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  • New Members

    Where do I begin ... starting with no cash?



    Hi

    I have browsing through the forums for sometime trying to determine where I can fit into the plan.

    I am currently working as a surveyor and estimating project manager within the facilities management industry and natural progression would be to take a leap into property.

    I am 26 years old and passionate about what I currently do but have little spare funds to my name. Be it I have just purchased my first family home with my wife.

    I see properties all the time that are great investments for myself I.e properties that require work and aren't for the faint of heart yet have the potential to provide massive returns.

    I'd like to know what people would suggest is the best course of action for saving the funds required for a refurbishment project.

    Be it I've done my research and most mortgage companies and lenders won't touch you unless you have at least 20% deposit for a investment property. In my area that equates to about £60k and that's before you finance the refurbishment aswell.

    Of course property refurbishments for commercial gain also require compliance under CDM 2015 something which I live and breathe in my day job and could offer as a service via consultancy.

    I guess I have a lot to offer just not the finance to take the leap.

    Best wishes

    Thomas W O'Connor

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    Thomas O'Connor

    Estimator and Commercial Project Manager

    http://www.linkedin.com/in/thomas-o-connor-532427146

    Hi Thomas and welcome.  Good to have someone of your skills commenting here. Smile

    There is no easy answer I am afraid, as a refurbishment project needs to be undertake with cash and/or bridging finance.  So the amounts of cash needed are much greater than 20%.

    Refurbishment really is the domain of people who have access to large amounts of cash.  You cannot undertake buy to sell activity using buy to let mortgage products.

    You may be able to find projects, cost them up, and then sell them on to others with the necessary funds, charging a fee for introducing the deal and managing the refurb.

    Another simple way to earn extra money is to let out a room in your home to a lodger.  You can earn up to £7,500 per annum tax free under the "Rent a Room" scheme.

    We let out two rooms in our home in Guildford to lodgers and it brings in £1250.00 per month.

    You could use such income to add to your pot of cash and build it up more quickly.

    The final suggestion I have is to consider the Keller Williams proposition, where you (and your wife?), could set up your own estate agency business under the KW banner/umbrella.

    You could run this on a part time basis, earning commissions for selling properties.  This would help build your network of people and contacts along with increasing your experience in the property sector. 

    I hope those suggestions help for starters?

    Good luck! Smile

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    Hi Vanessa

    Thanks for the reply.

    That was my main curiosity as to whether or not there is actually a market for selling leads with everything costed up for the refurbishment. I.e so all the prospective buyer would have to do is submit a PO for the balance of all quoted works upon exchange to get the ball rolling.

    What sort of contractual protection and infrastructure would someone have to put in place to get a model like that up and running?

    I.e between you and the seller and you and the purchaser?

    Where would the best place to find potential investors to sell said leads be?

    Obviously there is no figurative marketplace or open forum for selling said leads or finding potential investors. So what tried and tested models have people had success rates with when starting out on a venture like this?

    What industry certification would you have to invest in to become compliant with industry standard for sourcing projects and selling leads on with refurbishment estimates.

    The one thing I know I won't have a problem with is the pricing of works to be completed and procurement of supply chain and Project management experience to deliver the project safely.

    Maybe there is potential to using the property refurbishment as platform to setting up a potential principal contracting practice which again would require CHAS and safe contractor certification etc. But in turn would be able to fund taking on larger self funded projects eventually.

    But before all that the must be a market demand and who would trust someone who is just starting up with so many cowboys around?

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    Thomas O'Connor

    Estimator and Commercial Project Manager

    http://www.linkedin.com/in/thomas-o-connor-532427146

    You have highlighted the fact that I have saidvwould be only landlords who have a lot of cash will join the game in the future

    60k is a large amount of cash start a bussinss 

    and even if you had the cash and do a project lending is so tight now it’s hard to get your cash out to do another project before 2007 it was easy it’s not now

    and I belive it’s become a rich mans game now because of cash flow

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    What sort of contractual protection and infrastructure would someone have to put in place to get a model like that up and running?

    I.e between you and the seller and you and the purchaser?

    If you became an introducer who matches up with a buyer and a seller, you would be caught by estate agency legislation and would need to be a member of an ombudsman scheme, and other compliance considerations.  That is one of the reasons I suggested Keller Williams, as you would be covered by all their compliance.

