Landlord Investor FEBRUARY 2015

BY

INDUSTRY

EXPERTS

COVERING

ALL

ASPECTS

OF

BUY-TO-LET

FEBRUARY 2015

WRITTEN

LANDLORD | PROPERTY | INVESTMENT

PENSIONS VS PROPERTY: THE HOTTEST DEBATE IN TOWN

- Tom Entwistle / Mark Trainor

KENT BUY TO LET MARKET ANALYSIS

- Kate Faulkner

OVERCOMING TENANT REDUNDANCY

- Marie Parris

PENSIONS

VS PROPERTY

SEMINARS DELIVERED BY INDUSTRY EXPERTS BUY-TO-LET OPPORTUNITIES MEET INDUSTRY LEADERS TAX ADVICE

NETWORK WITH PROPERTY PROFESSIONALS LEGAL ADVICE FOR LANDLORDS GAIN VALUABLE KNOWLEDGE LOCAL COUNCIL

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WELCOME TO THE FEBRUARY ISSUE OF LANDLORD INVESTOR! Editorial Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors David Humphreys Evans Heating Fatima Begum Hamilton Fraser Karen Bennett Kate Faulkner Marie Parris Mark Trainor Steve Cox Susannah Cole Tom Entwistle

CONTENTS

We hope you have had an excellent start to the new year, where has January gone?

Buy-to-Let Analysis

Here we are in February, back into the swing of things, with this being our second issue of the year, and in-turn, we are also celebrating our second Landlord Investment Show of 2015 already.

Your Property Partner

In this issue, we cover Kent's buy to let hotspots as Kate Faulkner analyses the local area and it's investment opportunities. Marie Parris tells us how to deal with tenants who are made redundant and unable to pay their rent and our leading story this month is covered by Mark Trainor of Pennymatters, as well as Tom Entwistle of LandlordZONE: Pensions vs Property, the hottest debate in town.

Pensions Great Property Tips Trade Services Landlord Insurance Landlord Accreditations Financial Expert Advice

06 10 18 22 26 30 34 36 38

February is a month to start following up those property plans and resolutions you set in January. So use this issue and the articles in it as a springboard for those plans and set them in to motion!

Art Dept.

Design Craig Edmonds

Contact 0208 656 5075 landlordinvestmentshow.co.uk /LandlordInvestmentShow @LandlordInShow

Happy reading!

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury Tenants History Southbridge House Southbridge Place Croydon CR0 4HA Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited and our contributors will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.

LANDLORD INVESTOR February 2015

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MEET THE TEAM TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk

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February 2015

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OUR 2015 ROADSHOW

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BUY TO LET ANALYSIS

IS ASHFORD A GREAT PLACE TO BUY TO LET? Kate Faulkner - Propertychecklists.co.uk With property being tipped as the ‘new’ pension provider for the UK and prices in the South East growing by 11.4% according to the Land Registry 2014 versus 2013, it’s not a surprise that many think this is a great way to invest their hard earned cash.

...INVESTING IN PROPERTY CAN BE AN UNREGULATED INVESTMENT...

The problem with investing in property is that unlike stocks and shares, pensions and other financial investments, it’s not regulated and in my view, the level of quality advice and analysis on what property can deliver from an investment perspective is extremely poor.

A good example is the way property prices are often ‘reported’. In the main the reports tell you how property prices grow year on year and month on month.

So for the Kent area, property prices are up year on year by 10.6% and month on month +1.6%. This is often translated into huge increases which don’t take into account everything you need to know from an investment perspective. For example, if you bought a property in 2013 for £150,000, on average it would be worth now over £165,000 – a £15,000 increase, in theory.

February 2015

LANDLORD INVESTOR

But what they won’t tell you from an investment perspective is that all investments are subject to the effects of inflation and costs of buying and selling as well as tax – if it’s a property in addition to your own home.

1. If you bought the property with cash, the cost of living went up by 1.5% from 2014 versus 2013, so for your money to buy you the same in 2014 as it would have done in 2013, then the property would have needed to have sold for £152,250.

2. It costs around £3,000 to buy a property and like-

ly the same to sell it, so if you bought and sold the investment within a year, you would incur £6,000 costs to enter and exit the investment.

3. Then there is tax. Any money you make on a prop-

erty which isn’t and was never your home is subject to capital gains tax. And, depending on your personal financial circumstances, if you pay 20% income tax during a year, you’d pay 18% on any earnings from your property and 28% if you are a higher tax payer.

So although a £15,000 increase sounds great, by the

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What a year on year increase doesn’t explain either is that if you bought a property back in 2007, before the credit crunch, property prices hit an all-time high.

Prices in Kent for example, according to the Land Registry were, on average just over £200,000. They then fell to £167,000 by 2009, that’s a 16.5% fall – something everyone seems to have forgotten about in the last 12 months! And although prices did grow by over 10% in the last year, this was, in reality, property prices recovering to their previous heights. Today, according to the Land Registry, property prices are just £2,000 higher than they were in 2007 – six years ago.

This doesn’t mean that buy to let isn’t a good investment though – quite the opposite. But, many people and property investment pundits think and give the impression that property investment is a ‘sure thing’ and it’s ‘easy’ to make lots of money. It isn’t and since the credit crunch, many buy to let investors have gone bust in spectacular style.

To be successful at buy to let, you need to firstly understand the principles of investing in a property to let out. These are typically that you need to own the property for a long time – fifteen to twenty years and it’s wise to ‘gear’ your investment via a mortgage rather than buy with cash as it boosts your returns.

Secondly, you need to understand how properties fair

from a price and rental perspective in the area you are looking to invest. To date, property prices in Kent have done well. On average for England and Wales, property prices have grown in value by just under 6% per year since 2000, but in Kent, the growth has been better at 6.3% per year, partly thanks to the location being so close to London. So from a long term property price growth, Kent has, in the past delivered well. But the forecasts are that prices will grow at a lower rate in the future, with the likes of Savills, Chestertons and Knight Frank forecasting house prices growing between 3-5% per year in the South East, not as good as in the past, but still healthy property price growth compared to other areas.

From a rental income perspective, rents in the South East tend to varies from £800 to £1,000, which according to Your Move and Reed’s Rains Buy to Let Index, this gives a yield of just under 5%. The Belvoir Index which tracks rents back as far as March 2008, show rents in Kent are around £865 per month. This is giving landlords a healthy increase of 6% year on year - way above inflation which tends to be rare for rents. The best performing areas are Sidcup and Rochester. But as with property prices, this is really rents in recovery. Just like prices fell from 2007 to 2009, so rents in the area (and nationally) dipped in 2009 and 2010, ending up with rents in Kent now being about the same as they were at the start of the index in 2008.

LANDLORD INVESTOR February 2015

BUY TO LET ANALYSIS

time you take into account inflation, costs and then tax, that isn’t anywhere near the growth it initially suggests from an investment perspective.

