Real Estate Investing With No Money | Interview with Tom from FlipAnythingUSA

Is it really possible to invest in real estate with no money? In this video I interview Tom from FlipAnythingUSA and he has over 30 years experience with investing in both residential and commercial property.

And yes, he has experience with buying houses and commercial buildings with no money.

Subscribe to my YouTube Channel
 
Questions I ask Tom:

Why have you decide to share your knowledge of real estate investing with no money now, after all these years?

How does someone start out in property investing if they don’t have any funding or money?

What direction do you see your YouTube Channel going in, in the future?

Tom’s recommended video:
How to invest in real estate: No Money, No Problem! Don’t listen to nay sayers. It’s the Deal!

Subscribe to Tom’s channel FlipAnythingUSA

If you have any questions for Tom, please leave them in the comments section below and he will be sure to reply.

Cheers
 
Andy

Facebooktwittergoogle_plusredditpinterestmail

Best Place To Invest In Property Or Real Estate For YOU

It’s a question that often gets asked, so lets discuss the best place to invest in property or real estate, for YOU!

Now people typically ask this question because they want to know which areas are producing the best yields and capital growth. That’s fine, BUT the answers or locations they receive may not suit them for a number of reasons. The world is a big place and there isn’t any one particular place that is good for everyone.

There are two factors that you should consider, which I discuss in this short video:

What areas are you looking to invest in? Let me know in the comment section below and I will join in the discussion.

Thank you for watching and please let me know if you have any questions about your best place to invest in property or real estate, and I will do my best to help.

Andy

Facebooktwittergoogle_plusredditpinterestmail

Rental Property Management | Letting Agent Or Self Manage Your Investment Property | Buy To Let

Should you use a letting agent or do it yourself? Managing your own rental property can sound appealing to some people when they first start out as they know they will save money on letting agent fees. But you need to be honest with yourself and consider whats involved and whether managing a property would be right for you.

I have 3 questions that you can ask yourself to see if you have what it takes to be an effective rental property manager:

Subscribe To My YouTube Channel

My questions are:
 
1. Do You Have The Knowledge?
 
2. Do You Have The Resources?
 
3. Do You Have The Time?
 
If you have any questions about rental property management please leave a comment below. Thanks for visiting.
 
Cheers
 
Andy

Facebooktwittergoogle_plusredditpinterestmail

Scared Of Property Investing For Retirement? Let Me Help You

This video is based on Lana Hall’s guest post. It will provide you with 3 questions that you can ask yourself to help you overcome any fears you may have around property investing for the first time, and give you more confidence so you can make a start on property investing for retirement:

Subscribe To My YouTube Channel
 
Click here to see Lana’s original guest post.

Visit Lana’s website www.lanahallpsychology.com
 
What fears do you have about starting out in property investing? Or, if you have already started, how do you cope with your fears? Your comment may help someone else take their first big step into investing.
 
Cheers
 
Andy

Facebooktwittergoogle_plusredditpinterestmail

5 Common Mistakes Newbie Property Investors Make

If you are aware of them, you can avoid them! In this video I talk about the common mistakes people make when they are considering, or starting out in property investing. Watch to see how many of these mistakes I have made.

Subscribe To My YouTube Channel
 
They are:
 
1. Thinking you’ll get rich quick.
 
2. Not doing your homework.
 
3. Not doing your due diligence.
 
4. Paying too much.
 
5. Not starting!
 
Are there any other mistakes you are afraid of making, or have made, when you first started? If so, please share in the comments below.

Cheers

Facebooktwittergoogle_plusredditpinterestmail

5 Reasons To Consider Investing In Property

I’ve done it! I’ve faced my fears and uploaded my first YouTube video. There is so much to learn about YouTube.

Anyhoo …..

In the video, I talk about the 5 main reasons why people get actively involved with property investing, and why you should consider it too, if your not already doing it.

Subscribe To My YouTube Channel
 
The 5 reasons are:
 
1. Secure Your Financial Future or Even Your Financial Freedom
 
2. Providing Homes For People
 
3. Make Your Money Work
 
4. Education and Personal Development
 
5. Leaving A Legacy
 
Please let me know which reason is most likely to get you actively involved with property investing, or which reason will inspire you to improve your current portfolio.

Or, do you have another reason?

Facebooktwittergoogle_plusredditpinterestmail

Things To Consider When Searching For A Letting Agent

Some people choose to let and manage their properties by themselves, but I feel that I do not have enough knowledge and experience to succeed in this area at the moment.  I also value my time, and property management can be very time consuming, so I am happy to pay for this service.

