4 Reasons To Invest In Commercial Property In 2021 | Commercial Real Estate Opportunities UK

 

I absolutely love commercial real estate and over the next few years, commercial real estate offers investors some of the best ways to profit from property. 

I'm going to share with you four reasons why commercial property is the opportunity not to be missed.

1. Okay, reason number one: over the next year, commercial property opportunities will be in abundance.

 In other words, there will be more supply of commercial property than there is demand. Of course, the newspaper headlines and the media will be fixated with big-name stores collapses, such as the arcadia group and Debenhams, and many people will think well. The high street is doomed, but that really doesn't present the whole story. You see many of those shops such as Debenhams, for example, they're, just too big. They were designed and built for selling products off shelves. 

Now all that business has gone online now the thing with many of these stores that are shutting they're just too big and very difficult to repurpose to alternative uses without knocking the whole thing down.

 You see the opportunity for developers, and investors is with smaller shops and uppers. You see. The COVID 19 crisis has meant that many small businesses have been pushed to the brink, and that means there are lots of smaller shops and uppers which are ripe for repurposing and by repurposing I mean converting to residential use.

 You see these sort of shops and uppers the smaller shops they're too small fry for the sizeable big housing developers, and they're ideal for smaller investors, if only they know what to look at now. 

2.Reason number two is, of course, the public development rights that have come into force. We essentially have more commercial property in the UK than is required. 

The government knows this, and that's why they've brought in a whole bunch of permitted development rights. Now what these allow? You to do is repurpose commercial buildings to alternative uses such as residential usage, without having to go through convoluted planning permission. 

There are plenty of these permitted development rights available right now and thanks to Boris' build, build, build initiative. 

Even more permitted development rights are on their way in 2021.

3. Reason number three: well, the opportunity is simple: you see, commercial property is cheap per square foot, mainly when supply and demand mean that there's oversupply residential property, on the other hand, is often two or three times the value per square foot compared to commercial property, so the opportunity is simple. 

If you know what he's looking for you know how to exploit the permitted development rights; then you can take cheap commercial, real estate and repurpose as much of it as possible to residential usage. 

4. And number four is that there are some desirable permitted development rights which are available for smaller investors to exploit, which actually will expire 31st of July 2021. And that means the first six months of 2021 will be a little bit of a gold rush. It'll be a gold rush for savvy property investors who have clued-up of what to look for what PD rights they can apply to those properties and how how to go about repurposing those properties for maximum gain in that window of opportunity. 

More info about UK property here 

BRRRR Method | BRRRR Property Investing UK Strategy Explained | How To A...

The BRRRR method, which is buy, refurbish, rent, refinance and repeat what is the breath strategy all about? I'm going to explain it for you and set out how to make it work in 2021, [, Music ]. So my name is Ranjan. Badacharya I've been a property investor for 30 years. I started out using the BRRRR method, and many successful investors have basically made their careers on successfully applying this strategy. You may have seen me on the hit sky, tv-series, property elevator or you may have attended one of our property networking events in central London, but if you're new to this channel make sure you subscribe and hit that bell icon, we put out new content each And every week, and it's all dedicated to keeping you on top of your property investing game.

So what is all about?

Well, it's the strategy by which I got started in the property and most successful investors uh got started in property. What it allows you to do is it allows you to keep on going, because the thing with investing in property is that it costs money. You need a huge amount of cash to keep doing deal after deal after deal, but using the birth strategy. If you do it right, you can keep going on forever. Now bro works in any market in any market conditions, but there are tweaks that you have to apply to it, depending on where you are in the property market cycle. In this video, I'm going to explain and debunk blur specifically for applying it in the uk and in 2021. So let's dive straight in [, Music ], so the brewer method then buy refurbish rent refinance. Repeat, I'm going to summarize it for you and then I'm going to break it down step by step uh in terms of the individual steps and how to apply in 2021.

Buy well really that's about buying your property below market value. You'Ve, it only works. If you buy property for less than it's currently worth, then it's about refurbishing. The objective there is to refurbish so that you maximize your rental income. That'S the objective of the refurbished step! Then, of course, you want to rent it out. You want to get tenants in, and the objective of that is to make sure you start generating cash flow.