BUY TO LET ANALYSIS

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What these figures prove is that as with any type of investment, the reality is your returns will depend on how well you bought the property for and from a rental perspective, whether you have maintained it properly and if it’s in an area where tenant demand is growing or if you want to exit at a profit, buyers are waiting and willing to purchase.

And the only way to make sure you maximise your property investment returns is to get the best advice and analysis from independent experts and that’s what the Landlord Investment Show is for. I’ll be presenting there on the 5th February with an in-depth presentation on essential buy to let investment facts and figures and running my free property clinic to help answer any questions you may have about whether investing in property is right for you through to what to do next if you have a multiple property portfolio.

For more information on analysing buy to let investments, including free calculators to use and keeping up to date with what’s really happening to property prices and rents, visit www.propertychecklists.co.uk

⌂

February 2015

LANDLORD INVESTOR

MEET KATE, WHO WILL BE HOLDING SEMINARS AT ALL OF THE LANDLORD INVESTMENT SHOWS THIS YEAR INCLUDING: READING - APRIL LONDON OLYMPIA - JUNE NORTH LONDON/HERTS - SEPT MANCHESTER - OCTOBER LONDON OLYMPIA - NOVEMBER www.landlordinvestmentshow.co.uk

Download all the FREE checklists a Buy to Let Investor will need Independent expert advice on: • Property prices, rents, returns and forecasts • Analysing your buy to let • How to buy property below market value • How to choose the right buy to-let services

SEE OUR CHECKLISTS FOR ALL THE BUY TO LET HELP YOU WILL NEED www.propertychecklists.co.uk

T: 01652 641 722

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PENSIONS

PENSIONS AND RESIDENTIAL PROPERTY Mark Trainor - Pennymatters

WHY WOULD ANYONE WRITE AN ARTICLE ABOUT PENSIONS AND RESIDENTIAL PROPERTY WHEN ON THE SURFACE THEY ARE NOT RELATED? There was a time under the Labour Government that Gordon Brown announced that he was going to permit inclusion of buy-to-lets in a pension plan called a Self-Invested Pension Plan (SIPP). It was hailed at the time as being a great boost to the housing industry and the alignment of a bricks and mortar investment as being a long term pillar of pension planning was welcome.

February 2015

LANDLORD INVESTOR

There was much euphoria and activity as the bricks and mortar brigade started to ready themselves to accomplish this. Thousands of people went out and set up a SIPP and awaited the detailed legislation on what degree of borrowing would be permitted in the final rules. The proposals were put in the public domain early in the year with the actual legislation and detail to be published later. This being normal policy, masses of people went ahead with their plans and a great weight of prospective buy-to-let properties were earmarked to go into pensions. The autumn statement in December 2005 did not put the final rules in place but actually scrapped the plan completely together with other investments into SIPPs. There was an outcry of foul, and those who lost money on setting up SIPPs had to effectively wear it on their sleeves!

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He proposed far reaching changes across the board with pensions and the announcements on the 19th March led to massive falls in the share price of some annuity providers. The rules concerning death benefits, the flexibility of access of pension funds, and the ability to hand pension funds down generations were all headline grabbing. The new rules are due to come in with the Tax year 2015/16, but as we all know the devil is in the detail and would this live up to expectations when the rules were actually published, or would they be scrapped or watered down prior to being adopted.

Forgive me for not doing cartwheels but the scars left

by Mr Brown led me to promote a deal of caution in planning for these events. There was great rhetoric in the press about Grannies buying Lamborghini's, and serious concerns about people who would damage their future’s by spending all their pensions too quickly. We awaited the committee stages of the legislation thinking that the ideas and headlines would be watered down, but no, the bill received Royal Assent on the 17th December.

The bulk of pensions taken out since 1988 are money purchase personal pensions. These are pensions built up by monthly contributions that an individual makes with tax relief on their premiums and can be invested in a variety of different funds. They then build up with growth and additional contributions to produce a pot of money for the time when the individual wants to retire. They would either take tax free cash or not from the fund, and then purchase an annuity that would pay them an income from that point for the rest of their life. Annuities are the way in which a sum of money is converted to a monthly income, and this is done with reference to a rate of borrowing called a gilt yield. When gilt yields are high, the annuity rate is high and consequently a relatively large pension is purchased. One of the reasons that pensions have been much maligned in the last few years is the relatively low gilt rate and correspondingly a smaller than expected pension. Gilt yields and annuity rates are at or near an all-time low currently, so the actual rule changes are very welcome for those people who up to now would have bought an annuity. Purchasing an annuity in the near future is now likely to be the exception rather than the rule.

Prior to 1988 the bulk of people who were in pensions were in pensions sponsored by their Employers and had benefits related to their salary. These so called final salary schemes were often thought of as being the very best pensions and ones that gave index linked benefits such as the Civil Service etc. were the gold mark of pensions. If you were lucky enough to have a final salary pension scheme you took no risk with your pension and you earned an increas-

LANDLORD INVESTOR February 2015

PENSIONS

Roll the clock on to 2014 and we had a Tory Chancellor proposing the biggest shake up in pensions ever.

The announcement on the 19th March 2014 was a closely guarded one, and it took the whole industry by surprise. George Osborne apparently had lost his patience trying to deal with the life assurance companies and decided to fundamentally change our pension’s landscape forever.

PENSIONS

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ing proportion of your salary the longer you worked there, upon your eventual retirement. As the gilt rate and annuity rate has declined, the actual amount of money the Pension scheme needs to support an individual final salary pension rises. This effect has led to over half of the final salary schemes being shut down as they are too expensive to maintain. For people who have left their employer and have not drawn their final salary pension scheme, they have the right to request a transfer value from the trustees of the scheme. This transfer value is now standing at an alltime high relative to the benefit. The actual value of the transfer fund offered in lieu of the pension can be quite a large sum, and specialist advice should be sought prior to making any decision in this regard.

pension arena are leading some to think that monies will come out of equity based investments in pension funds and be put into bricks and mortar investments like buy- to- lets. This will happen but is likely to be a relatively small number initially, so is unlikely on its own to spur a buying frenzy in the property market.

WHAT DOES A BUY-TO-LET PROPERTY GIVE YOU? Direct access to an asset class that is difficult to replicate inside a pension arrangement. The funds in this area available from the market tend to have a bias towards commercial buildings.

Those people who have accrued significant benefits in pension schemes and are at age 55 or older will have a new way of looking at their pensions going forward. It may be that they want to access the tax free cash to be able to complete a deal. It may be that they want to draw down some taxable income from their pot at a lower rate than they would do in the following year. These new rules will be available from April 2015 but are not available for people in final salary schemes. From April transfers from unfunded public sector schemes will no longer be able to take place so if you were in a position to be looking at this time is of the essence. It is not known if transfers from other final salary schemes will be stopped in the future, but we do know that you have the legal right to ask for the transfer value once a year, and this is still the case. Interpreting the values and incorporating them in a financial plan are the drivers for any individual. The post April freedoms within the

February 2015

LANDLORD INVESTOR

Residential property owned as an investment has risks in the form of leverage, as the balance of the value of asset moves against the amount of any loan on it. Also the exposure to the behaviour of the tenant which could lead to periods where you are denied rent which has a direct impact on your own income. Rather than delegating the failure or success of letting to an investment manager you can take control of the decisions to be made. Part of the decision you will have is whether you are looking for income or growth in your portfolio and the financing of any buy-to-let.

