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Property Investment Strategies

British & Far East Traders refer to these points when analyzing investments for our own portfolio and for our clients


  • Below Market Value (BMV)
  • Lease Options (LO)
  • Rent to Rent (R2R)
  • Buy to Sell / Flips (B2S)
  • Buy to Let (BTL)
  • Serviced Accommodations (SA)
  • Commercial to Residential (C2R)-advance strategies
  • Land/ Large Development - advance strategies

Below Market Value (BMV)

  • most common deals investors are looking for
  • investors ideally look for 20% BMV because they aim to refinance them at ideally 80% Loan-to-Value (LTV). This leaves them with none of their own money left in the deal
  • ideally you need to offer around 70-75% of the Current Market Value so the deal is commercially viable to you as an investor when you refinance the property
  • the more BMV you can get the better the deal. 
  • expected values: 20-25% can still be expected in some parts of the UK; 10-15% in more buoyant markets; and of course in London Current Market Value is as good as BMV. 
  • 15-20% rough guide BMV for clients anywhere in UK
  • Off-market/Direct to Vendor (D2V)- tends to get better deals.  
  • Leeds, Manchester, Birmingham, London: finding BMV in these areas are increasingly difficult
  • Sellers with high equity in property: check in Land Registry and aim for pre-2000 purchase to aim to locate sellers with high equity left in their property

Lease Options (LO)

  • very popular strategy for investors
  • its almost the same as R2R, however we attach the option to purchase the property at the end of the term
  • the beauty of LO is you can control an asset without having to put large deposits down
  • pay the vendor what you promised them and keep the balance for yourself
  • get cashflow from asset without actually owning the property
  • very important to get a £150 minimum net cashflow per month (i.e after mortgage repayments, bills, management fees, ground rent, etc. )
  • term agreed upon should allow for capital growth (Mortgage Redemption Amount)
  • Ethical Lease Option: you should enter a Lease Option Agreement (LOA) with an actual plan to purchase the property at the end of the term OR re-assign the option/resell the option in order to settle the seller's price. 
  • Negative Equity in a property is the most common scenario lease options are triggered or entered upon
  • Lease Options Specialist training is highly recommended
  • Lease options should be very flexible
  • Direct to Seller/Direct to Vendors are the best ways to find these deals.
  • these deals are increasingly being funded now via Crowdfunding platforms or Peer to Peer lending as you will have the option to purchase the property and be able to develop it without using your own money

Rent to Rent (R2R)

  • probably one of the most popular strategies of the moment
  • Rent the property from the landlord and then you rent it out again to others- usually to multi-let people. 
  • Rent the property on a management agreement- you in effect becomes the landlord management agent wherein you offer the landlord a guaranteed rent per month
  • Rent out the property on a room by room basis to tenants and you keep the difference of the rent you collect ad the rent you pay to the landlord
  • aim for a minimum of £800-£1000 net cashflow per month
  • Recommendation: minimum effort maximum cashflow
  • Reality: even if you have agents managing the tenants, you could actually even end up managing the agents
  • Make sure you know the ins and outs of rent to rent before even engaging in this business model because it is time & effort intensive
  • Rent to Rent Training is highly recommended
  • Contract length can be anywhere from 12 months to 5 years
  • Contract should be flexible so you can agree break clauses& protection
  • Don't discount single-let rent to rent as they are much safer and a good way to know the process and a good start to build up that passive income
  • Rent to Rent negotiation: as low a payment to the landlord as possible: the lower the payment the better the cashflow
  • Negotiate rent with landlord based on Net Rent (i.e after taking off mortgage payments, bills, maintenance, voids, management) as opposed to the Gross Rent being asked by the landlord

Buy to Sell / Flip (B2S)

  • We are aiming for a minimum of 20% net profit ( after purchase price, refurbishment, selling costs)
  • start with this strategy locally or fairly close unless you've got an established team that can do all the refurbishments for you
  • start locally because you'll have to manage the contractors and the quotes
  • Bungalows are ideal for flips as they tend to resell very well.
  • 2-3 bed semis in mid to affluent areas resell very well all day long
  • Go to estate agents (EAs) to find these deals as your main way forward

Buy to Let (BTL)

  • Generally looking for 8% + gross annual rental yield
  • Ideally looking for low purchase price in order to recycle your initial investment
  • Location, tenant type, property type are very important as you will be holding the property longer term while cashflowing at the meantime
  • Always ensure there's tenant demand or you could be left with a liability and not an asset!

