Archive for the ‘Joint Ventures’ Category

Roberta Ward: Leading Property Mentor & Founder of New Digital Investor Magazine Speaks

February 3rd, 2011
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Please see an interview with one of the UK’s most reputable property entrepreneurs and owner of My Property Mentor, Roberta Ward.  In addition to talking about her new digital magazine – Investor Insight – we discuss the short term risks in the market; effective strategies to adopt moving forward; medium term expectations; lease options; joint-venturing and the property ‘guru’ phenomenon amongst other topics…

1) So, what have you been up to over the last year? Last year (and the year before) were real turn around years for us. We took a step back and reviewed all our assets and investments.  We made sure they were running to maximum efficiency, re-invested spare cash in other diverse projects and got very active in social media. We have also been planning a new Digital Investor magazine, which has just launched (Investor Insight).

2) Bar rising interest rates, what do you think are the major impending risks for UK property investors? Tax issues will be a major factor, there are lots of new changes coming in this year which will effect investors at both ends of a deal. And of course the lack of real finance will play a big factor in the market as a whole – whether thats rental or sales.

3) How do you think they could potentially be minimised? Get your financial advisor to inspect your tax issues so you dont loose money by not knowing the new rules, and, so you can move money into other areas. Be sure they are claiming all they can for you before the loop holes are closed by the current cuts. Now is the time to shore up all your investments and diversify into other things so you spread your risks-if you have not already done so.

4) What would be your advice to both newbie and experienced investors looking to strategise effectively moving forward? No one should enter the market unless they have some money behind them, proven income and a good credit history are key to getting finance. The days of back to back mortgages are long gone and unlikely to return for the foreseeable future. If you don’t have the above, then the next best thing is a joint venture with someone who has. These are tried and tested ways of investing in all markets, not fads like lease options for example. Anyone that tells you having a bunch of tenants is a ‘passive’ income is talking jibberish. Tenants are anything but passive and the more the market tightens the more competition there will be. It’s likely that there will be more demand for room rents if rentals rise beyond reach and as job losses bite. We’ve seen a marked rise in new room rent agents in our area, which is something I will be blogging about shortly too.

5) What are your thoughts on the medium term property market in the UK (the next 5 years)? Property investing in this market is not for the faint hearted, and I think you have to be in it full time to make it work for you. Eventually the market will sort itself out, especially if its allowed to crash. If the govt tinkers with it too much the recovery will be delayed.We are in for some tough times ahead.  As always, supply and demand will be the key pointers to which way the market will end up.

6) Would you ever recommend lease options as a property investment strategy? This is a difficult market even for some seasoned professionals, and many folk are looking for the next big thing to allow them to control property without any risk. However, property investing is ALL about risk. In my opinion lease options should not be used on the residential market. its only a matter of time before lease options are regulated. They will go the way of SARB. All it takes is for the media to get a whiff of what’s going on and for the FSA to intervene. Ultimately the FSA will have more powers thrown their way in the govt shake up. Remember too that some very big portfolio building companies have gone bankrupt last year, and many properties they acquired were done via lease options. What happened to the vendors of those properties acquired by options? This should tell you something. If your deals are not about creating a good outcome for all parties, then it’s about fleecing the property owner.

7) Is the market currently therefore only for the cash rich for the foreseeable future? Personally I think it is. There are plenty of auction bargains to be had for cash rich investors. And to be fair, when you play the property game with your own money, it becomes much more real- which is what it should be.There are opportunities in all markets, it depends on your focus.I suspect BTL will become further regulated ( if that’s possible!) which will deter some newer investors or those looking to replace a pension with a BTL.

8)We previously spoke on joint ventures – are there any new factors that have to be considered when exploring this strategy in the current market? With joint ventures, the main thing is not to be too greedy in the beginning.  Work up to the bigger deals,  don’t go mad at the start looking for massive deals. I’ve heard of many people paying too much attention to the deal entry and not to the exit. The exit strategy is a key element, particularly in this climate. If you are starting with new partners you have to test the waters to make sure you all trust each other and get on. Make sure the paperwork has no ambiguities and that all sides are clear on their roles, duties and legal framework. JVs are a timeless way to invest if you have some skills or money to offer. There is always a way to create a win/ win if you look at all the angles.  My downloadable e-book goes into more detail about JVs.

