To find the best architects, look at their previous work on your local planning portal. I always like to find a specialist with the right experience, relevant to your particular development type as you don't want an architect to learn on your job, then charge you for the pleasure! If I am doing a HMO, then I will work with an architect who has alot of HMO experience. Always get a detailed quote so there is a clear understanding as to the scope and costs of any work.
BUY BELOW (REAL) MARKET VALUE
So many people I have met over the last three decades claim to buy below market value, but few achieve it in reality. My general focus on "buying right" probably saved me over the years and was the main reason, I stayed afloat during the financial crisis, although, that was still a very challenging period for me as I was over-geared, and had trouble trying to sell a large block of apartments at the time. My business is not as big as before the Financial Crisis, but I feel I have a better Hedging Strategy now in place should we have another property crisis. To buy below real and (true) market value, is the ultimate challenge, and the holy grail of the property business, but to overcome this ultimate challenge, two key elements are required, and those are as follows:
1. You have the skills and experience to accurately value a property and this means you need to de doing alot of deals in your target area to get a real feel for values. The more property you buy and value, the more accurate you become at valuations. I also keep a close eye at all sales in my target area, and this can be done by attending live auctions (and not just reading the sales data post auction) and setting up postcode alerts on Zoopla, Rightmove and EIG, as EIG is my primary source of price comparison information as it's the only up-to-date system with the Land Reg being out of date by 3 to 4 months. See my article below in the 'D' for Due Diligence for more information on how you can improve your valuation skills.
2. You are getting your deals direct-to-vendor or through a good relationship with the right agent. I have been sourcing direct-to-vendor for many years and it's a slow and tiresome process, but it does actually work, and I have learned how to make it work over the years, so my results are less "hit and miss" than when I started many decades ago. I teach my direct-to-vendor strategy, and believe me, it is a specialist strategy (which has been honed, changed adjusted, evolved over the years) at my one day NRLA training event.
Note that a BMV is not the same as buying a ‘discounted’ property, which has a reduced price to reflect the costs of the work needed. This is a development margin, and properties with a clear development margin typically get snapped up quickly by established, long-term developers who have better working relationships with agents than you are likely to have.
The NRLA are your best source for all tenancy contracts, they are regularly updated according to very regular and ever evolving legislation changes and free to any NRLA members. NRLA provide a full suite of contracts for all the different tenancy types so you have robust legal protection. Vetting new tenants is increasingly important in an environment where the Government seeks to reduce our legal options to resolve disputes.
I ask all my tenants who sign new contracts to provide their 'home' address or parents address, as inevitably when a tenant goes into arrears, they are hard to contact and often seem to disappear and stop answering calls and emails. By getting their home address, it's alot easier to chase "the disappearing tenant." Any tenant who is not comfortable with providing this information will not be invited to sign any tenancy contract. I make it clear to perspective tenants as to the reason why I am asking for this additional information to give me more options in the event I am unable to contact any tenant in arrears.
In 32 years, just two tenants finished their contract in arrears and both of those instances where where I hadn't asked for this additional key information, they then disappeared, ignored my communications, and I didn't have any other low cost, time viable, quick options to chase the debt.
Should section 21 be removed, then I will be increasing my level of due diligence on prospective tenants.
Remember, your tenancy contract may or mot be enforceable, if you don't comply with your own legal obligations. Landlords now need to provide the following at the outset of an assured shorthold tenancy: A valid Gas Safety Certificate The current Energy Performance Certificate A current Electrical Installation Condition Report for the property The latest version of How to rent: The checklist for renting in England A smoke alarm fitted on every floor used as living space. These alarms must have been checked to show they are in working order at the outset of the tenancy. Confirmation that carbon monoxide alarms are fitted in every room with a solid fuel burning source. They must also be checked to show they are in working order at the outset of the tenancy Confirmation that the deposit has been protected if already paid Confirmation that the prescribed information for the deposit scheme has been provided to the tenant and anyone who has paid towards the deposit A privacy notice outlining how the tenant's data will be used In addition, landlords need to check the right to rent status of any occupiers moving into a property from February 1st 2016.
