We have no less than 10 more property financing strategies at the more creative end of the spectrum to get through. So, buckle up and have a listen as I am joined once again by Damien Fogg as we share some of these based on our own personal experience.
Given that neither Damien nor I have any time discipline whatsoever, we managed to overrun on the allotted time we planned for this episode, so that’s why it is broken down into two parts. Today we cover 100% vendor, developer, & bank finance as well as assisted sale and exchange with delayed completion.
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Transcription of the show
Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and it’s a pleasure to have you join me on the show again today.
First of all…Happy New Year! I hope that you had a great festive break and feel recharged and ready to roll for the year ahead. In fact, if you want to really make sure your property business planning gets off to a fast start, then why not join us at one of our forthcoming 360° Business Planning Workshops this month.
We ran the inaugural one in November and that went very well. So, we have beefed it up a bit and will be running another in London on Sunday 22nd January and one in Manchester on Saturday 29th January. Our aim is to help as many of you as possible have your best year yet in property. Check out the show notes for the link to the sign-up page or just drop me an email podcast@thepropertyvoice.net instead.
Right, on with today’s show and what a show it is!
We have no less than 10 more property financing strategies at the more creative end of the spectrum to get through. So, buckle up and have a listen as I am joined once again by Damien Fogg as we share some of these based on our own personal experience.
Given that neither Damien nor I have any time discipline whatsoever, we managed to overrun on the allotted time we planned for this episode, so that’s why it is broken down into two parts. In part two we will cover adverse possession, credit cards & personal loans, assignable off-plan contracts, friends and family and joint ventures.
However, today is also content-rich as we cover 100% vendor, developer, & bank finance as well as assisted sale and exchange with delayed completion.
Let’s have a listen into that now then.
Richard: Hi everybody, thanks for joining me again on The Property Voice podcast, I’m very pleased to say, it’s a bit of a wrap up and a whistle stop tour of sweeping up some of the remaining creative financing strategies, and I’m very pleased to say I’ve got with me today, Damien Fogg my good friend and business partner. First of all, Damien, how are you?
Damien: I’m not too bad, thanks for having me on Richard. Hello everyone listening.
Richard: It’s great to have you on, again it’s not the first time, but we are always happy to have you on the show, thanks Damien. We are going to have a little bit of a tete a tete I think with some of these remaining creative financing strategies, and rather than break them down into individual episodes. It’s a bit of a signposting exercise to go through, so I’m going to go through quite quickly but I tell you what Damien, just as I normally do with my Subject Matter Experts guests is just, I ask them to introduce themselves and their expertise as it where, so why don’t you just go ahead and do that to set the scene a little bit…
Damien: Hopefully people know who I am by now but…I am a chartered building surveyor and a qualified mortgage broker. So, I’ve got quite a lot of experience in property in general, I’ve worked with Richard now…for what, two or three years now…so we know each other quite well, we have got the same values so hopefully everything I say should fit in with what you have said so far. But been working in property for 10+ years, hundreds, thousands of property developments, managements blah blah blah, so quite a lot of property experience.
Richard: Yeah, and I think also, some finance, mortgage experience as well, is that right?
Damien: Yeah…I’m a qualified mortgage broker as well now so…probably all the stuff we are going to talk about, because I’m authorised and regulated by the Financial Conduct Authority and the Royal Institution of Chartered Surveyors, this is all generic advice that as Richard said is signposting you for things but don’t take any of it as purely personal financial advice, and do make sure you speak to relevant qualified people to look at your individual circumstances. So, that’s the caveats done…
Richard: Yeah indeed, that’s our ‘get out of jail free card’ out the way, well done. So, don’t please sue any of us, thank you very much! Ok, fabulous. So, we have got 10 strategies, creative financing strategies. We’ve got experience in nearly all of them I’m glad to say, so how do you want to play it Damien, what’s the best way?
Damien: Well, we have got the 10, but I’m not 100% sure who’s going to do which one, so why don’t you get started and then I’ll figure out which one we are going to talk about next?
