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Are you leaving deals on the table?

ninja learning May 05, 2021

When a deal falls through and someone else ‘buys’ the property, what do you do?

Properties are selling fast, the market is buoyant and the competition between buyers is hot.  It’s not just investor v. investor, you’re up against anyone who is looking for their next home too.  So, you’ve made an offer and the answer is ‘Sorry, someone else has made a better offer and it’s been accepted.’  Now what?

Most people write that one off and go on to their next deal.  But what if you haven’t actually missed out on the deal?

Did you know that one in every three deals fall through?

The sale is not complete until contracts are exchanged and that can take weeks - usually months.  As the saying goes ‘There’s many a slip between cup and lip’ and in property that is very true.

People don’t complete the deal for lots of reasons - they may have a change in personal circumstances, find another...

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Does Knotweed mean no mortgage?

THE QUESTION

I've seen a house with knotweed which is 8 metres from the house and is level 3. Do mortgage providers lend on properties with knotweed?  If not, could I get a bridging loan, excavate the knotweed and refurb the house then refinance?

THE ANSWER

Several issues here, so let’s deal with them 

  1. Mortgageability - Japanese Knotweed is one of the biggest no-nos for mortgage lenders, because of its potential ability to undermine the foundations of a property.  Its current 8 metres proximity to the property won’t be 8 metres for long, given its propensity to spread.  It’s highly unlikely that you would be granted a mortgage, especially at the time of year when it is in full growth mode, April to August, which can be up to 20 cm per day in some cases.
  2. Eradication of Japanese Knotweed is controlled and only possible through licensed contractors.  Excavation or chemical treatment are the options.  With excavation a depth of 3 metres...
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Build your support network

ninja learning Apr 04, 2021

Property investment can be very much a solo career, but a smart investor has a strong network surrounding them.  It makes everything easier and projects go more smoothly.  These are my recommendations for who you should have in your little black book.

  • A solicitor who is familiar with property - and, if you’re serious about building your portfolio, understands how bridging finance transactions are carried out and is sufficiently flexible and efficient to carry out the legal requirements swiftly.
  • A good independent broker who can access the whole market and has experience of mortgages, bridging and development finance and will give you good advice.
  • A reliable builder, carpenter, painter & decorator, electrician, plumber, and maybe a gardener, who will help with refurbs.

It’s wise to build good relationships with your local estate agents too.  If they know you’re a repeat purchaser and you can process purchases efficiently they’ll start to...

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Setting up a profitable deal

ninja learning Mar 15, 2021

THE QUESTION

How would you structure this to use as little of your own money as possible?

Property: 1 shop downstairs and 1 residential 2-bed flat upstairs

Single freehold title

Buying price £65k

  • The shop is leased for £4200/yr.
  • The flat is currently vacant (could bring in £4500/yr).
  • Some value can be added by extending the lease on the shop, and placing a tenant upstairs.
  • Minimal refurb required. Both up and down currently share an entrance.
  • Vendor finance may be an option for a few months.

How would you structure the offer to the vendor?

How would you add value?

What is the best way to finance it?

At what point would you put it on a mortgage?

THE ANSWER

The shared entrance could be problematic if the shop owner and the flat tenant are unconnected 

  1. How would the tenant get access to the flat out of shop opening hours 
  2. How would the shop owner guarantee the security of their stock, if the flat tenant had the keys to the shop?

Your ability to get a...

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Are repossessions a good deal?

ninja learning Mar 05, 2021

The answer to that is that it depends on who is actually selling.  If you’re purchasing from someone who has finance problems and may be in arrears with their mortgage, it’s definitely not a good idea – mortgage lenders prefer not to lend when you are buying from owners experiencing financial hardship.  However, if you’re looking at properties that the lender has repossessed and are now for sale - with vacant possession - they could be a profitable purchase.

The reasons for repossessions are many, but they all come down to the current home owner being unable to maintain their finance.  This might be because they’ve lost their income, a divorce whether neither party is able to maintain the property alone or a family fallout where joint heirs exist.

Realistically, the lender just wants their money back - with no regard as to whether the current owner gets anything out of the deal or not.  That’s why repossessed properties often...

