Tag: investment property

£0 to £100,000 in ONE Property Deal | Wealth Strategy 2021

Jason 0 Comments November 18, 2023 Retire Wealthy

If you want to sit back on your backside and 
moan about the nine to five job that you've got   carry on. 66 grand over seven years 
that's more than tripling your cash   good deal how many Bazoomers have you just put 
in your pocket. Further profit of 78 thousand   nine hundred and eighty two pounds BOOM! Hello there and welcome to this week's edition 
of money matters because after all money   does matter! How would you like to discover as we 
go through this video together, how you can make a   hundred thousand pounds in just one deal? So we'll 
go through the amount of money you would need   what guarantees you've got but the thing that 
i'm talking about this week is rent to buy.   I think this is the most little known and best 
kept secret in the property industry there's so   many challenges out there for both tenants and 
landlords and very often it's tenants against   landlords one get set against the other so let 
me just give you an example of what i'm talking   about.

Especially during pandemic and you know 
lockdowns everything else people really struggled   and i get that i'm very very sympathetic as a 
landlord to tenants problem but if a tenant gets   to the point where they can't pay in a normal 
world. In my world, what i think would be a   good solution would be the tenant goes to see 
the landlord they have a discussion they agree   you know a payment plan or give it so many months 
or whatever, but at some point decent human beings   don't want to freeload on other people so they 
would agree right well can you give me a month   i'm trying my hardest, i'm going to get another 
job or whatever or my mum's going to lend me some   money or whatever it might be and i'll get you 
your rent one way or another. But tell you what,   if i can't do that a month from now i'll just 
move out. Now that in my world that would be   a normal good conversation and i'll tell 
you why that conversation doesn't happen,   because if a tenant did that according to 
the rules according to the legal system   according to the benefit system they'd have 
just made themselves voluntarily homeless.   Now that to me is completely absurd they didn't 
get themselves made redundant on purpose they   didn't want to not pay the rent but if you speak 
to shelter or if you speak to the local council   they will tell you stay there until that landlord 
evicts you because only then will be you'll be   entitled to benefits.

So for me that is complete 
and utterly mad but that is the fundamental reason   why landlords and tenants are at loggerheads. If 
you said to a tenant what's your biggest problem   they'd probably say the landlord and if you said 
to the landlord what's your biggest problem they'd   probably save the tenant but it's because of the 
system. So how about we change the system so here   is the new system the rent to buy system instead 
of renting it to a regular tenant you actually   rent it to a tenant who's got aspirations of 
owning their own home and they enter into a   contract with you for seven years and i'll explain 
why seven years shortly and they pay a normal rent   over that seven years but also during that seven 
years they pay a little bit extra every month.   It's called, we call it a top-up that goes into a 
separate client account so you the landlord can't   touch it but over the seven years they save up a 
ten percent deposit and they then buy the house   or flat from you and the figure we use for the 
annual increase is the Rich's royal institute   charts fairs recommended an average which is 
four percent each year they're in the property   the property goes up in value normally and over 
a seven year period it's probably going to go up   by four percent compounded seven times which is 
roughly 31 so it's almost a third so if you had a   300 000 pound house they would buy it from you for 
roughly 400 000 pounds if you had 100 000 pound   house it will be 130 000 pounds that is the core 
that is the nuts and bolts of it but what we're   going to do now is we're going to look at this 
from everybody's perspective from the landlord's   perspective from the tenant's perspective from the 
estate agent's perspective because there's there's   very very few estate agents in the in the whole 
of the country that do this and i mean the whole   of the uk when i say the whole of the country and 
finally we're going to look at some actual numbers   for a hundred thousand pound profit or just a 
little bit over a hundred thousand pound profit   from one property and i think you're going to like 
it so strap yourself in enjoy the ride here we go   down the ramp to buy roller coaster okay so let's 
go look at this from a landlord's perspective i   want to introduce you to a good friend of mine 
this is Karen bock.