Most buy-to-let investors have the notion that they will form a property empire and that bricks and mortar are the best investment media. In reality those people who actually achieve the successful transformation to become a property baron have actually learnt a few things on the way. They must understand the relationship between the cost of the asset they are purchasing and the yield that it gives them. The amount of leverage they have and the base cost of their finance have a great bearing on the success or otherwise of any particular investment. The supply and demand of a particular area is affected by local issues and as such looking to spread assets in different areas will no doubt decrease the dependence on a particular trait of an area.

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IF YOU HAD A LIMITLESS AMOUNT OF CASH WHAT WOULD YOU BUY?

The same is true of the fixed income market place.

The fixed income market includes corporate bonds, cash deposits and treasuries. Currently the price of all these is effectively too high, which in turn gives rise to a very low yield. Combining this with a significant capital risk is why investors are shunning fixed interest securities currently. The only upside is that the Europeans have just announced they will be making an asset purchase programme of Fixed interest securities until September 2016, so this will somewhat stabilise the higher prices.

Do you know what your final income stream may be from your pensions, current and paid up personal ones, previous employer’s schemes? If you do then you are in a better position than many. If not why not make some enquiries? After all you want to have the best possible outcome, this will only be achieved if you have all the information. ⌂ To discuss this further contact us: T: 01344 988390 E: enquiries @pennymatters.co.uk W: http://www.pennymatters.co.uk

`

Property in the broadest sense is the last of the three big investment types. Property is not just residential, but can be warehouses, offices, retail and manufacturing. Like other investments there are two ways of making money from residential property, in letting it out there will be some sort of yield less costs, and over a period of time some capital appreciation from a rising price. In adding these two together we get to a total return figure. The simple demand curve of more people requiring houses in the UK than are in supply, leads us to think that there will be a steady rise in price. The likely raising of rates from an alltime low leads us to think that the property prices will fall. Here is the uneasy balance in the market place.

This is where an experienced professional broker can help with controlling what will probably be the highest ongoing cost of a buy-to-let which is the loan on a property. This has many inputs to get the best rate and duration. If by looking at other ways of augmenting the deposit, it may be possible to get to an optimum situation. Clearly the new pension rules will only affect those at age 55 or over;but they are an

LANDLORD INVESTOR February 2015

PENSIONS

In a negative sense many people have taken on board share tips and lost out badly. Commentators and economists worldwide try to predict the movement of global markets and currently we are seeing record highs in both the USA and in Germany. In buying an equity or share, there are normally two things that the share may do in the future. The first is that it may rise or fall in value, and the second is it may pay a dividend. When assessing this as an asset class you would then, on a total return basis, have to add the price movement to the dividend to get the entire return.

ever increasing proportion of our population so the use by some, of pension funds in the near future, will be on the increase. As mentioned earlier we have seen an evolution taking place over recent years as final salary schemes have been shut down and potential improvement in value of future income for the scheme members who have left has been depressed by circumstances beyond their immediate control.

SEMINARS DELIVERED BY INDUSTRY EXPERTS BUY-TO-LET OPPORTUNITIES MEET INDUSTRY LEADERS TAX ADVICE

NETWORK WITH PROPERTY PROFESSIONALS LEGAL ADVICE FOR LANDLORDS GAIN VALUABLE KNOWLEDGE LOCAL COUNCIL

OUR NEXT SHOWS IS IN...

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PENSION

PENSIONS

POSSIBILITIES AND BUY-TO-LET SUCCESS Tom Entwistle - LandlordZONE

IS THE PROSPECT OF PUTTING YOUR RETIREMENT SAVINGS INTO THE PROPERTY MARKET AND BECOMING A BUYTO-LET LANDLORD ATTRACTING YOU? According to the financial services firm, Hargreaves Lansdown, more than one in 10 pension savers plan to take their entire lifetime savings out of their pension pot, and around 16 per cent of those people want to reinvest it in buy-to-let property.

The opportunity to invest in good old bricks and mortar, beyond simply owning your own home, and making a regular income from tenants at the same time, is bound to seem attractive to many people when interest rates are low and stock market investments are volatile.

February 2015

LANDLORD INVESTOR

Pension freedom reforms allowing over-55s to access all their savings for old age in one go from next April will suddenly make this scenario a reality - an affordable opportunity for a lot more people.

So, property versus pensions is fast becoming the biggest financial debate in town. But is property a better bet than a pension? According to Hargreaves Lansdown there’s plenty of people who think it will be. Enthusiasts say that anyone getting into buy-to-let today will have a far larger nest egg at retirement, as well as a better long-term income through rising rents.

The rapid growth of buy-to-let, from around 8% of all households renting in the 1980s to something like 18 per cent today, means the number of UK private landlords is heading towards two million.

Demand for renting is transforming home ownership in Britain and there’s no sign of this abating any time soon. Take a growing population, increased immigration and an expanding student population and couple this with a shortage of housing and you have a market which is predicted to continue growing for some time to come.

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The way to combat this is for all new landlords to take some responsibility and be determined to operate their lettings to high professional standards.

- 20 years ago landlords numbered in their tens of thousands, whereas today almost two million private landlords own 4.9 million properties - The number of buy-to-let properties is expected to grow by a further million over the next five years - The current value of buy-to-let properties is estimated at just short of £1 trillion - £989bn Surprisingly, the financial crisis has not slowed the growth of buy-to-let - some of the fastest growth years have followed the banking crisis of 2008-09.

Of all the new homes built in recent years, a large proportion has ended up in the private rented sector. Of the 5m homes built between 1986 and 2012 Government figures show just over half are owned by buy-to-let landlords.

Most experienced landlords will tell you that investing in property can be a lucrative business.

With steady capital growth and a regular rental income it’s a great way to safeguard your longterm investment and even pass on wealth to the next generation.

However, like most business opportunities, investing in buy-to-let may not be all plain sailing, and if you want to make a success of the venture then you must be prepared to do your homework and for some hands-on management – buy-to-let is not a passive armchair investment.

Location is important. Where you buy is as important if not more important that what you buy.

You must ensure that there is good tenant demand and ideally your properties should be within a short distance from home. Doing thorough research on the local lettings market and your potential returns on investment is crucial.

Often new landlords are far too trusting and unaware of the problems that some tenants bring with them. Careful screening of tenant applicants is a very important part of being a successful landlord investor.

If you intend to use a letting agent, make sure you choose one with a good local reputation and one that’s a member of a recognised professional association.

If you intend to be a hands-on landlord, managing tenancies yourself, you need to learn to manage professionally: read up on the rules and regulations, keep your property up to modern safety and amenity standards, and always respond quickly to requests for maintenance and repairs.

Treat your tenants as customers and as you would expect to be treated yourself.