    The rest of your question is answered here.  So I thought I'd be property broker / sourcer and here How to set up a deal sourcing arrangement?

    Where would the best place to find potential investors to sell said leads be?

    It depends on your time and budget.  You could attend property networking events and build up a network that way, but it is not a quick process.  You could also build a brand and profile via social media, but again this takes time and effort.

    Top 4 social media sites that property professionals should invest time in for ROI

    Obviously there is no figurative marketplace or open forum for selling said leads or finding potential investors. So what tried and tested models have people had success rates with when starting out on a venture like this?

    There are marketplaces on facebook and indeed on Property Tribes.

    Further information:  Deal Sourcing Company - Where to sell deals?

    If you build a profile on social media, investors will come to you, rather than you trying to find investors.

    With your knowledge, you could offer a service where you cost up a refurb on behalf of a client and then manage it.  I am sure there would be a demand for such a service.  We have many threads in the Refurb Tribe asking for advice on costings.  If you responded there, and demonstrated your knowledge, you would gradually build up trust within the community, and people would see your domain expertise and want to work with you.

    I don't offer any services of any kind, have no website, or ever market myself, but every week, people and companies contact me for my assistance.  They come to me because of the profile I have built on the social web.  It can be all kinds of things - asking for my help in marketing a holiday let, or asking me to consult on landlord issues.  So I know that what I am suggesting has proof of concept and does work!

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    I agree it has become a rich man's game but the returns compared to even the likes of 401k and vanguard ISA's which only pay maximum 5% per annum on investment are incomparable.

    That and also that the banks will only protect up to £80k of your savings under the FDSA so property seeming a far safer way to save your money in a potential long term investment.

    I say long term due to the uncertainty of what Brexit will do to the market in the next few years. Even though I am not old enough to remember I have heard of continual ups and downs of the market and understand the principles and reproccusions of over saturation. Even though at the present there is still a major housing shortage in the UK.

    I live in the south east of England which is considered the most expensive area in the UK to live. So starting up close to home is an expensive venture and for your first venture number 1 rule is stay close to home.

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    Thomas O'Connor

    Estimator and Commercial Project Manager

    http://www.linkedin.com/in/thomas-o-connor-532427146


    401k are you talking about pensions I think 401k is the us prnsion

    i invest in ISA and I make more than 5%

    you are wanting to enter the most highly taxed vestment there is 

    to be very honest I think you have missed the boat unless you have cash to use

    the days of when you could start with little and build a bussiness are largely gone

    you need large amounts of cash today 30% is now the norm with all the costs stamp duty buying fees and mortgage fees mount

    if you do borrow the lender will want to see your funds for deposit before you go ahead

    I’m not saying it can’t be done but you will struggle

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Thanks Vanessa

    Very insightful I'll take a look at the points that you have mentioned and work upon them.

    I guess I have uncertainty in taking the leap for myself even though tried and tested I've been doing it for large corporations for some time now.

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    Thomas O'Connor

    Estimator and Commercial Project Manager

    http://www.linkedin.com/in/thomas-o-connor-532427146

    You are young and have lots to learn. Take it easy, enjoy life and don't try to over extend yourself just yet.

    Save some money for that rainy day. I always suggest you should have one years salary as savings . Why because you never know whats round the corner and should the worst happen you have time to take stock.

    Many people today if they lost their job would be in poverty within 1/2 months. At your age you have never seen what a recession and property collapse does, so just consolidate your position, build up cash and relax.

    You have many years ahead of you so don'r try and run before you can walk. Plenty of opportunities will come your way over the next few years and perhaps you will be then be in a much stronger position to take on the risk.

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    Toccers,

    If you want to send me an example of a good deal that you say you come across often, we will look at it and If it looks appealing we would offer you either a JV, or possibly provide funding.

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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson

    Good morning Phil

    Thanks for getting back in touch

    What sort of offers would you guys at Stewardsons find most appealing?

    Ive come across properties that are on my local market with values below 50%

    With capital investment for refurbishment these can offer a very nice ROI.

    I search both estate agent and auction postings in and around my area (south east of England) to find some of the best deals.

    Obviously none will be a quick flip these are properties that will require refurbishment for a generous return. Generally can be achieved well within tight 12 week deadlines with the right workforce and programme in place.


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    Thomas O'Connor

    Estimator and Commercial Project Manager

    http://www.linkedin.com/in/thomas-o-connor-532427146