Property Crash Course

The crash course was due to start on Thursday the 24th of October and I arrived in London on Wednesday evening. I arrived late on and crashed in my digs at around 2230.

The B+B was a shit hole and not the 4* that I was expecting. But I wasn’t here for luxuries I was here to learn and determine what my next move in property was.

I woke up on Thursday feeling a bit shitty as a little bit of man flu was starting to kick in. According to the website, day 1 was from 0900 to 2300 so this 1st day was going to be long. Day 2 was a little less and was due to finish by 1700.

Day 1

First things first we were straight into mindset.

“How you do anything is how you do everything.”

“Environment is stronger than willpower.”

“Use formulas not feelings.”

“The definition of greed is having a gift and not sharing it.”

“Own nothing control everything.”

“Play to win.”

“Success leaves clues.”

Nothing I hadn’t heard before from the books I had read and the videos I had watched. The bonus this time on this day was that I got to jump around, clap, dance and high five with 600 strangers. Not to mention go around and meet total strangers and discuss our backgrounds in property. Not my cup of tea at all.

Part of the reason I was here was to get outside of my comfort zone and I was 100% outside of my little comfort zone. I was also hoping for a big kick up the ass and that these 2 days would give me that kick and help me to push on in property. One way or the other, I would know what direction I would be going with property.

Although I was now aware of all the calculations needed when buying properties, I was happy to go over them again. We basically focused on ROI (Return on investment) as this is the most important calculation as it looks at the total money you invest into a property.

The 2 figures you need for this calculation are total investment and yearly profit. Total investment is your deposit (normally 25%) + Tax and legal (normally 4% of purchase price). Profit pcm is rent – (Mortgage + Management + Maintenance). Profit per year is profit pcm x 12. Let’s look at an example to illustrate:

£200,000 HOUSE

  • Total investment = 50k + 8k (deposit + 4% for tax and legal) = 58k
  • Rent = £800pcm
  • Mortgage = 3% of £150k = £4500 for year, therefore 4500/12= £375pcm
  • Mortgage + Management + Maintenance = 375 + 80 + 80 = £535
  • Therefore profit = 800 – 535 = £265pcm
  • Profit for the year = 265 x 12 = £3180
  • ROI = 3180 / 58,000 = 0.054 X 100 = 5.4% ROI

This isn’t a brilliant ROI, but it is still better than the less than 1% you would be getting in high street bank.

When we started to work in teams in the afternoon, I enjoyed it. The aim of the game was to use the calculations we had learned and find a suitable property with a high ROI and the course hosts were saying 20% were achievable figures. We were to work in teams of 3 and go on rightmove, do our due diligence and find a property at or around 20% ROI.

Due diligence was getting rammed down our throats and was worthwhile to be honest as it enables you to de-risk when purchasing a house. Basically, are you getting the house for a reasonable price and what is the realistic rent that can be achieved.

Due diligence

We were told that the first thing we needed to know was the full address including the postcode. There are a few sneaky ways of getting this and looking for the house number from the pictures is one of them. Another is to compare broadband for the property you are looking at and it will give you the post code – very sneaky.

Look at the value of the property on Mouseprice.com (I can only do this with the property’s post code) and this will give you an accurate value based on properties currently for sale and properties sold on same street or similar. You can also go on rightmove and see what’s selling on same street or similar properties within ¼ of a mile. Then carry out same search but select sold and see what similar houses have been selling for. This was useful for me and I will use these techniques for rental no.5.

To enable me to get an accurate ROI calculation, I also needed to know the rent on any prospective property, and we were taught a few techniques to do so.

Firstly, you call the estate agent, explain that you are an investor and one of your questions would be to ask for the achievable rent. At this stage, we were only looking at traditional buy-to-let’s. We now have a good idea of the rent we can expect to receive.

Next, we were told to go on rightmove and look for what is up for rent within ¼ of a mile and focus on similar properties. Finally, look at what has already been rented in this area. Again, look for a similar size property close to the address. For this search, look at openrent.co.uk and you should have a very accurate rental figure.

Let us look at what our team managed to find using our new skills (due diligence and ROI calculations):

2 Bed terraced house in Oldham – £64,950

  • We found the exact post code and were able to clarify that it was worth around 62k and the rent would be £450pcm
  • Total investment = £15.5k (25% of 62k) + 2.5k (tax and legal) = £18k
  • Profit pcm = £450 – (Mortgage + Management + Maintenance) = 450 – 206 = £244, Therefore profit per year = 244 x 12 = £2928
  • ROI = £2928 (Yearly profit) / £18,000 (Total investment) = 16%

At this point I have added to my buy-to-let knowledge, but I am mainly at this mad crash course (full of lunatics jumping up and down and high fiving each other) to learn creative strategies and determine whether they are for me or not. For me this is the point when the course goes South.

The sole purpose of the rest of the course is to (aggressively) sell the 600 strong crowd on the £18,000 (+VAT) advanced training. Wait, no, they go over all the benefits of the training (we will all become financially free etc etc), then at the end of the pitch they hit us with a big discount of £6,000. So, if we go to the back of the room (NOW!) we can get the training for an absolute bargain of £12,000. Thanks, but no thanks. That is almost half of the deposit for rental no.5.

Not only that, they have their successful students trying to sell us additional courses. As soon as they started aggressively selling the training courses my inner skeptic (rightly or wrongly) kicked right in. Then they had their multi-multi-multi-multi millionaire guest speaker back on stage for more jumping around, high fiving and talking about mindset / brain washing (the 600 strong crowd into paying for the training). Fuck me, what even is a multi-multi-multi-multi millionaire ????

