Transcription
Okay, all right. Um, so, God, I haven't done a webinar for ages. Um, so, uh, a little about me. Um, well, these are just some of the things that have been happening in my life over the past year. Um, so, a lot, lot of, lot of things going on. Um, a few holidays there. You'll see a couple of glass drinks, um, seem to feature heavily in my, my photos there. Um, I do a lot of wine tasting. Um, so, uh, it's one of my, one of my hobbies.
But, um, what I wanted to talk about tonight is, um, as I say, a little bit about myself. So, this, this house here, there is, up at this house in here, this is actually the house I grew up in, which is a place called Gravesend in Kent. Um, so, right, right in the south of the country. And the reason I put it there, really, just as a highlight in terms of property values. So, my father bought this house in 1968 for £3,500, and it was sold for £310,000 last year. So, it's showing the value of holding on to property over the long term. So, I, this was a council estate. Um, I left when I was 19, so a long time ago. My father died a few years later.
But what have I done in my life? So, um, these are some of the companies that either I've, um, set up or worked, worked for. So, my very first job was in banking. I left that when I was 26, and I've been self-employed ever since, and that's nearly 40 years ago. So, um, self-employed with Allied Dunbar. You, most of you, certainly if you're younger, won't know who that is, but if you, you'll recognize certainly St. James's Place, which is a, a well-known, um, organization doing pensions and life insurance. I sold bathrooms for Dolphin. I also sold conservatories. I set up a sales force for the Southeastern Electricity Board. And then you come on to my companies. So, these are all companies that I've set up. Gas Network was a central heating company. Technology speaks for itself. The Number Network was a telephone number company. Utility Network was electricity and gas contracts. And all, all of those. Sorry, the Gas Network I sold. Utility Network, I sold that one in 2009. That's the last, that's the last kind of corporate company, if you like, I had, and, and got, got a reasonable figure for that.
And then these other four down the bottom. I set up a crowdfunding platform, European crowdfunding platform, round about six years ago with a group of guys. The Power of Networking, that came to me by a joint venture partner who knew somebody who lived in New York who wanted an English property director. And I'd never met this guy in New York before, and now we're good friends. Patrick, he still lives in New York. Very nice place out there. So, we set, me and him and a few others, set up a crowdfunding platform. Just operational, works out of Rotterdam. And then, then Property Master Academy, which is my training company. I'm going to, a second, I have a finance brokerage and obviously my own developments.
But I was, you heard, brought up in a back council estate, and I've been self-employed for most of my life. So, I, you know, I've, I firmly believe that you put into life what you, you put in what, what you get out of it, you know. And, um, sorry, the slide's not working there. Let's do that. Um, apparently, someone decided I was a top 10 coach in the UK. Um, you can see there was awarded Training Provider of the Year 2024 through the Blue Bricks magazine. I don't do, some of you might think I've got another training company. I don't do training like what you would have heard some of the others do. I focus mostly on mentoring. So, that's my training side. I mentor investors. I get results, simple as that. And I'm a judge at the Property Investor Awards, something you might not be familiar with that because it's a long way from you guys, but it's held in London every year. There are a lot of people do come from the north to to come to the Property Investor Awards. Um, and that's the end of this, end, end of November. So, so that's kind of a, a brief, kind of background about me. And, um, and then my obviously my two late, two current companies outside of my training world, which is my, my finance brokerage and the, the land and development I do.
So, what I want to look at, really, was, um, strategies suitable for the current market. Because I think, you know, listen, is what Duncan said as well, and, and I think some of the things I put in here are actually quite, quite timely for what Polly said as well. Um, because I've always believed that, you know, if you've got the right product, you can sell in any market. And, and I think that's what I'm trying to hope to get across this evening. So, so what I tend to look for is strategies to add value that major building work. Um, and you'll understand a little bit like that when I get to some of the slides, and some creative thinking. So, you can solve a problem to uplift the value. I'm not so much into buying BMV, below, below market value stuff. I don't believe in personally. Um, and some of you might disagree with me, but I don't believe in BMV. I think it's a false economy in many instances. And, and often, you'll find surveyors will agree with me. So, so I don't, you know, the BMV side of things, I think you can get too many people get too caught up on. But what if you're, if you're adding value to something, then it doesn't really matter, to a degree, the price you're actually paying.