Then you're looking to refinance the objective. There is to make sure that you pretty much get most of your money back out of the deal, because if you don't, then it's difficult to go again and buy the next property. The only sustainable way of keeping on going in property is to implement this sort of bruh strategy, because if you have to leave money or too much money in each deal that you do, then basically you've only got a finite pot. And sooner or later you run out of money, so hence the refinancing objective is to pull out most or all of the money that you'd invested in the deal. So you've got your cash pot back and you're good to go again. In other words, repeat the whole thing again now: let's have a look at buy now in today's market and the market you'll face in 2021, you've got to focus on buying.

Well, as Warren Buffett says, you make your money when you buy not when you sell and that's more important in the in the market in 2021 than ever before. I know we we're experiencing a little bit of a mini boom in property right now, but uh in 2021, and we're likely to see things plateau for a while once unemployment and all of that starts to kick in i've done other videos on that subject. I'll put some links in the description below now. I'Ve got a simple graph here. It really shows uh property price inflation over time and i've got time and value axes if you like, and then i've got the market value today of the property now you're.

Looking at a property, all property has a market value and you ascertain the market value based on comparables. If you're, looking at a three-bedroom, semi you'll be able to find realistic. Comparables of what similar like-for-like three-bedroom semis have sold for uh within a 12-month period. Now, brr only works if you do not buy property at market value, whatever the market value is of the property, be residential or commercial, it doesn't matter. What you've got to do is buy it at under market value or BVM, so to buy property below market value. What are you looking for is motivated sellers who are selling distressed properties. Now i've done a whole video on this and how to apply that particular strategy in 2021. Again, we'll put links in the description below for further watching now later on in this video i'll share with you exactly how much below market value you need to be buying property for in order to do brr and get all your money out of the deal at The end, i hope, you're finding this video useful, if you make sure you smash that, like button it'll mean that youtube will share this with more people like you, let's look at the refurbished part of the BRRRR method. Now i mentioned when we talked about buy, you need to know the market value of the property that you're looking to buy based on comparables. But what you'll actually find is that in a particular location or in a particular street, there is actually a range of comparable values. You'Ll find that there's a lower end and there's a higher-end and there's normally a ceiling price beyond which a property um. It will not be worth anymore in a given street. What you need to know is for the property that you're buying. What is what is that sealing price? It doesn't matter, if you add in a swimming pool a jacuzzi or whatever you like in that particular street.

No house has ever sold for more than 250 000 pounds. If that's the case, then that is your ceiling price. So, if you're doing any refurbishment whatsoever, there is no point in doing anything where you are expecting a value beyond this ceiling price, particularly in a market like 2021

Now, when the market is going gangbusters and it's a boom type time, then you can possibly get away with it, because what you tend to find is that property prices are growing within a 12 month period in a boom time. So if you buy under market value - and you do a little bit of refurb and your refurb project takes six months or eight months and it's simply the time it takes for the refurb to happen - has actually made you some sort of profit um, but in in Particular in 2021 you've got to be very careful of this ceiling price that is the maximum you're going to get out of it. Now in the in the brewer method, uh, we are looking at refurbishing property to keep them for long-term rental. Now that's a completely different refurbishment and renovation strategy to doing uh renovation to sell on or flip on uh into the market. The renovate to let method, if you like, is far more about optimizing, the rental cash flow of the property, as opposed to when you flip it. Your renovation is focused around optimizing, the end value, so this is important because when you do the refinance part of it, you want to refinance the property not based on the price you paid for it down here, but you want to refinance it based on the um. The renovated price, which hopefully is the ceiling price for that property in that particular road. Now this is one area where a lot of people get confused. Now there are two elements of uplift which you can create in a property that you buy. There'S this bit here, which is the the pound that you're making by buying well by buying below market value and there's also the value that you create by refurbishing. Well now many people get this confused when you buy a property below market value, remember you're, buying it below the market value of its current condition. So if the property is is a little bit dilapidated, it needs a new kitchen needs a new bathroom and all of that needs need to do windows or whatever it needs. You know, then, you are comparing the market value of that property is discounted from the from the ceiling price of property in a1 condition in that street. So what you're looking at doing is assessing the property you're buying, which may be slightly distressed. It may be needing of repair works and the likes, but you're assessing it based on its market value in that dilapidated condition, and then you are making some uplift based on adding value to it by doing some works to the property. Now, when you get this total uplift in value to the ceiling price, that uplift is made up of added value through renovation and um purchasing.

