12 Days of Christmas Campaign
1. On the 1st day of Xmas my true love sent to me:
Property Magic
First things first, get educated. For those of you who never liked school, bit of bad news; some reading involved. Whilst I’m not asking for you to write a thesis or become a professor, it would be a good idea to do some background reading on property. The aim here is not to become an expert but to give you an insight of the industry and what it entails. A little knowledge can go a long way…
2. On the 2nd day of Xmas my true love said to me:
Choose your product
• Single Let
• Multi-Let
• Holiday Let
It is important for you to decide very early on exactly what it is that you would like to do. As this will determine the necessary steps of the entire investing journey. Your foundation has to be firm from the beginning. For example, do you want to sell your property or keep it? Do you want to have a single house dwelling or single units for many? Or perhaps you fancy a holiday let? Or a social cause providing supported living?
3. On the 3rd day of Xmas my true love said to me:
Select a suitable strategy
• Buy-Refurbish-Refinance-Rent (BRRR)
• Assisted sale
• Lease Option
• Rent to rent
Picking the right strategy is extremely important depending on the product you have chosen. You can’t go around chasing every shiny penny that you see. Pick one strategy and stick with it until you’ve mastered it. They say cash is king so get some money coming in before you explore other methods. Be flexible, learn and adapt where necessary. If it starts to dwindle there’s always the next property. Just relax, have some fun along the way.
4. On the 4th day of Xmas my true love said to me:
Locate your Location
Depending on your strategy you will need to find a suitable location for your investment. For example, if your plan is to go down the HMO route then you will need to be near universities, hospitals, business hubs and all industries. Here the aim is to make it as convenient as possible for your target market/tenants to make their commute more accessible. A lot of the working professionals will prefer central locations with an abundance of bars, eateries and grocery stores. If, however, you're more interested in single family let, then an area close to good local schools and parks etc maybe of interest.
5. On the 5th day of Xmas my true love said to me:
Do your Due Diligence
Once you have chosen your area you have to work out what the properties are going for, what can you do to the properties? Do you need any permissions or licenses to do what you need to do? Is there enough space at the front and back of the property to extend, if you need? How can you add value and will this increase enough to give you a workable profit? How much will it cost to refurbish the property? These are just some of the things you need to consider and think about before you purchase anything. There will be initial costs as in deposit & stamp-duty; holding costs such as council tax & insurance and closing costs involved in a resale, refinance or rental. Stay on top of those numbers.
6. On the 6th day of Xmas my true love said to me:
Raise Finance
Apart from going down the regular mortgage route there are other methods one can employ to raise finance. You could look for private investors who will be able to fund the whole project for a return from the profits or think about a joint venture with someone. They can put the money in and you do all the work then split the profit 50/50. If you’re able to, you can raise the money from family and friends where you will not have to pay any interest back. A bridge company can help you quickly purchase a property by paying up to 75% of the price, meaning you then have to raise the deposit only. There are many creative ways, you don’t always have to go the traditional way with a High Street bank.
7. On the 7th day of Xmas my true love said to me:
Source your Property
There are several ways you can source a property, the common way is through an estate agent or their on-line platforms. They can advise you about who wants a quick sale, what people are after in a particular area and more. It's always a good idea to build up a good relationship with an agent. You could also talk to a sourcing agent, similar to an estate agent but they will bring you deals that are below market price, however, they charge a commission fee. A good sourcing agent will help you to purchase the property and then help move it along to completion. Other methods of finding a property are by going direct to the vendor and auction sites. It's always a good idea to look at previous months auction lots and see what has not sold, maybe you can get a good price on it.
8. On the 8th day of Xmas my true love said to me:
Purchase your Property
This could take around eight weeks or more from start to finish. So you have to make sure you have everything ready from your side. If there is anything you can do to make sure to get it done as quickly as possible. So before you settle for a property make sure you have your funds ready, your solicitor ready and have to hand, any paperwork/documents you may need to present to them. Remember the rule of ‘25’; you will need to show £25k income or more, work on the basis of a 25% deposit on your buy-to-let (BTL) and your rental income must be at least 25% higher than your monthly mortgage repayments. Not a rule as such, though you can keep aside 25% of your rental income for any damage/contingency. Plus don't forget to check those all important surveys before making that offer.
9. On the 9th day of Xmas my true love said to me:
Build your Build Team
Personal recommendations are usually the best way forward, but in the absence of this you could visit sites such as Checkatrade or mybuilder.com which usually come with great reviews. Other ways to vet your builders is by checking that they have all the relevant insurances and are members of professional bodies. A few questions to consider: Will you be project managing or outsourcing this? What is the proposed schedule of works? What are the timeframes? What are the costs involved? Make sure contracts are in place as in who’s doing what and how often onsite, weekly or by weekly updates etc. These measures will ensure you have a smooth ride so make sure your contracts are set in stone. It will also be a good idea to decide how much involvement you will like and stick to the plan.
10. On the 10th day of Xmas my true love said to me:
Get Renovating
Part 1)
Strip-out the house and remove all excess rubbish and rubble. Make the place safe and start with all major structures i.e, knocking down walls and extending etc. Work from outside in by tackling your exterior (drains pipework). Start first fix electrics & plumbing. Make sure you have drawings of where all the radiators will go right down to the last plug socket/switch. Carpentry, insulation and order all necessary materials and appliances. Choose kitchen, bathroom, flooring, tiling and colour schemes.
Part 2)
Submit any application or planning proposal to the council. Apply for any licences in advance. Take out building insurance. Tick off work as you go along with building regulations. Obtain gas safety, electrical certificates and upto date EPC...oh and don’t forget to register that boiler. Now would be a good time to see if you are eligible for any government grants or subsidies.
11. On the 11th day of Xmas my true love said to me:
Appoint a broker
Get yourself a reputable mortgage broker who has access to the ‘whole market’ who will help you exit your current project. Sort out all your paperwork for at least three consecutive months:
3 x Payslips
3 x Bank statements
Or 2 years accounts if your self employed
All Identifications
Credit Check
Proof of deposit
Appoint a solicitor to carry out all conveyancing and instruct a valuer. This will entail a fee and is one of the most important aspects that will make or break your project. Don’t take this lightly and be fully prepared before you book your valuation. You want to present your house in the best light possible to get the maximum results.
12. On the 12th day of Xmas my true love said to me:
Market your property
If you're going down the sale route then obtain 3 x estate agency valuations and put your house on the market. Select a middle ground and don’t always go with the highest valuation as agents are known to hike up the price to get you onto their books.
If keeping your house as a rental, then will you be self-managing or hiring the services of a managing agent? You can opt for a full service, where they vet your tenant for you, handle deposits and move them in or a ‘tenant-find’ only. If you are finishing off your project with bits of snagging you can still promote your property through virtual staging. You can also self promote using social media for free or listing on platforms such as SpareRoom or OpenRent, but make sure your pictures are fab.
Happy Renting!