Your ability to carry out a high standard of due diligence is the difference between an an amateur and a professional. How do you know if you secured a good deal? If you can't accurately value a property for example. Knowing your values is key and one simple tip for getting under the skin of your local values is to attend all your local auctions, rather than read the sold price history after the live event. By attending live auctions you get a much better feel for what's in, and what's not in demand, and why certain properties sold or didn't sell for a certain price. Seeing it all as it happens, gives you get a better feel for the price, demand and trend dynamics which appear during the live event. Get the official paper catalogue posted yo your house, (most auctions have a catalogue mailing list) then use this magazine to make notes of:
-Number of bids and and comment on how slow or fast the bidding went
-How many telephone callers, proxy bids, to understand general demand
-Description of condition and anything which is unusual effecting the value
-Note, if the property is unmortgageable or even unbridgeable, which dramatically effects price
-How happy the auctioneer was and if he's enthusiastically offering congratulations, unfortunately, this often means someone has overpaid!
-Last bid value for unsold lots
-How close the last bid got to the reserve in the event of a failed sale as the auctioneer often says something like: "we were nearly there" or "we are not even close" etc.
I always note the number of bids for each lot, noting the level of interest and any other issues effecting the value. I then work out the yield of each lot based on the sale price, and I do this as the auctions runs live. Reading the statistics after the event without all this additional data, is like buying shares in a company without doing any research and completely different to doing an analysis and summery of each sale live as it happens as reading 'blind data' won't offer you a learning opportunity. There are many more detailed techniques where you can get a better understanding of how to value property more accurately, and these are discussed at my one day training event: The Key to Property Investment. https://www.nrla.org.uk/training-academy/classroom-finance-management-regulation/the-key-to-property-investment
If there is one benefit you can add to make your single-let or HMO more rentable, it's an ensuite, but many architects over the years have told me I didn't have enough space for an ensuite. A small tiny ensuite, is better than no ensuite. The smallest shower tray available which is not designed for the caravan market is a 700 x 700mm size, but often I don't have the space to make this work without ruining the bedroom layout and making the bedroom too small. However, there is another solution and I have installed it many times and this instantly increases rent, reduces tenant turnover and makes your property more desirable. With my technique, developed by myself - this can now be achieved in space which previously wasn't big enough for an ensuite or where the smallest shower tray on the market, is too big or just isn't an option for other layout reasons.
Use Acoustic Underlay and (short-pile) carpets as they last longer and especially on any upper floors to reduce noise. A low quality short-pile carpet will outlast a high pile equivalent (price point) carpet. I use mainly LTV in all HMO's and single-let properties (except in very high end 'flip' properties) as it's tongue and groove boards, just like laminate, but waterproof, fast to install and way less noisy than laminate. In a refurbishment which is not up to current Building Regulations standards, I use Acoustic Underlay on non ground floors and on stairs to reduce floor-to-floor noise dramatically. I always use carpets in all hallways, regardless of which floor, to help reduce feet walking noise. Lee Floorstok Ltd and C M S Danskin Acoustics are well known distributors of acoustic underlay who I have used for previous projects.
If you don't set yourself goals, in my mind, you are equivalent to a ship without a navigation system, but it's not enough to think about goals, you need to write goals down to make it happen as this shows how serious you really are.
If you are reading this, stop - get a pen or your notes app on your phone and write down 3 goals now. One key differentiator, I have noticed over the years, is that all the successful people I know, write down their goals. All the self-help and business books advocate it, and they do this, because it works. Not writing goals, it's like applying for a job without a CV, and I believe you are fooling yourself even thinking about goals, unless they are written down and reviewed regularly. So come on - stop fooling yourself - and do it!
