connect_aiginvestment_co_uk

Hi Dil, in the property hub magazine it has a rundown of Leeds area in edition 7, well worth the subscription, they have a different area every month and discuss postcodes etc

I am currently buying with 10% ROI (8% is acceptable if I really like the property/area but no lower) - the way I get this are by buying houses that need virtually no work with 75% mortgage and letting them as single lets, generally they have yields around 7%.  As soon as I include a refurb in the mix my cash invested will increase hence the ROI will decrease.  I have been doing this for 6 months in the NW and have bought a few (prior to this I was buying in London a while ago which is a completely different market).
 
I buy houses in good condition in areas that have high rental demand, in a buoyant market, so I haven't found anything significantly BMV.  It's easy to say an off plan new build flat is worth 100k but you are being offered it for only 80k, but look behind the figures, a friend showed me a new build 'BMV' flat offering for 80k and I looked at the area it in in which was high LHA, and freehold houses were being sold for 80k in the same area in good condition, with no leasehold charges/service fees. 
 
In areas with a very slow property market it's easy to say something is BMV, because little is selling so a desperate seller needs to do something to sell, this is happening in London right now, in fact it is because generally things are selling for 10% less than a year or two ago.
 
In London when I bought my last flat in the mid 2000's I was told top floor flats were selling for 10k more than middle or bottom floor at the time.  It was 177k at the time.  The ground floor flat in similar condition was bought for 165k a few months after, on paper it was easy to say it was BMV, however it was actually smaller at some of the storage cupboards in communal area make the 2nd bedroom smaller, the flat was dark and a lot less desirable.  I would argue the buyer actually overpaid.
 
So basically think about the deal on its individual merits, does it stack up?  I have been offered a lot of BMV property and as soon as I look into it, it is often market value, or even slightly above when the true cost of refurb is factored into it (refurbs are in my experience a lot more than we estimate so double your estimate for works and see if it still stacks up).  Once you buy it is it in a particular road in an area that will let right away by a long term tenant?  If it's a city centre flat and you need to do a tenant find every year you're losing rent plus c.£300 for a new tenant, so your yield massively decreases.
 
If you buy an off plan flat with guaranteed yields for X years this is factored into the cost of selling it to you, get onto right move or ring a local agent, see how much they are realistically renting for and how long they're on the market.
 
I basically ignore BMV, and focus on other things - ie. Does it have a good yield? What is the condition of the property in terms of long term risks? (ie will it need a lot of money spent on it in the near future or is it good enough that I have to spend relatively little for next 5-10 years?) Great tenant demand? How long do tenants stay in that type of property in that area? I aim to provide a house that is in a location and of a high enough standard that tenants want to stay 5-10+ years.
 
Find yourself a good independent lettings agent and they will be able to give you this specific information on the area you focus on.  Better to learn one area well than a few areas not so well.
 
Just some food for thought, hope it helps!

Hello all,
 
I was just wondering what checks you do before purchasing properties?  Is there anything glaringly obvious you feel I have missed out of the basics I have listed below.  There are generally for houses that aren't new builds.
 
Many thanks
 

1. Check it is in a major town near to good transport links (roads/trains) and if a Family home then near to good schools (if it's on RightMove this is easy to do).  This must be in an area where investment is coming into the area.
 
2. Look on Google street view to see the property and also the types of cars in the road and if there is anything I want to avoid like a petrol station opposite, is there parking?
 
3. Check current rental prices on RightMove/Zoopla for similar properties nearby
 
4. Plug all of the details into a spreadsheet to see if it stacks up even if interest rates go up to 6% factoring in all costs such as voids, letting agent fees, etc - it must be positive cashflow [As a quick and dirty calculation minimum of a 7% yield as a single let]
 
5. Look at address sold house price and local sold house prices.  Also compare the current prices to the 2007 values to see whether it has a lot more to grow.
 
6. Look at current sale prices on RightMove/Zoopla and how long similar properties have been on the market for, also I use PropertyBee on Firefox which is excellent.
 
7. MousePrice.com and Walkscore.com
 
8. Ring several local lettings agents to identify demand and for what type properties, what can be achieved for the property in rental terms and how long it takes to get them tenanted and what types of tenant.
 
9. Also consider second exit strategy if it doesn't let - eg. what is the market like for that sort of property?
 
10. Visit the property and as well as general checks see the boiler and fuse board
 
 

Start by speaking to a good broker to confirm you're mortgageable, and getting a good accountant to set up your Ltd Co.  Setting up a company and very cheap and quick (I paid £100 for my accountant to do it, you can get it done for cheaper but I wanted them to set it up).
 
