So, you’ve bought your property, it’s all going smoothly, financially you’ve done all the maths. But that financial brain doesn’t necessarily transfer to interior design.

You’ve got £5,000 of remaining budget to kit-out the rooms and decorate. Where do you go to find what you need and how do you avoid an overspend?

Perhaps traipse around individual furniture stores until you find what you want. Maybe carry out some research online before heading to the shops. Possibly even hire somebody else to do it all for you.

Whatever route you decide to take, be aware that discount deals websites like Groupon or Wowcher don’t only deal with restaurant vouchers and experience days anymore – they also offer cheap deals on furniture and all kinds of other household appliances and decorations.

On any given day you might find up to 70% off sofas, kitchen appliances or other furniture such as tables, mattresses, duvets, cushions and bedding.

Whereas before a company may have promoted deals solely via television, they’re now using sites like these to shift surplus stock for little to no profit.

The offers don’t always appear on the main page of these websites but if you click through various cities, like deals in Nottingham or Manchester for example, something is sure to be of interest and can be ordered online.

If you do decide to venture out and see the products first-hand, something else that will help to save some pounds is checking the in-store price of an item against the online price.

Make a note of the items that you like and their RRP as you walk around the store then check the store’s website when you get home – sometimes it’s different to the price listed in store.

Even if the online price turns out to be the same, type the name of the product into Google and you’re sure to find a cheaper version of the same product with a different supplier.

Basically, don’t settle for what you see in-store – there’s a whole world of cheaper items on the internet that will save you money. Usually offering free delivery too.

From a selling viewpoint, the more you save, the more you profit. From a rental viewpoint, the more you save, the better the yield.

So with this in mind, it’s well worth checking around the internet before committing to purchasing an item from the physical shop itself. You’ve got nothing to lose!

Whenever I am asked what area of property investing investors should go into, I almost always will say go for buy to let and will relate it to business. Many investors however still do not buy the correct property to fit the criteria they should look for. If you think of large businesses and how they measure growth and performance – they will continually talk about growing by either opening new branches or shops, or taking over existing ones.

So for instance a company may say “Our target is to open 30 new stores throughout the UK in 2012.” Another company may say we shall consolidate our position and work on performance of existing stores. In terms of growing as a business, this is where buy to let has a huge advantage over buying to sell. If you buy to sell, you have to re-start your company each time, and are not building up any longer term growth – you can make short term profits but you work very hard for this at times and is not very tax efficient.

Tax Efficient Option

For me I look to increase the overall value of my portfolio each year by buying further properties in areas I see continued capital growth and a healthy cashflow, and holding onto existing properties. The great thing with buy to let is it takes far less time than buy to sell, and is far more tax efficient in my opinion. Once you target an area and affordable properties – you can pay your deposit, mortgage the remaining amount, and let your money start working for you, and then move onto the next one.

I always think of each house as the equivalent of one store in a large chain of stores e.g. a Marks and Spencer store in an area of the country. If the house is performing well, it can be down to a good tenant/good managing agent/or good local area, vice versa if it struggles it will be down to one or two of these key points not performing. Many people may offer advice on buy to let, but essentially if you keep it simple, and follow some key criteria you will do very well. It is always worth looking at how your overall business is running, but then drilling down and looking at individual houses to see how they are individually performing. For instance overall your portfolio may be going up in value by 10% per annum, and running at a neutral cashflow, which you may think is very good – but if look closer you may see that 50% of your properties are going up by 20% in value and making a net income each month, while 50% are not showing any capital growth and losing money each month. Or you may see that a property you thought was performing very well, actually is giving a low return on investment as has very little borrowing on it.

Measuring Performance

How do you measure the performance of each investment? Let’s look at a couple of example properties: You own 2 properties in the same area of the country, both bought in Jan 07. Therefore similar levels of capital growth are expected – 10% for the year – and rental yields are similar as they are both 2 bedroom terraced properties.