HIGH TENANT TURNOVER
My business model is fundamentally focused on reducing tenant churn rates, and that whole process starts with selecting the right building to buy, rather than waiting for the right building to come up for sale on Rightmove or EIG, which simply won't happen. Getting the right location, layout, fixtures and fittings and furniture is key as is simple things like having an ensuite and a very comfortable mattress, plus adequate storage space, make all the difference. I use 'storage wardrobe beds' which effectively mean tenants have another full sized wardrobe under their bed which is easy accessible. These beds are not available on the open market and supplied by a specialist hotel bed supplier.
I encourage bad tenants who have zero interest in a positive working relationship with me, not to renew their tenancy, but since I am a pro-active Landlord, wanting to always improve tenant quality of life, I treat good tenants who I want to retain like customers and try to offer them a good quality of life and a high standard of service. Most of my HMO rooms ar at least 10 Sq meters in size and have an ensuite, which makes life so much easier when it comes to attracting and retaining tenants. I buy quality mattresses, the right type of comfortable furniture and design ample storage into the design. I also focus on tenant quality of life, with responsive maintenance service, the right insulation and soundproofing, so tenants are guaranteed a warm house, fast maintenance service, and a good night's sleep.
Many a night, I stayed in a plush badly designed hotel where the architects have no focus on quality of life, even, in a 4 or 5 star hotel, only to be woken up by noise caused by other residents or hotel staff, which defeats the purpose of a luxury hotel in my view. Getting the basics right is important, and a good nights sleep, in a warm comfortable and spacious property is key.
Property is a business and like all business, making the right decisions is key, but if you don't have the right data available, how can you make the right decision? When I buy in a new postcode or try to work out if a deal is good or bad, effectively I become a "property intelligence expert." Knowledge is power in the property game, and there are many sources of data, I rely on to help me make better decisions. Plus, it's also about finding the right data, like looking at House Price To Earnings Data, which to my surprise is not generally discussed in the media for some very strange reason. The media misrepresents all house price data, as they never take London out of the figures and don't take inflation into account. With London out of the figures and when inflation is added, the figures are a completely different story, but the media or the main banks and building societies are not interested in doing it this way, they continue to mislead the market.
House Price To Earnings Data is one of the key ways I evaluate when deciding which areas are most likely to have strong capital appreciation. To get the right quality sales price data on house prices, you need to pay for this as you won't get on the Land Registry which is 4 months out of date so going on 'sold' house price history on Rightmove isn't good enough.
This is a subject close to my heart and key data I rely on is unfortunately behind a pay wall and this and how to find other key hidden data is something I explore during my one day these are discussed at my one day property training event: The Key to Property Investment. https://www.nrla.org.uk/training-academy/classroom-finance-management-regulation/the-key-to-property-investment
My advice is to try and find someone who has different skills and experiences than you, and someone who can enhance the partnership. I always have the casting vote on who makes the final decision when it comes to selling any property as your business partner may want to sell, but you don't and vice versa. I like to be in control of this element. In an ideal world, you need sound legal advice from your solicitor before entering into any agreements. You can do all the due diligence in the world, but in the end it comes down to your own gut feeling about who you can and can't work with, so why not try and reduce your risk, and find someone who has extensive and verifiable experience.
Be very careful working with anyone who has a full-time property training business, as how can they be an active developer with real life case studies, if not? They always lie about their actual experience and wealth, some going to the trouble to rent supercars to pose with, which is way more common than you think.
Often these are run by marketing and speaking Gurus, rather than active property developers offering training on the side like I do. They are scammers, with no conscience who often have almost evangelist type following, and a high presence on social media. These people are dangerous and not credible or experienced property developers and there have been many stories in the media about investors losing their money investing with these so called Gurus. For more research on this topic, I recommend you follow 'Landlords in Distress' and the 'Property Seminars' thread on propertytribes.com
The sad fact of our consumer protection laws, is that you get more consumer protection buying a fridge at Argos than you do handing over tens of thousands to a so called Guru. You also get more consumer protection buying that fridge than you do if you buy a new BUILT property from a major housebuilder.