Richard: Ok, fair enough. In our usual, laissez faire style, play it by ear. So, I’m going to start us off then, thanks very much. I’ll need to think about what I’m going to say! The first one we are going to talk about is…it’s a kind of form of Vendor Finance, and its Instalment Contracts and so, this is essentially where you end up buying a property in instalments, funnily enough. So, it’s over time, that you actually make the repayments, so there’s a number of legal structures that you can adopt to do this. I’ve done this quite recently, in particular with some of the properties I’ve been acquiring in the US over the last 12 months or so…They seem, like everything in property, seems to be bigger and you know, existing longer in the US market than in the UK market. And so, I’ve bought a couple of properties in Orlando and Chicago over the last 12 months, and I’ve bought them on Instalment Contracts. Now, what that essentially means is, the owner of the property agrees to sell that property to me over time. And in both of these cases, it happens to be 15 years. So, I don’t need a mortgage, I don’t need a deposit, I just basically pay them a monthly fee and which, each month goes by I get an extra percentage of the property. Technically, and legally, it doesn’t work that way, I only get ownership once all of the instalments have been paid, and that gives a little bit of clue to one of the downside risks; which is if I don’t make all of the payments I never own that property. But, it’s been quite useful for me, you do need to do your sums, cause its sometimes pitched as no mortgage required, no interest to pay, all those sorts of sales messages. But the reality is, if someone is going to sell you a property over in this case, it happens to be 15 years. They need to get a return on their money as well and that’s built into the repayments. But the upside is, the properties are rented out, they are rented out for more than the instalments, and so therefore I…once all the costs are taken into account, pretty much break even in terms of a cash flow point of view, but I, essentially after 15 years, I own the property, home and clear. So, I look at this as a wealth build, a long-term wealth building strategy rather than a short-term cash flow strategy. And that’s why I’m doing it, so it’s just an extra dimension to my portfolio, Instalment Contracts, where the vendor is effectively funding me. That, in a nutshell, is it. I don’t know if I explained it full enough Damien? Maybe you can fill any gaps or ask me any questions on it if I haven’t covered it?
Damien: Yeah, no, I think it explains it clearly but I suppose my question would be, how does that relate to the UK market? I know, obviously as you say America is usually ahead of us and these things are bigger over there, but is it something that is available in the UK market? If, for example, a house is valued at £100000 and you agree to pay it off over 15 years, do you agree a higher purchase price, is that how they get their money back, or, talk us through how it would work or if it would work in the UK, I think would be my kind of leaning?
Richard: Well, yeah, I haven’t done one in the UK so I can’t tell you from experience, but what I can tell you from my understanding is, yes it can work in the UK. The difference in the UK market, it that essentially you still have a legal agreement and I suggest you go to a conveyancing solicitor who has specific experience in this and you can probably suggest a few, or at least one, who has experience. But then you do actually get the issues like stamp duty needs to be payable up front and that sort of thing, but in terms of commercially how you spread the payments, that’s up to the parties to work out really. If somebody wants to sell you a £100000 property over 10 years, at £10000 a year, breaking that down to the monthly repayments, they can do that. But, if they decide that actually, they want to collect some interest equivalent, for the fact that they won’t be fully repaid until after 10 years, of course the vendor can then decide to say well, the total instalments will add up to more than £100000 because I actually want an interest return as well. Its commercial, in other words, to agree what the instalments would be. But, obviously, anybody buying, would need to do their own sums. Just to flip back to my US model, what I did, is I did a discounted cash flow, using an assumed mortgage rate to arrive at today’s value, if I were to buy it cash. And I tested that against the market value, you can do exactly that in the UK market as well.
Damien: So, just flipping it round then, you have just that in the US version it’s kind of breakeven cash flow. The Vendor is getting their property purchased over 15 years, what’s the benefit to the vendor to do this, so, how available are these deals, how likely is it that people will come across them and find them because it’s, why would the vendor not just rent the property out and be no worse off, and still own the assets at the end of it?
