richard brown

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About richard brown

  • Rank
    Obsessed member!

Contact Methods

  • Website URL &
  • Skype

Profile Information

  • Property investment interests
    Value-adding refurb
    Single let
    Holiday / short-term let
    Trading / Flips / Development
    Selected overseas markets
  • My skills
    Commercial & strategic approach
    Knowledge sharer & mentor
    Blogger / writer
  • My goals
    I have 3 principal aims (my SMART goals are more specific):
    1. Through property to generate an income stream that would allow me to chose my lifestyle, location and daily activities that would include fun-filled 'work', helping others to grow & develop and lots of travel, leisure pursuits and that kind of stuff!
    2. To write at least one book...more likely 3 ;)
    3. To coach and mentor others - enjoying thanks & 'likes' for the free content along the way
  • Interests outside property
    My family, sport, travel, music and occasionally throwing myself out of an aeroplane at 10,000 feet, free-falling for the first 7,000 :)

Recent Profile Visitors

1,731 profile views
  1. Property Business Plan

    Sure, that's why I left my email address above...just drop my assistant Joan a message and reference this post and we will send you the biz plan by return
  2. I'm 36, 2 properlimited company clueless what to do next

    Hi Becky As Magnus Magnussen would say in Mastermind...'I've started, so I will finish'. Roughly translated this means you may as well stick with investing long-term BTLs through the company now that you have started. This is especially relevant if you plan to add to your portfolio and are a higher rate taxpayer. The tipping point where company ownership starts to pay off financially is around 4-8 properties, depending on their value, but you have to suck up some added costs before you get to these magic numbers and it's a little trickier to reverse into a company later on, although not impossible. The other approach is to go with personal name investing now and then try to fix the problem later, when it is actually a bigger problem to fix. However, keep in mind that the latest interest relief tax changes will quickly cause an added tax burden by limiting interest relief at the basic rate of tax AND also by probably pushing into a higher rate tax bracket by the sound of things. Ideas for the equity release / fund-raising: 1. Remortgage your former home and lend the money to the company, if you charge interest that will be tax-deductible. The tricky part here is that it was your former home, so you will have to get a BTL mortgage if you don't have one already. 2. Remortgage the low LTV BTL inside the company, do the maths on this though as you might be locked into a fixed rate deal with early redemption charges. However, the lender agree to a further advance possibly. 3. Longer-term, weigh up selling your former home if there is capital growth and enjoy the benefits of PPR, lettings relief and your annual CGT exemption, then reinvest the proceeds via the company. Any further suggestions will probably cost you...but not too much if you can join me at my workshop on 7th October It's probably aimed at someone just like you and is pretty decent value even if I say so myself, so here's the link... Failing that, feel free to check out my podcast, blog and book as per the links below at a total cost of around £3 lol Best Richard
  3. Property Business Plan

    Hi Thierry If you send the same question to my assistant, Joan at we will be happy to share a one-page property business plan & guide with you. Best Richard
  4. Do I do it?