Property 1: One is worth £70,000 and rents for £350 a month You have an 85% mortgage on this – and your mortgage payments and maintenance costs each month are exactly covered by your monthly rent.

Property 2: You have bought this for cash. It also rents for £350 a month – with no mortgage after maintenance costs you make a net figure of £2000 over the year.

Which has performed better? Well different investors may see it differently – for some the fact property 2 has made £2000 income would put it ahead. I would look at the return on my investment: Let’s assume buying costs on each were £2000.

With property 1, you have invested £10,500 + £2000 = £12,500, and at end of year you have made no net income, but have made £7,000 capital growth. So I would calculate this as a ROI of 56%

With property two, you have invested £70,000 + £2000 = £72,000, and at end of year you have made £2000 net income and £7000 capital growth. So I would calculate the ROI here as 12.5%

High Leverage

A big difference – and shows emphasis is always on high leverage and capital growth. How do you get this? Buy in affordable areas – and mortgage as often as you can – as long as your cashflow is kept to a manageable level. It is also important to realise like any business there will be short term issues but these should never get in the way of your longer term goals. So if you get an issue with your first tenant, or managing agent, but had a goal to get to 10 properties by the end of the year – do not give up at one property, or think there is no money in property! The only thing that is for sure is if you stop at one, you will not make a huge amount of money – you should continue with your midterm goals – this is important advice on buy to let investing! I lost money on one deal early on, but learnt from it, and have had issues with problem tenants from time to time, but have always had a clear longer term goal.

So I would say when buy to let investing treat property as a business, review it regularly, and overall measure the performance of your business by the growth each year, and the return on investment each year.

By Alan Forsyth

Propertysecrets.net is an information portal offering online advice and ready sourced deals at below market value. For updates on all of propertysecrets.net UK & Overseas Buy-to-Let Investments click here and register your interest today!

“What would you do if you had £1 Million to invest?” Wouldn’t this be a nice problem to have!

A great article by Simon Zutshi

I am frequently asked this question by people who want advice on how best to invest their money, although it is not usually for quite as much. My answer is always the same. It depends what you want to achieve: cash flow, or equity growth as this will affect the type of property you invest in!

People respond by saying “No Simon, I want to know what YOU would do if you had £1 million to invest?” Well that’s a bit different. I already have a great cash flow from my portfolio and I have enough property for my long-term pension plan, so my situation may be slightly different. However, in this article I will explain how I would personally use the money.

Borrowed Money?

First of all we need to determine if the £1 Million is free and clear cash or is it borrowed money, on which interest is payable. Let’s assume it is borrowed, as this is probably the circumstance for most people reading this article. Let’s say the cash is released equity from property and assume the cost of borrowing of is 6% per year. At this rate of interest, the monthly interest payment would be £5000 on borrowings of  £1M. My first objective would be to use half of the funds (in this case £500,000) and invest it in such a way to generate at least £5000 a month. This would enable me to cover the borrowing on the entire £1M thus leaving me rest of the funds (£500,000) to play with at no cost.

To generate £5000 per month I would need to work the first £500,000 to achieve an income of 1% per month (12% per annum). It is very possible to achieve this by working with other investors who have found great investment opportunities, but are unable to funds all of the deals they are finding.  This is the case with many of the investors on my Property Mastermind Programme, who just have too many deals to do on their own.

Money to Invest?

If you have money to invest you are in a great position to get other people to do the running around and bring great deals to you. It is critical that you educate yourself so that you can differentiate between the good and not so good deals. With plenty of cash you can afford to be fussy and cherry pick the very best deals. You can either find projects when you get a guaranteed return of 1% a month or you may become a joint-venture partner with potentially higher returns of maybe 20% per year will of course there is always a bit more risk.

Personally, I would find deals that require some initial funding, where we can add value, and then refinance after 6 to 12 months to take all of the money out and be left with a property with equity but none of my funds invested. This is a great way to rapidly build your portfolio.