Richard: Well, different reasons, they still technically have it as an asset so that might suit them for some purposes, if they want to show an asset statement or something like that. It could well be that the property…it’s not going to be Central Park New York, where you can buy this type of property, let’s be honest about that. So, it’s sort of, not going to be prime central locations, so maybe not that attractive, there may be a slight lull in the marketplace in that area and they can’t necessarily immediately, so they are happy to take a deferred sort of sale as it were. You know, from a buyers’ point of view, I go in with my eyes open and know that well, fair enough, maybe the market is a little bit flat at the moment, but in 15 years, what’s it going to look like, so you know it kind of works for me, it works for them. The other thing is, and this is something to perhaps be a little bit careful of, the vendor can still use that property for fundraising purposes if they wanted to. Now, what I have done in my case, is I have limited the contract provisions in that respect so that the vendor doesn’t just load up more and more debt, get into trouble, get it repossessed and then I never taken ownership. So, there’s a couple of risks, commercial risks to take account of there. I think essentially, probably the most realistic reason is they can’t sell it for what they want to sell it for in a realistic time, which is what would lead them to thinking about some sort of deferred Instalment Contract Agreement.
Damien: And, am I right in thinking this is mostly with existing house and not homeowners, but individuals, companies that own the property outright, it’s not new build stuff?
Richard: Yes, I think so. The ones I particularly bought were bought from a developer actually. And what he did is, he bought a property, he refurbished them and then he sold them using this model. And he bought them and they are pre-tenanted, so it’s a turnkey operation, as far as I am concerned, and that’s his business model. His business model is to buy rundown properties, do them up, tenant them and then sell them on as a package solution. The one in Chicago, its Section 8, or LHA tenants, so, again you know, it might not suit everybody to have that kind of tenant, but that was sort of the package that they are offering effectively. And, from their point of view, they get around about 150% of today’s value over the term of the contract and I still think that is a good deal because it works out at less than 5% mortgage equivalent rate.
Damien: This was a slight way for me to help you Segway into the next one…I was trying to be smooth in our links but…
Richard: Are you trying to get me to talk about the next one on my list where you?
Damien: I was going to…
Richard: But not so subtly, I didn’t pick it up. So, moving onto to Developer Finance, which is slightly different so, Vendor Finance is where it could be a homeowner as you rightly say, it happened to be a developer in this case but they did own the property. Developer Finance is often, and I didn’t pick up your link! It is probably a new build or a conversion, the developer has built the property, I can talk about a specific example I had there. I bought a flat that was new build, it was already tenanted actually in my particular case, from a developer in Sheffield, and the developer basically wanted to get off site, sell the last remaining units and get off site and move on to another project. So, they were offering all sorts of incentives to do that, normally they would offer a price incentive but in this case, they also offered finance incentive, so the developer provided they effective bridging finance to acquire that property. So, just to clarify, the developer, essentially lent the money for me to buy the property. And in this example, they lent the full purchase price, albeit it was a discounted purchase price, and I know your views on this Damien, so don’t start going down that route, right? But, in very round figure terms, I bought it for roundabout £95000 and ended up selling it 8 months later for £125000, I think it was £130000 but there were some extra costs in there and the developer funded the £95000, £975000 purchase price. So, it’s very specific circumstance that allowed that to happen, but if you knock on doors of developers, towards the end of projects, you often find either discounts, or sometimes, in this rare case, Developer Finance opportunities as well. The downside to the developer is I’m not sure if they can record a sale if they are also financing the property but I will leave that to them to worry about, rather than me. Obviously, the upside for me, is that I didn’t need to go through a formal finance application with the bank, and I just used the developers funding, and in fact, it was 100% funding so I didn’t have to put any money in, any of my own money in.
Damien: Sounds good. I think from my experience with the larger national house builders, I think they probably would count that as a housing completion, for their numbers and their financial accounting, because they have effectively sold something but they now have an asset against it. Because as you say, they just become a normal mortgage lender, don’t they? You owe them a lot of money but you have purchased the property off them, so I think they would stick that on the balance sheet as a housing completion for their numbers.
Richard: Yeah, I think you are probably right, they may actually go as far as having separate legal entities, one doing the sale, one doing the finance and maybe that’s how they do it. Who am I to question? All I’m saying is though, how to find the opportunity, particularly in slower markets or particularly when a developer is just looking to get off site, and they just want to clear the last couple of units.