    Hi Harvey There are lots of things you could do, but what is the right thing for you to do? It has to start with your goals: what you want to achieve and by when. I am not clear on what you are looking to achieve and there is no need to spell it out for me,. But if the idea of owning 3 BTLs that you don't have to pay for after 9-13 years at a cashflow neutral point of view does not appeal...then what does? Flipping was something I was going to mention earlier but I decided not to as I thought BTL was your comfort zone. However, the problem with flipping is that you have no retained asset but you still have to service your debt repayments and at £10k a year on the £90k equity release on your home,. You will have to peddle very fast to make enough to cover that and be happy with the result. If you work on around 10% to 15% ROI (can be better but beginner's margins and all that), then you would generate around £9,000 to £13,500 per flip project...they typically take 9 months to complete (including sale time) and 1-3 months to find, so assume 1 a year per project to be safe. However, your annual debt servicing on the £90k is £10,800, leaving you between -£1,800 and £2,700 a year in cashflow...with no retained asset. So, that's less attractive as I am sure you would agree. OK, make 20% and things start to look better but that's not as easy as it sounds without skill and experience...and sometimes a bit of luck too! So, here's my last suggestion before I give away all of my secrets Increase your rate of savings to partially / fully cover your increased debt servicing, extend the borrowing term to reduce the debt repayments or set aside your increased savings into a property war chest will know how much this is per year. Then, look for those same BTLs but at a cost of say £65k to £70k on the grotty ones needing work, spend £10k to £15k doing them up and revalue them at around £100k. Refinance them at 75% LTV (or possibly 80%) to release 80% to 90% of your starting funds. Top up the difference through the savings mentioned...rinse and repeat. It's a model I use a lot, I tend to leave around £10k to £15k per project in the deal, then save this up ready for the next one. This is what is known as the Buy-Refurbish-Refinance strategy or BRR for's a hybrid of the BTL & Flip strategy and suits people that can wait a little to get a decent income and don't mind a project. It relies on a principle known as 'forced appreciation', which means adding value over and above the average capital growth in the area. The tricky part is finding the deals, undertaking the works and then ensuring you get the right revaluation...that's where the magic really comes in. The good news is that are usually quicker to turn around compared to Flips, especially if you use commercial lenders not hamstrung by the 'six month rule'. OK, so that's as far as I will take this for in a freebie forum post...over to you now! Best Richard
  5. Do I do it?

    Hi Harvey 'it would be cash flow neutral for 9 years, then I would have something' - You are getting 3 BTL properties for free here effectively, especially if you structure the home loan correctly! These should grow in value at 50%, 100% or possibly more over a 9-13 year period ,based on historical performance (and location). Based on the average house price growth over the past 55 years, that's an additional £90k in equity whilst using none of your own money...I think that's quite something don't you? Reality check Best Richard
  6. Do I do it?

    Hi Harvey You made a classic error: when you remortgage to release equity for re-investment purposes, it is not your money but borrowed funds! Fix: include the interest portion of the new home loan into your BTL ROI calculation and also reduce the 'cash invested' figure to reflect your personal cash invested (hint: day 1 will be zero so infinite ROI...end of year 9 will be the £30k figure you have now). Opex and Capex in your assessment - the repayments on your new home mortgage are a mixture of capital and interest remember. Fix: exclude the capital element from your opex (profit) view of the transaction as this is capex. Or appreciate that the repayments at close to cashflow neutral make for a fully servicing portfolio (give or take). You are accelerating the repayment of the loan to pump-prime your 3 BTLs but have not appreciated this also reduces the cashflow until repayment. Fix: understand that this is an aggressive rate of repayment, which by the sound of it you want. If you want greater cashflow, then extend the term of the remortgage (does 10 or 12 years make it neutral for example?). Otherwise, accept that your 3 BTLs more or less pays off the extra advance within a decade and that's bloomin good I can tell you! Personally, I would extend the term, set aside my profits and either make overpayments on my home loan or save up for more BTLs instead...unless you are 75 years old or something. So, taking all of these things into will remortgage to release enough equity to buy 3 profitable BTLs with none of your own money, using a loan that will be fully repaid in just 9 years more or less serviced from the income from these BTLs. I'd say that was alright my friend BTL is not get rich quick, if someone told you that they were lying! However, there are ways in property to accelerate your wealth too...that part would be true! Best Richard
  7. Hi Greg Good topic! Here's mine, based on taking around 20 years to land around zero net worth before turning it around to become a millionaire within the next 5 years or so: 1. Start sooner (as young as possible) to realise the benefits of 'time in the market' & compound growth 2. Educate yourself in property and finance to reduce becoming shark bait, take unwise risks or suffer 'ignorance-related opportunity cost' 3. Understand and apply the different forms of leverage to magnify & multiply your returns: good debt & alternative/creative financing, partnerships, systems, outsourcing, etc. 4. Understand who you really are, what you really want to achieve and what resources you have available to you to make sure what you do is aligned and personalised to your specific situation and goals, not the latest fad 5. Plug your gaps: points 2, 3 & 4 should help you to identify your gaps...then go and find ways to plug them to optimise your performance & results Do these 5 things to grow faster, improve upside returns and reduce downside risks & losses Best Richard
  8. Remote Property Flipping?

    Hi Phil There are several business models around 'remote property flipping': 1. Buying and selling property remotely directly - this means you but the property and make a margin by either improving it, wholesaling it or re-targeting the sales channel. This is like a job or business, if done yourself make no mistake. It is almost impossible to do this alone, unless you have a team or a partner to support you on the ground but it has been done. 2. Buying and selling property remotely indirectly - this means securing the property purchase in the form of an option, assignable contract, assisted sale and these sort of things, you just 'sell the paper'. As with 1 above this is like a job or a business too. It's a matchmaking task between buyers and sellers and I see a few people offering training in this space now. I am not sure that all of the claims made are credible, but that's just a personal view. 3. Partnering with people doing 1 above (and rarely 2 above) - this means becoming a business / finance partner or engaging someone person actually doing the work. The best example is JV flips where one partner provides funds and the other the know-how, skills, contacts, etc. (we do this, including remotely or with remote partners!), you will need some funds to do this to get going, of course. A variation is a 'done with you offering' where someone guides you through the process for a fee (which we also do!). I mention 2 above, as I am aware that some people offer marketing / business partnerships in this space. I would be a bit cautious if the latter model as all you are effectively funding would be marketing costs and so the success of the partner to both attract and then resell the leads is paramount. So, a lot depends on what resources you have available to get going: time, know-how, money and what business model suits you best given your personal circumstances. Best Richard
  9. Saving for number 3

    Hi Andy As to you your extension point - it sounds like an annexe with it's separate access, in which case you might need planning approval and it could also receive it's own council tax assessment = two council tax bills for the property. As for the JV situation, in a post like this you only get to share the headlines, of course. However, one of my primary concerns would be the relationship with the JV partner and what you have agreed with them. You say they want their funds back out and that this should happen before you invest in more property. To be honest, I probably see the extension with the plan to rent it out as an investment as an objective observer. That said, perhaps you can have a chat with them and see what they say. I would also go back to what was written down in the first place as well...I hope you did have a written agreement? As it may be the case that their situation has changed after what was originally agreed and you are trying to work with them on a solution to help them out. If that's the case, then the extension idea might not be possible to pursue if the original terms would have allowed it and if the 'new investment restriction' agreed to mean another property investment rather than a home extension for short-stay guests. I had this situation in the past, where a JV partner's situation changed and they wanted their money back sooner that we had agreed (in writing). In this case, I was able to move things around to help them out and return their funds much sooner than they had originally agreed but to meet the changed needs. It's not always possible, for example, if you have all the cash tied up in the project it is used for and you need to sell or refinance to extract it. However, as I was able to rejig things a little, it meant they went away happy and the win for me was maintaining a good relationship with them and good karma most likely! Working with JV partners is all about trust, openness and a win-win solution-oriented approach I usually find. Best Richard
  10. Correct way to calculate return on investment

    Hi Micrea If you know the story of Goldilocks and the Three Bears, then you will understand everything you need to know about KPIs, metrics and measuring your investment returns! You need your investment measures to be 'just right', also known as the Goldilocks Principle. Nearly everyone you will come across will tell you that the investment property has a gross yield of x% - this is 'too little' in terms of an investment measure for most investors, as it ignores pretty much everything that is relevant (e.g. all the costs!). Even it's more favourable big brother net yield has it's limitations. Then, we can extend ourselves with complex financial modelling, such as Net Present Value (NPV), Discounted Cashflow (DCF), the Risk-Adjusted Return on Investment (RAROI to differentiate it from simple ROI, which I will come back to) and the Internal Rate of Return (IRR) as you mention. All of these measures have one common ingredient - they all take into consideration the 'time value of money', which states that when cashflows occur can make a huge difference to your actual returns. Would you prefer £1 today or £1 in 1 year? In truth, for the average investor, this is way too complex and so 'too big' in our Goldilocks world. Finally, we have a few Key Performance Indicators (KPIs) that sit somewhere in the middle, which take most of the relevant items into account, without requiring the brain the size of a planet to figure them out. My personal favourites are (simple) Return on Investment (ROI) or better defined as Cash on Cash Return (COCR), Net Annual Cashflow & Payback Period, along with one or two others once I get more serious! These are the 'just right' metrics that will serve a purpose for most investors and so meet the Goldilocks Principle most of the time. Now, if you have a complex business model with various different timings of cashflows (such as large-scale developments), then IRR and similar metrics that take account of the time value of money will probably serve you better. However, if all you want is a few BTLs, then IRR is probably way too over-engineered for most of us to use I would suggest. So, choose your personal KPIs to suit your level of maturity, business model complexity and also appropriateness to your investment goals. These two articles might help, although for a more in-depth review of IRR and the like I have a 33 page white paper that I wrote when I worked in financial services...which I will avoid dumping onto you right now! Links: So, in conclusion, choose the KPIs that are just right for you! Best Richard
  11. HELP! Not sure how to start?!

    Hi Matthew Thanks! Helping people at the start or early stage of their property investing journey is something of a personal mission. By all means feel free to check out some of the resources mentioned in my signature below if that would help. Much of it was born from how I felt as a newbie myself, with all the conflicting, overwhelming and even down-right wrong (perhaps fraudulent) misinformation around. So, to your question and approach. Most people would buy one at a time, but most people don't have the cash to buy 10 at once to be fair. Providing you can locate a decent block (make sure you buy the complete block along with the freehold and control the management company in the case of flats), or that the overall fundamentals in a portfolio / part-portfolio stack up, you could realise some benefits from this latter approach such as: 1. A 'wholesale' discount for buying in bulk 2. Potential stamp duty savings if you buy at least 6 units in a single transaction 3. Potentially some reduced transaction costs when undertaking a consolidated purchase 4. Less competition from everyday investors 5. A ready made income stream from a single consolidated purchase Many of these purchases will be sold via specialist / commercial agents, sourcers or even auction and so you probably won't find them on the regular portals, or if you do it might not be that obvious. On the other hand, if you can't find the right bulk buy opportunity right now, or if you find that in some portfolios the odd 'dog property' is bundled in with some decent ones to disguise the fact, then by all mean go ahead and buy one at a time. However, I would expect a significant financial benefit from buying in bulk, so it might be worth a bit of effort to hunt them down. I would also confirm access to finance is available via your broker to avoid any embarrassment later on...but if nothing else, you may be able to buy with cash and then refinance out once you meet the minimum holding period to make your rental income count as personal income. It may also be worth exploring this anyway, as it may open up more lender choices in say 6 months' time... Best Richard
  12. Newbie looking for some advice

    Hi Essex You have a classic beginner dilemma here, which comes from not starting in the right place The right place to start is with your goals and purpose and only after knowing that can you decide on things like strategy (BTL) and tactics (Brentwood v Huddersfield). Investing in Brentwood implies an emphasis more on long-term capital growth, whilst investing in Huddersfield implies an emphasis more on short-term what is your priority? This comes out of your goals: what you want to achieve and when by. That all said, if you are looking for something of a combination of growth and income, then the so-called Northern Powerhouse...or rather elements of it, could offer a decent balance as explained here: I'm not sure how much Huddersfield will feature as a potentially high growth area though, better bets might be Manchester or Leeds I suspect. Hope that helps, Best Richard
  13. HELP! Not sure how to start?!

    Hi Matthew Great stuff that you cashed out of your business at such a young age, well done for achieving that! So, I will start with a question: how hard do you want to make this income-generating process? The hard way is to do ones and twos (actually quite a lot at £65k each), scouring the portals / auction listings for doer-uppers, do the work, sell them on and start over again. The easy way is to buy ready-to-rent properties, or better still, a block of flats or a portfolio and then put your feet up a bit. The mix and match approach is to do some the easy way and some the hard way if you really enjoy keeping busy and doing projects (say 25% invested into projects for example) £5k per month with a starting fund of £1.2m equates to an return on investment (ROI) on cash invested of 5%...which is VERY doable with property, even before capital growth. Personally, I like to do other things with my time and so and I would aim at either the easy way or the mix and match approach to have a bit of fun along the way. You should be able to get financing, even without an income / job...especially if you buy a ready-made block of flats or portfolio, which will be taken into account as you income by a commercial lender. Talk to a decent whole of market mortgage broker about that. So, asking the question hard do you want to make it? I was going to say good luck, but take care is probably more fitting...just watch out for the sharks is all I would say! Best Richard
  14. Hi... I just can't find a property to buy!

    Hi Harry I see a few people say that they struggle to find deals with decent ROI BUT it is definitely possible! The best ways to achieve high ROI opportunities are to 1) invest in higher yield locations and 2) don't just rely on discount but try to add value to a property and then refinance to reduce the cash invested / increase the net ROI...or combine the two. I discuss some aspects of this in a recent article about buying 'BMV' on Linked In: But, to illustrate the point, attached is a snapshot of a deal we looked at in Liverpool recently. Note, that Liverpool is widely regarded as being a high yield area and this particular property proves that at 7% gross yield. It would be in what you might class as a benefit tenant location, so is not necessarily right for everyone...but there is usually a trade-off for higher returns in some way. You can still get close to 8% ROI without renting to benefit tenants as well. The picture attached shows 3 different strategies: Far right - standard BTL, buying a done up property that does not need work and simply renting it for the LHA rate...these can be found still and as you will see it beats your 8% target ROI Far left - flip / buy-to-sell (BTS) project, where you buy a property that needs work, improve it and then sell it on...higher ROI than BTL but you have to repeat the model say each year as you don't retain the asset Middle - buy-refurbish-refinance (BRR), where you do as per the BTS but instead of selling, you (re)mortgage and keep it with less cash left invested compared with will see how the ROI can be increased massively by adopting this approach. It s more work and you do need to know how to go about this strategy, but these deals do exist. So, my suggestion is to look in higher yield areas and also consider value-adding strategies, such as BTS or especially BRR if you are looking for higher ROI on properties to retain in your portfolio. Hope that helps, Best Richard
  15. Another Ltd or personal investor query

    Hi James You are probably a borderline case and much would depend on what happened to your plans after 'the inevitable crash'. If you plan to keep growing, then maybe a limited company is the right choice for you as this post would help explain: However, you could go both ways, at least in the short-term, as it looks like there are clear pluses and minus for both, such as: Low income requirement from rental income - favours dividend payment from a company Higher lending costs for a company - favours personal ownership Wife may reduce earnings later and so become a clear basic rate taxpayer - favours taking most income in her name personally Mortgage interest relief caps in personal names - favours investing via a company Limited number of properties over foreseeable future (value depending per article) - favours personal ownership Higher rate taxpayers (for now) - favours company ownership Certain legal and tax structures available - favours personal ownership with other instruments to spread things around between different 'legal persons' Ability to pass down property to children or other beneficiaries - usually favours companies Higher leveraged and the tax limitations of claiming interest deductions - favours company ownership So, you see that if you had have said one or two properties, it probably favours personal ownership still, but if you have said 10, it would have more clearly favoured company ownership instead. 3-4 is somewhere in the middle, so unless you have a screaming reason to do otherwise, one option would be to own personally to get going, with the opportunity of selling and using capital gains tax offsets a little later to probably get the best of the current rules and costs. This would then allow you to defer the decision to set up a company until you knew you would be going to go into larger levels of property ownership. However, it does carry more hassle and transnational costs and you may end up paying a bit of tax if the capital growth is stellar (but tax means you make money too!). However, everyone's situation is different and so it is a good idea to speak to a tax adviser yes. My own tax accountant (Fylde Tax Accountants) are not taking on new clients unless they are larger portfolio landlords, otherwise I would have suggested that you have a chat with them. I usually suggest to people that getting going is the most important aspect and so complex tax advice and structures , whilst ideal to get right from the start, can usually be fixed one way or another before it gets too out of hand. Good luck! Richard