This goes on until 1930 then we have an hour break for food. That’s when my night really goes South. I find a local pub as I can’t face anymore property talk with loads of strangers (I know my dark cloud is starting to kick in, but I was tired and had severe man flu).

I order a burger and pint and start watching the Europa league game. The game was ok and I’m able to switch off for a while. My burger comes and I devour it as it’s been hours without food. Towards the end of the burger I realise it is bloody and barely cooked. I don’t even complain. Not only that, the greed kicks in and I even finish it – bad move!

At 2030 I am back in the conference room for the final push of the day. It is hard work staying focused for the last few hours, but I stay until the end. Despite feeling a bit shitty and being irritated by the aggressive sales pitch, I have mainly enjoyed day 1. Hard graft because of the amount to take in but I feel it has been worthwhile.

Just after 2300 I am back in the digs and straight on the toilet as I am not feeling too clever. I manage to fall asleep, but I am back up at 0200 tossing and turning and feeling horrendous. By 0300 I am throwing the burger up and it is coming out of my nose and mouth. This lasts about half an hour.

My plan is to get up and get home as I don’t want to be spewing in front of 600 strangers.

By 0700 I have had few hours sleep and my stomach as settled so I’m going in for day 2. I might have severe man flu, but I need to man up.

Day 2

Day 2 is all about no money down deals. I find it interesting and the way they use rightmove and various other sites is impressive.

They touch on the best areas to invest in. They go into rent to rent, HMO’s, lease option agreement’s and serviced accommodation. They even contact a landlord and start the process of securing a deal. The deal is an apartment in Northern Ireland and my inner sceptic thinks it’s just for show and that the deal won’t happen.

HMO’s are were you rent out each room and this is normally around £400pcm. This is lucrative and you can get up to £1600pcm in rent for the 4 rooms (£800 profit after all costs are considered). Lease option agreement is basically where you rent a property from a landlord for a long period (3-5 years normally) and have the option of purchase at the end of the agreement.

Serviced accommodation is like a mini hotel where you rent your apartment or rooms out per night. It is all meant to be automated through certain sites and you arrange regular cleaners. My inner sceptic can’t see how this strategy is automated and thinks it would be very hands on. Although I am not quite ready for this strategy, it is something I may re-visit further down the line. This sounds lucrative but the whole renting an apartment to rent out as serviced accommodation is screaming complications (with leases and mortgage companies).

Every type of no deal down requires compliance to ensure it is legal. Let us look at the example below to demonstrate R2R (rent to rent) which is a popular no money down strategy:

R2R Case study

  • Search for 2 bed-apartment in popular city like York
  • The idea is to offer the landlord 3-5 years guaranteed rent
  • If it is up for £900 pcm you offer them £800 pcm and in theory, they are happy because they are getting guaranteed rent for a long period – the inner sceptic is not convinced
  • Once you have secured the deal (this is subject to having all the correct legal documentation in-place) you then rent it out as serviced accommodation and make up to £3000 pcm in profit after all costs – the inner sceptic is not convinced
  • The plan is to get to the viewing, build rapport with the landlord, then explain about exactly what your plans are regarding serviced accommodation
  • They even go through what to say to the landlord in the initial conversation, “I’m not going to be renting it out myself, it will be a corporate let… I can do Friday or Saturday when is best for you? This alternative close (averting attention away from the fact your not renting it out) is a sneaky way of getting to the viewing and fully explaining the serviced accommodation plans

With what I am getting taught, the no money down (HMO, Serviced accommodation etc) strategies don’t really appeal to me at this stage. I can only see issues and complications with mortgage companies and other key stakeholders (e.g. the leaseholder of a block of apartments would need to sign off on your serviced accommodation).

Wait for it, there is another sales pitch coming. To get fully trained up on HMO’s I can enroll onto the HMO bootcamp for £2995 + VAT. Not only that, I can get myself on the Serviced Accommodation University for the fuck all price of £3995 +VAT. I haven’t got it written down, but another course thrown in is the legalities (as they call it) including all the templates and agreements for the no money down deals. I would like to have a little look at this out of interest, but it is another £2,000 I haven’t got.

That is a grand total of £10,388 for 3 days of training. But wait. If you go to the back of the room (Now!) you can get all that training for just £2,000. Again, I am going to resist as my inner sceptic is warning me against these courses. Not only that but they are getting aggressive with the sales pitch now and it is getting right on my tits. It is time to vacate.

At 1330 there is a break for lunch, and this is my time to exit the building. I leave and make my way to the train station.

Looking back on the 2-day seminar / property crash course, I am glad I went. Doing a seminar had been on my radar for a while and I had finally been to one. I did learn a lot of useful information that will help me going forward with property. I now know that my current strategy of buying one house per year is what suits me for the time being.

Although I met some nice people on the course, I didn’t meet any contacts who I will stay in contact with and that was part of the reason I went. It might have been the man flu, it might have been the fact the course was relentless – I just couldn’t bring myself to mingle at the intervals. I needed a break from the property talk if anything.

What I will do is continue to learn about property. If I see a book that looks up my street, I will read it and I will continue to read property blogs, so I am up to date with the UK property market.

The PIN (Property Investors Network) meetings also interest me. There are a few local to me in Middlesbrough and Darlington and this will be ideal in comparison to getting to London. I think I could manage once a month, and this will only add to my property knowledge.

This 2-day course didn’t quite turn out as I’d hoped. I was hoping that the creative strategies would inspire me to reach my FI (Financial Independence) early and would really push me on. Shit happens and I will push on with my self-development. If anything, it has given me some clarity and helped me to fully realise what works for me with property.

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