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Four Pillars Of Property Due Diligence · The Property Unleashed Podcast

• 0:10
  SPEAKER_00: So, hello, and welcome to today's Creative Strategies session, which we've moved to a lunchtime slot now.
• 0:19
  SPEAKER_00: I want to be sharing with you some skills and some knowledge in these sessions.
• 0:24
  SPEAKER_00: Also, we can go through and answer any questions that people might have as well.
• 0:30
  SPEAKER_00: But today we're going to be really having a broad overview about the four pillars of property due diligence that I like to go through and I like to make sure that they're in place for each and every deal that I actually do.
• 0:44
  SPEAKER_00: And we are going to put a more in-depth training into the vault covering due diligence, what to look out for, also the different methods of creative financing as well.
• 0:56
  SPEAKER_00: So if you do have any questions while we go through this, then please feel free to stick them in the chat box.
• 1:01
  SPEAKER_00: And I'll answer any questions as I'm going through there as well.
• 1:05
  SPEAKER_00: But it's great to be here today.
• 1:07
  SPEAKER_00: And as I say, I'm going to go through the four pillars of property due diligence.
• 1:11
  SPEAKER_00: So if you do have any questions as we're going through this, then feel free to ask.
• 1:16
  SPEAKER_00: But like I say, I'm going to be doing a more in-depth training and putting it in the vault as well so that you properly understand each of these four pillars.
• 1:25
  SPEAKER_00: So let's run through this now, shall we?
• 1:27
  SPEAKER_00: So we can help and support everybody.
• 1:29
  SPEAKER_00: Now, some of these you'll already know about.
• 1:31
  SPEAKER_00: Some of these you might just have thought, oh, I didn't think of that, which is always good.
• 1:36
  SPEAKER_00: And that's what it's all about here.
• 1:38
  SPEAKER_00: So first and foremost, it is about the property itself.
• 1:43
  SPEAKER_00: You know, realistically doing the right due diligence, making sure that that process is done, making sure that it's broken down into actionable steps that you can work your way through and tick off is always important.
• 1:56
  SPEAKER_00: Think of these as the sort of foundational checks that you must perform before doing any deals.
• 2:02
  SPEAKER_00: Now, that could be creative strategy deals, purchase lease options.
• 2:06
  SPEAKER_00: That could be an assisted sale, that could be just a normal purchase.
• 2:11
  SPEAKER_00: A lot of these, what we're going to cover here, will really help you with any of those different strategies that we try and do here as well.
• 2:19
  SPEAKER_00: And I just want to say that, you know, the marketplace, the property market right now is very, very quiet.
• 2:24
  SPEAKER_00: And it's only going to get a bit quieter as we go into August because fundamentally it gets quite quiet in August anyway.
• 2:30
  SPEAKER_00: So if there are properties out there for sale, or there are properties out there for rent that you're looking at doing, you know, rent-to-rent deals on, or you're looking at purchasing or doing purchase lease options on, now is a great time to be getting out there and talking to the agents, talking to the owners of the properties.
• 2:47
  SPEAKER_00: So first and foremost, and one of the most important pillars obviously is the deal itself.
• 2:52
  SPEAKER_00: It is the property.
• 2:54
  SPEAKER_00: So we really want to examine a property checklist, making sure that we cover these sections.
• 3:00
  SPEAKER_00: So firstly, I like to always check the planning usage class of the property.
• 3:07
  SPEAKER_00: Is it a C3 residential property?
• 3:10
  SPEAKER_00: Is it a C2, which could be residential or could be for institutions like care homes?
• 3:17
  SPEAKER_00: Is it an HMO?
• 3:18
  SPEAKER_00: Is it a C4 property?
• 3:21
  SPEAKER_00: And of course, there is C1, which is your hospitality as well.
• 3:25
  SPEAKER_00: Service accommodation doesn't have a planning usage at the moment.
• 3:28
  SPEAKER_00: If it's a sort of a if it's like an apart hotel, it could be a C1 class, uh C1 class or a B and B.
• 3:36
  SPEAKER_00: But predominantly a lot of the properties we look at will either be C3 residential, or if they're an HMO, they might be a C4 class, unless they're basically a seven-bed HMO or above, in which case they may be classed as a Sue Gemeris.
• 3:51
  SPEAKER_00: Okay, when it comes to that.
• 3:53
  SPEAKER_00: But it's very important that you understand the planning usage of the property deal that you're looking at.
• 4:00
  SPEAKER_00: So does it have the correct planning?