Yes to directors loan, your accountant will run you through this. Always pay for professionals to advise you, you will save a lot in the long run than getting incorrect advice.  I believe you can backdate expenses, I read it somewhere, but your accountant will be able to confirm. I pay £700+VAT for Ltd Co accounts and £300+VAT for personal accounts a year.  If you don't yet have an accountant you may find this an interesting read - https://www.amazon.co.uk/Your-Accountant-Good-Bad-Greedy/dp/0995525609
 
Personally my route was to pick 'an' area, not necessarily the most exciting which currently seems to be Manchester followed by Liverpool (and Crewe if you're a TPP listener!), just one with good fundamentals and a buoyant rental market, then finding a great independent agent, once I had that I was able to find a few properties relatively quickly with their advice.
 
I buy houses, 2 bed terraced properties for the yield. Everyone has different reasons and preferences so go with what feels right to you.  I believe there will always be a strong market for houses whereas city centre flats can have a lot of tenant moves, I want long term tenants, but it is just my opinion.  Be wary of sourcing agents - I tend to book 30 viewings in 2 days and get viewings done, I do this every other month and find it easy to do, once you're on the ground you will learn a lot.
 
Best of luck.

Yeah, we have smashed the 2007 prices in London by around 80%, however lots of places around the UK have barely made it back to that level.  People talk about house prices but in reality prices are set by the availability and cost of credit.  Credit wasn't as cheap in 2007 as it is now, but if you had a pulse you could get a mortgage hence the bubble as people were fighting to get onto the market and buying additional homes for the expected capital growth, and the valuers weren't being particularly cautious about overvaluing properties as everyone thought you couldn' t lose in property.
 
We never know where the next recession will come from, it could be the sub-prime car credit, brexit, or something completely unexpected, but when people think they can't lose in property that is the time I will be cautious and either sell off poorer performing assets or ensure my level of liquidity is ready to capitalise on the next recession by keeping cash ready.
 
People acted with stupidity leading up the credit crunch, they were remortgaging their houses to buy cars, holidays, clothes, etc and felt that they were rich.  I feel that I am seeing the same at the moment with cars, everyone is driving a car they can't afford to buy to they are leasing to look wealthier than they are in front of their friends.  Precious few people are preparing for the future. Wealth doesn't appear or disappear during recessions, it merely changes hands from those who failed to plan to those who did.
 
In terms of house prices I am currently buying in the NW (Greater Manchester) and refuse to pay more than 2007 levels for anything to protect myself.  There are lots of Southern/Overseas investors piling into the North to buy new-build flats in the city centres so I am staying away from those types of properties.  I prefer houses in the suburbs which are yielding more highly and I believe will have a greater long term demand.

If you haven't got a good broker I would also get one who will be able to advise you what to do relating to finance - Simon Allen from Searchlight finance is often mentioned on these forums and I have used him myself to set up 6 BTL mortgages and he is absolutely fantastic.
 
I would also start reading books relating to property - anything by Rob Dix, Angela Bryant or Richard Brown (who posted above) is good, with no BS. Be wary of some 'gurus' and their offerings.  Richard also has a great podcast (the property voice) and I would recommend Property Geek by Rob Dix as well.
 
I am a relatively new investor, my personal focus is houses for single lets as I want minimal effort.  I see tough times ahead for more 'exciting' strategies such as HMOs on a number of fronts and see lots of them for sale on Facebook groups.  Personally when I first started I set myself a goal of 18 months self-learning before I started to invest and when I was ready I got a great broker then started to research my areas. Never take anyones word for anything, always check yourself by speaking to others, especially if you're offered a 'great' opportunity.  I personally found a good letting agent first then used their help to identify the specific roads within my target area to look at.  I am in London investing in the NW.
 
Best of luck in the future James, from the sounds of it you're in a great position with a small portfolio already. Take your time and don't rush into making a decision, as surfers say "there is always another wave".

Without knowing anything about your situation or goals (and Richard has already given an excellent reply)... it is worth considering carefully that you need a lot less cash (deposit and SDLT) and generally get better interest rates on residential mortgages. I might consider being an owner occupier first, even if you decide to let it out in the future.
 
If it was me I would consider buying a larger property than I needed and renting out a room using my tax free allowance.  If you don't mind living with another a far cheaper/easier way of getting 'into' property.
 