Damien: End of financial year for developers is always a good one to find, most of them are either going to be tax year or calendar year but there are a couple out there that have random ones. There is one that ends at the end of July, no idea why. But if you approach developers on a bigger project, as Richard said, is coming to the end of it, sometimes you will get good deals that you can negotiate with them at that point.
Richard: I agree. So, I think people are probably aware that maybe it’s a source of potential discounted deals, albeit off developer list price, don’t comment Damien…
Damien: I’m not saying a thing…
Richard: Great! So, they could be a source of discounted deals, on occasion it could also be a source of finance deals from the developer as well using Developer Finance. But, lets maybe leave that one there. But, I think it’s about time you had a go Damien…
Damien: Yes, I agree! So, the one I have got on my list here then, Assisted Sale, so that’s quite similar in as much as the current Vendor is the one that kind of helps you along with the financing side of things. What this effectively means is, if you find a property that is in need of work and you think I could buy that, do the work and sell it and make a profit, if only I had enough money to buy the property in the first place, if you approach the vendor and actually say to them, you, for whatever reason, don’t want to/can’t/haven’t got the money to do the work to this property, and then make a profit, that’s why you are selling it with work needed. I have a small amount but enough to do the work but I can’t afford the property in the first place, how about we go together and I will pay for all of the work to be done, we will then advertise the property for sale at a much higher price, and then we’ll split the profit 50/50. So, from a vendors’ perspective, if, just using numbers, if they can sell the property for say £80000, you agree to pay, you agree to buy the property at £80000, but you are going to spend say, £20000 on the works, and then you will look to sell the property for, let’s just say £120000. The vendor still gets their £80000 but they now get a 50/50 split of the profit which in this case would be £10000 so they are getting £10000 more than they would have done and you are getting £10000 from having only put £20000 in, so you are getting a 50% return on investment. So, that’s, in broad terms, how Assisted Sale works. I’ve done it myself and those numbers weren’t that far off, I think we agreed it was the high 70s, I spent about £16-17000 on it and we sold it for £125000, so, the return for me was about the 60%ish, but the vendor instead of getting the high 70s could of bullied them a little bit more on the price if I wanted to buy it off them so I probably could have got them down to say 70, they ended up walking away with whatever it was, best part of £90000, so, they were happy, I was happy and it didn’t tie up much money from my point of view.
Richard: Yeah, I think that’s key isn’t it, we often talk about trade-offs between time, money and knowledge, and in that case, you didn’t use any of your own money, may be for the works, I don’t know if you funded the works, did you?
Damien: Yeah, I funded the works on that one.
Richard: Ok, fine, so you just used a little bit of money to fund the works, but mainly it was your time and your knowledge that you’re applying to make the return for you.
Damien: Exactly yeah, so instead of it costing me £95000, it actually only cost me £16000, so from a return on investment point of view, its effectively buying a refurb project with a 100% purchase price finance doing it this way. But then you get 50% profit at the end, rather than the full 100% so it’s you know, ideal world you would buy them all cash yourself, do all the works and move on from an even transaction point of view. For return on investment, something like this can massively, well my return on investment was 70% or something ridiculous, in about 4 months I think. So, because we didn’t have to do the 6 months’ rule as well because they never technically sold the property to me, they had already owned it for several years, so once the works had been done they could instantly put it back on the market. So, the works took about 7 weeks I think from memory and then it took about the same again to sell it on and then a bit of delay with legals, as ever but yeah it was about 4 months, start to finish. The Vendor got a win out of it, they got more money, I got a win out of it, I got a profit on a relatively small input of cash so, how you go about finding these deals…
Richard: Ah! That was the question burning in my head…
Damien: I knew it was! It could almost sense it. The way I…and I haven’t done these a lot, I’ve done 2 of them I think in the years I’ve been doing it, partially because I’ve not had to, I’ve not needed to be that creative from a financial point of view, fortunately. So, but the way I’ve done it is—I’ve basically approached people who are selling dilapidated properties that I would usually just and try and buy as a refurb project and just, I think at the time I just bought over 3 houses at the same time, so I didn’t have the cash available to buy it, but I’d looked at 4 of them and this was one I still wanted. And so, I just proposed it to, to the agents who stared at me blankly for quite a while, so just well said…any chance you can either get me in touch with the Vendor or we can all sit down and have this conversation and because I knew the agents quiet well, they were like well, yeah, fine, we will do that. The way I explained it to the agent is basically you could get a percentage of the sale price now, at £80000, or you can wait 3-4 months and you can get a percentage sale of the property at £125000, so again they win from it, so they were happy to let me at least, have the conversation with the vendor and then once I explained it to the vendor that basically, I will be doing work to your property but it’s for your benefit. If we can’t sell and the whole thing goes…wrong…I was going to say a naughty word then…then they effectively still have an improved property. But, we did put an agreement in place, that they would repay me from the sale proceeds, any of my just costs, so that we were going to split a profit but if it all went wrong, if everyone walked away, I’d at least get my money back. So, that was probably, not the tightest legal agreement I’ve ever put in place, so that would probably be the bit I’d highlight to people—is keep an eye on.
