Video Series 7/30 - How to Appraise a Buy to Let Property Investment

Well here it is, for those that want to see the numbercrunching and spreadsheet analysis!









If you like this video please like, comment and share and join the Clapham Property Blog community on Facebook, LinkedIn and Youtube. If you prefer old fashioned email just drop me a line or come and meet me in person at the Clapham Property Meet!

Video Series Day 3/30 - Photography!

Welcome to day 3 of my video series on investment tips to help get you better returns from your property developments and investments. Today’s video will focus on photography, so I’m going to give you 5 massive tips on how to get the best from your property in still picture format.

Click here for the video:

Summary:

1. Dress the property like you are living there, create that homely feel. Pictures up, scatter cushions tidy, curtains tied back, lots of light in there. Prep all the rooms. Toilet seat DOWN! If shower is wet squeegee it down, make it look fresh. Maybe a coloured towel and some ornaments on the sink? Discretion as can look cluttered, speaking of which make sure to take away shampoo bottles etc. Same for kitchen, toaster, kettle, microwave etc…
2. Use a professional photographer or camera and do some editing, brighten up the photos, or if you want to you can outsource that to someone.
3. Failing that: best angle is normally from the doorway. Try to get two walls in and remember that the main focus should be the join of the wall with the window. Additional reverse shot maybe but the focus should on a shot with a window in it.
4. Chest height. If you’re very tall then lower the camera a little bit and HOLD IT STILL! Better yet get a tripod. You can actually play with the exposure times on your camera to get more natural light in the frame if it’s a dark flat. Try that and with the lights on and off in order to get more material to play with.
5. Exterior – comes back to what I was saying about curb appeal. Make sure it looks nice. Windows painted/cleaned, tidy front door, no rusty old door knob. Make it look really luscious. Is it inviting? The picture is the first thing that people look at.

They say that 95% of people start their property search online. People want nice things and people know when they are getting value for money. Why do big developers get away with charging a ludicrous some for small new build flats? It’s because they know how to market. So don’t innovate, copy what the big boys do and market your property and get a better price. Dress it up, nice photos, voila!

When you go to buy a car, new or used, what kind of cars do you see on the forecourt? Property is easily 10x more expensive, why are you not presenting as well as a used car salesman?? Make sure you present your property well for the photos so it can be displayed on the forecourt (RM and Zoopdeeloops) well. You will get more clicks, more viewings, more offers.

Here’s a few examples of properties that haven’t been presented well and some that have. You can easily see the difference. Sometimes prices vary in the same block simply because of the photos/marketing efforts. It can easily make £150pcm difference. Do you want an extra £1800 per annum for putting away a few shampoo bottles and tidying?

So that’s it for today, join me tomorrow for day 4 of my video series.

As always if you are looking for help with your investments in south London or further afield just contact me through the tinternetweb, give me a shout on your preferred social media platform or just old fashioned email: jeroen@claphampropertyblog. If you’d like to meet in person then come and join me at the Clapham Property Meet, the monthly social networking event for property investors. There’s no selling, no pitching, just good quality content from a guest speaker who will be an experienced investors just like me and my co-host Trevor Cutmore. See you soon, and remember to sign up to the blog at www.claphampropertyblog.com if you’d like an email straight to your inbox when I publish a new article!

Video Series Day 2/30 - Refurbs on the Cheap!

Thanks for all your positive comments from yesterday's episode. In case you missed it go back to it here - I talked about curb appeal. On to today's video:

Day 2: refurbs on the cheap.

As you'll know I've been an estate agent for nearly 15 years before turning to property investment full-time. You will know I've seen my fair share of the good, the bad and the ugly that the London PRS has to offer. In the video I offer my insight into what makes a refurb look "cheap" and how you can avoid being that "cheap" investor! After all everyone likes a bit of quality in their life and housing is no exception. Better returns are for those who go the extra mile.

So if you want to know where that magical price point lies click on to the video and have a look and listen as I talk real examples and show you pictures of the good, the bad and the ugly! I hope you find the video useful. Stand by for tomorrow's episode too, it's a topic very close to my heart!

As always, if you are keen to start investing, or start doing something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

The start of another project to maximise returns in South London

I did a short walk-through video of my latest purchase over in Deptford, I thought you may want to have a look to see how you could add value to your next rental property.

I will be reconfiguring the layout (much like my other project I'm running at the same time), so turning the property from 4 bedrooms to 5, but retaining a good amount of living/kitchen space. Naturally this will be open-plan, but I would say it's not going to feel cramped, the living space will end up being L-shaped, 5 metres in length by 3 metres. So roughly speaking that's 5x3 for the living area and 3x3 for the kitchen, very generous. In fact I also own a studio flat with similar dimensions just to put that into perspective - that whole flat can fit into the living room of this one! I digress however..

