How to Find and Analyse Good Property Deals | The Anxious Investor | Skillshare

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How to Find and Analyse Good Property Deals

teacher avatar The Anxious Investor, I am addicted to creating things!

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

5 Lessons (18m)
    • 1. Introduction

      1:24
    • 2. Step 1: Finding a deal

      7:24
    • 3. Step 2: Analysing the deal

      4:47
    • 4. Step 3: Is it a good deal?

      3:31
    • 5. Concluding key points

      1:14
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About This Class

Finding property deals is a numbers game, but it is not impossible. However, what we consider good is always subjective. This is why analysing the properties we find is important.

Analysing Property Deals is a key skill you need to get right in order to make sure your investments are worthwhile and they actually are. 

If we can get our numbers right, we can massively mitigate our risks and this is what I want from you all when investing in property. 

Don't forget to run over the first class, as this will teach you and highlight areas that are important for this class to make 100% sense.

Meet Your Teacher

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The Anxious Investor

I am addicted to creating things!

Teacher

Hey my names Aren aka The Anxious Investor & I will do my absolute best to help you live life on your own terms. Be sure to connect and let me know how I can help.

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Transcripts

1. Introduction: Hey everyone, my name's Aaron and I'm back with another class where this time I'm going to be demonstrating live for your hard-to-find property deals. Now, I'm not naive enough to suggest that we're actually going to find a deal right here, right now. However, in this demonstration will I do hope is to show you how to navigate through the online portals and make sense of properties you are potentially viewing. And the goal of this video will be to look for properties where we can buy, renovate, and sell for a profit. Shipping, basically. And of course, if we don't find one that fits the criteria, I will then explain why I don't believe a potentially work and what we could do differently. Also, I'm not advocating that you offer in any of these properties until you have done your check with movies brokers got building quotes and put it through a deal analyzer as well to finally understand all of the costs associated with it. And to make things more exciting, what we're going to aim for is 20 percent gross profit. So I'm putting myself under pressure here, but let's just see if there is something available online. And if not, I'll explain the reasons why I feel it's not ideal. And just some final point is just before we begin. Firstly, I want to say the location is completely random, which you're going to find out in a few moments. Secondly, the goal of this class is just to show you the logic process of analyzing deals, but more specifically in regards to flips for this particular class. And third, I will highlight the importance of ROI and some ways that you can mitigate the risks for yourself when you go out there and stop property investing. 2. Step 1: Finding a deal : Anyway, let's jump to this. So we're going to create a random post code and we are in S 648 AF, which, well, I have no idea. So the first thing we're gonna do is throw this into here and click for sale. We can also do it here for rent and here as well. So yeah. It's a little bit tedious, but it's always worth doing from the star. And I'm just going to explain some parameters that we're going to use as well. So we're going to look for a flip. Now. I'm gonna go up to a purchase price of a 100 K. So either you've got that cash, the lucky ones of you, or you need 20 today percent roughly speaking, of a deposit. And then you can bridge this, generally speaking. So 25000 pounds could probably get you started for this kind of flip. Now we got to understand that if we buy something, let's say sealing of a 100 thousand pounds, we need to make 20000 pounds, so we add 20 thousand straight away. But then we've got all the costs such as the initial cost, the holding cost, and then obviously the renovation as well. So ideally, we want to be looking at something, say 100 and 140, 150, just as a general rule of thumb. So we're going to try that when we get started. Okay, now, I've just quickly updated it and I've saved you guys a few minutes. So I've done it within three months because sometimes you don't always find something in that particular area. We've gone up to a 100 thousand pounds. We're looking at 23 bedroom houses, which is probably a good place to start flipping houses, pop to type the houses. So I've done this for all of these as you can see, and I'm just going to search now. Okay, so we're back on. So straight away, you've got feature properties and I'm going to quickly explain what that means. I featured property, generally speaking, is somebody who's paid a little bit extra to their agents. So the agent is Mary weathers here to list it straight away. So it's a bit like a Google or Facebook ad. Now, there's nothing wrong with that. But it could, they potentially could mean that they're more eager to sell a little bit quicker. I've done this previously on my residential home, so something to think about there. It doesn't. Okay, That's fine for the gold price, as I've explained a few times, is something that an auction. So generally speaking, it rarely goes for the actual price. So just be a little bit wary about that. The office in the region of means that obviously, you can have a 105, 110, 1995. We have a bit of a scope. So that's fine there. I'm just going to let you get one of these. And what we're gonna do is run with it for an example. And what I'm actually looking at here is a look at this and this looks pretty nice. It looks renovated inside. The same process with this one here. I'm trying to look for something that looks slightly outdated and I mean that with respect. Okay. So we've got premium listed here. So as we know, they probably looking to sell it a little bit quicker or the happy to have it pushed up on the ranking page. So we're gonna go with this one which is a three by semi detached house for sale in my Explorer. And you just got to love the marked in here not to be missed. Well, we're not missing it. So let's jump in. So it's a semi detached. It's got floor plans and double glaze stuff. Epc TV confirmed interesting. And just open the floor plan. Just have a quick look. So yeah, your standard three bedroom has little box ring, master bedroom, second bedroom, bathroom. And then the follows. So these are my favorite kind of properties. So. I'll explain why. Because it looks at least from the onset that there is a lot of value to be added. And it looks like not much has really been done in terms of bringing it up to a modern day standard, which is fantastic by the way. So I'm guessing this is potentially an elderly or disabled individual hair living here. The garden looks very, very well maintained by the mind. So, okay, 100 thousand pounds. Now we're going to pretend that we can offer within a 100 thousand pounds for this particular example. And it was a three bedroom semi detached. Okay. So we're looking at rents as well. Now, you'll have to do this as a first step. This could always be done after book. It's The next type, so let's just do it now. So there's no comparable is here, which is useful. So we've got two bedrooms. Okay. So two-bedroom 70 touched rent for 65 595. So the chances are you can probably get a little bit more than that. So let's just hold fire on that for a moment. So the next step we're going to do is look at the comparable is within that particular area. So we're going to search, we're going to increase the radius here. So obviously, the further right you go, the less the comparables are accurate. So you want to try and get something as close as possible. But just for the purpose of this one will go three models. Because obviously when you, nothing was in that particular area. And what would be great is if you can find these postcode for this one. Here is slightly different. So I think we initially put that post coding for this one. It came as a three mile radius. So actually, you might find something brilliant. Okay. So the only comparable that we have is this, which was in 2011, which has a very, very long time ago. So we're just going to increase it to one mile. Fingers crossed guys. Okay. Brilliant. So we are looking for a three bedroom. So two bedrooms and T is semi detached. Okay. So they're awesome. Decent prices here. I'm just trying to find where they are. So we have one here for three bedrooms, semi detached itself, 170, brilliant. We've got another one, 173 hold nice houses from the outside. And three by two, 170. Not sure how many rooms that one is, but we can always click it. Okay, So let's just say 170. Please do obviously go through more of them, writing down into a spreadsheet, work out an average as well. Just to kind of give yourself some indication of why they selling for also make sure that you check the location of this in comparison to the comparable is that you have. So for example, in certain areas, as you may well know, some houses on a particular road or with more than the ones on adjacent road. So that's really important to know as well. However, if there is no comparable is online that you can find out, then they will use the ones that come up so it can work in your favor as well. But you need to make sure that you're looking at everything as much as you possibly can. So for this particular one, the first thing obviously you have to do is view the property did not go solely off. What you're seeing online is it's impossible to calculate how much this will cost as a renovation. And we know that when there's a fine, But if I was going to run it, you're looking at three bedroom has plastering, probably a brand new rewire at a gas central heating, updating brand new kitchen in the kitchen doesn't look too big. It looks quite similar to the high stuff. Got myself. Standards side bedrooms, I'd probably take this back and just noise finish my show what the ceilings alike. Brand new copies and you don't really need too much landscaping. They're probably change a little bit of this front, so I don't know, let's just say 16000 pounds for this particular one. Now, the next step is to open the door analyzer, which I'm going to do now. 3. Step 2: Analysing the deal: Hopefully you're all with me. This is the first time I've ever done something like this. So hopefully it makes sense. So we're gonna say the purchase price was just going to keep it a 100 for now. And stamp G, so that automatically calculates it. And obviously, we know there's a bit of a holiday with that at the minute. Let's turn broker fees. I can probably get it for about that for this particular type of property. If I was just going to purchase it out. Right? But if you're using a bridging company, for example, I together finance for example, if you are going to loan you the rest of it, there will be fees added. So I'd probably double that because generally speaking, you got to pay fees as well. Broker fee might be slightly more, but let's just keep as a sourcing fee, there is no afib because we found ourselves renovation costs, we're going to go in 16 thousand. That's just based on the kind of prices that I've managed to, a similar one for. Now again, when you see, ideally try and take a builder with you. Or if you're experienced enough, you probably know what to do. But let's just say 16. There's a 10 percent contingency already added in 1600, and then finance costs. So the finance cost run off here. So how long does this project take? Now it looks pretty straightforward. Icon, imagine there's anything structural there or that will come up in the survey and probably caused them problems trying to sell it. So from here we're going to say six months. And the most important one is the estimated revaluation here. So here we're going to throw a 170 thousand. So the council tax, again, you can find out what the council tax is within the area, literally glucose in the postcode. Now, remember, we were looking for roughly 20000 pounds profit. What I mean by that is gross profit. So obviously were not taken into account at time or anything. Looking at this, roughly speaking, it looks like a deal. Now, I wouldn't just go and offer on this, even though that is a lot more than 20000, I'd want to dive more into the comparable or want to make sure that there's something very close to it that has sold in a doughnut condition that doesn't look like it needs work for a 170 to really have that level of confidence that actually this could work. But on the backend, I think we've landed on something pretty decent here. So what you can do now is play around with this. You can literally say, okay, three, you could afford to probably go in with a 110 thousand. In fact, you could probably make a lot of mistakes, which many of you will make an amine that respectfully, no matter how experienced you are, you always make mistakes or shall I call them lessons on each and every one of our projects. So even if you spent 20000 pounds of this, you pitch it for a 110 thousand pounds. We take into account all of the finance and contingency costs for six months. Let's just call it nine months because the boat is runaway and you've had a nightmare like Hawaii, I've had a nightmare. Your total holding cost will come to around thetas and you've got exit fees worst-case if you have to refinance it, but remember, if you don't refinance it, you still have to pay the listing fee. So that's why keep them there, because the principle is still the same. Your gross profit if flipped, is 23,268. Now of course, if the purchase price exceeds a 100 thousand, you need the extra amount of money in order to purchase it. Now, imagine if you flip it and you can't make this 20000 pounds. Let's just say it's not a buyer's market. How you find out if it's a buyers market is you speak to local stages and you find out how quickly our houses selling. You also look, right, move and z, and look at the recently sold one. So subjective sale or what's actually sold. If you're not seeing much information there, it just might not be that kind of area where house prices are moving into, for example, but against B22 agent. Now, remember I said we're looking at the rent and there's a reason for that. So we said 65 for t bedroom and that looks really nice, but that's the kind of quality you can't get for the renovation that we spoke about. Just gonna see if Z has something different. Now the reason I use both is you'll find different stuff on different ones now nor write me is the biggest portable. Ziegler also has sometimes the odd property that may not actually be arrived me, so it's always good to have both. I'm just going to narrow this down now because we know we've got a three bedroom. We also know we've got a highest fingers crossed. 65. I think. Again, I'm guessing and I need a lot more information, but 650 or three bedroom and a terrorist. 650 is very, very conservative. We'll just go with 659 because that's the only number we have and I suppose it's better to be safe than sorry. So we're going to throw in 650 here. Mortgage payments for this is done on a 25 percent deposit left in. So before it 2500, you move, it would be a 127 thousand and have just only a 3%. Again, find out what the mortgages. 4. Step 3: Is it a good deal?: Now your ROI, which is the most important number here, is 25 percent. Now what that means is if we use the bridge, for example, we use 25 percent deposit based on this calculator, we would have put in a 146,781 pounds and 92 pens. I told money out would be a 127,500. And what this is is effectively the bank, so the Banquo to you, so you buy this property with cash, we're just going to pick up surrounded monster. You buy this with cash. You then do an open, you take away all the nasties. So now it looks brand spanking new, really should go. You then go to a bank and say, Hey guys, everything selling 470 thousand pounds on this road. I believe this is worth a 170 thousand because we split it up. Fantastic bank over here where it says, boolean will give you that, but we need you to leave some money and brilliant. So you will have to leave 25 percent in DOE new 75 percent. And that's 75 percent is a 127,500. So when they loan you that because you've bought it with cash or an investor or however you purchased it, they will give that either to yourself or to the bridging company. So for example, if you've got bridging loan here, they will pay that bridging loan back and almost takeover. So refinance effective, you're taking over another loan. So this bank will replace that bank. If you've got no bank in the first instance, getting paid that money, it's constrained to your account, which means you leave in 19 thousand and the return on investment based on that rental income. And I've done it on a cash flow here. So the cashflow here, sorry from speaking fast, drop it in the comments. If I've gone over this too quickly. But your cashflow here, I've done it with 10% voids and maintenance. Most often or not, we're seeing people talk about their profit, but they're not accounted for void maintenance. So based on 400 pounds per calendar month, you're making up that property if you rent it out. I return on investment is 25 percent, which effectively means over the year, we would have made 25 percent of our money left in this back in four years time. I 25 percent times four a 100 percent we got a 100 percent of our money back. Hopefully that made sense. Rewind that if you need to drop it in the comments down below. So that is pretty much that. Now of course I said make sure you check on street checker here, check your council tax as well, and make sure you check on here the actual postcard. Let's see if it comes up. So computers crashed. But it explains a type of houses and people of beryllium, it has. So there's more women, their age groups. It shows a shows a co-chair, the employment, the crime. Now you can click this and I'm going to come up. I've done this too many times. So yeah. It tells you the kind of crimes. So I'm not sure what you wanna do with that information, but I think it's just useful to know because if there's a lot of drugs, for example, I don't know. And social behavior, for example, do you really want to be living there? Maybe this is a half for yourself that you want to buy, do a refinance and they lived there. That works as well. So that's pretty much where I'm going to end this. Again. I can go into so much more detail. Maybe I'll run these kind of live streams later down the line if you guys find it useful, but asymptote processes. But what I need you guys to do now is ask any questions in the comments down below, so I can get back to you and help you with that information. 5. Concluding key points: Okay, So if you made it this far, I hope for you gain some insight into the thought process of analyzing deals that as property investors do online. And before we close, there are some final points as well I really needed to take note of. The first is make sure you get three quotes of work before you start any projects. So make sure you get proper thorough quotes. The second is to ensure you have all your fingers correct, as how you buy, this will determine your actual costs of interest. The thet have your maximum offering place and pleased on budget. And for example, we could have gone to maybe a 110 thousand and this particular one. But you don't want to end up in a bidding war and spend a 108 thousand times because that would chip away, or your profit for getting good information from a stage is about the prices they could sell for a Latin agents about the prices that they could actually ran for. Five, don't rely solely on Zuko price estimates like cheese. I find that some of them are in the ballpark, but others are far too generic. As you can see from this example, to make sure that you get comparables of the building type and is close to the location as possible, along with the information from the agents. And six, I sort of thank you for taking time out your day, please do let me know any comments on how we can move forward in the classes and if there's anything else that you need me to help you with. Thanks for watching.