Businesses are always evolving with the times, and letting agents are no different. There are now a number of online letting agents offering some attractive fees as they don’t have the typical overheads of a traditional high street letting agent.  However, I have not taken the giant step to try these yet, so my experience and advice is based on the traditional method.

REPUTATION

The best way to find a reputable letting agent is by word of mouth, but if you are not fortunate enough to be given any recommendations, it is important to spend some time visiting and questioning local agents.

Letting AgentI approach at least 3 letting agents when I have a property to fill.  I also visit their shop to get a feel as to how they look and operate. Image can be important for a potential tenant, so I am always keen to checkout the shop front for myself.  The location of their office is also important to me as I like to see them located on a busy high street with a large footfall.  That said, most people probably search online when looking for somewhere to rent and then telephone and meet the agent without stepping foot in their shop, so maybe it doesn’t matter so much these days, but as a landlord and an investor, I struggle to ignore this factor.

2 WORTHY NOTES

1.  Since October 2014, all letting agents, by law, must belong to a redress scheme which provides a free, independent service, for resolving disputes between the letting agent and their customers.  Here are the 3 government approved letting agent redress schemes:

Ask the letting agent which scheme they belong to.

2.  For transparency, from 27 May 2015, letting agents must publish full details of their fees and charges for both landlords and tenants, on their websites and in a prominent position in all their offices.  I will always check the associated fees before I enter into negotiations with any agent.

LEVEL OF SERVICE & FEES?

There are 3 levels of service which most letting agents provide:
 
Tenant Find

    • Advertising your property on popular portals like RightMove and Zoopla.
    • Conducting viewings with prospective tenants
    • Tenant referencing and credit check

I was recently quoted £195 + VAT for this service.
 
Let Only
 
Includes all the above plus:

      • Issuing a tenancy agreement (contract)
      • Registration with a Deposit Protection Scheme
      • Taking the tenants deposit
      • Taking the first rental payment
      • Setting up any direct debits
      • Submitting meter readings to the utility company(s)

They may also offer additional services with an extra charge for:

      • Providing an Energy Performance Certificate
      • Providing a Gas Safe Certificate
      • Creating an inventory

You can expect to pay anywhere between the equivalent of 2 to 4 weeks rent for this service.
 
Full Management
 
Fees are typically broken down into 2 categories:
 
Setup fees:

      • Advertising your property
      • Vetting suitable tenants and obtaining references
      • Issuing a tenancy agreement (contract)
      • Creating an inventory
      • Registration with a Deposit Protection Scheme
      • Taking the tenants deposit
      • Taking the first rental payment
      • Setting up any direct debits
      • Submitting meter readings to the utility company(s)
      • Providing an Energy Performance
      • Providing a Gas Safe Certificate

(Note: Some letting agents charge separately for some items e.g. certificates, to give landlords the choice of purchasing them for themselves.  This can be cheaper for the landlord as agents typically add a percentage to cover their time for arranging these).

The agent will normally deduct all setup fees from the first months rent.
 
Management fees:
 
This covers regular inspections and the ongoing day to day management of the property.  The tenants will contact your agent, instead of you, if they have any questions, queries or problems.  This is a great option for landlords who are in full time employment.

Management fees will be a percentage of the rental income over their letting term and are deducted from the monthly rent you receive.  These fees typically range from 6 – 15% + VAT, although I negotiated with one of my agents and reached 5.5% + VAT (WAHOO!)

You can take a look at my Income Report for September 2015 to find out how much I paid for a recent setup fee with a full management service.

NEGOTIATE

Remember what I wrote on my previous post about Making An Offer? – everything is negotiable!

Now that you have an understanding of the different types of services letting agents provide, you can start your search by visiting The Association of Residential Letting Agents website.

AND FINALLY

This is my last post in the Start Here section!  If you have read through all of them, congratulations!  This is the first sign that proves you have enough interest and determination to make a success from property investing.  Your next move is to TAKE ACTION and make things happen, one step at a time.

Property investing is a people business, but it can also be a lonely business at times. Please subscribe to my newsletter to receive further content in the future, that will be geared towards education and keeping you motivated to succeed.

Was this post helpful, or do you feel you still have some unanswered questions? Please leave a comment in the box below.  Thanks!

Facebooktwittergoogle_plusredditpinterestmail

What To Consider Before Making An Offer

Property is only worth what someone is willing to pay for it.  There isn’t an entity that decides how much a property is worth, it is completely driven by the general population. It’s important that you buy at a good price!