9) There has a been a lot of debate on the ‘property guru’ phenomenon – what do you think it takes to be a true property ‘expert’? Well it’s not easy that’s for sure! A true expert is one that has been through at least one crash in the market and survived, not someone who has been around only when the finance was easy. There is NO substitute for experience. I look at it this way, if someone is selling a course or system, then are they really investing gurus or are they marketing gurus?  Both are fine in their own right, but only one is a property expert. Anyone can rehash others information to sell a course.

10) Please can you tell us about your new website – Investor Insight – and why you chose to create it?
Over the last couple of years we as a company and as individuals have invested in many diverse things so that when the property crash came we were prepared. We were lucky to be introduced to a seriously switched on IFA who was well connected in the City. As a company and as investors we have learned so much that we decided to put all this new information & excellent contacts to greater use and build an investor site. The site is about investing as a whole, including wealth generation, tax, legal issues, property here and abroad, sustainable investment, stocks and shares and all the other stuff in between. We’re planning regular celebrity and well known article writers, competitions with large prizes and loads more! Our aim is to make investing approachable, easy and interactive for all with an interest. By passing along the great knowledge and contacts we have we hope to continue to show people a wider and safer investing model than just pure property.

http://mypropertymentor.co.uk
http://investorinsight.net

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Joint Ventures in Property 2010

January 20th, 2010
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Many readers would remember the interview we did with Roberta Ward in 2009 where we discussed the various ins and outs of undertaking joint ventured property investments.  As the last year has seen many changes with regards to how property investors operate in the market place, we thought it would be a good idea to gain some new insights into joint-venturing and ask one of the UK’s genuine property experts her thoughts on the market moving forward.
1) So, what have you been up to over the last year?
Last year my partners and I took a step back from buying property, as we felt the market was too volatile to make rational decisions at the start of the year. It was a transition period for our business. We had started looking for other income streams connected to and outside of the property market to make our base more solid, and to create more revenue to invest with. We also seeked further finance opportunities which gave us the opportunity to review all our current properties and how they were performing so as to apply changes where necessary. Regular reviews are essential in property investing.
2) We originally spoke about undertaking joint ventures as an effective strategy for those were perhaps finding investing by themselves difficult, as well as those who wanted to share risk.  As we start 2010, does a joint venturing approach to residential property still work?
Yes, JVs work in any market. Like anything else, you have to fit the JV around the deal. People with bad credit can build portfolios using JV partners names on the mortgages along with 2nd charges etc –  ones who may have a better rating than themselves perhaps. Trust, and a good legal document/ advice are the essentials for any partnership.
3) Would many of the principles you highlighted still stand or has much changed in the last year?
I personally don’t think much has changed on the JV front. The difference is the market, agents are forcing prices upwards due to lack of supply.  Valuations in this market may be unstable and prone to dropping when the interest rates change, or the repos which banks are holding are released, or even with the more stringent rules the government want to apply to landlords. Many will get fed up and dump their properties if the market is high enough in their area, potentially causing a drop in price as availability is increased.
4) Have there been any other strategies that you have seen emerge that would be of interest to our readers?
