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10 STEPS TO LONG-TERM HOLD GOLD

I have spoken a lot about what you need to do to potentially make a long-term-hold investment work. In order to be successful you have to tick every box and ensure every stage of the process has the right plan and people in place to facilitate it. ⠀

The stages you need to cover are: ⠀
1. Buy the right property (size, planning state, suitable for purchase) ⠀
2. For the right price (minimum of 25% profit on cost on initial spreadsheet) ⠀
3. In the right location (for market and multiple exits) ⠀
4. With the right plan (for cost, quality and market) ⠀
5. Executed correctly (right contractors, project managed well) ⠀
6. Done on time (to ensure onward rental and to hit refinance deadlines) ⠀
7. That hits or exceeds target valuation. (on refinance or sale). ⠀
8. That rents well (to the right market at the right price) ⠀
9. With little or no voids ⠀
10. With minimal maintenance and ongoing issues. ⠀

Easy isn’t it! 😊⠀

We have been doing this for years and have just started a crowdfunding raise for a 6 year, buy, refinance and hold strategy. We would love to take as many as possible on the journey. ⠀

To find out more please visit https://www.leocrowdfunding.com/property/detail/west-buildings-hmo-development-by-targetfive-t5⠀

Investment in property related assets puts your capital at risk and returns are not guaranteed. Please read the full risk warning at https://www.leocrowdfunding.com/risk before deciding to invest. Past performance is not a guarantee of future results

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GOOD NEWS FOR OUR INVESTOR – REFINANCE VALUATION IS IN

Today we received great news from our investor that the property Target Five sourced, redesigned and renovated for them in Brighton, has come back with a fantastic revaluation figure – of course we knew it would 😉 but as many of you may have also experienced re-vals since lockdown have been very tricky and not always so positive!⠀

This property was originally a two bedroom first floor, large maisonette, and was designed and renovated to a six bed/2 bath HMO with a loft conversion, which now offers a great rental yield return for our investor. The project started at the end of October last year, completing in January 2020.⠀

Preparing for the valuation survey itself is paramount, as part of Target Five’s service to our VIP Investors, we put together a comprehensive valuation report for the surveyor on the day, documenting the details around the project, the current rental income, detailed explanation of current comparable properties for both the rental and sales market, the renovation specification, planning documents and certificates/licences acquired. Meeting the surveyor in person is vital, especially if the property is tenanted, you need to be on hand to answer all questions. ⠀

All to show and prove what a success this project has been and what we believe the value to be from when we set out on this journey for our VIP Investor to make a profit on .⠀
👍 ℙ𝕦𝕣𝕔𝕙𝕒𝕤𝕖 ℙ𝕣𝕚𝕔𝕖 £300,000 ⠀
🏚️ ℝ𝕖𝕟𝕠𝕧𝕒𝕥𝕚𝕠𝕟 ℂ𝕠𝕤𝕥𝕤 £58,000⠀
👏 ℝ𝕖𝕧𝕒𝕝𝕦𝕒𝕥𝕚𝕠𝕟 £575,000 ⠀

Interested in working with T5, please call 01273 525656 or email information@targetfive.co.uk⠀

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RINSE & REPEAT

It is relatively easy to find one good property – the challenge comes with a consistency of product and a cohesive portfolio. As every start-up is asked, “It’s a great idea but is it scalable?”. Once you have a scalable property strategy then things become interesting. ⠀

You can define your approach, your rental or sales market and get your refurbishment package and team together. Then sort out your finance entry and exit, with multiple options and you are away!⠀

You can then build relationships and repeat it. Rinse and Repeat. The great thing is with a successful refinance model, only a small portion of your initial investment is left in. Target Five have been following this buy, refurbish and refinance model ourselves and for other people for 8 years. We have completed more than 200 of these type projects and our record is second to none. We focus on areas that we know and with finance partners we have used before. ⠀

T5 have just started a crowdfunding raise for one of these properties and would love to take as many as possible on the journey. To find out more please visit https://buff.ly/2Dzud6O).⠀

Investment in property related assets puts your capital at risk and returns are not guaranteed. Please read the full risk warning at https://buff.ly/3cXqsWh before deciding to invest. Past performance is not a guarantee of future results.