Having covered the cost of borrowing the entire £1M utilising the first half as described above, that leaves £500,000 for me to invest without necessarily needing to gain a return on that money.

Refinancing Investments

Refinancing investments is my preferred option, although sometimes I find deals with fantastic cash flow, which require cash deposits to be left in them for the long-term. I am happy to do this as long as there is a great return on the invested funds of at least 20%. There are many HMO and multi-let properties that fall into this category. Assuming a 75% loan to value borrowing on these HMO properties, with £200,000 for deposits, I would be able afford between four and six HMO properties, depending on location. Purchasing this type of property (which should generate £500-£700 net profits per month property) could give me an extra cash flow of  £2,500 to £4000 profit per month.  I don’t really need that extra cash flow so I would use this extra income to build up a bigger cash reserve for the future.

Taking about cash reserves, I would want to keep £150,000 in reserve for those occasional fantastic opportunities that come up which require a very quick cash purchase. If you are looking for them, the “deal of a decade” comes up about once a month.

I would keep £50,000 to use for options deals as there are some fantastic options that do require a few thousand pounds investment.

Commodities

The final £100,000 I would use as a long-term hedge against future potential high interest rates. My personal preference is to invest this money into physical silver and gold. Both of these precious metal commodities have dramatically increased in value over the last few years and some people believe they have reached the top of the market. However I have consulted with some of the best commodity experts in the world who really know what they are talking about, and I now believe that these commodities could significantly increase in value over the next 10 years.

To summarise: 50% of this money invested to generate sufficient cash flow to cover borrowing of the total £1M. 20% invest into long-term projects to generate cash flow. 15% I would keep ready to use for rapid cash purchases. 5% to buy options. The remaining 10% to diversify into commodities as a long term hedge.

Last week’s Manchester pin meeting was again an evening full of information, learnings and opportunity. With a great mix of new and experienced investors, as well as a variety of service providers everyone was able to benefit.

Our regular mortgage broker, Richard Ignatowicz started the evening by giving us an update on the latest mortgage products available and some changes to existing products in the market place. If you would like to contact Richard about Mortgage Information please do so at: richard@mortgagesavers.co.uk

Peter Anti of Concentric Lettings shared with us how to protect your property from theft through protecting the title.  He also confirmed that the number of new tenants continue to rise with a 20% rise recorded in recent months. If you would like to contact Peter you can do either by Tel: 0161 246 6074 or Email:  SouthManchester@ConcentricLettings.co.uk

Mark Okuniewski of Drawbridge Construction the first of our main speakers, shared with us some of his 12 years of experience in property.  More specifically he talked to us about three of his own personal property investment strategies.  Mark explained how he purchased properties, added value to them and sold them on, making significant profits which enabled him to purchase properties to convert to HMO’s and hold for ongoing cashflow.  Mark also talked us through some amazing development strategies he has employed, for example, how he converted a 3 bed terrace property into a good size 10 bed property. If you wish to contact Mark please do so on 0800 8799978

Matthew Moody of Millennia Property gave an interactive presentation with the audience working together on identifying and negotiating a deal, sharing with us his own top ten tips for negotiation.  Matthew also explained the key to cashflow and making your property portfolio or business work for you, sharing some of the fundamental systems required to increase profits and leverage your time as you become a more experienced investor. If you want more information from Matthew and to get in contact with Millennia Property, email us at partners@millenniaproperty.co.uk or call us on 01604 521301.

Congratulations to Lionel Palatine who won the prize draw worth £497 to attend a pin one day seminar. Ensure you have your chance to win next month by booking your place 24 hours in advance. Book now www.pinmanchester.co.uk

Don’t forget that we break for summer in August so the next Manchester pin meeting will be on Wednesday 21st September where our speakers will be Ben Leppier and Barry Davies who will share with us how to ‘Make money from property that you don’t own…NOW!’.  So mark the date in your diaries and I look forward to speaking with you then. www.pinmanchester.co.uk

Please remember we are also moving to a new venue, so as from September we will meet at Whitefield Golf Club, which is only about 500 yds from Jct 17 of the M60. Higher Lane, Whitefield, Manchester, M45 7EZ.