• 4:02
  SPEAKER_00: Because sometimes you might come across an opportunity or a deal that isn't actually under the right planning usage for what it is.
• 4:10
  SPEAKER_00: Now you can check the local planning portals for all of this as well.
• 4:14
  SPEAKER_00: Equally, the deeds of the property and everything will say what it is.
• 4:18
  SPEAKER_00: We work, and I work in my company, is a lot of C3 properties we convert to C2 children's care residential properties, in which case that means that we can then put providers in there with specific needs, and that ups the rents quite dramatically, actually.
• 4:35
  SPEAKER_00: So it can take something that maybe would make about 1300, 1500 quid if it was a buy to let make about two and a half, three and a half thousand pounds per month over a nice long term.
• 4:47
  SPEAKER_00: C2 isn't just children's care, it can be adult care, it can be nurseries, it can be care homes and all of those.
• 4:54
  SPEAKER_00: So there's different classes of C2.
• 4:57
  SPEAKER_00: And for our argument's sake, we we're doing uh an opportunity.
• 5:00
  SPEAKER_00: We're looking at a deal that actually has C2 nursery.
• 5:04
  SPEAKER_00: So the nursery is allowed to have up to 12 children in it.
• 5:08
  SPEAKER_00: We're taking it from C2 nursery to C2 children's care for two children, and it's great when you do stuff like that because normally the planning is pretty much guaranteed.
• 5:18
  SPEAKER_00: Because if it got the planning usage change for 12 kids, chances are nobody's going to argue if we're now converting that to two children.
• 5:26
  SPEAKER_00: But C2 can be quite a good one as well.
• 5:28
  SPEAKER_00: But make sure it's got the right planning usage so that you properly understand what the property is being used for.
• 5:34
  SPEAKER_00: And as I say, there's talk of potential a planning change coming in for service accommodation.
• 5:41
  SPEAKER_00: There's talk, it could be a C C5 or something.
• 5:43
  SPEAKER_00: I mean, they've got to pick these numbers out, haven't they?
• 5:46
  SPEAKER_00: But nothing is in place just yet.
• 5:48
  SPEAKER_00: So don't worry about having to change any planning usage of your property for service to accommodation.
• 5:54
  SPEAKER_00: As I say, HMOs, if it's a fully licensed setup HMO, chances are it'll probably be a C4 planned planning property.
• 6:01
  SPEAKER_00: If it's still a C3, just check to see whether in your local council and district and area it needs changing.
• 6:07
  SPEAKER_00: The next thing is does it have any restricted covenances on the property?
• 6:12
  SPEAKER_00: Because these are legal clauses tied to the land that restrict what you can do with the property itself.
• 6:20
  SPEAKER_00: So if you were looking at buying a property or getting creative with a property and getting hold of it, and it had some certain restricted covenances on it, you might not be able to build extensions on there.
• 6:32
  SPEAKER_00: You might not be able to use it for business use if you wanted to do service accommodation on it and stuff like that.
• 6:38
  SPEAKER_00: But normally what you can do is if you are buying a property, your solicitors will uncover any of these.
• 6:44
  SPEAKER_00: If you're not sure, obviously ask the property owner and they should be able to help you and tell you, or ask the agents as well.
• 6:51
  SPEAKER_00: But it's very, very important to understand and to know whether we've got any restricted covenances on any of the properties that we're looking at doing these deals on.
• 7:00
  SPEAKER_00: The next thing is if realistically is the structural integrity of the property.
• 7:05
  SPEAKER_00: Now, if you're buying from auctions and things, this is more important because a lot of people, when there's a problem with a property, will chuck it in an auction and hope nobody notices.
• 7:14
  SPEAKER_00: It should be in illegal packs, but the amount of people that don't go through and read all the legal packs, obviously, can catch you out.
• 7:21
  SPEAKER_00: But I like to always, particularly if I'm looking at buying the property or I'm looking at having it over the long term, I like to get a full structural survey on the property itself, particularly if it's an older property as well.
• 7:34
  SPEAKER_00: Or any properties that are showing signs of damp, a good bit of damp buildup, they've got cracks, maybe there's a little subsidence there, maybe something just looks a bit off.
• 7:45
  SPEAKER_00: Don't always rely on the basic mortgage valuation to pick up anything that could be structurally wrong with the property.
• 7:52
  SPEAKER_00: When they do a basic mortgage valuation, they are looking at the property.
