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AWARD WINNING PROPERTY CONVERSION – PODCAST NOW AVAILABLE

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In this BRAND NEW Podcast Series, we will be going behind the scenes on some of the UK’s most Creative, Lucrative and Award-Winning Deals 

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Hosted by , Mark S Barrett from The Property Brokerage, this month it gives me the absolute pleasure to welcome Target Five’s Andy Babbayan who will share insight and inspiration on all things property conversion.

In this podcast we review Andy’s award-winning commercial conversion where he shares how he sourced, stacked, built and refinanced out a commercial mixed-use site leaving none of his own money in and cash flowing over £35,000 per annum.

If you want to understand how to get your award-winning commercial conversion this is one Podcast you do not want to miss. ??????? 055 – ?????? ???, ???? ???? ?????? ??? ??? ??? ?????.. https://buff.ly/3qLk2AO (COPY AND PASTE LINK INTO YOUR BROWSER).

 

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UKPA INVESTOR DISCOVERY DAY

Andy and Tina are in the central Brighton today presenting another UKPA (UK Property Angels), Investor Discovery Day.

Investors got to see some great developments in progress in Central Brighton as well as some new investment opportunities that Target Five have to offer.

If you want to find out more about UK Property Angels, please visit their website here https://ukpropertyangels.co.uk/investors also check out Target Five’s previous network projects with @ukpa_official.

Also, a special thanks to Guy, Andrew and Dagmar for the lovely branded biscuits

UKPA & TAGRET FIVE PROPERTY CONSUTANTS PRESENTATION TO INVESTORS

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STAGES OF PROPERTY DEVELOPMENT – STRUCTURING LAND DEALS

Part 4 of Sven’s video series on The Stages of Development, has landed! here are his Deal Options:

Unconditional Purchase: is the most basic form of purchase and in our opinion ‘quite dodgy’ if the land does not have planning, we don’t use this option very often!

Conditional Land Purchase Contract: once conditions have been met such as planning the developer is obliged to buy the land.

Option Agreements: Our favoured method of deal.  A contract with a set time, a long stop date and set price.  It gives the developer the option of purchasing the land in that time frame, allowing the developer to obtain planning, undertake due diligence and to purchase the land if they still want to.

Promotion Agreement: Between the land owner and developer, usually the developer will do the work to promote the land i.e. get the planning, then sell to the open market.  Splitting the profit with the land owner.

Joint Ventures: These can take many forms, usually between land owner, developer and a finance partner.  Who come together with an agreement to suit all parties.  Make sure there is CLARITY on this agreement, highlighting what everyone’s roles are and what they are bringing to the table.  Our advice is to try not to partner with people who have the same skill sets as you, compliment not duplicate!

There will be a total of 8 videos in Sven’s series on The Stages of Property Development, missed any? don’t worry you can find them all on our news page, scroll down.

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CLT MODULAR NEW BUILD – SITE UPDATE

Six days ago our flat pack Carbon sustainable development (Cross Laminated Timber (CLT), Modular Construction), was delivered from Austria, all 25 tonnes!

Today we have been to site and the rooms are taking shape with the first few panels in place, very exciting – fingers crossed the weather holds out ?⠀

Thank you to @rjlandanddevelopment and ⠀
@cseeinvestments for helping to document our new build journey.⠀

We will keep you updated of course with progress, it’ll be coming thick and fast now!⠀

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OUR FLAT PACK CLT MODULAR NEW BUILD HOME, IS HERE!

It is quite a momentous day for Target Five, as our team are onsite at our project in Newland Street, Worthing, as our CLT construction (Cross Laminated Timber carbon sustainable development) has arrived from Austria.

25 tonnes of materials, shipped over on the back of an artic lorry via the fabulous team at Stora Enso. There are 14 packs which are positioned sequentially for the build progress, very much like Meccano but on a mammoth scale! not that we are daunted or anything. This is a first for T5 re: modular building and we are very much learning enormously as we go along with our trusted team and guides at Olive Modular with our PM Tim overseeing.

To the plan then, the main construction will take circa 2 weeks! starting at the rear back gable and working towards the front pavement.

By using a Cross Laminated Timber (CLT), Modular Construction designs and building methods we will be delivering low carbon results with high quality standards compared to traditional methods of constructing developments re: the use of cement and how this impacts CO2.⠀Creating Energy efficient, Environmentally beneficial buildings.

We will keep you updated of course with progress, it’ll be coming thick and fast now!

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STAGES OF PROPERTY DEVELOPMENT – DUE DILIGENCE

In the third of Sven’s video series on The Stages of Development, he is looking at the key points when undertaking Due Diligence:

The 4 Key Points To Follow:
– Legal due diligence; looking at searches, land registry, titles.  Are there any easements or covenants?

– Physical site due diligence; boundaries, topographical survey, soil samples, percolation tests.  Some of these tests can only be done at certain times of the year, so you will need to factor this in, especially if you’re offering option agreements/subject to contract agreements.

– Planning due diligence; MOST IMPORTANT.  We recommend using a planning consultant! This is where the value is most definitely added!

– Construction & onsite due diligence; is it feasible? What are the constraints, especially for airspace developments, mixed use conversions or mews developments.

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HMO’S ARE THEY RISKY?

I have heard a lot about people moving away from HMOs due to the risk. I understand it – many places are over concentrated in therefore occupancies and refinance valuations have dropped. This is something we saw in Brighton – the student market became saturated and rents and occupancy dropped.