Why?

Well to maximise returns for rental you will have to increase a) the quality of the accommodation and b) you will have to increase the number of bedrooms. I can't very well extend beyond the upstairs unless I want to encroach on the neighbours, so by reconfiguring the space I will add a bedroom where the kitchen is currently. Ideal.

How?

Well you need to ensure that the walls aren't load-bearing of course before you go knocking things out. A structural survey is of paramount importance. Once that's out the way and the surveyor confirmed that none of the walls I wanted to move were load-bearing it was green light for the builders to go and turn my artist's impressions into reality.

Have a look at the video here and see what I'm doing: https://youtu.be/SVEINeRMYo4

Numbers?

You would think that simply buying a property and calling a room a bedroom instead of a kitchen or reception room wouldn't really add value. Well, normally it doesn't. In days gone by this trick has been used by many a landlord, taking a standard, two reception, three bedroom house into a 4 bedroom, 1 reception room house. I think we're all past this now, it may get a few quid extra in rent, but there's no value add (no, not even if you put up a partition wall in the once through lounge). So why is this different? Well, for one, I am totally refurbishing the property. My purchase price reflects the seller's situation. He wanted a quick, cash sale and didn't want to do any work. There were in excess of 10 people living there (of dubious immigration status as well I would guess) and he was looking for essentially a cash buyer. I have a great relationship with a bridging finance firm and the cash was ready within 2 days of request. To get there, however, was some task though as the seller, in his infinite wisdom, had not applied for various packs he needed to sell the leasehold interest, so the purchase took over 3 months. "Cash buyers only need apply..."

So for this 4 bedroom, 1100sqft property I paid a grand total of £305,000, plus stamp duty, costs, building work, etc will take me up to about £368,000 or thereabouts. I am planning to refinance the property and by using other 5 bedroom ex local authority properties as comparables I'd imagine the surveyor will agree with my estimate of £450,000, which is conservative. There are currently others on the market, which are of a lower standard of course (as this will be brand new and have 3 bathrooms) but they are unsold so I cannot consider these, really. A 75% mortgage would lend £337,500, therefore repaying most of my costs.

Summary:

£305 Purchase Price

£14 Stamp

£2.5 legals

£16.5 finance over 6 months

£30 building work and furnishing

£368 total

Refinancing on 75% of £450k (conservative) leaving 360-337=£23k in the property. So it's not No Money Down, but certainly Little Money Left In as they like to call it. Not too bad.

On the rental side increasing from 4 to 5 bedrooms means the rent will jump from £2200pcm to £2800pcm, so a healthy return even after mortgage costs (under £1000pcm). The property will cash flow nearly £2000pcm, or £24k per annum. That means that it will pay back the money I left in (23k) in about 1 year. That's nice.

So that's this project - are you looking to invest in a new buy to let? Or perhaps you are interested in co-investing in some of my projects? Whether you are investing, or yet have to start investing in South London get in touch with me via email if you want to see better returns. These projects are not fictitious, the figures are not plucked out of thin air. With nearly 15 years of South London property market experience I buy wisely for myself and my clients. If you are looking to have a chat in person why not come and join us at the Clapham Property Meet, the go-to social property networking event in Clapham. This month's meet is featuring Mark Barrett who will be giving an advanced talk on taxation - not section 24 and the like, you will know about all that I'm sure. So if you are looking to start/continue/advance your property investment come and join us!

5 helpful tips on getting the best out of your refurbishment in Clapham

Any astute investor will know that one of the ways to make a profit from property is to add value by improving the property. Often times investors will look to significantly improve the property before they offer it back to the market for rent. After all, there should be some "sweat money" factored into the purchase price. So if you are buying right a £400,000 should be worth significantly more than £420,000 if you are looking to spend £20,000 on improvements.

So here's 5 improvements that will add the most value to your next refurbishment (weigh up the costs vs the extra you will achieve in rent though, each project is different):

1. Redecoration - nobody wants a tired looking property. The attraction of shiny new builds is real for tenants. The kitchens, bathrooms and all the finishes are brand new. They however do not present the best investments for landlords. If you are looking for better returns a simple coat of paint with perhaps a feature wall thrown in will work miracles. Go ahead and match some of the soft furnishings too, you'll see what difference it makes in rent. Here's an example of a bedroom I did recently. See how just adding a neutral coat of paint and tying the curtains with a simple touch light gives it a slight edge? 

