Information About Property Investment In The UK From Mark Ford, Property Investment and Finance Director of Pooleford Property Services & Investments Limited.
Mark Ford, Pooleford Property, shares his experiences of working as a property investor in the UK property investment market.
One very good way to create monthly cash flow and residual income working from home is to build a property portfolio, working with a team of professional property managers and contractors to manage the properties.
Whether it’s buy to let, buy to sell or property options, we have done it and we can help you.
On this page I share with you my experience of working as a UK property investor and I list on this page the properties that we have purchased through our company, Pooleford Property, either on a buy to let basis or through a property lease option since 2006.
Pooleford Property Investment Portfolio And Property Finding Business
I hold options to purchase over 3 properties, and I have purchased another 18 properties with my property business partner, Liz Poole. Without the encouragement, support, hard work and professionalism of Liz Poole, we would not have succeeded to the levels we have.
We are also privileged to have around us some fantastic people, such as Sharon Costello, our property manager and a very professional team of contractors.
This would not have been possible without a number of joint venture partners, business partners, and of course the tenants.
We take the opportunity to show our appreciation to everyone who has worked with us in our property business in the finding, purchasing, renovating, and management of our properties. Thank You!
Pooleford Property Finding & Bespoke Property Service
Apart from our own property portfolio, we have also successfully found another 10 discounted properties, entered into the negotiations, and purchased the properties on behalf of our property investor clients.
We now tenant these properties out and manage them for our property investor clients.
We also have extensive experience of buying, renovating and selling property in the UK property market; and again I will share information with you about the buy to sell market to help you in completing your own property renovation projects.
Property Investment In The UK – Mark Ford’s Experiences
Earlier on in this post I promised to set out for you my experiences of working as a property investor in the UK property investment market. Here goes… a few thoughts!
If I was to look for one word that I would use to describe this, it would be turbulent and it would also be fair to say that your emotions are up and down a lot. Be prepared for a smooth ride some days and a rough ride on other days!
You see, you may think that owning properties and renting them out is very straight forward, that every property investor is rich, and I hear you say… “Aren’t they lucky that they have all those properties?”
Well, in speaking honestly with you, let me tell you a few home truths and tell you exactly how it is. Have you got nerves of steel?… you may need it to be a property investor!
The best position is for you to be a cash buyer. You will be able to pick up many properties on a quick sale basis, at a discounted price.
Remember this… the money is made when you buy and not when you sell. A strange notion, but it’s true. The cheaper the price at the front end, the higher the profit at the back end on a subsequent sale.
And… Do The Numbers!… here’s what you need to consider.
- Property purchase price
- Legal costs and disbursements
- Planning costs
- Renovation labour and materials costs
- Finance costs to set up the finance
- Mortgage and financial adviser fees
- Bridging loan fees
- Monthly mortgage costs
- Redemption fees
- Letting fees
- Property management fees
- Property maintenance fees
- Ground rents
- Service charges
- Rental voids
- Market rent
- Property buildings and contents insurance
- Back end sale price
- Sales costs
- Accountants fees
- Tax issues
- Contingency funding
- And… last but not least… What is left for you?… What is your profit?
When we stack up a property, we break the costs down into three elements; buying costs, holding costs, and selling costs. This way we know what it will cost us to buy the property, what it will cost us to manage the property after the completion of the purchase, and what the costs of sale are.
This process enables us to work out our profits and determine our yield from the sale or the rental yield during ownership.
The Numbers Must Stack Up On A Profit Deal Or Walk Away!
Having said that, just remember that the numbers must stack up. You don’t want to end up spending all that money, time and effort to end up with no money in your pocket.
If you can pick up properties from auction or from the distressed property market at a discount to market value, add value through the renovations and then rent out or sell on, you should be doing okay!
However, many people, including myself, have used finance either through joint ventures or mortgages to buy the properties. When buying properties the intention is to create cashflow and monthly residual income. This is true, but what you may not appreciate is that acquiring properties on mortgage is more of an asset holding business for the long term, rather than for short term cashflow.