So, to give you an example. So, some of you may have heard of short leases. Now, short leases, um, you know, apply mostly to flats. You can get houses with a leasehold as well, but it's mostly we're talking about flats here. And if you don't understand what a short lease is, so basically, anything generally speaking under about 70 years becomes more difficult to get a mortgage on. Um, not so much if, if you're an investor, you can still get mortgages on them, but residential buyers can't. And that's really the main market for these. So, um, so there's this process whereby you can extend a lease. And by extending the lease, the statutory length is 90 years. So, you can add another 90 years on to whatever the lease is. Um, you add value. Now, that doesn't mean you have to spend an awful lot of money, of course. It depends on what the current lease is. So, for example, if you've got a, a leasehold flat which has a current, um, lease left of, let's say, 50 years, then that's going to cost you more than a flat that's got 70 years left on the lease. And there are two ways of extending a lease. You can either do the statutory route, which is by adding, applying to the issuing section 42 notice to the current freeholder, which they have to respond to. Um, and you can extend by 90 years. Or you go down an informal route with the freeholder, where you approach them and say, okay, I don't want to do the 90 years. So, if you've got like a 70, um, something that's got 70 years left on, you can actually say, well, actually, I only want 50 years because that would take it to 120 years anyway, which makes it a very salable flat at that point. So, understand the short lease process. You can add value in any market. And that's what I'm going to show you. Even all, all the strategies I'm going to talk about will work in any market. Excuse me, I've got to take water because I'm just getting over a cold. So, um, that's just one, one example of where you can add value very simply by understanding the process.
Next opportunity. Same flat. Excuse me. Converting a one-bed flat to a two-bed flat, or a one-bed house to a two-bed house, or a two-bed house to a three-bed house. All of those, because of the way that property is valued in the UK, by adding a bedroom, always adds value. So, regardless of what happens in the market, adding a bedroom will always add value. So, in this instance here, I'm going to just show an example here of what the flat looked like. So, this is the before. And just to kind of give it some context, where the living room is currently, um, that faced onto a wooded area. Where the bedroom is, faces onto some quite nice lawns, outlook, lake, and so on. Um, so, this is a little bit of audience participation. Uh, you can either type in the chat box if, if it's easy to unmute, I don't mind. But, um, how would you reorganize that to change it into a two-bedroom flat? And I can't see the chat box, so I'll have to leave that to you, Martin. I'll let you know if anyone jumps in. I'm happy to jump in. You could go for it. Do a, do a kitchen, kitchen kind of living room type scenario, free up the space from the kitchen, perhaps? I don't know. Possibly. Possibly. All I mean, I don't know what the scale is on that. I'm not very good at reading that. But or the bedroom, I don't know. Chop the bottom of the bedroom off, presumably, put a wall in there. Any other takers? It's a 72 square meter flat. It's a reasonable size. If the outlook is currently on the bedroom, would you then move that to be the living room and split the current living room into two to make two bedrooms? You're kind of along the right kind of path there, Bruce. The first, first time when I've done this presentation, you're the first person that's come back with that. Yes. So, I'll show you what we did. You're quite right. We switched them around. The living room, clearly, what's, what's the point of having a bedroom facing a nice lawn and lake? Totally the wrong way around. So, we switched them around. Kept the kitchen where it is. The bathroom, which again, there are no measurements there, but the bathroom was big enough to convert to a bedroom. And also, you can see there, we've, by changing the living room to the bedroom, we've also got room to add an en-suite bathroom and create an additional bathroom. So, now we've got not just a one-bed, one-bathroom flat, we've created a two-bedroom, two-bath flat. Now, common sense tells you that's added value, regardless. So, you know, that's what I was saying about looking at strategies where you can add value. Because you will always make money in the market. All right. If, if you're relying too much on BMV, there's, there's too many variables involved. So, here, it's, it's not about someone's opinion. This is about, you know, you've added value. You've added a bathroom. You've added a bedroom. So, therefore, that's increased the value of the flat. And in the same token, in this instance, we've extended the lease. So, not only it's a double whammy, you've extended the lease, increased the, the marketability of the flat by making it a two-bedroom, two-bath, and adding value at the same time. So, added quite a lot of value to this flat. And this is quite a common strategy, not just in flats, but also houses. You know, if you can change a two-bedroom house to a three-bedroom house, certainly some of the older style properties, the 1950s, the older, um, ex-council type properties, they, they've usually got big rooms that you can actually reconfigure around and change into a bigger house. The house I showed you that I used to live in was, was a three-bedroom house. It's been changed to a four-bedroom because the front, the whole front of the house was one bedroom when I was a kid. So, they changed it into a four-bedroom house, and that's added value to it. So, why it's increased, obviously, in value.