• 7:56
  SPEAKER_00: If they see anything specifically, they might point it out, but that's not like having a full structural survey.
• 8:02
  SPEAKER_00: Now, as you can appreciate, that will cost you some money, but you don't necessarily always have to do it right here, right now, unless you're buying it.
• 8:10
  SPEAKER_00: If you're buying it now, get a full survey done on it.
• 8:12
  SPEAKER_00: Why?
• 8:13
  SPEAKER_00: Because you're spending hundreds of thousands of pounds potentially on a property, make sure it's right.
• 8:18
  SPEAKER_00: The other thing is if you do find something, if something comes up in that survey, it might be a bit of a bargaining chip for you to haggle on the price as well.
• 8:26
  SPEAKER_00: Just because you've done a full survey, it's come back and it's said that there's a problem with the property, it's going to cost X amount to fix.
• 8:33
  SPEAKER_00: The owner's got to get that done potentially unless they drop the price.
• 8:36
  SPEAKER_00: Now they might be willing to drop the price, in which case then you've saved yourself some money anyway.
• 8:41
  SPEAKER_00: So make sure that you get a structural survey done on the property.
• 8:45
  SPEAKER_00: Conservation areas as well.
• 8:47
  SPEAKER_00: You can just Google that in your local areas, but you're looking for potential conversation areas, or you're looking for is the property a listed building?
• 8:59
  SPEAKER_00: Okay, because these all come with significant restrictions on alterations of that property.
• 9:05
  SPEAKER_00: And of course, that can really, really impact you when it comes to your refurbishment plans and how you're looking at costing all of that up.
• 9:13
  SPEAKER_00: So do make sure that you cover, if nothing else, these very four important pillars there when you're buying a property.
• 9:21
  SPEAKER_00: Now, on top of the property, obviously, you're going to be looking at your numbers, you're going to be looking at your cash flow.
• 9:25
  SPEAKER_00: So that leads us on to the next one, which is crunching the numbers, of course, and focusing on what is important to you.
• 9:32
  SPEAKER_00: Because what's important to me might not be important to you.
• 9:35
  SPEAKER_00: I'm more of a cash flow guy than I am an ROI yields and all of that sort of thing.
• 9:40
  SPEAKER_00: Does it make financial sense and will it make me enough money each and every month that I'm happy?
• 9:46
  SPEAKER_00: If it does, then it's normally a deal that I'll start looking at.
• 9:49
  SPEAKER_00: But firstly, you might not, you might look at it differently.
• 9:52
  SPEAKER_00: It's always good to work out and have a look at the ROI and work out any yield calculations as well when it comes to running your numbers.
• 10:02
  SPEAKER_00: Beyond just the headline figures, understand how to calculate true return on investment, gross net yields, treat it like a business.
• 10:10
  SPEAKER_00: So have a little look at how much money you've got to put into it and also then what's the cash flow on it, what's the running costs of it.
• 10:17
  SPEAKER_00: Take into account we're gonna have to pay a bit of tax on this as well.
• 10:21
  SPEAKER_00: Make sure that all of the numbers that you do, you stress test against interest rates.
• 10:26
  SPEAKER_00: Now, even if you're doing a purchase lease option and you're saying, well, I'm not even gonna buy it for five years, in five years, interest rates could go down, but interest rates could go up as well.
• 10:36
  SPEAKER_00: So make sure that you stress test whatever interest rates currently are at the moment and maybe increase them a bit by one, two, three percent to what they are currently now, just to give you an idea that if worst case scenario is will the property still service the debt and provide a profit if they were to go up and increase by X amount.
• 10:59
  SPEAKER_00: This is critical in today's volatile market.
• 11:02
  SPEAKER_00: And I like to always start at 6%.
• 11:05
  SPEAKER_00: Sometimes I'll even take it to 8% and extremes just to see how it looks.
• 11:10
  SPEAKER_00: I'm not saying I'm I'm ever gonna do a deal there, but if it washes its face and it's not gonna lose a massive amount of money at 8%, trust me, if anything goes to 8% when it comes to mortgages and things, the country's gonna be in a serious problem because most people can't actually stomach anything over 6% without really looking at a financial disaster.
• 11:30
  SPEAKER_00: So if it still stacks, it doesn't have to make me any money, but if it still stacks a couple of percentage above maybe what the percentage is now, it's still a good deal to look at.
• 11:39
  SPEAKER_00: If you're on that cusp right here, right now, maybe at four or four and a half percent, you're thinking, well, as long as interest rates don't go up, I'm okay.