Richard: Yeah, that was the other question I had really, how would you contract such a thing? What kind of contract is it for example?
Damien: So, its effectively, it’s a deed of trust, so, you’re taking over, you have a beneficial interest in that property now, to the extent of the amount of money that you put in for the work side of things. So, in this case, I have effectively a deed of trust that is worth £16000, I think it was about £16500 from memory. So, when they come to sell it, they have agreed to pay me £16500, and that was kind of done with negotiation, well we think it’s going to cost this, and they kind of agreed and they didn’t really know what they were doing and that’s why they hadn’t done the works themselves. And they agreed that seemed like a fair and reasonable amount, so, but we then put, we set a line in the sand and said your property at this day, worth £77000, I’m going to spend £16500, so anything over and above that that we can sell it for, is a 50/50 split. So, basically, they get, they get their £77000, I defiantly get my £16500, anything over we split 50/50. And that’s kind of how the deed of trust worked.
Richard: Did you also have an agency agreement or did you cover the terms of agency in the deed of trust? In other words, you would have to get them to sell at a certain price? Would you do the marketing or would you leave that to the estate agent?
Damien: Yeah…No we didn’t do any of that, possibly I should have done, we knew we were going to go with the existing agents who were going to put us in touch with each other, there was a bit of an ethical—I wanted to use them as they helped me get this deal in the first place, so we kind of knew we were going to do that. I’d already run all the numbers and shown them my desktop due diligence to say look…when this property is in this condition, it should be valued at this price. So, we had an idea of what we’d be trying to market it for, and sell it for, but I guess in theory, they could have changed their mind and said, well no, I’m going to put it on the market for £70000 now. I don’t know why they would have done but, yeah in theory, they could have, maybe that is something that I should have put in there.
Richard: What I was going to say was, there is probably a few notes about risks. Generally, contract is definitely one of those, isn’t it, from many of these things, we are going to talk about or have already talked about, so, ok. Great, Assisted Sale…back to me is it. Fair enough. So, maybe continuing the theme, we have gone Vendor, Developer, how about Bank finance? So, it is very much a variation on a theme and this can happen sometimes with repossessions, or calling in a facility, so the bank ends up owning the asset, or they technically already do because they had a charge on it. This specific example—it’s probably best to illustrate with a specific example, so, the specific example I’ve personally done...you are going to like this…I’m always talking about International Properties, and you are going to tell me to focus on the UK, but I’m going to do it again…because I did it in Portugal. I bought a property in Portugal, it was roundabout the housing crash, and that’s significant I think, you know, roundabout 2010 I think it was, something like that. So, you know Portugal wasn’t going through great times, had a bit of a crash and the developer had a very good reputation, in fact wasn’t particularly themselves in financial difficulty, but the bank felt exposed, because of the amount of debt they had outstanding and they could probably see what was going to happen in the market, so they told the developer we want you to shift a lot of your property. And in order to help you, we are happy to offer finance facilities to any individual customers, so in other words, they ended up shifting their debt from the developer, on individual units to individual purchases. So, I ended up buying an apartment in the Algarve, I got 100% finance from the bank, as a result of that. And the bank in return got, effectively transferred, or reduced their exposure to the developer, the developer got a sale, albeit they probably weren’t very happy with the value, because they were pushed into some sort of forced sale scenario. I bought the property, and the lender concerned gave me 100% for intents and purposes. So, that was it, I bought a property, I put nothing into it of my own money, it was a very good property. When I looked at it, did some due diligence, it was a good developer, I don’t think all of the ones available at the time were necessarily as good, which is a warning and one of the clues that the stage in the market cycle lent itself to that opportunity arising, might not be as readily available today in other words.
