Property Investing for Beginners (BRR Method)

1. intro: In this course, you'll learn how to invest in property using the buyer refurbish refinanced method, which is also known as the BRR method. You will learn how the PRR method works, how to finance property investments, how to analyze property deals, how to build a deal's funnel to efficiently evaluate property investments, how to offer, negotiate, how to manage the buying process, and so much more. This course will teach you everything you need step-by-step in order size your property investment business. So let's get started. 2. Risk and reward: Okay, so in this lecture we're going to be covering why this strategy works, the fundamentals and exactly the process which goes into this in order to make their strategy effective. So before we get into the strategy itself, one of the cool things we have to cover within the wall of investing or within the world of property investing is this relationship between risk and reward. And generally if we have a risk anymore, the relationship is that as you take more risks, you generally have a high reward. So essentially, think about any sort of risky investment. It doesn't have to be property, could be stock market, so it could be anything where you take a higher risk. People generally take a higher risk because they want a higher reward. Now, the issue with that is that as your risk increases, the reward does increase, but you're also taking a bigger risks, which means the whole thing could completely collapsed. So now, if we're looking to the world of property and what are some of the risks in property? So the first one is market uncertainty. Market uncertainty essentially means that, let's say you have a strategy of property strategy which is reliant to a new selling the property So you buy and then you sell at the end. And it is any sort of market uncertainty. So there's Brexit or currently at the time of recording this, we're again through COVID-19. Then you might not necessarily have a buyer at the end, which could be a problem. Because if you're reliant on sale and there's no one buying, then you have a property which needs to sell, but you can't get out of it. So market uncertainty, what's happening in the market in itself is a bit of a risk. The next one is a development risk. Now, development risk essentially means that, let's say you're building houses on land. Are you building apartments or you're doing a big conversion. So maybe you have an office building and you're converting it into apartments. Then whenever you're doing a big development, it comes with some sort of some element of development risk because there, there could be issues with the ground which people weren't aware of before. There could be issues with a building which people weren't aware off. So imagine a big office building and wants the builders go in and they started to strip the building out. You don't necessarily know the exact condition of that building. So whenever you're doing a development, because there are those uncertainties about, well, what is the land actually like and so on and so on. There's always that element of risk. And of course, the reason people do those deals is because, well, if they get through that and they mitigate those risks, then there is potentially a higher reward. The next risk in this list is planning game. Now, planning gain essentially means that in the world or property, a lot of things require planning permission. So you have to submit to the council saying this is what we're looking to do. And that again, could mean building houses on land. It can mean converting a building. It could be anything along those lines. And whenever there is planning required and there is always a big, big uncertainty because you might end up getting planning, you might not end up getting planning. And if you don't end up getting planning, you now have a piece of land and building which you can't really do anything else with. You might then sell it on to someone else and who might have a go. But again, at the end of the day there is uncertainty. There's a lot of risk. But at the same time, if you do end up getting planning on whatever you're looking for, there is also there very, very high reward because well, you got the planning in place. Now you can build flash, you can build houses, you can build whatever you want. But it comes with our risk. So generally, if we're looking at the relationship, it goes from down to up. As the risk increases, the reward also generally increases. Now, the strategy we're referring to here, that is what I call the proposed strategy on this diagram. Now, what the proposed strategy says is that this strategy, I'm not saying this strategy is going to make you the most money is the highest return strategy and property, because that's not necessarily the case. What the strategy does do is it essentially is the highest return you can possibly make the highest reward for the lowest risk. This strategy is really for people who are new into the property world, who don't want to take a lot of chances even if you're not new and you don't necessarily want to take the big, big chances because you don't want to risk it all on one deal. You want to have small stepping stone but make it very, very good return. This is the perfect strategy for those people. Now, this is one of the big reasons, which is why I'm very, very low tolerant when it comes to risk. Why I don't necessarily want to take big chances. Because if we're looking at this table, the left column says percentage loss. The right column says percentage gain. So what it shows is that if you have a five per cent loss, let's say you make a 5% loss in any type of investment, then you actually have to make a 5.3% gain in order to get your money back. If we look at the complete table and look all the way down to 50 per cent. So let's say 50 per cent loss. Now the percentage gain is a 100%. What that means is, then, let's say you start off with a £100 to keep the numbers are very, very simple. If you start off with £100 and you lose 50 per cent of that, then you've effectively lost £50. So you started with 100 and now you're down to 50. If you want to get back up to a 100, essentially where you started, you will have to double your money from 50 to 100s. That is a 100% return. So essentially, what this table shows is that as the losses increase, you actually have to make a much, much higher gain just to get back to 0. This isn't even making money, this is just getting back to 0. So now if we put this into context, if you have a strategy where let's say you have a £100 thousand to invest and the strategy doesn't pay off for you and then you end up losing half that money. So you lose 50 per cent. You will now have to make a 100 per cent return just to get back to 0. Whereas the way I like to personally investors, I don't necessarily like to take big chances are big risk. Because this way, if I'm not losing, I don't have to do the hard work to get back to 0. I want to keep stacking my wins rather than losing. And then trying a lot, lot harder just to get back to 0. So this is the philosophy behind this strategy, which is a very, very low-risk strategy and high return. But keep in mind that it's not necessarily the highest return the world or property, but that is not necessarily what we're going for here. We're getting for a very, very good return. But without taking the chances. 3. Investing Model: The process for this investing, for the strategy is very simple. Essentially what we're doing is we're purchasing a property, then we're adding a lot of value. So value will come onto shortly in terms of how we are adding value, but we were adding value. And what that essentially means is that we're making the property be worth more money. So we're increasing the value of that property. And then once we increase the value of their property, we have two options. We can either look to refinance. And what that means is that we will cover this in the finance section. But what that means is that you refinance onto a mortgage and then you hold the property for the long term. You rent the property out and you hold it for the long term. Or the second option is that you end up selling the property, which is commonly known as a flip. So you buy you add a lot of value, and then you sell the property. So he essentially flip it. But that is a process and it's simplistic form. So now, what are the different ways we can actually add value to these properties? Well, the first one is doing some sort of extension. So that mean that could mean unless you have a loft in the property, you go into the loft. It could mean that you have a garden, you extend back into the garden. Generally, there is a thing called permitted development rights, which would mean that you can do a lot of these things without unnecessarily requiring planning permission. Some things require planning, some things don't. But generally, if you're doing small extensions, you can get away with it and don't necessarily have to apply for planning. But for example, let's say you go into a loft, you extend the back of the house, you converted garage because the property down has more space. What that would mean is that property would be worth more money. The second way is like measurement for some sort of garish conversion. So if you have a garage and you turn into a home office, you turn it into another bedroom, Your turn into a bedroom within all sweet, again, that will increase the value of the property because generally, a room or bedroom especially is worth more than a Gary. So if you have those if you have those type of projects, then you can typically do that. The next one is built on land. So now let's say you have a piece of land and you can essentially building houses on that land or you end up building apartments and Ireland, again, that comes with this risk, comes with development risk comes to planning risk. But again, it is a way you can add value to these properties by building something on a piece of land, convert houses into flats. So now let's say you have a house, a big house in whichever area you are in, and you end up turning that house into multiple flats. So you have a big building. It could even be just two flats. So you have a two-story building and you turn into two flats, or you can have a four-story building, five story building in London, you typically get buildings which are very high. They come with their basement and you can maybe turn them into four flats, into five flats. And again, that comes with its own challenges. It comes to planning, but that's another way you can essentially add value to the properties. Commercial to residential. Commercial to residential means that what you're doing is you're taking an office building, you're taking some sort of warehouse, and you're turning that into residential, you turning into apartments. And again, you can either cellos at the end, you can do whatever you want at the end, but the value is coming from that you have an office building. And because now you're turning into multiple apartments is worth more money because individual apartments stacked together, depending on the area, depending on the numbers, typically is worth more money. Next one is adding parking space. So if you have a house and maybe have a small garden in the front and you pave it and you get again permission from the council. You can typically turn that into parking space, and generally, that will increase the value slightly. It's not going to have a huge, huge impact, but it will increase the value slightly. And that's another way you essentially increasing value of your property. Next one is get a discount. So rather than actually doing works to increase the value, what you could do is let's say there's a property on for a £100 thousand and you you negotiate and you work out a deal with the landlord and you end up buying it for £80 thousand because it's genuinely worth a 100 and you buy for 80, you've actually created this much value in the middle just by buying it with a bit of a discount. So again, that is a way of adding value, which is that you are buying a cheap and the value is from the discount that you're creating. So, which type of properties should we convert? Now, there are two main types of properties that we're looking at when it comes to converting and adding bedrooms. The first one is one bedroom flats, which can be converted into two bedroom flats. And then the second one is two bedroom houses, which can be converted into three bedroom houses. So now let's go to the apartments for a second, which is the flats. So y term one bedroom flats into two bedroom flats. Well, one of the big reasons is there's a lot of research, a lot of reports which indicates that. Two bedroom properties have the best return, they have the highest yield. So if we're going from one into two, this is for apartments, by the way, we'll come onto houses in a second. Then if you want the highest return and you're holding these properties, then that will give you the highest return when it comes to adding a room and then holding. So that's why we turn one into two. Another reason to do one into two is there is a lot of supply of one bedroom properties which can be converted. So typically, if you go onto you look at your area and you look for one bedroom properties, you typically get a lot of these. Whereas if you look at small properties, so let's say a studio, for example. Generally there aren't that many studios which can be converted to unbutton properties because they are too small, whereas a lot of one-bedroom properties, they are very, very good sizes, which are ideal for conversion into two. Now, the reason we don't convert necessarily two-bedroom properties into three bedroom properties is because if we're buying and holding on and renting these properties, three bedroom flats typically aren't as common when it comes to renting out. So that is why we stick with the sweet spot, which is telling one bedroom properties into two bedroom properties because the research shows that have the highest yield, the highest return for two-bedroom properties. And also because they're very, very desirable from a renting point of view. Whereas once you get bigger and bigger and bigger, desirability isn't quite the same because typically there's not a lot of three-bedroom properties from an apartments point of view, from flats point of view. So that's why we stick to the one bedroom into two bedroom, which is ample supply, easy to convert their goods sizes are in good locations, and because the end product is a two-bedroom, they're very, very desirable. Now let's move on to how this y term, two bedroom houses into three bedroom houses. Again, this study show that two-bedroom house is typically have the highest yield, highest return, and followed by three bedroom properties. However, it is very, very hard to turn a one-bedroom house, typically into a two-bedroom house. Because again, one-bedroom house are very, they're not that common. You hardly have any of them. So if your strategy is, well, I'm only going to turn one bedrooms into two bedroom houses. The problem is you don't typically come across many of those. So if you're looking to do these projects, well, there's not many out there on the market, which you can do. So, whereas, turning a two-bedroom house into a three-bedroom house, a three-bedroom house is a typically a family house. So from a rental point of view, it'll be it'll be it'll it'll rent easily depending on if you've got a good area through bedroom properties are very, very desirable because they're typically that sweet spot of a family home. So that is why we turn Two bedroom houses into three bedroom houses because it's desirable from a family of point of view. And there's a lot of two-bedroom properties which you could turn into three bedroom properties. Now, if you go from three bedroom into four bedroom properties, typically, again, you sort of have the similar issue, which is from a rental point of view, three bedrooms is typically the sweet spot. And if we're looking to buy-in hold these properties, especially then you want to be in that sweet spot. So for the best return for the safest strategy, the two conversions we go for, the one bedroom flats, which turned into two bedroom flats, or the two bedroom houses, which turned into three bedroom houses. Now, these are the returns from the houses yield study, which essentially shows that they conducted research on properties throughout the UK and they compare the yield. One bedroom properties had a yield of 4.1%. Yield, by the way, is essentially the annual rent divided by the value of the property. For one bedrooms. A yield was 4.1 per cent. For two bedrooms, it was a highest at 4.8 per cent. For three bedrooms, it will slightly lower at 4.5 per cent and full bedroom plus it was lower at 3.6%. So going back to the previous point, this is why we want to turn one bedrooms into two bedroom for apartments, because bedrooms had the highest yield and they are very, very ideal when it comes to apartments. And we want to turn to bedroom houses into three bedroom houses. Because again, they don't have the highest return. But it's very, very hard to turn one bedroom houses into two bedroom houses. And you'll find a lot more properties which are two bedroom houses, which you can turn into three bedroom houses. And after two-bedroom property is three beds have the highest return. So we're looking at both, well, how much supply there is, because of course we want a strategy where we can do a lot of these projects. So that's one factor. The other factor is, well, if I'm going to buy in, hold these, well, what's the retain can get on these? And even from a selling point, we have things that are slightly different because while you're not too concerned about the yields, since you're going to buy and flip. Anyway, we're typically three bedroom flats aren't that common, whereas two bedroom flats are very, very common. And again, from a 3-bit house point of view, like I mentioned before, three bigger houses are very common. They're family houses in this country. And it will be much, much easier to get a sale on three-bedroom properties then typically bigger and bigger and bigger properties. So I think in either case, if you're looking to buy and hold or if you're looking to buy and sell, I think those are the sweet spot when it comes to this strategy. 4. Project Case Study: So now I'm just going to take you through a case study of one of the recent projects we did, which is in voxel London. So the property we have is very, very close to voxel station. It is essentially a six or seven minute walk from voxel station. And what we did there was we bought a one-bedroom properties. So on the left-hand side you can see the floor plan for the one-bedroom property, which we bought in voxel. And then on the right-hand side you can see how we converted that property. So essentially, the model is very simple. This is the apartment example. This is not a house example, but the model is very simple, which is, if you look at the original kitchen on the left-hand side diagram, that kitchen has now been converted into a bedroom. And the kitchen has now essentially moved in to the open plain living room. So that is essentially what you're doing with these properties, which is you're moving the kitchen into into the living room to make it open plan. And you're converting the existing kitchen into the bedroom. Now, later on we will go through layouts and exactly how the layout to work and exactly what to look out for. But that is essentially what you're doing with apartments, with houses, the layout are slightly different because there's multiple floors. And again, we will go through that in a lot of detail. But for the time being, for the introduction section, that is all you have to understand, which is all you're doing is you're adding bedrooms by re-configuring the layout. Now, if you look back at the diagram, we haven't necessarily moved any walls. The floor plan is actually exactly the same as what it was before. All we have done is move the kitchen from one room into the other room. We haven't we haven't taken any walls down. We haven't put any walls up. Now, if you look at the main bedroom, we have put an own sweet. But again, that is nothing major, but that is essentially the model here, which is you're taking a property, you're re-configuring the layout and you're adding another bedroom. So if we look at the pictures, this was the original living room, which has now been converted into the open plan in the bottom left-hand corner, you can just about see where the kitchen is. The kitchen is along that wall and now it is an open plan living room. Again, this was the original bedroom, which is now converted into a bedroom, but with a non sweet this was the kitchen. Now again, kitchen was in our very, very bad condition, and the kitchen was converted into the second bedroom. So on the left-hand side, you have the Wardrobe, you've got a double bed, you go to a side table. You can't really see in the picture, but on the right-hand side there is actually a built-in cupboard as well. It's just how the space was sort of laid out. And again, you've turned the kitchen into what is the second bedroom? You have the bathroom, the existing bathroom. So a lot of these old properties that don't necessarily have a toilet within the bathroom. The toilet is separate, so we've changed the bath into a shower. We've added a toilet. We've completely modernized the whole toilet. And again, so like I mentioned before, a lot of these properties, the old ones, they have a bit of a weird layout, which is the toilet is normally in a separate room by itself and normally isn't a sink. So we put it in a brand new toilet. We tiled it. We put her in a put it in a sink, completely, completely refurbished the toilet there. And this is what a building is in voxel. Now, let's, let's talk about the figures and essentially how the model works from a finance point of view, from an investing point of view. So now, if we look at the figures, the purchase price on this property was £290 thousand. That is how much we paid to buy the property. The reefer cost was only £23 thousand. The other cost were £40 thousand. Now these include taxes. So for example, stamp duty, that includes a financing cost. So that could be your mortgage cost. Your bridge finance includes your legal fees, which are your solicitor or fees and so on and so on. So all the other cost equation to about £40 thousand. Now, once we had added the bedroom to this property, so it was a one-bedroom, we turned into a two-bedroom. We then went for the refinance. The mortgage company came in and they said it was worth £390 thousand and the rent was £1800. So we bought it for 290 thousand. And a few months later, when we re mortgaged, it was worth £390 thousand. So now let's compare the two models. So there is a traditional way of investing which is essentially, let's take a bit of money and let's put it into our property and then rent it out. Or, and then we will compare that model to essentially the model which we're talking about here. And how do they differ when it comes to making? 