There are few investments like property which offer you the opportunity to make quite the same money with so little time and effort on your part, if you get yourself organised. But don’t fall into the trap of thinking you can do it with no work; no mental effort or careful planning on your part.

Tom Entwistle is Editor of LandlordZONE® and an experienced landlord himself. ⌂

The private rented sector has been coming in for a fair amount of criticism recently, mainly as a result of a small minority of rogues in the industry, both landlords and letting agents who quite frankly are ripping off their tenants.

LANDLORD INVESTOR February 2015

PENSIONS

As a result of this there’s the constant threat of more rules and regulations which governments impose on the industry. From agent redress schemes and landlord licensing through to zero tolerance on retaliatory evictions, there’s likely to be more bureaucracy to contend with in the future.

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YOUR PROPERTY PARTNER

WHAT TO DO IF YOUR TENANTS ARE MADE REDUNDANT, AND CANNOT PAY YOUR RENT Marie Parris George Ellis Property Services

ANYONE CAN LOSE THEIR JOB AND YOUR TENANT IS NO EXCEPTION. At the start of a new year, and with an election looming this could become the reality for a number of your tenants this year.

As a precautionary measure you should have written in your tenancy agreement a clause to notify you (as landlord or letting agent) of any change in the tenant’s personal circumstances. Also when you conduct your interim inspection checks, it should become standard to ask the question – “Are you still working for the same company?” That way you always have current contact details on file.

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LANDLORD INVESTOR

Assuming you are aware of the fact showing some empathy towards the tenant’s situation, initially does help, but in the same conversation you need to ascertain how they plan to pay the next month’s rent and thereafter. Therefore practical solutions are a necessity. Below are five options you could discuss with your tenants to implement. Remember that your buy-to-let property or properties is a business and you need to treat it accordingly. That means acting quickly when rent payments are not made on time. When you have a mortgage to pay on your investment, and it is not paid, this will impact on your credit (or in the case of an agent your relationship with your client). You must not bury your head in the sand but find a solution to the temporary problem quickly, especially when you do not have other “funds” to take from.

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OPTION4

Direct tenant to seek assistance through their local housing authority. Regardless whether you like it or not, a tenant can seek assistance with their rent through their local housing authority benefits office.

As a landlord you should have an idea what rate is payable under local housing allowance. Remember that if your tenant is under the age of 35 they will only qualify for a shared room rate. Ensure you have third party consent. Under your existing tenancy the tenant will be liable for any top up amounts.

OPTION 2

Use a proportion of their deposit every month for a limited period of time, with their permission and if you have access to it. This would aid as a top up solution and their deposit would need to be re-paid back. Again the option works best if the situation is similar to that in option 3 and you must get a written agreement and the tenants to sign to this. The down side of this is that your deposit is depleting and therefore, you must ensure that once tenant is back in employment this is repaid. If cashflow is not your issue, you can still ensure you do not miss out on your rent by deducting the agreed amounts at the end of the tenancy.

Are there any savings to dip into that could be used for a short period.

OPTION 5

OPTION 3

Get the tenant to surrender the tenancy (if they wish).

Agree to reduce the rent for a specified period of time to give them some breathing space – this works, especially well, if it is a joint tenancy and only one person has been made redundant. Always put it in writing. This option will work best for a landlord who is not cash flow stricken and where they have good tenants and would like to keep them.

WITH THE ECONOMIC CLIMATE STILL LOOKING UNCERTAIN FOR 2015 IF THIS HAPPENED TO ONE OF YOUR TENANTS WHICH OPTION WOULD YOU CHOOSE? George Ellis Property Services can be contacted on:

WEST END 26 Dover Street Mayfair London W1S 4LY Telephone: 0207 763 7200

SOUTH LONDON 261 Beckenham Road Beckenham Kent BR3 4RP Telephone: 0208 778 9686 Email: info@georgeellis.london Web: www.georgeellis.london Twitter: @geproperty

LANDLORD INVESTOR February 2015

YOUR PROPERTY PARTNER

OPTION 1

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GREAT PROPERTY TIPS

JOINT VENTURE PROJECTS PART I Susannah Cole The Good Property Company

IF YOU ARE NOT STARTING OUT WITH A LARGE SUM OF MONEY WITH WHICH TO INVEST, WHAT CAN YOU DO? One way to move ahead with your property business is to work with Investors. They bring the cash, whilst you bring hard graft and expertise. I started by pulling money out of my personal home mortgage and investing that into my first two buy to keep projects. After that I would have been stuck if people had not taken an interest in working with me.

February 2015

LANDLORD INVESTOR

There are 7 important stages for you to consider when running a Buy to Sell project with a JV partner, they are:

1.

2.

3.

4.

5.

6.

7.

PRE DEAL DEAL PURCHASE PROPERTY REFURB POST REFURB AND DRESSING PROPERTY SALES PROCESS OFFER IN & CONVEYANCING PROCESS POST SALE ANALYSIS

Remember that when entering into a partnership with another investor, the position you want to be taking is one of team mentality. You are working shoulder to shoulder; it should not be an ‘us and them’ situation.

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GREAT PROPERTY TIPS

PRE DEAL Start by discussing the working relationship principles; you will be discussing the structure of the deal and the level of deal spend – we suggest starting small, have a test case to suss out your working relationship.

Go through the ‘what ifs’ - what could go wrong!

Be aware of the statistics, for example, 1 in 3 deals falls out of bed; this will help set your partner’s expectations. I find this is really important to follow, you don’t want to promise your partners the earth and sky; they need to understand it’s an entrepreneurial business with risks involved; by being clear about those risks, you are both already prepared if they do crop up.

Agree communication with your partner, both the frequency and your preferred method. Communication is often something that slips when you’re busy running a project; you must remember that you are the only way your partner will keep up to date with the project.

DEAL PURCHASE Become your partner’s ‘Office Manager’; as you’re buying the property you will do a lot of the admin even if the deal is in your partner’s name, be aware there’s a lot more work involved in conveyancing property than first meets the eye; you need clear processes and a lot of time!

Be mindful that at this stage most investors get what we have termed Investor Wobble, even me!

The best way to help your investor not to have too many sleepless nights is to communicate frequently, so they know the project is being well managed by you.

PROPERTY REFURB Now that you’ve bought the property your next step is to refurbish it. First, consult the experts, the estate agents, who know what people require in their particular area – for example open plan living/ kitchen, or an en-suite in the master bedroom.

This is a great opportunity for you and your partner to have a joint meeting with estate agents to kick off the project and confirm the refurb that you will be managing.

Remember Investor Wobble... Where your partner gets worried; you’re so busy managing a project you forget to talk to them as you know it’s all in hand. So, step out of your own business for a moment and get back to communicating with your partner, whether this is via telephone, by sharing photos of the project, or meeting on site. Regular financial updates will avoid unwelcome surprises and if ever you hit a speed bump discuss it with your partner.

LANDLORD INVESTOR February 2015

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GREAT PROPERTY TIPS

POST REFURB & 'DRESSING' Well done! You’ve managed the refurb successfully and now you’re almost ready to put the property back on the market.