So, another one, which may not be so well known, is title splitting. Now, title splitting is most commonly done with a block of flats. So, scenario here would be, there are quite a lot of houses out there where landlords have converted the interior without planning. So, they may have changed it into small studios. Studios are not ideal. You ideally want bigger than that, but the principle was essentially the same. You could have this if you imagine a house that's been split into four flats, but they're still under one title. Now, because of that, when you split them, you're creating five titles. So, if, say, we've got a house with four flats, you're creating five titles: four for the flats, and one for the freehold. Now, there are some changes going on with regards to leaseholds and so on, but the principles are there. And we've very successfully have done this a number of times now where, without necessarily doing any kind of refurbishment or anything of that nature, we've just split the titles. And by splitting the titles, we've created value because we've got that extra title there. But also, we've created a product now that's more marketable. Because if you've got a house that is currently in four flats without being split, nobody can buy it apart from another landlord. But when you actually split the title and create titles for those four flats, you've now got a marketable product that can go out to the first-time buyer market or buy-to-let market, whichever. Um, and the process is, is relatively straightforward. Um, most people don't do it because they don't understand the process. But it's, it's getting a lawyer on board that understands title splitting and creating leases. What I can tell you is that when you, when you split a title, you technically can't have the same owner of the leaseholds as is the freehold. Okay? So, if you're the freehold owner of the block of flats, once you start to create leases, technically speaking, you can't be the owner of those leases as well. So, essentially, what you do is you have one company that will own the freehold, and then it'll be different people or companies that will own the leases. This can be a quite profitable strategy, really, again, from not doing a great deal. And this is some of the figures. So, this is the figures for this particular one. Uh, it's a little bit old now, but, um, you can see the principles, really. Very small amount of refurbishment money compared to the purchase price. So, that was the total cost. But by splitting them out, we added value. You can see there, you know, roughly £120,000 just by creating those separate leases. And that's, you know, once you get your head around the strategy, there are very few people doing this. There are very few people doing the conversion of one to two beds. There are very few people doing title splits. And I, what I, what I tend to look at are the strategies that most other people aren't doing. So, if they were sold, you know, profit. If we sold all that, the profit £123,000. That whole process of creating those separate leases could be done easily within six months, relatively straightforward.
Options. Another way of, of creating value if you're into land. So, Duncan about land, or I think there's a question about greenfield, green belt. I'll come on to a little bit of that in a second. Um, so, options. If you're not familiar with it, options are a common tool used by developers. I, I use them all the time. Um, and here, essentially, you're not buying the land. So, you have, you have a condition on that option. You might, it'll be, in this instance, the condition is we will buy that subject to planning. You can do an option. You can also do a conditional contract with exchange. But the most common is an option. And of course, with an option agreement, I never pay more than a pound. And then I have some costs to pay. So, I have my planning, architects' fees, legal fees. This, in this instance, is about £15,000. Now, this is southeast London, it's quite a high value, clearly. Um, but sale price to the developer was £800,000, a profit of £265,000 in this one. All right. So, and, and what have we done? Well, we've spent a bit of money. So, the risk money is £15,000, right? So, we've spent money on planning, architects, legal fees. So, that's our risk money. But look at the upside. Now, this is not for the faint-hearted. This kind of strategy, if you're looking for land, it's not for the faint-hearted because you have got that exposure, £15,000, which you could lose. Although the way I do it, um, we have a, a way of looking at it that we have a, a 97% success rate. So, still, that's still a little bit of risk there. But this can be done with any, any bit of land. You just need to understand the planning process. Um, now, you don't necessarily need an architect, by the way, for planning. A very good planning consultant is a lot cheaper. So, you can get planning through a planning consultant, and they're, they'll understand the planning law much, much better than most architects. I think a lot of people are under the misapprehension that you need to use an architect to do all these things, and you don't. Um, so, that's again, another strategy where you're adding quite a lot of value. It doesn't matter, really, within degrees, what the value of the land is currently, because often you can pay above market price for the land.