Have a fantastic summer and I really look forward to seeing you in September.

Susan Alexander
Manchester pin host

In just 10 years from now, how would you like to have paid off your home mortgage in full and have secured a strong pension?

Most people recognize that investing in property is one of the best ways to build your long term wealth for you and your family.

Investing in property is not a get rich quick scheme.  You do need to invest some time, money and effort but this will be the best investment you will ever make. One of best things about property is that you work once and get paid forever. The effort that you put in upfront in finding each property and getting it ready to rent out is rewarded by the positive cash flow at the end of every month for as long as you own it, as well as the long term capital growth.

It is this long term capital growth that can help you pay off your home mortgage as well as build a cash generating portfolio of property investments. In the UK the long term trend for property prices is to rise. This is because we live on an island with limited space and an increasing population. Rents and house prices will naturally rise over time. With the current market conditions you need to educate yourself to make sure you purchase the right investment at the right price in the right location.

Deposit Funding

Typically you do need some money for your deposits to be able to invest in property. This deposit seed money could come from a number of different sources such as: your own savings, inheritance, redundancy money, profit from a business, borrowed from a family member or the most common source of deposits, the equity in your existing property.

Many people don’t like the idea of using equity in their own home to invest as they are worried about the risks! If this is how you feel, I would encourage you to think again. Here is a simple strategy where you can fairly easily pay off your home mortgage in full and build a property portfolio in just ten years. It’s a safe, steady strategy.

For the sake of this example let’s assume you’ve got some equity in your home. In fact for many years you have been working hard to pay off your home mortgage. Please note that if you are only ever going to have one property (the home you live in), then it is a very good idea to pay off your home mortgage as quickly as you possibly can. By paying off your home mortgage you will be reducing one of your biggest outgoing expenses and you will reach financial independence far quicker. However investors think very differently to this.

For most people their home is the biggest asset they will ever own. Many people are content to pay off the mortgage happy in the knowledge that over time the value of their asset will increase. If your home is worth £200,000 now then you could just sit back and relax and in 10 years time your property will probably double in value to £400,000. How would that make you feel?

Does this mean you are financially better off? Well, if your house is worth £400,000 you may feel much better than when it was worth £200,000. But in reality you are no better off. You see all the other properties will also have gone up to in value. If you wanted to move from your existing house, to a similar size house that would also cost you £400,000. In real terms you’ve had no net gain. And for you to benefit from that increase in value you would have to sell the house and downsize to a smaller, cheaper property or move to a cheaper area which is what many people do when they retire.

Using other people’s money

Investors recognise that it’s beneficial to have more than one property because they can profit from the increased capital value of their entire property portfolio, especially if they’ve used other people’s money to buy that portfolio. Just to clarify here. When you release the equity from your home you are in fact using other people’s money which is secured against your home. It’s not your money!

Consider this alternative strategy. Instead of trying to pay off their own home mortgage as quickly as possible investors will do the opposite! They will use as much equity as they can from their existing properties to buy more to expand their portfolio.

Remember in this example we are going to assume you’ve got £200,000 of equity in your own home and let’s say you could release up to 80% of the value of that equity, which means that you would be able to release £160,000 to use as seed capital for your deposits.

To keep the example simple we will assume the Buy To Let (BTL) properties you would purchase are worth about £100,000 in today’s market.

If you were to use 75% Loan To Value (LTV) mortgages, that means you could get a £75,000 BTL mortgage on each investment property and you would be required to put in a £25,000 deposit.

With seed capital of £160,000, you would have deposits for six investment properties (6 x £25,000 = £150,000) and you would have £10,000 left over to cover your purchasing costs such as solicitors and survey fees.