In my experience the difference between the rent and the amount paid to the mortgage company is stripped away in maintenance fees, ground rents, service charges, property management fees, letting fees, rental voids and the tenant who passed all the credit checks but doesn’t pay the rent.
Yes, make no bones about it, you will suffer rent arrears which is a risk to your cashflow and business longevity.
I find that 80% of tenants are just brilliant and you have a very friendly business relationship.
The other 20% take up your time chasing rent and doing repairs that you are legally obliged to do even though they aren’t paying the rent.
It is only the small minority but I have found that you are always likely to be carrying rent arrears and that this must be built into your budget, along with enough money for ongoing maintenance issues that arise.
On the point of maintenance, you can expect maintenance issues nearly every week and, unless you are going to have all your time taken up doing it yourself, you will need a property manager and a tried and trusted team of contractors to carry out the work.
And also remember on the costs issue.. that you will also have to deal with the extensive delays that can be introduced into your project renovation plans by having to deal with planning and building regulation issues.
Let alone, the increased and unexpected costs that can arise when you discover something about the property you were unaware of before you started the renovations.
Yes, a lot to think about.. are you still up for it?
Making A Living From Property Investment – One Of Our Properties!
If you are a full time property investor then my experience shows that it will be difficult to make a living just off a couple of properties and that you will need to build a substantial property portfolio to create enough cashflow to live off.
With a small property portfolio you may find all your money disappearing on expenses and that you have more of a liability on your hands, than an asset.
Work out what the financial freedom figure is for you and working to a rule of around £200 a month net per property, how many properties will you need to hit the monthly figure you want.
Then go and do the market research, find motivated sellers and build your portfolio as a cash buyer, property option buyer or as a mortgage/deposit buyer.
Wow, Mark … That’s a lot of information I need to be aware of and a lot of information that I was not aware of..
Yes it is and has it scared you off? As I said, nerves of steel are required and the above just presents for you a no holds barred straight talking approach to some of the things that you will come across in your property investing career.
Even so… I love it and the sense of satisfaction you get from doing up a property and returning it to the market for someone to be able to live in it, is just a special feeling.
Property Investment UK As A Multiple Income Stream
As fantastic as property investing in the UK is, I have found that it works best as part of an overall multiple income stream strategy. When I saw the income between the mortgage and rent being stripped away on expenses this became one of the reasons I turned to the internet for extra income streams.
Liz Poole and myself now run our property portfolio in with an internet business by managing together the home based businesses listed at this link.
So, how can you reduce your costs when working as a property investor?… One Answer… Property Options.
Well that’s a great question… and one that we asked ourselves having bought a number of buy to let properties.
One way is to learn about property options and rather than go on the title as the owner of a property, take control of someone else’s property. In doing this you free the property owners from all their responsibilities over the property, so that they can get on with their lives now, rather than later.
Well, how does that save money?…
Quite simply, you do not need to worry about taking out a mortgage or even have a deposit to set up this kind of property deal.
If the deal is structured right you can take the difference between the rent and what you agree to pay to the property owner. Therefore, if the property owner does not have a mortgage the cash left over is much more because you do not have a mortgage to pay.
Remember though, that you are responsible for the property in all respects, financially or otherwise, just as if you were the owner. This is why the rent that you may agree to pay the owner is lower than a standard property rental arrangement.
Property options are good for cashflow and are ideal for a depressed property market. One of the biggest features of an option is that they are bespoke and made to fit to a particular set of circumstances. This makes a property option very interesting to set up and a great solution for someone stuck with a property who wants to move fast.
For example, a property lease option is really helpful where a property owner does not need the cash out of the property immediately and wants to get on with life by walking away from the property now, rather than later.
For further information on property lease options > click here.
Buy To Rent
There are a wide range of reasons why a property owner may wish to sell their property fast and this is the area where you can get some good property deals.