Well, what you've got to be absolutely clear about is how much money or how much profit you're making from that deal by buying well and how much is actually from refurbishment now in 2021, you've got to be very careful on your refurbishment budget you're, not going to Add massive value simply by repainting a place and putting a new bathroom suite in and having mushroom colored walls and yellow fluffy cushions. That is not the market we're in in 2021. As a rough rule of thumb, if you're spending a pound on your works, then you will generate two pounds worth of value as long as, of course, that value doesn't take you above the ceiling price for that property in that street. Now, let's have a look at the different things that you can do when you refurbish a property, be it residential or commercial, it doesn't matter. There are basically four types of refurbishment or renovation works. You can carry out I'm going to kind of put them out on this chart here and explain which ones are the right ones to do, or the best ones to focus on in 2021. So you've got some refurbishments which are more expensive than others, um so high to low cost and some which will take you um, greater or lesser time to actually do now, the one that is the lowest cost and the uh lowest time uh in terms of effort And gives you maximum um bang for buck is to is what i call repair and fix so what's wrong with the property that prevents it from being rented out and cash flowing as quickly as possible. So it might be that the heating needs replacing. It might be. There'S some dodgy windows in there might mean that the electric fuse box is old, it's essential repair, type of stuff to get the property uh ready for rental.

The second area i focus on is curb appeal, enhancing, curb appeal. So when you walk up to the entrance of the property, what does it look like? First impressions count. First, impressions count for valuers when you subsequently refinance the property, we'll talk about that a little bit later, but often improving. The curb appeal of a property is one of these things: that's relatively low in terms of cost and quick in terms of time, then you start getting to the more complex areas of renovations and the next complex area, if you like, is what i call spatial improvement And that's to do with improving the layout.

So a typical example of this is let's say: you've got a very large lounge and a separate kitchen. A classic textbook thing to do to optimize rental income is to put the kitchen basically into the lounge, make it into an open plan, kitchen lounge and then make the kitchen into an extra bedroom. So that's playing around with the spatial layout of the property to optimize. It for rental. Another example of this is if you've got a very oversized bedroom with two windows.

For example, you can you can in many cases chop the bedroom in half with a partition wall, etc, to increase the bedroom count in that property and the fourth most expensive area to um.

To think about is add space now that's to do with extensions, whether it's going into the loft you're doing a side extension rear extension basement whatever you're adding space. So that is where you start to go up this ladder of expense and time it takes to do for 2021 when you're doing bro. You want to focus your refurbishment activity here. You want to do repair and fix to get the property ready for rental, and you want to do some simple, curb appeal type of things, because that way: you're going to get the property on the rental market as quickly as possible by getting it on the rental Market as quickly as possible, that means it's cash flowing and when it's cash flow, you can refinance it, pull your money out and you're good to go on the next one, because the idea of brr in a market like we've got in 2021 is to do as

Many of these as possible in a quick time as possible because you've got a golden opportunity over the next few years to require some serious, real estate stock. What you don't want to be doing is spending years on one particular property project, because you've decided to add extensions and do all this other stuff, which is very time-consuming. Now, here's a handy tip for you in times like this. You really want to be acquired quickly and, as i said, concentrating on these areas of refurbishment, but these are always things you can come back to. You know when the market's booming again, you know you may not necessarily want to buy. You may think the markets topped out these are times when you can go back to some of the properties that you've bought when the going was really really good and look to spend a little bit of time, uh on looking at these sort of strategies. Of course, doing this, these sort of strategies work best when you've owned the properties for a few years and benefited from some capital appreciation in them, so that these sort of renovations are easier to finance.

Of course, i should say that there are some circumstances where i would do this. I would do this in the spatial improvement um as part of getting my property cash flow positive. Now, if the spatial improvement is going to lead, lead or result in a greater cash flow rental cash flow, then it's definitely worth doing it's where spatial improvement involves things like RICS, if you have to use an rsj, which is a massive steel beam structural improvements to The property, then it's pretty much in the more time and more expense category. If your spatial improvement doesn't involve structurally altering the property, then i would consider doing it as part of these sort of quick in and out works, provided it's giving you a rental cash flow. Uplift, so next up, we want to rent the thing out. We want to spin out the refurbishments as quickly as possible, get some cash to get some tenants in there and generate some rental cash flow because you want to make you want to generate as much rental cash flow as possible because remember when you get onto the Refinance part of it, your mortgage, that you're going to get is ultimately going to be determined by the amount of rent that you're generating on that property.

So hence all your refurbishment activity is focused on that one thing: uh optimizing the rent uh to be the maximum possible, which then optimizes the money that you can subsequently pull out. Um from the mortgage. So have you done the method? Tell me about it in the comments below I'd love, to hear your feedback, particularly if you're doing bro right now. Now, let's look at refinance and also finance in general, if you like. Now, when you buy the property in the first place, you're typically buying it, some people are lucky enough to buy it with cash. They have their own cash pot, so they put the money in they buy the property outline with cash.