Here’s another opportunity to meet with your JV partner. I suggest you meet up with a minimum of 3 estate agents to confirm your selling price and agent. Getting feedback on your property from the agent will help your partner see that it’s the market place speaking as to end value, not you. This often helps confirm your expertise in their eyes as the estate agents will undoubtedly be pleased with what you’ve developed.

After the meeting with the estate agent, you and your partner agree the selling strategy; this should include any price drops and the pre-planned timescales for those should the property not be snapped up immediately; in the current marketplace, we look to hold a price for 4 weeks, put in the first drop after two weeks, then put in a second price drop two weeks after that. Remember Return on Capital Employed (ROCE) is a function of time and money and so you want to sell as fast as you can.

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MEET SUSANNAH, WHO WILL PART TWO, NEXT MONTH...

BE HOLDING SEMINARS I hope you’ve enjoyed the first of two articles of a practical running of a Buy to Sell with a JV partner.

Next month’s edition will cover the sales and conVARIOUS LANDLORD veyancing processes, along with post sale analysis legislation on how to be a sophisticated invesINVESTMENT SHOWS THIS and tor. We wish you the best in your own successful BTS and JV partnerships, if you want to contact YEAR INCLUDING: us…..

Email: info@thegoodpropertycompany.co.uk

READING - APRIL LONDON OLYMPIA - JUNE NORTH LONDON/HERTS - SEPT LONDON OLYMPIA - NOVEMBER

www.landlordinvestmentshow.co.uk

February 2015

LANDLORD INVESTOR

Facebook: facebook.com/SusannahColeTGPC YouTube: www.youtube.com/user/goodpropertycompany Telephone: 0117 942 8914

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TRADE SERVICES

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YOUR PROPERTY, YOUR RESPONSIBILITY Evans Heating UK - www.evansheatinguk.com

EVANS HEATING UK ARE A FAST GROWING HEATING AND PLUMBING COMPANY WITH A GROWING REPUTATION. We pride ourselves on being the best at what we do, so we can assure you that the work carried out will be to the highest of standards and at a very affordable price. We exhibited at the Landlord Investment show last year which doubled our workload and helped us to take the next step in our business and taking on more engineers, we do a lot of work throughout Kent for 7 of the leading estate agents plus we have a large portfolio of our own private landlords that we look after. We would like to take this opportunity in helping out you the landlord with everything you really need to know about your annual Gas safety inspection.

February 2015

LANDLORD INVESTOR

Landlords have specific legal responsibilities to their tenants when it comes to gas safety

UNDERSTANDING THE LAW FOR RENTAL ACCOMMODATION As a landlord, you are responsible for the safety of your tenants. Landlords' duties apply to a wide range of accommodation, occupied under a lease or licence, which includes, but not exclusively:

Residential premises provided for rent by local authorities, housing associations, private sector landlords, housing co-operatives, hostels

Rooms let in bed-sit accommodation, private households, bed and breakfast accommodation and hotels

Rented holiday accommodation such as chalets, cottages, flats, caravans and narrow boats on inland waterways.

The Gas Safety (Installation and Use) Regulations 1998 deal with landlords’ duties to make sure gas appliances, fittings and flues provided for tenants are safe.

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LANDLORD'S RESPONSIBILITIES If you let a property equipped with gas appliances you have three main responsibilities:

TRADE SERVICES

Maintenance: pipework, appliances and flues must be maintained in a safe condition. Gas appliances should be serviced in accordance with the manufacturer’s instructions. If these are not available it is recommended that they are serviced annually unless advised otherwise by a Gas Safe registered engineer.

Gas safety checks: a 12 monthly gas safety check must be carried out on every gas appliance/flue.

A gas safety check will make sure gas fittings and appliances are safe to use.

An example of an old, but maintained back boiler.

Record: a record of the annual gas safety check must be provided to your tenant within 28 days of the check being completed or to new tenants before they move in. Landlords must keep copies of the gas safety certificate for two years.

All installation, maintenance and safety checks need to be carried out by a gas safe registered engineer.

If a tenant has their own gas appliance that you have not provided, then you are responsible for the maintenance of the gas pipework but not for the actual appliance.

You should also make sure your tenants know where to turn off the gas and what to do in the event of a gas emergency.

An example of a good flame.

Bad flame: Sure signs that the injectors are blocked.

Disaster: The importance of having your boiler serviced annually.

GAS SAFETY FOR LANDLORDS Running a property can be a stressful business.

But are you aware of your legal gas safety duties as a landlord? Every year, landlords are conned by illegal gas workers who perform poor gas work, causing serious illness and death of tenants. And if it’s your property, it’s your responsibility.

WHAT IF MY TENANT WON'T ALLOW ME ACCESS TO THE PROPERTY? The contract you draw up with the tenant should allow you access for any maintenance or safety check work to be carried out. You have to take ‘all reasonable steps’ to ensure this work is carried out, and this may involve giving written notice to a tenant requesting access, and explaining the reason. Keep a record of any action, in case a tenant refuses access and you have to demonstrate what steps have been taken.

LANDLORD INVESTOR February 2015

TRADE SERVICES

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WHAT IF I'M ONLY RENTING MY PROPERTY FOR A SHORT PERIOD OF TIME? Even if a property is only rented for a short period of time, perhaps only a week as a holiday home, you are still a landlord and have specific duties for gas safety. For information on landlords' gas safety responsibilities which apply to short term lets.

What is carbon monoxide?

Carbon monoxide (CO) is a highly poisonous substance produced by the incomplete burning of gas and liquid petroleum gas (LPG). This happens when a gas appliance has been incorrectly fitted, badly repaired or poorly maintained. It can also occur if flues, chimneys or vents are blocked. Oil and solid fuels such as coal, wood, petrol and oil can also produce carbon monoxide.

How do I avoid a carbon monoxide leak in my home?

Your home may show signs of carbon monoxide.

Any one of the following could be a sign that there is carbon monoxide in your home.

• The flame on your cooker should be crisp and blue. Lazy yellow or orange flames mean you need to get your cooker checked • Dark staining around or on appliances • Pilot lights that frequently blow out • Increased condensation inside windows

February 2015

LANDLORD INVESTOR

If you have a faulty appliance in your home, it could lead to carbon monoxide poisoning. Get your gas appliances checked by a Gas Safe registered engineer to avoid carbon monoxide poisoning.

Because carbon monoxide has no taste, smell or colour. Gas Safe Register strongly recommends that, as a second line of defence you install an audible carbon monoxide detector.

We at Evans Heating UK understand the importance of your gas safety checks and we also understand that these can be easily forgotten about, but don’t worry, we wont let you forget about it, you will be added to our database and you will receive a reminder letter one month before its due date.