She inherited some money   and she wanted to make sure that she made the 
money work for her as opposed to her having to   work for the money so listen in i think you're 
going to like this. Hi i'm Karen and i'm here at   touchstone today to go and view my first property 
that i've bought and it's for a rent to buy and   i'm really excited about going to see this one 
now my mother died earlier on this year and   when my sister and i inherited their property 
which we sold for a substantial amount of money   i needed something to be doing with the money 
not just sticking at a bank and leaving it to   rot so i'd often thought about doing property 
and was talking to Gordie about sourcing the   property for me which she did we went to look 
at this property and i said yes straight away   it was a lovely house three-bedroom property only 
needs a tiny little bit of work doing to it which   is a great thumbs up so i didn't have to do loads 
of work put an offer in and they that offer was   accepted and we're just waiting now for it all 
to go through with this solicitors and everything   massive wise to why i'm doing this which is my son 
he's 16 and he's disabled he doesn't walk he never   will walk and unfortunately i know our care system 
so well that i know he'll always he doesn't ever   want to be what i call a wage slave i don't want 
him to be a wage slave either don't fall on these.

I prefer to buy to let because once i've bought 
once i've put the people in who are going to   rent it it's basically their home so they will 
eventually own it i don't need to do anything it   takes out all the hassle of having a buy to let 
of thinking oh if they broke a tap or i've got   to come and fix and break tire i've got to find a 
plumber no it's their problem not mine so they pay   a normal rent and a top up which goes towards it's 
paid them deposit for their mortgage if they walk   away from that that's that one is mine plus the 
fact if they default on their rent i've got top up   i can take that money the rent money from them so 
it's a no-brainer it's a win-win all the way down   the line it's lovely i like it i think someone's 
going to make somebody a really nice home   really nice home it's such a lovely area as well 
it's got everything shops around the corner nice   small area activities for kids to do you know 
so but i would say to anybody that is looking   to do something with money if they have to 
come into money don't just stick it in a bank   make it work for you go and get a look go and have 
a go and you meet so many nice people they're all   on the same wavelength as you you don't get looked 
at like an idiot what are you buying property for   first oh no buy property it's you know why not 
it's there to be had if you want to sit back on   your backside and learn about the nine to five 
job that you've got carry on because i want out   of mine okay so how about that what do you think 
to Karen and her journey that's exciting stuff   isn't it so there's the landlord let's now go and 
meet a lovely couple with some lovely children uh   so let's go and hear from lee and Ashlynn of some 
rent by tenants but Gordie and myself we took him   a little bottle of champagne say welcome to your 
new home and this is what they had to say about   rent to buy hello and welcome to Rossington so the 
two of us have come out to welcome a new tenant   who just moved in here yesterday wow they got 
this lovely new home and they've agreed to talk   to us about what differences made to them i'm 
looking forward to it and to welcome them to   their new home because they will be buying this 
see you inside i'd like to introduce you to lee   and Ashlynn so you've got you've got three lovely 
baby and you've got a fourth one on the way yes feels amazing yeah yeah process was fairly 
easy right yeah it's been really easy the only   stressful part was moving well yeah what's 
this little one called angelica angelica   you're here you're looking good now yeah yeah 
does it feel like a family home yet already   yes just after like one night i think 
it's because we all muddled in we all   pitched in and we all did a bit even 
the kids what's the last few years.

