Does this investing model make sense?

Does this investing model make sense?

17:11 PM, 2nd February 2020, About 2 years ago 23

Text Size

I’ve seen people make millions investing in property, despite not earning that much in their regular jobs, or having much financial sophistication.

As primarily a share investor, I was surprised that people could make money with these strategies.

I have decided to document what they have done in a general sense, using 5 scenarios. The model used explained in the video below.

I was hoping for some feedback on the model.

Does the video clearly convey the technique?

Is there something I am missing that could improve this model?

Would you consider using this model?

I know it works because I’ve seen people use it. So I just want to make an improved version 2 of the video.

Thanks

 



Comments

by Mark Alexander

20:35 PM, 3rd February 2020, About 2 years ago

Reply to the comment left by at 03/02/2020 - 20:19
What do you mean when you say “so that you can improve”?

Like Dennis has said, I think they are brilliant. In fact, so brilliant that Property118 now owns 25% of the shares in their company.

I know Chris Sheldon well enough to be confident that if he had a rep who was as disinterested as you suggest, that rep will be long gone and replaced by now. I will have a chat to him though.

by silversurfer2017

20:46 PM, 3rd February 2020, About 2 years ago

Reply to the comment left by Mark Alexander at 03/02/2020 - 20:35I think it depends on how lucky or unlucky you are with the local manager and the quality of the person who takes the photos and does the viewings. Because other have been pleased it seems to me that I was just 'unfortunate'. Pity it cost me nearly £2,000 to find out. By all means speak to Chris Sheldon, I remember the name . Do not get upset by constructive criticism, dealing with this is how businesses improve. I started my own retail business at the age of 25 and sold up and retired at the age of 54. I was always prepared to learn from my suppliers and my customers.
I think that Romans got offers so quickly was not just by chance but by their professional attitude to prospective tenants and their interest in my property

by Dennis Leverett

23:40 PM, 3rd February 2020, About 2 years ago

Reply to the comment left by at 03/02/2020 - 20:46
I fully understand what you are saying having had bad experiences with various agents myself. I can only go by my experiences and I have to say the lady who dealt with us, not sure if I'm allowed to mention her name, was probably the most professional person I've ever dealt with re: property letting and had a great personality to go with it, love her to bits. She gave us lots of good advice on things we hadn't considered important which we acted on and thank her dearly. I also have to say thanks to Mark Smith and the Property Meet Video, very concise presentation, easily understood and very helpful in considering my future. Thanks.

by Dennis Leverett

23:54 PM, 3rd February 2020, About 2 years ago

Reply to the comment left by Dennis Leverett at 03/02/2020 - 23:40I meant to add, I started on my own at 25, I've employed lots of people over the years and sometimes you get it wrong but mostly you get it right and those are the ones you look after. I've not made millions but am comfortable, asset rich, and have a great family, lovely children and grandchildren who all seem to have inherited my work ethics and at 70 am so proud of all of them.

by silversurfer2017

8:05 AM, 4th February 2020, About 2 years ago

Reply to the comment left by Dennis Leverett at 03/02/2020 - 23:54
Dennis, it is a shame that the lady you used was not covering the Windsor area at the time I was trying to re-let my property. I feel sure that like you, I would have been very pleased with the outcome.

by JC

0:49 AM, 6th February 2020, About 2 years ago

I also do not have a great experience with LettingSupermarket. I used them because Property118 promoted them and thought they had credibility. Similar experience with yours, not proactive, I am doing all the chasing of rent arrears and finding out updates etc. I just got an email recently asking what to do as tenant highlighted one of the radiators was not working (no further details or recommendations). I would expect any letting agents to at least recommend some solutions to the tenant like bleeding that particular radiator or at least visit the property to find out what exactly is wrong. To me that is what Full Management service is about, and not just passing tenant complaints to me.

by Paul Simmons

9:42 AM, 8th February 2020, About 2 years ago

First of all apologies for everyone that knows this but felt compelled to comment on video.
The problem as with many people giving information on property. You are using statistics which are not relevant to today’s investing.
Disclaimer: I am still buying certain types of property and you can still find a ‘good buy’ but this take normally a ‘good eye’, time, a track record of portfolio for best rates and ltd company bank deals etc.
Property is still good to a point but anyone that has not invested in property please take into consideration the following if first getting into it. Because it has no relation to investing in shares, index funds etc.
Forget reading about the general media and old statistics of property values increasing. It has to do with regions, towns, cities and areas in these places and type of property. Also, how much they lost in value in during 2007/8 recession. I have a mix of flats, maisonettes, family homes and HMO’s.
Example;
Hastings
Brought 1 bed split level flat
£69,000 (fair condition)
Goodish buy 2003.
Worth today (17 years later) £120,000. Needs a compete refurbishment after being tenanted. Has it been worth it in terms of rental income. Not really after service charges, Block refurbishment and major works, lease extension, boiler, selective licence, tenant damage etc etc.
2003 rent £450
2030 rent £565