You would then be the proud owner of a property portfolio containing you own home (worth £200,000) and 6 investments at £100,000 each (6 x £100,000) with a total value of £800,000. How would that feel?

Don’t forget that you will also have some debt! There is the £160,000 mortgage from your own home, and you also have six BLT mortgages of £75,000 (6 x £75,000 = £450,000) which means your total debt is £610,000. That might feel like a lot of debt and that might scare you, but the great thing is you are not going to be covering the cost of that debt. The tenants in your rental properties should be covering the cost of all the borrowing.

£1M of equity

Having done the initial hard work finding and buying the right six properties you sit back and wait! I would always recommend using a good quality letting agent to manage your properties for you, so that you don’t have the hassle. If property prices were to double on average in the next 10 years your total portfolio would increase in value from £800,000 to £1.6M.  Your outstanding debt which was taken out as interest only mortgages is still only £610,000. That means you have almost £1M of equity, that’s quite a good lump of equity to have.

At some point in the future you would want to pay off the mortgage on your own home. Each of the investment properties would be worth £200,000 with a BTL mortgage of just £75,000. What you could do is re-mortgage some or all of those investment properties to pay off your own home in full. Let’s say you re-mortgage each of the six investment properties to release just £27,000 from each one. That would give you £161,000 in cash which you would be enough to clear all of the debt on your own home and you would still have the six investment properties (with just over 50% borrowing) giving you a rental income and almost £1M in equity.

So here’s the big question! Would you rather do nothing, just sit back, wait and in time your home may double in value from £200,000 to £400,000 without any of the effort or, would you rather educate yourself take some action and in the same time period end up with almost £1M in equity instead of just £400,000? Now take your time…..don’t make any rash decisions…. which would you prefer? I think I can guess which it would be.

Let me ask you, how long would it take you to save £1M? For most people it would never happen. But in this example it was possible by purchasing just six investment properties. To build a strong pension you don’t need hundreds of properties in fact less than 10 would be enough for most people.

I hope this article has inspired you to take control of your financial future.

Thanks to Simon Zutshi for this fantastic article. Simon has been investing since 1995. He is generally recognized as the top UK speaker and educator on property investment. He is the founder of the property investors network (pin) which provide a supportive environment for investors like you to learn more about successful property investing. There are currently monthly pin meetings in 11 cities around the UK. For more details visit the pin website.

This information in this article is taken from Simon Zutshi’s book “Property Magic 2010 and Beyond: How to buy property using other people’s time, money and experience.” Property Magic is an Amazon No 1 best seller and highly recommended. You can buy it here:

Property Magic 2010: How to Buy Property Using Other People’s Time, Money and Experience

Simon Zutshi
Founder, Property Investors Network

Simon Zutshi is founder of the property investors network www.pinmeeting.co.uk

The whole aim of your buy to let investment is to provide you with a sustained, long-term income and that means finding tenants to fill the property. The internet has changed the way the world works and there are so many options available to landlords when it comes to their buy to let investments.

Free eBook

If you’re interested in finding a a great tenant for your property, then you can download our free eBook: “How to Find a Better Tenant Faster”.  The eBook is full of useful tips to finding a great tenant for your property.

You can find information on buy to let home insurance, tenants’ rights, gas and electricity safety requirements and much more. The internet is also a great place to advertise. With various websites available for you to advertise your property, you can spread the word quickly and for little if any outlay. Practically every lettings agency will have a website, meaning you could market your property through them to reach an even wider audience.

However, the emergence of the digital world does not spell the end of the traditional ways of finding tenants. Word-of-mouth, shop window advertising and local newspapers all represent tried and trusted ways of letting people know that your house is available for rent.

So which is the best way of going about finding tenants? The key is to weigh up the pros and cons of each and decide from there.

The internet – is it the way forward?

There is no doubt the internet has changed the world. It is a place to network, keep in contact with friends, shop and find out about almost any topic. It is also a place where people look for properties. All lettings agencies have websites these days because the internet allows prospective tenants to find places in a certain price bracket and location much easier than calling around various agencies and speaking to people over the phone. The convenience of the internet means you cannot ignore it as a way of advertising your property.