We will then liaise straight with the tenants and work around them, whether it be late evenings or weekends due to work commitments we will ensure this is completed on time. We offer great prices on our gas safety checks and the more you give us the less you pay. ⌂

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LANDLORD INSURANCE

THE PERILS OF UNEXPECTED WINTER WEATHER Hamilton Frasier

WE ARE NOW HURTLING ONCE AGAIN TOWARDS WINTER, AND THE HEAVY RAINFALL AND GALE FORCE WINDS CAUSING HAVOC AND DAMAGE TO HOMES ACROSS THE UK. This serves as a reminder to landlords that wintry weather can be a significant threat to their properties.

With a prolonged period of cold snaps and winter flooding causing insurance claims to peak, there are many actions that can be taken to ensure your rental properties keep your tenants dry and warm and your properties in good working order.

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LANDLORD INVESTOR

It is recommended to prepare for this as early as possible in order to avoid claims such as escape of water, blocked drains and storm damage. Having a yearly inspection during autumn, paying close attention to roofing and replacing broken tiles are just some of the steps you should take to prepare your property.

Below are some of our top tips for maintaining your premises before the weather gets bad and what to do in the event of an emergency.

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equately insulated. It’s worth checking that this has not been moved or dislodged by tenants.

respond quickly and undertake emergency repairs to prevent further damage.

In the event that something does happen to your property and you do discover damage this winter here are some simple steps you should follow:

2. Make sure that overflow pipes are correctly connected and not blocked.

• With burst pipes you should use towels or blankets to try to stem leaks while you turn off the water at the stopcock or mains.

3. Clear out your gutters and downpipes and check

• Turning on taps to drain the water from the system faster.

that they are free from cracks or splits.

4. Clear drain gratings of leaves and debris.

5. Ensure any external pipework is not lagged, including outside taps which should either be turned off internally if possible and drained down, or fitted with an insulated jacket.

6. Replace any cracked or missing roof tiles.

7. If your property is unoccupied, ensure you com-

ply with any special terms and conditions that may apply such as regular inspections or draining down of services.

Don’t forget it is also worth speaking to your tenants so they can help protect your property too.

WHAT ADVICE CAN YOU GIVE TO YOUR TENANTS: • If your tenants are planning to be away, ensure that they leave the heating on low. An arrangement that involves you making a contribution to heating costs would be prudent as your tenants will be more likely to do this.

• Turn off the source for hot water and central heating.

• Arrange for emergency repairs to be undertaken as quickly as possible in order to prevent further damage or inconvenience for your tenants. You should arrange and pay for emergency repairs and retain your paid invoices as you may be able to reclaim the cost later.

• If emergency repairs are made ensure you keep photographs and receipts/invoices if you have not spoken to your insurer before undertaking the works • Contact your insurers as quickly as possible to report your claim.

Unexpected weather can still potentially cause severe damage to your properties even with the best efforts and adequate preparations taken by the owner. In order to have peace of mind, a comprehensive landlord insurance policy is recommended should the worst happen. If you would like advice on what additional steps you can take to protect your property in the run up to winter the professionals at Total Landlord Insurance would be more than happy to help.

0800 63 43 880 / 020 8275 7060

• Whether at home or not, doors between heated and unheated parts of the property should be left open to allow warm air to move around the property.

In really cold spells this could include leaving the loft hatch open to allow warm air to circulate reducing the risk of frozen pipes in the loft.

• Do they know where the stopcock or isolation valves are located in case they have to turn off the water to any part of the property?

• You might want to consider providing your tenant with the number of a reputable contractor who could

LANDLORD INVESTOR February 2015

LANDLORD INSURANCE

PREVENTION TIPS: 1. Ensure your pipes and tanks in the loft are ad-

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LANDLORD INSURANCE

SETTING APPROPRIATE SUMS INSURED Steve Cox - Alan Boswell Group

One of the challenges facing landlords is getting the right insurance for their property. After all, if your insurance is inadequate, then your tenants could find themselves without a home – and you without the rental income.

IT IS THEREFORE IMPORTANT TO ENSURE THAT YOU HAVE THE RIGHT FORM OF INSURANCE ON YOUR LET PROPERTY AND THAT IT INCLUDES LOSS OF RENT COVER. You should ensure that the widest range of ‘perils’ available is included – many losses are not as the result of fire damage, but storm, flood, burst pipes and malicious damage. If your insurance does not cover these and other ‘perils’ then it is unlikely to provide the protection you need.

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LANDLORD INVESTOR

HOW MUCH COVER? It is equally important, however, to ensure that you have the right amount of insurance. If you do not, then an insurance company can reduce the amount it pays out in the event of a claim (they call this applying average).

For example: if you have a property that would cost £100,000 to rebuild, but it is only insured for £75,000, then in the event of a claim that costs £50,000 to put right, the insurance company will not pay the full amount but reduce the claim by 25% (the amount of the ‘under-insurance’). This means that you would only receive £37,500 towards the repair / rebuilding costs and would have to find the remaining £12,500 yourself in order to have the work completed. In addition, the amount of lost rent that you are entitled to claim is based on a percentage of the buildings sum insured and could be reduced in the same way, if the cover is inadequate.

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A BIT HARSH?

CHOOSING THE RIGHT AMOUNT FOR REBUILD COST The sum insured for rebuilding purposes has nothing whatsoever to do with market value. The level of cover required is the amount of money that would be required to clear the ground and rebuild the property (there will be an additional allowance in most policies to cover architects’ and surveyors’ fees); this could be more, or less, than its market value.

GETTING THE RIGHT ADVICE It is important to seek independent professional advice before making any decision about your property owners’ property and liability insurance as well as your financial obligations. You should always ask your insurance advisers what experience they have of dealing with residential and/or commercial rental property insurance. At Alan Boswell Insurance Brokers we have a specialist property team to advise you on the most appropriate policy for your requirements. ⌂

The surest way to assess the sum insured is to seek a professional estimate of rebuilding costs. However, for most standard-built properties, the Association of British Insurers has a website that can be used to obtain a rough guide.

It can be found at: www.abi.bcis.co.uk For further advice contact Steve on: T: 01603 218031 M: 07766 715654 W: alanboswell.com E: scox@alanboswell.com Alan Boswell Group offers a range of other services including business, home, travel, car insurance and financial planning.

LANDLORD INVESTOR February 2015

LANDLORD INSURANCE

While this may sound harsh, it is actually very fair. After all, insurance companies need to collect sufficient money to cover all claims. If some customers do not have adequately high sums insured to cover the risk of the total building being destroyed, then the insurance company will not be able to collect the full amount of premiums required to cover all losses.

Premiums are based, not just on the likelihood of a claim taking place, but also its assessment of the proportion of a building that is likely to be damaged.

You need to calculate the total floor area – for example, in a three-storey building, this will probably be three times the floor area of the ground floor. You will need to indicate what type of property you own and its approximate age as well as the region it is in. Once completed, the calculator will give you an indication of the sum insured required.

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LANDLORD ACCREDITATION

LLAS: THE KEY TO SUCCESSFUL RENTAL OPERATIONS Fatima Begum London Landlord Accreditation Scheme LLAS had a fantastic year in 2014. We have built new relationships with some very successful organisations like Endsleigh Insurance services and many more through project work, sponsorships and hosting two massive events.