This is another title split example. Now, this, this is, houses, as you can see, it's not flats this time. So, previous example I showed you was flats. This was actually a farm where the farm buildings have been converted to holiday lets, and they've got use changed from C1 back to C3. So, C3 being standard residential. And then split the titles. And I think, uh, there were nine, it's nine units here. So, they were all created, nine separate freeholds this time, not leaseholds, separate freeholds. Nine freeholds were created, and that added an awful lot of value in this instance. So, this is down in, um, Somerset. So, so quite a cheap area, southwest of, uh, England. So, purchase cost, quite a lot. I mean, obviously, you've bought quite a lot of property there, you know, but that's an average £100,000 per property, roughly speaking. Build cost and fees, so you spread that between the, the nine, um, properties. That's not a great deal that you've actually spent there, roughly £50,000 per, per property. Selling cost. You've got the total cost there. Total net profit of nearly £800,000. That's an amazing uplift. Bear in mind, you look at the cost there. Now, this was done with a JV. But also, apart from those buildings, you can actually see there, the, the farm buildings to the left. You can see a barn on that, on this picture that hasn't been converted yet. You've also got the land by the barn where you can potentially get planning on. And to the far right, on the existing plots, there's also land there where also you could potentially get planning on. So, this actual plot was found on Rightmove. All, all, everything I'm showing you, by the way, on tonight, nothing is off-market. It's all been found on Rightmove. Okay. Um, and with this particular one, the lady was elderly, she's in her 80s. She lived across the road from, from this, these farm buildings, and she is now a joint venture partner. So, the money she got from the sale, she's now reinvested in the next project. So, there are multiple ways you can actually make these things work.
This is one of my recent ones. I bought this last year. This is in, um, part of Essex. So, when you look at that, again, you might want, if you can, chat, comment in the chat box. Um, what, what is it? Do you think part, some of it might be obvious? What is, what is the attraction of the site? Road by the looks of it on the bottom left. Yeah, that's, that's definitely that's the road down there. What else might be an attraction about it? Land. Yeah, it's obviously half of it empty. That's what they mean. Road frontage and land has been offered by Dominic. Yeah. One of the main things for this for me was the grade out area at the back. They're all new builds. And more importantly, they were all sold. When I looked at the site, I thought, well, okay, there's potential here to get some new build housing as well. The site next to me, they've already, I think they've built about 20 now. There's another 30 to build. That's a huge plot. That used to be a house. There was a house there. It's now, now a road going down, and there were going to be 50 houses. So, it was a huge plot from a from a house. This is the mine is the next door neighbor. So, my house is bigger. Anything's there valued higher. And obviously, yes, the land that's highlighted there's potential there to get planning. So, I bought this in December last year. That's the design. I've actually got planning now for three houses. So, two, two large four-bedroom detached, this one on the left, this one on the right, and a three-bedroom detached bungalow at the front. All within a fenced, walled environment. Because, um, if you look back here, you probably can't see it so much because of all this greenery, but this right down the right-hand side, this is a wall at the back. That's, it's a, an 8-foot high wall all the way around there, all the way here, all the way at the front. Now, unfortunately, because of all this vegetation over the years, there's never been cut back, it's affected the wall at the front. So, that wall's now got to come down. But what we're going to replace it with, with the design, is a six-foot high black fence as it goes in with, with the other parts. These are slate roofs. The garages will be timber-framed, dark, um, black, and out wood as well. Just to create that value. Now, the can't got the values. The next, oh, yeah. So, cost me £420,000 with fees and everything else. Around about £200,000 planning uplift. About £350,000. So, what does that mean? Essentially, the way I look at this, and this is one of my strategies that I do all the time, I look at this and think, okay, the house was very rundown. So, there's potential to make money on the house. What I look to do is at worst, break even. Because as far as I'm concerned, the money is in the land around it. So, I look for houses with large plots. And if I can get planning, which I say, 99% of the time I will, because I work with the right people, I've been doing this years, I know what I'm doing. Um, 99% of the time I will get planning. This one wasn't straightforward, but we still got the planning through in the end. So, that value, those those plots then have a value. Now, I could keep the house and just sell the plots, but I'm decided. I'm actually, at the moment, the whole thing is on the market. So, the, the existing house is worth around about £650,000. It will sell for that kind of figure. So, kind of break even. So, I'm, I'm making, you know, let's say £250,000, £300,000, £100,000 per plot just to getting the planning. That would have been done within 12 months.
