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CONVEYANCING CHALLENGES

Once we have decided to go ahead with a project, assessed the risk, chosen a funding route & agreed a price, the next stage is to take the property to our legal team to start the conveyance process. ⠀

This is the part of the process that can, if not handled correctly, offer us the most challenges & potential delays. We work closely with our extended team of lawyers Nazish Ahmad & Lauren Fitzgerald at Jury O’Shea solicitors to ensure we are working at pace & effectively to meet any deadlines imposed by the agents or sellers. ⠀

They know that our expectations are not only to check the legal aspects of the property in line with the project intentions but also work quickly but efficiently & with a keen eye for detail. ⠀

There are always problems when buying a property but we make sure we look for the solution in every problem & this is the key to successful purchases. It is very often the case that the very nature of the property we are buying is slightly challenged with a problem attached & this can often be the reason why we are interested. ⠀

If it was easy everyone would be doing it! ⠀

We do however have to make sure we check every aspect of the title, the leases (where applicable) & the rights and covenants of the land to ensure we can in fact do what we need to do to complete the project in line with our initial strategy. We rely on our team to check this for us & advise us accordingly. ⠀

Once it is exchanged it is legally binding & it is important we know exactly what we are getting before this point. ⠀

– Tina Wenham

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ETHICS & TRANSPARENCY WITH INVESTORS

This is really aligned with win-win and is a cultural thing. Investors are partners, they are critical to your business, but rather than being schmoozed and flattered, they need to be dealt with as business people. With respect and with transparency.

I have always believed in a consultative approach to sales. I am not a salesman, but I am good at sales. I just tell it like it is, relate it to the client and demonstrate to them how it is a solution for their requirement. In order to do this correctly you need to be absolutely straight. I have not always been as straight. When I started off I tried too hard to make things seem better than they are – and it never ever worked! Sure the deals worked, but not as they expected, which is what they remember.

At T5 we are lucky – we have made that luck and sweated for it, but we are in a fortunate position. We are oversubscribed almost all of the time. How have we got there? By treating our investors as equals, this means being nice but not too nice but especially it means being respectful. Almost all our business comes through referral and recommendation. This is the ultimate vote of confidence.

We will soon be looking for more funding and it’s different to what we have done before. How will we do it? By engaging with people, educating them and treating them with respect. It takes longer at first but it will pay dividends! (TOP PUN ALERT).

– Andy Babbayan

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New Development – Arundel Road, Angmering. In Partnership with Chesterman Homes

Target Five are partnering with Chesterman Homes and their new development Arundel Road, Angmering, Littlehampton. Chesterman Homes secured this off market development opportunity on an option and dealt with the planning, which went to a parish appeal.

The development of x2 4 bed semi-detached houses began in March but as soon as it started it, construction stopped due to the Covid-19 pandemic. Works restarted in June.

We are excited to share the final CGI’s for the development, which are now ready for marketing the property, with the construction due to complete early next year.

About:-
These impressive homes are situated in the picturesque village of Angmering, with easy access to the village centre. The bright and spacious accommodation comprises living room, family room being the width of the house leading onto the garden, consisting of open plan kitchen/dining room with utility room and a separate wc. Upstairs, there are four bedrooms with en-suite shower room to the master bedroom and a family bathroom. Outside, there is off street parking for two vehicles and a generous westerly aspect rear garden.

Facts and figures:
Purchase – £250,000
Build Cost – £500,000
GDV – £950,000

with thanks to:
www.facebook.com/Chesterman-Homes-Property-Developers
www.chestermanhomes.co.uk

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NEW PROJECT UNDERWAY – WEST BUILDINGS, WORTHING

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West Buildings, is a late Victorian mixed-use property in the centre of Worthing, adjacent to the seafront. this building is doing nothing for the local community and economy! But once we’re finished with it it’ll be part of a bustling parade of shops and flats, providing accommodation for professionals, and a shop for locals.⠀

We plan to turn the upper part of the building into a 2-bed flat and the lower part into an HMO-style 3 bed flat, all of which can be accomplished under Permitted Development. The ground floor commercial unit will be retained. ⠀

Our designs for this project are based on the concept of ‘urban industrial’ here you can see a couple of our mood board ideas.

We will be sharing a video of the inside of this property soon, as we have started the satisfying stage of ripping out! ⠀

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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

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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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Multi Exits Identified

Following on from our focus on Risk is the need to assess your exit. If you do not have multi exits identified in the following key areas, DO NOT BUY!

  1. Use:  The more versatile the better. There will always be an A plan, the one that is projected to return the most profit, but B, C and D plans must also be potentially profitable. If only plan A is financially viable then DO NOT BUY!
  2. Rental Market: The critical R in BRRR (Buy, Refurbish, Rent, Refinance) in my view is Rent. If you are a long-term hold then it needs to produce good income. This means it needs to be robustly rentable and attractive to multiple markets. The best way to ensure this is spacious, well-proportioned and central properties. They are not always the cheapest but they are generally the easiest to rent! If you are banking on one tenant type to make money – DO NOT BUY!
  3. Sales or refinance: You have to ensure there is a market for your property. Too often people are over reliant on a commercial valuation to refinance a deal. Ensure you have a product attractive to multiple lenders and attractive to buyers. If it is not attractive to both then DO NOT BUY!

We will aim to do £30M plus worth of deals this year as we have each year for the past seven years. We are always looking for the best way for our clients to potentially achieve success through investing. Through our partnership with @LEOcrowdfunding we feel we have found an interesting and considered way to invest small and potentially build to bigger returns. We are excited to be working on our first project with them and although we are not quite ready to ‘lift the lid’ on that yet, we have some similar recent project case studies on their website now. (https://www.leocrowdfunding.com/property/detail/case-study-hmo-preston-street-brighton-by-target-five)

Get in touch to find out how you can get involved 01273 525656 or email information@targetfive.co.uk

Investment in property related assets puts your capital at risk and returns are not guaranteed. Past performance is not a reliable indicator of future success.  Please read the full risk warning at www.LEOcrowdfunding.com/risk before deciding to invest.

 

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We Love Commercial & Mixed-Use Properties

T5 love mixed-use and commercial conversion to residential!

I have always found it impossible to understand why residential investors ignore commercial and mixed-use property. Why? Whilst there are many reasons, I have distilled this down to three key reasons why I feel they create a true arbitrage opportunity:

Price per sq/ft: If you are not already valuing everything on a price per sq/ft or sq/m basis, then start now. It is how commercial and development opportunities have always been valued and is the easiest way to assess value, potential uplift and to show value to a valuer. Put simply these properties offer the best 3/sq ft rate around.

Locations: Mixed-use or commercial and ancillary use properties are historically located in busy, central and well-connected areas. Perfect for renting to every type of market.

Permitted Development rights: Build, Build, Build! You heard the man!  With the extension of Permitted Development rights, it is not only just the case that you can often add two flats above, but in many cases the entire building can be converted under Prior Notification, which means a simple planning process and no need to comply with space standards – ideal to create yield in central locations!

We will aim to do £30M+ worth of deals this year, as we have each year for the past 7 years. We are always looking for the best way for our clients to potentially achieve success through investing. Through our partnership with @LEOcrowdfunding we feel we have found an interesting and considered way to invest small and potentially build to bigger returns. We are excited to be working on our first project with them and although we are not quite ready to ‘lift the lid’ on that yet, we have some similar recent project case studies on their website now. (link to bio/ case study for Preston Street)

Get in touch to find out how you can get involved 01273 525656 or email information@targetfive.co.uk

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