Lettings Agents

You could sign up with a lettings agency and let them market your place via their website, or you could place adverts on sites such as Gumtree or specific property portals to reach as wider audience as possible. Social networking sites such as Facebook and Twitter also represent a way of spreading the word. Property forums are another option, as are local newspaper sites.

How much you choose to invest in online marketing is something to think about carefully. For example, going via the digital route could prove a wise move if you are aiming for students or young professionals as these are internet-savvy individuals who have grown up with the technology. If, however, you are aiming for those in their 50s or over, the internet may not be so useful, as these groups are less likely to use the technology on a regular basis.

Advertising on websites will incur monthly costs so it is worth doing plenty of research and finding out which sites are most visited and have the best reputation before parting with your cash.

Traditional methods – still relevant?

The emergence of the internet has not spelled the death knell for the more traditional way of marketing a buy to let property. If you go through a lettings agency, they will promote your house in their high street outlet as well as their website, meaning you can take advantage of both. Many people enjoy speaking to someone face-to-face when deciding where to live, which is something the internet cannot deliver. A lettings agent can take prospective tenants through the property and answer any questions they may have.

Shop Windows

Advertising in shop windows is still an effective way of generating interest as well. In student areas in particular, this could be a cheap yet highly profitable way of marketing your home. Local newspapers are another option available to you. Again, these are relatively cheap and offer you an opportunity to find tenants from the local area.

Where traditional marketing suffers against internet promotion is the size of the audience you can reach. The internet is a global phenomenon and your property can be seen by a person from Edinburgh and another from Dorset within seconds of each other. Local newspapers and shop windows will only be seen by those in a particular area, therefore narrowing your scope in terms of who you can attract. While there are definitely cost savings to be made, it is important to weigh up the most effective way of spending your money.

Solution – the best of both worlds?

Both online and offline options offer many positives and can help you drum up a lot of interest in your property. As both have their advantages and disadvantages, you could enjoy the best of both worlds and split your budget between the two. The deficiencies of one are compensated by the other, so a two-pronged approach could see tenants queuing up to see your property in no time.

Don’t forget for further information you can also download the JDP and G R Phelps’s free eBook – How to find a better tenant faster. It has some fantastic information in there, including:

• Checking the market
• Preparing your tenancy agreement
• Sample tenancy agreements
• Sample Inventory
• Legal rights of tenants and much, much more.

All you need to do to receive this free eBook is to subscribe to the JDP website for free.

Article provided by Simple Landlords Insurance

The last 12 months have been profitable for many of those with buy to let insurance and the good times look set to continue for the foreseeable future due to a lack of supply, according to one expert.

Property analyst at FindaProperty.com Samantha Baden said that people’s living arrangements have undergone a fundamental shift in recent years due to the effects of the economic downturn.

She stated that people have got used to spending prolonged periods in rented accommodation and many estate agents have had to acknowledge this and adapt their business models to reflect the changing times.

For Landlords, the picture looks rosy, as the expert believes the situation will remain as it is for the foreseeable future.

“The lack of supply is continuing to exacerbate the problem, driving up rents even further and it doesn’t look like this situation will change in the short term,” Ms Baden added.

James Davis, chief executive officer at Upad, said recently that the UK has undergone a “major shift” towards renting, with London leading the way.

Posted by Luella Ravelin

Article by Lisa Orme – This  article is actually a favour to myself!

A chance comment on a forum turned into another business opportunity. Rob Hubbard of Walker Fox is a deal finder; he posted on a forum a while ago saying that he was finding great deals but didn’t have a database of investors to pass deals onto furthermore it seemed that most people who he did speak to wanted No Money Down deals which he wouldn’t do and that usually meant they had little to no money and he was sure many deals would never come to completion letting down his sellers. I suggested that he partner with a mortgage broker; brokers have a ready list of clients wanting to buy, they have already been vetted by the mortgage broker so are mortgagable, and if you partner with the right one you can be assured there will be no NMD shenanigans.

