richard brown

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About richard brown

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    Obsessed member!

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Profile Information

  • Property investment interests
    Value-adding refurb
    Single let
    Holiday / short-term let
    Trading / Flips / Development
    Selected overseas markets
  • 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 :)

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  1. Whether it's a good investment or not is down to you to decide BUT one thing I noted is that some of the assumptions in your calculations are potentially providing a false read of the ROI here, as per the attached screenshot. Purchase price - this will of course depend on where you land with the negotiations, but I have assumed 5% off the asking price, which is average. Buying costs - don't forget the SDLT, legal fees, mortgage costs and survey - I used some typical numbers for these. Works - £2k for a combi boiler and kitchen units might be doable if you are tagging onto the existing GCH system, but it's not recommended. Needless to say, I allowed £3k plus £750 for 'white goods' as a middle ground Rent - I went with your LHA rent at the top end Management - I know you said you will self-manage but that does not mean it is free Your time has a value and when you come to re-let, you may have some actual costs as well. You could choose to remove this but in which case, I think self-managing should carry a premium to allow for your time then...debatable but that's my view at least Voids - you show perhaps an initial view here, but there will be voids over the period of ownership. For example, there will be an initial void as you do the works and then time between tenancies. According to Upad the average tenancy is now 15 months and according to the NLA the average void period of their membership is 3 weeks per year. Best to budget some in then I suggest. Sundry - you picked up insurance, but there are other costs, such as the gas safety certificate, property inspections, deposit protection fees, advertising, PAT test, Legionella test, DPA/GDPR compliance, licensing fees (if applicable), accountant contribution and so on. You might argue that many of these do not apply if you are self-managing but as with the management point above, better to provide for something than not, or allow a premium to cover for your time. Contingency - Or maintenance; I went with my own assumption of one months' rent per year for a fully refurbished or ready-to-rent property, but in truth your 10% is probably a better bet and I should have used that. So, using these assumptions, I make the ROI 8.1%, which you should decide if that;s good enough for you or not. We can probably debate some of these points until the cows come home, but the main thing is not to deceive ourselves as to the true cost of a BTL. Self-management is also a very active and hands-on approach and don't forget that over the long-term of say 10-25 years, there will be lots of activity to manage (re-letting, arrears, repairs, updating, refurbishment, mortgage renewal, year-end books, etc.), which does have at least an 'opportunity cost'. It's not meant to pull your deal apart; I'm just trying to show the complete picture of a BTL...I hope that helps perhaps others as well. Best Richard
  2. In a messed up situation

    Hi Stirling Oops...I can well imagine the sort of conversation taking place there! Open questions tend to help more than directed pointers towards a pre-conceived end-game I have found through experience... Where would you like us to be in 10 years' time? What sort of plans would you like to put in place for the kid's future? In an ideal world, what kind of work and lifestyle would you want? In our case, the answers were something along the lines of: home in two countries, extensive travel and a choice of whether to work or not; we got the kids through Uni and gave them a good start in let them fly their own path and...flexible 'project or portfolio-type of work', my wife wants to be a non-exec director and I like property projects ad sharing knowledge. Also, understanding attitude to risk, go & no-go areas in terms of what you will do, how much time, money, effort, etc. to throw at this. In our case, our risk profile is different, so we had to stretch a little to meet somewhere in the middle, investing in areas with an established legal system and not where our assets could be at risk, a lot of the money, but not without having a contingency / rainy day fund, I do the investing and wealth creation, she does the conventional career stuff, that sort of thing. These are just some of the steps you could take to 'seek first to understand...' Aligning our goals with our partner is essential, but also challenging...I didn't say easy did I? All the best, Richard
  3. Hi Robin Two main things to consider here: 1. The provision of free housing to you by the company would be a benefit in kind and so taxable. That's going to interest HMRC for sure! Best speak to an accountant on the exact implications. 2. You mention 'mortgage interest' in the list of expenses to be covered, which tells me the BTL has a BTL mortgage on it most likely. The lender will be VERY interested in your plan and virtually all BTL loans will expressly forbid you to live in the property. So, you need to also check into that before running into difficulties with your lender. Sorry to bring a gloomy response to your question, but that's just the way it is...please don't shoot the messenger Best Richard
  4. In a messed up situation