• 11:47
  SPEAKER_00: Maybe it's not a great deal.
• 11:49
  SPEAKER_00: Maybe you're paying too much for it.
• 11:51
  SPEAKER_00: You need to just look at those numbers.
• 11:53
  SPEAKER_00: The next thing to look at is your maintenance and potential voids of the property.
• 11:58
  SPEAKER_00: Unless you put it with a provider or a charity and they they give you a five-year lease, you are gonna have voids and you are gonna have maintenance.
• 12:06
  SPEAKER_00: Now, I work now predominantly with a lot of charities and providers to make sure that we put FRI fully reassuring, uh sorry, fully reappairing and assuring leases on those.
• 12:16
  SPEAKER_00: So a lot of the maintenance is covered.
• 12:17
  SPEAKER_00: There are still a few things that I have to make sure I take care of, but I have no voids, I have no management costs as well.
• 12:23
  SPEAKER_00: But if you're doing HMOs or you're doing service accommodation, you will have maintenance, you will have void periods.
• 12:28
  SPEAKER_00: So always factor into your budget a realistic amount for repairs, for maintenance, and for periods when the property might be empty.
• 12:38
  SPEAKER_00: Okay, if you're not going to have somebody going in there to basically manage it and look after it all for you.
• 12:44
  SPEAKER_00: And then also with the property, whether you're looking at doing service to accommodation, whether you're looking at doing something else with it, I always like to look at the market rents versus the mortgage, ensuring that the predicted rental information that I currently have now comfortably covers all the mortgage payments and operating costs.
• 13:04
  SPEAKER_00: It's almost like saying, Well, I'm going to use it for service to accommodation, but what happens if that doesn't work?
• 13:09
  SPEAKER_00: What's plan B?
• 13:10
  SPEAKER_00: A lot of the times we say, well, don't have a plan B, just go for plan A and make sure, make it happen.
• 13:14
  SPEAKER_00: That's brilliant stuff.
• 13:16
  SPEAKER_00: But let's be realistic here.
• 13:17
  SPEAKER_00: It's good to just have that plan B.
• 13:19
  SPEAKER_00: Base your numbers on market rents for the deal that you're doing, if it still stacks up, you can sleep well at night.
• 13:26
  SPEAKER_00: Why?
• 13:26
  SPEAKER_00: Because if what you're trying to do is service accommodation, it doesn't quite work out, it still works out as a buy-to-let or stacks up as a buy-to-let, happy days.
• 13:35
  SPEAKER_00: You're looking at putting a provider in there, last minute that provider pulls out, can't get another provider, does it still stack, or am I and I have to start paying it all?
• 13:43
  SPEAKER_00: If it still stacks, it's a good deal.
• 13:45
  SPEAKER_00: And of course, that's what we're only looking at doing.
• 13:47
  SPEAKER_00: There are so many opportunities out there that we're looking for good deals.
• 13:52
  SPEAKER_00: We're not just looking for any old deal.
• 13:54
  SPEAKER_00: So do make time for this.
• 13:56
  SPEAKER_00: And if it doesn't stack, but you've built up a good rapport with the agent or the owner, and you're thinking, what can I do?
• 14:03
  SPEAKER_00: I've got to make something happen with this.
• 14:05
  SPEAKER_00: Start looking for other ways to do deals.
• 14:08
  SPEAKER_00: It could be the case that potentially they're open to having a provider in there.
• 14:13
  SPEAKER_00: It doesn't stack for you to be involved in that.
• 14:15
  SPEAKER_00: Well, if you bring that property to us and we can do a deal with that owner and we put a provider in there, we charge a fee, we'll split that fee with you.
• 14:23
  SPEAKER_00: So you can still make money on potentially leads that don't stack up and work for you.
• 14:27
  SPEAKER_00: Or if it really just doesn't work, walk away and let's move on to the next opportunity because there's lots of opportunities out there.
• 14:35
  SPEAKER_00: The next thing, and property is very much a people's business, but you need to look at vetting anybody that you're looking at working with.
• 14:43
  SPEAKER_00: Now that can be a whole host of different sorts of people, it can be joint venture partners.
• 14:48
  SPEAKER_00: A lot of people say to me, Well, I've got somebody who wants to do a JV because they've got the money.
• 14:52
  SPEAKER_00: A lot of people have got the money, but they haven't got the will or the the, or they're just scared.
• 14:57
  SPEAKER_00: I think for want of a better word, it's just they're just scared to do something for themselves.
