Tag: property investing courses
£0 to £100,000 in ONE Property Deal | Wealth Strategy 2021
Jason 0 Comments 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.
Recent Comments