    Hi Stirling Forgive me for saying this, but the thoughts seem to be a little cluttered here BUT fear not, they can become de-cluttered! The reason why the thoughts at least appear to be cluttered is probably for two reasons: 1) the options outlined are very tactical (buy or rent, save or sell, etc.) and 2) there seems to be a lack of alignment to your long-term goals and vision, at least based on what you shared so far. So, I always suggest that new or early stage property investors begin with the end in mind (as Covey says), which is with their purpose and goals, which is wrapped into a concept I like to call your 'Someday Goal'. Once you know clearly what this is, the tactical and even strategic decisions become more straightforward, as you will be basing your decisions around these. I suggest your wife is also a part of this thought-process as well, if not already. The attached articles might help you with that and you can always subscribe to my YPN articles by emailing into to our website...if you want to that is! Read them in order though (97 then 98). Once you know where you are heading, decisions or choices such as you suggest here will become much clearer...the right choice depends on where you want to get to. by when and in what sort of way. The right choice might not be an easy one, but it should still be the best one to take you towards your overall Someday Goal. Too much to say about all this in a single post, so I hope the shares give you some insights. Best Richard RichardBrown_YPN98.pdf RichardBrown_YPN97.pdf
  5. Advice needed

    Hi Vicky Sounds like a tricky situation, I hope it works out OK. There is something known as the 6-month rule as you have detected. Basically, most mortgage lenders will insist on a property being owned for at least 6 months before they will receive a new mortgage application on it from a new buyer. It's not all lenders, just those that are members of the Council of Mortgage Lenders (CML), sadly though, this will cover most lenders. You can still sell it to a cash buyer or to a non-CML backed home buyer within 6 months. Also, by the time you have sold it, the 6 months will be nearly up anyway. I have seen some lenders that insist on the applicant waiting until the 6-month mark is reached and others only that the 6-month mark is released before releasing the funds. It does tend to take a couple of months to complete conveyancing using a mortgage typically and you would be lucky to sell within a month as well...unless you were selling at a very low price and for cash say. Get in touch if you want some more guidance here though. Best Richard
  6. What would you do?

    Hi Ros Assuming you are aware that you won't be able to access any of the pension fund until you reach at least 55 years of age, whatever you do is a deferral plan to some extent. Sensible wisdom would suggest spreading it around a bit (diversification)...possibly not just into different property projects either...but I am not an IFA keep in mind. From a property point of view, you can't invest directly into residential property through a SSAS. You can invest in commercial property and can also finance residential property in a development phase, but can't fund an occupied residential property - again check the details. So, with a fairly hands-off approach, that would suggest a couple of distinct possibilities. 1. Buying one or more commercial buildings (offices, shops, etc.) and just collect the rents. You could make this a little more appealing from a returns point of view by using a sensible level of borrowing (the SSAS can borrow money too!). If you happen to have your own business, then this is also a neat little way that you could buy your own premises... 2. Funding other people's property developments and just becoming a private lender collecting interest and then recycling the capital after each project is completed, which I have some experience of. There will be other options if you want to be more hands on, but these are the simplest two for sure. I have bags of free resources on my own website, so you don't have to spend a fortune on courses wither...especially with a hands-off approach.The main skill set you will need to develop is that of research and due diligence, so I would suggest that you start with that before launching into how to be a full or part-time property developer Best Richard
  7. Energy Consumption Management