To add I would consider carefully before buying a new build property, others may disagree but in my experience they are generally overpriced.  In my opinion the help to buy scheme is to prop up house builders not help FTBs.  I have always favoured houses that need a refurb as I can get added equity as soon as the refurb is done. But it can be a little capital intensive in the short term as you need the cash for the refurb (and it will cost twice as much and take twice as long as you estimate).

The best thing you can do buying outside your area is to find a good letting agent before even considering looking at properties, they will guide you through the process of identifying the best roads within their area.  Meet them, interview them, go through their systems and knowledge, look for reviews, find their clients through facebook, what does your gut say about them? Look for an independent lettings agent rather than a chain.  They will know the specific roads that tenants stay long term. 
 
And remember we can't predict capital growth as we don't know what the future holds - invest based on the fundamentals, don't speculate.  Employment, transport links, yield, etc.
 
Best of luck

I would say (3) - stick with your broker, mine doesn't charge for remortgages after the initial purchase, but their advice in invaluable.  Don't cheap out, the advice of a good broker on all the surrounding circumstances in invaluable even if you think you know what you're getting into.  Every lender is different and they will know the pitfalls.

The best thing you can do buying outside your area is to find a good letting agent before even considering looking at properties, they will guide you through the process of identifying the best roads within their area.  Meet them, interview them, go through their systems and knowledge, look for reviews, find their clients through facebook, what does your gut say about them? Look for an independent lettings agent rather than a chain.  They will know the specific roads that tenants stay long term. 
 
And remember we can't predict capital growth as we don't know what the future holds - invest based on the fundamentals, don't speculate.  Employment, transport links, yield, etc.
 
Best of luck

The best thing you can do buying outside your area is to find a good letting agent before even considering looking at properties, they will guide you through the process of identifying the best roads within their area.  Meet them, interview them, go through their systems and knowledge, look for reviews, find their clients through facebook, what does your gut say about them? Look for an independent lettings agent rather than a chain.  They will know the specific roads that tenants stay long term. 
 
And remember we can't predict capital growth as we don't know what the future holds - invest based on the fundamentals, don't speculate.  Employment, transport links, yield, etc.
 
Best of luck

I went on the introduction day too, it was pretty good, but I decided HMOs weren't for me, it was well worth going though for £37, although it was clearly an introduction before the upsell (like a lot of property courses from what I could see). I got a lot of very good information and wrote a lot of notes. 
 
He had a couple of other speaks there which were really good, a finance broker from GPS Financial in Wales and Mark Barrett Property Accountant, they were excellent.

I personally wouldn't want to buy through an auction, they never seem particularly good value and auctioneers are masters at creating hype in the room, although I have heard of people buying unsold lots after the auction for a decent price.  I view a lot of properties on rightmove before a purchase and make a lot of offers before one is accepted.  Generally for every purchase I viewed at least 30 properties (usually over 2 days), although you may not have the time for this.
 
A bridging loan and then a mortgage after is an idea, so long as you remember you need to own the property 6 months before you can remortgage, also a surveyor may not give you a higher remortgage valuation than the sale price after 6 months, depends who you get.  Also you need to make sure you can get a mortgage on the property first as it is easier to get a bridging loan than a mortgage.  If you're getting a mortgage through a limited company it may take even longer than getting one in your own name.
 
You could also try looking at direct to vendor sourcing methods online and trying some out yourself or working with a sourcer.  Just make sure the deal stacks up factoring in any sourcing costs.
 
The property podcast has loads of useful FREE information so check it out too, it will answer all of your questions and more, the two Robs are full of common sense.
 
Best of luck!

good luck with that haf, I hope it turns out well for you but I fear that just providing 'before' photos alone will not achieve the result you want. The lenders surveyors mind-set will be to value the property at what you paid for it; unless you present them with compelling reasons not to. Photos will help but you need more to build your case. I will detail below what forms part of the Recycle Your Cash workshop that I run that deals with how to maximise your refinance valuations
 
turn up! if you are not present on the survey, you cannot influence the surveyor provide a detailed, uncosted works schedule that show what work you have done. How detailed? think of a Quantity Surveyors report; the close you can get to that standard, the better get comparables of SOLD properties in the same or adjacent streets within the last few months if the property is not yet tenanted make sure it is 'dressed'. Putting furniture in the property help to give the perception of value get your own survey report done before you let a lenders surveyor anywhere near the property. Give them all of the above and get an unbiased value from a surveyor not beholding to a lender
  Put all of the above, together with your photos, in a pack to give to the lenders solicitor

Hi Adam,
 
I've used The Inventory Manager (http://www.theinventorymanager.co.uk/) in the past; I'm also having a play around with iSurvey at the moment which a lot of my clients rave about, but I'm still getting used to it.
 