• 15:00
  SPEAKER_00: So they say, let's JV.
• 15:02
  SPEAKER_00: I wouldn't be too quick to jump into JVs unless it's somebody I've known a long time, family member, something like that.
• 15:08
  SPEAKER_00: I've jumped into JVs before and they don't always work out very, very well.
• 15:12
  SPEAKER_00: They're always great at the beginning.
• 15:13
  SPEAKER_00: Everybody smiles and laughing and stuff, but somebody always thinks they're doing more than somebody else, and it can become a bit of a mess.
• 15:20
  SPEAKER_00: So if you can try and keep anybody that wants to bring money into your investing as an investor rather than as a joint venture partner.
• 15:28
  SPEAKER_00: But if you are going to work with a joint venture partner, you need to really get to know them, understand them, understand their family, who's their next of kin just in case something happens to them.
• 15:38
  SPEAKER_00: Will they still be on the same page?
• 15:40
  SPEAKER_00: I.e., if you're looking at holding a property for the long term for cash flow, if that something happened to them and the next of kin took over that property, would they still, would they still be on that long-term vision of yours, or would they want that money back out?
• 15:55
  SPEAKER_00: All of those things you've got to work on.
• 15:57
  SPEAKER_00: And that's particularly if you're doing JVs and things.
• 16:00
  SPEAKER_00: But if you're working with deal sources or anything like that, make sure that they are compliant deal sources.
• 16:05
  SPEAKER_00: You've got somebody out there trying to find you deals and stuff, make sure they're members of the PRS, make sure they're members of the ICA, make sure they've got anti-money laundering, make sure all of that, that they've got their terms and conditions in place and things.
• 16:18
  SPEAKER_00: I see a lot of people out there trying to source properties for people and things that haven't got a clue.
• 16:22
  SPEAKER_00: I've also do come across people that are doing it very well as well.
• 16:25
  SPEAKER_00: But make sure you do due diligence on anybody that's saying to you, I've got a great deal here, particularly if they come up to you with an opportunity and you know the area and you think there's something off with the numbers, chances are there are, because they don't always know the strategies that they're doing.
• 16:39
  SPEAKER_00: So a lot of deal sources know how to deal source because they've done a course on deal sourcing, but it might they might be trying to sell a rent-to-rent deal, yet they've never done a rent-to-rent course, they've never done a rent-to-rent deal.
• 16:49
  SPEAKER_00: And they like to just manipulate the numbers to make everything look perfect when chances are it probably in the real world won't actually work like that.
• 16:58
  SPEAKER_00: So always do your own due diligence, run your own numbers and make sure that you are happy that uh worst case scenario, it's still a good deal to do.
• 17:08
  SPEAKER_00: Equally to that, it's like with builders.
• 17:11
  SPEAKER_00: If you're gonna work with builders and have builders, then chances are we're gonna have handy people, we are gonna have tradespeople at some point.
• 17:17
  SPEAKER_00: We always want to look to get multiple quotes.
• 17:19
  SPEAKER_00: We want to check referencing, we want to view previous work if you can do.
• 17:23
  SPEAKER_00: If they're gonna come in there and do a lot of work, it's great to have a look and see what they've done in the past.
• 17:27
  SPEAKER_00: A cheap builder is probably the most expensive mistake I ever see anybody pay when they're actually doing a refer.
• 17:34
  SPEAKER_00: I've seen people lose, you know, 25, 50k on bad builders that have not done their job and have gone away and run up with people's money.
• 17:42
  SPEAKER_00: So make sure that you're checking any builders' track records, you're checking any previous work and you're talking to people that have used them before.
• 17:49
  SPEAKER_00: If you are doing a buy-to-let or you are doing anything where you're gonna actually have tenants, uh HMOs and stuff, make sure you do the tenant referencing.
• 18:00
  SPEAKER_00: Okay, always check employment if if they are employed and things, credit checks, and make sure you speak to any previous landlords.
• 18:08
  SPEAKER_00: If they if they haven't got any any previous landlords, they haven't got anybody that can be basically a guarantor for them, don't think well, they seem really nice.
• 18:17
  SPEAKER_00: The chances are there's a problem there, and that should be a red flag.
• 18:21
  SPEAKER_00: The chances are if you still let people like that into your properties or your agent does, you become their guarantor because if they don't pay, you're paying.
• 18:29
  SPEAKER_00: So make sure that you do these checks on them.