They do some renovations, they refinance it, get their cash pot back and they're good to go again. Other people do it with bridging finance because you can buy the property initially using bridging finance. Do the works, um reef and then refinance it onto a long-term mortgage once the property is let out. You do have to remember, though, that most mortgage companies require you to own the property for a minimum period of six months before you're allowed to refinance it onto a long-term mortgage. So you need to take that into account when you work out your bridging costs and the renovation time period, and all of that now, when you do your refinance, you're, typically going to get a 75 loan to value mortgage. In other words, the valuer will come around and value the property, hopefully at that, because you have renovated it to really get the ceiling price for that particular property in that particular location. Now, as i said, the mortgage company will give you 75 of that value. Now the other 25 is equity that you need to have the ideal that you're aiming for with bruh is to get as much of that 25 equity from the deal itself and the only two places that equity can come from it's here from buying below market value. The discount to market value that you bought the property from and any value that you've added through refurbishment, that's where your equity comes from, and if that is equivalent to what the bank requires, then you've basically pulled your money out of the deal.

So let me just give you some simple rules of thumb to help you out. So when you're doing your refurb, your refurb budget, you shouldn't, spend, don't spend more than 10 of you of the purchase price. Whatever you buy, the thing for don't spend more than ten per cent on doing the thing up, allow roughly five per cent of the purchase price for costs; legal costs fees this that the other and by fees i don't mean financing fees, which you can often add to the Loan but things like solicitor fees, professional fees that you may have to pay. So when you take into account that the bank requires you to have 25 equity in the deal, when you take into account that you've got to stick up about 10 to refurbish 5 costs, and all of that, when you factor that all in as a rough rule Of thumb, to help you guys out when you are looking at a property, if you want to brew it and get all your money out, you've got to be buying it at anywhere between 35 and 40 below market value. Now you can do that. People do that, but these own, these deals only happen from motivated sellers. Um are abound all over the place in times when there's a little bit of distress in 2021. Of course, we've got um unemployment increasing and follow schemes ending.

There are a lot of things coming which are pointing to some signs in the economy that they're going to be a lot of distressed property sales out there in the market. Now the br our ideal is to pull all your money out in every deal. But if you just have, if you just fall short of this a little bit, you may find that you've got a deal um and you've only got about five per cent invested in it. Um, that's still not very bad at all. It means you have slightly less cash pot in the future uh to go on, but it's still a good deal. So what so? What i recommend to people is look at brr as doing things with no money left in as it were. In other words, you pull out all your all your money from the deal after you've done it, but that is ideal and in my experience maybe one in six one in seven deals actually turn out like that. Most deals turn out to be low money. Less left in the deal, in other words when he refinanced out you're, typically got between five and ten percent tied up in the deal. At the end, you see one of the most fantastic measures in uh real estate. Investing to use is your return on cash.

Your cash on cash return, if you like now think about it. If you bought property 40 below market value and you've applied everything in this video on a deal and you've refinanced and you've got none, and you basically got all your money out of the deal. The amount of cash you have invested in the deal is zero and the return your return on that cash is literally infinite and that pretty much is the magic money tree of property, investing the return. The annual return you make from renting the property out, in other words, the positive cash flow once you've taken out, taking your rent and subtracted your mortgage costs and all the other costs of owning it and that rental profit cash cash flow that you generate per annum Is a return that you're making on no money tied up in the deal which is infinite now? An infinite return is, of course, the holy grail of poorer investing. Now, a lot of your typical deals will involve tying up some money in each deal. Maybe five? Ten per cent of the total uh you've got tied up in it, but what you're going to look at is for the money that you're tying up in the deal. What'S your return now, my golden rule of thumb is that rate of return on the cash you've got tied up in the deal is more than 25. That'S pretty much more than you'll get anywhere else, and that's probably worth trying up that money in that particular deal. So the repeat part of it basically in the market that you're going to face in 2021, get in and out of the deal as quickly as possible and you're good to go again and do as many as you can in the short period of opportunity. That we'll have over the next few years, but one word of caution is don't go on doing this forever. I would do a maximum of uh 10 deals using the brr strategy.