Damien: Yeah, I think that’s probably why I’m not going to ask many questions on it. I think it was a good…tactic at the time. But I think realistically you are going to struggle to find any of them, so, maybe re-listen to this episode in a few years’ time if it happens again?
Richard: I think, what we are trying to do here is talk about having a range of tools in your armoury, but some of those tools are going to be more relevant at certain times in the market cycle. And in fact, what you probably don’t know Damien, is that I’ve been speaking quite a lot about alternative creative strategies, over the series and some of them—so Lease Options work very well when there is a lot of negative equity, for example. And we have already had that conversation in a different episode, but then you know, there are still reasons why lease options work today, but they work particularly well when there is negative equity, you know, after a housing crash. Same is true with the 100% bank finance, it’s probably after a housing crash. It’s going to be more relevant. Anyway, labouring that point, that’s probably me done on my one, how about you, do you want to get back in the chair and talk about another one?
Damien: Yeah, so similar to the last Assisted Sale one, is something called Exchange with the Delayed Completion, where you, kind of, it does what it says on the tin, you exchange to buy a property but before you actually complete on it, you then carry out the works, so you can get it valued at a higher price and you complete on it at that higher level. It worked quite well a few years ago, where you would, I mean there is not a great deal more to say on it, is there? You exchange on the property at a certain price, you then get to do all the work on it and hopefully get it up valued. There is, just thinking about it, there is actually a way you could exchange at higher price, do the works on it, so that it then gets valued up at that price, again to reduce the amount of equity deposit that you have to put down into it, because it is a genuine…you have not sort of bought the property, done the work then refinanced it, this is the initial purchase price, and it would be valued up at what it looks like in the state you try and buy it in. So, a couple of creative ways you could use that just thinking about it loud!
Richard: Well, glad to see you put so much thought into it, you have done, you have actually done this, haven’t you?
Damien: I have, yes. So, I was doing this about a similar sort of time I done the Assisted Sale one, so it was sort of 2006, through to about 2013, I was doing stuff like this, so yeah, I have good experience of this. It’s quite a legal thing, so again, we can put you in touch with some people who might have some experience of this, but it was something that whereas the Assisted Sale was kind of me writing it down, saying this sounds reasonable, because you are exchanging contracts, you need to go through a conveyancing solicitor and make sure it is all above board and legit and you are signing up to purchase a property. So, it is more of a legal commitment this way. And you are definitely buying this property, it’s just that you are delaying the date that you actually complete on. I think I had 6 months between exchange and completion and that allowed me to do a bunch of works, get a tenant in there. So, from day one of actually owning the property, I had an increased property value with a sitting tenant. So, it worked very well from my perspective before I started incurring mortgage fees and all that sort of stuff.
Richard: Yeah, I think, you know, just to clarify, you are going to need things, practical things, like they call it Key Access, don’t they? But, for all intents and purposes you need to go into that property and do stuff to it….
Damien: And that again something signed between the two solicitors, to say, yeah, you now have authority to have the key and access it and do works.
Richard: And presumably, you would need insurance?
Damien: Well again, once you exchange because you are then the legal buyer it’s up to you to have buildings insurance on there. But any work you do, well yourself or whoever is doing the work, have some kind of public liability insurance to make sure you are protected.