• 18:31
  SPEAKER_00: And of course, your power team as well, when you've got your solicitors, your accountants, your mortgage brokers.
• 18:36
  SPEAKER_00: I always like to try and work with people who are property investors themselves that maybe have a small portfolio themselves.
• 18:43
  SPEAKER_00: Why?
• 18:43
  SPEAKER_00: Because they've been there, they're walking the walk, so to speak.
• 18:47
  SPEAKER_00: So if you've got solicitors that are potentially property investors, even if they say they're property solicitors, that's great.
• 18:54
  SPEAKER_00: But are you actually doing any investing yourself?
• 18:56
  SPEAKER_00: Got any buy to let's any HMOs yourself?
• 18:58
  SPEAKER_00: I like to see that.
• 18:59
  SPEAKER_00: If I see that, then I know for a fact that big, you know, these accountants are probably, or these solicitors are probably working in their own business, doing their own deals and things.
• 19:08
  SPEAKER_00: You know what I mean?
• 19:09
  SPEAKER_00: So it's good to see that.
• 19:10
  SPEAKER_00: It's good to be able to market yourself off of that.
• 19:12
  SPEAKER_00: And of course, then they understand what you're going through and what you're doing.
• 19:16
  SPEAKER_00: So don't be afraid to ask any of your power team if they've got a portfolio, if they do any property deals themselves.
• 19:22
  SPEAKER_00: The last pillar that I want to go through here is the marketplace, is analyzing and understanding the marketplace.
• 19:29
  SPEAKER_00: So always make sure you understand the local supply of properties in the area by a landlords and the demand in there.
• 19:37
  SPEAKER_00: Is there demand for HMOs?
• 19:38
  SPEAKER_00: Is there demand for single lets?
• 19:40
  SPEAKER_00: Is there demand for service accommodation?
• 19:43
  SPEAKER_00: Okay, it's quite easy to go on the portals.
• 19:45
  SPEAKER_00: You know, you can go on spare room, see what the demand is looking like for HMOs.
• 19:49
  SPEAKER_00: You can talk to letting agents as well.
• 19:51
  SPEAKER_00: What is the, you know, if you ring up a letting agent and say, I'm thinking of buying a property in this area, it's gonna be a four-bed property.
• 19:58
  SPEAKER_00: Do you think buy to let is good there, or would it be good as an HMO?
• 20:02
  SPEAKER_00: What are you how are you finding the market at the moment?
• 20:04
  SPEAKER_00: Because obviously, once I've done all of this, I'm gonna need an agent to help me.
• 20:08
  SPEAKER_00: And you ring up three or four or five agents and see what they say.
• 20:11
  SPEAKER_00: And if they all say the same thing, chances are that's the way the market is in your area.
• 20:15
  SPEAKER_00: Don't try and listen to these guys and girls and then think to yourself, I tell you what, they're all saying the market's saturated with HMOs and they're struggling in the let rooms.
• 20:22
  SPEAKER_00: I'll do it anyway because I'll just do my HMO better than everybody else's.
• 20:27
  SPEAKER_00: Some will say what suits them as well.
• 20:31
  SPEAKER_00: So take everything with a pinch of salt.
• 20:33
  SPEAKER_00: And what do I mean by that?
• 20:34
  SPEAKER_00: Well, maybe HMOs is really good, but they're more of a buy-to-let agent.
• 20:38
  SPEAKER_00: They're going to be saying, well, buy to let's work because they don't want to take an HMO.
• 20:42
  SPEAKER_00: That's not their business structure.
• 20:43
  SPEAKER_00: So make sure that you understand their business structure when you're asking these questions.
• 20:47
  SPEAKER_00: But check out what the local supply for demand is out there as well.
• 20:51
  SPEAKER_00: Is there a genuine need for the type of property that you're looking at putting out there?
• 20:55
  SPEAKER_00: As I say, we work with a lot of providers now for children's care, for supported living and for social housing.
• 21:01
  SPEAKER_00: So I really look at those areas now and I say, what is the demand in that area?
• 21:05
  SPEAKER_00: The demand might be for only social housing, which means the ceiling price that I can get on a monthly rate is this.
• 21:11
  SPEAKER_00: I can't get anybody else to stay there because it just won't work.
• 21:14
  SPEAKER_00: So I can work to those numbers.
• 21:16
  SPEAKER_00: At least I know the numbers to work to.
• 21:19
  SPEAKER_00: Whereas another area, maybe better for supported living, maybe better even to convert to C2.
