It seems like almost everyone is learning how to cash in and make a buck from the current property market craze. Home buying and selling is hot right now, and many are learning how to turn real estate investing into a gold mine. But unless you know the basis of property investing, you can’t even get started.
Many people share the dream of wanting to work for themselves alone, being their own boss, making money their own way. Property investing is a great way to make this dream a reality, but you have to know what you’re doing. You have to know the right knowledge, and learn how to play the game. Only then can you learn to enjoy the pay-off. The more you learn about property investing, the bigger and better your pay-offs should be. That’s what makes this type of investing so lucrative and exciting.
When you learn to read, you start with your A-B-C. And when you want to start in property market, you have to learn the A-B-C of property investing. This refers to the property market, and it only means knowing the condition of properties in any particular area. For instance, in a single city or area inside a city, you’ll want to know how much properties are selling for, how many properties are available, which neighborhoods are popular. You should know as much about the area you’re working in as possible. Know where homes are selling and where they’re not selling, and know what sort of price those homes are getting. This is a great way to get a feel for "this market" and learn what kind of money you can hope to bring in. Knowing your area is a very basic rule of investing property.
Once you know how the market looks in your area, you can get down to the deep roots of property investing. The trick to enjoy success in this market is in learning what people want. What are home buyers looking for? What do you look for, when you buy a home? The kitchen and bathroom areas are very important, and many property professionals say that these areas are what sell homes. Keep costs down as much as possible, but if you’re going to splurge then put the money into these areas of the home. You’re likely to get the most money back from this investment. Learn more about more inexpensive materials, such as poured concrete instead of granite, and laminate flooring instead of hardwood, to learn how to make a home beautiful for less. This is one of the basics of property investing – knowing how to walk the fine line between spending too much and too little.
It’s important to work out a budget, plan for disaster, and keep on track as much as possible. Have an idea of what you want to get out of each property before you sell, and don’t put more into any one property than you think you should. If you won’t get that investment back, don’t put it in. This is one of the basics of investment property – staying on track with the budget. Remember, the less you make from the sale of the property, the less you make from your investment.
No Perfect Deal, Only Perfect Timing
We have previously discussed about the fact that the perfect deal does not exist and that we can fall into a state of procrastination if we try to find the perfect deal with each purchase.
The most important thing to remember is timing and the one thing that you will learn is that now is the right time. Now is the only point that you can take advantage of a deal.
Once you have assessed the current market and chosen the appropriate strategy you can then go about finding a property.
The moment you say that NOW is the wrong time to buy you are actually saying either, you don’t know what you are doing and therefore you need help or, you are saying you know how property works in a giving market but in this market right now you don’t know what to do and therefore need help.
Either way you require further property education and assistance.
Every successful property investor that l know will tell you that the time to buy is always now. You will always find a reason of why now is not the best time to buy but those who succeed in property are the ones that overcome this procrastination and buy.
I am not however saying to jump at the first opportunity you see. This is why l have my 3 month rule. lf you haven’t purchased something within 3 months, you are procrastinating. Anything less than 3 months and you may not be doing your due diligence.
So the 3 steps are:
So quite simply the perfect time to invest is - always NOW.
Live with passion,
Brett Wood
---------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The most important thing to remember is timing and the one thing that you will learn is that now is the right time. Now is the only point that you can take advantage of a deal.
Once you have assessed the current market and chosen the appropriate strategy you can then go about finding a property.
The moment you say that NOW is the wrong time to buy you are actually saying either, you don’t know what you are doing and therefore you need help or, you are saying you know how property works in a giving market but in this market right now you don’t know what to do and therefore need help.
Either way you require further property education and assistance.
Every successful property investor that l know will tell you that the time to buy is always now. You will always find a reason of why now is not the best time to buy but those who succeed in property are the ones that overcome this procrastination and buy.
I am not however saying to jump at the first opportunity you see. This is why l have my 3 month rule. lf you haven’t purchased something within 3 months, you are procrastinating. Anything less than 3 months and you may not be doing your due diligence.
So the 3 steps are:
- Check the market
- Check your strategy
- Invest to the market and strategy - NOW
So quite simply the perfect time to invest is - always NOW.
Live with passion,
Brett Wood
---------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Property Sleep Test
To me, after many years investing and with dozens of properties in my portfolio, the actual act of investing still revolves around what I like to call the “sleep test”. Can I invest in this property and sleep a full uninterrupted night without worrying?
If the answer is yes then I’m ready to invest.
It allows me to make a decision based on a sound and calm mind and limits the “great salesperson” factor. By that, I mean that it gives me some space and some to time to halt a deal I might have rushed into.
In fact, this is such a useful technique, I use it for any purchase above £300.
I do my research, choose the item, do everything I need to buy it, but I don’t. Instead, I go home and sleep a full night. Then in the morning if I still want it I will buy it. I can’t tell you how many times I’ve woken up with a fresh perspective and not made a bad purchase. It’s amazing the difference a day (or a night in our case) makes.
So, if you couldn’t sleep a full night then either try to drink less coffee or ask yourself am I lacking education or detail in some area? If you are, then you need to rectify this prior to investing. If you’re not lacking in education or detail then perhaps it is not the right deal for you.