So unsurprisingly a few weeks later Rob and I decided to JV together and a number of others have followed since! It certainly wasn’t my intention to partner with deal finders. Deal packaging is nothing new and to be honest I’ve never really been an advocate of them in the past as so many of the so-called deals offered simply aren’t. So therein lay a great opportunity. I am regularly being approached by property investors who are getting great deals but are not in a position to buy themselves or can’t buy as many as they would like and I have clients wanting deals.

The great thing is I get to sit in the middle to:-

• Ensure the deal is genuine
• Get to know the finder/packager and be able to recommend them to my clients
• Know the investor is mortgagable and can complete on the deal
• My clients get to do more deals and make more money meaning we all get more business

Brilliant!

The only issue I have at the moment is that a lot of the new finders/packagers I’m working with haven’t done it before and are unsure of what constitutes a deal that others will buy and how to package them up. So I thought I’d use this month’s article to create a bit of a how to guide to deal packaging that I can simply send to the finders. I’m sure readers will find it useful too and if you want to become a finder I highly recommend partnering up with a mortgage adviser who can match you up with suitable buyers just like we are doing.

So what constitutes a deal?

This is a major issue I’ve always had with deal packaging because what suits one person doesn’t necessarily suit another. But in general terms given current mortgage availability and the marketplace most investors are going to be seeking 20-40% discounts on a genuine open market value (OMV).

Most investors want to keep the property to let out but others want to buy to sell and some want to refurb to let out to try to recoup some of their invested monies.

You will need to understand your investor’s requirements before going out and finding deals. Or conversely have enough investors to offer deals to that you can offer out a variety of deals that will likely appeal to at least one of them.

What is genuine OMV?

I’ve seen all sorts of descriptions of what constitutes genuine OMV and the fact is it isn’t a set figure and certainly can’t be quantified. It isn’t even a figure determined by the valuer because if the valuer happens to find out your purchase price most times that’s what they value it at! Furthermore court cases demonstrate that it is not unheard of for valuers to be a party to overinflated valuations.

Your job is to provide a plethora of information to the investor that gives them confidence that they are buying a genuinely discounted property. After all if they are buying the property at the agreed purchase price and not trying to use smoke screens to create a perceived market value it doesn’t really matter. It’s only when you’re trying to con investors, valuers and lenders alike that this becomes an issue.

For approximately £150 you can arrange for an independent valuation by a RICS surveyor. This should be done when your seller has agreed to sell at a discounted price but that price has not yet been determined. The RICS valuation can not only be used to determine that purchase price but also to provide your investor with a current market valuation.

Please note that this is nothing more than the valuers opinion; it is not a scientific calculation! You should never only use a valuer’s valuation to determine the value of a property. After all when you go to the lender and state your actual purchase price the very same valuer will value the property at that price not the likely higher price he previously valued it at!

This exercise is to ensure your investor is confident of the valuation and that they are getting a discount worthy of your fee.

What Information Should You Provide?

I recommend that you provide your investors with an emailable pdf document comprising most or all of the following:-

• Independent RICS valuation
• Comparable sold prices
• Comparable for sale prices from a variety of sources
• Estate agents confirmation of current value
• Comparable rental prices
• Letter from a reputable letting agent confirming the rental valuation and demand
• An overview of the property including a full description of the interior and exterior
• An overview of the surrounding area
• Interior and exterior photographs
• Schedule of any works and likely costs

You can provide an illustration of the likely mortgage payments, cashflow etc but I recommend asking a mortgage adviser to draw this information up for you as publishing mortgage terms, rates and payments is highly regulated especially if it constitutes any form of advertising.

What Should You Charge?

