Deal Packaging SA Successfully

In this episode, David takes a deep dive into packaging SA for investors. He takes us through this complex area providing detailed information and advice based on his own extensive experience. If you are a deal packager this is a podcast you should be listening to, so that you can confidently add SA to your portfolio of offers for investors. KEY TAKEAWAYS Houses, not flats or apartments Houses are usually freehold whereas flats are usually leasehold. A leasehold usually doesn’t permit short term lets. SA occupants arriving at unsociable hours could also be disruptive for other owner-occupiers in the block. Insurance is vital We have insurance in case there’s a problem and the incorrect insurance can really hurt people as when things go wrong it can result in no one taking responsibility. Make sure you have the right insurance for the use of the house. You’ve got to look after both your investor, yourself and stay safe. Finance Make sure you are working with lenders who specialise in finance for the SA market. There are lenders who will lend up to 75% of the purchase price based on postcode and the experience of the purchasers. Planning If you are buying a house, if used as SA it will usually remain as C3, residential use. Councils can take the view that SA does not change the use of the property, it changes the term under which the property is occupied. Capital allowances HMRC will approve capital allowances for commercial buildings. Capital allowances are tax relief, for bits of the building that are not actually the building, and it applies to commercial buildings. If you are buying a house for SA it is classed as a commercial building. Get a professional capital allowance assessor to come in and tell you what is possible. Returns The investor is going to be interested in the possible returns on a particular building. In SA you can get multi-let returns in a single building. The SA management is key The most difficult thing in SA is management. Investors want hands free management, they might be located hundreds of miles away. Access local property forums and find out who is managing property successfully in the local area. The SA management team is vital, and the deal can be broken or made through the quality of SA management. Council tax Look at changing the property to business rates as it is a commercial building. What’s the advantage? If you have one house in a local authority area you can then apply for small business relief and this could potentially result in a zero-business rate. BEST MOMENTS ‘Packagers have to know how to package every type of property’ ‘Everyone wants a bigger return on their money’ ‘I like to keep it simple, so we source houses’ ‘As soon as you begin to rent out individual rooms you will require planning to change usage to C1’ ‘Remember as the packager, you source everything, take your fee and move on, it's your investor who will be doing this’ ‘It's like the wild west out there at the moment’ ‘Let’s party while the party is on’ ‘The returns are the big seller, you are going to get the investor’s attention’ ‘In a rent to rent your margins get squeezed very quickly, the bottom-line profits can be very disappointing’ ‘It’s a strategy that offers investors massive uplift and good returns on their investment’ ‘You should add it to your portfolio of offers as a deal packager’ VALUABLE RESOURCES https://www.facebook.com/groups/progressivepropertycommunity/ https://itunes.apple.com/gb/podcast/property-sourcing-profits-podcast/id1384873667?mt=2 ABOUT THE HOST David is a property expert with over 25 years’ experience and his own portfolio of 26 units. His current rent roll is in excess of £10k per month. He is also a partner in a Deal Sourcing and Packaging business in the North West of England and has sourced over 250 properties for investors since 2004. In recent years he has, by necessity, had to develop an expertise in LHA strategies. This area is increasingly becoming a niche for him, and he enjoys empowering other landlords by sharing the knowledge he has gained. The ultimate purpose when sourcing properties in this sector for investors is to minimise risk while maximising profit. He has had to find answers to the challenges of Tenant Find, Management, ensuring rents are paid and the transition to Universal Credit. These are strategies he uses in his own business and also on behalf of investors. His investor clients regularly achieve annual gross yields of over 20% with high occupancy rates and voids resolved, sometimes within hours. CONTACT METHOD https://www.linkedin.com/in/david-siegler-7b126316/ https://www.facebook.com/DavidSieglerInvestments/