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Property Entrepreneur Course

𝗗𝗲𝘃𝗲𝗹𝗼𝗽 𝗮 𝗽𝗮𝘀𝘀𝗶𝗼𝗻 𝗳𝗼𝗿 𝗹𝗲𝗮𝗿𝗻𝗶𝗻𝗴. 𝗜𝗳 𝘆𝗼𝘂 𝗱𝗼, 𝘆𝗼𝘂 𝘄𝗶𝗹𝗹 𝗻𝗲𝘃𝗲𝗿 𝗰𝗲𝗮𝘀𝗲 𝘁𝗼 𝗴𝗿𝗼𝘄.” – Anthony J. D’Angelo ⠀

The T5 team have hit the road this week, travelling to The Belfry Hotel & Resort in Birmingham, to start their year long Property Entrepreneur courses @propertyentrepreneur_

T5 Director Tina Wenham, travelled yesterday, participating in The Property Entrepreneur Avanced 2021 course, with Tim and Arthur starting today on the PE 2021 course.⠀

Both courses enables us to execute the next level of business strategy, systems, raising and refining finances, building a world class team and moving into niche and market leading positions that deliver sustainable levels of growth and the lucrative returns of both time and profit. ⠀

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Buying Below Market Value

I have always disliked BMV as a concept. For too long, it has been the focus for so many training companies and has become people’s strategy, essentially buying anything as long as it’s cheap. Exploiting people’s situations for profit, but also buying in a haphazard way without any real strategy. Basically: lose-lose. Sellers feel short changed and buyers end up with a hotpotch of properties without any unifying goal or aims (as well as being impossible to manage).

BMV is coming about though in a way that is win-win. There is turbulence at the moment and where there is turbulence and uncertainty, then comes buying opportunity. Some people are nervous and exiting the market voluntarily, having made money on their properties. Many long-term landlords are voluntarily exiting. This creates an arbitrage opportunity and where, potentially, the real value is to be found. This means that we are now seeing the chance to buy great quality, central properties in our chosen area with great value. A win for all!

T5 have just started a crowdfunding raise for one of these properties and would love to take as many as possible on the journey. To find out more please visit https://www.leocrowdfunding.com/property/detail/west-buildings-hmo-development-by-targetfive-t5 or on our Opportunites page.

Investment in property related assets puts your capital at risk and returns are not guaranteed. Please read the full risk warning at https://www.leocrowdfunding.com/riskbefore deciding to invest.

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Permitted Development

We have always looked to avoid planning where possible. Why?…⠀

Planning is slow, cumbersome and not always predictable – especially in Brighton and Hove, a council known nationwide for its restrictive approach to planning. So we have used Permitted Development (PD) opportunities. For many years this has taken the shape of C3-C4 out of A4 areas, box-dormers, 3m rear extensions etc. Adding square footage to create yield. With A4 for HMO moving city wide, and the over saturation of investors moving in to this market, we have looked to utilise other PD opportunities. ⠀

It is likely that more PD will come in addition to what has been announced in the past few weeks. This will no doubt include conversion of the new E Class of properties in non protected areas to C3.⠀

What are we looking at? Mostly Light Industrial to resi and 2 flats above commercial, in areas where we believe further PD will come. We were focussing on other things during the office to residential rush a few years ago, but this will come again with reduced reliance on office space – so we are looking at this too, where the conversion costs work and where it will make good quality and appropriate accommodation.⠀

Years ago it was all about commercial for yield and that group of landlords are now selling up or in some cases dying off! There are opportunities to be had and this could be a great few years for PD – if we do it right. Relaxed planning laws is no excuse for exploitation and profiteering!⠀

 

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Commercial To Residential – Doing It Right

In years passed the value has been turning residential into commercial property, especially in central locations. Now the tide has turned and it could be explosive. Retail has been under threat for years, but with the Covid-19 we will see all manner of commercial properties no longer become viable. This combined with a chronic under-supply of residential property we will see a huge switch.⠀

Government led relaxation of planning laws and increased Permitted Development (PD) rights will act as the facilitator.⠀

We have been moving this way for some time and plan to ride the wave but we are determined to ride it well and where possible consult with local planners even where it may not technically be needed. ⠀

We are going to be careful to keep our own ambitions in check and manage expectations of clients. With deregulation comes increased responsibility. Will we be doing as many deals as we can – yes! Will we put quality over quantity and try to do it right as well? Yes, we must.⠀