After that, i would think about doing b, r, oops r, basically killing one of the r's. Now, the r that we're going to kill is the financing refinancing r, and let me explain why, because b and fours is great for building your portfolio when you are starting out. But what you've got to realize is the more properties you build in this way. When you get to a portfolio of 10 you're carrying a rather large amount of debt uh on the value of those assets, and particularly if you're, investing in low-value areas that can start to affect the risk profile of your whole property business. As you grow your portfolio, you really don't want to be maxed out at 75 loans to value borrowing across your entire portfolio, because if they're any turns in the market or anything that happens, then your whole ship can easily be sunk, so build up using b and 4Rs, when you get to 10, have a think about whether you actually need to do that refinance element when you've rented out think of it.

This way, if you built up 10 properties and they're all cash flowing positive you're, generating a reasonable amount of cash flow from the portfolio that you've built using b and the 4rs on the 11th one. You don't necessarily need to refinance if you have bought well. In other words, below market value, you have refurbed well and added some value to it, and then you rent out if you don't bother refinancing your debt, will be based on the lower original purchase price. That means you'll be making even more rental cash flow. It's very important to look at rental cash flow as part of your overall property investing gain, because, yes, you can refinance and borrow more, but remember. Borrowing always has to be paid back. The pied piper will call one day and ask for their money back rental cash flow that you generate is yours to keep. You don't have to give that back to anyone, it's your earned income, so the blur method has been around for donkey's years ever since real estate, uh became a thing if you like, and it is the staple strategy of which explains how people have built uh their

Property portfolios and property empires, if you like, let me know what you think of this video in the comments below this applies to both residential and commercial property. I do a lot of training on commercial property and how you can apply this method as well. In the commercial real estate space, of course, there's a whole bunch of opportunities unfolding over the next few years. In that arena, I do some free training as well. It'S 90 minutes of free training. You can register for that at uh propertyhyphenworkshop.com. The links are below as well so uh make sure you subscribed by the way and see you guys in the next video

Housing Market Crash WILL NOT HAPPEN in 2021 | Eight Reasons Why UK Prop...

Uk housing market crash in 2021. Basically there ain't gonna be one in this video I'm going to share with you eight reasons why there won't be a property price crash in 2021. I'm going to share with you three types of property that you really want to avoid like the plague or should I say, avoid like covid19 in 2021, and I'm going to share with you my four-step plan to maximize the opportunity in 2021. So there's a lot to cover, so stay tuned, [, Music ]. Now my name is Ranjan Bhattacharya. I've been investing in developing properties for over 30 years. You may have seen me on property elevator, the hit sky tv show for property investors, or you may have attended one of our property networking events in central London now if you're new to this channel or you're, not a subscriber well, why ever not subscribe and hit The bell icon, we put out new content each and every week and it's all dedicated to making you a more successful property investor.

I've put out a number of videos on property prices in the property market. I'll put a recommended watching list of those videos in the description so be sure to check that out now there are lots of people on youtube, predicting a big property crash in 2021. Now some of these people have been predicting crashes for years, but you know what even a stopped clock is absolutely correct. Twice a day now, I'm saying there won't be a crash in property prices in 2021, but i'm not saying there's going to be a massive boom either they hear a lot of people talk about the fact that the UK is a small island and we have a Massive shortage of Housing, and that is going to mean that property prices are going to go up up up well, that may be true over the long term, but it certainly isn't true over the short term, I mean, after all, the Isle of Wight is a small Island what's been happening there with property prices in the long term, property prices will go up. So why are we so fixated with what's happening to property prices in the immediate future?

Well, when you buy an investment property, the first few years of ownership is the most risky you've got to buy. The thing you've got to make sure you cash flow it as quickly as possible and you've got to make sure that you exit out of the deal with as much of your money as possible. I've done a video on the brewer method, which underpins what i've just talked about. So if you as an investor, you're buying an investment property - and it goes down if you like - if you buy it at the wrong time - and it goes down and prices do crash in the short term, that poses a massive problem for you. So, let's get into it eight factors why property prices will not crash in 2021.

Number one is the amount of money that the government has printed and put into the economy. It's close to one trillion pound three times as much money that was pumped into the economy after the credit crunch in 2009., the value of your pound has gone down in real terms and when they make money in more plentiful supply, what happens is the value or The price of real finite assets tends to go up. This is happening in spades. If you look at gold, for example, a one ounce gold coin a couple of years ago - cost about a thousand pound. Today, it's upwards of fifteen hundred pounds for that same one, ounce gold coins we're seeing right now massive upward movements in the uk stock market stock markets have experienced their largest gains over the course of the last 30 days than at any period over the last 30 Years, why is that? Well, companies, ftse 100 companies are finite when the government prints so much money. What happens is that find the value or the price of finite assets tends to rise uh to maintain the same value if you like, as as they were before, that extra money was printed? This means that, because of this extra money, that's been printed, property prices will see a rise, but for the moment, unlike gold in the stock market, that rise will be subdued. In fact, i believe it will plateau the reason for that is because we have the specter of unemployment.