The idea is that you start negotiations and let the vendor join in.  Effectively, you are showing an interest.  Don’t feel bad if you make a low offer, you need to keep your feelings aside.  You are not forcing the vendor to sell, you are simply given them an option to accept, decline or engage; you are making an offer.

Making an offer is the start of entering into negotiations.  This is something I have not mastered yet; negotiation is a skill, but I would like to share with you what I have learned so far.

Ways to be a better negotiator

You have already done your research and due diligence, so make sure you convey your knowledge.  View several properties before making any offers and let them know you understand the local market.  Asking well-informed questions is one way of displaying your knowledge.

Keep calm and don’t look too keen when viewing.  Take time to think about your options after all your viewings, and don’t rush into making any offers.

It is important to remember that the estate agent works for the vendor and not you.  They are professional negotiators and the higher the offer the vendor receives, the higher commission they receive.  Be prepared for bargaining tactics and take what they say with a pinch of salt.  You must remain calm and confident.

Buying as an investor means that you do not have anything to sell, and this can be very appealing to vendors if they have to move quickly due to work or a whole raft of other reasons.  Speed in the sale can be more appealing than the highest price to some vendors.  Make this clear to the agent or vendor when viewing.  If you have your deposit funds and AIP, you are good to go!  You can only be beaten buy a cash buyer in terms of speed.

If you want to develop your negotiation skills further, I can recommend Everything is Negotiable by Gavin Kennedy.  It’s a book packed with advice on how to handle negotiations in the world of business.

Making an offer

Remember this important statement – you make your money when you buy a property, not when you sell!

Here are some reasons why you would typically make an offer of 15-20% lower than the asking price:

  • A similar property recently sold at a lower price and the market hasn’t changed.
  • There are some repairs and/or improvements that would need to be carried out.
  • The property has been on the market for a while and hasn’t sold.

I prefer to make my offer in person so that I can read their reaction.  I then back up my offer in writing which also confirms my terms and conditions.

Here is a copy of my offer letter which you can use or alter to fit your circumstances.

You will see that it also emphasises that I am in a good strong position to buy with a predetermined timeline for completion of the sale.  Making your offer over the phone, backed up with an email with the offer letter, is fine.

Tip: If the vendor comes back to you with a counter offer, and you are happy to accept, it is worth requesting a condition before agreeing to that offer.

This happened to me when I was looking to purchase my first renovation project, and I agreed on the condition that I would be allowed access to the property between exchange of contracts and completion.  This gave me 2 weeks to remove the old carpets, kitchen, bathroom suite etc, before I had to make any mortgage payments. Time is money!

Once your offer has been accepted, you need to understand that it’s not legally binding (in England and Wales; there are different rules in Scotland) until the exchange of contracts.  Both you and the vendor can pull out.  It is important that your solicitor moves quickly once you have paid for any survey and valuation fees, as these cost hundreds of pounds and are non refundable if the vendor pulls out.  It is not too common, but it has been known to happen.

The main reason a vendor would pull out, would be because they have received a higher offer.  This is called “gazumping”.  If you are “gazumped”, you can either drop out or counter-gazump.  This is why it’s important to insist the vendor agrees to take the property off the market once your offer has been accepted.

Some estate agents will let you put down a non-refundable deposit to “lock-in” the sale for a certain period of time. This protects you against gazumpers, but not all agents will agree to this.  This is something I have recently learnt but have not yet tried.  If you do this, make sure the terms state that you will receive your deposit back if the vendor pulls out.

I hope this post has helped.  If you have any questions or any tips, please leave a comment in the box below.  Thanks!

Facebooktwittergoogle_plusredditpinterestmail

Calculations for Property Investment Purchases

It’s important that you have a positive net cashflow at the end of each month, if you don’t, you will end up with a property that will cost you money (a liability) instead of a property that provides cash in the bank (an asset).

There are 4 sets of figures you need to know to assess any rental property:

1.  Purchase costs – The price of the property and legal fees.

2.  Monthly rental income – Can be researched online and via letting agents.

3.  Monthly finance payments – Will be provided by the mortgage lender.

4.  Operating expenses – Based on the condition of the property and letting agent fees.

You may already have an AIP at this stage which will give you detailed information about your monthly finance (mortgage) payments.  If not, here is an online calculator that you can use to find out what your payments will be.

Here is an example:

The price of the property is £85,000.00 and is purchased with a typical 75% loan to value (LTV):
 
£85,000.00 x 75% = £63,750.00 (loan)
 
£85,000.00 x 25% = £21,250.00 (deposit)
 
Legal and mortgage fees are just under £2,000.00 which gives a total cash payment of £23,250.00.

