things property...it depends... Depends on your goals, timescale, resources, capital/income/funding needs, availability and terms of lending, state of the market, valuers, etc, etc. BRR - buy refurbish refinance is a really good half-way house between a flip and a regular BTL. Here you deliberately set out to refinance after adding value after a period of months. You should expect to recycle around 1/2 to 2/3 of a 'regular BTL deposit' and entry cost equivalent property. Example: £100k BTL requires c£30k cash in (including buying costs and fees with a 25% deposit), or a with BRR you should expect to leave in £15k, £10k or less sometimes if you are lucky. You will need to be 'lucky' though, as you rightly highlight 'revaluation risk' as being a condition to watch out for. Most valuations that I see on BRR within +/- 6 months are fairly low-balled as you can see here: http://www.thepropertyvoice.net/soundbite-property-horror-stories-part-7-valuers/ To put this into perspective, I recently agreed to sell a flip to a first-time buyer for the £125k asking price...their lender valued it at £115k, which basically killed the deal despite my best efforts...it should really have valued at £120k per a bunch of relevant comps. So, I then decided to BRR instead (always have a Plan B exit) when my valuation came back in at £110k would you believe? I lost my appeal BUT when life gives you lemons, you make lemonade. I rented it at a premium as it was the best house in the area and so my cash flow was good and when I do come to sell or refinance in a couple of years, it will have more equity to release. Yes, you can get refinancing in less than 6 months; in fact, there is a growing number of refurb-to-let lending products coming onto the market now from the so-called challenger banks and commercial lenders like Precise, Paragon and LendInvest I understand...I am not a mortgage broker, however! If you want a variation, then flip-one-BRR-one, using the flip profits to fund the cash left in the BRRs...this is smart if you want to start building income and assets. Another variation is BRRS or BTLS - where you will sell the property after a period of time, say 2-5 years. A BTL lender won't have a problem with this sort of timescale but would start to have problems over shorter timescales than this. Ironically, 2 years is also about the sort of time when a valuer will get more comfortable in valuing against market prices instead of 'cost plus'. Don't use BTL mortgages when you plan to sell within 18 months though is my advice. Higher LTV is a trade-off as Dennis has said, so I would only go with that if the value of releasing more of your funds sooner rather than later is significant. It arguably should be if you can make a c10% to 20% return on an incremental cost of say 3% to 5% overall, which is how I would look at the equation, personally. There are also some tax plays that I could also mention but that's for my 'inner circle' only... Best Richard
  12. Hi Rockwood You have 3 basic options... Plan A - this is your original plan i.e. to sell and sell you shall! On-market, auction, off-market...just sell the damn thing and move on to fight another day. Plan B - you should always have a plan B...unless your plan A is so rock solid that you know you will be OK. Usually, plan B is to retain the property, refinancing onto a longer-term loan if you need the cash. You can refi at up to 85% LTV with some lenders, which should at least get your original capital back out or you can refi at a lower LTV to maximise rental income, depending on your priorities and circumstances. Plan C - is the 'creative alternative'...and could take various forms. For example, sell a stake to a JV partner, offer the equity as additional, collateral for another project, switch strategy so that you can either increase the value of the property and/or the net rental income by retaining it. The bottom line is that if you are fairly committed to flip, then you should follow Plan A in most instances, even if that means taking a hit on the profit. If you can afford to sit it out for a time, then Plan B is probably the best thing to do. I had a flip project a few years ago. My exit was undone when my next-door neighbour put their house on the market just before me at a low-ball offer price. This would have led to a race to the bottom in terms of my selling price, all the time burning costs as you say. So, I merged Plan B with Plan C OVER TIME, such that initially I refinanced as a BTL and then, later on, converted the property into serviced accommodation (short-term let) and finally converted the garage into additional rentable space. It is now one of the best-performing properties in my portfolio with 23% ROI and that's before the additional income from the garage conversion kicks in! When life gives you lemons... Best Richard
  13. For me, holiday lets/serviced accommodation trump HMOs right now - you have to be very careful with HMOs, especially in student areas. If you are having success in your home town with this, then why change a winning formula? Then, I would buy a larger own home than you need and then rent out 1-2 bedrooms = lower-deposit, mortgage-free due to tax-free rent payments and tax-free on sale as well. This would be like a mini-HMO in any case. Or buy a 'project' and do the work as you go to also retain any gain from forced appreciation. You can then save the rental income or refinance to release the additional equity from a project to fuel further growth. Your own home, IF looked at as an investment proposition, is one of the most underrated property strategies there is! That should sort out the next two years, after which you can take stock of the market then and reset. Best Richard
  14. Hi James Ultimately, creating anything of value requires a couple of ingredients... Value creation (BTL portfolio, becoming a developer, delivering investor services for an income, etc.) / time taken to realise = resources (time input, money, know-how, systems, etc.) x applied action (built around beliefs, attitude and behaviour) / price (the cost of the resources & action or inaction) These 4 core ingredients in arriving at the value you wish to create are always present (time to realise, resources used, actions taken and the price paid)...it is the mixture that differs that's all. There is also quality to consider, but let's park that for now. So, you could teach yourself everything...I did that for 4 years after deciding to make a go of property. That decision 'cost me' £2m in property value and lost rental income before taking into consideration any capital appreciation. This could be short-circuited to 100 to 180 days now to at least get started. On the other hand, I know someone that has 'invested' over a hundred thousand pounds into 'property education' and is currently broke. There is always a 'give and a get' with all forms of training and education...you need to 'get' the right knowledge or support but you also have to 'give' the right input and effort to apply what is learnt as well. I also know people that learned by doing property projects...usually learning and losing a little as they go. Learn by failing (trial and error) if you like BUT at least you will get to own an asset that is capable of recovering your 'cost of learning' so-to-speak. You can also shadow learn from someone who has been there and done that...some comes for free (within limits), others not so (e.g. pay for mentoring or volunteer to work for someone for free or low pay instead). I am not precious about the 'HOW' (which way you choose to learn) but I would absolutely recommend that you had better apply yourself in whatever course you take...both during and especially afterwards. You can make each of these methods work for you (DIY, property education, shadowing or trial and error) but be prepared to pay the price whichever route you take and there is ALWAYS a price to pay for our learning and development...you just need to decide which price you want to pay. You also need to know yourself too...what will motivate you the most (are you internally driven, externally-pushed or a combination?) and which style of learning do you have (verbal, visual, logical, physical, etc.)? The answers to these questions will help you decide what's best for you, not what is best for me or anyone else. But THE single most important thing of all is...to do something and apply yourself, regardless of the method of learning you chose to adopt! Chose wisely... Richard