On the on the horizon, i mean there's immediately going to be some short-term unemployment. We'Ve got furlough schemes coming to an end, uh in in the first quarter of 2021. These will all subdue demand for property in the short term, but as soon as unemployment starts to bounce back to normal levels, as it will do, and it will do in a very short space of time. That'S when we'll see a massive asset price bubble emerge and particularly property prices will inflate, but do bear in mind um. When i talk about inflate, that is not inflating the real value of the properties. That'S just inflating them in terms of price to keep the price. The same as they were before the government pumped in one trillion pounds worth of extra money into the economy. So as a hedge against that hidden inflation, investing in property is a surefire bet. Reason number two is long-term low interest rates. Interest rates, as we know, are at all time record lows and they're likely to stay so for the foreseeable future by foreseeable future. I i don't see any any spikes in at least seven eight years. Why is that? Because we are a more global, integrated economy than ever before. The last time, uh interest rates really spiked was in the very very early 1990s. In 1991 we saw an overnight doubling of interest rates. They went up from seven eight percent to fifteen percent. Now, at that time, the world wasn't as connected as it is now, and significant economies um weren't as joined together as they are now. What happens now is that all the major economies tend to do things in sync and at the moment we have, for the foreseeable future, at an ultra low interest rate environment

Oh and smash that, like button guys, it really helps us out on youtube and comment. Tell me what you think about what I'm saying below number three is the sdlt holiday. The stamp duty holiday in the UK comes to an end on the 31st of march 2021, but i believe that will be extended. The reason it would be extended is because the um, the housing market, hates cliffhedges and I think the worst time for a cliff edge, is exactly on in march, at a time when the economy will be looking to recover so expect to see that holiday extended. For the short term, number four is the five percent deposit scheme for first-time buyers, and this is going to be absolutely massive in terms of underpinning the housing market previously, of course, um new build developers, developers of new properties could apply for the help to buy scheme Or should we say, help to sell scheme which allowed them to sell the properties to first-time buyers, and they only required a five percent deposit? Now the amazing thing is the government is planning to extend this scheme to first-time buyers for of second-hand property, second user property, and that will be amazing. This is an ideological thing for the tories and i think it is going to go ahead. Um you see the tories know, of course, that um homeowners tend to vote tory and what they're trying to do is encourage more home ownership to encourage vote bank for the future.

So I believe, that's going to happen, but that means a huge amount for the property market, because what it means is that people, first-time buyers will be able to get on the housing ladder at record. Low interest rates with only a five percent deposit required and not have to go for some of these expensive, overpriced new bills with high service charges and all of that they can buy a two bedroom, terrace property second hand and benefit from that five percent. Deposit number five, the whole world seems to be going green, yes, uh they're, going to be a whole raft of green incentives and grants. Government grants to help property owners with renovations to basically bring up to standard the insulation and the energy performance of buildings. So, as a property investor, if you're buying a dilapidated building which is in need of renovation, you will basically benefit from certain improvement grants. Number six is the city exodus. Now the city exodus is temporary, guys um now we're hearing a lot about uh migration. It'S as though you know some people are talking about, as though people are herds of wildebeests going across the plains migrating away from the big cities, leaving these hollow places where they're going to be completely desolate, but mark my words. This is completely temporary. Once we've all had our vaccinations and our we've got our papers uh that we have to walk around with to say we are um, covid free and all of that you know this is all going to bounce back, because we are social creatures. Uh people want people contact, many of you may know. I run the baker street property meet the uk's largest property networking event in central london pre-covered and we used to have 300 people come to our monthly networking meets. You know not a week goes by when we don't get emails, saying when are we starting baker street when you, when, when can we um sort of meet up again and that's because people strive or crave human contact now it might be okay for some um to Flee the big city and go to some countryside bolt hole where the internet is on dial-up and you can walk your dog with a bit of fresh air. But there's no one to be seen for miles.