Well there was the mad dash towards doing option agreements for those who suddenly could not finance deals and got pulled in to the NMD way of doing things.  Effectively many tried to do the same type of deals via options instead of finance.  Not for the faint hearted or inexperienced property investor in my own opinion.  Lots can go wrong and you need proper legal advice – even the lawyers involved are constantly tweaking the format of the documents which make you wonder about previous earlier deals. I saw one deal on a forum recently which I analysed on my blog here: http://mypropertymentor.co.uk/blog/2010/01/analysis-lease-option-rip-off-deal/
5) What would be some joint venture tips that you would suggest to someone who is starting out in property in 2010?
This kind of depends on how quickly you want to achieve something. People will not trust you if you are just starting in property, so it depends what you can bring to the table. You will need to prove you have either experience, or money to invest or you must be willing to share the work in some way.   Another idea is that you could attempt to source deals for people instead or give your time freely to learn from an experienced investor, this could lead to doing deals a bit later on.  If you would like to know more specific details of how to do joint ventures I have an ebook available from my web site: My Property Mentor. www.mypropertymentor.co.uk
6) In many ways, using a lease option with a homeowner is a form of joint-venturing – what are your thoughts on undertaking these types of transaction?
Yes, but in a JV both partners are in it for profit and working towards common goals. In my experience, homeowners do not understand options or what you are really doing with their property. Often you may be their way out of a mess, which makes them vulnerable and prone to being taken advantage of. I have a couple of blog posts in which I write about options in more detail:
http://mypropertymentor.co.uk/blog/2009/11/lease-options-regulation-in-sight/
http://mypropertymentor.co.uk/blog/2009/09/finance-versus-options-which-would-you-choose/
http://mypropertymentor.co.uk/blog/2009/09/the-options-band-waggon-has-rolled-in-to-town/
7) Can you re-iterate some of the most important factors, perhaps with a few to the year ahead, of what people should be looking for in a joint venture partner?
A good agreement with Trust Deeds; common goals long and short term if necessary; secure exit strategies for the deals; big discounts to take account of market fluctuations are the main ones.
8)What are your thoughts on using commercial lending to finance residential property investments – are there any inherent risks in taking this route?
Commercial lending is a complex issue. Basically, commercial lending is generally available if you have property within a portfolio with equity. In many ways it is even tighter than regular BTL lending and you would typically see the lender put 2nd charges across the whole of your portfolio and then lend you up to 60% of its total equity value. For most BTL investors this is ruled out as their portfolios are heavily leveraged due to the NMD fiasco of building a portfolio. In many cases, you would be better off with private equity lending instead as the charges would be temporary and on individual property. Or you could look at bridging initially perhaps, depends on the deal of course.
What are you plans for your own property business and your events?
This year we are launching some very exciting things, which are still under wraps right now. We have two potential projects – one abroad, which we are seeking finance on at present. The foreign one is a renovation – so a REAL challenge that one! The other is a local investor property we are considering taking on as a multi-let. This year I intend to grow the networking side of the business. We are also moving into new circles and moving away from the “Show biz Landlords” (as a friend of mine calls the networking circuit speakers!) into a more up market development crowd – as that’s where our heart lies. I see this year as a year of planned growth where we build on the foundations of last year’s ground work.
How can people find out more about your up-and-coming events in Chelmsford?
Our networking events are held on the last Tuesday of every month and all details are posted on our web site in the networking pages: www.mypropertymentor.co.uk. This month we are talking about future planning. This will involve tax and retirement planning for your long term exit of the property arena. Our regular speakers cover a wide range of topics. I can honestly say that networking is the most important thing I have done in the last few years. Without it you are prone to get stuck in one way of thinking. Networking creates opportunity and creative thought which will ultimately move you forward at a much faster pace than going it alone.