Remember, the greatest of deals normally only comes along once a day. Think about it. The practical test of this is that no matter how good the deal is, always, always delay your decision until you have slept on it until you are sure that you understand the deal. This will normally only come with experience.
If you wake in the morning feeling enlivened and fresh then you have passed the sleep test. If you wake feeling like you just went to bed then perhaps it is time for more consideration? The most important lesson in property investment is this: you are responsible for each and every one of your own decisions.
Live with passion,
Brett Wood
------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
If the answer is yes then I’m ready to invest.
It allows me to make a decision based on a sound and calm mind and limits the “great salesperson” factor. By that, I mean that it gives me some space and some to time to halt a deal I might have rushed into.
In fact, this is such a useful technique, I use it for any purchase above £300.
I do my research, choose the item, do everything I need to buy it, but I don’t. Instead, I go home and sleep a full night. Then in the morning if I still want it I will buy it. I can’t tell you how many times I’ve woken up with a fresh perspective and not made a bad purchase. It’s amazing the difference a day (or a night in our case) makes.
So, if you couldn’t sleep a full night then either try to drink less coffee or ask yourself am I lacking education or detail in some area? If you are, then you need to rectify this prior to investing. If you’re not lacking in education or detail then perhaps it is not the right deal for you.
Remember, the greatest of deals normally only comes along once a day. Think about it. The practical test of this is that no matter how good the deal is, always, always delay your decision until you have slept on it until you are sure that you understand the deal. This will normally only come with experience.
If you wake in the morning feeling enlivened and fresh then you have passed the sleep test. If you wake feeling like you just went to bed then perhaps it is time for more consideration? The most important lesson in property investment is this: you are responsible for each and every one of your own decisions.
Live with passion,
Brett Wood
------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Every person House Rule
Hey guys,
The one thing I have learned from properties that I have owned is that it doesn’t matter how good the deal is, unless you can get a tenant it will soon turn into a very painful financial decision.
That’s why as part of my two laws of property I also say that the property must be able to attract a tenant.
For me this means looking at the mass market in each area and buying houses they would live in. I call this the “Every person” house.
Imagine a ‘bell curve’ diagram. Poor people live in houses at one end and rich people live in houses at the other. The every person lives in the middle and makes up by far the biggest proportion of the market.
Now I never buy where poor people live. The tend to not pay the rent, they wreck the house, the don’t treat it like a home and I end up with void periods or added costs in repairs. This is totally against my Set and Forget philosophy. Now I am not going to get into a political argument about the poor, remember I am an investor and as such expect a return on my investment, if I was a charity they I might think otherwise.
A great case in point is that Simon and I attended a Landlords Association course. The morning was spend telling stories of horrific things happening to landlords. The common thread was that every property without question was either a HMO (House for Multiple Occupancy) or a cheap property under about £120K. Not one instance was the property in the Every person category.
In the UK I have been associated with over 1000 property sales and we only have once instance of a ‘tenant from hell’. Sure we have had people miss payments, leave damage but in all cases they have fixed up the problem or the deposit has covered the damage.
Now I don’t buy where rich people live. When times are good everything is fine but when times are tough they tend to go and live with the every person and I am left with void periods. Again this is against my Set and Forget Philosophy.
Obviously the Every person house will change between areas — London city center would be a 1 or 2 bedroom apartment valued between £200,000 and £350,000 and Newcastle would be a 3 bed terraced house outside the center worth between £75,000 & £200,000.
What I am saying is this buy a house that will have the biggest demand for the area. Stay away from huge mansions or low valued properties but always always buy with good solid fundamentals, the shops, the schools and the transport links.
Always think — I’ll buy this, but who will rent it?
Live with passion,
Brett Wood
Brett Wood is a successful off plan property investor in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The one thing I have learned from properties that I have owned is that it doesn’t matter how good the deal is, unless you can get a tenant it will soon turn into a very painful financial decision.
That’s why as part of my two laws of property I also say that the property must be able to attract a tenant.
For me this means looking at the mass market in each area and buying houses they would live in. I call this the “Every person” house.
Imagine a ‘bell curve’ diagram. Poor people live in houses at one end and rich people live in houses at the other. The every person lives in the middle and makes up by far the biggest proportion of the market.
Now I never buy where poor people live. The tend to not pay the rent, they wreck the house, the don’t treat it like a home and I end up with void periods or added costs in repairs. This is totally against my Set and Forget philosophy. Now I am not going to get into a political argument about the poor, remember I am an investor and as such expect a return on my investment, if I was a charity they I might think otherwise.
A great case in point is that Simon and I attended a Landlords Association course. The morning was spend telling stories of horrific things happening to landlords. The common thread was that every property without question was either a HMO (House for Multiple Occupancy) or a cheap property under about £120K. Not one instance was the property in the Every person category.
In the UK I have been associated with over 1000 property sales and we only have once instance of a ‘tenant from hell’. Sure we have had people miss payments, leave damage but in all cases they have fixed up the problem or the deposit has covered the damage.
Now I don’t buy where rich people live. When times are good everything is fine but when times are tough they tend to go and live with the every person and I am left with void periods. Again this is against my Set and Forget Philosophy.
Obviously the Every person house will change between areas — London city center would be a 1 or 2 bedroom apartment valued between £200,000 and £350,000 and Newcastle would be a 3 bed terraced house outside the center worth between £75,000 & £200,000.
What I am saying is this buy a house that will have the biggest demand for the area. Stay away from huge mansions or low valued properties but always always buy with good solid fundamentals, the shops, the schools and the transport links.
Always think — I’ll buy this, but who will rent it?
Live with passion,
Brett Wood
Brett Wood is a successful off plan property investor in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The 3 'P's Of Your Mortgage Application
The actual process of receiving a mortgage offer is quite simple. It hinges around three key points. As long as you get the tick at all 3 stages there should be no reason not to get your mortgage approved.
The stages or 'P's are simply - Person, Property and Proposition
The first to remember is that a cross on any of the 'P's will mean a decline.
Person
This is based firstly on your credit score from your credit file. Your credit score is a function of any number of bits of information about your previous and current financial history. Each of the bits of information is given a weighting to come up with your credit score.
This is then used to make a decision. It may be 'Approved', 'Referred' or 'Declined' at this point. This stage is a computer based decision.
If you are 'Referred' it simply means that your application has to go to a real person in order to be approved. Referred is nothing to worry about. Unless you have a premium credit score or are perhaps known to the funder you are likely to get referred.
A decline at this point is a bad thing and in all honesty will mean you need to take a serious look at your credit file. There is obviously something seriously wrong with it.
Property
The biggest determinant to the success of this aspect is the property survey or valuation. In the case of a Buy to Let investment the survey has two vital pieces of information that will make or break the deal - the 'property valuation' and the 'rental valuation'. In the case of a residential home it all rests on one thing only - the property valuation.
Ok so I am not going to go into more detail than to say as long as you get ticks on both the property valuation and the rental valuation you are almost there.
The final thing is all of the other variables and comments on the report. The trick to this is to consider what a lender would consider a good risk. Anything that may prohibit a quick sale will be viewed negatively.
Proposition
The final step is the proposition. This comes down to the lending criteria of the funder. There are so many criteria each lender has for their products; in fact they all supply a booklet for each product.
Now assuming your credit file and valuation are fine the Underwriter will check your supporting documents. This is the point at which they will raise queries which must be answered prior to the final formal mortgage offer.
With all their queries answered nothing should stop you from your mortgage offer.
Lending Prudently:
At the end of the day getting your mortgage comes down to one final all important 'P';
Prudence - quite simply is the funder lending 'Prudently';
As long as the funder can stand up in court if they have to repossess your property and be seen to have 'lent prudently'; they are likely to approve your mortgage.
Think of it this way, if a lender gives a person with no money and no job a mortgage and after 2 months the person stops paying the mortgage. The bank attempts to repossess the property and the person takes the bank to court. In court the bank may run into problems because as the man rightly says 'How could you expect me to make payments on time when I have no job and no money?';
The funders are very aware of this possibility and take many precautions prior to completion to ensure you ability and commitment to repay the amount borrowed.
Live with passion,
Brett
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The stages or 'P's are simply - Person, Property and Proposition
The first to remember is that a cross on any of the 'P's will mean a decline.
Person
This is based firstly on your credit score from your credit file. Your credit score is a function of any number of bits of information about your previous and current financial history. Each of the bits of information is given a weighting to come up with your credit score.
This is then used to make a decision. It may be 'Approved', 'Referred' or 'Declined' at this point. This stage is a computer based decision.
If you are 'Referred' it simply means that your application has to go to a real person in order to be approved. Referred is nothing to worry about. Unless you have a premium credit score or are perhaps known to the funder you are likely to get referred.
A decline at this point is a bad thing and in all honesty will mean you need to take a serious look at your credit file. There is obviously something seriously wrong with it.
Property
The biggest determinant to the success of this aspect is the property survey or valuation. In the case of a Buy to Let investment the survey has two vital pieces of information that will make or break the deal - the 'property valuation' and the 'rental valuation'. In the case of a residential home it all rests on one thing only - the property valuation.
Ok so I am not going to go into more detail than to say as long as you get ticks on both the property valuation and the rental valuation you are almost there.
The final thing is all of the other variables and comments on the report. The trick to this is to consider what a lender would consider a good risk. Anything that may prohibit a quick sale will be viewed negatively.
Proposition
The final step is the proposition. This comes down to the lending criteria of the funder. There are so many criteria each lender has for their products; in fact they all supply a booklet for each product.
Now assuming your credit file and valuation are fine the Underwriter will check your supporting documents. This is the point at which they will raise queries which must be answered prior to the final formal mortgage offer.
With all their queries answered nothing should stop you from your mortgage offer.
Lending Prudently:
At the end of the day getting your mortgage comes down to one final all important 'P';
Prudence - quite simply is the funder lending 'Prudently';
As long as the funder can stand up in court if they have to repossess your property and be seen to have 'lent prudently'; they are likely to approve your mortgage.
Think of it this way, if a lender gives a person with no money and no job a mortgage and after 2 months the person stops paying the mortgage. The bank attempts to repossess the property and the person takes the bank to court. In court the bank may run into problems because as the man rightly says 'How could you expect me to make payments on time when I have no job and no money?';
The funders are very aware of this possibility and take many precautions prior to completion to ensure you ability and commitment to repay the amount borrowed.
Live with passion,
Brett
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped 1000s of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
In Search Of The Perfect Property Deal
One of the most damaging limitations that a beginner investor faces when building a property portfolio is the dreaded perfect deal.
As if trying to find the a property wasn't enough the budding investor now has to find the perfect finance, the perfect solicitor, the perfect area, the perfect rent, the perfect growth prospects, the perfect builder, the perfect sales consultant, the perfect club, the perfect interest rate - everything has to be nothing short of PERFECT.
So how do they achieve this? ln short, you simply don't and despite everyone's best intentions you won't.
I have been in property one way or another for over 9 years l am yet to find the elusive perfect deal. I have however consistently made money from property and built a substantial portfolio of properties, despite every single property that is part of this portfolio being imperfect in some way.
So what's the motto - Be realistic but practical. Do your due diligence using the various guidelines l have suggested to buying, holding and selling property but don't use these as a excuse for procrastination.
My simple 3 month rule applies in these circumstances. lt simply states:
You have 3 months to purchase a property - any more and you are procrastinating, any less and you are not researching.
Practically, this means that you don't have to buy the first property you see, you have 3 months but likewise it is better to buy anything than to sit around waiting for the perfect deal (which if we're honest we'll admit doesn't exist)
I have a very dear friend whom I would love to see successful, he has had a sizable deposit for the past 3 years. When property was galloping upwards he complained that property was too expensive, now that it is stagnate, he complains it might crash.
Despite my best educational efforts and demonstrated performance he is still to own a property. Interestingly enough, one of the first properties I purchased in a development that he also had the opportunity to buy has now gone up £30,000 which isn't bad for a property that costs me £100 per month. At the time I bought it was an imperfect property, funnily enough it still is, but £30,000 isn't bad for “imperfect”.
The real question comes down to one of what really is my first purchase?
Despite my best intentions to find the best deal every deal I also understand that crudely your first property should teach you process and allow you to overcome emotion firstly and secondly it should make you money.
I believe that as long as you get the education & experience under your belt on your first the money will follow.
So be sure to ask lots of questions then you can get onto making money.
Brett Wood is an author and off plan property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
As if trying to find the a property wasn't enough the budding investor now has to find the perfect finance, the perfect solicitor, the perfect area, the perfect rent, the perfect growth prospects, the perfect builder, the perfect sales consultant, the perfect club, the perfect interest rate - everything has to be nothing short of PERFECT.
So how do they achieve this? ln short, you simply don't and despite everyone's best intentions you won't.
I have been in property one way or another for over 9 years l am yet to find the elusive perfect deal. I have however consistently made money from property and built a substantial portfolio of properties, despite every single property that is part of this portfolio being imperfect in some way.
So what's the motto - Be realistic but practical. Do your due diligence using the various guidelines l have suggested to buying, holding and selling property but don't use these as a excuse for procrastination.
My simple 3 month rule applies in these circumstances. lt simply states:
You have 3 months to purchase a property - any more and you are procrastinating, any less and you are not researching.
Practically, this means that you don't have to buy the first property you see, you have 3 months but likewise it is better to buy anything than to sit around waiting for the perfect deal (which if we're honest we'll admit doesn't exist)
I have a very dear friend whom I would love to see successful, he has had a sizable deposit for the past 3 years. When property was galloping upwards he complained that property was too expensive, now that it is stagnate, he complains it might crash.
Despite my best educational efforts and demonstrated performance he is still to own a property. Interestingly enough, one of the first properties I purchased in a development that he also had the opportunity to buy has now gone up £30,000 which isn't bad for a property that costs me £100 per month. At the time I bought it was an imperfect property, funnily enough it still is, but £30,000 isn't bad for “imperfect”.
The real question comes down to one of what really is my first purchase?
Despite my best intentions to find the best deal every deal I also understand that crudely your first property should teach you process and allow you to overcome emotion firstly and secondly it should make you money.
I believe that as long as you get the education & experience under your belt on your first the money will follow.
So be sure to ask lots of questions then you can get onto making money.
Brett Wood is an author and off plan property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
How Do You Create Income From Property?
The question I pose to most of my clients when I first meet them is how do you create income from property? I get many different answers but in actual fact there are only 3 main ways of creating income from property.
Direct property cashflow
Most people associate income from property as being an excess of rent over expenses. Whilst this is one it has one big drawback -- income tax. As you are earning income from your property in excess of expenses you will pay tax on your profits. This is one of the reason we aim for maximum leverage from our property to ensure we avoid income tax.
Selling your property
The other way you can earn large chucks of cash is to sell your property. Doing this you will be liable for capital gains tax on the increase in value over any allowances. The capital gains tax rulings change often so you will need to speak to a professional about this. The benefits of this are that you have cash unencumbered once you have taken into account the tax.
Re-mortgaging Your Property
The final way and definitely the best way of avoiding any form of taxation is to refinance or re-mortgage the property and use the extra capital for whatever purpose. As you are using debt to fund your income you will NOT be subject to income tax or capital gains tax.
In truth all three methods will be employed as you build your portfolio of properties and begin to generate the lifestyle you want.
Brett Wood is an off plan property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Direct property cashflow
Most people associate income from property as being an excess of rent over expenses. Whilst this is one it has one big drawback -- income tax. As you are earning income from your property in excess of expenses you will pay tax on your profits. This is one of the reason we aim for maximum leverage from our property to ensure we avoid income tax.
Selling your property
The other way you can earn large chucks of cash is to sell your property. Doing this you will be liable for capital gains tax on the increase in value over any allowances. The capital gains tax rulings change often so you will need to speak to a professional about this. The benefits of this are that you have cash unencumbered once you have taken into account the tax.
Re-mortgaging Your Property
The final way and definitely the best way of avoiding any form of taxation is to refinance or re-mortgage the property and use the extra capital for whatever purpose. As you are using debt to fund your income you will NOT be subject to income tax or capital gains tax.
In truth all three methods will be employed as you build your portfolio of properties and begin to generate the lifestyle you want.
Brett Wood is an off plan property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Should You Ever Pay Off Your Property?
This question needs to be broken into two questions. Should I ever pay off my home? Should I ever pay off my investment properties?
Let's deal with the home first. Yes you should pay off your home eventually because it is a non tax deductible expense if it relates to your principle place of residence. OK, so that was the accountant speaking in me and since l am a very poor accountant lets put my investor hat back on.
The extension of this answer is that until you have built up a significant enough portfolio to maintain momentum in your portfolio you will have no choice but to leverage your home. I think it is safe to say that most people have a home with significant equity especially if you have owned it more than 2 years. This equity is the key to build wealth.
By accessing this equity and using the leverage of a mortgage on your buy to let properties you can turn £100,000 equity into a million pound portfolio. The sole purpose you do this is to gain the advantage of capital growth. Until such a time as your portfolio self sustains its growth you cannot afford to pay off your mortgage. Once you have developed your portfolio then and only then can you take your principle place of residence out of the investment portfolio.
OK, now the investment properties. You should never pay your mortgage down on these, always opt for interest only because your mortgage balance will stay the same throughout but your value will double, effectively halving and more your mortgage.
When you consider that the biggest challenge with building a portfolio is maintaining cashflow, why would you pay additional money into the property when you know that it's going to double in the next 7-10 years. You are far better reinvesting the cash flow in further property. Long term this more effective use of your time. It also limits the amount of tax you pay.
Brett Wood is a successful off plan property investor in the United Kingdom.His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Let's deal with the home first. Yes you should pay off your home eventually because it is a non tax deductible expense if it relates to your principle place of residence. OK, so that was the accountant speaking in me and since l am a very poor accountant lets put my investor hat back on.
The extension of this answer is that until you have built up a significant enough portfolio to maintain momentum in your portfolio you will have no choice but to leverage your home. I think it is safe to say that most people have a home with significant equity especially if you have owned it more than 2 years. This equity is the key to build wealth.
By accessing this equity and using the leverage of a mortgage on your buy to let properties you can turn £100,000 equity into a million pound portfolio. The sole purpose you do this is to gain the advantage of capital growth. Until such a time as your portfolio self sustains its growth you cannot afford to pay off your mortgage. Once you have developed your portfolio then and only then can you take your principle place of residence out of the investment portfolio.
OK, now the investment properties. You should never pay your mortgage down on these, always opt for interest only because your mortgage balance will stay the same throughout but your value will double, effectively halving and more your mortgage.
When you consider that the biggest challenge with building a portfolio is maintaining cashflow, why would you pay additional money into the property when you know that it's going to double in the next 7-10 years. You are far better reinvesting the cash flow in further property. Long term this more effective use of your time. It also limits the amount of tax you pay.
Brett Wood is a successful off plan property investor in the United Kingdom.His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
New Build Vs Off Plan Property - Which Is Better?
Firstly let's look at how I define each of these terms.
New build is classified as a development that is within 3 months of completion or has completed but has not yet been tenanted. Off plan is a development that is longer than 3 months out from completion or where the property has not moved earth yet.
Now some people may say that off plan is simply property "off the plan" or property which has not begun being built and technically they are correct, but let me explain why I consider it very different.
It's all about structure.
My definition is not really based on time it is based more on the fact that in most cases with newly built property you can exchange and complete at the same or within a short time. This simply means that if you have structured correctly your money will go into the property and come out very quickly, effectively realizing your gain at purchase and exponentially growing your return of investment.
In an off plan scenario you would normally be expected to place a 5 or 10% deposit on exchange and then wait for completion which could be up to a couple of years later. Only at this time could you realize a gain from the property, prior to this it is simply a paper gain.
Hopefully now that you have a grasp of the two concepts we can move on to working out which one presents a better return. After all, that's all that should matter in property investing.
The answer is quite simple — It depends on the market. You need to look what the market is doing. This in property is what we call your strategy meeting the market. Choosing the appropriate strategy for the market
Let's consider two very different property markets and two different types of property and the relative results they achieve. The stagnant market
If you purchase an off plan property that is due to be completed in 18 months time and place a 10% deposit down at exchange, you would expect that because the market is stagnant the property will not increase in value over that period.
So therefore you have paid 10% and made effectively no return over this period but you have also taken a risk that the values, rentals, or market may change making it hard to get a mortgage. No looking so good for our off plan scenario.
On the other hand if you had purchased a new build property you would have paid your 10% deposit and within a short time received your 10% allowance upon successful completion back. Your actual cash tied up will be significantly less than the off plan scenario. This extra cash can then be used to purchase another property.
Therefore if you purchase off plan in a stagnant market you are likely to buy one property as opposed to new build where, for the same cash input you could buy perhaps three times as much property. Clearly in a stagnant market new build is a better proposition than off plan property. The galloping market
The same two properties purchased in a galloping market would mean that the new build is still a decent proposition except that you now have to consider that you have a mortgage to service. It will certainly go up in value more than in a stagnant market and because interest rates are low your cashflow is eased.
Now consider the off plan. You still secure with a 10% deposit but over the course of the build program your property may have increase in value by say 10%. You don't have a mortgage or cash flows to worry about.
Now here's the power of off plan in a galloping market. Say the property is worth £200,000. You place a £20,000 deposit on it. Now if it goes up 10%, it goes up on the entire value (£200,000) not just your deposit so you have just doubled your money before you have even completed. (£200,000 x 10% = £20,000)
So consider the above before you go and get sold a heap of rubbish about how great off plan is.
There is no doubt that in the right market and the right circumstances it is a fantastic proposition but don't caught up in the hype of the sales pitch and thinking that doubling your money before completion is easy. This is where working with a professional portfolio manager will make you job so much easier, they will explain the pros and cons of each decision.
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
New build is classified as a development that is within 3 months of completion or has completed but has not yet been tenanted. Off plan is a development that is longer than 3 months out from completion or where the property has not moved earth yet.
Now some people may say that off plan is simply property "off the plan" or property which has not begun being built and technically they are correct, but let me explain why I consider it very different.
It's all about structure.
My definition is not really based on time it is based more on the fact that in most cases with newly built property you can exchange and complete at the same or within a short time. This simply means that if you have structured correctly your money will go into the property and come out very quickly, effectively realizing your gain at purchase and exponentially growing your return of investment.
In an off plan scenario you would normally be expected to place a 5 or 10% deposit on exchange and then wait for completion which could be up to a couple of years later. Only at this time could you realize a gain from the property, prior to this it is simply a paper gain.
Hopefully now that you have a grasp of the two concepts we can move on to working out which one presents a better return. After all, that's all that should matter in property investing.
The answer is quite simple — It depends on the market. You need to look what the market is doing. This in property is what we call your strategy meeting the market. Choosing the appropriate strategy for the market
Let's consider two very different property markets and two different types of property and the relative results they achieve. The stagnant market
If you purchase an off plan property that is due to be completed in 18 months time and place a 10% deposit down at exchange, you would expect that because the market is stagnant the property will not increase in value over that period.
So therefore you have paid 10% and made effectively no return over this period but you have also taken a risk that the values, rentals, or market may change making it hard to get a mortgage. No looking so good for our off plan scenario.
On the other hand if you had purchased a new build property you would have paid your 10% deposit and within a short time received your 10% allowance upon successful completion back. Your actual cash tied up will be significantly less than the off plan scenario. This extra cash can then be used to purchase another property.
Therefore if you purchase off plan in a stagnant market you are likely to buy one property as opposed to new build where, for the same cash input you could buy perhaps three times as much property. Clearly in a stagnant market new build is a better proposition than off plan property. The galloping market
The same two properties purchased in a galloping market would mean that the new build is still a decent proposition except that you now have to consider that you have a mortgage to service. It will certainly go up in value more than in a stagnant market and because interest rates are low your cashflow is eased.
Now consider the off plan. You still secure with a 10% deposit but over the course of the build program your property may have increase in value by say 10%. You don't have a mortgage or cash flows to worry about.
Now here's the power of off plan in a galloping market. Say the property is worth £200,000. You place a £20,000 deposit on it. Now if it goes up 10%, it goes up on the entire value (£200,000) not just your deposit so you have just doubled your money before you have even completed. (£200,000 x 10% = £20,000)
So consider the above before you go and get sold a heap of rubbish about how great off plan is.
There is no doubt that in the right market and the right circumstances it is a fantastic proposition but don't caught up in the hype of the sales pitch and thinking that doubling your money before completion is easy. This is where working with a professional portfolio manager will make you job so much easier, they will explain the pros and cons of each decision.
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
How To Find An Extra £200 To Pay For An Additional Buy To Let Property
Before I helped people build property portfolios I used to help people work out their financial problems and debts, setting them back on the path to financial security.
I developed some very simple ways to do this. “Simple”, but not often easy. They required two critical things that you absolutely must develop if you are to be successful in life: discipline and re-education. Now this article is not about either of these qualities but unless you have discipline I can tell you, you will find the following task very hard indeed.
Firstly, don’t pay too much attention to this article’s title. It’s there to grab your attention. £200 is a notional figure. Change it to whatever you want it to be.
This is a simple step-by-step process to find extra money within your existing income. Just follow the steps without actually trying to cut down on your spending, after you have completed this you can take a serious look at what you should really be spending your money on.
The origins of these activities are from the book The Richest Man in Babylon by George C. Clason. It is required reading for everyone from the youngest to the oldest of us. I have read this book at least 30 times over the past 15 years. It articulates many of the disciplines that I have developed and that I see in so many successful people. In particular I love the following quote from the book, it sums up exactly where most people are in their lives financially.
If you have not acquired more than a bare existence in the years since we were youths, it is because you either have failed to learn the laws that govern the building of wealth, or else you do not observe them.
This is a potent reminder that we firstly must learn the laws and then put them into practice.
Follow the steps exactly and good luck. Ok - let’s get started:
Read the entire article through twice. For the next 30 days you only have 1 task which is Step 1. Once you have completed this move on and implement Step 2. Don’t try and jump ahead.
Step 1 - track your current expenditures for 30 days.
Remember to be honest with yourself. In order to fully complete this exercise you should track your expenditure over a 30-day period. This will open a can of worms in your thinking. You will begin to realize how much money you spend without ever thinking about it. It is generally this undisciplined spending that holds you back from being financially free.
Most people fail or stop this process after about 4 days. If you fail to track everything, stick too it as best as you can. I have tried and failed numerous times, in fact I can honestly only say that I succeeded once. It’s unfortunate but for those people who don’t track everything you will miss the very things that you need to be made aware of.
This process of writing down all your expenditure is more of a mental process than a financial one. You see most people have become so numb about spending that they don’t even realize they are doing it. This process will simply give you the awareness of where your money goes.
Track every expenditure for a full 30 days, as you do it think about each pound or dollar you spend. You will begin to realize that some of your expenses are essential others are not so essential. For now you don’t need to change your habits just observe the mental process you go through.
Step 2 - “pay yourself first”
This is the most basic of financial disciplines and one that I would argue will slingshot you to financial freedom quicker than any other single thing.
For this I want you to buy The Richest Man in Babylon. Read it and then begin to think about what it says. The book only takes about three hours to read but it will change profoundly the way your think about money.
I still to this day pay myself first and it is the single most profound reason for my financial situation today.
All you need to do for this step is calculate what you earn each month after tax and then work out 10% of this figure. This is what you will pay yourself first.
If your after tax income is £1800 the you would put aside £180. Pay yourself first £180, before you pay anyone else including the credit cards, banks, or any other person or organization.
As soon as you get paid your income simply take this £180 and deposit it into an account that is separate from your normal account. Make it harder to get too, that will stop you giving into temptation or (perceived necessity). It will take some effort but you will make do on the remaining amounts.
The power of just this £180 is in the way it focuses your mind away from the fact that you have so many debts and no savings. It changes the way you think from debt-ridden to small-time saver. Even the smallest of savings feels better than the biggest of debts. This positive affirmation sends a clear signal to your brain that you are now a saver and with savings you can open yourself up to investment opportunities. With investments you are thinking at a totally new level. It won’t be long and you can truly start to make a huge difference.
In my experience my people can do this for about 3 or 4 months but then they find some good reason why they should borrow it and pay it back, next payday. This never happens. Trust me you will not. This is why it is often good to place it somewhere where you need someone else to access the money. I used to have a 2 to sign with my mother and Mum knew the rules behind allowing me to withdraw money. I needed a clear business plan.
Step 3 - Mapping your cashflow
The third step is simply to group each category of expense into either -
OK, for the first time through only look at the discretionary. Make a list of all the discretionary spending over the 30 days and then choose the ones you can truly do without. We will focus on these first.
Now the best way to change your habits is to focus your energies on a few things rather than a lot. By focusing you get the brain thinking creatively about ways you can adapt and compromise. This is a great facility the brain has.
Make sure you write down what it is you want! NOT what you don’t want!
BE CREATIVE
The come up with ways of making sure you don’t spend more than you are allowed.
I remember back to when I did it last, I wanted to stop spending $200 per night when I went out to nightclubs. (I was in Australia at the time) So I never took any cash out with me and then I restricted the amount I could take out of the Cash Machine to $40 at a time. It was so infuriating to have to make so many trips to the cash machine that I actually decreased my spending to around $80.
The other thing I did was to drink with my left hand rather than my right. It slowed my drinking rate down considerably. That was a trick I learned from a mate who used to run quit smoking seminars.
Once you choose your thing or things then come up with these little systems. A system is just a way of focusing your energies. Try them, they really work.
Try this for a few weeks and see if you can make some changes. It won’t be easy, but the results are worthwhile.
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
I developed some very simple ways to do this. “Simple”, but not often easy. They required two critical things that you absolutely must develop if you are to be successful in life: discipline and re-education. Now this article is not about either of these qualities but unless you have discipline I can tell you, you will find the following task very hard indeed.
Firstly, don’t pay too much attention to this article’s title. It’s there to grab your attention. £200 is a notional figure. Change it to whatever you want it to be.
This is a simple step-by-step process to find extra money within your existing income. Just follow the steps without actually trying to cut down on your spending, after you have completed this you can take a serious look at what you should really be spending your money on.
The origins of these activities are from the book The Richest Man in Babylon by George C. Clason. It is required reading for everyone from the youngest to the oldest of us. I have read this book at least 30 times over the past 15 years. It articulates many of the disciplines that I have developed and that I see in so many successful people. In particular I love the following quote from the book, it sums up exactly where most people are in their lives financially.
If you have not acquired more than a bare existence in the years since we were youths, it is because you either have failed to learn the laws that govern the building of wealth, or else you do not observe them.
This is a potent reminder that we firstly must learn the laws and then put them into practice.
Follow the steps exactly and good luck. Ok - let’s get started:
Read the entire article through twice. For the next 30 days you only have 1 task which is Step 1. Once you have completed this move on and implement Step 2. Don’t try and jump ahead.
Step 1 - track your current expenditures for 30 days.
Remember to be honest with yourself. In order to fully complete this exercise you should track your expenditure over a 30-day period. This will open a can of worms in your thinking. You will begin to realize how much money you spend without ever thinking about it. It is generally this undisciplined spending that holds you back from being financially free.
Most people fail or stop this process after about 4 days. If you fail to track everything, stick too it as best as you can. I have tried and failed numerous times, in fact I can honestly only say that I succeeded once. It’s unfortunate but for those people who don’t track everything you will miss the very things that you need to be made aware of.
This process of writing down all your expenditure is more of a mental process than a financial one. You see most people have become so numb about spending that they don’t even realize they are doing it. This process will simply give you the awareness of where your money goes.
Track every expenditure for a full 30 days, as you do it think about each pound or dollar you spend. You will begin to realize that some of your expenses are essential others are not so essential. For now you don’t need to change your habits just observe the mental process you go through.
Step 2 - “pay yourself first”
This is the most basic of financial disciplines and one that I would argue will slingshot you to financial freedom quicker than any other single thing.
For this I want you to buy The Richest Man in Babylon. Read it and then begin to think about what it says. The book only takes about three hours to read but it will change profoundly the way your think about money.
I still to this day pay myself first and it is the single most profound reason for my financial situation today.
All you need to do for this step is calculate what you earn each month after tax and then work out 10% of this figure. This is what you will pay yourself first.
If your after tax income is £1800 the you would put aside £180. Pay yourself first £180, before you pay anyone else including the credit cards, banks, or any other person or organization.
As soon as you get paid your income simply take this £180 and deposit it into an account that is separate from your normal account. Make it harder to get too, that will stop you giving into temptation or (perceived necessity). It will take some effort but you will make do on the remaining amounts.
The power of just this £180 is in the way it focuses your mind away from the fact that you have so many debts and no savings. It changes the way you think from debt-ridden to small-time saver. Even the smallest of savings feels better than the biggest of debts. This positive affirmation sends a clear signal to your brain that you are now a saver and with savings you can open yourself up to investment opportunities. With investments you are thinking at a totally new level. It won’t be long and you can truly start to make a huge difference.
In my experience my people can do this for about 3 or 4 months but then they find some good reason why they should borrow it and pay it back, next payday. This never happens. Trust me you will not. This is why it is often good to place it somewhere where you need someone else to access the money. I used to have a 2 to sign with my mother and Mum knew the rules behind allowing me to withdraw money. I needed a clear business plan.
Step 3 - Mapping your cashflow
The third step is simply to group each category of expense into either -
- SURVIVAL - absolutely essential. Without it you could not survive, obviously
- REQUIRED - required is something you must have to function as a member of civilized society, and
- DISCRETIONARY - discretionary is those things that make your life happy and fulfilling but if you didn’t have them you would still survive.
OK, for the first time through only look at the discretionary. Make a list of all the discretionary spending over the 30 days and then choose the ones you can truly do without. We will focus on these first.
Now the best way to change your habits is to focus your energies on a few things rather than a lot. By focusing you get the brain thinking creatively about ways you can adapt and compromise. This is a great facility the brain has.
Make sure you write down what it is you want! NOT what you don’t want!
BE CREATIVE
The come up with ways of making sure you don’t spend more than you are allowed.
I remember back to when I did it last, I wanted to stop spending $200 per night when I went out to nightclubs. (I was in Australia at the time) So I never took any cash out with me and then I restricted the amount I could take out of the Cash Machine to $40 at a time. It was so infuriating to have to make so many trips to the cash machine that I actually decreased my spending to around $80.
The other thing I did was to drink with my left hand rather than my right. It slowed my drinking rate down considerably. That was a trick I learned from a mate who used to run quit smoking seminars.
Once you choose your thing or things then come up with these little systems. A system is just a way of focusing your energies. Try them, they really work.
Try this for a few weeks and see if you can make some changes. It won’t be easy, but the results are worthwhile.
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Subscribe to:
Posts (Atom)