    One thought occurred to me after your reply...Cryptocurrency! Given the relative ease with which your tenant agreed to both a rent increase and to apply his deposit to the excess bill, makes me wonder what he is up to lol Cryptocurrency mining is a kind of white collar cannabis farm now it seems. The act of mining Cryptocurrencies requires by definition LOTS of electricity usage as a 'cost of production'...but in a house share / HMO it is not the data miner picking up the tab, it is of course us! One potential solution I did hear about here, could be to set data limits on the broadband / wifi for data usage...don't ask me how, but have a listen to my chat with a home automation installer, who mentions it here: and here: I guess you have some idea of how they are using high amounts of energy, so maybe this is not the case, but high-end computer equipment running 24/7 will definitely suck a lot of juice, that's for sure. Best Richard
  8. Apparently, your message came through OK Kevin. Look out for Karen's response in due course. R
  9. Hi Moore Not wishing to seem pedantic, but to be specific, what I said in full was: Combining 'BMV' AND high yield AND professional tenants with NO remedial work is a bit of a unicorn in truth. In other words, looking for a discount without undertaking works and also high yields with 'professional tenants' (usually defined as 'white collar workers' and so usually also excludes 'blue collar workers') is difficult to find in total. Many of the other comments made in this thread have borne this out to some extent. That said, recently I have personally reviewed BTL properties requiring no or very little work in respectable areas such as the city suburbs and satellite towns in these regions: north-west: such as Manchester, Liverpool, & Warrington, north: Leeds, Bradford & Sheffield, east-midlands: Nottingham, Leicester & Derby, Staffs: Stoke, west-midlands: Birmingham. I could probably add some areas in the north-east, Scotland, Wales, and south-west to that list quite easily, but I am not looking there in a big way right now. Oh, I also invested in properties in Chicago & Cleveland in the USA with 15% gross yields with single lets too! There is a big debate about returns and how to measure them. Personally, I prefer ROI as it measures net returns (usually pre-tax) as a % of the total cash invested (rather than the total cost of the property, fees, works, etc.). The deals I referred to here, all achieved at least 10% ROI and as said required no or very little work. How to find them...well, I have a system and if you want to know more just drop me a line and I can share more on it but in the meantime, here is a link to a podcast episode on property sourcing that covers many of the sourcing methods and ways to look: Personally, I love the value-adding strategies and so prefer BRR to BTL, as it makes my money work harder for me...after a little bit of effort at the front end. But it's 'different strokes for different folks' here and what is one person's elixir can be another's poison. In other words, decide what is right for YOU personally. It could be ready-to-rent BTLs with mid-to-high yield to working tenants, or low yield with potential for capital growth, an added value project, such as a flip or BRR, conversions & developments, short-term / holiday lets and so on. The deals are out there, just that they can take some digging up at times. Best Richard
  10. Energy Consumption Management

