Itâs not someone who wears designer suits and likes fine wines! If youâre getting into the property market it can be tempting to get someone with money to invest in your property purchase, to help to get your portfolio moving. But any joint venture (JV) partner who is investing cash MUST qualify as a sophisticated investor - according to the FCA.
This is also known as Directive PS13/3.
It covers a range of categories of investment - and includes property deals. So, before you consider getting into a JV, you need to be sure that your potential investor qualifies as a sophisticated investor or falls into one of the excluded categories.
What is an Unregulated Collective Investment?
Any financial deal that offers a split of the profits and, by definition, a split of the losses; and you cannot guarantee that your project will make a profit.
The FCAâs viewpoint is that an unsophisticated investor canât do an accurate analysis of what is - or is not - a good investment.
There are fiv...
Property investors need to use the F words frequently to get the results they want. And Iâm not talking at swearing at the tradespeople who are getting behind with the refurb!
When youâre an inspired investor you operate with a cash buyer mind-set - and if youâve heard me speaking anywhere youâll be familiar with my take on this. Itâs all about breaking out of traditional âmortgage-buyerâ thinking. You need a strategy to set you and your money free from being trapped in mortgage deposits so you canât use it to buy more properties.
Track down a good deal - where the property is vacant and needs a refurb. An ideal property needs to be structurally sound, but is probably pretty run down otherwise and needs the bathroom and kitchen stripping out and replacing and a serious paint job throughout.
Time to get your persuasion skills out! Your mission is to talk the vendor into a delayed ...
Weâve been searching for a property to flip for several months, consistently doing viewings and putting in offers. Â But, our offers are always rejected.
Weâve done our due diligence so know what our maximum is to make a decent profit. Â We follow up properties that weâve offered on and have broadened our area with no luck.
How do we get vendors to accept our offers? We viewed over 50 and made offers on many without having any of them accepted by the vendor. Â Any help/advice is gratefully received.
You are doing nothing wrong and plenty right, but an understanding of human behaviour will enable you to get a better perspective. Â Â Itâs human nature to over-value what you own already and under-value what you seek to own.
Whilst your calculation of what you need to pay for a property is probably accurate, it is not matching sellerâs expectation of the sale price that they can achieve.
If your offers were being readily accepted, there would be something wrong, b...
This is the Cash Buyer Mind-set at work â and itâs a technique very few investors use. Â Most of them wouldnât even consider this kind of negotiation â leaving the field free for the Ninja Investors who have the knowledge and know when and how to use it.
This Ninja strategy lets you buy properties with a minimal deposit and leaves your cash free for refurb, simply by delaying completion. Â
Delayed completion bridging is also referred to as âExchange, with delayed completionâ (EDC). The objective is to have no money left in on the day you complete â or at least a lot less than the 25% deposit plus your refurb money.
Hereâs the strategy in a nutshell:
One major advantage with bridging finance is that it...
Most mortgage lenders require a 25% deposit, based on the amount youâre paying for your property. If youâre planning to get into property that can be a big hurdle to get over.
The days of no-money-down mortgages are long gone and are unlikely to return. Leveraging credit cards is a decidedly dodgy way to raise funds, so where does that leave you?
This strategy blows apart the preconception that a 25% deposit is required to buy an investment property. Better still it works in a variety of situations.Â
This strategy can turn around a property quickly â and make your profit ...
When youâre negotiating with the seller of a property you are interested in, donât forget to prepare properly. Â That means being ready with your persuasion strategies. One of these is the Calculator Close. This is how it works.
Start with the asking price â get them to enter this in the calculator. Then break down all the costs involved in getting it to the ceiling price, one by one, including:
Donât allow them to use âbargain basementâ costs, explain that you like to use good quality mater...
When youâre trying to negotiate with vendors to bring down the price of your property, you need some smart strategies to reduce the price (and increase your profits). The Calculator Close is one of these strategies, this is how it works:
Start with the asking price â get them to enter this in the calculator. Then break down all the costs involved in getting it to the ceiling price, one by one, including:
Donât allow them to use âbargain basementâ costs, explain that y...
I am looking for some inspiration on a potential property. Â It is a lovely property that is presently mixed use as a business and flats.
It can be converted to five flats that will fetch a premium price due to the location. The person selling is prepared to listen to options and is prepared to let us develop out the property while she still owns it, therefore, minimal cost to us at purchase.
 I have a few ideas myself but am looking for a bit of inspired creativity.
One creative solution was suggested by one of my students who recognised that this opportunity fits one of the strategies I teach on my Ninja Investor Programme workshops.
Through our brokerage, we have financed a number of projects funded exactly this way. So this is not just theory, it works and works well when the number are right.
If you have the current ownerâs agreement and permission to enter the property and do the required works to do the conversion, then the delayed completion strat...
Some people will warn you that buying a property that you canât get a mortgage on is madness. If you listen to them you could be missing out on some great opportunities that may be unmortgageable â but are still very profitable!
Traditional lenders have a long list of types of property they wonât touch. These include:
For most people property deals require a substantial wad of cash to get into the game, but that isnât always the case.
Typically a mortgage requires 25% down â and thatâs before you start doing the refurb. Then there are the properties that are basically sound, but arenât in good enough condition to live in â and which no mortgage lender will even consider.
Properties that need a serious facelift are unmortgageable â but they also offer the investor an excellent deal. Once the work is done theyâre worth much, much more than the purchase price and the return on investment can be substantial â but without that essential cash they tend to be the preserve of cash buyers.
However, there are ways around this challenge â and theyâre legal and are very profitable for the investor.
Two of my clients came to me for help with very different outcomes.
The first client â letâs call him Alan â had found a property that had been a care home, but had cl...
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