The Freedom of Information Act, has given me insight into local planning matters, often controversial issues, I've learned about before the news story hits the media. Knowledge of local planning matters and the politics and gossip effecting the property business in your area is important to know and you can get all this information before it hits the newspapers by following:
www.whatdotheyknow.com which gives an insight into all the Freedom of Information requests at your Local City Council. You can set alerts, to get emailed when certain topics of interest to you arise.
LEGAL - ARE YOU LEGAL?
Landlords now need to provide the following at the outset of an assured shorthold tenancy: A valid Gas Safety Certificate The current Energy Performance Certificate A current Electrical Installation Condition Report for the property The latest version of How to rent: The checklist for renting in England A smoke alarm fitted on every floor used as living space. These alarms must have been checked to show they are in working order at the outset of the tenancy. Confirmation that carbon monoxide alarms are fitted in every room with a solid fuel burning source. They must also be checked to show they are in working order at the outset of the tenancy Confirmation that the deposit has been protected if already paid Confirmation that the prescribed information for the deposit scheme has been provided to the tenant and anyone who has paid towards the deposit A privacy notice outlining how the tenant’s data will be used In addition, landlords need to check the right to rent status of any occupiers moving into a property from February 1st 2016.
Despite what the media likes to portray, making money in property is complicated and with development margins of 20% in a cyclical and capital intensive industry at the mercy of a sentiment driven market. The property industry attracts many "Get Rick Quick" purveyors who show the trappings of wealth on their Social Media. Unfortunately, like so much we read online - this is often Fake News.
NO MONEY DOWN
The "No Money Down" heading, is the biggest marketing hook used by many at unscrupulous training events in order to drive attendance.
Openrent is the only option for landlords wanting to list on Rightmove and Zoopla directly, without having an account with either portal. In addition, Openrent automatically list your advertising on Gumtree. We use Openrent and Spareroom on a daily basis.
A Quantity Surveyor is the cornerstone of successful Project Management. The single biggest reason so many struggle with Project Management is a failure to understand the massive risks involved. This manifests itself when people struggle to correctly map out the full scope of works required before the job starts (meaning no unbudgeted extras, appearing after work begins) and a failure to then accurately estimate the full building costs. On top of this you need an experienced professional (Quantity Surveyor) to work out the cheapest, quickest way to make it all happen, plus, the most appropriate materials required for your project.
This is largely because some people simply don't understand, that this a highly professional skill, and to get this right, you need to employ the services of a Quantity Surveyor. Getting your due diligence completed before you exchange and estimating your costs, accurately, is the difference between an amateur and a professional developer. Failing to consult this key professional, is without doubt, the main reason why many fail to finish on time, go over their budget and often end up in dispute with their builder.
I instruct my QS, before exchange, not after, by doing this, you are significantly de-risking your deals and in addition protecting yourself by putting your project on a solid legal footing as the QS will not just accurately estimate costs, but, also guide and advise you on signing a JCT with your builder, which further reduces risk and helps you avoid builder sharp-practice. A good QS is key and the most important person in my power team and their information has stopped me getting into deals which first seemed very lucrative, but on closer detailed analysis, turned out to be much less lucrative. I leave those deals to others who are happy to buy blind or can't be bothered doing the necessary standard of due diligence.
The single biggest reason so many struggle with Project Management is their failure to employ a Quantity Surveyor. The importance of employing a quantity surveyor is second to none. Their expertise covers a wide range of areas when it comes to your building project, some of which involve determining costs, building control and project management, structural issues, building product specifications and being able to keep track of the project as a whole
Always engage the services of a quantity surveyor before contacting any builders. Start your due diligence instantly upon verbally agreeing to any deal, well before exchange and understand all the dynamics and costs well before you exchange on any property. Without a quantity surveyor, I would guess you have an 80% chance of cost overruns and disputes, or falling out with your builder, which is very common. The single biggest reason many fail in their Project Management is their failure to employ a Quantity Surveyor, I repeated this point again, because getting the right QS, is a game changer.
If you want to build a sustainable business in property, you need to be able to refinance and take out the vast majority of you cash out of the deal, otherwise, your career will come to an abrupt end after you run out of deposit funds. Many are claiming to be property investors or developers, but there is no skill involved if you are funding your despots from other sources of cash, which haven't come from your own ability to recycle the same cash. In a world of fake news, and where bragging on social media has become the norm - I call these people "fake developers" or "fake investors".
Need a Building Survey? Don't waste your time on a Building Survey as it's not a comprehensive survey and doesn't look at the issues most likely to cause you the most hassle, and cost which is: structural issues.
So what typically happens in practice is your building surveyor will attend, do the survey, all looks good, but the he will point out any structural defects and simply recommend you get a Structural Survey. So you now have to pay for two surveys. Instead, go straight to the main event and get a Structural Survey from the outset and I can recommend engineers I work with, just drop me an email through this website.
TEN COMMON THINGS INVESTORS GET WRONG
1.) In terms of deals and valuations, not realising, “the day you buy is the day you sell”, meaning the old adage of buying right and how it really matters what you pay for an asset, against its true market value. I believe anyone can become a developer, but your buying, valuation and business acumen, plus haggling skills, are key. Effectively, you have to be a bit of a wheeler dealer type person to thrive, and most of the really successful people in property are just such personalities. If you can’t value a property, then how do you know you got a good deal? If you can’t value it, plus you are too embarrassed to haggle for an asset, then it's a double whammy. I explain extensively in much detail on how to value an asset in chapter four.
2.) Misunderstanding the key metrics when it comes to assessing a deal, meaning there are certain thresholds and figures which make me walk away from a deal. Being able to refurbish, then refinance and recycle my deposit funds by getting all my cash out in important metric, understanding valuations and especially HMO valuations, and how to recycle my deposit. An example of a common mistake is many people pay too much for an HMO and end up with, say, an 8% yield when they can get a single-let which will return 7%. This means they haven't understood the risk-reward as you need a minimum of 10% net return on an HMO to take into account voids and extra costs. Another mistake is choosing deals where you can’t recycle all your cash out which ends up with the unfortunate event of you running out of deposit money. For me the only game in town is the HMO game, because, if you get your HMO business model right with the right standard of sized ensuite rooms, in the right location, it’s the ultimate for cash-flow, if you have low tenant churn with an average stay of at least 1 year.
3.) Repayment mortgage loan strategy, interest only, getting yield calculations right, managing economic cycles and property strategy hedging are all issues not commonly discussed. If you can afford a full repayment mortgage, it really makes such a difference over the longer term and is probably the reason I didn’t go bust during the financial crash in 2008. I also started to pay attention to the hedging strategies of major Hedge Funds and, in particular, the theories of the famous investor, Howard Marks, after the last property crash. From this, I realised markets are so cyclical, with the UK market largely driven by sentiment. Over time, I realised that you really need some form of hedging strategy. Now, this isn’t an exact science and can be as simple as not having too much of the same type of product in your portfolio or having some of your mortgages on a repayment basis.
4.) Understand the value of tenant retention and reducing tenant churn and tenant quality. Basically, this means you have to be so careful of who you let into your property and how you design your building to increase the quality of life for tenants. In my case, to improve my tenant quality, there is one key extra piece of information I ask from tenants, which I have learned over the years and really makes a big difference: I discuss this in chapter ten, which focuses on managing and retaining tenants. Keeping tenants for longer is a combination of things such as having larger rooms with ensuites where possible, a high quality mattress and specialised beds to reduce clutter in smaller rooms, which I explain more in chapter seven. There are a few other things which can be done to improve the quality of life and reduce churn rate, and more recently I have tried hard to design my properties with practical improvements and layouts, which encourage tenants to stay longer.
5.) Getting advice from professional trainers instead of genuinely experienced developers currently active in the market. Yes, I know I would say this to promote my mentoring business, but I have met so many people who received training of particular poor quality, based more on a “get rich quick” theme rather than the reality of the business, with many of these trainers focusing on unrealistic strategies such as “no money down” and “lease options”. The majority of property trainers in the UK have low long-term transactional and deal range experience, and have not lived through the ups and downs of UK economic cycles. Most have a few rental properties, and then grossly exaggerate their experience level and years they have been in property. They then effectively retire from the property game to become professional trainers.
6.) Forgetting the law of property economics. The faster you grow a property business, the lower the quality of your portfolio. The other key laws of property are as follows: Property is a high risk and complicated capital intensive business, which is at the mercy of a very cyclical and market sentiment driven economy. One month the market is booming and the next month we can be looking at a crash. Despite many complaining about the UK Planning System, I for one don’t want it simplified as this system gives professionals the opportunity to add value and planning gain. If the system wasn’t complicated and risky, there would be little uplift when planning is approved and sites without planning would be considerably more expensive to purchase.
7.) Room sizes, layout planning, and getting a robust buy to let design is such a big issue for me. Over the years I have reduced my maintenance by buying longer warranty items on anything with moving parts. For example, shower sliding door rollers fall off, and taps stop working. A cheap boiler is guaranteed to fail soon after the short warranty period, which can be anything from two to seven years. If you buy the right product with a longer warranty, life is so much easier. Washing machines fail, cookers fail, but with a bit more due diligence on the products and their length of warranty and specification, this can make a really big difference in reducing maintenance calls.
8.) In terms of layout a common mistake here is architects seem to design big bathrooms, only to end up with the bedrooms compromised in size, or perhaps, making the en-suite too large and not using this valuable space in the master bedroom, which is often not that big. Given space is a lot tighter in buy-to-let than family homes, you can transform the look and feel of a room with a better layout and by reducing clutter to better utilise the space provided. Plus, a simple thing that is so effective but commonly done, is to use the full base of a double bed as a full wardrobe. This means you effectively have another wardrobe under your bed by choosing the right type of bed, which I buy from specialist hotel bed suppliers. I find divan beds with storage drawers fall apart and their drawers can only withstand about 50% of the available storage. The Ottoman type beds are too expensive, and they also tend to break because of their moving parts.
9.) Anything to do with project management and employing builders is a total nightmare in the property game. The chances of your contractor going bust or you having a serious dispute with your builder is extremely high in the industry, and is a fundamental issue with some of the larger main contracting business models, as the winning bid has a contract at a low or negative margin and then has to work out how to make money on it. Project management, getting the right professionals around and not getting a Quantity Surveyor in to assess your refurbishment costs, is probably the most common mistake made by people doing a refurbishment project. I get my Quantity Surveyor into a building before exchange, so I know how I stand on costs prior to exchange taking place. This puts the project on a more professional footing as the Quantity Surveyor will arrange the formal contract with the builder to reduce the chances of builder sharp practice, common disputes and cost overruns.
10.) The biggest mistake I made early in my career was not realising I needed professional help. I was unable to acknowledge my need for it and failure to pay for the right resources held me back. I didn't realise these professionals would save me a fortune in the end and reduce my risks. Getting the right professionals around you is key. A solicitor giving poor quality service really causes a lot of stress. I used to be patient when I received bad service, however, now I move on fast and find someone who wants my business as my thoughts are, why should I go through the stress? Know that you can’t operate in the property business without good relationships with the likes of letting agents, architects, structural engineers and other key professionals such as a quantity surveyor for example.
UNDERSTANDING THE FUNDAMENTALS
In terms of my strategy, these are my fundamentals
My strategy is based on:
-Gaining clarity of risk-reward
-Emphasising due diligence
-Location (the ‘invisible borders’ rule)
-Reducing the ‘hassle factor’ in all decisions
-Generating cash-flows for repayment mortgages
-Hedging for inevitable market downturns
My deals typically come from:
-Targeted relationships with the ‘right’ agents
-Alert management and crawling software
-Walking the streets to create deals
In terms of deals and valuations, not realising, “the day you buy is the day you sell”, meaning the old adage of buying right and how it really matters what you pay for an asset, against its true market value. I believe anyone can become a developer, but your buying, valuation and business acumen, plus haggling skills, are key. Effectively, you have to be a bit of a wheeler dealer type person to thrive, and most of the really successful people in property are just such personalities. If you can’t value a property, then how do you know you got a good deal? If you can’t value it, plus you are too embarrassed to haggle for an asset, then it's a double whammy. I explain extensively in much detail on how to value an asset in chapter four.
Unless you have sufficient experience in this area, it is unlikely you are going to be able to make an accurate valuation. It’s important to have a clear understanding of valuations and how they work on a practical basis, before you are able to buy below real and true market value.
I realised many years ago that it’s very difficult to get a deal to stack up on anything already featured on sites such as Rightmove, where properties tend to be overpriced and where investors are often chasing after the same deals. When I first moved to Liverpool and started off my property business there, I knew absolutely no one in the industry and had no contacts to help me take that first step in the city so this lead me to walking the streets, to find my own deals.
WORKMEN - PAYING ON TIME
If your existing workmen or contractors seem uninterested or difficult to contact, have you ever wondered why?
When you have an emergency call-out over a bank holiday or late at night, you need the goodwill of your contractors, and the easiest way to achieve this is to treat them well and pay them promptly. This may sound obvious to some, but it always surprises me how many feel it is okay to delay paying suppliers, and some even think this is normal practice. And then they wonder why the suppliers do not answer their phone when they need them.
By far the best way to encourage great service and build positive working relationships is to pay suppliers promptly. This has served me well and allows me to get speedy replies to queries, and it often leads to my professional team going “above and beyond” as a result of a good working relationship.
I find the whole dynamic between you and your professional changes for the better when you pay even sooner than the payment due date. I always pay invoices in a matter of a few days, not weeks
CREATING AN X FACTOR FOR YOUR PROPERTY
The days of being average are over, in today's competitive market, you need to set your property apart from the competition and you need a property which attracts the highest possible rental return so you can sweat the asset, but at the same time give your tenants a good product and a high quality of life. Happy tenants, are loyal tenants, but you should treat your tenants as customers and be pro-active in resolving any issues that may have during the tenancy.
I work all deals on a yield based calculation, it's simple and less easy to manipulate than RIO calculations, which is often used by agents who are selling a property. Sometimes, when you see a property advertised by its RIO, and not it's yield, this is because the yield is very low and the headline RIO figure is always a higher number so looks better from a marketing perspective.
All decisions should be based on yield valuation, so it is important to get the basics right from the start. With this in mind, here is the formula you would use to work out the yield of a property, excluding legal or one-off costs.
Gross Yield = Annual Rent / Property Value x 100
Example 1: A property costs £465,000 and the annual rent is £78,000.
Gross Yield = 78,000 / 465,000 x 100
Example 2: A property costs £235,000 and the annual rent is £19,400.
Gross Yield = 19,400 / 235,000 x 100
ZOOPLA & WEB SPIDERS
With Zoopla, unlike Rightmove, you can search by 'most popular' which is useful to determine what's in demand, and the only major property portal which allows you to do this. I have used specialist search bot technology or 'web spider' engines to find properties not listed on the main portals as about 20% of all property for sale never gets a listing on Rightmove, Zoopla or EIG.
Zoopla and Rightmove have recently added a new keyword search option in 2020 allowing you to add certain keywords.