Yeah it's always been down to landlords selling 
houses from underneath yeah but well you've   given us an opportunity but i love doing this i 
love doing the we call it going to buy yeah rent i think that was our issue having just put a bit 
of money aside as well as paying the rent and   the bills at least this way it's all done in one 
move and you don't miss it because it's not there   we're not very good savers are we if we do 
save it's like something breaks down or the   kids need someone needs to pay for school trip 
or whatever so you're dipping in and dipping in   so somebody out there watching this that fancy 
the idea breaks by what advice would you give them   do it do it do it yeah i think that's 
it that's as simple as that just what a fabulous family i mean they were so 
delighted to be in that house and uh you didn't   see in the video but they actually had a couple 
of dogs as well so there are all sorts of issues   with with previous tenancies that rent buy just 
ticks all of their boxes next up in this quickfire   series through what is rent to buy let's go meet 
the agent so let's go meet my friend business   partner gordy duffield and let's find out what 
kind of properties do you need special mortgages   paperwork you know all that stuff over to gauri 
okay so i would like to introduce you to my   good friend and business partner gordy very good 
very good so gaudy you run diamond estates yeah   and one of the parts of diamond states is rent to 
buy why do you think rent to buy is a good thing   for land or dental okay i think in property what 
we've seen over the years is tenants v landlords   it's always been in tennessee landlords send a few 
landlords and i truly believe this is a complete   win-win for both parties is there anything wrong 
with us making money and helping other people no   i don't believe so so i think the big thing is for 
rent to buy for landlords is to secure income for   a many periods of years and for the tenants to get 
an opportunity what they made never had before an   opportunity to own their own home that's cool yeah 
couldn't agree more if we're going to try and help   both parties here so you know tenants landlords 
they'll be watching this video so if a landlord   wants to get into rent to buy yeah what sort of 
what's the ideal property uh good question um i   mean just to be clear we filled one bed flats we 
filled seven bed houses we filled forty thousand   pound house we filled one point two million pound 
houses but i think the ideal property that we look   at is a two three bedroom house um either a terra 
seven detached or detached that's the kind of idea   two three bed house does the garden matter um not 
massively what we are seeing since the covered as   gardens are becoming more popular uh what about 
parking garages anything like that again doesn't   really matter on street pack it's fine so what 
you're really talking about these vast majority   of properties are probably going to be suitable 
correct but what i'm getting a feel for is that   probably a studio flat is the least suitable yes 
it's not somebody's forever home no no which parts   of the country do you cover which parts of the 
country don't we cover maybe one everywhere all   over so top of scotland to the bottom of england 
we've got stuff right up in neon which is stayed   on vanessa and we've got stuff right down in 
portsmouth um all right so almost anywhere in   the uk or anywhere in the uk and the vast majority 
types of property yeah what about from a tenant's   perspective where do you find tenants from are 
there many of them in fact let me change the   question okay have you got more tenants or have 
you got more property more tenants more tenants   not how many more tenants thousands more 
settlements so that there's thousands thousands   of people that want to buy their own property 
correct and when when people come through with   diamond estates and say i've heard about this rent 
to buy thing or whatever do they actually believe   it or do they think what the hell is going on it 
takes some convincing we had to really adjust this   at the very start as well because we had to figure 
out what they didn't understand about it but no i   think uh once is explained clearly to them yep 
they get it it's pretty simple you know it's   pretty simple well it is essentially yeah rent for 
the seven years save up a deposit and buy that's there has to be downsides what's the downside 
here um downsides it's funny this because i don't   know if i see this as the downside but if you're a 
landlord and the property does increase more than   what the pre-agreed price was um you'll lose out 
on the money in the sale price but i always ask   the question would you be happy with seven years 
guaranteed right and an increase in 31.6 in seven   years well the answer is yes yeah and so i don't 
really see that as a downside but i suppose that   is yeah i do get that i get that from property 
investors because Warren Buffett obviously not   really a property investor is a stocks & shares 
investor but he says his favourite holding period   is forever yeah and there's many landlords that 
just don't like the idea of selling correct yeah   but i get and i normally counter that by saying 
well if you've if you've got one property and it   goes up in value by thirty percent of seven years 
you can take that the original equity you had in   your original house you can take the sale price 
yeah and you can turn one house into two typically   so yeah what about from the tenants perspective i 
mean i guess there will be downsides i mean i know   one of our rented by tenants discovered um after 
a couple of years that the property just wasn't   right for them and they left yeah i think it's 
something to do with the relationship or something   yeah but they had to walk away from two years top 
up money yeah that is the day downside people's   circumstances do change uh and with regards to 
the contract they are contractually obliged to   stay there for the period of the rental term if 
they leave early they lose their top up but that   is fully explained to them beforehand they are 
adults so they understand that when they're when   they're moving in what i want to do is i just 
want to ask you a dead simple question with one   hundred thousand pound house you know around here 
you can still buy a house hundred thousand pounds   yeah with a hundred thousand pound house how 
much money realistically do you think a landlord   could earn over the seven year period from the 
hundred thousand pound down towards what their   total income stream is going to be if you take 
a four percent average which is what we take   and four percent times four percent 
point four percent seven times   uh works out at thirty one point something percent 
so let's call it yeah thirty one percent yep   thirty one percent on a hundred thousand pound 
house is obviously thirty one thousand pounds yeah   so that's your capital increase what's the monthly 
rent on this one you're talking about um it sets   600 pounds per month 600 600 a month so if we 
then say that all your bills and the mortgage   and everything else it's not even going to be 200 
credit but less than 200 so say 650 650 650.

