The Rodcast - Property, Business, Investment

It is so important to understand what investors look for in a person and property deal when trying to raise funds for your property developments.

In this episode Helen Chorley does exactly that.

She discusses how she went from working on the trading floor of JP Morgan to investing in other peoples property deals.

We discussed what qualities she wants to see in terms of;

1. The people involved in the deal.

2. The structure of the deal.

3. The type of project.

What she does on the deal once the funds have been transferred to the project and it is underway.

What she does to diversify when investing in other people's developments.

What positive and negative thoughts she has on the future of her investing in UK property. 

Hope you enjoy.

If you want to attend the event on 9th January you can book tickets here

https://www.eventbrite.com/e/charity-property-business-workshop-tickets-80349239739

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WOW if you buy or are looking to buy at auction then this is going to tick your boxes. We discuss 8 lots coming up for auction on 11 December 2019 and some associated risks and opportunities with each lot.

Some of the things discussed are;

Enforcement notices

Permitted Development

Strengthening a commercial covenanant

Adding Value to an asset

HMOs and supply and stress

and lots more

There is some brilliant insight into what the pros look at when sizing up whether to buy these lots so get your pen and paper ready.

As always Piotr Rusinek, Jay Howard and Ranjan Bhattacharya add way more value than I do on these.

Link for the catalogue is https://auctionhouselondon.co.uk/current-auction/

Dont forget our charity workshop on the 9th January. If you are looking to scale your property business then this is a must

https://www.eventbrite.com/e/charity-property-business-workshop-tickets-80349239739

If you are interested there is a great workshop on 7th December which goes into more details about permitted development that we discuss

- PD Workshop with Colin Smith*

http://bit.ly/pdworkshop712

*£450+VAT per person* 

There is also a specific Auction workshop run by Piotr and Jay on 8th December - Property Auction Workshop* 

http://bit.ly/auctionworkshop 

*£497+VAT per person*

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John Howard has been in the property business for 40 years.

He has bought and sold over 3500 properties, been a director of Cambridge United FC, been an owner of Auction House UK, several estate agencies and has a passion for training and breeding racehorces.

In this episode we discuss how John got into the property business at a young age. Why he liked to trade properties often over developing them out. What he feels are risks to his business and much more.

You can find out more about John on his website https://johnhowardpropertyexpert.co.uk/

The link for tickets and information regarding the Charity workshop for property businesses on 9th January 2020 is https://www.eventbrite.com/e/charity-property-business-workshop-tickets-80349239739?fbclid=IwAR3W1weWLemAWwnBFuMI3WccUqCA5qAmLJLPctwGN84ZXEnRMJHfH9ACp70

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In the first of our Tax mini series we explore Capital Allowances.

Simon Howley of www.bellhowley.com gives us an explanation of what Capital Allowances are, how they are used and some examples of what can be utilised on developments in terms of Capital Allowances

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Chris is a chartered surveyor who acts for both developers and contractors on all types of builds ranging from £5mil to £40 mil. But its the principles we discuss that can be taken into any size build.

We discuss everything from procurement types and tendering including what to provide your potential contractors with,

Different types of contracts and their benefits,

What to look for in a contractor,

Reducing pre construction phase and the benefits and negatives,

How to stay on top of the build costs,

How to maintain the programme and efficiency,

Disputes and how to protect yourself if or when they arise,

The truth about low "declared margins"

and lots more

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In this episode we hear Paul's story of how he started what would become the the biggest development company in central Europe with 33 offices in 5 countries.

We talk about how started in property, the move from residential to building major retail parks, how leverage worked for him and how close he came to losing it all!

We then go onto discuss his new business venture https://www.hilltopcreditpartners.com/ which funds SME developers in the UK and why the man who sold everything a few weeks before the great financial crisis thinks its a good time to buy.

One of the things Paul touches on in this episode is Yield compression.

If you don't understand yield compression here is an example.

Some funds/investors buy for income purposes and they want to make sure their income is safe for the future. The safer that income the lower the yield they will be prepared to take. Safe or low risk will depend on how likely it is that the income is going to keep coming in for the foreseeable future. That depends on many factors such as location, use class, the ability of the tenant not to go bust, the length of the term etc...

So leasing a building to a newly formed company with no balance sheet whose directors have no assets to guarentee or underwrite the lease with and who want to rent out VHS videos to the public will not be seen as low risk and would get a higher yield than renting a building to the UK government (who has never defaulted on a loan) for the purpose of housing inmates for the next 30 years, which would be seen as low risk and would be valued with a lower risk.

The VHS shop could be a 14% yield

And the prison a 3% yield.

So that means if the rent for each was £100k per year;

The VHS would be valued at £714k

The prison at £3.333 million

The formula is to take rent 100k and divide by 0.14 (for the VHS) or 0.03 (for the prison) 

So when my guest says they built something to a 17% yield that means it cost them 

£588k to get 100k of income

And they sold for a 5% yield it means the buyer valued that 100k income at £2 million which is a margin of around 250% profit on cost before taking leverage into account. 

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Simon (Tax Planner) and Amanda (solicitor) from https://bellhowley.com/ join me to discuss the benefits of a group structure in terms of property investment and development businesses such as;

Tax efficiency, Group Vat, ring fencing assets and legacy... as well as issues such as lending.

We talk about and how creating a trust can be an optimal way of leaving a legacy.

Be sure to listen to the end where I go into detail regarding personal issues I have had in my business and what needs to be done to safeguard against potential problems.

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There are not many people who can say they have bought a property every year for the last 30 years, have weathered and flourished through 3 recessions have amassed a diversified personal property portfolio in excess of £50 million but that is exactly what my guest has done.

Ranjan really is a class act. In this discussion he tells us how he got into property,

Some of the reasons outside his control in the market which meant he had to adapt,

How what he thought were disasters for his business quickly turned into fantastic opportunities... and much more.

We recorded and filmed this at his serviced office block in st Albans which is one of his latest developments.

He has created a brand in Fab lets and also is a big personality around London hosting the Baker street property meet and also hosting a youtube channel.

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With help from Jay and Piot we discuss some of the upcoming lots at the Auction House London auction on 17/09/19 and what some of the opportunities may be with them as well as some things to watch out for.

We discuss lease extensions and enfranchisement, commercial yields and risks with certain covenants, development opportunities and some of the regional opportunities as well as who may be the perfect buyers.

Although the lots are for a specific auction the strategies and tactics discussed may be utilised for similar sites.

you can see the lots here

https://auctionhouselondon.co.uk/pdfs/catalogue.pdf

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In this episode Jason tells us how his company, Bmor http://www.bmor.co.uk/ has been able to grow into a fantastic company that has a turnover £600 million to date. We talk about how he got into property, bulk trading high volumes of units and how the financial crisis came at a time where he had exchanged on 2000 units and the lending got pulled overnight meaning he couldn't complete on a single one losing the business millions.

We discuss his learning from this time including structuring companies and insurance and warranties and how their insight allowed them to have an edge in property including; getting overseas investment, starting transparent funds, understanding the time to look at counter cyclical income plays, the world of private equity and much more.

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