LLAS celebrated its 10 years towards the end of 2014, making it the longest running and the most successful accreditation scheme in the country.

A memorable event was held to celebrate this milestone, one that will not be forgotten. We presented the event on a Ship. The celebration brought together many that were involved from the beginning of LLAS and some new faces too.

The 150 plus guests involved sponsors, landlords, agents, local authority staff and associated professionals from the private rented sector.

We had speeches and presentations delivered by our keynote speaker and winners of the March 2014 award ceremony. Our workshops were very challenging and thought provoking which led to very lively discussions. We also did a Quiz on Private Rented Sector, which was very much enjoyed by everyone.

Following on to light hearted entertainment with a drink reception; we had networking on the quarter and upper deck, with many posing for pictures.

Once seated for the hot fork buffet, everyone tucked into a wonderful selection of food. The buzz in the room was absolutely out of this world, everyone was networking over dinner, and there was laughter and more drinking.

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LANDLORD INVESTOR

As the DJ played the music, the quarterdeck became a lively party as the guests gathered, networked and enjoyed each other’s company. The girls took over the dance floor, with some singing, and the drinks kept flowing.

All in all, it was a successful event which lived up to its expectations.

The London Landlord Accreditation Scheme (LLAS) launched in 2004 as a partnership of London boroughs, landlord organisations and educational organisations to recognise good practice and improve conditions in the private rented sector.

The scheme provides training and on-going professional development. This includes additional training opportunities specialising in particular areas of interest.

With 13,000 plus members, LLAS is the biggest and most established scheme of its kind operating throughout London and in many parts of the UK. Very early in its life it became clear that the scheme was going to be a success as membership increased and following industry demand, the scheme welcomed letting and managing agents

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An umbrella organisation, UKLAP exists to promote the LLAS model outside of London. Regions across the UK are now affiliated with LLAS. You do not need to own and rent a property in London to become accredited by LLAS. Of course, everything comes at a price and there is no such thing as a free lunch. You will find that LLAS courses are the cheapest amongst all other schemes, saving you money in the long run with no fees or contracts and also giving you the benefit to achieve the knowledge delivered by experts covering all aspects of private sector to help you maintain what you are doing. With our local authority expertise and experience, we can offer our members something that no other schemes can. All you need to do is visit our website www. londonlandlords.org.uk, register your details and book the Official Accreditation course online at your chosen location. It’s that simple.

that sponsored the award/event to do the honours and hand it over to the winner. It was a formal black tie event, 300 plus attendees including VIPs and high profile speakers and we had the pleasure of having Martin Roberts from BBC Home under Hammer presenter and Deputy Mayor Richard Blakeway. The event had live musician, champagne reception, and some keynote speakers delivering their speech on the challenges and growth in the PRS world. The night was a huge success, no less than an Oscar night, with fine dining and champagne all around.

As you can see we embrace and deliver on networking events, and there are some upcoming events in 2015 to look forward to, so watch this space!

Thank you to all scheme members, support staff and local government and industry representatives, landlords and agents for their continuing support to our success. ⌂

The LLAS and UKLAP are the most successful voluntary accreditation schemes in the country and form the backbone of the London Rental Standard.

The London Rental Standard is the Mayor of London’s campaign to improve private renting and promote good standards. Open to landlords and agents, it allows those that sign up to use the LRS badge, which is instantly recognisable across London as a mark for quality. To join, landlords and agents must sign up to our London Landlord Accreditation Scheme at www.londonlandlords. org.uk Once a landlord or agent gets accredited with LLAS/UKLAP they can use our logo and give tenants the confidence to know that you are a responsible landlord, accredited by LLAS, widely recognised as the scheme that sets the standard.

The LLAS award ceremony and networking event took place at the beginning of 2014 at the Thistle Hotel and was held to recognise and celebrate the best practices and accomplishments of Landlords and agents in PRS and awarded them for specific categories. We produced awards and had them engraved, and gave opportunity to each company

LANDLORD INVESTOR February 2015

LANDLORD ACCREDITATION

into its membership. The scheme introduced a requirement that members must undertake some continuous professional development in order to maintain membership. Changes in the law and court ruling have shown that CPD is key to operating a successful and compliant rental business in the current environment.

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FINANCIAL

SHORT TERM LENDING TO REFURBISH Karen Bennett Sales and Marketing Director, Commercial Mortgages Shawbrook Bank

THE ATTRACTION OF FLIPPING PROPERTY HAS BEEN AROUND FOR QUITE A WHILE...

Presumably since the Stone Age when the more savvy cave dwellers just threw some animal hide on the walls and persuaded the Neanderthal couple down the road to swap digs because it looked brand new.

Purchasing property and conducting some light refurbishment to increase capital value for sale or to benefit from potentially attractive rental income remains a huge market - not just within the UK but on a global scale. For your average landlord, this type of investment is an important part of portfolio activity but this sector brings with it several challenges with sourcing appropriate finance being the most crucial.

There are a multitude of lenders operating in this space from the high street banks to the more specialist lenders and challenger banks. It is important

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LANDLORD INVESTOR

not to discount the alternative finance market out of hand as this avenue can often yield far more tailored, service driven products to suit the needs of the property investor, professional landlord and SME business owner.

Take Shawbrook Bank for example – a leading challenger bank offering a suite of lending options for property investors. Our range of short term lending products has been carefully designed with refurbishment in mind and provides a range of products for various levels including light and heavy refurbishment. Perhaps most interestingly from a customer point of view is the rate on their residential short term loan product that sits at an impressive 0.69% up to 70% LTV – currently one of the most competitive in the short term lending space.

Shawbrook work exclusively through the intermediary channel, using professional brokers as our route to market. This underutilized model brings a great deal to the table for customers wishing to source tailor made finance as it provides a whole of market view across multiple lenders. With speed often being the driving force in the short term lending space, (auction purchases being just one example), the dedicated Short Term Lending teams within the bank have a reputation for their efficiency in dealing with brokers to secure the desired finance for landlords and property professionals. Amongst several ‘service level agreements’ within the bank, one is the pledge to deliver terms backed with a credit profile assessment within 4 working hours - hugely attractive for clients wishing to move quickly.

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FINANCIAL

An additional advantage is the ability to move the short term loan onto a term product once it reaches maturity. The benefits are threefold – firstly this allows the investor to change their mind should the capital value not stack up as predicted (or if the rental income is too good to ignore), and tenant the property over the longer term. Secondly, should a mainstream lending institution have a problem with an aspect of the property that the bridging or short term lender has overlooked, the client may be stuck with no exit at maturity – quite a serious predicament. Shawbrook provide this strategy for their short term loan clients and whilst the term product may not be quite as competitive on rate as some vanilla buy-to-let lenders, it does offer that security of exit. A final benefit is that there is no minimum ownership required. Typically, the high street lenders will insist on the property being held for at least 6 months before sale whereas Shawbrook do not. In fact, should you carry out your light refurbishment within a week we are more than happy for you to re-finance - a refreshing product highlight bringing even more flexibility to the process.