2. Square footage. Can you add or re-purpose the space? This is key really. An investor client of mine recently purchased a house and by going into the loft he was able to add another two bedrooms and a bathroom (and achieve an extra £20,000 in rent). The result was that the loft alone yielded a 40% return on his money! If the floor space can't be increased can it be repurposed? For example I am creating an open-plan living/kitchen in one of my latest additions. This will add another bedroom to the property and thus increasing the overall rent by roughly 1/3. The kitchen was due to be replaced anyway, so my only additional cost will be plumbing and a letter to the freeholder for permission.

3. Kitchens and bathrooms. These are absolutely crucial for successful letting. With kitchens and bathrooms available at rock bottom prices these days there is absolutely no reason your property should not have nice, modern kitchens and bathrooms. If you would like me to help you get the very best in discounts then do get in touch. Here is a picture of the next kitchen going into one of my properties and I sourced this for under £1000 (add £800 for all the appliances).

4. Flooring. old, tired carpets are a no-no in any property, let alone if you are looking to attract professional tenants to your newly acquired property. Durability is the key of course, but it's got to look good. No point therefore in going for the cheapest, thinnest carpets - this is an investment. Have you considered something more hard wearing for communal areas and limiting carpets to the bedrooms? Wood or tiles work miracles in hallways and living rooms (or tiling that looks like wood, I'm trialling this myself so stay tuned for more on this to see how it works out - I'm optimistic). You should be aiming for £15psqm. Cheap doesn't equal nice though, so beware to choose something nice.

5. Your builder. This is key to your overall success. Having a good relationship with your builder is key. After all, it's him doing all the hard work, not you. Draw up a schedule of works - everything that you want doing. Write it down and even have it to hand to give to him at the quote stage. This will make things easier as nothing can be forgotten! Furthermore payment terms are to be laid down in writing. X% in advance if he is sourcing materials, but labour can be done weekly in arrears. Remember to allow time for him to fix any snagging, and define a time period. For example if you are supplying the materials and it's a 4 week job expect to pay him 25% each week bar the last week where you hold back 10% for a period of say 2 weeks in case of any "snags," or things that come up after he's walked out the door. If there is a particular element you are not happy with, reduce the payment accordingly, but do not withhold all the money - after all 90% of it will be done to satisfaction.

If you are looking to purchase a property with letting in mind and you would like an expert opinion then by all means get in touch. Perhaps there is an angle that you haven't thought of that could yield you better returns. Just start the conversation via email. You can also have a look at some of my recent projects here and here. Are you interested in having me source high yielding investments for you? Manage your refurbishment projects? Help you get the very best trade discounts? It's time you got in touch.

The Changing Face of Property Finance - effects on your Clapham Property Investing

This month at the Clapham Property Meet...!

Trevor and Jeroen welcome Martin Smedley, a property finance expert with 30 years' experience in the financial services sector working predominantly in the commercial mortgage sector. Martin has extensive experience with Commercial mortgages, Development Finance, Refurbishment Finance, HMO funding, Bridging and of course Buy To Let.

This month's talk will be on the changing lending landscape and how you can make sure you can finance your next investment! 

Jeroen and Trevor discuss adding value to rental properties and how to seek out the best yielding properties.

And the monthly Q&A where you can get your questions answered! Please feel free to email your questions in beforehand to questions@claphampropertymeet.co.uk.

Format of the evening:

6:00-7:00: Arrival and networking

7:00-7:15 - Introduction and Market Update with Jeroen and Trevor

7:15-7:45 - Martin Smedley - the Changing Face of Property Finance in 2017

7:45-8:05 - Jeroen talks about maximising rental returns by adding value

8:05-8:30 - Question time! A time to bring your questions to the floor to get answers!

8:30-8:45 - Round the room introductions for networking

We look forward to welcoming you back at THE JAM TREE CLAPHAM, 13-19 Old Town SW4 0JT!

Tickets can be reserved by joining the Meetup Group and RSVPing YES

5 ways to add value to your investments in Clapham in 2017!

I mentioned in my last post that it is becoming increasingly difficult to make a living as a regular buy to let landlord. This year is the year of having to add value somehow, simply buying and parking an investment will not get you the returns that you did in years gone by. With the increased red tape, taxation and scarcity of good deals you will have to work that little bit harder in order to maximise every pound you invest.