TIM is certainly pretty straightforward to use, I used it when I worked for a large letting agency so don't know exactly what the costs are per inventory etc, but you certainly get a professional looking inventory at the end of the day.
 
One thing I would say is if you use an app make sure your device has a flash. It's a bit tricky to show how sparkly the inside of an oven is without one!

Hey David
 
Just take the existing stamp duty calculation and add 0.03*PRICE, like the following:
 
=SUMPRODUCT(--(A1>{125000;250000;925000;1500000}), (A1-{125000;250000;925000;1500000}), {0.02;0.03;0.05;0.02})+(A1*0.03)
 
Hope that helps!

Hello all,
 
I was just wondering what checks you do before purchasing properties?  Is there anything glaringly obvious you feel I have missed out of the basics I have listed below.  There are generally for houses that aren't new builds.
 
Many thanks
 

1. Check it is in a major town near to good transport links (roads/trains) and if a Family home then near to good schools (if it's on RightMove this is easy to do).  This must be in an area where investment is coming into the area.
 
2. Look on Google street view to see the property and also the types of cars in the road and if there is anything I want to avoid like a petrol station opposite, is there parking?
 
3. Check current rental prices on RightMove/Zoopla for similar properties nearby
 
4. Plug all of the details into a spreadsheet to see if it stacks up even if interest rates go up to 6% factoring in all costs such as voids, letting agent fees, etc - it must be positive cashflow [As a quick and dirty calculation minimum of a 7% yield as a single let]
 
5. Look at address sold house price and local sold house prices.  Also compare the current prices to the 2007 values to see whether it has a lot more to grow.
 
6. Look at current sale prices on RightMove/Zoopla and how long similar properties have been on the market for, also I use PropertyBee on Firefox which is excellent.
 
7. MousePrice.com and Walkscore.com
 
8. Ring several local lettings agents to identify demand and for what type properties, what can be achieved for the property in rental terms and how long it takes to get them tenanted and what types of tenant.
 
9. Also consider second exit strategy if it doesn't let - eg. what is the market like for that sort of property?
 
10. Visit the property and as well as general checks see the boiler and fuse board
 
 

Hello dear Hubbers,
 
Intro
 
I have been monitoring the forum and podcasts for around a year and absolutely love them, TPH is an awesome community and you are all inspirational people whether you realise it on not, and clearly the two Robs are also total legends to have created it.  Their advice makes total sense to me, and I really like that they don't always paint everything through rose-tinted glasses, like a number of other property 'experts' out there who seem to be more interested in selling you courses to tell you the 'insider' information. 
 
Plans
 
I am from North London and plan to invest around the HS2/HS3 areas, mainly looking at Liverpool, Leeds, Hull, Sheffield and Crewe.  We have a couple of properties in North London but the yields are no longer particularly exciting and have not really looked at them from a serious business perspective.  I particularly like the look of Liverpool.  The 'Where to invest in 2017' Podcast was brilliant, they set out a really persuasive argument for investing in some areas I hadn't considered before.
 
We are planning to invest in longer term BTLs (single let) starting in September 2017 when we will be in a position to do so.  I know there are more exciting options out there but we don't have the time to spare.  My Family flipped around 10 properties in the 80s/90s, I am one of the few (crazy) people that has a real aversion to 'nice' properties, it has to be a good building in a good location but with decor that looks like it hasn't been touched in 50 years otherwise I don't like it!  As such every property I have bought has been a complete mess and I have refurbed to a high standard.  I am planning to try to break the cycle though and try to buy properties that are in a ready or nearly ready state to let... is there some sort of support group out there for me?
 
About Me
 
I currently run a photography/videography business in London which has been successful and am keen to have a longer term pension pot which will (hopefully!) make some good returns in the next 10-20 years. I run a large team and network with everyone I meet, which has been the basis of building a successful company for me.  I am a self-starter, I always succeed in what I do then tend to move onto new challenges once I have cracked a particular field, which is probably a good and a bad trait.  I have a couple of other new businesses in the planning stages this year, I understand how to run a successful company, however consider myself a complete novice as a landlord, over the past 15 years in London whatever you but in London would have made great returns so it has not been much of a challenge... and I don't get much time to sleep! 
 
Help Offered
 
In terms of help I can give others I have run my own web design company for a number of years which I have tried to scale back over the past few years, I can also give advice on photography/videography, there is nothing worse for me than poorly advertised property photographs!  It is actually fairly easy to do with a cheap DSLR and minimal know-how.  I do all my own photography when listing properties with estate agents regardless of sale or rent but would. I am happy to offer advice on photography and may be able to assist with locating a suitable professional photographers in your areas if you want assistance.
 