The fee you charge is often down to negotiation with the investor and also whether there are other ways you earn out of the deal. For example you could arrange for the refurbishment and resale of a buy to sell and split the profits instead of taking a fee. Several finders I work with run estate or letting agencies so are happy to deal with the resale or management of the property as all or part of their fee. If however you are simply packaging up the deal and can prove a genuine minimum 25% discount then a fee in the region of £5,000 is usually acceptable. Significantly higher discounts could attract higher fees especially on higher value properties in areas where deals are harder to come by such as London and the SE. Conversely you may be able to pass on more marginally discounted deals for lower fees to some investors.

This is why it’s so important to get to know your investors requirements beforehand. When I work with the finder’s part of this fact finding mission is to determine their mortgagabilty and a strategy. It’s quite common for investors to approach me with a set plan in mind only to discover its not realistic or doesn’t suit their needs and had they have pursued that course may have found themselves in trouble or unable to buy more properties. Once we talk about their goals and financing options and develop a plan then it is much easier for the finder to work to – again we all win.

Article Provided by Lisa Orme

Mortgage Broker and Property Investor

The above is for information purposes only; rates can change and may not be applicable at the time of publication.

Please consult appropriate professionals and contact us for up to date quotations.

Keys (UK) Limited is an Appointed Representative of Julian Harris Mortgages Ltd. Authorised and regulated by the Financial Services Authority in the conduct of mortgage and general insurance business with FSA No. 304155.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.

Think carefully before securing other debts against your home.

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I had the pleasure of interviewing Mike Warren this week,  Mike is based in the US and is the International leading expert on tax liens and judgment liens.

Mike is going to be presenting at the next Lease Options Live Event, May 14th/15th in London so I wanted to find out what tax liens were all about.

Have a listen to this short 15 minute audio clip to find out more about tax liens.  It sounds like an amazing strategy.  Mike uses an example of  a property in Florida worth $69,000.  You pay the back taxes of $1,700.   You can receive interest on this amount of between 18% – 36% within 12 months.  Not only that but if the owner doesn’t pay the back taxes, you are entitled to that house free and clear.

So for a $1,700 investment you will have a house worth $69,000.  If you chose to you could then sell the house for $30,000 for example. Making you a $28,000 profit (minus selling expenses).

This strategy is also guaranteed by the US government.  It all sounds too good to be true!??  Have a listen to the audio to find out more.

Download audio file (rec_mgjwa68_04_Apr_2011_20_05_13.mp3)

If you like the sounds of this strategy (I do) then why not get along to the Lease Options Live Event on May 14th/15th.

The power of this lies in the fact that the seller has granted you an exclusive right to buy within a defined and agreed time period.  Notice the word “exclusive”.  The seller is not able to sell to anyone else, except you.

At the same time you are able to sell the contract on to another purchaser, transferring the right to buy at the discounted price to them for a fee.

Let’s look at a real example from a North East town.   The seller had been marketing a very large and now empty house for nine months.  With no rental income the monthly mortgage payments of £475 was crippling.

Having started a new business recently and with a need for capital to support it and very little time to cope with an empty property, the seller’s motivation was keen.  After some discussion a purchase price of £93,600 was agreed which was below the marketed price of £110,000 and still enough to clear the mortgage and inject funds into the seller’s start-up business.

The seller was very concerned that he would be unable to make the mortgage payments before the house sold.  A four-month purchase option at £93,600 was agreed and a maximum of four monthly mortgage payments to be made by the buyer, which would be credited to the purchase price at completion.  Once the simple paperwork was signed the option was assigned to a waiting developer-investor for a modest but welcome fee.

Confident that planning would be granted, the developer exercised the option and later successfully converted the building into two flats achieving an end value of £200,000 and about £80,000 in equity after costs.

This case shows how you can profit from property deals that don’t really fit your personal buying criteria, or if as a finder you want to create quick cash.  Simply put, it shows how you can use a purchase option to lock in a discounted price.

Thanks to Mark Jackson, Lease Options Made Simple for this article.