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A festive future

It’s nearly the end of another year and the time when that ‘quiet’ time between Christmas and New Year is an excellent time to reflect on your year and make plans for the year to come.

So how was 2019 for you?  What did you achieve that made you feel good?  What was in your plan at the beginning of the year, but somehow didn’t get done?

What would you like next year to look like?  And more importantly, what will you need to do to make reality match that?

If you’re reading this, you’re probably either already in property or you’re seriously considering getting into it - and you must be aware that it’s one of the industries where the people outside it are known for being negative about it.  In order to succeed, you’ll need to be able to combat negative input.

To overcome the challenges along the way, you’ll need to develop a positive attitude to dealing with these.  It’s all about seeing a...

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Isn’t bridging expensive?

We have brokered hundreds of bridging loans, I also run the UK's best established (only?) training programme (the Ninja Investor Programme) to educate investors in the intelligent use of bridging.  But the minute you mention the word ‘bridging’, people who haven’t learned about it tend to say, ‘that’s expensive!’

Bridging interest rates are higher than most mortgage rates, BUT if the difference is not doing the deal or paying a little bit more and making a good profit then bridging isn’t expensive at all.  I’m always surprised that people prefer to borrow money from a Joint Venture partner rather than from a bridger - and then give away 50% or their hard-earned profits.  No bridger will take 50% of your profit.

The interest rate for your bridging loan depend on a number of factors that you don’t have much influence over.   When you find a deal, you want to bridge that specific deal.  The rate depends...

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Buy as a company or as an individual?

THE QUESTION

I have a restaurant business, which is a limited company.  A couple of our sites are in places where finding staff can be tough, so offering live-in accommodation could really help us.  I’d like to buy a property to use as staff accommodation, what kind of mortgages are available and how much will I need for a deposit?

THE ANSWER

Staff accommodation seems to be a sensible solution to restaurants in remote places.  There is a prestigious restaurant on the Isle of Skye that does exactly that; and staff accommodation is an attractive perk in the hospitality industry.

Buying a significant asset (especially property) in the name of a trading business leaves the asset available for any potential future creditors of the business to go after.  

The smarter options would be to buy in your personal name or set up a new limited company for owning property.  Deciding which is the smarter of the two is, essentially, a tax question because you will be...

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Refurb and flip

Many property investors focus on buying property, adding value by refurbing and then reselling or refinancing as a buy-to-let.  It’s the core of most property investment.

Of course, there are many other strategies, but let’s look at how you make finance a refurb and flip effectively.

1:  Find a suitable property

This might be a property with a motivated buyer where you can negotiate a deal below market value.  This will benefit you in reducing the amount of capital you will have to invest.

2: Calculate refurb costs

It’s important to do this exercise carefully - no guesstimates.  The refurb needs to improve the value of the property too or you’ll lose money on the deal, especially if you plan to resell right after refurb. 

Getting your money out and repaying your loan should leave you with a healthy profit.  Work out what you want to make on the deal, then work out exactly what your refurb will cost.  When you’ve got...

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Get better deals

When you’re trying to negotiate with vendors to bring down the price of your property, you need some smart strategies to reduce the price (and increase your profits).  The Calculator Close is one of these strategies, this is how it works:

The Calculator Close

  • Rule 1: You must give control of the calculator to the other party.
  • Rule 2: Any figure punched into the calculator must come from them, never from you.

Start with the asking price – get them to enter this in the calculator.  Then break down all the costs involved in getting it to the ceiling price, one by one, including:

  • The cost of the needed refurb; you’ll add credibility by breaking down the cost into separate component parts, materials and tradesmen or room by room.
  • Any buying and selling/refinancing costs (including Stamp duty land tax)
  • Maybe borrowing costs
  • Definitely the profit you need to make from the project to make it worthwhile taking on.

Don’t allow them to use ‘bargain...

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It’s all in your mind

Belief is powerful.  If you believe you can do something it gets much easier to succeed.  Of course, the opposite applies, if you don’t believe you can achieve something you will get what you expect.

I’ve been practising neuro-linguistic programming (NLP) for over fifteen years. So when I received a cancer diagnosis from my doctor in April 2016, I knew pretty much what I needed to do, to use my mind to allow my body to heal itself.  I’d been diagnosed with stage 3 (next to the worst level) in several places so I knew I had to take it seriously.

I underwent chemo as well, but I conditioned my mind so that I didn’t suffer any adverse effects from chemotherapy.  I felt perfectly healthy throughout the whole process—I never even needed to take a single day off work.

I got scanned at different points; to check progress, Eight weeks later the scan showed I’d reduced the cancer  by 90%, and in another twelve weeks I’d got...

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From landlord to developer?

Most property investors are looking for existing buildings to convert, refurb and either turn into rental income or sell at a nice profit.  However, if you’re looking for a new challenge, it’s tempting to consider building from scratch.

Before you get excited at the idea of building homes to either rent or sell, you need to know about finance.  This isn’t mortgage territory – and it really isn’t bridging finance territory either.  The funding for new build projects is called ‘development finance’.

Self-build mortgages do exist for a main residence, but if the lender suspects that you’re borrowing a self-build mortgage and planning to develop and sell on, they can pull the funding at any point, regardless of what point the project has reached.

Development finance lenders have a policy of putting up barriers to entry and this lets them choose the projects that they consider have a high chance of success. 

Development...

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