Here's 5 ways to add value and make better returns:

1. Multi-let
   Yes it's as it sounds, you let the same property with sharers but instead of letting it on one tenancy you let it room by room. You CAN make better returns employing this strategy, but do check the terms of your mortgage, some lenders prohibit it. Point to note is that it will be more time intensive and potentially you will have a void now and again. Not for the time poor. You will need to add value to the customer by including bills such as gas, electric, broadband and the such.
   
2. Extend - the sky is the limit
   If you have a freehold house, an ideal way to add to your gross rental income would be to do a loft conversion. In most areas you can get a loft conversion done under Permitted Development or PD and get another two bedrooms and a bathroom up on the second floor. An average room in Clapham goes for £700-900pcm, so let's say you make an additional £1800pcm/£21,600pa by converting the loft. That's not a bad return on a say £50k expenditure, over 40% return on capital employed! If you have a spare £50k sitting around then it's worth thinking about (£50k won't buy you another property)! You can do this on leasehold flats too providing you own the loft, otherwise you'll have to negotiate with your freeholder to purchase the loft space, which can add to the cost. Often times it still makes sense to proceed though, although with a flat you can't do this under PD, you will have to apply for planning permission. Not to worry though, your loft company can sort this all for you. Check with the local HMO office though if the property will be more than 2 storeys, the textbook definition of an HMO is "five occupants over three storeys living in two or more households" so freehold houses would often fall under this. Some councils' definitions vary though, so please do check if you will become licensable if you decide to go down this route.
   
3. New purchases - add value from the outset
   This is key for all those investors looking to add to their portfolio this year. Say for instance you were to price up a normal BTL opportunity. You do your sums and you calculate the potential return based on your input. Deposit, stamp duty, legal fees and you divide the net income (so gross rental less agency and finance costs). There will often be other things involved as well, the "set up costs" like a lick of paint, new furniture and so forth. Now here are two golden nuggets in one: when purchasing, get the seller to leave the furniture. You're probably thinking "oh it's rubbish I'll have to replace it" and that's exactly why you should get them to leave it. Because a REPLACEMENT of said furniture is tax deductible, whereas the first purchase is not. Stained mattress/broken frame? Excellent reason to replace, no? Exactly. Here is nugget number two... If you purchase the property with bridging finance, spend money on refurbishment and ADD VALUE so that your property is worth significantly more then you can refinance to a new lender and withdraw 75% of the NEW value. This means that you will, if you do the sums right, get your money back in your pocket that you just shelled out on the refurb, leaving you with that money to invest further. If by using this strategy you could leave £30-50k less in a property, even taking into account the bridging costs, this would create leverage and you can then take that money and invest it elsewhere - after all if you are looking to maximise the returns you are better to leverage. This of course depends on whether you are expanding, you could also refinance and simply ask for a lower LTV (loan to value) so that you get a better rate and pay less interest monthly. Food for thought; this will be a personal choice. Personally this is my strategy of choice as I'm aggressively expanding my portfolio and I'm looking to leverage as much as possible. I recycled nearly 60k out of my previous purchase.
   
   
4. Refurbish your existing property
   Bathrooms and kitchens sell! Not just that but if your property isn't up to scratch then you won't be getting the best returns. If an average 3bed property can fetch a rental increase of £150pcm or £1800 per annum then spending £5000 on a refurbishment provides you with a 40% return and it will pay for itself in 2.5 years. Bathrooms and kitchens tend to last about 10 years mind, so it's not like they will last forever, but do go the whole 9 yards and raise your game. Make your property more desirable. After all the competition is fierce for good tenants - do you want to be an average landlord with an average property or do you want to be good/better/best and offer a good product? I'm not talking gold taps and marble flooring incidentally. If you want me to advise you on cost-effective refurbishments then get in touch - I'm sure you've seen the quality of my own projects so I'm happy to manage your refurbishments too if you're looking to go down this road.
   
5. Work together with a fellow investor to pool your resources.
   The life of an investor can be lonely - it needn't be though. You would be amazed at how many people came to the Clapham Property Meet earlier this week to learn more about investing. If you network with other investors you will get the confidence to do things with your portfolio and your money in order to create better returns. So take action and experiment with strategies that are tried and tested by others. Never bought an ex-local authority property? Talk to someone about the pitfalls. Never invested outside of Clapham? Learn from others' experiences. Never multi-let before? There will be someone who has done it and is happy to share.

So - how are you going to add value to your investments? As a thank you for reading I'm going to offer a FREE 20 minute phone call to run through your strategy and give you some hints and tips. I'm going to limit this to the first 5 readers that respond, so if you're interested in a quick strategy pep-talk for 2017 then do drop me a line and we'll get a call scheduled in.