But a lot of people like to be surrounded by other people, particularly young people, uh, want to be around people and the best place for that is cities, and we see massive evidence of that. You know the minute there's any any uh, let up in any of the lockdown regulations that affect your part of the country. What do you see? Everyone goes down the pub and socializes and wants to be with other people, so the city exodus is going to be short-lived and that's going to present short-term opportunities for the kanye savvy property entrepreneur—number seven unincorporated landlords. Now, there's a massive problem brewing for middle-class property investors who haven't bought properties through a limited company who do a middle class job and they're they're in the 40 45 tax bracket, and perhaps they've got one or two properties which they have as buy to lay investments On the side, these people are going to face massive problems. Firstly, with section 24, the tax on their mortgage interest payments, um, they've lost 10 wear and tear allowance and rishi sunak has proposed uh extra capital gains tax for people that own second properties in their own name.

Of course, if you own properties within a company uh or your portfolio, landlord with with properties held within a company you're not going to be faced by this kind of issue, so they're going to be some middle-class landlords in in professional jobs who don't do property as A business they just do a couple on the side um, it is going to prove uneconomic for these guys to hold on to their properties in many areas, and these guys will look to sell.

But I believe these properties, this stock, is going to be mopped up by first-time buyers, taking advantage of the five percent deposit and ability to buy at very, very low interest rates. Number eight is the job situation. There are no bones about it. The job situation in the uh in the short term - ain't good - it ain't rosy and there's going to be a bit of doom and gloom, but the axe is going to fall disproportionately on the low-skilled job market and that's one of the reasons I'm going to urge. You to avoid low-value areas.

These will be risky over the next couple of years. Now, what I've talked about is very general. The housing market is not the same in every area, and every type of property is not affected by the same trends that I've talked about. Now, what I'm going to go on to now are three types of property which really you should avoid in 2021 because those are going to give you trouble, but before I do that make sure you've liked this video youtube shares it with more people, just like you. So three types of property which are too risky for 2021 well um, I'm saying the market will plateau we're not going to see too much happening in terms of rise or fall in 2021. After that time, we'll we'll start to see some boom boom boom when the market's plateauing. One thing you want to stay away from is new bills, and I'm talking in particular about new bills, flat new build flats. New build flats, often command a premium. To a second hand, property - and now is not the time to be paying over market value for a given property, particularly when these also come with very high service charges. So new build properties, stay clear.

These will fall in the short term and low value areas. Now low value desolate areas will be challenging, there's a reason why certain properties in certain locations are cheap, often it's because of the job situation. The job situation was dire before covid and guess what it's going to be after covered even more dire, and often these areas are in areas where, according to the national census figures, the population is actually decreasing year on year. Now there are plenty of areas in the northeast and the northwest of england uh, where property prices have not even moved since 2007.

Now stay tuned to the next session, I'll share with you exactly how to avoid investing in low value areas, and the third area of concern I have is HMOs. Hmo demand in many areas is reaching saturation point. A lot of hmos are aimed at tenant groups who have been most savagely affected by the unemployment situation. That'S unfolding and also particularly in cheap areas. There'S been a massive rush to because the properties are cheap. They've been a massive rush by new investors to go out and buy these properties and make um sort of five-bedroom hmos and the like and they've found that the tenants are simply not there. Brexit has also had a role to play. Um people came from Europe uh to to live temporarily in hmos, while they worked a few years before they went back home. That market has disappeared. So I'm seeing and i'm hearing from a lot of people with hmos uh struggling to maintain anywhere near full occupancy and are looking to convert them back into single-family. Let'S so hmos in low value areas is something to avoid. So, let's draw some of this together. As i share with you, my four-point action plan for profiting from these opportunities in 2021.

So number one doesn't wait for the crash to happen because it ain't gonna happen, except for certain types of properties, as I've discussed, the new bills, the low value areas and the HMOs expect more of a plateau in 2021. Keep an eye out on the unemployment figures. As soon as the job market returns to type of normality, we will see boom boom boom. So number two don't invest in low value areas. What do I mean by low-value areas? The average house price in the Uk is now 250 000 pound. So what I'm saying, if you're investing in areas where you can pick up a house for 40 grand that's the average price, that's what i mean by no value that is desolate. As a rough rule. Rule of thumb i would be looking to invest in areas where the average house price in that locality is in excess of 200 000 pound. You can find that information out from zoopla right move. They have past sale, price data and averages per region, and also land registry number three focus on adding immediate value: don't buy stuff, you can't add immediate value to now.