Many readers would remember the interview we did with Roberta Ward in 2009 where we discussed the various ins and outs of undertaking joint ventured property investments.  As the last year has seen many changes with regards to how property investors / landlords operate in the market place, we thought it would be a good idea to gain some new insights into joint-venturing and ask one of the UK’s most genuine and frankly-speaking property experts her thoughts on the market moving forward…

1) So, what have you been up to over the last year? Last year my partners and I took a step back from buying property as we felt the market was too volatile to make rational decisions at the start of the year. It was a transition period for our business. We had started looking for other income streams connected to and outside of the property market to make our base more solid, and to create more revenue to invest with. We also seeked further finance opportunities which gave us the opportunity to review all our current properties and how they were performing so as to apply changes where necessary. Regular reviews are essential in property investing.

2) We originally spoke about undertaking joint ventures as an effective strategy for those were perhaps finding investing by themselves difficult, as well as those who wanted to share risk.  As we start 2010, does a joint venturing approach to residential property still work?  Yes, JVs work in any market. Like anything else, you have to fit the JV around the deal. People with bad credit can build portfolios using JV partners names on the mortgages along with 2nd charges etc. –  ones who may have a better rating than themselves perhaps. Trust, and a good legal document/ advice are the essentials for any partnership.

3) Would many of the principles you highlighted still stand or has much changed in the last year?  I personally don’t think much has changed on the JV front. The difference is the market, agents are forcing prices upwards due to lack of supply. Valuations in this market may be unstable and prone to dropping when the interest rates change; or the repos which banks are holding are released; or even with the more stringent rules the government want to apply to landlords. Many will get fed up and dump their properties if the market is high enough in their area, potentially causing a drop in price as availability is increased.

4) Have there been any other strategies that you have seen emerge that would be of interest to our readers?  Well there was the mad dash towards doing option agreements for those who suddenly could not finance deals and got pulled in to the NMD way of doing things.  Effectively many tried to do the same type of deals via options instead of finance.  Not for the faint hearted or inexperienced property investor in my own opinion.  Lots can go wrong and you need proper legal advice – even the lawyers involved are constantly tweaking the format of the documents which make you wonder about previous earlier deals. I saw one lease options deal on a forum recently which I analysed on my blog here.

5) What would be some joint venture tips that you would suggest to someone who is starting out in property in 2010?  This kind of depends on how quickly you want to achieve something. People will not trust you if you are just starting in property, so it depends what you can bring to the table. You will need to prove you have either experience, money to invest or you must be willing to share the work in some way.   Another idea is that you could attempt to source deals for people instead or give your time freely to learn from an experienced investor, this could lead to doing deals a bit later on.  If you would like to know more specific details of how to do joint ventures I have an ebook available from my web site: My Property Mentor.

6) In many ways, using a lease option with a homeowner is a form of joint-venturing – what are your thoughts on undertaking these types of transaction?  Yes, but in a JV both partners are in it for profit and working towards common goals. In my experience, homeowners do not understand options or what you are really doing with their property. Often you may be their way out of a mess, which makes them vulnerable and prone to being taken advantage of. I have a few blog posts in which I write about options in more detail:

7) Can you re-iterate some of the most important factors, perhaps with a few to the year ahead, of what people should be looking for in a joint venture partner?  A good agreement with Trust Deeds; common goals long and short term if necessary; secure exit strategies for the deals; big discounts to take account of market fluctuations are the main ones.

8)What are your thoughts on using commercial lending to finance residential property investments – are there any inherent risks in taking this route? Commercial lending is a complex issue. Is is essentially only available if you have property within a portfolio with equity. In many ways it is even tighter than regular BTL lending and you would typically see the lender put second charges across the whole of your portfolio and then lend you up to 60% of its total equity value. For most BTL investors this is ruled out as their portfolios are heavily leveraged due to the NMD fiasco of building a portfolio. In many cases, you would be better off with private equity lending instead as the charges would be temporary and on individual property. Or you could look at bridging initially perhaps, all depends on the deal of course.

9) What are you plans for your own property business and your events?  This year we are launching some very exciting things, which are still under wraps right now. We have two potential projects – one abroad, which we are seeking finance on at present. The foreign one is a renovation – so a REAL challenge that one! The other is a local investor property we are considering taking on as a multi-let. This year I intend to grow the networking side of the business. We are also moving into new circles and moving away from the “Show biz Landlords” (as a friend of mine calls the networking circuit speakers!) into a more up market development crowd – as that’s where our heart lies. I see this year as a year of planned growth where we build on the foundations of last year’s ground work.

10) How can people find out more about your up-and-coming events in Chelmsford?  Our networking events are held on the last Tuesday of every month and all details are posted on our web site in the networking pages. This month we are talking about tax and retirement planning for your long term exit of the property arena. Our regular speakers cover a wide range of topics. I can honestly say that networking is the most important thing I have done in the last few years.  Networking creates opportunity and creative thought which will ultimately move you forward at a much faster pace than going it alone. Without it you are prone to get stuck in one way of thinking.

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Joint Venturing in 2009

March 11th, 2009
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Here’s a link to an interview with Roberta Ward, full time property investor who runs the very popular ‘Chelmsford Property Networking Event’ and has re-released her book on joint-venturing (in light of the major changes in the property market).

Interview with Roberta Ward on Joint Venturing Part 1, Part 2

With a lack of financing ability some investors are struggling to strategise on ways to take advantage of the buyers market. In this interview Roberta highlights her experiences of undertaking joint ventures; what to look out for; partnership agreements; risks and common pitfalls to name a few of the topics discussed.

Please click here to get access to the interview and feel free to add your comments below…

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