The property can achieve an annual rental income of £9,360.00.  All figures listed below are monthly which includes a full management service with a letting agent and a mortgage interest rate of 3.89%, which is a comparable at the time of writing this post:

Rent £780.00  
Mortgage   £206.66
Insurance   £17.00
Agent (10%+VAT)   £93.60
Repairs (5%)   £39.00
Void (8%)   £62.40
Total £780.00 (A) £418.66 (B)
Net Income (A-B)  £361.34

Notes:

1.  The percentage for repairs will depend on the overall condition of the property.

2.  I save 8% for voids as this roughly equates to 1 months rental income over a 12 month period, meaning that I have enough to cover my operating costs if the property stands empty for 1 month of the following year.

Your Net Yield is calculated as follows:

The annual net income, divided by the purchase price, multiplied by 100.

(£361.00 x 12) £4,332.00 divided by £87,000.00 = 0.049 x 100 = 4.9%

Your Return On Investment (ROI) is calculated as follows:

The annual net income, divided by cash paid, multiplied by 100.

(£361.00 x 12) £4,332.00 divided by £23,250.00 = 0.186 x 100 = 18.6%

The Net Yield and ROI are the figures you want to focus on.  They tell you the return you are receiving on the property and the money you have invested. With this example you can see that within a little over 5 years, you will have received enough rental income to have replaced your initial deposit for the investment.

Does the example make sense to you?  Is there anything I can add to help? Please let me know in the comment section below.

Facebooktwittergoogle_plusredditpinterestmail

A Checklist For Viewing Investment Properties

Viewing properties can be exciting and it is very easy to be caught in the moment and be in awe of your potential purchase.  It is important to remember that you are shopping for a business and not a home.  You need to work with your mind and gut, not your heart.  If you walk in and fall in love with the property, I suggest you walk out and move onto the next one.

I have viewed 9 properties in a single day and it can be hard to remember the details of each property when you get back home.  To help me, I take plenty of photo’s with my mobile phone, and I have a checklist that I carry so I can simply tick the items and make notes as I walk around for reference later.

This is not a definitive list and you may think of additional items you would like to add, but here is a brief explanation of each area I check.

Please feel free to download my checklist for viewing investment properties:

1.  Roof – Does the condition look good?  Is it level and are there any tiles missing? Are the gutters clean and stable and are the drains clear?  Make sure the flashings and the facias are secure and in good condition.

2.  Walls – Are any of the external walls bowed and is the pointing in good condition?

3.  Doors – Do all doors close properly? If not, it could be a sign of structural movement.

4.  Cracks – Check all rooms and hallways for cracks.  If you are able to fit the side of a 10p into the crack, there could by a structural problem which will require further investigation.

5.  Boiler – Is there central heating and does the boiler and all radiators appear to be in good condition?  A new heating system will cost around £3k or more depending on the size of the property.

6.  Electrics – Do the sockets and fuse box look old or do they look modern and in good condition?

7.  Windows – Is there double glazing?  Open and check the windows, as they can also be expensive to replace, and make notes if the property is only part double glazed.

8.  Flooring – Does any part of the floor creek or feel bouncy and are the carpets, tiles, lino in good condition?

9.  Damp – There are many different types of damp and only a specialist will be able to tell you the cause and cure when you first start out, but it’s important to check for any signs of damp.  If the property is furnished, it’s a good idea to look behind the furniture and make sure you check the ceilings and not just the walls.

10.  Adding Value – This is what sets successful investors apart from the rest.  It doesn’t necessarily need to be something that you would do from the start, but if you identify the possibility of adding another bedroom, reception room, extending the kitchen or converting the loft, you could increase your cashflow as well as the value.  It’s also worth checking if other people on the street have added extensions as they will have set a precedence.  Adding value can also be as simple as redecorating and replacing the flooring if the property looks dated.

11.  White Goods – Are electrical goods included in the sale and what condition are they in?

12.  Tenants – Is the property already tenanted? If so, what type of tenancy agreement is in place, what is the income and how long is left on the agreement?

Depending how deep you want to go, the list could go on.  But checking these details first will help you purchase an investment with some piece of mind and will reduce the risk of any major hidden surprises later on.

Please let me know if you would like to see something else added to the list.  I will be more than happy to update it for everyones benefit.  Thanks.

Facebooktwittergoogle_plusredditpinterestmail