Does this make them bad investments? It depends on you and your product. Are they hard work – yes, is there more regulation – yes, is the competition fierce – yes. So if you are looking for an easy hands off investment, where occupancy will always be constant and you will not need to reinvest in your asset then HMOs are not for you.

If, like us you are professional landlords and developers, happy to put in the work and actually enjoy the experience of creating nice places to live that is relevant to the market and prepared to reinvest and reconfigure assets so that they remain relevant – then they are great investments – AS PART OF A BALANCED PORTFOLIO. Do I just own HMOs, no.

Do I continue to buy them, yes! HMOs are moving on, the trend is with Coliving – shared living by choice, with much more consideration to the quality and practicality of the property to reflect the needs of the market. HMOs are here to stay, it is not that people only stay in them out of necessity but that they now do so out of choice, better for many that than a lonely studio flat or bedsit.

SO there is a market and they do work IF you do it right and CONTINUE to do it right. Do not oppose regulation, it is usually done to improve standards and protect both landlords and tenants. Embrace it and even encourage it, get ahead of the wave, become a thought leader and get involved in the conversation. 

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CONSIDERING INVESTING? OUR TOP TIPS

Know your end game – When do you need the money returned & what interest are you hoping for.

Who is as important as what – The project is important but you need to know that you are investing with the right people, get to know the people around & behind the project, understand them, their reason, moral stand points etc. Never give a company or organization money on a first conversation, we would never ask someone we didn’t know to invest with us, we like to know who we are working with you should too.

Learn about the project – Do your own research into the project the money is intended for, what will it be used for in the project & how will the company deal with problems & challenges.

Ask about a track record, success’ & failures.- You will learn a lot about the people you will be investing with by how they deal with problems & how they react to being asked challenging questions. A reputable, confident & successful property company will have dealt with a fair share of issues & will not have a problem discussing how they overcame them with any potential investor.

Ask what securities are available – There may be an option for a second charge or deed of priority; it may secure your funds more, but be mindful this will be reflected in your return.

Be Fearless, but not reckless – Your money should work hard for you, but it won’t without you taking a leap of faith & investing. It’s ok to be worried or anxious but if you have followed our tips you should have all the information you need to make an informed decision.

Consider reinvestment and rolling over your interest – Interest earnt from passive investing is considered an income, & is therefore liable to be taxed as such. If at the end of the term, you don’t need the funds back immediately, consider reinvesting or extending the terms & adding the interest to the pot. You can then take the interest profit when it is most tax efficient for you to do so.

If you would like to learn about investing with us, get in touch we would be happy to start the conversation with you & see if we both feel comfortable with an investment agreement (01273 525656 or information@targetfive.co.uk).

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FEELING THE PINCH WITH CONVEYANCING DELAYS

Is anyone else feeling the pinch when it comes to delays around the process to buy property at the moment? 

We have really felt a delay in the process of buying projects recently & have taken a look to see how we can address this & is there anything we can do to mitigate the delays. As the old adage goes; time = money & therefore we have to try & reduce the time things are taking. 

Why are things taking longer; 

  1. The increased transactions across the market caused by the looming end to the stamp duty holiday has meant solicitors are working at maximum capacity & inevitably therefore things will take longer to be dealt with. 
  2. Funding delays – traditional lending is still very cautious & the legal due diligence is extensive & can take as long as the legal process to buy. 
  3. It’s never simple – this is very specific to us but would probably apply to most investors/developers – the very nature of what we buy is complicated. It’s how we add value, we solve problems & create value where others perhaps could not & this therefore requires a keen & detailed look at the title, covenants & other important legal factors to do with the property. 

So what can we all do to help things along?

Have a key team of people around you, we work with two legal teams well known to us & who know how we do things. Nazish Ahmad at Jury O’Shea solicitors & Justin Thompson at Thompson Allen, this means they have a lot of our ID’s etc already & know what they are looking for us straight away. This saves lots of time. 

Funding – Be ready & choose your route early, this will save you time & money in the long run. 

Be tenacious, always ask what you can do to help your teams & be kind to them, it will go a very long way to making sure you are top of their list to deal with.

 

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OPPORTUNITIES & THE CHALLENGES

There is an abundance of opportunities available for investors at the moment & we are looking at all options, working the feasibility & selection process to make sure we & our clients are getting the very best of these.

However, with opportunity comes risk & uncertainty. It’s in these risks there is often the best potential in a property. We take all the precautions we can. Advice from third party consultants, reviews of past projects & generally tapping into ours & those around us experience, knowledge & problem solving capabilities.

There is one area that is a real challenge for us. Funding these projects.

Lenders are notoriously risk averse, understandably of course, but we have to find a way to help them see the opportunity for what it is.

We are working significantly in the mixed use & commercial conversion to residential projects at present, this has presented us with a challenge.

Lenders, even the most dynamic & forward thinking, are cautious in this area. Their worry is over the state of the high street & the appetite for new business’ to want to return to traditional high street shops. This has a direct result on the percentage you can borrow against these projects of Loan to value (LTV). This is often closer to 50% than the traditional 70% of a straight residential conversion.

In addition, where we are retaining commercial spaces within the completed project, there is sway towards more cautious exit lending also.

Our solutions based approach means we don’t just give up on an opportunity, it does mean we look even more carefully at the project & make sure we have assessed & investigated all exit strategies aggressively.

Top tips for assessing these projects;

Location
Planning
Borrowing Costs & LTV
Exits
Research