Shawbrook do not really offer much for the first time investor and operate more with seasoned property investors but in no way should this be seen as a negative. We are here for the long term and our criteria, processes and focus on self-improvement clearly demonstrate that we are determined to build a sustainable future for customers, delivered through a highly stable and service focused lending platform.

This is further evidenced in the form of an ongoing commitment to existing customers with initiatives such as an ‘existing customer discount’ of 0.25% off the rate OR the arrangement fee up to a loan size of £750k (£10m for short term loans). Positively, Shawbrook retain a healthy appetite to lend and we oper-

ate on a case by case basis, assessing each customer on their own merit rather than adopting the ‘tick box’ mentality favored by the high street banks. This approach often fails to take in to account the various ‘shades of grey’ that are involved in many cases involving commercial property finance, and we have a range of processes that take this into account.

Shawbrook believe that it is crucial for the ongoing health of the industry to have lenders bringing innovation and service to the table, delivered with sustainability in mind that culminates in positive customer outcomes. We would encourage investors, property professionals and landlords to engage with a broker or financial intermediary to ensure they get a full view of the funding landscape and the many benefits this can bring. ⌂

Please contact us for further information: T: 01277 751 112 E: pi@shawbrook.co.uk “THE OVERALL COST FOR COMPARISON IS 6.2% APR. THE ACTUAL RATE AVAILABLE WILL DEPEND UPON YOUR CIRCUMSTANCES. ASK FOR A PERSONALISED ILLUSTRATION. ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. A BROKER FEE MAY APPLY.”

LANDLORD INVESTOR February 2015

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EXPERT ADVICE

THE GREAT DEBATE "FREE" OR "PAID FOR" ONLINE TRAINING? David Humphreys - Property Investor Online

SOME ARGUE THAT THERE IS ABSOLUTELY NO NEED TO "BUY" PROPERTY INVESTOR TRAINING BECAUSE EVERYTHING YOU NEED TO KNOW IS AVAILABLE FOR FREE ON THE NET OR WITHIN FREE CD'S AND GUIDES...

With Google, you can find hundreds, even thousands of Free Training videos, e-book's, guides, webinars & CDs.

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LANDLORD INVESTOR

This debate has been ongoing for years. In fact back in 1997 when I was posting on the subject, on Motley Fool, then THE Forum of the day, trainers & educators “selling” their services were regarded as beneath contempt and yet, to be successful, it has always been the case that substantial chunks of borrowed money will be involved, in some cases running into millions.

How times have changed, today, post credit crunch, the money lenders, mortgage companies, banks etc., are now starting to ask for “proof of training” before agreeing to any investment lending.

Property investment is a very big multi-topic subject and yet often investors try numerous strategies in which they have little or no experience or training and wonder why it didn’t work out as they expected/hoped. It’s a bit like a Surgeon working from top, your brain, to toe, literally your feet. Of course they don’t, the brain man doesn’t even work on your ear, nose or throat. That’s for another Surgeon, and so it is with property investment.

Investing in family housing, is a very different ball game to HMO’s, Housing in Multiple Occupation, or MultiLets, where very different Laws & Regulations apply, which can change between Local Authorities.

You may decide to invest in run down distressed housing, which can involve you in buying at auction, a potential minefield, then fixing up the property, another minefield of planning laws & building regulations, plus using either self-employed builders & sub-contractors or employing a team of tradesmen, yet another minefield and there are many more.

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To go into property investment without any training & education, even mentoring, is akin to throwing water into the wind, and a strong wind, and hoping/expecting not to get wet. (The PC analogy!)

You don't know what you don't know.

You don't know what you need to know.

You may not even know the words/terms to search for.

You have no way of checking the technical accuracy of any free material.

You don't know if the material will help you with your aims & objectives.

You probably can't tell whether the content is current or out of date.

Are You watching/listening to a real "expert", or just a "wannabe"?

The Paid For Training & Education will probably find you, but, before you “sign up”, you should have a very clear idea of what strategy you are going to develop, what strategy you are going to become “expert” in, which brings me back to the Free Training on the web.

Most of the Free Training on the web is promo material for the Paid For Trainers but some contain a lot of really worthwhile information, and age is not often a problem. There haven’t been any major changes to the Law, HMO excepted, in close on 20 years. The same applies to Tax Law. HMO/Student housing remains much the same as it was in the 1960’s, Rent2Rent; the “new” “No Money Needed” strategy was operated in the 1960’s when it was called Guaranteed Rent. I started using this strategy to help develop my agency management portfolio in 1969.

Buying run down property to fix up, is as old as the hills, as is selling after fix up. Letting after fix up has only become popular as tenants emerged from being regarded as 2nd, even 3rd class citizens to being regarded today as mainly responsible, and buy to let became an “acceptable” investment, which was not the case pre-buy to let. Banks have also helped because they are prepared to give the owner a mortgage based on the fixed up value which often releas-

EXPERT ADVICE

But how do you make the decision, Free or Paid For and if, Free, where do you start looking for all this Free Training & Education without any hassle when? es all the cash tied up, the NMLI strategy. There are also big tax advantages with this strategy as most of the cost of fix up falls into the “revenue expenses” pot which can lead to tax free rents.

Back to the training, your best way forward is to use the Free Online Training to form an opinion about the direction you want to take, your strategy. Then look & listen to the relevant online material which should firm up your resolve to pursue your chosen strategy and, most importantly, enable you to form an opinion about specific trainers in your chosen field.

For example there are many expert trainers in the HMO field, but to be right for you, you need to develop an affinity with and trust in your trainer, they are after all going to take you seriously into debt. Also distance can be an obstacle and you need all the skittles solidly upright.

Another example is Rent2Rent, whilst this strategy does not generally involve a whole load of debt, it does involve skills that you may find difficult to master and contractual commitments that can translate into debt, so once again trainer trust & affinity is paramount.

So how do you achieve your first two objectives? Decide on Your Strategy & Decide on Your Trainer?

You can start at The Landlord Investment Shows, where I will be delivering a Free Seminar on Free & Paid For Training. And/Or In the comfort of your home, after all “Why Travel To Train”, you can go to Property Investor Online, www.propertyinvestoronline.com which searches the Net for Free Training Material. Reviews the material, including time spent on intro, bio/content/promo/QA’s, Categorises, Scores & Tags it. Then links it to Property Investor Online, which also offers a Q/A email service to member investors.

As of Jan 2015, 104 videos (50 Hours) are loaded under 12 Main Categories, including 4 hours of Free Videos which are changed weekly. ⌂

LANDLORD INVESTOR February 2015

F I N A N C E YO U R N E X T O P P O RT U N I T Y

Our specialist mortgages and industry expertise help property professionals succeed. If you have aspirations to grow your portfolio, make Shawbrook Bank your partner.

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Highly competitive short term loans

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Interest only option available up to 10 years

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Lending on standard residential, HMOs, multi-units and commercial properties

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Lending to individuals, LLPs and limited companies

COMMERCIAL MORTGAGE TEAM T 01277 751 112 pi@shawbrook.co.uk

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ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT