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  • Mortgages & Finance

    Traits of "smart" landlords - finance context

    We are approaching the end of our "Smart Landlord" campaign which has been running throughout January 2019 to celebrate Property Tribes' 10th anniversary.

    One of the traits of a Smart landlord is that they leverage the knowledge, contacts, and experience of property professionals, such as a reputable letting agenttax advisor, and mortgage broker.

    All of these trusted suppliers can be found amongst the sponsors and commercial partners of Property Tribes and are linked to above.

    Smart landlords understand that finance is the lifeblood of a property business and comes before anything else.

    Today's article has been written for us by Howard Reuben, Principal of the award-winning brokerage, HD Consultants, which powers  Property Tribes Financial Services.

    Howard has written about how to be a "smarter" borrower:

    With over 26 years’ experience as a Broker Firm, and over 100 years combined experience within the Team, we have observed the processes, strategies, habits and actions carried out by our numerous successful property investor Clients.

    From those ‘first time buy-to-let’ers’ buying in a personal name, to the most experienced portfolio property owners who have complex incorporation group structures, we have worked alongside these positive, driven and profitable investors.

    The most common traits that we have witnessed among those who have achieved the most, are; 

    > they planned their strategies,

    > they took advice in an open minded way,

    > they got themselves “good for the money” enabling them to be considered favourably by agents, developers, sourcers and networks, before making offers on properties, and – importantly –

    > they knew their numbers and had the ‘right’ finance options and funding tactics planned and available to take advantage of the opportunities that came their way.

    And here are a few methods that these very savvy and Smart Landlords have in common;

    1. They proactively worked with specialist mortgage Brokers like ourselves who know the BTL, HMO, permitted development, commercial mortgage, auction finance and short term lending / bridging finance marketplace. 

      Knowing the people who work in the banks (personal contacts with the heads of credit and senior underwriters) is a world of difference from the traditional residential mortgage broker who dabbles in BTL, and who simply tries to find a product just through the sourcing systems and their BDM’s.  

      A specialist Broker helps to speed up the access to the most suitable funds and the best value terms.
    2. Their property portfolios are regularly assessed and rebalanced by the Broker, ensuring that the aggregate LTV across the portfolio is providing overall best cost and value. 

      High LTV’s affect underlying cost and a specialist Broker can recommend the finance distribution to enable lowest monthly outgoings, thereby increasing cashflow from the same overall debt.
    3. Forward funding facilities – a specialist Broker can provide Smart Landlords with access to funds that can be drawn down immediately to help secure those opportunities that are presented (off market, BMV, JV, discounted, auction etc). 

      Our lenders are currently offering a £2m forward funding facility, increasing up to £5m following successful use of the first tranche.
    4. And connected to (4), a Smart Landlord shows the vendors that they are ‘good for the money’. 

      Having a valid Mortgage Certificate in hand (an Agreement / Decision in Principle) shows that an authorised Broker has carried out initial due diligence, found the product, carried out the credit check and provided a formal recommendation which means that the vendor can have that assurance that the Smart Landlord buyer has the funds available to be able to proceed.
    5. Peace of mind debt cover / succession planning – Smart Landlords insist that life insurance is a fundamental piece of their ‘jigsaw’, ie their professional property business. 

      The flexible policy arrangements are structured in the most tax efficient way by the specialist BTL estate planner, and with the accountant assisting, the policy premiums can be offset and as a result the borrowers tax bill can be reduced. 

      Families and business can rest assured that the portfolio can continue with the intended beneficiaries, unencumbered, and with all rental income retained, rather than the possible alternative which is that upon death of the borrower, the properties need to be sold off to pay back the mortgages, and sold off at reduced ‘fire sale’ prices, with punitive CGT payable, inheritances lost and all rental income now enjoyed by the new owners. 

      A simple case of putting in place the relevant debt cover arrangement removes all worry, removes added grief and helps to retain assets, growth and income.  The Smart Landlord factors the cost in to the rent and/or business accounts – benefiting from low cost, high value, priceless solutions.
    6. Our Smart Landlord clients make money before buying the property. 

      They look to minimise the stamp duty surcharge, increase the property value and seek to recycle their cash, pulling our most if not all of their initial investment too. 

      How?  One successful strategy is to buy a semi commercial (or fully commercial) unit and convert to residential accommodation.  There is not enough space here to detail the strategies, but a specialist Broker can explain this and work with you to implement the right finance for the project.  One such product being successfully used is the ‘Refurbishment-to-let’ mortgage.  Personalised quotes and options available upon request from your specialist Broker.
    7. Smart Landlords build a War Chest to fight the battles.

      Some of our Smart Landlord clients are contemplating the ‘what if?’ that property prices might fall.  If that is true, then today is the day when they are worth the most and capital raising remortgages are now a proactive strategy to release the maximum funds possible right now and put aside to ensure the monies are there to use to contribute to the buying opportunities that will be coming their way. 

      A portfolio review and identifying maximum equity that can be released is what a specialist Broker can achieve for you.

    The above points are actual case studies of some of the work which we have already achieved for PT members … the Smart Landlords.

    As a Team of specialist Brokers, Property Tribes Financial Services can provide you with access to the widest range of mortgage and insurance products and as landlords ourselves too, we understand the highs and lows of owning properties, we have lived and survived through the credit crunch and we are still retained by a numerous and growing list of Clients around the UK to continue to help with their BTL, HMO, holiday let and commercial property funding requirements.

    Take advantage of a free 2019 portfolio review now and see how Property Tribes Financial Services can help you too!

    SEE ALSO  -          Kickstart 2019 - FREE portfolio review!

    UP NEXT -              Get some dates in your diary to fire up 2019!

    DON'T MISS -         Mindset of the Smart Landlord



    This is excellent and absolutely right.

    I would add: Serious investors know the worth of surrounding themselves with quality professional advisers and don't try to penny pinch on fees! A good finance broker, rather like a good accountant, will make you far more than they cost you.