• 21:25
  SPEAKER_00: Well, I can work to those numbers.
• 21:26
  SPEAKER_00: But what is the demand in that area?
• 21:28
  SPEAKER_00: And that can work really, really well.
• 21:30
  SPEAKER_00: Once you understand any of the specific demands and the locations there, then of course you know for a fact that you're doing really good deals.
• 21:38
  SPEAKER_00: C2 provider requirements as well.
• 21:41
  SPEAKER_00: If targeting C2, understand their specific needs for location, accessibility, and of course, property features.
• 21:47
  SPEAKER_00: Again, if you're looking at doing student lets, obviously, are you close to the university?
• 21:51
  SPEAKER_00: If you're looking at doing it for professionals, are you close to the town centers where there's going to be work, where there's going to be offices and things?
• 21:58
  SPEAKER_00: If you're doing it for whatever However, make sure you know your target market.
• 22:03
  SPEAKER_00: I always say this very, very important to understand your market before actually you start looking for properties.
• 22:08
  SPEAKER_00: Understand what you want to do in your business and then go out there and find what suits.
• 22:14
  SPEAKER_00: You well, basically gives you the tools for your business to be able to operate.
• 22:18
  SPEAKER_00: Whereas a lot of people do it the other way around, they find a deal and then they think, oh, what can I do with this?
• 22:22
  SPEAKER_00: Well, I'm thinking essay, or I'm thinking this, or I'm thinking that.
• 22:25
  SPEAKER_00: No, find out what you want to do.
• 22:27
  SPEAKER_00: What do you want to be known for?
• 22:28
  SPEAKER_00: How are you going to operate?
• 22:29
  SPEAKER_00: That's one thing I've always done is when I first started with HMOs, I wanted to be working tenants.
• 22:36
  SPEAKER_00: That was it.
• 22:36
  SPEAKER_00: I wanted working tenants in there.
• 22:38
  SPEAKER_00: I thought I wanted to be the sort of agent, if you like, the management company that was for working tenants.
• 22:43
  SPEAKER_00: We knew what you liked, we knew the price range was right for you, and we were going to be the best in the area of doing that.
• 22:48
  SPEAKER_00: I didn't go out there and say, well, I want all of the doctors and I want all of this or I want students.
• 22:52
  SPEAKER_00: No, I knew what I wanted, and that's why I think I was as successful as I was in building my HMOs.
• 22:58
  SPEAKER_00: Service accommodation.
• 23:00
  SPEAKER_00: Again, I'm not looking for holiday makers.
• 23:02
  SPEAKER_00: I'm not looking for people that are coming and partying and stuff.
• 23:05
  SPEAKER_00: I'm looking for people that need somewhere to stay because they're working in the area.
• 23:09
  SPEAKER_00: So we are always looking for corporate clients or people that are just going to be staying in and around the area for a few weeks and they need somewhere to stay.
• 23:17
  SPEAKER_00: That's what we target.
• 23:18
  SPEAKER_00: We don't do nightly rates.
• 23:20
  SPEAKER_00: We don't know a lot of my essays, I haven't got anybody in there over the weekend because it's not really that sort of area.
• 23:26
  SPEAKER_00: But I'd rather have it Mondays to Thursdays, keeping it for the right clients.
• 23:30
  SPEAKER_00: So understand the clients before you get there, okay?
• 23:33
  SPEAKER_00: Exit strategies as well.
• 23:35
  SPEAKER_00: Always make sure you've got a good exit strategy when it comes to whatever deals that you're looking at doing.
• 23:40
  SPEAKER_00: So if you are doing a rent to rent, it's easy.
• 23:42
  SPEAKER_00: Your exit strategy could be when that contract's up.
• 23:44
  SPEAKER_00: If you're looking at buying it, are you looking at holding it?
• 23:46
  SPEAKER_00: Are you looking at flipping it?
• 23:48
  SPEAKER_00: Are you looking at just having it for a set amount of time?
• 23:50
  SPEAKER_00: Always have an idea about what your exit strategy should be.
• 23:53
  SPEAKER_00: Predominantly, people say we've got to hold on to property for the long term.
• 23:57
  SPEAKER_00: I'm quite happy to buy and sell properties.
• 23:59
  SPEAKER_00: If a property's not performing, it's gone.
• 24:01
  SPEAKER_00: Simple as that.
• 24:01
  SPEAKER_00: I'll look for the next one because there's always a better deal around the corner.