So   let's say 450 quid times 10 it's four and a 
half thousand uh so that'll be 5 400. yeah so   i reckon let's keep it simple make five five grand 
a month on the rent five grand a year a month yeah   that's gonna be 35 000 pounds rental profit 
right and 31 000 pound capital profits it's   a human calculator isn't he jesus he 
said it was a simple question as well   66 grams here's the question landlords out there 
oh potential androids out there would you be happy   with sixty six thousand pound profit from one 
hundred thousand pound house because if you're   going to buy a hundred thousand pound house 
you can still get eight percent buy more yeah   so you'd have to come up with 20 grand yeah 100 
so how about that everybody you put in 20 grand   your 20 grand could be returned to you with an 
extra 66 grand over seven years so that's more   than tripling your cash good deal you might be 
out there thinking jesus i've got some rent i've   got some bicycle properties i want them to rent to 
buy it or i'm going to go and buy something yeah   what should they do give me a phone okay simply 
so uh so here's the details for diamond is his   phone number here's the website address so just 
crack on and uh get all the goldie oh or one of   the team yeah definitely i mean just a word of 
warning it's absolutely fine speaking of gordy   or diamond uh but there's actually very very few 
agents that do this isn't there there's a couple   agents to do we're by far the biggest and best 
that do do so yeah so if you're interested you   want to learn more crack on pick up the phone 
send an email whatever thank you very much   thank you take care thank you boom all right so 
thank you gory that was fascinating wasn't it and   something gory and i just checked with him 
afterwards just to give bit extra information   last week diamond estates took on 17 more rent to 
buy properties and most of them are filled already   so imagine if you'd you'd been that landlord 
that gave diamond estates your property last week   probably have a tenant in it already so 17 
a week we're taking on at the moment there's   a massive demand for this anyway enough of 
the chit chat and meeting everyone let's go   to the numbers room and crunch some numbers okay 
so welcome to the numbers room this is the numbers   board but before we get to that look at this 
house so this is the house that i'm gonna use   uh just walk through the numbers with you 
on uh so this is um elm green um conisbourgh   and it's a property i'll show you all figures 
but it's a it's a three bed house that we're   turning to a four bed house so as you've heard 
three four bed detached houses with gardens   absolutely ideal for rent to buy so let's get into 
the numbers i want to give you the full numbers so   this is actually a combination strategy that i'm 
giving you now this is buy refurbish remortgage   and then rent to buy on the end so quickly 
we purchased this one for 163 thousand pounds   that was purchase price on this one i had 
to get all the the legals uh the refurb and   everything else and i was putting it all in one 
number the total total total was thirty five   thousand pounds all up we're into this property 
for what's that 188 thousand okay so that's the   total cost of buying it next what's it worth 
after the refurbs we've turned it from a three   bed to a four bit we just rearranged some of the 
walls upstairs it was actually quite cheap to do   boom it goes and re-values at 250 000 
pounds which is sweet now if you want to   you can you can put 80 percent um vitamin mortgage 
on that so 80 of that is 200 000 pounds still   quite affordable mortgages but we've only spent 
188 000 pounds so end of stage one we have got   a house with none of our own money in it and 12 
000 pounds catching happy days everyone happy   with that so that is part one you the landlord 
if it is you the landlord you've got a 250   000 pound house and that's the starting price 
okay you've got 200 000 pound mortgage on it 250   so in addition to the money you've pulled out 
you've also got 50 000 pounds of equity in the   property so along comes a tenant buyer and says 
i would like to rent that property for the short   term and i would like to purchase it in the long 
term and just to remind you the two main reasons   why tenant buyers don't buy their own houses 
straight off the bat is they've either got some   sort of poor credit history uh CCJ something 
like that and believe it or not 25 of the uk   population is impacted by some sort of credit 
issue 25 and the other main reason is they got a   deposit so we need to look at two things how does 
it impact what all the numbers for the tenants and   what's the numbers to the landlord so first up 
you've decided to sell it in seven years time   so one two three four five six seven 
years time and each year rick's rolling   chief chart surveyor said you should assume 
that house prices increased by four percent okay so the department of hard toms has 
been hard at work and drumroll please   here we go the sale price will be 328 982 pounds which is a profit a further profit 
of 78 982 pounds boom but that's not the end of it   that's just your capital profit on the sale of the 
property and don't forget if you want to take 12   grand out so you haven't actually got any of your 
own money in here so you've already got money out   plus further capital profit seven years 
time of three hundred and twenty eight   thousand nine hundred and eighty two minus two 
hundred and fifty thousand pounds seventy eight   thousand nine hundred and eighty two pounds 
happy days you know i said that's not all of   it that's just the capital profit well let's add 
the rent shall we so let's move our money up here   boom still makes me happy every time i see that 
and now let's add the rent profit the rent for   this particular house in this particular 
area is one thousand one hundred pounds   per month we're going to look at two separate 
things now we're gonna look at what do you   the landlord make money-wise out of it and what 
does it actually cost the tenant to buy it okay   so let's do the what do you make out of it 
first in fact no let's have a look at how   much does the tenant actually pay for us because 
that's nice and easy they pay the 1100 per month   but they also need a top up the top hub goes 
towards the deposit so they can buy it so they   need to have a 10 deposit so they can buy the 
property in seven years time to be safe let's   round that up to 330 000 so they need a 33 000 
pound deposit we can divide that by 84.