5. This Model vs Traditional Model: So now if we look at the traditional model, typically let's say you need a 20% deposit to buy a property. And that 20% deposit is, by the way, we are assuming that you're buying a £390 thousand property because that is what my property was valued at £390 thousand. So if you bought a £390 thousand property on the market, registered rent out in in good condition. So no reverb required none of that. You essentially go to right. Move you find it £390 thousand two-bedroom property, which is ready to rent out day one. So you will need a 20% deposit, which is £78 thousand. You will have stamped duty of £21,000.200. You will have £2 thousand within legal fees and you will have furnished cost of about £3 thousand, which makes your total investment £104,200. That is how you would traditionally invest in property, which is, you take, you go to your day job, you do whatever you need to do, you save up a £104 thousand, you take that money and you essentially put it into a property and then you rent it out. So you are £104,200 in. Now, let's compare that to this model that we have here. So the purchase price of this property was £290 thousand. For a second. Let's not worry too much about how you how you bought the property that did you buy with a mortgage to do by with a bridge finance? Did you buy it using your cash? It doesn't really matter too much of that state, just so you understand the model. But now, let's say the cost of the property is £290 thousand. The reverb, like we mentioned before, is £23 thousand and all the other costs equate to £40 thousand. So therefore, the total cost is £353 thousand. It costs you £353 thousand all in the purchase, the reverb, all the other costs. That is how much it cost you. But now, once you have spent that much money, you go to the bank and you say, Well, I bought a one-bedroom property now is a two-bedroom property is worth more money because while there's two bedrooms, how much is it worth? The bank came in and they said, Well, the property is worth £390 thousand, that is the GDV. Now, when you go for their mortgage at that stage. So now in this model, we're not selling, in this model, we're refinancing in holding the property. When do you go for the refinance stage on this property? We had an 80 per cent mortgage. We go to 80% mortgage. So when it's worth £390 thousand, the bank says, well, okay, we think is worth £390 thousand. You have to have a 20% deposit in the property, and we will give you 80 per cent. So if the GDB is £390 thousand, so that's the full price. The bank will say that, Well, you keep 20 per cent of your equity in the deal and we'll give you 80 per cent. So in this case, we had to have £78 thousand represented our deposit. And the bank said, well, here's £312 thousand as you're 80% mortgage. Now. So keep this in mind. We have spent £353 thousand. That is how much money we've spent. And in bank says, well, we'll give you 312. So if you spend 353 and then the bank or the refinance because the value is higher, gave you 312 back. Then essentially all these cost you is, which is money lifting, is cost you £41 thousand because you're 80% mortgage is £312 thousand, your total cost was 353. And the only money you have left in the transaction is £41 thousand because you spent 353, the bank gave you bank 312 and you have £40 thousand of your own money now left in that project. So what does that mean when it comes to a return? So now if we look at a diagram which shows the comparison, well, in this new model, it only cost us £41 thousand to buy a property essentially, which is worth £390 thousand, because whatever money we spend, we got most of it back bar the £41 thousand. Whereas if you look at the traditional model, to buy a £390 thousand property, we would have to spend a £104,200. So with a new model, you end up with a £390 thousand property for 41 thousand, the old model. To get the same property, it would cost us a £104,000.200. And that is really the power of this model, which is we're buying a property, adding a lot of value and sent to the bank. Well, look, it's worth more money. Now, we want to pull out some crime money. We want to read mortgage. And because you're adding the value, you can take a lot of your money back. So you can essentially keep recycling your money. So if you have a pot of money to invest, rather than investing all Italian one going one transaction. You, every time you invest, you get a portion of that bag and then you can use that portion to invest again and again. That is a difference of 2.5 times. Because essentially it cost you 41 thousand, whereas if you did it the normal way, it would be a 104 thousand. So that is a difference of 2.5 times essentially how much money it would cost you, how much money you would have to invest in order to get the same property. Let's look at the cashflow. How does the cashflow work on this particular project? Well, the rent on this deal is £1800. The mortgage was £1100. We've equated five per cent for maintenance, which is £45. We've included a service charge of a £100 that is a service charge on this property. And we've put in a two weeks void period, which is £70.72 pounds per month. And at the end, the net cashflow, how much money you actually getting your bank account is around £483 every single month. So now let's compare the two models here. So with this model, your cashflow is £483 per month, but your money left in is 41 thousand. Its cost you £41 thousand in order to generate that result because you have the property and it's making 483 every single month. And the return on investment on that property is 14.1, 14%. The return on investment, or you can call it the return on capital employed, essentially means that, well, if I invest £41 thousand into a deal in I'm making 483 every single month. Then over the course of a year, 483 times by 12 is something around £6 thousand. So if I invest 41 thousand and I make 6 thousand back every single year, then my return is about 14.1 per cent. That is return on investment, or you can call it a return on capital employed. Pretty much the same thing. But now, if we look at the traditional model, you will still make a cashflow of £483. The money left in would be a 104,200 and your return on investment would be 5.5 per cent. So essentially what that again, the same calculation, but this time you are to invest a 104,200. In order to make 483. The new model, you only have to invest 41 thousand to make 483. So now, if you compare the return that you're receiving, the ROI, the ROCE returning cash important, whatever you want to call it, that is a difference of more than 2.5 times. Because if you look at the traditional model, you're making a 5.5 per cent return. If you look at this model, it is a 14.1 per cent return that is more than 2.5 times. And what that means is that if you have a pot of money to invest in, you want to buy and hold properties. With this model, you can get a 2.5 times return every time you invest in a project. So you're essentially massively, massively increasing your return. That is a deal criteria that we'd like to aim for when it comes to buying and holding properties. That for me, it is a good deal if I can essentially make 2.5 times a return on a project that I would make. Essentially if I were just buying it outright and not adding any value, not doing anything. So when the people, you know, who typically invest in properties, so maybe, you know, a family friend, or a colleague who typically bought property in the past, using the model, which is what, I'll save up some job income and I'll just go and buy a property. They will, in this case, make a 5.5% return. Whereas you, by doing what you're doing, by adding value, you will make 2.5 times higher return than them. Purely because you're adding value, you're pulling a lot of your money by count. And for the exact same property, you have massively increase your returns. 6. Flip vs Hold: Now, let's talk about flipping versus holding. Well, what are some of the advantages, disadvantages when it comes to the flip model against the whole model. So now if we look at the advantage of the whole model, the first one is the long-term appreciation. When you're buying and holding property, a lot of money in property is made by the long-term appreciation as the value of the property increases. Well, that is essentially the money you've made. So now let's say you buy a property for a £100 thousand in X number of years, that could be eight years, nine years, ten years, 11 years, whatever that time period is, as the value of that property continues to increase. So now let's say it's worth £200 thousand. Well, that is the profit you've made. And you've essentially made that profit without necessarily having to do anything. Because the market has just continued to add value, add value, add value. So that is one big, big benefit of the whole strategy, which is the appreciation. The second one is that you can read mortgage your money. You can remove it a lot of cash. So for example, my friend Rob, essentially, he bought a property in 2009. And in 2009 he bought it for £250 thousand. And last year in 2019, he actually refinanced their property for £500 thousand, so he bought it for 250 in ten years, it doubled in value, now is worth £500 thousand. He said to the bank, well, the property is increased in value. Can I get a mortgage? And essentially many can I refinance the property and get a higher learning that property? And he received a higher loan because obviously it's worth more money and the bank gave him £200 thousand. Now, depending on how you buy that property, whether it's in your own name or whether it's an accompany. If this property was in your own name, for example, and you re mortgaged, it would essentially mean that you would have £200 thousand tax-free. There's no tax on loans. And you've received a whole bunch of money. Now, if this wasn't a limited company, you essentially have £200 thousand in a company. And you can now use that money to buy more and more and more properties. So that is a huge benefit of holding onto property for the long run because every five years, every ten years, you can keep pulling out more and more money. And then using that same money is buying more and more properties. And over time, as you have more properties, you're getting more cashback, your remortgaging more money bag, and your portfolio just gets bigger and bigger and bigger without necessarily having to do anything because the market is increasing the value of those properties. The next one is passive income. Now, of course, one of the reasons a lot of people invest in vital their properties is because they want multiple streams of income. So if you have a job or maybe you want to leave your job, holding property is going to be better for you because purely because well, essentially this way you have another stream of income coming in every single month. So depending on how many properties you have or depending on what your goals are. If you hold onto properties this way, once you've done a project, is it's kinda like done forever and every single month you keep making more and more money without necessarily having to do anything. And finally, it is very, very low risk when you're binding holding property. And you're not relying on someone else buying it from you. At the end of the ten months or once a reverb is finished, you don't necessarily have the risk of selling the property. A lot of developers, and they're going bust because let's say they have short-term finance for 12 months and the market has gotten a bit south and the properties aren't selling because they are forced to sell the property at the end of the day, they get a bit stuck because well, that's the only thing they can do and no one's buying. And that is a huge risk in itself. Whereas when you're buying and holding property and your essential, your goal is well, I'm just going to end the property out, then you don't necessarily have those risks. So it's one of the big advantages, huge advantages of the whole strategy is that it's very, very low risk and from that perspective, not much can go wrong. Now, what is the disadvantage of the whole strategy? There is one disadvantage which is, well, one major disadvantage, which is that your money is essentially then stuck in that property. So, let's say for example, in the voxel example, we had £41 thousand. That £41 thousand is now is now stuck in that project. And until the property increases in value and I can refinance that money is tied up. But that is how a lot of investing works, which is you invest a bit of money and then you keep getting a return on that investment. But if there was a disadvantage or a downside to holding, it would be that that money is now locked up and you can't use that portion. Of course, when you invest a lot of the money you get back, but the money which is left in the £41 thousand, you can't really, really sad very, very quickly. So that is one of the disadvantages of the holding strategy. Now let's talk about the advantages of selling. The first advantage of selling IE flipping is that you can cash out your profits. So for example, every time you do a deal and let's say you made a profit of £50,000.1, £100 thousand. Every time you sell and flip, you end up getting that £50 thousand. When you end, you end up getting that a £100 thousand. So you realize the profits much, much faster. And that takes us on to the second advantage, which is. That allows you to accumulate capital and move on to bigger projects. So now let's say you do a small deal and you make £20 thousand. But now you have £20 thousand more than where you started now using that money and the money you had initially, and now you can do a bigger project and make a £50 thousand. And once you've made £50 thousand, you can now move on to, you've accumulated you're 20 and you've got another 50, and now you've got another 70. Now you use all that money, introduce something even bigger. And now you can make a 100000.150000 and you can essentially keep going bigger and bigger and bigger because every single time you are getting your money back with some profit, you're accumulating a bigger pile and using that bigger pile, you can just keep getting bigger and bigger and bigger. Now, those are the advantages. What are some of the disadvantages of the flipped model? Well, the first one is a capital gains tax. So now let's say you buy a property. So in the case of voxel, you buy for £209 thousand and then you sell it for £390 thousand because of values go from two nitrogen 390, you have to pay capital gains tax when you sell that property. Capital gains tax is essentially a tax on the gain, gain you made on that property. So if you buy a property and even if you sell it a few years down the line, then you will have to pay capital gains tax. That is one of the disadvantages of selling the property, of flipping a property, which is you have to pay tax. Whereas if you compare it to the buy-and-hold model, every time you refinance and you get a you get a chunk of money bag. You don't have to pay any tax because that money is from remortgaging it is alone. You don't have to pay tax on the loan. So that's one of the big disadvantages of having a buy and sell strategy and you have to pay the tax on your game. The second one is the risk because you're reliant on a sale. So again, one of the big challenges and where a lot of developers go bust is where there are reliant on a sale. Because like I mentioned before, if you have short-term financing for 12 months, you have to pay the lender back at the end of the 12 months. And now they say something happens in the economy, Brexit happens or something happens and you're unable to sell the property. That could be at the time of recording, we're going through COVID-19 with the lockdowns. Now, if there's a lockdown and you can't sell a property, then you have a lot of problems. So that is, the flip strategy is good, but it also comes with the inherent risk, which is if something happens to the market and you're unable to sell, then you have a property and you can't sell it. You can't pay your lenders back, you can't pay your investors back. And that is typically how a lot of people end up going bust. Now, another disadvantage of the flip strategy is that you don't benefit from capital appreciation. So again, with the whole strategy, like the example I gave you with RAB, he had a property for £250 thousand, is now gone up to £500 thousand. And without him doing anything, it just keeps making them more and more money. Whereas if you're doing a buy and sell, you only make the gain by adding the value, but you don't necessarily benefit from any long-term appreciation of the property. So that's again, one of the disadvantages of the two strategies. Now, again, it depends on your situation, your contexts, but by weighing up these pros and cons, this is why we personally do the buy and hold strategy is because we think the benefits outweigh the disadvantages. Because you have a property once you've done it, once, it keeps bringing your money every single month. And if you're trying to replace the income, you want that passive cashflow every single month. So it essentially keeps building up and up and up. So you can get to a stage where you can leave a job or you have a secondary income. You also benefit from the capital appreciation. Every time it appreciates you read mortgage, some money back out. You don't have to pay tax now because it's either in your personal name or isn't a company and you use that money to then just buying more and more properties. So there's a lot of advantages of the whole strategy. And that is why typically we go for the buy and hold model as opposed to the buy-in cell model. 7. Finance : In this section we're going to cover a finance. So when it comes to finance, those two things you need to know. The first is a bridging loan and the second, a bachelor mortgage. So what happens is when we buy this property, whether it's a one-bedroom property or whether it's a house, I tend to buy the property using a bridging loan. A bridging loan is essentially the easiest way to think about this, is imagine a mortgage, but not for 25 years before six months, 12 months, 18 months. Typically I tend to get around the 12 months mark. This finance is essentially short-term finance, which is typically a lot more expensive than a mortgage because it's designed for short-term basis. For example, with a mortgage, you might be looking to pay 3, 3%, 0.5% interest per year. Whereas with a bridge loan, you tend to pay about 7%, 8 percent per year. So it's a lot more expensive. But the reason we tend to use bridging finance is because it is actually built for development. A bunch of their mortgage is not built for you to buy a property than development, then refinance. And that's one reason. The other reason is bridging finance. It's relatively easy to get in second is much, much faster than getting a bunch of that mortgage. So sometimes when you are negotiating, it is almost akin to having cash. So when you speak to agents and when you speak to landlords, if you're patient data to a landlord, you can sort of use that to your advantage that you can buy the property much, much quicker and using that sometimes you can get a discount. The other reason we use breeding finances because this allows us to do multiple projects at the same time. We can take our multiple bridge loans at the same time. And so it just speeds up the process when it comes to acquiring property. Now whether bridge loan, you can typically get a 75% loan to value bridge loan, but now that's 75% loan to value also includes all the interest payments and all the fees that you have to pay in order to get that bridge loan. So what happens is when you get a bridge loan from these lenders, they say they will give you a seventy-five percent loan to value, but they don't actually give you the 75 per cent loan. Well, they tend to do is they give you 75% less all their fees and all their interests. Because the fees and interests are built-in. So typically what that means is you actually end up getting around 7172% percent. And the rest of the money you have to put down as a deposit yourself. Three catch. So that is essentially how a bridge loan works. Now what happens is you buy the property using a bridge loan. You will then undertake all the work. So you whether you turn a one-bedroom property into a two-bedroom property, or whether you turn a house into a multiple says whatever that project is. Once you've done that, the six-month mark, you will then go for a refinance on a byte to let mortgage. The reason you have to wait six months is because there's a stress test in this country. That's the rule in this country which most lenders follow, that you can't refinance within the six months mark. If you bought a property, you have to wait until six months in order to refinance the property. Now, there are specialist lenders who will let you refinance before the six-month mark. The problem is they don't always give you the best rate. So in my experience, what I've found is it's just better to wait six months and then refinance at that stage. So when you go for the refinance, what will happen is you had one loan which was a bridging loan. The property has now gone up in value. When it's gone to the higher valuation, you can now take a big alone. And when you take out the big alone, you essentially pay off the bridging loan at the same time. So you bought it on a bridge, you've added value, you can refinance onto a bachelor mortgage, pay off that bridge. And that is essentially how you go through the entire process of buying and holding properties. You don't necessarily need to know too much beyond that. When it comes to the financial requirements and the requirements for bridging, it just depends on the lender. So the best thing to do isn't necessarily to research out bridging works and how bachelor mortgages worked. The best thing to do with spiritual broker and say, this is my financial situation and this is essentially what I'm looking to do, the type of projects I'm looking to do. And they will tell you your finance requirements and what student Max borrowing you can get an older sort of thing. So if you have a good broker on board, there isn't a great deal for you to do. You can essentially arrange all this finance for you. If you want to use my broker, if you click the description link, there's a link in there which says property team. And you can click that link and you can get introduced to my broker. Or if you have a different browser, you can just use a different broker. But what you need is you need one broker or one brokerage company. You can help you with a bunch of that finance and the bridging finance, because you want to make sure that if someone gives you the bridging finance, you want to make sure that by the end of the project, you can also get a bunch of them mortgage on that property in order to pay off the bridging loan. If you are getting a bridge loan, you can't get a bottle and mortgage for whatever reason then you have a big, big issue because you have a bridge loan which is for typically for 12 months, which now you can repay that loan because no one's gonna give you a budget and mortgage, assuming you can get back to that mortgage for whatever reason, you need to make sure you have a broker who can deal with both before you even buy the property, you need to speak to your broker and say, Well, this is what I'm looking to do. Is there any reason why I can't get the bridging loan and is there any reason why I can't get a bunch of mortgage when the project is done. The last thing you want is that you essentially carry out this project. You buy something, you add a lot of value, and for whatever reason, you can't get a budget and mortgage at the end because then you will be stuck picked on because you can't repay the loan, speak to a broker or speak to my broker and essentially tell them that what I'm looking to do is this I'm looking to buy this property on a bridge loan. This is how I'm going to add value and this is my exit strategy. Whether that's selling the property at the end or whether that's holding the property and refinance onto a bunch of that mortgage us and the requirements, Awesome, We'll rates you can get, asked them what loan to value you can get. And once you have all those details, you can then move forward with the finance section on your property projects. 