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BRRR-Yield Vs Capital Uplift

𝘞𝘩𝘢𝘵 𝘥𝘰 𝘺𝘰𝘶 𝘵𝘩𝘪𝘯𝘬 𝘢𝘣𝘰𝘶𝘵 𝘉𝘙𝘙𝘙, 𝘠𝘐𝘦𝘭𝘥 𝘢𝘯𝘥 𝘜𝘱𝘭𝘪𝘧𝘵?⠀

My take:⠀
For a long time the key to portfolio building has been the ability to recycle cash. This means adding value and achieving a refinance sufficiently high that once you⠀
refinance onto a new longer term product, as much of your initial deposit, refurb costs and other fees is pulled out for the next purchase. This is now referred to as BRR, BRRR, or even BRRR (depending on how many Rs you want to add). ⠀

The key to making this happen therefore is capital uplift rather than yield created. Whilst the Yield – the income from the property, is important, it only needs to be sufficient to drive the loan. It is the capital uplift against the capital employed – the profitability of the project that drive the ability to recycle cash.⠀

My recommendation? Create an arbitrary figure for Yield that works for you. For us it’s 10% Gross Yield – this means we know it will make good cashflow. Our main focus is⠀
on Capital uplift – creating value. This is what allows us to keep moving our money, creates sensible equity, de-risks the project and allows the wonders of leverage and⠀
compound interest to do their work.⠀

The critical number – 25% profit on GDV. If all costs come to 75% of GDV then you can recycle your cash.⠀

If you are interested in working with us then get in touch! on information@targetfive.co.uk⠀

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Estimating Build Cost – How Do You Do It?

My take on it:⠀

Perhaps the hardest thing when evaluating a deal and the bit most likely to go wrong iis the unknown element, the cost of refurbishment. The price, within reason is fixed, costs, (Stamp Duty etc) are fixed, the rent and end value are not fixed but entirely predictable. ⠀

Add to this the need to act swiftly and make quick decisions and you need to have a methodical approach that enable you to get this right. How often have you underestimated the costs? I have done it loads of times and our PMs biggest gripe with me is that I can sometimes do this. ⠀

How am I doing it now? Put simply for £200k refurbs or less I use A 2 phase approach. Firstly look at £/sq ft spent on SIMILAR refurbs THAT YOU OR SOMEONE YOU KNOW AND TRUST HAS DONE, allowing for all costs, and apply that. Then Secondly add up the component parts, create a price list and add it up. I.e. ensuite – £4k. Dormer Loft – £30k etc. Then look at the two and take the higher plus 5% contingency. THEN sanity check it.⠀

For £200k or more AND ALL LAND DEALS I employ a QS. For £250-£1000 you will get far more certainly and peace of mind.⠀

If you are interested in working with us then get in touch on information@targetfive.co.uk

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Target Five Property Consultants – HMO Journey So Far

Since our formation in 2013 we have established ourselves as experts in the HMO property development field having undertaken 350+ renovations.⠀
It has been interesting putting together this post and pictures to see how far we have evolved from what was; I guess we shall call ‘standard & compliant’ HMO renovations that were similar across the country.⠀

The type of HMO being offered to let now has vastly changed due to the changing needs and expectations of the tenant, who want and deserve a level of luxury in their shared accommodation. Taking the above into account, we have had to evolve and adapt our model quickly and with consideration. ⠀

Changes we have made: – ⠀

👉 We view every new property as an opportunity and challenge to shake things up. With each new property we hold interior design brainstorming sessions, which we then develop into mood boards.⠀
👉 Each property is CAT 5 & broadband ready, with USB ports located in the ‘useful’ places.⠀
👉 Considered and thoughtful living spaces, designed to be practical for coliving homes.⠀
👉Casual spaces such as hallways and landings are not forgotten and are given a little extra something, whether it be a feature wall, amazing paint effect or vinyl art.⠀
👉 En-suite showerrooms: this change we feel is a must given the current climate of the coronavirus, being able to offer your tenants as much of their own safe space as possible! not to mention the end rental figure achieved for our investors.⠀
👉 Bespoke furniture: here we focus on our interior design and what will work within budget but also be durable! Using companies that specialise in landlord furniture packages, such as @landlordfurnitureco who offer fantastically designed furniture for all concepts and budgets.⠀

And much more!⠀