Why 84   well that's seven years times 12 months so if they 
contribute in monthly in even amounts it's that   figure divided by 84 so get the trusty calculator 
out 392 pounds and 85 pence so let's round it up   to that the top up will be 300 and let's call it 
395 because you don't want a silly figure like   392 pounds and 86 pence or at least i wouldn't on 
top of their uh rent money of 1100 they're paying   roughly an extra 400 a month and in seven years 
time they've got 33 000 pounds because this top up doesn't actually go into your bank account 
because that wouldn't be right or fair or ethical   actually goes into a client account which means 
unless they breach their terms and conditions or   don't pay the mortgage or something you can't 
touch it so as long as they honour their side   of the contract you've got on your side of the 
contract and they get 33 000 pounds cash back   at the end of the seven year period they take 
that and then they go and buy the house okay   so hope that's nice and clear so let's wipe that 
slate clean shall we what do you the landlord get   because i said right beginning of this you can 
make more than a hundred grand in one div you've   got to ignore the top-up because that's not your 
money unless they mess you about so you're getting   1100 a month now we said didn't we on this one 
that it was a 200 000 pound mortgage so what's   the interest payment our 200 pound mortgage well 
interest only is normal for buy to let so we've   got 200 000 like that and i'm going to say we 
said this was an 80 mortgage so i've actually   looked just before i recorded this at yeah these 
sort of price comparison websites for mortgages   and it was just a little bit less than 
but i'm going to call it four percent   200 000 times four percent is eight thousand 
pounds a year so if we divide that by 12   that is oh that's a scary number that's the number 
of the beast look at that this is the beast of a   project 666.