8. Evaluating Risk: So in this section we're going to be looking at dual analysis and covering all the different components which make up DNA analysis and essentially everything which is needed to analyze a deal. Deal analysis is broken up into a lot of different subtopics. So for example, we have evaluating risk, finance costs, stamp duty, legal fees, additional cost, refurbishment cost, calculating the GDB, essentially, what is the property going to be worth once we've added a bedroom and done a complete reefer. What are some of the key metrics, the deal criteria, how to calculate the offer. And then we'll go into a demonstration of how the deal analyzer works and applied on a particular, on a case study of one of the projects that we have done previously. So if we look at evaluating the risks, there are a lot of different risks when it comes to property investing. And we've covered some of these previously, but here are some of these in a lot more depth. So for example, one of the risks when it come to property is the planning risk. So what this particular project, there is no planning permission required, so therefore there is no planning risk. But generally in the world of property investing, there is a risk when it comes to planning. Because if you're, for example, let's say building on land and you have to get permission from the council. Are you planning permission? If you don't get that planning permission, then you can get a bit stuck because you bought something and you can't essentially build an add on that property on that land. But with the type of projects we're looking at where we are adding bedroom because everything is internal, all the changes are done internally. There is no planning permission required, so that is a risk which we do not have with this particular project. The second type of risk is what is known as a development risk. Now, development risk means that, for example, let's say again, you are building on land and, or you're turning your taking a big office building and you're turning into apartments. Whenever you do something which is essentially a big project, then it comes with the risk associated IEEE, well, there might be some issues with the land or once you start to strip of building out, there might be some issues with the building when it comes to converge and, and that, that in itself is a big risk. Whereas again, the project we're looking at here where we're adding bedrooms, you don't necessarily have any development risk because you aren't developing per se. It is at best a cosmetic reverb, a light reverb. So you don't have those big development risks that you typically have in some proxy projects. So it's another risk that we don't necessarily have to worry about with this particular type of model. The next one we have is delays. And now that could mean delays in terms of your refurbishment, and it could also mean delays in towns of the mortgage. Now, the reason that is a risk is because, for example, when you're on short-term finance, on bridging finance, you typically take out bridge for about 12 months. So that means you have to buy the property. And that's when they're bridging finance starts. You have to do the work and then you have to read mortgage and move on to a mortgage within that period, within those 12 months because only when you re mortgaged property do you get your money back and then you can pay off your first, then Live, which is a bridge lender. So that is a risk because you have that timeframe in order for you to finish the reverb and also finish rate mortgage process. Now, how you typically get around that is by essentially giving yourself more time. So if you think the product is going to be done in nine months, you can get a twelv month break just to be on the safe side by three extra month. So in case there's any sort of delays, you have an additional period to make sure that well, I've got a three-month buffer in there to make sure that nothing can go wrong. The next one is a cost overrun risk. So typically with a lot of property projects that you might estimate, the reverb is going to cost this much and end up costing you a bit more than that. And that could be a risk in itself because if you don't have the funds or if that means the deal is no longer viable, that typically again, isn't really a risk when it comes to these type of projects because they're very small reverbs. So when the builder says it's going to cost twenty thousand, thirty thousand, forty thousand, it typically does end up costing what they initially said because there aren't any big surprises, which they haven't seen before. Like I said before, most of this is just a light cosmetic refer this isn't something big or something. It's very unlikely something unexpected could happen, which the builder wasn't aware of. Now if you're building a land, there could be issues with the land or if you're like I said, taking office building and converting an office building, there could be issues with the office building which weren't previously seen. But again, you don't really have that when you're doing a small project like this. So it's not a risk, which is a big risk in this particular example. The next one is exit strategy. Now, exit strategy means that ideally you want to have multiple exit strategy is meaning, well, for example, if you're investing this much money, how do you get your money back out? And that is essentially what an exit strategy is. Where people get a bit stuck, is essentially that let's say you're a developer and you're buying property and your plan is to buy and sell. Well, the issue is if something happens to the market or something goes wrong. And you're unable to sell those apartments at the end. And your exit strategy as well, I'm going to buy and sell your exit being I'm going to sell. Well, if you can't sell at the end and that becomes a massive, massive issue because well, that is your only exit strategy. Whereas if you have an exit strategy which is a safer exit strategy like Well, I'm just going to refinance. I don't need a cell. I don't need to sell anything. I don't need a sale at the end of the day. And I know I've already checked with my lenders that they'll they'll happily lend on. This is a much, much safer exit because you aren't reliant on a bio coming in and buying the property, or if you can have multiple exits. So for example, let's say even if you are looking to flip their property, ie buy and sell. And you can have Plan a is a flip. And Plan B, you can make sure that number's still work if you were to refinance and hold the property. So by exit strategy essentially means that you have multiple options. Now, holding is typically the safer option purely because well, you would have already checked with your broker and before purchasing the property that once you get financed on this and if it's all fine, then there won't be any surprises, any real issues when it comes to the real mortgage. And you can just read mortgage the property, pull all your money back out. But it becomes a bit trickier when you're looking to sell. Because if you can't sell within that period, it can become a bit of a challenge. But again, with this model of buying and holding, don't really typically have their risk as long as you have a good broker said to you, well, I've checked with the lenders and you will easily be able to get finance on this. So that is how you mitigate that by making sure you have multiple exit strategies and you have a strategy where you can at least hold at least you can definitely hold. The next one is any sort of lease issues. So these could include a right to buy or it could include any type of restrictions. So when you're buying the property and your solicitor is looking at the property, I'm looking at the documents, looking at leases. I'm looking at all those sort of things. They might be able to identify any sort of issues. For example, we had our property which had a right to buy restriction, which meant that the person we had bought the property from, he bought it from the Council five years earlier. Now, when he bought it from the council, he actually bought it at a discount because you will the council tenant, he bought it under the right to buy scheme. But when you buy a property under the right to buy scheme, it means that depending on the council, with this particular one, he wasn't able to he's not allowed to sell that property for ten years. And if he wants to sell it, he first has to offer it to the council. And if they say we don't want to buy it, only then can you offer it to someone else? Now, the council or didn't want to buy it. He put this onto right move. We ended up buying it. But when we bought this, the restriction also applies to us. We are not able to sell that property for five years. And if we want to sell it, we first have to approach. The council, asked them if they want to buy it and if they don't want to buy it, only then can we sell it to someone else. Now, that might not seem like an issue because we have a sale in either case, because the council will buy it if anything, if they wanted. That is, but from a lending point of view is a restriction which a lot of lenders do not necessarily like. So that can mean they can be an issue with getting a mortgage. And if there's an issue with getting a mortgage, that can become a risk in itself. So that is something that's solicitor will work with you on. They will highlight any issues any problems when it comes to any legal issues with their property. But that is something they will typically deal with when it comes to identifying or working out. Are there any sort of issues when it comes to this? The next one is free holder consent. Now, the reason that is on the risk list is because you want to make sure that you have, in principle permission for the project that you're trying to do before you buy the property. So what that means is if you're looking to buy an apartment, when you convert an apartment from a one-bedroom into a two-bedroom, you need the permission from the free holder or the people who own the building. And what you don't want to do is you don't want to buy the property and then apply it because if they say no to permission, then you can get stuck. Whereas if you approach them beforehand and before we actually buy the property, get something in writing in principle that this is where we're looking to do. Can you see any issues? If they if they approve that and if they get back to you saying Yep, in principle, that's all fine. That will that will mitigate their risk. But you need to make sure that you have, you are free holder consent, at least in principle, before you purchase the property, because that way you don't have any nasty surprises when someone says, Well, hold on, maybe you can't convert this because of this, this and that reason. So that is how you would mitigate that risk by essentially by planning ahead and by making sure all of that is done before you get to purchasing and exchanging on that property. 9. Finance Cost: Now, in terms of the finance costs, the first finance cost is related to bridging finance. Now, bridging finance is broken up into a lot of different components and this is covered in the finance session, but I will quickly briefly go through these. So you have arrangement fee, which is typically one to two per cent. You have an exit fee which is normally 1% or it can be 0. You have a repayment fee. Sometimes you have a repayment fee, sometimes you don't. You typically have a valuation fee. You have the legal fees. So these are all the costs associated to the bridging finance. And then the two important numbers. One is the gross loan and you have the net loan. Now, this is covered in the finance section if you want to know what these are in greater detail, but those are all the costs associated when it comes to a bridging finance. We then move on to the mortgage finance. Now, with a mortgage finance, again, you have the arrangement fee, which is typically one or two per cent. You have the exit fee, which is typically around 1%. You have the repayment fee, you have the valuation fee, you have the legal fees. And again, you have the gross loan and the Netherlands, the gross line being the total loan including any fees and net loan, meaning essentially the money you receive in the bank. Now these are again covered in a lot more detail in the finance section. But for the time being, for this section, you just need to know what are the different costs associated with finance. Because when we analyze our deal, we need to know what the costs are, how much money we're going to make. And is that a good return or is that a bad return? 10. Stamp Duty: Now, in terms of the finance costs, the first finance cost is related to bridging finance. Now, bridging finance is broken up into a lot of different components and this is covered in the finance session, but I will quickly briefly go through these. So you have arrangement fee, which is typically one to two per cent. You have an exit fee which is normally 1% or it can be 0. You have a repayment fee. Sometimes you have a repayment fee, sometimes you don't. You typically have a valuation fee. You have the legal fees. So these are all the costs associated to the bridging finance. And then the two important numbers. One is the gross loan and you have the net loan. Now, this is covered in the finance section if you want to know what these are in greater detail, but those are all the costs associated when it comes to a bridging finance. We then move on to the mortgage finance. Now, with a mortgage finance, again, you have the arrangement fee, which is typically one or two per cent. You have the exit fee, which is typically around 1%. You have the repayment fee, you have the valuation fee, you have the legal fees, and again, you have the gross loan and the Netherlands, the crossline being the total loan including any fees and net loan, meaning essentially the money you receive in the bank. Now these are again covered in a lot more detail in the finance section. But for the time being, for this section, you just need to know what are the different costs associated with finance. Because when we analyze our deal, we need to know what the costs are, how much money we're going to make. And is that a good return or is that a bad return? Next, we look at a stamp duty. On the left-hand side you can see the purchase price. So then you have the rate of stamp duty and the additional property rate. So what that says is that as the purchase price increases, then the percentage of stamp duty also increases. So for example, if you were to buy a property is between 0£125 thousand, the rate of stamp duty is 0 per cent. If this is your first property, it is 3% if this is an additional property. So what that means, let's say you're already a homeowner or you already have an investment property. If you already have some property, you're automatically in the column, which is additional property rate. If you currently do not have any properties and that includes your home, then you are in the rate of stamp duty. So for example, if you want to buy a property for £250 thousand, then what will happen is you will pay 2% if you currently don't have any properties, or you will pay 5% if you do have properties. Now, one thing to note is that properties under £40 thousand are not subject to additional stamp duty. So if you buy some, intubate them £40 thousand, then you are within the category of 0 to £125 thousand or 0 per cent. It is not subject to the additional rate. Now, one more thing to keep in mind here is, and by the way, all of this is going to be automatically calculated for you, a deal analyzer. But another thing to keep in mind is that the waste time due to works is very, very similar to income tax, which is that, for example, if you make £100 thousand, the first £11 thousand, I believe, has almost no tags. The next £20 thousand is subject to maybe 18 per cent. The next batch is subject to twenty-five percent, and so on and so on and so on. So the waste time due to works is exactly the same as income tax. If you were to buy, let's say, a £1 million property and your additional property rate at 13%. It doesn't mean you will pay 13% of £1 million. What it will mean is that for the portion of that 1 million, which is between 925,001 million, you'll pay 13%. The portion below you will pay eight per cent, five per cent, and three per cent. So it's staggered exactly like income tax, but that is a cost you have when it comes to property investing. So when you buy a property, you have to pay stamp duty. And this figure in the deal analyzer will be calculated for you. Now, there is stamped duty relief when it comes to buying multiple dwellings. So for example, let's say you're buying a property which has a big property which has three or four flats within one property, and you're buying three or four flats in one go. Now, generally you can get relief for these type of projects. There is a link which is bit.ly, LY for stroke stamp duty relief, one, which shows you some other examples in which you can get relief. Now for the sake of this course and for the sake of this strategy, stamp due to relieve does not apply to this particular strategy. So it's something you can ignore for the time being, but it is just some additional reading if you would like to get a deeper insight onto stamp duty in some ways you could save it, but typically it applies to bigger projects. For example, when you're buying multiple apartments. Now stamp duty is typically payable 14 days from completion. So for example, once you have computed on property, you have about two weeks to pay stamp duty. Otherwise they can be a fine. Your solicitor will let you know about this. They will keep you updated with stamp duty. They will tell you what the processes are, how to pay it, so on and so on. But just to keep in mind, that is roughly when stamp duty has to be paid. So like I mentioned, solicitors will arrange the payment for you for stamp duty. 11. Additional Costs: Then we have some additional costs. So you might have letting agent fees. So for example, if you're using a letting agent to manage the property for you, you will have fees, you will have land or insurance. Now, lander insurance will mean building insurance. It could mean content insurance, land reliability. All of this will be covered in the legal section, but these are some costs you have to be aware of for the time being. You also have maintenance costs. So for example, if you're letting this property out, you might have repairs every now and then. So those will have to be paid for. You have crown rent and service chart. This is only for apartments. So if you are if you own a house, then you don't necessarily have this, but you will essentially have a buffer. For example, you might have, you might have a pot of money which you save every single month you put aside. So if there are any sort of repairs, they get dealt with using that using that buffer essentially. So it's not a cost is technically a cost which only applies for apartments and crown rent and service charge. But if you are doing houses, then every now and then you will have to update a Windows or update something every X number of years. So that is essentially that cost. Then you also have a void. So void essentially means that it is unlikely that the property is going to be let out for every single day, every single year, there will be a time where a tenant leaves and there's a gap when the next tenant moves in. So when the first one leaves and the next one moves in, there might be a week, maybe ten days. And essentially voids isn't necessarily money you pay out, but it's money you've potentially lost because while there's no tenant in there, you aren't getting in rent, so it is foregone income. And that is how you calculate voids. 12. Refurb Costs: Now, in terms of their refurbishment cost, the essentially this is going to be covered in the project management section, but you need to get three to five quotes. You need to get a schedule of works which will explain all the small details when it comes to doing your refurbishment project. This will explain exactly what's going to be done in the project. You need a cost schedule. You need to know the timeliness of the builders. Essentially meaning, for example, you need to know how long will the builders tank? Will they take one month? Will it take two months to do the work? Three months. Again, this will be covered in the project management section, but you need to know what the refurbishment cost is going to be for this particular project in order to analyze the deal. You also have the interior design fees and any sort of furniture or staging cost. So if you are using an interior designer, you have to include their fees as part of the refurbishment project and any furniture that you are going to be purchasing for the property. Now, staging typically means, for example, if you stage their property with furniture and once, for example, what normally happens is if you were to buy and sell a property, a lot of people stage the property. I'ii just put some furniture in there. So when people come and view it looks a lot better. So think of a show home, those sorts of things. And you do that. And once you've sold the property or their furniture, goes back to the staging company. You're essentially renting the furniture for a short time to dress up their property. Now you typically won't do that if you're buying in holding, you might decide to buy furniture in order to furnish your property and rent out, but you won't. Typically bidding stages. You will only be doing stage if you're actually buying and selling. But again, that is a cost which would be input at this particular stage. 13. Deal Metrics: Then we're looking at the deal metrics. So the first metric is the gross yield. Now the grocery old means the annual rent divided by the property value, the GDV, the gross surreal essentially tells you, well, if this is my rent divided by the property value, what is the yield on that? Now the net yield is essentially almost the same as the gross yield, but it is a net annual rent divided by the property value, also known as TDD. What that means is you take your rent, you take away all the costs or the management, the lending agent management, management fees, any maintenance fees. So for example, you might have to, over the course of a year, you might say, Well, I'll have a ten per cent maintenance allowance in case something goes wrong, you might have a void periods. So again, this will be calculated by the deal analyzer, but the net yield is essentially taking all the money you actually get in your pocket after all the cost over one year divided by the value of the property, and that will give you the net yield. The next one is profit on GDV. What that means is essentially profit as a percentage of GDP. We have profit on cost, which is profit as a percentage of total cost. Now, those two metrics are more so important when it comes to buying and selling property. Because essentially you're looking at, well, what is the profit margin in this particular deal? The next one is money left in. Money left in essentially tells you, well, if you're going to buy and refinance the property, how much of my money is going to be left in that particular deal? So, for example, if you buy a one-bedroom property, turn into a two-bedroom, and then you go to the bank and you refinance your money. At the end of the day. How much money, how much of your money will be tied into that deal. And if you have no money tied into that deal than that essentially means you've a property for free because you have a property with none of your own money in that particular deal. And finally, last but not least, you have return on capital employed ROCE. What that shows you is the net annual rent. I how much money you're putting in your pocket, divided by the money left in ROCE, you can call it return on cash employed or the return on investment ROI. Throughout this program, we've mentioned a few different times that the goal when it comes to holding property is 2.5 times the ROI or the ROCE. What this means is if I'm making, If I have £40 thousand left in the deal, how much money am I making every single year? So let's say I make £10 thousand every single year. Well that means if I put in 40 and I make 10 thousand every single year, that's a twenty-five percent return. And ROCE or ROI is essentially calculating our figure for you. It is telling you, well, the money you have invested in this deal, the money you have left in this deal, what is the return you're making on that money? That is what this bigger we'll tell you. So those are some of the key metrics to look at when you're looking at a deal. But I think what's more important is a deal criteria, because all of these metrics essentially make up the deal criteria. The thing you need to be paying attention to when looking at what is this a good deal or is this a bad deal? 14. Deal Criteria: So if we look at the deal criteria, there are two main criteria as if you're buying and selling property or E, flipping property. The first criteria is you want at least a 20 per cent profit on cost. So what that means is if you were to buy and sell something, you want to make at least a 20% margin on that particular deal. And if you were holding, you want to make a 2.5 times ROI or ROCE. Meaning for example, if you were to take your money and invest a traditional way and just go in, buy a property. It will cost you this much money and you'll make a cashflow every single month. By doing this strategy, you want to be making at least 2.5 times that. So for example, rather than you just spending your money and getting a 5% return, you want to be making 2.5 times the five per cent return. So all the key metrics are used to calculate, essentially to calculate the deal criteria and to calculate a while that does a deal criteria work or does the deal criteria not work? And again, this is something which is going to be covered in the deal. Analyze a system, and you will see step-by-step exactly how that works. 15. Calculating Offer: Now in this stage we are going to be calculating the author. Now when it comes to calculating the offer, the first thing you want to do is determine exactly what is your strategy, are you holding or are you flipping? Because based on your strategy, you will look at the different deal criteria. Because for flipping the deal criteria that 20% margin and for holding the deal criteria is a 2.5 times ROI. So once you've decided, well, I'm going to be either flipping or I'm going to be either holding. You. Then move on to step two, which is you calculate the purchase price. What that means is once you now, well, this is a criteria I'm going for based on my strategy, deal analyzer will calculate for you, well, this is the price you need to purchase the property add in order to make sure you hit that criteria. So for example, let's say our properties on the market for £100 thousand, the analyzer might say, Well, if you get it for £84 thousand, it will meet the criteria and then it's a good deal. Anything more expensive than £84 thousand. It's not going to give you the return which meets the criteria. So that's the second thing. You have to work out and they deal analyzer will calculate that for you. There last thing you then look at is you calculate the offer price. Now the offer price is typically 10% lower than your purchase price. So for example, let's say the properties on for a £100 thousand and the deal analyze the system says, well, if you can get it for 90 thousand, then it's a good deal. Now, because it meets all your criteria. For a 100, you want to buy for 90, but you don't want to start that negotiation in 90. You want to start the negotiation ten per cent lower than that. So £9 thousand lower than that at 81 thousand, because then you have some room to negotiate. You have some room in order to work your way up to the price that you actually want. And again, that is something that deal unless the system will calculate for you. And when we go through the demonstration and one of the examples, you will see exactly how the numbers work. 16. Deal Analyser Demo: In this video, we'll begin to the BRR deal analyzer. And I'll essentially be taking you through a demo deal and showing you exactly how to analyze a deal and how to see, well, does this deal work? Does it make any money or should we simply move on to the next deal? Now, in this demonstration, I'm looking at a one-bedroom apartment, which will be converting into a two-bedroom apartment and seeing well does the deal stack? So this is appropriate. I'm looking at which is in Kensington. Again, I believe this is a zone to London, so North Central London, but just as sort of central London, it is a one-bedroom property. It is not a Mason. As a Mason, that essentially means that property of fat, which is on two floors, this is actually just on one floor. Yeah. Let me just show you the location and the floor plan just to give you some sort of indication of where this is. So this is actually right next to the Oval cricket ground, if you roughly know where that is, is between Kensington station and Vauxhall station and in London, so very, very close to central London. So that is where the property is located. The full plans are pretty good. It's a pretty good size, is 58.8 square meters. The layouts are really good. The room size is already good, so it takes all the boxes from that point of view and now, and now, because it takes all the boxes, we're now going to be doing the desktop analysis on this particular property. So the first thing we need to do is open the deal analyzer. Now, when you open the deal analyzer, it will give you two options. Enable macros or disabled macros. You need to click enable macros because that is essentially how all the formulas our calculators. So click enable macros. Now, the first thing we arrive at is the valuation sheet, where we need to first calculate the value of what the property would be worth as a two-bedroom property. So currently, this is a one-bedroom flat and will return this into a two-bedroom flat. Now, if you were looking at houses, we need to calculate well, if you purchase a two-bedroom house, well, what is the value going to be as a three-bedroom house? So let's stop inputting this details. The first thing it says is, what is the right move link? So you need to input the right move link. So you go into right move, you take the link and you simply put the link in here. And again you have the right move link. The next thing you need is the property address. So together properly address going to write, move, and scroll down. And normally you'll see properties sold nearby. If you click properties soil nearby, click view more. Once you load onto this page, it will actually show you all the properties which was sold in the same building. So you have a flat 19th that one fled 20 Now, we don't know the exact exact property address, but all we need to know is the building for the time being. So this is a building here which is Grace. How's Vauxhall street? Now? You sometimes can't copy there, so you just have to open this up. And once you click onto this, you have, you have the address here which you can simply copy. And once you've copied it, you can paste it in the box. And now you have the address. You don't know what flat number it is, but that doesn't really matter too much for the time being. The next thing you need is the property size. So again, in terms of property size, if I just go back onto the property itself. Now together, property size, you can simply click on the floor plans here. And down here, it will show you all the properties sizes. Now, it might be up there, it might be to the left, but somewhere on the floor plan that will tell you the property size. Now, I look at the size in terms of square meters. So I'm looking at essentially if I zoom in and make this slightly bigger, I look at everything in square meters. So I'm looking at this number here, which is 58.8. So I input 58.8. Now, the building type, what type of building is it? Is it an x council flat? Is that private flat or is it a house? Now, if I show you the pictures, it's quite easy to identify that this is actually an x council building. And by the way, I mentioned the oval cricket ground, which is actually just here. You can see some of the spikes now this is actually the, the, I believe the lighting for the oval tricky grounds are literally maybe like ten seconds away. So very, very good location in terms of that. So this is x council flat. Then we have the asking price. So the asking price is this here, which is £330 thousand. So I've put this in £330 thousand. Now, the next thing we need to do is once we have all the information we need to know well, if we turn this property into a two-bedroom property, how much can we rent this property out? Four. And similarly, if you're looking at a two-bedroom house and you will turn this into a three-bedroom house. Well, how much could you rent that three-bedroom house at four, we need to know what the rentals are because that is how we will calculate well, what is the cashflow for this particular property? So in order to get the rental, we first need to copy the postcode because we need to know well which postcard or we're looking at. And then we go back into a right move. And we're going to write move here. We input and then we click to rent. Now we select this postcode only because ideally we want the properties to be as close as possible. If we can't find any properties within this postcode, we can then increase the radius slightly and then slightly more. Ideally, we don't want to go any further than half a mile. Ideally, we want to stick within other this postcode are most like within half a quarter of a mile, but then maximum we want to be going here is half a mile. So we'll stick with this postcard only will select two bedroom because we're going to turn this property into a two-bedroom property. We want to select flats and apartments because while this property is a flat. And then we can also click this button here which says Include lead agreed properties. What this will do, this will show you properties which have recently been letting the market. Now, this is very useful because if there are properties which have been lead, then that gives us a good indication while the inner properties are renting at that particular price. Then we click fine properties. And as you can see, there's actually none, no properties in this exact postcode. Now, that isn't too surprising because that just means that within that particular building, something hasn't been rented out. Hint there isn't something to render within that building right now. That's not very uncommon at all. So you can simply click a quarter mile. Now, once you select a quarter mile, you see that there's a lot more properties on the market. And now all we have to do is simply find the ones which are two-bedroom properties, which are ideally in a good standard, but any standard we can write down for the time being and are XX counsel. So if we open up the first one here, we can see that we can see that if you look in the floor plan in even if you make this bigger, we can say that this is a two-bedroom property. Now we need to know, well, is this private or x cancel this building. This picture suggests to me that it is XX counsel, I'm just going to see if there's any more pictures of the outside, but I'm pretty sure this is XX counsel. This is an x cancel building, so this property is fine. So what we need to do now is we need to move this onto the deal analyzer. So if I go back onto the analyzer, the first thing is says is, well, what is the rent for this comparable property? And the rent in this case is down here, which is 1550. So I can input this 1550. The condition. The condition looks pretty good. It doesn't seem absolutely brand new. The kitchen seems a bit old, slightly off the hinges. The bathroom again does seem a bit old, but it doesn't seem in bad condition a role. So I'll will give us a six out of ten. The building type we already established is x council flat. The proximity is 0.25 miles from the property. The reason we know that is is because we've searched within half a mile off the property. Now, if you want to be exact, you can change it to this one here, which is, it tells you exactly how far it is from our property, the postcode, and it is 0 to one mile. So I'll change this to 0.21. In terms of the note section and the link here, you just have to add the right move link. And in terms of the nodes, there's nothing, particularly I want to add, it seems like a very standard property. There's nothing I need to make a note off. So again, you can just take this link and input this link here. And now you have the link for the property. So just a couple of things here, by the way, which is the only details you have to input are in the blue. In the blue boxes. Everything which is great, everything which is yellow as indicated by these colors or even green. They're already calculated for you. There are formulas and they're already essentially worked out for you. The only thing which we have two input is anything which is in blue. Now, one more thing to explain here, the reason we have this column here which says include one equals yes. Once you put in all these properties, if you then say, Well, I don t think this first one actually is a good comparable because, well, this one actually is, let's just say for argument's sake, this was private and everything else was XX counsel, and you say, Well, yeah, I don't think this one's a good comparable because well, this is private and it's not XX counsel, or maybe the rental and this one was something ridiculous, like £7 thousand and everything else was £1500. So rather than deleting this, you can simply just select 0. And what will happen is it will essentially delete it from all of the averages. So it's just a quick way of essentially inputting or taking our properties which you don't think are accurate comparables, or are maybe outliers. So this is essentially what you have to do here or you can have all the comparable is you just simply leave one or maybe let's say you only found for comparable, what you would do is you would have 1111 and then the last one, maybe you stick to 0 because you can find the fifth one. So only have 101 indicates that it is included and a 0 includes indicates that, well, you want to emit that comparable. So we'll change this back to x council flat. We'll get rid of this one. And now what we need to do is now we need to find four more comparables for the rent. So if I go back onto this and now let's open this one up here. Let's see if this is x cancel. We can open up this one here. We can open this one. We can open this one. And let's just open one more in case one of these are not XX counsel, so this is the next one we're looking at. Let's see if there's private or XX counsel, if there's any pictures of the outside. Yep. This is again, an x council property, so this is less input the details. So the rent is 17121712, and I will just input this myself just to speed up the process here. But again, you can simply go up, look, well, how far is it from the property? 0.22 miles. So I'll just put that in. And again under nodes, this one, I'll write that the lead has already been agreed. So I'll say let agreed. So you have, this is, this one's fine. Xs cancel this one again, this is a bit different because, well, this is actually, I don't know if this is part of the cricket ground, but it seems to be just outside of the cookie round. This doesn't really seem like a typical type of property. I'm not even sure if this is x Council. This is actually a private property which has well, pretty amazing view to the overall cricket ground. That's interesting. Yeah, but this is not an x council properties, so we can get rid of this and this wouldn't really make for a good variable a good comparison anyway, purely because it has something which other properties typically do not. Which is, it has some sort of terrorists which overlooks the cricket ground. So we can get rid of this one. Let's have a look at the next one. Again, I don't I don't think this is a council of property. This is most likely a private property, so we can get rid of this one. Now. This one doesn't seem to have any pictures of the outside. So what we have to do is we have to scroll down and we have to look at the map. Now, once you click Open map, you get this here. Now you can zoom into the property. And the property I believe is this building here and there's there's there's a couple of ways of doing this. You can either click this button, which is satellite. And again, it's sort of hard to see exactly what this building is. The next thing you can do is you can take this person from the Google Earth map and you can drop this person and make sure it is facing, this human thing is facing the building. Okay, so it's taking me inside a shop. Let's go outside the shop here. Let me exit the shop and see what the building is above the shop. And again, I think this might just be private. Yes. See again, this is this is simply just private apartments above A-sharp. So we can't really use this as a comparison, but that is again, a good way of identifying, well, this is a private building or is this an x council building? So we can get rid of this one? And now we move on to the next. So I believe this is probably not counsel either. I believe this might be a private apartment. So we can get rid of this one. And now we, we still, we are still on essentially two because, well, this is private as well. So now we essentially just keep scrolling until we find some more. So as you can see that we've already done this one. This is, this is an x cancel. I can see from the picture our site. Sometimes you can even just scroll through here and see which ones are XX counsel and which ones aren't. So you can see this is x cancel. Again, if I just keep scrolling here. You can really interesting has a view to the cricket ground and it's not XX counsel anyway, so we can move on. This one doesn't have any pictures of the outside. Now we could simply just go into maps, have a look that way, but I'll just move on for the time being for the sake of this exercise. And this one is x cancels. So we can open this one up. Again. I believe this one might be xs cancel as well. This does look like an x council property. But again, it's not exactly a good comparable because one is above shops, whereas the one we have is not above shops. So we can leave this one. This one I believe is most likely private. It looks kind of like private just from those from those pictures alone. Let's have a look at this one here. Okay, so this is an x Council of property. So let's open this one up here. So we have this as an x council property. We have this one. We have, I believe this one. Let me just confirm. Yeah, this is xs cancel. And finally, I believe this one was also xs cancel and I believe we have one more maybe. Yep, we also have this property here. So what I'm going to do now we've essentially found five council properties that we need in the area. So I'm essentially going to take all of these details and put them into the deal analyzer. So essentially, we have five properties of five rent comparable within within the area within within a quarter of a mile of our property. So I'll quickly just take these details now and put them into the deal analyzer. So essentially I've taken these five comparables and I've put the deals, I will have put essentially the rent comparable into the deal, analyze a system. So now what we have is we have five comparable I've included all of them, and we have the rents, we have the conditions, we have the building type and how close they are to the property and also the link. Now, we can see that the average property is being rented for £1559. The average condition is well around five out of ten. Now, by the time we turn this property into a two-bedroom property, these are going to be brand new, so essentially, it's going to be ten out of ten condition. But currently, the rent