Thanks
 
Thanks so much to the two Robs and to all of you who are part of this forum and regularly post for the excellent advice and chat, I hope to start making more of a contribution myself in the near future.
 
Kind regards
 
 

The Buy-Refurbish-Refinance (BRR) Strategy is one of my personal favourites for reasons that you have picked up on...it allows your funds to stretch further than leaving deposits and works spend sat in a property.
 
However, it is not as simple as modelling on a spreadsheet unfortunately!
 
I don't know what type of property you are buying but it has to be low value based on £30k total per property. Then, you are reliant on a significant uplift in value from a very low works spend (by assumption). That's one challenge in itself...finding projects that can generate such an uplift in value. We usually work on 40%+ or more for a refurb project and you will probably need more than that here, but they are hard to find, trust me!
 
Then, how do you add sufficient value in the mind of a surveyor if you only have spent say £5k to £10k tarting it up? They are not that easily swayed, especially after only 6 months of ownership...so the refinancing at the top value could be tricky and by no means certain. We are now spending c£20k+ on our refurb projects and that accounts for our holding costs and fees, so don't believe the 'it will only cost a couple of grand to redecorate and get top dollar' drivel that some agents / sourcers would have you believe.
 
Next, the initial purchase financing...I am not sure what sort of finance product you are looking at but a bridging loan is expensive (fees in - high interest and fees to put on a BTL) and if you go for a refurb-style mortgage there is no guarantee that you would justify the uplift in value you seek after the project from what looks like a cosmetic face-lift rather than a significant value add.
 
Then, you assume running up to 5 projects in parallel, which is not realistic really unless you a) find all 5 deals at the same time (unlikely) and 2) are an expert project director with 5 separate project teams in place ready to act on your precise instructions at the drop of a hat.
 
Finally, the time taken in the project, finding the projects and refinancing them all adds up, so 6 months recycling and repeat is not that realistic, allow a full year all in including finding the deal and exiting onto the refinance.
 
That all said, BRR is a very good strategy and your idea in principle is very good at £200 per month net cashflow and c£10k or so left in each project. I just think you need to flex a few things to make it workable in reality. For example, I would suggest running only 2 or at most 3 projects at once, probably also staggering them. I think the starting fund per project at c£30k each needs upping, the duration needs extending, the financing costs need to be realistic and the type of end valuation expectation / return on works investment needs to be genuinely attractive to a hard-nosed surveyor...and you may need to leave more like £15k or so in each project in reality.
 
FYI we do several of these types of project per year, so I am talking from experience here.
 
Flex and be a little more realistic and you have a decent plan therefore
 
Best
Richard
 
PS - here's a tip, if you had 3 projects, then flip 1 and BRR 2...helps to fund the money you will leave in...

Hi Brian,
 
That's a difficult question to provide a straight-forward answer to. It really depends on your strategy, which in turn depends on your goals (or put simply what you want from property). Once you know what property is to you, and what you want it to do for you, you can put together a plan to get there factoring in the following:
 
TIME
How much free time do you have? How hands on/off can you afford to be? Can you self-manage a BTL? When do you want to reach your goal? RISK
What is your attitude to risk? How much 'debt' (or loan to value) are you willing to take on? Do you want the certainty of buyer/tenant over a potential higher rental/sale value? LOCAL
​Do you need or want to be close to your investments? This will obviously have an effect on the ability to self manage, if you wanted to do that. Does your local area's housing market fit your goals? Ltd Co. / Sole Trader
This is quite a topical (and key I might add) decision to make, but not one to be taken too lightly. Big implications on tax strategy Inheritance planning? Ltd co. can be far more efficient at handing down properties. Lending - Maybe or maybe not the biggest factor at play here. A Ltd co. (at least in today's economic climate) will experience a smaller market of lenders, and stricter requirements. The interest rate will almost certainly be higher also, although this could  be offset by deducting prior to tax (something that will be no longer possible to a sole trader thanks to Mr O!) This is by no means an exhaustive list, more just an indication of variables at play - I'm sure you can appreciate your 'ideal investment' would be dramatically different depending on your answers to some of these questions. Do spend time forming your goals (together with your partner of course!), and then spend the time to form a thorough strategy that works for you.  Having solid goals/strategy in place will answer your question for the most part.
 
Hope this helps and doesn't just muddy the waters for you! Feel free to question me on anything if it hasn't quite made sense.
 
Tim