Serviced Accomodation(SA)

  • Hot Strategy at the moment due to high income
  • Ensure you do your sums and stress test at different occupancy levels
  • Letting properties out on short term holiday type agreements ( people on 2-3 night breaks, stag dos, hen dos, blue collar workers, companies who bring workers on 2-3 month contracts who dont want to put them on hotels ordon't want to undergo the complications of a 6-month Assured Shorthold Tenancy (AST)
  • As an investor you will generate a higher income because you generate income on a night by night OR a week by week basis as opposed to monthly basis on an AST
  • Potential Issues: Freeholder must agree to Service Accommodation
  • Can be used as a Buy to SA (B2SA) or Rent to SA (R2SA)
  • Further training should be sought due to it not a regular residential investment as it comes with alot of legislation and regulations

Summary for Investment Strategies

  • Always know your target figures and reverse engineer the investment or the deal
  • Don't fish in the pond (local), you need to fish in the sea (nationally & globally). 
  • Mindset: you need to open your parameters geographically and in terms of strategies you are employing. Don't be a one trick pony
  • Set-up email alerts on rightmove.co.uk so you get firsthand notification of properties that become available in the market
  • As a deal trader, it allows you to see the best deals first, thus this is the best foundation for your business & your portfolio. This is the fastest way to reach your property cashflow goals. 
  • Average phonecall to an agent or vendor should last 15-20 mins to build rapport. Accept that you will hear alot of nos. The longer you keep them on the phone, the more comfortable they become with you, the more information they will give you, the more chances are that you can put together an offer which could work with the vendor and the agent. Don't talk about the property for the first 5 minutes- talk about the agent first. But for busy agents who insist you go straight to the point of what you are after, that's the time you talk about the property. There is no such thing as a script. Use conversational-led negotiations
  • You have to appreciate that properties in London won't be cashcows, they're not going to be the cashflowing properties. They will be the ones that are going to appreciate in value. The properties up north- because they are naturally low in value will be the ones going to produce cashflow. 
  • Don't choose only 1 strategy, always try to look for opportunities to add VALUE
  • The best deal sourcers are always the ones who are able to think outside the box

Research

  • Methods of Research:
  • Estate Agents (EAs) & Letting Agents: ​they are probably the best people to ask for some local knowledge. Some of them might be a bit frosty spending some time with you if you're not gonna bring business to them. Build rapport. A great way is to ask them about the area. 
  • Use your own local knowledge/ Good old fashioned research
  • Drive-bys, popping in to local shops or businesses
  • Research Online for statistical analysis (specially for investors who are not local to the area)- tenant demographics, property type, employment status, home ownership status. Check link : www.streetcheck.co.uk
  • Property Networking Meetings
  • University Student Liason
  • Find deals from the comfort of your own sofa: https://www.rightmove.co.uk/  https://www.zoopla.co.uk/  https://www.gumtree.com/ and lots of other online property platform
  • Estate Agents' Pain & Motivation: *they want to sell as many houses as possible; they want to sell houses as quickly as possible; they want to sell them as easily as possible; they just want to make the commission; when they have a tired property they will struggle to sell it to a first-time buyer
  • Source-Package-Sell (SPS)
  • Step 1 Deal Sourcing: Find a Deal: Estate Agents, Letting Agents, Auctions, Online Platforms, Other Sourcers, Direct to Owner
  • Estate Agents: 90% of properties are sold through estate agents in the UK; they can become your unpaid sales force; they need your help shifting tired properties that don't appeal to first time buyers
  • Seller Motivation: Upsizing, Downsizing, Moving to be closer to family, new job (different parts of the country or abroad), lost their job, probate, in debt, divorce.