Richard: And I guess the delayed completion bid, as you rightly say, you are buying this property so you probably have a forward completion date, you are going to have to have your funding in place, and perhaps a backup plan if it doesn’t work out quite as you plan?
Damien: Exactly, the Assisted Sale one is kind of a wing and a prayer, hopefully this will work out, if it doesn’t, it’s not the end of the world, with this one because you have legally exchanged contracts, if you walk away you are losing your deposit and you are in breach of contract because you have signed on the dotted line to say I will buy this property. So, it is slightly more onerous, so the risk is possibly a little bit greater with this one, whereas with the Assisted Sale. On the counter of that though, the other side is tied into the sale of it, whereas the Assisted Sale, possibly less so…swings and roundabouts.
Richard: When you did this one, the exchange or when you have done it, have you intended to—well I suppose you haven’t, you have just had deposit monies, a small deposit money when you exchange yeah?
Damien: Yeah, I have exchanged with about 5% usually, and then I’ve done the works, started advertising it for a tenant, and then completed after that. So usually, I will put a 6onth completion, between delay in the completion but once I’ve done the works and got someone in, I usually just ok, I’m ready to complete now.
Richard: So, from a financing point of view, financing commitment point of view you have put in the cost of the works and a notional deposit, a nominal deposit.
Damien: Yip, hence why it’s a creative financing strategy.
Richard: Fantastic. Is there anything that happened on that particular one, or that you are aware of generally, people should be aware of?
Damien: I think again, this one, it’s the hen’s teeth element of how many people are willing to do this. Most people who are looking to sell their property, are looking to do it for a reason so, if they are an owner occupier, if they have got another property lined up, so, if you say any chance you can leave now so I can do loads of work, that isn’t necessarily going to fit in with a lot of people. So, it tends to work a bit better with investors who are tenanting the property and just a bit bored of it, the property now needs work so it’s not worth their while to do the works themselves but it doesn’t make any impact to them if they exchange and complete in a few months’ time. If you can swing it in a highly appreciating market, happy days, because you get an extra 6 months of capital appreciation. Equally, the opposite to that, if the markets dropping, then you might find yourself, you exchanged at a price that the property is now worth less than. Which could be bad times. So, again it’s just a case of how you find these things in the first place and again for me, because I buy most of my stuff via an estate agents, it came with a conversation with the vendor.
Richard: Yeah and I think, getting access to the vendor is important, isn’t it in some of these?
Damien: Yeah, I mean a lot of people are now trying to do direct to vendor, yeah if you can do it great but that’s kind of a full-time job to get access to vendors directly.
Richard: Yeah. Ok, so, I guess it would probably be empty properties, run down properties, stuck on the market properties…
Damien: I mean, I assume that’s all that exists because that’s all I ever look for.
Richard: It’s not all that’s out there…just to be clear. Ah, now there’s a nice Segway to my next one. People actually living in houses. Can I pick up my next one?
Damien: I mean I’m curious to see how the Segway works but yeah, go for it.
Richard: So, how about squatting?
Damien: Oh, I see what you did there…
Richard: Yeah, creative strategy, the next one on my list is called Adverse Possession. Otherwise known as Squatting…
Property Chatter
Interview with Subject Matter Expert: Damien Fogg.
And on that cliff-hanger, we must leave it for this week. Don’t worry, we shall explain all about squatting as a creative financing strategy without risking arrest next time out!
I do plan to do a wrap-up episode in a couple of weeks, so will pick up on the common or not-so-common themes when I do that.
Don’t forget our 360° Property Business Workshops later this month.
Sunday 22nd January in London and Saturday 28th January in Manchester. The link to the workshop sign-up page is in the show notes but I will send it to you if you email me as well podcast@thepropertyvoice.net just drop 360 Workshop in the title if you do that. We genuinely have limited spaces at these workshops, as we like to be able to speak to everyone individually, so don’t delay J
I really do hope that 2017 turns out to be your best year in property yet, we are very excited about the coming year…so, let’s commit together now to making it happen, shall we?
As always, email me personally if you want to talk about anything from today’s show or more generally in property investing, the show notes will be over at the website www.thepropertyvoice.net
Thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.