    Hi Kirsteenb I think you have hinted at the most common solutions already, but the top ones are: 1. Contractual - a bills cap is used quite often (bills inclusive subject to not exceeding £x per week on average) or a 'fair use policy' as a softer version...but far less enforceable. The challenge is that you often need to run a whole year to see the pattern play out and then your tenant could move on, so you also need an element of control. You could also rent on a bills exclusive, but that rarely works with unrelated HMO tenants on separate tenancies. 2. Energy management systems - you mention Hive, which along with similar systems allows you to control your heating settings. Combine this with TRV values on rads and you can them set zones (eg rooms) and set maximum settings in each area. It is much harder to control electricity in a similar way, but low-energy light bulbs allow less electricity usage generally, but it won't stop the cannabis grower with their should also review your energy provider regularly, I am no using Labrador to benchmark my energy providers, but other providers are available. Finally, look into energy-efficient systems like solar, wind, heat-recovery pumps and economy 7 electric heaters if suitable to your property and especially when undertaking renovations. 3. Inspections & engagement - to supplement the above contractual and control issues, make sure you have regular inspections and look inside people's rooms. You can also then set the expectation for energy usage at the start of the tenancy and raise again as you see bills come through and at inspection time. I have also appointed a 'lead tenant' on occasion, who gets a slight rent reduction for being my eyes and ears on a daily basis. 4. Incentives - also consider sharing the winnings with the tenants as a bit of 'gamification'. I have not done this, but if you did go with a bills cap for example, why not also 'gain share' any savings below the average to offer a potential rent rebate to the tenants? Just an idea to have a carrot as well as a stick. Personally, so far I have mostly only gone with 2 and 3 above as I have not had too much of an issue beyond that. Best Richard
  11. Hi Moore Some really good observations from both Kingsley and Londoner there, which are a lot more realistic than you will see from some property trainers and the sourcing sales glossies that's for sure! Combining 'BMV' AND high yield AND professional tenants with NO remedial work is a bit of a unicorn in truth. I agree with Londoner about genuine BMV but that said, I tend to find plenty of properties that achieve a 10% ROI with minimal or no work on the open market...I would tell you where to find these but I am not allowed to The one potential compromise I suggest you make is with the tenant profile. Everybody seems to want a 'professional tenant' when all you really need is a reliable 'working tenant'. Make sure the tenant is not spending more than 40% and ideally closer to 30% of their take home pay on the rent and a working tenant with good references should be fine. Keep in mind that families tend to stay for longer than young singles generally as well. I would say you can definitely find a BTL with minimal works suitable for renting to a couple / family for £160k that can achieve a 10% ROI. In fact, I know this to be the case as several have passed across my desk in the last few weeks and months alone. Get in touch if you want to know more, but if you want to find them yourself - as a starting point, look in locations where the average gross yield is >=7% (ignoring multi-lets from the results) and then appreciate that you will have to kiss a few frogs along the way! Best Richard
  12. Hi Paul You are right, things can happen over a lifetime...I had a really good friend and without going into detail, money disappeared from from mine and others' businesses due to a personal problem. I am not suggesting not to trust anyone...just have a written agreement and then have some checks and balances is all. I suggest that you draft a 'Heads of Terms' and just jot down some of the bullet points per our exchanges as a starting point. Or, Google: 'Property Joint Venture Agreement' and / or 'Shareholder Agreement Template' or sign up to Law Depot or Rocket Lawyer and get their template versions. You will find that none are a 100% match to your needs, but pay £10 to £25 for a a couple of decent templates and just use them to produce the full HoT and then hand them over to a solicitor to fully draft. It should not cost a lot to turn a pre-drafted HoT into a formal agreement, hundreds not thousands. Best Richard
  13. Hi Paul A couple of potential holes to plug here: 1. Your exit plan - what is it? You don't have to tell us, but you should know what it is and then you can answer the question of how many investment companies you end up setting up. 2. Terms of engagement - you should have shareholder agreements and as you identify the business plans for all the companies (how decisions will be made, exit plan, dealing with deadlock, profit distribution / rollover, capital introduction, borrowings, etc.). However, you might also want a separate JV agreement and definitely write down the terms of engagement with the separate building company, as with a non-competition possibility, this could be open to abuse, or at least lazy-bidding or a temptation to transfer profits across to skew the results in one person's favour. 3. Terms of directors loans - you should agree the basis of these, such as intended loan period and any interest expectation, particularly if the sums are expected to differ. 4. Roles and responsibilities - these should really be included in 2 above, but best to stress the importance of being very clear on who is going to do what and how decisions will be arrived at. For example, are all refurb decisions (including standard, budget, scope, etc.) to be decided by your partner, how will you agree on what to buy, how to sell and at what price, etc.? Partnerships are a great way to develop a business, but by discussing and agreeing these things in advance (and more besides) it can help to head off potential problems and cause of conflict later on. Best Richard
  14. Age 22 - Beginner - KEEN!

    Hi Simon Fund-raising - lots I could say here but a good resource to get you started in the 'grow your pot' section in the attached podcast episode and show notes: I have done most of the following: sold unwanted items or assets, taken a second job, started a home business in my spare time, borrowed from friends and family, used unsecured debt (dangerous though!), buddied up & JVs, second charges / equity release and probably a few more I have forgotten. If you would like the business plan article, just drop an email referencing this conversation and what you are looking for to my assistant at and she will let you know how to get it (it's in the subscription-free access to my YPN articles on my website). Best Richard
  15. Age 22 - Beginner - KEEN!

    Hi Simon It's so, good to start early if you don't know how much that will help you later on,. As Warren Buffett says 'it's time in the market, not timing the market that counts'! A couple of tips, one tactical, the other more strategic: 1. Your plan for your own home - see if you can buy either a 3-bed house and rent out 2 rooms (take the box room yourself if necessary for some extra delayed gratification!) and / or where the rent generated is equivalent to c£7,500 per year, as that's the tax-free allowance. This will probably allow you to live there effectively for free and so also to save up towards your next step. Better still...see if you can also add some value to this property to create some additional equity for later on... 2. Your plan more long-term - this is the strategic part...get a property business plan together. The simplest way to get started is to answer the following questions: what do I want, when do I want it and why? If you want more on this, I have written a mini-series for Your Property Network magazine around creating your property business plan - get in touch if you would like a copy. If you can start with these two steps, you may not need a mentor right now to be honest, as it sounds like it will take you at least a year to achieve step 1 and that's OK. I would then suggest using this time to study your craft before rushing ahead too far with mentoring...unless you have such a big itch (or 'reason why') that you have to turn a leisurely walk into an Iron Man challenge instead Best Richard