is about 1559 for something which is on average about five out of ten. So I think we should be able to get anywhere between 1650 to maybe even 1700 for the fact that, well, we have a two-bedroom property, but it's also a brand new rather than something which is in very, very bad condition. So we'll put in 1650. That seems about right, Just as just slightly more than what is currently on the market. But we have a property which is ten out of ten is brand new, so we should be able to charge a premium rent based on the fact that while it's a brand new property. So what we have now is we have the rent of the property. But now we need to know well, if we turn this into a two-bedroom property, what does that property worth? So this is where we need to start looking at the sold comparables. And so again, if we have a one-bedroom property, we're turning into a two-bedroom property. We need to know, well, what does that two-bedroom property worth? And similarly, if you are looking at a two-bedroom house, well, how much is a three-bedroom house going to be worth? So again, we do a similar exercise but using a different tool. So we go into this and again, take the postcode. Now, once we've taken the postcode, we can close all of this. We don't need these anymore, but we do need a tool called mass price. So now when you go to mass price and the first thing we need to do is make an account with mass price. And we need a Pro account, which I believe might be about £10 a month or £15 a month. And once you go into your account, click Visit mouse price Pro, which you can see down here. And then under pro services, click comps search list. Now, here you need to enter the postcode, click search. And when you do that, you get all the comparator comparable of all the properties which have sold in this area. Starting from the closest two things which are slightly further away. So as you can see, our property was in the building grace house. And you see all these properties which are also in create sounds which I've sold. But some of these properties hold recently, some sold a few years ago. Now, when we look at properties to convert and when we're looking to add value and then refinance later on or even sell. How the properties are generally valued is by you have a mortgage surveyor or a rig survey, or someone who's going to value the property. They want to look at properties which are similar, which have sold within the last six months and have sold within a half a mile radius. So that is essentially what we're going to be working with as well. But again, the closer you can get in terms of the proximity that better. So what we'll do is under bedrooms will select two bedrooms only because we're turning our property into a two-bedroom. So we want to know well, what a two-bedroom property is worth. And that's what really eliminated quite a few properties. Property type, we're looking at a flat, the date of sale. We want the last six months, ideally. And if we can't find anything in the last six months, we can slightly branch out and increased two the last one year. But ideally we want to be within the last six months because that's how mortgage companies look at comparables. And the distance. Again, similarly to write me, we want to start as close as possible, and then we can branch further and further out based on what we find. So we'll go within the supplied postcode. So again, very, very similar to before. Within, within the supply postcard we find nothing. So we then increase to a quarter mile radius. Now, with a quarter mile radius, we essentially find a one property. And what we need to do now is we're going to say, well, is this a council property, is this a private property? And does this make for a good comparable? So you can open this up in a new tab. Once you have this property, the first thing we need to know well, is this private or is this x cancel? So we can do is you can take this address here. You can take the full address, copy it, go into Google and poses to Google. Now, there's a few ways of doing this. The first one is if you look at images. Generally you can see, well the type of building based on the images. Now, this is called lot bro street while at house. And it might be hard to see, see this is not exactly the same property because this is Random House. So again, there's no, there's no pictures. Okay, so we can leave this one, we can go to all. The next way of doing this is sometimes you have the Zoom link as the first link when you input the property address. And if you click onto the Zoom link and scroll all the way down, sometimes you have pictures of that particular property. Now in this case, there are no pictures available. So we found nothing on Google, we found nothing on zooplankton. The next thing we can do is go back into mass price and scroll down onto the map. And so this is where their properties, we can zoom in on the map. So we know this is a property we're looking at here. But what we can do is we can click this button here which says bird's eye view or even aerial view. But if we click bird's-eye, we can see, well, this is actually this building here. Now I can tell this as an x council building, but as you can see, this has 123456. It has six floors and it might even have seven fluids if i've I've missed countered if I zoom in it, it might even have seven floors. So I believe I can receive properly, but again, 123456. Yeah, I think it has six or seven floors. Now, this doesn't make for a good comparable because the property we're looking at is 12345 floors and this is a high-rise building or is definitely bigger than the property we're looking at in terms of floors. So that doesn't make for a good comparable. So we can essentially leave this one for the time being because we're not going to use it. And we can then branch out and make this slightly bigger by going to half a mile radius. Now, when we look at half a mile, essentially we're doing the same thing which is we're looking at, well, which of these makes a good comparable? Now we've already looked at this one, and this one is essentially a council, that is a high-rise council. So this doesn't really work. We then go on to the next one. And once we open this one again, we do the similar exercise. We take this and we put this onto Google. And it again under images. We can see that again, we can't really tell too much. So we go back onto the zooplankton. Look and see if there's any pictures. I'll say this one. This will now does have pictures. And yet this is this type of property. So again, it's not exactly the same type of property. This might might be XX counsel, but it is most likely private. And so therefore we can eliminate this one because it is not a good comparable. So we can eliminate both of these. And then we simply just move on to the next one, the next one, the next one. Now, what you might find is that you might essentially go through all of these and you might not find a lot of comparables. In that case, what you, what you need to do is increase this from the last six months to the last one year. And again, we'll start the same way, which is first we'll look at within the supplied postcode. And again within the postcode there is nothing. So we go to a quarter of a mile. So last time, the only one we had in the quarter mile was this one here. But now we have two more to potentially look at. So by the way, I didn't go through all of the properties just for the sake of this exercise. But essentially what you would do is within, within the last six months, you would first go through all of them and to see what can you actually get five comparable or not. And if you can't get fired comparable is only then would you increase to the last one year. But just to speed up the exercise, I've increased this two, the last one year. Now, let's look at this property here. Again, I can take this or again, I can simply scroll down, go onto maps and views. See that the property is here. Do the bird's eye view. And again, this is pretty much exactly the same type of building and we're looking at so we're looking at 12345 floor building. And this is exactly the same, which is look, it's got 12345 floors. So this is, this makes for a good comparable. So we take this property, the first thing we need to know is what was the price it will solve for. And if you go back here, you can see that the soul price is £400 thousand and it was sold on November 19, So November 2019. So I'd take this here, 400,400 thousand. The date sold was November 2019. The building type is x council. Okay. So the next thing, if I go back here, the next thing we need to know is, well, what size was the property? And to work out the size of the property. Sometimes it will tell you the size here. But what I find is that this is not always accurate. So what you can do is click this button here which says check EPC. I'll open this up. And you need the postcode of this exact building. So you copy the postcode. Go to EPC, click accept terms. And you enter the postcode here, click Search Report. And the one we were looking at was flat at 12. So we find flat 12, which is here. Click Show reports, and then click the one in English. Unless you know how to speak Welsh or read well shaven. What I will do is that will actually download the energy performance certificate for that property. The reason we need this is when we open this up, it will actually tell you the size of the property. Now the size of this property is 39 square meters. So this is what I meant that sometimes this is not exactly accurate, but the, the true size is 39 square meters. And this is done by the energy performance certificate people when they viewed the property debt of assessment 2017. So pretty recent. So this is the sides here which is 39 square meters. So I take this, I put 39 here. Now in terms of the condition. Now, sometimes you have pictures and sometimes you don't. So again, I can close these now as we don't need this, I can take the full address and I can put this into Google and try to find the zoo play listing, which is typically always the first one. And then I scroll down, scroll down, scroll down. And again, see this. This time you do have pictures now. You don't always have pictures, but this time you do. So the condition it seems in pretty good condition. Maybe they've had a lick of paint and the bathroom is relatively old, the kitchens relatively old. And I believe this is a ground floor apartment, so the condition isn't the best is not brand new. I'd probably give this a five out of ten. So the conditions five out of ten, the proximity to our property. So if we're looking at this one here, which is a proximity, if I go back here and actually go back into even, even the main mass price thing, it will tell you that it's a 0.2 kilometers away. Now this is done in kilometers for some reason. I don't know why, but we can put a 0.2. But just keep in mind that this is in kilometers or rather than in miles, but that will give us a good approximation. So we know what the proximity is and I will change this to kilometers just for the time being. And then under notes, I'll just write ground floor, just, just helpful to know. And and finally, we need to know, well, the link of their property. So I would actually input the Zoom link in this case, purely because of all this one has some more information purely because it does have the pictures. If the ukulele didn't have any pictures, I would just put in the mass pricing, but since they're all some pictures and if I want to see the pictures again, I can do quite easily. I'll just input this link here. So I input the Zoom link, and that is the first one done. Now we're looking at essentially the next one. Well, okay, so we've done this one. We now look at this property here is this and x cancel property. So we open this up and again we can simply just scroll down. Again going bird's eye view. So this, I believe if I spin this around slightly, is this property here which is 12345 floors. So again, this is a good comparable because it's a very, very close and then building is pretty much exactly the same as the one we're looking at. So this is fine. So we'll use this as a comparable and I'll take all the details just exactly like what I've done before, and I will put them into the soul comparables. So we do that now and now because we've looked at all the properties in a quarter mile, we now increases to a half a mile. And again, we do the same exercise. So I believe we've looked at the first three. We look at some of the other ones now and we essentially go through all this list until we find three more comparable. Now, we can open this one here, but generally I already know this is not going to be an x Council of property, probably because x cancel properties are normally have some sort of name for the building. And because there's no name, this is flat 488. This is most likely going to be a house which was converted into flats. But if I open this up, you can do the same exercise and you can go through this and determine what this is. If I click Okay, zoom in and go on aerial view. So you can see this is a house which was converted into flats here. So this is the house. And the reason I know this is because in the address it is 41 a and then the street name now, you typically only get that when you have a house number 48 was probably converted into multiple flat. So we can get rid of this. Again, this will be a similar situation which is 317 canning turn road. Again, this will be a house which was converted. We can open this up, but again, this will be exactly the same thing which is FAD one to four, number 11. So the house will be number 11 and someone would have converted and you can double-check these, but most likely that is the case. I'll simply ignore these ones for the time being. Now, of course, if you were looking at a private property, then you wouldn't ignore these because while these would make these would be the comparable as you need in order to determine the value. So now let's open this one here, which is Palm House now, because it says Palm House and gives a building name. It might be Council. Now orient. This might be a private building because it's called Palm House, I believe is probably private. But let's have a look. See, this is really interesting. Now when I've gone on to this, you can see that it's actually just an empty plot of land and with a *****. That means this property has probably recently been developed and most likely it's going to be a new build building, because while currently there's nothing here, and most likely at developers bought this piece of land and build something here. So I can verify this by again, taking this and take this address and putting this into Google and going into even images and is just seeing. So you can see this is a brand new development. And again, that makes sense because there was an empty piece of land here. Again, we can ignore Palm House. Again. This is farmhouse again, so we can ignore this one here. Let's open this one. Now when we open this one again, similar, similar exercise. We go down here. We go on the bird's eye view. And this is interesting. So I believe again, this is most likely a house converted. I believe I can Google this and just to get a better view. And if I go on to images here, again, this is not exactly the same type of property. This might be purchased by the council at some stage, potentially, but again, most likely this is a private property. We can ignore this one here. Let's move on to this property here. So if I go into images and maybe we've looked at this one before since it's already come up. Okay. So we have looked at this one before. So this is the one we looked at earlier. So again, we can ignore this. This is the same building as the other one. This is most likely to be private. Again, let's open this one up here. Number 29. And again, we're essentially going through them one by one. Now this could be interesting. Let's have a look at this, but I would actually not even include this one potentially because as you can see, this was purchased for £185 thousand. This is a clear outlier when you look at everything else. Now, this might've had a short lease or maybe a family member solar to another family member. I don't exactly know what the situation is, but this wouldn't really make a good comparison anyway, purely because while they were sold for a £185 thousand, which is not very realistic unless there was some sort of issue. So for that reason, we can get rid of this one. And we essentially just keep moving through these until we find three more because we already found one. We have a one here which we found and we need three more. So if you can't get three more, even if you can get a minimum of three, that should be fine. So now let's open this one here. I'm hoping this was XX counsel, because while we've seen quite a few already, Let's open this one. Go on bird's eye view. And again, this is xs cancel, but it is one it is a lot bigger, so I believe 1234567 floors. So XX counsel, but seven floors, so I don't want to include this one. Then we go on to the next page. So this, this building is the same as this building, so we can ignore this one. And I'm just going to find some random, the ones which have maybe like a building name and I can make a good comparable. So these all seem to be houses which had been converted or, or private buildings purely because while they're so expensive, essentially. And now we can go through this one here. And we go to maps and views. Go on to bird's eye. And this is cancel and this is 12345 flows. So again, we can use this one as a comparable. So now we have, we have this property here, which is also a good comparable it is still within half a mile, but it's really on the edge of the half a mile radius. And we have this property here which is closer, but this is the one which was seven floors as opposed to five fluids. But because we can't find anymore which are exactly the same within half a mile then within the last one year, these these are the ones we'll be taking. So what I'm going to do now is I'm going to take the details of these three properties. And do exactly the same exercise in order to fill in all of the information here and put in the size, putting the conditions, and put in all of the links. So I'll quickly take these three properties and input all the details. So what I've done now is I've taken all these five comparables for comparable, and I've put them onto the deal analyzer. Now, I've been put all the details here. I'll just quickly go through them now. So we have a fulcrum parables. Now, sometimes in your area based on your area, the property type, you might have a lot more comparable as you might have less comparable. Ideally, we'd want a minimum of two or three at least which are good comparable. But you see based on the building, your rain, or the location you are in, how many you can get. But ideally we want fine, but at a minimum we want at least two. And like I said, sometimes you have more, sometimes you have less. So if we look at these comparable, now, if we look at the fourth one here, this just soften this one here. Now, this is a good comparable because it is XX counsel, it is within half a mile, but it is actually on the seventh floor. And the buildings, we're looking at our low-rise buildings with a maximum of five floors. So I don t think this makes the best comparable. So I'm going to change this one to a 0 for the time being. And the last one I'll change to a 0 because obviously we don 17. Understanding Deals Funnel: So in this section we're going to be going through the deals funnel. Now, what exactly is the deals funnel wiser deals funnel important. So the first thing is, why exactly do we need a deal's phone? Now, the reason you need a deal's funnel is essentially to monitor all your leads. Now, what are deals funnel basically means is that while deals are your deals and a funnel is essentially a way of keeping all your deals in one place. So imagine a funnel like this or a funnel that you use for cooking or something. That every time you have a funnel and you put in a new lead, a new deal, you are essentially £20, the ones which work and eliminate all the ones which essentially do not work. So that is what a deal is. Finalists, which is essentially having all your deals in one place. So you can monitor which stage they're at. Which ones I've seen, which ones I haven't seen yet. I've analyzed this one. I haven't analyzed this one. But by having a systematic way, by having a process, it will save you a lot of time, and it will save you a lot of confusion because once you start looking at a lot of these deals, the big problem is that it gets very, very messy very quickly. So this is to stay organized, to become very systematic, to have a process of evaluating deals. This is a good deal, this is a bad deal based on a set of criteria. So that is why you need a deal to funnel. The second thing is when it comes to a deal's funnel, the purpose of the funnel is to reject deals, not qualify deals. What that means is that whenever you put a lead into this funnel, you've got this funnel and you put a property in. Your aim is not to make that deal work. Your aim is to very quickly, what kind of reason as to why it doesn't work. The reason, the reason you do that is because some things you can do very, very quickly in order to identify, is this going to work or is this not going to work? For example, one of the criteria is we have is avoid concrete buildings or make sure the kitchen has a window. Because if you're going to turn the bedroom kitchen into our bedroom, it has travelled window. Now. I can work that out in about five seconds. That well, okay. Well, if it's a concrete structure, then it's not going to work for me. And that deal now goes out of my funnel. I don't want to do anymore analysis. But if you spend 56 hours doing all the research or the numbers or the comparables. And then you realize, well, hold on and say, there's no window in the kitchen that doesn't work, then you've just wasted five hours on that one particular deal which was never going to work. Now, if you're looking at 102030 days a week, then you can't spend five hours on every single deal because there's too much time. So the aim is to very quickly identify the reasons it wouldn't work, eliminate all the rubbish ones. And then once we're down to the last few, then we try to see, well, which one has potential, which one doesn't. But by very quickly eliminating the ones which are never going to work, you will save a ton of time. But if you don't eliminate them and you spend hours and hours and every single one trying to make it work. And then realize, well, the size isn't big enough or something, or one of the things which you could have identified very quickly, you will, you will waste a lot of time. So these are the stages of the deals funnel. And the stages are designed in a way you can eliminate deals as quickly as possible and get down to essentially the gold, essentially the good deals without burning a lot of your time. So if we look at the first stage, the first stage is when a new lead comes in. Now this lead might come from different sources and we'll go through all of these stages in a lot more detail in a second, but a New Deal comes in. And that takes no time. Essentially, I've put one minute. Then you do the criteria checks. So the building criteria, the location criteria, that property criteria, does the layout work? And again, that might take you one minute. Now, if all of those things pass, we then call the seller. My landlord. This might be the estate agent. This could be anyone. We call the seller to get some more details about the property. Now, if that is all okay, if it passes that states that might take ten minutes. If you pass that stage, we do a desktop analysis. This is essentially where we analyze a deal without seeing it. At that stage, we do the desktop and Altis, IEEE, we analyze as much as we can using our computer or without going to have to see it. Because if you go and see the property and then realize, well, well, I could have figured this out online, this was never going to work. Then you've wasted a lot of time going and seeing the property. If you live, let's say half an hour away from the property, you have to get ready to drive their park, see it, come back and that, that might take a lot of your time. So we'll do the desktop analysis, which will take about 60 minutes. If that passes, we do that property viewing, which can again take 60 minutes. We then do the full analysis, which could take about 60 minutes as well. And by the way, I say 60 minutes for a lot of these, but as you get better and as you improve, of course that time will come down because you will just get faster at doing this. Whereas when you're doing this at the solid will take a bit longer because you're not exactly used to all the steps even with property viewing, if you if you're doing viewings engineered five at the same time, it won't take you one hour because travel times the same once you're in the area might take you half an hour to get to the area. But if you view ten in one day, then of course you've saved a lot of time that way. But this is just to give you some sort of rough indication of how long it could possibly take, especially when you're starting out. So we then do the full analysis. Then if you pass through the full analysis, we then make an offer on the property. We start the negotiation process. That doesn't take very long. I put about five-minutes. It might be a few phone calls here and there, but that process generally is not very long. And hopefully by the infant, we haven't offered accepted. But if we look at some of the early stages during the criteria check and there's about 34 criteria than calling this seller. That will take you about ten minutes, about five-minutes. And very quickly within about ten minutes, you've already from your funnel, you've already eliminated a lot of deals which can never work. And then you're only doing a deeper dive on the staff which has potential. So that is the aim of the funnel, which is not necessarily to qualify stuff, is they're designed to get rid of the rubbish leads as fast as possible. So you're not burning a lot of your time on the ones which have no potential. Now, what we're going to do now is go through step-by-step in detail, all of the stages and what is required in the stages, watch after doing those stages in order to make these deals work. 18. Building a Deals Funnel: In this video, I'm going to be showing you how you can build your own deals funnel. Now, the reason we need a deal's funnel is because, well, imagine you're looking at ten different deals and you're looking at all these deals, but you can't remember which one you've seen, which one you haven't seen which one you're about to make an offer on or which one had an issue with the viewing and so on and so on. Because when you're looking at multiple deals at the same time, what essentially ends up happening is that the whole thing turns into a bit of a mess unless you're very, very organized. And essentially it's deals, funnels basically allows us to be a lot more organized because everything is kept in one place. You know exactly which stage of the deals funnel the deal is that if you need any information quickly about that particular property, you have everything in one place. What is happening with that dealer will that progresses, which would stages is stuck at all and so on and so on. So that is essentially the reason for having a deal's funnel and the way we're going to build the deals. Finally, using this tool called Asana. Asana is a task management app and it can do quite a lot of other things as well. So you don't necessarily just have to use this for property. You can use this for you, other businesses or even your day job and so on and so on. It's just a very, very good way of staying organized and keeping everything in one place. Now, Asana, when it comes to the pricing, there is a free version. The free version should allow you to do most of the things that I'm gonna be showing you today. If it doesn't allow you to do some of the things and you might have to move on to the premium version, which is 949 per month. So now once you met an account with Asana, you essentially end up on a page like this where you have to input a new project. Now we can call new project ideal deals funnel. This doesn't really matter. This is whatever your team is. My team has called property investing. It is public to my entire team. So now you can make this service just private to anyone who is in that particular project. There's depends on if it's just you yourself in a sauna, then obviously none of this really matters. But if you have a team or if you have business partners and different people want to look at different things, then you can obviously change that setting accordingly. Now when it comes to the default view, we want to go with a board view and click Create Project. Now what this does is the board view essentially you have columns with different names, different progress stages and so on and so on. And you essentially have these cards which you can drag and drop. Now you probably have seen this in a lot of the new software these days when it comes to task management. So the first thing we need to do is change all of these columns to the relevant stages of the deals funnel. So if I take you back here and you look at the deals funnel, these are the stages which is new leed criteria check called seller desktop analysis, property viewing, full analysis or for negotiation and offer accepted. So these stages have to coincide with these stages up here. So essentially we can do is you can change this and edit this to call it Mu lead. The next day it was criteria check. The next stage was called seller, desktop analysis, property viewing, and so on and so on. And you can do this alongside this video, and you can just pause and play the video while you sort of build these stages. Fall analysis is the next one. And the last two are offer and negotiation and offer accepted. So now what we've done is we essentially have all of the stages. So this current will represent the property. So for example, let's say that property is called property one. This essentially is the first property you're looking at. Now once it goes onto this stage, you essentially just simply move the card there. Once it goes into that stage, you simply just move the card there, so on and so on. So that there is pretty, pretty simple in terms of these are the stages and these are the properties within that particular state. And now you know all of the properties you are looking at entirely, but you also know that which property is at which stage. So you can very quickly look. Well, how many properties have I made an offer on how many proteasome I still analyzing and so on and so on. So now that's good for doing that stage. But what we still have missing is the fact that while the property currently only has an assignee fuel and the due date, and that's pretty much it. So what you want to do is you want to add some more details here to customize this for whatever you're looking to do. So you can press this button here which says customize. And then these are some of the current, current fields. Now, you can use an assignee if you want. You can use a due date if you want. But we need to do is you need to add some more fields. Now, these fields, they have to also coincide with essentially the deals funnel stages. So if I get back onto here, when it comes to the new lead, these were some of the criteria. There's nothing really you need to add for the new lead per se. But if we move on to the criteria stage, we have four different criterias. The type of property, the type of building, the location criteria, and the property criteria itself. So if we take, for example, the type of property, what we want to do is when we go on to his Sunnah, the first field is called type of property. And we can have different types of fields. We can have drop-down menus, we can have text and we can have number. Now in this one, since we only have two types of properties, we can call it private and XX counsel. And click Create field. So what happens now is when I open property, property one, as you can see, there is this new field here which says the type of property. If I slide, I can now slag, well, was this private property or was this an x Council of property? So whichever one you select, it essentially tags it for you. Now in a similar way, we then look at the next criteria with the next one was the type of building. So we've already said the types of criteria that certain buildings are good in certain buildings are not as good. So if we go back to customize, go back to Add Field. We can call it building criteria, and we can call it passed or failed. And these are, the criteria is we've already previously set. So again, if you go onto here and you look at the building criteria, if it's failed, then that essentially means that this is a deal you shouldn't be looking at because this criteria has failed. Now every time throughout any stage of this deals funnel where you think, well, this property does no longer work, you simply click Mark Complete. And once you complete that task, what will happen is generally the filter will be set to incomplete tasks. You want to set your filters to incomplete tasks, because that will only show you the properties which you are currently working on. If you look at completed tasks, this will show you which properties you have eliminated or the author has already been accepted. So I always keep my default view on this because I take that property off. As you can see, it is now no longer there because while I'm no longer working on their deal anymore. But let me just add that property back because obviously we still need to continue with this exercise, but I hope that sort of explains a point in there. So in this case, we will say, Well, they're building criteria has passed. The next one is the location criteria and also the property criteria. So again, we add some more fuels and we click Customize, click Add Field, location criteria. And again we call it passed or failed. The final criteria we have to add when it comes to this is the property criteria itself. So property criteria, again, past and failed. So now what we've done is in terms of the first stage of the deals funnel, we have essentially gone through the main things when it comes to looking at the criterias. So now we go onto the next stage. Now the next stage was all about XX counsel consent, so we can add a fuel in there. Now, of course, this only applies if the property is XX. Counsel, if it's not x cancel, then it doesn't matter. Now, I'm going to call this approved and rejected. This doesn't necessarily mean that you will get consent to this stage. Now to get further clarification on this, you will have to watch a section on free holder consent and do a bit more digging in terms of whether you can or can't get free older consent. But at this stage, the only thing you will know is whether you can in principle get consent from the council or if you can't. But if in principle you can get permission, then obviously this will be rejected if you can, and this will be approved. And once again, if I if I open this up and this was the type of property was XX counsel, only then would you look at XX counsel consent. And again, you will click approved or rejected. Now, if it was rejected, once again, we can't do anything with this property, so I will simply take this off. But for the time, for the sake of this, we will click approved. One thing I should have done is when I, when I wrote x council, I should have written x counsel consent. And then click Save. We're going to be calling the seller, which most likely will be the agent. And these are the questions we had identified which we need to ask the seller. So it's a property is still available and so on and so on. So what I'm going to do now is I'm going to add these fields again onto, onto Asana. So if I click Add field on the market. Yes. No. Again, if the property is not in the market, then you simply take this off. Because obviously we can't do anything with this tool anymore because while the properties no longer on the market. So what I'm going to do now in quickly is I'm just going to quickly add all of these and then resume from there. So what I've done now is I've essentially added all of these fields on the left-hand side, as you can see. So it has a property is still on the market? Yes or no. How long has it been on the market, the length of the lease, the service charge, and made it works, the vendor situation, what the agent things is going to be worth if there's been any offers. I've essentially covered all of that and this is now we're all now we're in the call center stage. Then we move on to the next stage, which is the desktop analysis. Now, in the desktop analysis, we essentially add another field. So now we need to know what has a desktop analysis past or has it failed. So we will have a criteria for a deal if those criteria is parsed and we essentially click past and in first criteria is fail in meaning while this is not a good deal for us, then we simply click failed. And once again, once we get to that stage, we simply select, well it has it past or has it failed? And we continue to move this at the next stage. The next part of the funnel is the property viewing stage. So we need to add a new field. And what I will call this field is viewing comments. So essentially, this is where I would save all of my viewing comments. So any notes I want to make about the property, I can simply just add it here. So for example, if I know the layout wasn't, sorry, I can't spell, wasn't good, and so on. And so whatever notes you want to make, you can simply add your viewing nodes here. If there is no issue, you simply just move on to the next stage. The next stage is the full deal analysis. Now again, what you're looking to do here is you're looking to work out well, okay. Does this deal work or does this deal not work based on your new information? So this might be information from your, from your brokers and so on and so on. So we call this full deal analysis. And again, when Genoa, while other criteria is past or have they failed. Finally, we move on to the offer stage. Now, what we can do now is for the very last one we can click customize. We can click Add Field and this will be the final one. Offer, a mount. We can click the offer amount and add texts or add a number. We can add this end pound. So we also have an offer or a mountain wants, this is in the office stage. You can essentially just add it there. And if this property gets accepted, you simply just move it there. So essentially what you've done is if I was to start with a brand new property when you have a brand new properties. So let's just say I find a new property, a new lead has come in and this is called I can't think of a name. Let's just call it Rhode House, London. So this is a new property, this is new lead I've put in. I then select the type of property, so well, okay. This is x council. Now, once I've selected the XX counsel property, I then do the criteria check now. Okay. In terms of criteria, the building criteria as fine, location criteria is fine. This is done all my research and other things which we have covered. So the project criteria is passed now in terms of counsel consent? Yep, that's all good. Now, if all of that is fine, you simply move on to the next stage, the next stage, and the next day and so on and so on. And by the end of it, it keeps all of your properties in one place. You know exactly where the deals are, which stages they're red. The other thing you can do with this is you can obviously also add attachments. So for example, if you want to add a file, a floor plan pictures, you can add those. You can add any subtask. If you're adding tasks to do with that particular property, you can add those. You have a description box, you have a comments box. So you can customize this and uses how you see fit. But this is essentially how I would personally use it and this is essentially what I do, which is I fill in this information I need and I create these stages so I know exactly where the deals are, what stage those those particular deals are. And this is where I can say a lot more organized and I can see exactly which property is I need to view which properties I'm still analyzing and so on and so on. So that is how you build a deal's funnel on Asana and how you keep everything in one place and how you just be a lot more efficient when it comes to finding and finding a deal which essentially works. 19. New Lead: The first aid is a new lead. This is where a new property is coming into your funnel. Now, we're essentially what you have to do is add all the potential properties to the deals funnel. Now, these can be from different sources. These can be from a state agency. It could be from sources. It could be Darrow to vendor or landlords. It could be different places. Now when it comes to write move, you might have right move filters setup. You might have your sources, e-mail list setup. Essentially the purpose of this stage is to make sure every single property lead you're looking at any property which you guys send to you by agents, by landlord, whoever that is essentially goes into one place. So that is the first aid, which is the new leads stage. Once you have put everything into the new leads stage, we move on to stage two. 20. Criteria Check: In stage two, we're looking at the criteria check. Now as part of the criteria check, the first criteria is, well, what type of property or we're looking at private or council. Now, like we mentioned before, if it's private, then the type of building doesn't really matter too much because all private buildings are typically desirable. But if you're looking at council building, we then move on to the next criteria, which is the type of building. So when the type of building you want to avoid council estates, avoid high-rise buildings, avoid any flats above shops, and you want to avoid concrete structures. So that is the next part of that criteria. Within the criteria check this. And these are things you can identify very quickly. Is it concrete? Is it above shops, so on and so on. And then you eliminate those ones. You then go on to the next criteria within this, which is the location criteria. Well, is the property in an area recommended by the letting agent? So once you've identified which areas are good, which areas are bad? This particular lead, does this sit in one of the good areas or does it sit in one of the band areas? And if he doesn't sit in any of the areas, you could just call that engagements and say, well, I'm looking to invest in and property in this area. What do you think of this area? And again, I would call four or five different agents to get a better view of it. But most of this should be already done because you will know whichever is a good, which areas are bad? Again, does it isn't a good area or is it a bad area? And if it's in a bad area, again, we eliminate that deal. Last but not least, can the layout be converted into so you can add bedrooms in it as a property or require works. And does it have a long lease if you're looking at apartments? So again, those are things you can identify very, very quickly using a checklist that we have for apartments and for our houses. If it passes all of these criterias in the criteria, we then move on to the next stage. So as part of the criteria check, one of the things you also want to check depending on the type of building, is. For x council properties, you want to do a consent check. Now, this only applies for x cancel properties. It doesn't apply for a private properties. And what we're going to do at this stage that once it's passed all the criteria check, we're going to check, well, the new layout that you have created by moving the kitchen and by adding a new bedroom. That well, the council will be okay with giving you free holder or consent. Now if reorder can send my B is going to be covered in a later section. But where are we going to do is check with the council. Is it okay if we turn the property from one bedroom into a two-bedroom and essentially converted. So that is something we do at this stage. But the next stage is calling the seller and asking some questions to the cell to get a better picture of what is the situation where the property, what is happening with their property and to work out well, is this something which could be a good deal? 21. Call Seller: Now this is the first thing you want to ask the seller. The first thing you want to ask is is the property is still available and if the cell cell wall, the property is not available. If it's if it's already sold, then you want to eliminate that property because well, of course, it has already sold to someone else. There is no more use for that particular lead. The second thing you want to ask the seller is, how long has the property being on the market? Now, generally this is useful to know because if a property has been on the market for a long time, for a few months, then the seller might be a lot more motivated to get a sale. Whereas if the property is only just come on the market a few weeks ago or within the month generally because it's still a fresh listing. You might not be that motivated, that might be waiting, willing to hold out for higher offers and so on and so on. It's never a 100% accurate. They might be very motivated in day one, they might take a lower offer because they might need the money. But these are some general indication that the longer something has been in the market and it's not selling, the landlords are a lot more motivated and this is good information to know when it comes to negotiating crafting your office. The next question is, what is the length of the lease? Now this only applies for flat. And essentially, the reason you want to know this is because, well, if a lease is too short and if the lease is less than 90 years is something I would personally avoid n, So I would essentially reject that lead at that particular time. The next thing you want to ask is, what is the service charge and ground rent? Again, this applies for flats only. The reason you need to know this is because when it comes to the desktop analysis, we will need these calculations in order to work out, well, what is the cashflow? What is the return that we're receiving on this particular project? So ask this question if you're looking at an apartment. Another thing to ask is, are there any major works expected? Again, this is only for flat major works. Essentially means that are there going to be any big work's happening to the building, maybe they're redecorating and building new windows and doors. And if that is happening, you want to ask the agent that you require more information and you want to know how much that is going to cost. So for example, if, let's say the major works, we're going to cost £20 thousand and that was those works were coming up in due course. If you own the property when the work's happened, you essentially have to pay that cost. So therefore, if you know, if works have already been announced and you know, they're coming up and there are costs, £20 thousand, that is money you can potentially negotiate off the purchase price. So rather than you're paying £20 thousand, you'd negotiate that within your discount. So again, very, very important to know if there is anything in major which is going to happen to the building in the near future or if anything has already been announced. The next question is, what is the vendors situation? Why is the vendors selling or the ventral landlord means the same thing. Why are they selling? Again, this could be useful information when it comes to negotiation. If someone is leaving the country, they want to leave and they want a quick sale. And again, this is a win-win because if they need a quick sale and you can give them a quick sale by moving very quickly, by arranging, bridging finance. They get the benefit of a quick sale and you get the benefit of a slightly lower price. So it's a win-win for both people. And again, it's just helpful to know that early on in terms of, well, what is, what is the complete picture? What is what is happening here? So when it comes to negotiation, it's something you can put it on the table. Another thing to ask is, what would it be worth if I added a bedroom? So for example, if you're looking at one bedroom properties, you want to ask, well, how much would it be worth if it's two bedrooms or if you're looking at a two-bedroom house, you want to ask, well, how much is it going to be worth? If it's worth if it's a three bedroom property. And when they give you an estimation, you want to say, Can you send me some comparables that can you send me something which has been which has been on the market recently, which has sold on the market recently, which is similar to what they're saying. So now let's say you are looking at a one bedroom property for £100 thousand. They say, Well, I think if you turn this into a two-bedroom, I think it'll be what, 150 you want to say? Well, can you send me some examples of £150,000.2 bedroom flats, which I've sold in the market recently. So I can compare, very, very important to have this information early on from the agents. So you know exactly what the price points are going to be when you turn from a one-bedroom into a two-bedroom property. The next thing you want to ask is, have there been any offers on the property? Now the reason you want to know this is because if there hasn't been any offers and the property, again, the landlord might be a bit more motivated because well, no one's offering has been on the market for a while. So again, all this is doing is just painting a better picture for you in order to work out what's a good deal and what's a bad deal. So yeah. Just asked you, Has there been any office they're not going to tell you what the offers were, but they will give you an indication of if there has been any offers over. There hasn't been any offers. And finally, the one thing to note is that you do not want to be booking a viewing at this stage. At this stage, all you want to do is get this information. Again, asked for the comparable. So if when you've said What do you think this will be worth as a two-bedroom, three-bedroom based on your projects. Also, some comparable say well, okay. Can you send me some comparable so I can have a look, do a bit more research, and then I'll get back to you. You don't want to book a viewing of this stage because we first want to do the desktop analysis. And if the desktop analysis works out and it shows that there potentially could be a deal only then should you be viewing this asked for those details and say you'll get back to them once you've had a deeper look at the property. Now, this is a top tip when it comes to getting discounts on properties. Now, based on the call with a seller, you can only assess if you're able to get a discount on the property. And generally, you can get a discount if the property is vacant, is probate. Probate means someone has passed away and maybe their family or their kids are selling their property and they're going to realize a lot of money anywhere from the sale because the parent who passed away the property might be mortgaged three or It's just extra money they're going to receive, or if the property has been repossessed by the bank. Now, again, discount is more likely if it's been on the market for a long time. There hasn't been any offers. And if there's also been consistent price drops or any price drops, as shown by the property log tool. Now, it is harder to get a discount if the property currently has a tenant. It's only recently been on the market, or if the property owner occupied. What that means is that the landlord is actually living in the property himself and he might not be that desperate to move or since there's not an investment property. But now, these are just general rules. Keep in mind that it is never complete patriot and no two situations are exactly the same. So this is not a foolproof way of getting discounts, are not getting discounts because someone could have had a property on the market for one day and they might be desperate for a sale or someone could have had the property on for two years and they might not might not be that fast at all. But these are just general indications that if this is the case, then you generally can get a discount. And if it's that case, then generally it makes it much, much harder to get a discount. So they just keep those things in mind when it comes to negotiating. 22. Desktop analysis: So in this stage we now move on to the desktop analysis. Now, with the desktop analysis, we are essentially looking at evaluations methodology when we're doing the desktop analysis. And what that means is that what we want to do is we want to look at well, if we buy this property and add a bedroom by doing evaluation, well, how much is that property you're going to be worth with the additional bedroom. And the way we do that is by looking at comparable to what that means, similar properties. So if you take a one-bedroom property and you turn it into a two-bedroom property, what do you want to know is, well, if I look in the market for similar two-bedroom properties or properties which are recently sold, which a two-bedroom well, how much are they priced at? How much do they sell it or how much are they renting out. So that is essentially what we're doing with a desktop analysis, which is we don't have to go to see a property. We can do all of this research using Google and all the other tools are we going to be going through? And essentially we working out, well, what is the property going to be worth if we add another room? Now, using this methodology, we are calculating the final value, which is the GDV, which stands for the growth, development and value, i e Well, if we're taking a one-bedroom property and turning into a two bed or to bet house into a 3-bit house. Well, what is that going to be worth by the end of it? And so by looking at similar properties, we're arriving at the GDV and that is something we do at a desktop analysis stage. Next, we're estimating the cost. So we're estimating that finance cost is the reverb cost and the illegals cost. So we're getting an estimate of all these costs in order to determine, well, is this on paper a good deal or if it's a bad deal? Now keep in mind the desktop analysis something. Once you get the hang of it, you can do it very quickly and the estimate is normally remain roughly the same. Now, all of this is going to be covered in a deal analysis section where we actually go through a live deal. But for the time being, just need to know what the different stages aren't. Essentially what is covered in all the different stages. So you can take those boxes as you go through them. So that's something we do at the desktop analysis stage, which is we look at the estimates rather than than the exact figures because we still, we don't want to spend too much time. We don't want to get in touch with their brokers and builders and solicitors to work out the exact cost because I will take a lot of time. For the time being. We can just estimate what the costs are, which will give us a very good idea. Well, is this even close to being a deal or am I wasting my time, contact and brokers on deals which are never going to work. We also look at the rent and the interest coverage ratio. Now again, this is going to, this is going to be covered in the finance section. And essentially what that means is that you're going to get a mortgage on this property when you refinance well, is it going to meet the interest coverage ratio calculation? That is the rent high enough to cover your mortgage? Again, that is something we can do at this stage. And if it fails that check, then we can essentially eliminate that deal at this particular stage because there's no point in viewing something if the deal is never going to stack on paper. And finally, once we have done the desktop analysis, we are only booking in viewings based on a 20% variance. And this is going to be calculated by the deal analyzer for you. What that means is that essentially, let's say you're looking at a property which is on the market for a £100 thousand. Now, if it's on for £100 thousand and your deal analysis, your desktop analysis says, well, for if you buy for £80 thousand, then it's a great deal that criteria works. Everything works. Then because, because it's on for a 120 per cent difference means anywhere from 80 thousand to 120 thousand. So it is on, for 120 per cent down is 1820 per cent, up is 120. You're, you're, you want to be within that range when it comes to viewing stuff. To give you an example, let's say you have to buy for £80,000.1, £100 thousand property to make it work. Now, that's okay because you might be able to get a £20 thousand discount. You're still within that 20 per cent range, so that should be okay. But let's say a property is on for £100 thousand. And your deal analysis says, Well, you'd have to buy it for £40 thousand to make it work. Now, if it was on for a 100 and you have to buy it for 40, that margin is so big that it says 60, 60% discount is very, very unlikely. You're going to pull off a 60% discount. So I personally wouldn't waste my time viewing stuff are on the hope that, well, I'll get a 60% discount, whereas a 20% margin and a lot more realistic. So I only view properties. If the price I want to pay, the price I want to buy the property add is within 20 per cent of what is currently listed at. So if my analyzer says, I can buy it for £80 thousand and it's one for a 100. Well that's, that's a 20% difference because if you're at a 100, if you reduce by 20 per cent, you are £80 thousand. So that's okay. You want to be within that range, but there's no point in viewing stuff where essentially if you go to view it and you need a 40% discount of 50 per cent discount is so unlikely that you might end up burning a lot of your time. Again, that's going to be calculated for you by the dealer analyzer and that's going to be covered in the deal analysis section. But that's something to keep in mind that we're only viewing stuff where you only need up to a 20% discount, which is, which is something you can pull off. And beyond that, I think the chances of a deal going through a bit unlikely you could view it, but I think most of the time you will end up wasting a lot of your time. And if you want to have a streamline process whereby you're not wasting a lot of your time on stuff which is never going to work. I would stick within that range, which has only abused out where you need a maximum of a 20% discount. So if all those texts paths, we then move on to the next stage. 23. Viewing: Now, at the viewing stays, there are a few different things to do. The first one is you have to look at the condition of the building. So you'd have to look, well, are there any structural issues? So for example, there's a building have any very, very obvious cracks on the front on the size of a property leaning sometimes sometimes the building isn't exactly a straight. It's not exactly like the Leaning Tower of Pisa, but sometimes you do get properties where the floor is slightly uneven and it's very noticeable. And again, there's clearly some sort of issue with their land or some sort of issue, or if there's massive cracks outside, again, the building is in bad condition and it might be structural issues, it might even be cleanliness issues. For example, if you walk into a building and the maintenance is really bad as very dirty, it doesn't look nice. Again, that is good to have an effect because if you rent their property out, you buy it, you might convert it. You might add rooms. When it comes to renting the property out. It might be hard to rent out because people might not want to rent in a building which is very, very not maintained well, essentially. So two main things to look out for. Are there any issues with the building structurally? And that will be very, very obvious because when you're looking at an apartment building or even a house is very, most of the time is obvious to see if there's any big issues, and most of the time is not as generally, a very small percentage of cases have some sort of big structural issue. And the second one is, well, the cleanliness of the building. This typically applies more for flat and apartments as opposed to houses, because with the house you're going to clean it anyway. But because there's communal areas in apartments which you have no control over is something you want to have a look at. The second thing you want to do is you want to make sure that you check the layout is as per the floor plans, because sometimes the floor plans don't show you odd cupboards and pillars and these random things in corners, which might mean that you can actually convert from a one bedroom into a two bedroom or a two-bedroom house into a three-bedroom house because the floor plan didn't show you these tiny thing. So you just want to make sure that if property is exactly as it shows on the floor plans and when it comes to converting, it should be easy. Sometimes you have these built-in cupboards and so on and so on which you can take account. And but because they're eating into the room, it might make it hard to convert it again, doesn't happen all the time, but it does happen sometimes. So it's something to be aware of. The next thing you want to do is this has four flats only that you want to ask the seller, does a property have communal heating? If the property has communal heating, what that means is that the central heating system for the entire building runs off one big system. What that means is it becomes very hard to replace radiators or move the positioning of radiators. Now, this generally is not going to be too much of an issue even if you keep the radiators where you are. But it's something useful to know at that particular stage, which is, well, do we have the options to move radiators or do we not have the option to move radiators is very, very hard if it's a communal heating system because everything is connected to one place and it can become very expensive if you want to move radiated into different rooms. But it's not going to kill a deal, but it's just something useful to know if you are viewing a property. The next thing you want to know is the location of the boiler. The boiler is typically in the kitchen and again, the boiler can be very, very hard to move. There's something you can clarify when you build a depending on the building, typically apply more so for a flat as opposed to houses, but when it comes to the location of the boiler, that's something you want to know where it's located because sometimes it can be hard to move. And if that is going to impact your layout, then you might have different considerations. Which is, you might take the boiler out and you might just essentially putting electric system in the entire property. And this way, you do not require a boiler. That might be the other solution. Again, it's not something which will kill a deal, but it's something useful to know. Well, where exactly is the boiler and insist if it's going to impact a layout. If the boiler is in a cupboard in the hallway, That's amazing because it will essentially just remain there or if it's in a bathroom, again, no issues at all because it can just remain there. But if it's in a kitchen, which is then going to be turned into a bedroom. It can be a bit of a problem. But even then we have solutions. I can convert it into an electric system which will not impact your two mites. So now nothing, nothing which will kill a deal, but again, useful to know at that particular stage. The next thing you want to do is you want to be taking pictures and videos of the property. Now, one of the reasons you want to be taking pictures and videos of the property is one for your own records. So when you go in later and analyze a deal, you remember exactly what the property looked like, but more importantly, you can also send that to your builder and send him all the pictures and videos and just clarify, well, can I turn this property in? Can I convert this by adding bedrooms? Can I move the kitchen? Can I move the bathroom by having detailed patient and do tills videos, you don't have to necessarily bring the building with you or organize a second viewing. And it will give you a very good idea and the builder can confirm, yeah, that should be all fine. That should be easy to convert. And by looking at pictures and videos, they can only give you a rough cost estimate, which is very, very helpful when it comes to analyzing your deals. So take plenty of videos, take plenty of pictures to make sure you've you've you've seen the whole property and gotten clarity over roughly what it's going to cost. And second, that should there be any issues in converting this property? Now, finally, this is a private property and this is a private apartment, private flat. Then you also need to do the free holder consent state and you need to have a look at the free older consent and just verify that well, are there going to be any issues in order to convert this property and add bedrooms? Now, there is going to be a whole video section on this in exactly how to do this. And essentially what you want to do here is you want to clarify, well, are there going to be any sort of issues or with a free holder have any issues in us turning this property and adding a bedroom? 24. Deal Analysis Demo: Now when you're doing the fault analysis from the same deal, everything actually remains exactly the same as the desktop analysis. The only difference is you need the exact number for the Reef app cost. And this is something you can get for you and builder. And you also need the exact numbers for your bridging cost when it comes to the loan to value is and all these sorts of things. And all you have to do is if you want to, you can simply, for example, the estimate is £226 thousand. If you, if in reality it's actually £224 thousand, you can simply delete this and have £224 thousand and input the exact figures in there. So any changes you want to make, you can simply just making there with the exact cost. So you have to do that for their refurbish. You have to do that for all of the fees when it comes to bridging finance and any fees when it comes to your interior designer. And finally, your fees when it comes to mortgages. So what is the loan to value getting? What is a mortgage rate? And are there any arrangement fees, all those sorts of things, evaluation fees and so on and so on. So the desk job analysis is actually very, very straightforward. All you have to do is make three changes, which is the reverb cost, the bridging loan fees, and also the mortgage fees, and maybe even some minor things here and there. The interior design cost, but that's not going to make too much of a difference anyway. Once you have changed those numbers to exact numbers, the rest is exactly the same. The deal analysis remains exactly the same. You can press this check button to work out well, I'd have the prices changed slightly, but again, they should be very, very similar because these estimates generally are pretty, pretty accurate. So that is how you do the full analysis, which is, it's just one added step compared to the desktop analysis is very, very simple to do, not a great deal to do there. You simply have to get these costs from your, from your Power Team, from your team, and simply input those and just see if there's any slight differences in the final numbers. 25. Offer: Now at the offer stage, there are essentially two main things. The first one is you calculate the purchase price based on your strategy, which is either a flip or hold. So essentially once you've decided, well, I'm going to be holding onto this property or flipping this property. The deal analyzable tell you, well, this is the price we need to purchase this property add in order to make sure that this means the deal criteria. Now, if you remember back to the deal criteria, the deal criteria was that if you're flipping a property, you want to be making at least a 20% margin. Or if you're holding a property, you want to be making at least 2.5 times the ROI of a traditional deal. The deal analyzer will calculate that for you and it will tell you the purchase price you need to buy the property add in order to make that deal work. You then calculate the offer price for negotiation. Now this is going to be covered more than the negotiation section, but for the time being, which you need to know is that, let's say our properties on for a £100 thousand. Now your purchase price might be £80 thousand. Meanwhile, at £80 thousand is a good deal and you'll buy a thousand pounds. But you don't want to start a negotiation. 8£8 thousand you want to start a negotiation probably 10% lower than that. So you have a bit of a margin in order to work your way up. So this is going to be covered a bit more than negotiation section in terms of how to negotiate deals. But for the office stage, that is essentially all you have to do, which is you're pulling the offer out, which is slightly lower than what you actually wanted for negotiating and hopefully getting that deal done. 26. Why Negotiate: So in this section we're going to be covering negotiation. And it's going to be broken down into three main components. The first one is, well, why negotiate? Why is negotiating important? The second importance of deal flow. Lastly, how to negotiate? So if you look at the first one, well, why negotiate? One of the main reasons you should negotiate is because money is made when you buy a property. So for example, what that means is that if you can actually buy your property with a discount built-in already, then you already have some added value. Now, as we mentioned before, you don't necessarily need a discount, and you don't necessarily always have to get a discount. But a lot of the times when you're buying property in order to make you a deal work, you typically do need a small discount. That could mean 5%, 10, 15% percent. And if you can get their discount, let's say you get a 50% discount. Let's say it's a £100 thousand property, you get 15% discount, which means £15 thousand. You've essentially made £15 thousand without really doing anything just by negotiating. So that is what people mean when they say money is made when you buy a property. Because if you can get a good deal with a discount, you make money for that reason. The other reason we will say money is made when you buy a property is because if you analyze a good deal, then the money really is in the fact that you analyze a good deal in that particular property is going to be making money. Money isn't typically made by just buying anything and hoping it goes up in value and so on and so on. So money is really made when you bite. So therefore, you typically need a bit of a discount in order to get the deal over the line. And that's why negotiating is important. The second reason it's important is because it protects you from any downsides. Like we mentioned the deal analysis section, that if you, for example, let's say you buy a property, there's £100 thousand property, you get a 15% discount as eighty-five thousand pounds. If the market was to go down by 10%, 15 percent, you already have a bit of a buffer built-in with your discount, so it protects you from many downsides. So those are the main reasons when it comes to negotiating, why you shouldn't negotiate. Because while ultimately, if you negotiate, you can end up with a much, much better deal, you can make a higher return, you can make a lot more money. 27. Importance of Deal Flow: Now the second thing is the importance of deal flow. The first thing you need to do is build a pipeline. And the reason you want to build a pipeline is because you never want to be looking at only one deal. The reason you never want to be looking at one deal and you want to build a pipeline is because if you're only looking at one deal and you have nothing else on the table. When it comes to negotiation, it does become a bit emotional because you really want to do your first deal. You want to get something, you have the line, you're just, you're keen to sort of get moving and you will typically end up buying a deal or getting into investment, which isn't necessarily the best deal because you're emotionally tied because you just want to get something over the line. Whereas when the agent starts and negotiate and this auto play their games, at the same time, you become a bit too emotionally tired and you might end up doing a deal which isn't actually that great. Whereas if you're looking at 20 deals, you don't mind if one of the deals don't work, how to have 567 of them don't necessarily work out because you still have another 15 to look at. So you're not emotionally tied to one. So that is a reason you should be always looking at a lot of deals as opposed to just one particular deal. Because if you're looking at 20, you will never get tied to one in particular. You'll be always looking at different deals. If the agent starts playing games. 28. How to Negotiate: How exactly do you negotiate? How do you negotiate a deal? Now the first thing is when it comes to the seller, you want to know what the vendor situation is. Now, for example, if the property has been on the market for a long time, if the price keeps coming down again and again, you know, that person is motivated, or if it's, for example, the agent, the agent has given you any insight as if they are motivated. If they aren't motivated, if you have those insights, if you understand their problem better than you can negotiate. So for example, let's say someone has to leave the country and then you'd have very, very quick sale. If you offer them a quick sale is serves. It's a win for them because they get their money quickly. And it could also be a win for you because you get a bit of a discount for giving them a very, very quick sale. Where's, there might be other people who might give them a higher price, but they might take a lot longer to complete and they might not have the time to wait around. So by knowing what the vendor situation is, you can normally gauge to some degree as if to, as to what can I get a deal here or can I not get a deal here? The second thing you want to look at it is you want to look for any price changes using property log. So the property Locke software will tell you if there's been any sort of drops within the price. For example, if the price keeps dropping again and again and again, that will typically indicate that the person is motivated. They want a quick sale purely because, well, again, the price is dropping, dropping and dropping. And that person, you might be in a much, much better position to negotiate with them since, again, they might have won a quick sale. So you're serving you're giving them what they want, which is a quick sale and you're getting what you want, which is a slightly lower price for the convenience which are giving them, which is a much, much faster sale. And nothing you can bring to the negotiation is you can highlight any sort of issues. Now, this could be any sort of mortgage issues which are which have been highlighted. There could be any sort of issues with the solicitors report. It could be market issues. So at the time of recording this, again through COVID-19 and again, that could be an issue that you could use in order to negotiate. So when you look at the solicitor report, as mentioned before, we had a property which had a right to buy restriction. And because this property had a restriction, as Solicitor highlight this restriction. And we were able to negotiate a price because a negotiated discount, because with the restriction in place that property isn't as desirable to lenders. And if there's no undesirable to lenders, there's less lenders are looking at that particular property. So because we knew of this issue and we highlight this issue, we were actually able to get a discount because that issue was essentially in place. So by bringing up these issues, you have a valid reason for getting a discount. You what you can't do is you can't just say, I'm looking to buy this property. I know it's on for a £100 thousand, but I'll pay you 70. Like there has to be some reason for you to ask for a discount. And these are some of the reasons which is you can highlight any sort of issue. You can highlight a market issue like COVID-19, or you could highlight while we might be getting into our recession and therefore, I want, it's an investment for me. I want to be on the safe side. And again, that's a very valid reason for asking for a discount. Or it could be something as simple as you could say, well, you know, I'm an investor. I'm going to buy this two-bedroom house, ten into a three-bedroom house. The agents, you've said to me that if I buy it for if I buy the two-bedroom house is worth a £100 thousand. If I turn into a two-bedroom, it's only a £150 thousand, but I'm an investor, I need to make a bit of money in the middle as well. Otherwise, there's no point in tend for me to make any money. I need to buy the £80 thousand. Otherwise I can't make any money. You can even show them your numbers and you can say, well, here are my calculations. And if you look at my calculations, I can't make any money at £100 thousand, I can make money at £80,000.85 thousand pounds, so I'm happy to pay that. The point I'm trying to make is there has to be some sort of valid reason for negotiation. You have to give some sort of justification. They can't be. Well, this, this is the number I've come up with. This is the number I'm going to pay. It has to be some sort of valid reason, market uncertainty. I'm an investor, I need a bit of a margin, otherwise it doesn't work for me. Here are the numbers or it could be any sort of issues highlighted by the solicitor. Now, another way you can negotiate is through the law of time investment. Now, what that means is generally, as the deal goes on longer and longer and longer people are more willing to negotiate and more willing to go back and forth when it comes to this type of stuff. If you call the agent and you've never seen the property and you say, Well, it's on for a 100, I'll buy for 75. They, they might think, well this person is more serious than all that interested. Whereas if you go and view it and you sort of take your time with it and you come back and analyze. Maybe you email the agent for some comparables once you've had a bit of a back-and-forth and everyone's a lot more invested in the deal, then you can ask for a discount and it will be much better received. And the analogy I always use is, let's say you're watching a movie at your home on Netflix, on a TV, or however you're watching a movie on your phone. Now, if you're ten minutes into the movie and you don't like the movie, What does it do? Everyone just tends to move you off, not interested. But now let's say you, you're watching the same movie at the cinema, your ten minutes sin. What happens then? Well, ninety-nine point nine percent of the time, people don't end up leaving, they end up just watching the whole movie. And whereas, if there were at home, they wouldn't just change the channel. The reason you don't just leave the cinema is because you're invested, paid for the ticket, you've got ready, you've made a plan, you've driven, you parked your car, you're invested in the project a bit more. So in a similar way, if you're going to negotiate, negotiate as far down the line as you can as opposed to in the first five minutes because then everyone knows you're a lot more serious. You've gone back and forth, back and forth a few times. And the later you can leave it for negotiation generally the easier because everyone knows that you're serious and you're on a table and you want to get this done. So it will be much, much better received the longer you can leave it compared to earlier. Now, once you've seen the property, view the property after a day or two, then you can just make the offer. I'm not saying drag it out for no reason. It's better to leave it later than earlier. And the final point when it comes to negotiation, what do you want to do is you don't want to buy into the agents tactics. This is why the deal flow is very, very important because the agents, they will play their games. They will say, Well, there's a lot of people interested. We've had a lot of offers. There's a lot of interest. You have to increase your offer or we have to know by this date because essentially what they're trying to do is they're trying to build a picture that there's a lot of people after this property is very, very good properties, so on and so on. And they will do the best they can in order to rush you into an offer in something except which is higher than do you want to pay by, essentially by making it feel more scarce? I e, this is the only protein like this. This is the only one. There's loads of people after this. And it's funny because every time you make an offer on something, as soon as you make an offer, this is property might have been on the market for ten years as soon as you make an offer on air, apparently everyone's made an offer on this, so don't worry too much about that. Don't buy into their games. Always stick to the numbers. That's what you have to do is stick to the numbers. And the second thing you have to do is you have to make sure you have a lot of deal flow. Because if they stop playing their games, which they will, because this is how this industry works. When they start to play their games and say, well, this is happening. There's too many offers, there's so many, it's so much interests. You stick with your numbers and if it doesn't go through, it doesn't go through. You simply move on to the next 19 or the next 20 or the next 25. Never be in a position where you're only looking at one deal because when they started play their games and start to build competition, then you become very, very emotional about the investment decision process. And that's something you don't want to do. You want to stick with the numbers at all time? Now, talking about numbers, how do you calculate the numbers when it comes to negotiation? So the first thing you want to do is once you know what your purchase price is. So let's say the properties on the market for £100 thousand, the deal analyzer has told you at £90 thousand, this is going to be a good deal. So you know, you want, you don't want to be anywhere above £90 thousand, you want to be 90 and below 90 is where the deal works for you. So the first thing you want to do is you want to start 10% lower than the offer price and the purchase price. So you want to be, for example, if it was on for 100 and the deal analyze it says £90 thousand is what you need to, for this to be a good deal. You want to start at these ten per cent lower than that. So you want to start at least a £100,000.9 thousand pounds of what you want to pay. You want to start at 10% lower, so you want to be at £81 thousand. The reason for that is because you want a bit of a gap. You can work your way up within negotiations. Now with the gaps, What do you want to do is you want to increase your offers in increments. Increments which gets smaller and smaller. What that means is, now, let's say to give the numbers very, very simple. Let's say a property is on for £150 thousand and you offer a 110, sorry, a 100. And they say no, you say 110, they say no. You say 120, they say no. You say 130, they say no. Then everyone knows the next offer is going to be 1 fourth, because every single time, all you're doing is just adding 10101010. And it's very obvious what you're doing, which is you're trying a very low offer and just adding ten every single time. And once you get to 130, they know the next one is 1 fourth, because you keep increasing intense. But what you should do is you should actually increase by less every single time. So again, let's say it's one for 150. And you want to start from 100. You say a 100. If they say no, next time you go 110, they say no. So now because you increase your offer by 10 thousand, next time you want to increase by less than 10 thousand. So next time you might only increase by 7 thousand. So you say a 100110, no, a 117. Okay, so now you've increased by 7 thousand. Next time it has to be less than 7 thousand, so it might be 4 thousand. So you go a 100 hundred, ten hundred, seventeen hundred twenty one hundred twenty four. So what's happening is because the gap, because it offers are getting smaller and smaller and smaller every time. It subconsciously signals that you're getting to your end point. Your offers a kind of like this. They, the gaps are getting smaller and smaller and smaller and smaller and you're converging to your final price. But when you go 10011020304050, because the gaps are exactly the same as subconsciously says to the person, well, this person is key. It's going to keep increasing intense and he's going to keep increasing the offer by 101010 every single time. You want to make sure that your increments are getting smaller and smaller. And that is something which is going to be calculated by the deal analyze this system for you in the deal analyzer. So that is how you negotiate, which is you work out where you want to be. You start lower and you work your way up and you always make sure you have a lot of deals that you are looking at. So you never get emotionally attached to one. And this way, you can focus on the numbers alone and get the deal over the line at the price you want. 29. Offer accepted: Now, once the deal has been accepted, this is the process. Once the offer has been accepted and you're good to go and your you've got your first deal over the line. So again, if we look at the funnel is very, very simple from there. Once the offer is accepted, then goes to the solicitors, you end up purchasing the property, the work started their property and essentially the work is finished. But if we do a deeper dive into all of these stages as to what is involved, then you will get a better picture of what is actually easier to do at each stage. Now, once the offer has been accepted, these are the things you have to do. The first one is you have to inform the builder once the offer is accepted, you will typically have about six weeks, eight weeks, until you get the keys to the property. That is how long the process normally tastes. And so you can let it build to know that within about six weeks, within about eight weeks, you will have the keys to the property you want to do the work. Now, it's very important you tell the builder and in as much advanced notice as you can, because that way the builder will sort of work out well. This is, I've got this work starting in six to eight weeks and he will make sure yes, tiny for you. What you don't want to do is get the keys and then you're looking for a builder because that might take a month, I might take a few weeks, could even take more than a month. And suddenly you're delaying the project. And if you are in bridging, finance is costing you money while you're on that. So you want to make sure the builders builders lined up, he's good to go. So as soon as you get the keys, he can start doing the works. The next thing you want to do is you want to inform the interior designer. Now if you're using an interior designer, this is something you would do at this stage because at that stage, the interior designer would start to come up with a scheme, the colors and so on and so on. So again, by the time you get the keys, you know, all the exact colors, you know where everything is going to go, because you can then take that plan and give it to the builder so he knows where the sockets are going to go, what color paints are, one and so on. So if you're using a designer, that is something you would do at that particular stage. The next thing you want to do is you want to inform your solicitor. Now, this is something which is going to be done by the seller anyway, but it's something you can also do, which you can get in touch with your solicitor or say you've had an offer accepted and they will sort of take the process from there. So there isn't a great deal you will have to do. They will let you know the information they require from you and you essentially take it one step at a time as the Solicitor makes progress with the project. And finally, you want to inform your broker. You want to let them know that the offer has been accepted, is you're going to be going through with this project. 30. Exchanged & Completed: Now, once the property has been purchased, so essentially what that means is that your solicitor has done the convincing you've exchanged in a property, you've completed their property, and now you are you own this property now your name is on the title or your company's name is on the title, you own the property. At this stage, there isn't a great deal to do. You essentially have to collect the keys from the seller, from the estate agent, whoever is sold you the property, you take the keys and you give them to your builder. This way you build, we can start doing the work to the property. And so I'm making progress with a reverb. 31. Refurbishment Starts: Now, once the refurbishment has started, once the builders are in there, you can start applying for building control. Now there is going to be an in-depth video on how to apply for building control, but that it will be done at this particular stage to make sure you have everything is done in accordance to building control, so there are no issues with the property. 32. Refurbishment Finished: Now the next idea is when the property refurbishment has been finished. Now, once it's been finished or are three main things to do. The first one is you have to have a letting agent who can come in and value of their property and possibly even manage it for you if this is something that you don't want it to yourself. So if you want to self-manage, you can essentially self. You can start the process yourself or letting this property out. And there's going to be an in-depth video on how to do that. All you can get a letting agent in there who can essentially render property out for you and they can manage everything for you. But that will be done once the reverb has been finished so they can see what their property it looks like. They can take pictures and so on and so on. The next thing you want to do is you want to take pictures of the property. Again, this will be typically done when a reefer was finished. If you're going to be doing staging and furnishing the property, the pictures will be done after that. And again, the reason you need pictures as if you were to let the property out yourself, of course, you will require pictures. But again, it's also good just to build up your portfolio of the projects you've done. Because if you're going to do more, more products in the future is always good to show people what you've done previously so they can get an idea of the type of projects that you do. And finally, you want to start the mortgage process. Now with every mortgage process, essentially, once the Reef app has been done and you've essentially owned the property for six months. Now, the roofer might be done within two months or three months. We still have to wait a tiny bit. So you have to wait till the six-month mark. And then we essentially start the mortgage process. And that will typically be done after the reverb at some stage of the reverb and we apply for a mortgage so we can pull a lot of our funds back and essentially use that money for the future projects.