Some examples could be;
- Chain breaks
- Get out of debt fast
- Job relocation
- Property not selling on open market
- Landlords fed up of renting
Whatever the circumstances, structure the buy to rent deal by taking into account all of the expenses I have mentioned above, go for a rental yield of 6% or above, consider buying properties up to 125K, look for £200 a month cashflow minimum, get yourself a good rental agent and look at this as a long term strategy because it certainly is not a get rich quick scheme!
If you visit our Pooleford Property website that we are developing we go into a lot more detail about the buy to let property market in the UK.
Click the Pooleford logo above for more information.
Buy To Sell – A Few Thoughts And Some Tips!
If you get this right you can make some significant profits. Again it will come down to the numbers, making your money when you buy, working out your profit before you lift a finger on the renovations and knowing what your potential outcome is at the back end, when you sell.
Many property developers prefer being a residential property developer because they do not want the stresses that arise from renting out properties in the long term. They just want to be in the property at a set price and out of the property on a sale with their money back plus profit. Very understandable!
Before I set up Pooleford Property my first venture into the world of property development was back in the spring of 2005.
I did a joint venture with my friend Carol Fountain where I purchased the property with a deposit and a mortgage, and Carol funded the renovation works.
We did some of the initial stripping out of the property ourselves and then handed this three bedroomed semi detached house over to our contractors.
A word on builders and contractors. Be careful, you will be paying them thousands of pounds to do the work for you. Here are some tips.
- Do not pay any money upfront. If they are worth their salt they will have accounts with their suppliers.
- Pay money direct to the builder or contractors bank account and not in cash.
- Pay in stages when you are satisfied that the work has been done to the standard you expected and discussed together at the start.
- Be clear on exactly what it is you want done and provide the contractor with a schedule of works and a contract setting out what has been agreed between you.
- Do not project manage the development from a distance. Check in on a regular basis to see how work is progressing and discuss the ongoing work with the lead contractor. I used to turn up every Friday and in the week, and only when I was satisfied that the agreed work had been done for that week would I part with our money.
- Set an agreed time for the work to be completed.
- Go and see other work that the builder/contractor has done.
- Talk to the owner of the other property where the work was done to see if they are happy with the work that has been completed.
There are more, but the above are some good tips to follow so that you won’t get stung by a builder.
Anyway… back to my story on the three bed semi – detached house I did up with Carol back in 2005…
We used a tried and trusted builder, who was well known to my family and well known to me, to do the work on this house, Lee Dakin and his brother Robert Dakin.
I have enjoyed our relationship very much and they have done the work on most of our property renovations. Thank you.
We purchased the property for £140k, carried out a full renovation of the property putting in new kitchens, knocking down walls, new bathrooms, in fact a full re-furbushment and we got out of the property at £184,950. Not bad and a great day when I received the cheque from my solicitor on completion of the sale.
You can see an image of the property we renovated below.
Well… that was it… I was hooked. My first property venture was a success.
So, what next?…
Well, I then set about doing up, with a 50K spend, my own house and I also renovated Carol Fountain’s house, which she still lives happily in today.
Next… in September 2006 I started buying up properties, renovating them and either selling them on or renting them out. And… as they say, the rest is history.
If you visit my Property Investment page you will be able to read more about property investment and view my property portfolio.
Do You Want To Know More?
1. Buy To Sell
If you visit our Pooleford Property website that we are developing we go into a lot more detail about the buy to sell property market in the UK.
Click the Pooleford logo above for more information.
2. Property Options
3. Property Rentals
If you are based in the UK, in the areas where we hold our property portfolio, and you are looking for a rental property please get in touch by using my contact details and I will be pleased to put you in touch with my property manager, Sharon Costello.
Alternatively, you can set up an appointment by completing the contact form below.
Comments or questions are welcome.
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I wish you every success with your own property investment ventures.
Mark Ford – Property Investment UK – Top of Page