666. do i need a cross or something 
when i write that number down is it scary isn't it   so that's your mortgage what else do you 
need to pay well uh you need to pay insurance   and landlord insurance you know building insurance 
is probably going to be about 20 quid something   like that so let's just make it a national number 
if i put 24 there that's going to round it up   and what other costs have you got well here's the 
great bit yeah normally i'd be saying oh you need   to put aside 20 for you know voids and maintenance 
and all that but you don't because it's a rent to   buy so all the money you would normally have 
to spend on the property you know paint it fix   the boiler if it breaks all that stuff well the 
tenants doing that because that it's their home   or it will be in seven years time oh it's their 
home now for goodness sake because this that's   what the contract says it's binding as long 
as they do what they say they're going to do   so 24 quid for insurance now because 
rent to buys are so simple to manage   many people would manage it themselves but let's 
say worst case you actually employed an agent to   do it you negotiate with the agent you said i'll 
pay you 10 to normal rate but it's so easy bloody   bloody blah so let's call it 100 pounds so this 
is for the letting agent yeah you know for letting   fees let's add all that up 790 pounds so your 
total costs are 790 pounds so your profit per   month you've got your 1100 pounds we need to take 
off 790 pounds which makes 310 pounds per month   profit what i now need to do to get to my seven 
years profit is very very simple i need to take   my 310 pounds multiply it by 84 which is 7 years 
and 12 months which gives me a further 26 and 40   pounds now let's go for the grand total shall we 
are you ready for the big reveal the grand total   how many Bazoomers have you just put in your 
pocket how much extra cash have you got on your   hip will your trousers fall down these are all 
important questions to ask because look at this   boom grand total 105 022 of your english 
pounds well British pounds actually   so just to go through that slowly 
so we all explain all you understand   so we started off at 250 000 pounds didn't we so 
it's not fair you actually get 50 000 pounds cash   more than this but you could have sold it at the 
start for 250 000 pounds couldn't you so we're   talking about extra profit from rent to buy the 
fair way to do it is not to deduct the mortgage   but to deduct the start value so we've agreed the 
sale price with the tenant 328 982 pounds that's   four percent four percent four percent seven 
times the start value was a quarter million so   the extra money you've made because of rent to 
buy is 78 982 so it's just that take away that   and then we said per month you make 310 pound 
profit well if you do that for 7 years 12 months   in a year obviously that's where the 26 040 comes 
from add them together socks off go and catch your   socks they're flying around the living room 105 
022 pounds with zero aggravation because i've done   about you many people i talk to a lot of people 
that's what i do i'm a professional speaker i talk   a lot of people tell me that time is the most 
valuable asset they'll agree with yeah yeah yeah   time's like a favourable asset pool and then they 
want to micromanage everything i don't i want to   put a tenant in send them a Christmas card every 
year and then make 100 grand profit that is far   far better for me than chasing tenant through the 
courts renting arrears fixing things i'm making   money i'm doing a really good thing because this 
is a lovely family home and a lovely family will   buy it in seven years time so it's a roof over 
somebody's head that they otherwise wouldn't have   and i'm making underground in the process 
and okay i showed you an example here where   we actually purchased the property we did it up 
we turned it to a four bed house you don't need   to do all that stuff you don't because you could 
just go my kids by the way this is what they call   it i'll just explain to you you could just go to 
the house shop because if we buy so many houses   jenny and judo youngsters they don't call it the 
estate agent they call it the house shop so you   could just go to the house shop don't do 
anything clever don't do anything you know   advanced that would need training just go and 
buy a property for quarter of a million quid so   yes you've got to put down 50 000 pounds but in 
seven years time you've tripled it so instead of   fifty grand you've now got 150 grand and 
now instead of one house go and buy three   just recycle that cash and buy three more anyway 
let's wrap this up hope you like the number   crunching room we'll be back here soon and that 
my friends is how you make money with rent to buy Oh sorry i forgot that's worst case because that 
assumes you don't put the rent up for seven years   and that's quite unlikely isn't it but you'd agree 
that at the start anyway speaking of up okay and   that my friends is a wrap one project dead simple 
hundred thousand pound profit if you like the   idea of rent to buy and you haven't quite go go 
watch it again with the best 15 minutes you ever   invest in yourself let us know how we can help 
you put your comments below make sure you have   subscribed and put the notification bell on you've 
been wonderful i've been Paul see you next week.

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