• 24:05
  SPEAKER_00: So just remember to always think about that.
• 24:07
  SPEAKER_00: And always, always keep an eye on your local infrastructure of the areas.
• 24:13
  SPEAKER_00: Okay.
• 24:13
  SPEAKER_00: Any new transport links, any schools, any major employment boosts in the area can really help you.
• 24:19
  SPEAKER_00: Now, also, they can have a negative impact as well.
• 24:22
  SPEAKER_00: Is there anything that's going to be built that's potentially going to harm house prices in the area?
• 24:27
  SPEAKER_00: Go on your local portals, Google them for your areas.
• 24:30
  SPEAKER_00: You can have a little look through the local portals, see what planning's been rejected, see what planning's been accepted, see what the infrastructure of your area is going to be like for the foreseeable future.
• 24:41
  SPEAKER_00: In one of our areas, we knew for a fact that they were going to be building a lot of factories in this area.
• 24:46
  SPEAKER_00: So we targeted a lot of rent-to-rent HMO deals in the area.
• 24:50
  SPEAKER_00: And when the factories were being built, we had a lot of work people staying in those properties.
• 24:55
  SPEAKER_00: And now we have a lot of people that work in those factories staying in us.
• 24:59
  SPEAKER_00: And we've got a really good demand of people that always want to stay in our properties or live in our properties, should I say?
• 25:05
  SPEAKER_00: And that was because we knew what was coming.
• 25:07
  SPEAKER_00: So make sure you know your area.
• 25:09
  SPEAKER_00: Make sure that any potential deal that you're looking at, you create your own check sheet.
• 25:14
  SPEAKER_00: If you're in ETA, which you should be if you're watching this, I'll do a little check sheet when we put this into the vault.
• 25:20
  SPEAKER_00: And of course, don't move forward until you can thoroughly tick all of the boxes and be happy with that.
• 25:25
  SPEAKER_00: So I like to also say a bit of thinking time is for your next potential deal, create a checklist based on the four pillars or your four pillars, what's most important to you.
• 25:35
  SPEAKER_00: Make sure every item has been thoroughly targeted and investigated to help you moving forward.
• 25:41
  SPEAKER_00: And if you do need a bit of help when it comes to calculating your ROI, when it comes to actually doing your numbers, what you want to do to calculate your ROI is you want to take the annual net profit of any property, then you want to divide that by the total cash invested in the property.
• 26:02
  SPEAKER_00: I was just checking it was on your screen because it's not on mine.
• 26:05
  SPEAKER_00: Uh the total cash invested, including deposit, stamp duty, and legal fees, then multiply it by 100, and that will give you an ROI.
• 26:12
  SPEAKER_00: If you want to work out your yield, well, I just use a device that's online.
• 26:16
  SPEAKER_00: So it's a foxtons.co.uk slash landlord slash yield calculator.
• 26:22
  SPEAKER_00: You can see it on the screen there and everything.
• 26:24
  SPEAKER_00: And always look to have a decent yield.
• 26:26
  SPEAKER_00: Five to eight percent is always good.
• 26:29
  SPEAKER_00: So that is what I wanted to share with everybody on this first afternoon session that uh we're going to be running now.
• 26:36
  SPEAKER_00: So I'll do an evening session and an afternoon session once a month.
• 26:39
  SPEAKER_00: And if there's any questions, do feel free to jump into the community, ask those questions away.
• 26:45
  SPEAKER_00: This will uh be put into the vault, so you'll be able to watch this.
• 26:48
  SPEAKER_00: And equally to that, we have got a due diligence with the four pillars in a lot more detail training coming uh that you'll be able to access very shortly in the vault, as well as all of the other trainings.
• 26:58
  SPEAKER_00: We've got HMO training coming, service accommodation, and new in-depth training.
• 27:03
  SPEAKER_00: We've got the back-to-back leasing, which is currently coming out at the moment.
• 27:07
  SPEAKER_00: We've got some C2 training coming as well, how to convert properties, along with a lot, lot more.
• 27:13
  SPEAKER_00: So stay posted.
• 27:14
  SPEAKER_00: Any questions, need any help and support?
• 27:16
  SPEAKER_00: Do feel free to reach out to us in the community.
• 27:19
  SPEAKER_00: We are here to help and support you.
• 27:20
  SPEAKER_00: Thank you for joining me today.
• 27:22
  SPEAKER_00: You take care, and I look forward to you joining me very soon.
• 27:24
  SPEAKER_00: Bye for now.