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Buying below-market-value property

ninja learning Feb 20, 2021

THE QUESTION

What are the best sources to buy BMV?  I want to take my portfolio to the next level and maximise on returns.

THE ANSWER

This is a sensible way to leverage your profits and there are a few simple rules here.

1.  Only spend time with sellers that NEED to sell.  Everyone on Rightmove wants to sell their property, otherwise why list it.  But probably 90% + are happy to let it sit there until they achieve something close to the asking price. 

What you need to find are those few sellers with a more urgent need to sell, they can’t wait 6, 9 or 12 months to get a good price.  They need to sell quicker and quicker means cheaper - in other words they’re motivated sellers.

These people may have to move for work, to look after elderly parents, finalise a divorce or want to complete probate.  They don’t have time to sit around waiting for someone to buy - and then wait for a chain to resolve.

2.  Only look at properties in...

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The power of accountability

mindset Feb 05, 2021

Nobody likes to admit they’ve fallen short and as long as nobody know what you’re aiming to achieve, you never have to stand up and be counted.  But with no fire under you, will you achieve all you hope to?

This isn’t just a property thing - it’s pretty universal - but people who are wannabe investors are many.  They know it’s possible, because other people are successfully investing in many different ways, but they’re not taking action.

What holds them back?

The number one stumbling block is fear.  This is usually fear of failure - and failure when you’re dealing in assets worth hundreds of thousands can be life-changing.  However, sometimes it’s fear of success.  It sounds crazy, but some people worry about what changes they’ll have to make if they are hugely successful.

Procrastination also happens because everyone is different.  Individuals look at other investors and can always find a reason why...

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How to finance a B&B

ninja learning Jan 20, 2021

THE QUESTION

Who would be a good lender for existing B&B properties, with an estimated value of £400k?

THE ANSWER

There are specific commercial lenders that lend on B&Bs.  

With very few exceptions, B&B owners will have run their B&B in a certain way.  Show me a B&B owner and I can give you a very accurate description of them and their business mind-set, a B&B owner avatar, if you like.     

With numerous B&B and guest house finance arrangements under our belt, we know there are, invariably, very big issues getting mortgage on them.  On the face of it, it looks like difficult to almost impossible to finance these properties. But, if you know the workaround to it, it means you can pick them up very cheaply.   

The first thing you need to get from any B&B owner is their last 3 years accounts, because any commercial lender wants to see how much cash the business is generating to support a mortgage payment....

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New Year, new goals

ninja learning Jan 05, 2021

So here we are at the beginning of another year.  While we couldn’t have predicted how 2020 went, the people who have come through it best are those who were able to flex and rethink their strategies quickly.

If you’ve been following me for a while you’ll know I believe that mind-set is the key to success.  Successful people believe in themselves and their abilities.  Successful people also set goals.

As the Cheshire Cat pointed out to Alice ‘If you don’t know where you’re going, any road will get you there.’

Given the unexpected events of the last year, that might seem counter-intuitive.  After all, if you set goals in January 2020, the chances are that, by the end of March, they’d become difficult, if not impossible to achieve.  But that doesn’t mean you shouldn’t set goals.

Goals are not set in concrete - they’re an end result to be achieved.  You don’t ‘do’ a goal,...

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How do you recycle your cash?

ninja learning Dec 20, 2020

THE QUESTION

I have converted an end-terrace into two flats and these are both listed for sale. The building is presently owned by the Ltd Company as one freehold, unencumbered, with individual leaseholds to be drafted to prospective purchasers once sold.

Whilst I wait for these to sell, what options exist for raising finance towards the purchase of the next project?  What LTV ratios and lending rates could I expect to be offered?  Assuming that any form of traditional bank lending is a non-starter, what type of lenders could I approach?

Having all cash tied up in this one asset obviously results in quite the large opportunity cost!

THE ANSWER

Leveraging your cash into the next deal is the perennial problem for developers and there is a simple answer to your conundrum, but if you are thinking of using a mortgage, forget it, it’s a non-starter.  No mortgage lender lends when they can see the property is on the market to sell.  Nor do they lend when they know...

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