Brighton, Southwick 2 bed maisonette
£79,000 (brought 2001)
Today’s sale price £250,000 in good condition
2001 rent £500/525
2020 rent £925

Brighton (5 minutes from station) 1 bedroom flat with garden
Brought £135,000 needed refurbishment
Value £260,000 very good condition
Brought 2008
Value 2020
Rent 2007: £640
Rent 2020: £840

I could give more but believe me. The best gains were made in London generally in last jump. Then in East London, Hackney etc when in become more hip and Gentrified. Maybe central Manchester/Liverpool. (Not my area)
1995/6 to 2004 - Very good uplift for most of country especially SE.
If you Missed this then the gains over 30 years will not be what it was and capital appreciation now needs to be considered very carefully.
As a Mark said, you are missing so many points in the general things you have to deal with. Especially with certain types of properties which all vary;
But here are some for Novice landlord. By all means property can be good but the model of buying 5 with 20% down and it’s all amazing in returns is a slight urban myth;
Consider;
Gas Safety
Select licensing
Fire assessment/direction4/
Electrical certification from April
EPC
Inventory costs
Managing agent fees
Deposit fees for registering deposits
Account fees
Service charges
Major works for flats
Tenant damage
Rent arrears
Arrangement fees (eats into capital every 2 or 5 years)
Morgage Broker fees
Solicitor fees on remortgages
Lease extensions
HMO licence fees
Single room agent fees for new room let’s
Insurance for house or rooms
Re-touch up every time tenant moves out/to keep property in ok condition
Refurbishment- when you have property 20/30 years it needs a fair bit of new carpets/kitchens/bathroom stuff done or completely redone. No one talks about this when comparing with a Passive low fee index fund.
Rent arrears
Court claims (will happen one over this time)
If you have enough properties you will also have complete refurbs because of a fire/bath left on/ nightmare tenant etc.
Even with good tenants.
Dealing with agents whether managed or not
Contractors (have to have a good team but still takes ability to deal with this efficiently)
Cost of your time
Morgage relief issues
Yes, you will get phone calls a bad times of self managing and if letting agent they will still contact you as you need to keep an eye on what is being spent on what and is it necessary. Even if a good agent.

This is why post property investors have to make money through other means. Older investors will be in a much stronger position because of time having property.

So, have a have a good think when comparing to shares and you have to buy correct or wait a longtime to make a really good return. Also, think where you are buying!
Also, rates are at a never to be again this low. If they double it will cripple many newer landlords.

by Dennis Leverett

11:56 AM, 8th February 2020, About 2 years ago

Reply to the comment left by Paul Simmons at 08/02/2020 - 09:42
I think that just about sums it up, be aware of the "experts" that want to sell you something. If starting up, go to a few property meets in your area and talk to those that actually do it.

by Mark Alexander

12:15 PM, 8th February 2020, About 2 years ago

Reply to the comment left by Paul Simmons at 08/02/2020 - 09:42
Very well said!

I know some newbies are taught by their guru’s that those of us who have been in the business for many years are pulling up the ladder behind us. However, that’s not true. The reality is that we have seen ever increasing legislation that has made investment into the PRS far less viable than it was in the past.

I wish any newbies all the very best and would recommend they take professional advice on the optimal ownership structure before they start, because it not as simple as buying a £100 off the shelf company or buying your own name if you want to build a legacy for your kids.

by David Lawrenson

18:07 PM, 13th February 2020, About 2 years ago

Wow, you have got a great deal of good advice here from Mark A and others!

Agreed with previous comment that not all areas and types of property move in the same way over time. They are very divergent. And the example of Hackney, given by someone above, (and many parts of inner E and SE London over the last 20 years vs say Middlessbro would be a good example)

We made most of our money buying ahead of new rail and tube links that had been given the go ahead to be built, which fortunately for us were also within an hour of where we live. (Jubilee Line extension, Dockland Light Railway extension and revamp / extension of the old East London line - all in SE London. Now we sit and wait for the extension of CrossRail to Gravesend / Ebbsfleet - a matter of time).

I generally advise my clients to buy within an hours drive of home, unless there are overwhelming and compelling reasons to buy further afield.

Also, houses have in most areas far outperformed flats. Developers can always build up and buy more flats, only God (and some very big earthquakes) can create new land). So the supply of houses is constrained.

Show agents you have the money - yes show them the statements showing this on it. No waiting for mortgages and surveyors and all that rigmarole. More on buying BMV from agents here: https://www.lettingfocus.com/blogs/2015/11/buying-below-market-value-from-estate-agents/

Offer estate agents the lettings business if you end up as the buyer.

Control the business of finding tenants - and keep a tight rein on what agents are doing in this regard for you. Get a bad tenant and your heart and health will suffer. Lots of good advice on how to do this in my book, "Buy to Let Landlords Guide to Finding Great Tenants".

David Lawrenson
http://www.LettingFocus.com
Landlords Cosultancy


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER