richard brown

Established Member
  • Content count

    846
  • Joined

  • Last visited

About richard brown

  • Rank
    Obsessed member!

Contact Methods

  • Website URL
    http://www.thepropertyvoice.net
  • Skype
    richardmb333

Profile Information

  • Property investment interests
    Value-adding refurb
    Single let
    HMO
    Holiday / short-term let
    Trading / Flips / Development
    Selected overseas markets
    Mentoring
  • My skills
    Commercial & strategic property investment specialist
    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

2,303 profile views
  1. Critique My Joint Venture Investor Pack

    Hi Rob I do applaud you for attempting to pull together a professional looking pack. Here is some initial feedback for you: 1. It's too long and spread out - consider having a one-page teaser and then a follow up document. Even in a follow up document it should be smaller than the 12 pages you have shown, use columns, have smaller tables, use less words and more bullet points, images, etc. 2. You might struggle with the risk / return offer here and you don't really mention security, but who knows! 3. You are pushing out risk-sharing JVs...you need to be very careful with the law and regulations around that. For example, you cannot pitch a risk-sharing project to someone that is not a sophisticated or high net worth investor, so check the rules before you go too far down the track. 4. I would remove some of the personal contact info, especially when sharing on forums such as this...you don't know who could be scraping your personal info. 5. I would show more about the case studies you have already undertaken, what were the results on these? What is the evidence behind the results / projections? 6. As you are effectively doing this part-time and working full-time, it strikes me as a pitch to friends and family the way it is presented at least. If intended as a pitch to others, I would shift the emphasis away from your job and doing it evenings and weekends and present a formal project plan...it doesn't matter if you plan to complete 20 hours per week on the project if these are on Saturdays and Sundays as long as 20 hours are completed. Just one way of approaching that without it sounding like a hobby really. Hope that helps, Best Richard
  2. Shared Ownership Headache

    Hi Dave Honestly, someone needs to answer some serious questions here! You bought a 50% share in a property from a housing association in 2005...which already had a short lease of 79 years remaining? At the very least, I would expect the HA to fund 50% of the lease extension, if not all of it having sold you what looks like a bit of a pup tbh. However, you also took out a 15-year mortgage, which I assume is capital repayment, so you are paying it off over time. So, in 5 years, it sounds like you will own the property, or at least your share of it out right. So, that's good even if it looks like you fell under water for a while. The net returns right now are poor to be fair, but become average after 2021. You may have double counted letting agent fees, as the tenant find should either be included in their management fee or be a lot less than the £650 you quoted. However, have you provided for voids and maintenance in your figures (maybe RGI offsets voids)? It's definitely not the best deal in the world and if you plan to buy another property / home over the next 5 years it will cost you in terms of the 3% SDLT premium on the next one just for retaining this property. There aren't many redeeming factors that seem apparent from my reading of the situation, so perhaps cutting your losses might be a good option. However, it also depends on your plans and whether the HA will support you in a free of charge / subsidized lease extension. I would certainly be looking for that anyway as you will find it difficult to sell at full value without it. Sorry if this appears a little negative, just trying to be honest with you in reality. Best Richard
  3. BTL vs REITs

    Hi Glenn Yep, REITs have a genuine place for some people looking to invest in property! The 'Millionaire Next Door' school of thought would certainly support picking both stock market index funds and similar with property. For a steady and long-term approach, I can't see a big reason not to consider them and for some people, it really is just an easier a less hassle way into property. However, I will start the discussion off...here are some reasons why perhaps they might not work for everyone: 1. Costs - there are costs to pay to manage the REIT in the form of salaries, fees and other related costs of managing any kind of investment portfolio. 2. Average returns - OK, so the REIT managers will probably claim to beat the average, but 6% is not exactly stellar performance, so if you think you can beat that, then holding your own properties can help you to beat the average. 3. Limited leverage - REIT's are unlikely to have LTVs at 75%, so that will by definition reduce the benefit of leverage...whilst also reducing the risks of it too! 4. Befitting from Controlling assets - owning a REIT means you don't own the underlying assets. Sometimes it is worth owning the asset to capitalise further, such as with adding value, changing use, offering security, access to additional borrowing, etc. 5. Controlling your own destiny - some people would rather stand or fall based on their own decisions instead of giving your money to a company that might just mess it up...or worse! 6. Not trackers - a REIT is not an index fund, it invests in individual properties and many only commercial properties as that, even the F&C fund you mention is not an index fund and as you note invests in commercial property not residential. There may be some tax issues, but mostly I hate discussing tax as people's circumstances are different and personal to them. I am not here to persuade you what to do, but for me, I prefer to invest directly in property myself, but for others a REIT could be perfectly fine. Best Richard
  4. Opinions on 'modern method of auction'?

    Hi Darren I have not used MMOA yet, but I probably would do under the right circumstances. It does seem to offer something that you don't always find on a standard sale...certainty. If you effectively exchange contracts and the wording is well drafted, then the seller is committed to the sale. This is a plus for an investor to help avoid abortive purchases and so wasted costs in that situation. WRT fees - this is simple economics to me...if the deal stacks up after accounting for the fees and compares favourably to an equivalent non-MMOA purchase, then what's the issue? It is quite similar to paying a deal sourcer / buying agent really, so do the numbers and decide from there. That all said, if you can locate a similar property on the open market without all the fees, then it will probably be better to follow that course of action. I would imagine that the MMOA sales are for properties that need to be sold quickly and so hopefully also at an apparent discount. Whilst I am not a big fan of throwing money away, I am not closed to the idea of paying fees when there is a genuine upside in doing so. Certainty of completion and discount are two things that do bring a value, but as said, the deal still needs to stack up. I am agnostic towards the concept in principle therefore...although I tend to find decent deals on market (see my Property Deal Tips link in my signature below) and use reputable deal sourcers for certain off-market deals on occasion too...so I am not sure when I will use MMOA in practice. Best Richard
  5. I am getting a little confused now I must admit HMOs have a higher gross yield due to simply renting to more occupants and generating a higher total rental income from the same asset when compared to say a family renting that same property. For example, if your £300k property (not sure where that came from but let''s run with it) can be rented to a family for say £1,500 per month that's a 6% gross yield. If rented to 4 students sharing at say £500 per month each, that's £2,000 per month and an 8% gross yield. Or, if you can squeeze and extra bedroom in it's £2,500 per month or 10% gross yield. 6 would be 12% and so on. A single tenant will be responsible for paying all of the bills and council tax, so you retain a higher percentage of the gross rent than with an HMO as you quite rightly point out. But it is still usually more beneficial to pay bills on an HMO beyond a certain level. For example, if the 4-bed option has £500 in bills or other costs, then it works out the same net rent as the single let, but with more work, wear and tear on the property makes it less desirable. Add the 5th or a 6th bedroom and then it starts to pay off. I think that's your conclusion too. You point about having or needing more cash is also relevant, not everyone has £500k to invest, of course, and even if they do, they may prefer to see a proportional increase in the the return on their investment. Finally, a word about HMO valuations. Not all HMOs will be valued on an investment basis. If it essentially looks like a regular house and it so happens that 4 people happen to be sharing the property (say 3 in the bedrooms and 1 in the lounge used as a bedroom), with little in the way of modification, then it will be valued in the conventional way for a house (bricks and mortar valuation), rather than as an investment property. This affects lending and potentially also it's resale value as a result. Best Richard
  6. Can I Pay My Wife From Capital of House Sale

    Hi Stanley I think you have fallen into a trap that many do unfortunately. Profit from the sale of a flip is subject to income tax and not capital gains tax, so no £11k tax-free sum and no reduced CGT rate either, sadly. You may find it beneficial to flip properties through a company rather than personally. You will end up paying corporation tax on the profits, but you can still offset allowable business deductions like your wife's pay and business expenses. You can also withdraw dividends to a certain level tax-free and if you don't withdraw profits beyond this level personally, you won't be taxed on them personally either. If you are both shareholders you can each withdraw dividends up to the current £5k per annum limit tax-free. So, your wife's personal allowance effectively replaces the CGT annual exemption and the tax-free dividend payments allow another £10k of income to you both tax-free, which is repeatable each year on the profits of sale unlike the CGT allowance. You will have to pay corporation tax on the profit from the sale after the pay and expenses are deducted but before the dividends are paid. I would, however, strongly suggest that you get proper tax advice from a tax accountant to be 100% clear on the best way to proceed. Best Richard
  7. Large HMOs around Birmingham should achieve a gross yield of 11% to 13% and this will be significantly higher than a standard let yes. If the property you are talking about an HMO, this could explain the increase valuation based on the 'investment income method of valuation'. Rule of thumb os 6-10 times gross annual income, with 10x being for top-HMOs with en suites in Article 4 locations...7x being shared houses with maybe a single or 2 bathrooms in lower yield locations (the Co Durhams). Birmingham should be somewhere in the mid-range of that, but it's not an exact science either! Best Richard
  8. Based on the gross yield alone, £15k / £210k = 7.1%, which is actually quite high, depending on the location (no offence but high for London, low for County Durham). A property is worth as much as a willing buyer will pay for it...and if using finance what a lender thinks it's worth too The most reliable way to value it is based on recent, nearby, like-for-like sales. If none exist, expand the search area / time and also look at properties on the market. The developer's margin is slightly irrelevant and in truth none of your business really. However, understanding this, along with an appreciation of what they can realistically achieve for the property and their motivation for selling can certainly help in positioning your offer. Whether they accept or not is up to them. Some people say that if you are not embarrassed when making an offer, then it is too high! At the end of the day, your offer should be based on what it is worth to you and how likely it would be for you to acquire an alternative for a similar price. Hope that helps. Richard
  9. Bristol newbie looking for advice - urgent!

    Hi Ella Great, keep that confidence, but with a hint of caution and scepticism and you will do just fine! As to self-managing vs. using an agent - that's a BIG debate you have started there. My take is simple really...either leave it to the professionals i.e. the letting agents, or get accredited by one of the major landlord associations if you do decide to self-manage. The accreditation will give you the knowhow and back up to help you along, but if you want an easier life, the agent route should take care of that, provided you pick a good one! Some people say, use an agent for the first tenancy and then self-manage at renewal (after 6 or 12 months), which allows the hardest part to pass and for you to pick up some knowledge along the way as well. It's not just about knowledge or confidence for that matter, it's also about personal preference, lifestyle choice, your attitude to investing (passive or active) and of course how much you value your time. Net profit is important, but don't undervalue your own time either. As you progress in this industry your time becomes ever more valuable I can assure you. No right or wrong answer, more of a 'best fit' for you and your personal situation really. Best Richard
  10. New limited company Property Development

    It's a little toppy - no real reason to separate out all the individual line items, other than to pad out the cost lol My accountant charges a flat annual fee to include all of this...the step from accounts prep to tax comp is a couple of lines in a spreadsheet and a form to HMRC. The Confirmation Statement & PSC Register is a couple of forms sent to Companies House, so not a lot of additional work in other words. Don't forget that they have not specified payroll or personal tax returns there either, and these costs will be subject to VAT as well probably That said, a good accountant is hard to beat, so if you also get unlimited advice from an experienced / wise sage for example, then no harm paying a bit extra for that....but I get that at a lower rate than you have been quoted, but charges also vary across the country as well. You should get advice on the VAT element from your accountant as well! Best Richard
  11. Bristol newbie looking for advice - urgent!

    Hi Ella Sounds like you have your head screwed on pretty well to me, saving to buy your own home from age 16 and accomplishing it at 22 deserves immense credit and you should be held up as a role model for doing so, well done! WRT your latest deal, firstly, there is usually something in a project that could go better than you hoped, but at the same time you should not be too hard on yourself for that as it happens to us all. If this project genuinely returns 10.5% ROI as a BTL, then that's pretty good I have to say. Just make sure that the ROI takes into consideration ALL cash inputs (eg you mention a renovation, have you accounted for that?) and the profit also accounts for all costs and accruals too (eg voids, maintenance, insurance, agent fees, etc. on top of the mortgage payments). If it does, then 10.5% ROI is over-achieving what the average investor would be, so that's excellent. Don't be fooled into believing that double-digit ROI is easy, it's not! Personally, with that sort of return and a (potential) mortgage offer in hand at less than 3% I would not wait...if it stacks up based on this mortgage, you will start earning money now rather than leaving money on the table until you can shave a few pennies off the rate later. You can always remortgage later, after the fixed period ends. If you want some free or low cost resources, just check out my links below,,,but you seem to be doing ok to me! Good luck! Richard
  12. BRR is this how it works against a deal?

    Hi Royce Yes, CML suggest that their members must have a reasonable period between ownership and refinancing and the de facto gap happens to be 6 months for most of the members (it's actually a guideline rather than an absolute rule). However, the non-CML members, such as commercial lenders and challenger banks can refinance in a matter of a few months, so that's the way to go if you want to refinance quickly, although sometimes their rates can be a little higher. R
  13. BRR is this how it works against a deal?

    Hi Royce I do love a good BRR project myself too! However, based on the info you have shared, I sense that perhaps you have not experienced one before, or if so, it went swimmingly well? They don't always go as well in practice as on paper unfortunately. I say this as I see the following potential omissions or risks in what you shared: You seem to miss out a number of costs, such as fees for the refinancing and holding costs (e.g. council tax, insurance, utilities, bridger legal fees, remortgage fees, etc.), so make sure you have captured everything in your numbers £10k in works to generate an increase in value of £35k might be a little optimistic these day...remember, that you will have to get the buy-in of both the valuer and the lender for this to stick and a simple makeover often does not usually do that, but stranger things have happened! 4 months from completion to refinance is also optimistic and is also only possible when using a commercial / non-CML lender any way due to 'the 6-month rule'...I usually budget on 6 months myself. Still, even if some or all of these things go against you, the idea of a 'free hose' or 50% to 100% cash recycling is very compelling isn't it? Best Richard PS - so true on the pre-3% SDLT premium days...this has made flips and BRR more challenging for sure!
  14. Rapid home buyers

    Hi Omar I have some experience, but on the other side of the fence i.e. as an investor / developer that has bought properties using such companies These 'fast sale companies' usually adopt a model of introducing you to a buyer that can move quickly and can take on most issues that you might have in a property in their stride (e.g. tenant issues, property issues, legal issues, etc.). Often the buyers use cash or cash-equivalent funding (such as bridging finance), to enable a fast sale to take place. The sale usually takes place in around 4-6 weeks, slowed down mainly by the legal conveyancing process. The trade-off for a fast completion is usually a discount from the equivalent market value of the property. To the seller, this is valuable if by completing quickly this helps them in some way, such as by avoiding pain (e.g. repossession, financial difficulties, dealing with agents and tyre-kicking viewings and so on) or by providing a more positive benefit (e.g. by giving them cash more quickly to move on with their lives, releasing them from a stressful problem and so on). The company usually gets paid a fee by the buyer introduced. The buyer usually pays this fee provided the discount offered is substantial enough for them to live with the problems of a fast completion, which often come with other problems like legal and property issues as I said. I think you probably get that already in a large part. What many of these companies do is try and lock you into selling through them exclusively, such as by a purchase option agreement or assisted sale agreement for example. Then, they usually look for an individual buyer through their network to take the purchase on by assigning these rights in some way. Some of these fast sale companies essentially buy the property themselves (or for their owners / directors), which has a plus and also a minus, The plus might be no other party to deal with, so technically simpler, faster and more certain. The minus is sometimes that the vendor is put in a difficult position, which could later be exploited. For example, there have been reports of some buyers dropping the price just prior to completion, knowing that the vendor might be royally-shafted unless they agree. So, choose wisely! I have an alternative for you to at least try out if you like. I run a Property Deal Tips service that highlights good deals to property investors. As long as the return on investment is at least 10% (different to a discount), the deal could stack up and be circulated among the subscriber list. Clearly, the better returning deals will be more appealing and go faster. If you would like me to take a look at your property, I would be happy to do so, just get in touch (various contacts below). One word of warning though, a price drop from £125k to £115k does not make your property 8% below market value (BMV), and even if it were, it is unlikely to gain sufficient attention to an investor that can complete quickly, mainly due to the level of transaction, holding and selling costs that they have to factor in, before even looking for their 'developer or investor margin' use of cash resources and the pressure and sheer hassle factor of moving quickly. Expect a discount of at least 15% (and more likely 20%+) from equivalent like-for-like values for it to be an attractive proposition to a fast sale, cash buyer in order to make it worth their while. This might sound harsh but it is the reality that comes with this level of motivation I'm afraid. Hope that helps explain, and as said, get in touch if you want me to take a look. Best Richard
  15. Hi Craig This is one of the most tax-efficient property strategies there is! Rent-A-Room income is tax-free up to £7,500 Profit on sale of the home will be Capital Gains Tax free Conversion of your home to BTL later would also attract Lettings Relief, selling at a profit subsequently would be subject to capital gains tax, which is lower than income tax The only drawbacks are an inability to offset any costs against tax, such as mortgage interest and the Rent-A-Room Scheme is limited to 2 people There are a few other considerations, such as sharing your home with strangers, which is usually fine when you are single and not always when you have a family say and lender / insurer / freeholder (if applicable) notification or permission. That aside, I personally think it's pretty hard to beat as a tax-efficient property strategy as I discuss on my podcast here: http://www.thepropertyvoice.net/musings-home-as-a-tax-efficient-property-investment-asset/ Go for it I say...but don't put all your eggs in one basket either Best Richard