This is another one. Again, you can see my, my strategy here. This, this house here, this is the house that's on there currently. It's a disgusting property. It's a total, terrible layout. You can see the road at the front here. So, this is at the end, the end of this road. This house. So, what, what I'm going to do is, um, knock this house down, and we're going to build five more. Now, the way I work these, okay, it's not straightforward. So, going back to this one as well, once I put an offer in, I put a holding offer in. So, my offer is designed to make them think, not necessarily accept, because I don't want to accept it too quickly. So, what I do with each of these is, whilst I'm negotiating, if you want to call it that, with the vendor, I'm never quick to respond. You know, agents always call you up, oh, no, they've rejected your offer, do you want to put another offer in? I say, well, I'll think about it. Because a lot of these properties I'm looking at have been on the market already for four, maybe five or six months. So, I know they're not going anywhere because they'll have issues. This particular, the first property I just showed you, they had issues because it was totally rundown and a lot of damp. In fact, on the first day of building, my guys walked through the front door and fell through the floor because all the floorboards were rotted. That wasn't a cost that allowed for in the build, by the way. So, my refurb cost was quite high. This one, it's a disgusting property, that's why it's not selling. It's a probate one as well, which is another key indicator. Um, and, um, usually what I try to go for first is an option agreement because that's much easier to do. But in, what I'm doing, whilst I'm negotiating and playing around, I will put a pre-app in with the local council to see where there's potential to do what I want to do. So, I'm de-risking all the time. Now, because a pre-app will usually come back within six to eight weeks. Quickest one I've had back is in four weeks. Um, by the time I've faffed around negotiating two and fro with the agent, I would have had my pre-app response back. Now, sometimes I might lose the property because the buyer will come in. Fine. That means I've lost two or three, £400 by putting the pre-app in. But the majority instance, that doesn't happen. So, I'll go back, I'll try and get an option. And some, and you can get options through estate agents, by the way. A lot of people think you can't, but you can get options through estate agents. But if, for some reason, they won't accept it, that's often the case with beneficiaries, like in this instance, the probate, they, because they want the money. So, what I will do is a delayed completion. I won't do a conditional contract. I'll do a delayed completion. So, what I'll do is exchange contracts, I'll immediately apply for planning based on the pre-app advice. So, they've come back and said, yes, in this instance, we can get five properties on. Yes, we agree with you. What they came back with and said, well, actually, what we prefer is two houses and three bungalows. So, you know, that's great advice. And that, that's enough for me to de-risk the situation to go in and say, right, I'm going to offer you, in this instance, we offered full asking price, there's a delayed completion of four months because I know, because of the type of planning I apply for, I'll have an answer within two months.
Other opportunities. And I'm always done apart from what I've just described. I think niching in certain areas. I think HMOs work. But what I've seen in the market is too many people are copycatting. They're doing exactly the same as the next HMO. And in my opinion, to succeed in HMOs, you need to be a little bit different. You need to focus on a particular target market. It might be contractors, it could be doctors. I know one particular HMO company that specializes in providing houses for surgeons. That's all they do. They don't do outside that. Consequently, they charge a premium rate. Apart hotels. Now, I'm not a great lover of serviced accommodation at all. I think that's a market that's becoming saturated. But apart hotels are a little bit different. So, you know, where, where everything is automated, taking away the, the bed and breakfast element of a B&B, creating an automated situation on a high end, really, really works very well. Commercial property. I think it's an underutilized market. Um, now is a fantastic time to buy commercial property. It's valued differently to residential. If you don't understand it, it's valued more in the income and the person, the person or company that's actually in there, rather than the bricks and mortar, which is residential property is totally the other way around. And then trading. So, buying and selling properties. So, finding opportunities. So, like similar to what I'm doing, where I'm, where I'm buying and, and generally, I don't do the refurb, by the way. I will buy the property that still needs refurb, get the planning on the side, and just sell it straight on. So, I've traded it straight on. What I try to do is what's called a bank-to-bank transaction, where I will buy it, agree a sale very quickly with somebody else, so I'm selling it before I've completed. And that way, I don't pay stamp duty, by the way. And then the BRRRR model, buy, refurbish, rent, refinance, repeat model. I think it's great. If you're, if you're adding value, you're always going to make money in whatever market you're working in. So, oh, that's apologies. That's, that's me. Um, if you, I'm not selling anything tonight, but if you do need any help, that's my email address. And, uh, I'm done. Martin, unless you have any questions.