I'Ve talked about the brew strategy and we've done a video on that. Now, when you implement the bro strategy in a in a plateauing market that isn't going anywhere, the way you pull your money out at the end is pretty much by making sure you can add significant value to what you're buying in 2021, one of the best ways Of adding value real value to properties that you purchase is going to be commercial to residential conversions. Now this is a subject that i run some specialist training in and i also have a free 90-minute webinar on the subject which you can join me on um and the link is on the screen and and in the description below propertyhyphanworkshop.com number. Four focus on cash flow. Anything you buy needs to cash flow positively, on or as close to day, one of purchase as possible. Remember, you're, borrowing at record low rates, your rental income needs to cover those costs and produce a surplus that will tide you over until when the market starts to grow in terms of asset value.

And of course, I mentioned earlier in the video that we've got a lot of the middle-class landlords who are unincorporated they're selling up because of section 24 capital gains tax, and all of that this is going to mean that there will be more demand for rented Housing, so that about sums it up, let me know what you think in the comments below just to sort of give you the summary. If you like, one trillion pounds has been printed, you know and the value that money is going to go into the value or the price of finite assets. We'Ve already seen that in gold we've already seen that in stocks and shares it's going to happen in property. It'S just going to be a bit subdued for the next year, or so until the unemployment situation is sorted out and then the property will go the same way as gold and stocks so 2021 for the savvy entrepreneur is the ideal time to get started in property .

Housing Market Update (DECEMBER) - Simon Zutshi

 

I'm going to give you a Housing Market Update for what's happening in the UK property market in December 2020. There's a lot going on right now, so we've got lots to cover in this video.

Let's look at what's happened so far this year in 2020, Now for the last 10 years we have been in a real growth market in the UK And whatever happens, when you have a growing market, you have a boom and at some point you have a bust. So I think a lot of people have been expecting that's going to happen Now at the beginning of 2020. I was talking about the number of landlords who are looking to retire and sell up early

These are people, who've got property portfolios, they might've had for 10, 15 20 years, even and they've got to the point where they think you know what I might think about retiring in the next few years. Typically, when people have portfolios of property, they might give them onto their kids. Very often, their kids have seen how hard their parents work and don't really want to have those portfolios. So very often retiring landlords actually sell the portfolio. They'Ve had a massive growth in value. They sell them, they pay their Capital Gains Tax and they retire on a big pile of money. Sounds like a good idea to me, But in April 2017 the government brought in their new Section 24 Tax Laws, Which meant that if you own property in your own name, which most people do as property investors. And if you have mortgages, which again most people do and if you're a higher rate tax payer, it means you have to pay a lot more tax on your property income.

So, for that reason, some investors have moved their properties into a company structure, which is one of the reasons the government have done this. They want to control property within corporations, they're easier to tax, they're, easier, legislate against. They don't want millions and millions of individual Landlords, But that's another video Anyway, so many people have done that. But some are saying you know what I don't want: the cost or hassle of doing that. I'M just going to retire early, so they're starting to sell up their properties, And we know this because of our network of property meetings all over the country In 2019 and the beginning of 2020, we saw long-term landlords come to those network meetings looking to sell up Some of their properties because of Section 24 and these new tax changes, So that meant a lot more landlords bringing more property onto the market. For this reason, we felt that actually 2020 might see a dip in the market. Then COVID happens.

And really in the UK it kind of hit home the beginning of March And then later in March, we went into the very first lockdown Now what that meant for property prices in the UK was that for 12 weeks or so nothing happened. What I mean by that is all of the lenders. The mortgage companies stopped lending Now. The reason that happened was because A they were very nervous about the market and what was going to happen. This pandemic and lockdown had never really happened here in the UK before, But the main reason was actually, they didn't have capacity to take on new work or even deal with existing cases.

And that's because the government announced that there were going to be these rent holidays for tenants who were struggling to pay because of the pandemic, And there were going to be rent mortgage, sorry, mortgage holidays for the landlords. So what that meant was if you were struggling to pay your mortgage, you could speak to your lender and get three months of mortgage holidays. Now there was a real knee jerk reaction. I think a lot of investors thought well. I don't know, what's going to happen, My tenants might struggle to pay

Maybe I should get this mortgage holiday just in case And so tens of thousands of people landlords applied to their mortgage companies to get these rent holidays Now. The problem was these: mortgage companies just were not set up for this work. They were over overwhelmed and they had to take all their staff out of all the other departments and put them into a department just to deal with the people working for these mortgage holidays. So that's one of the reasons that lenders completely stopped. The other thing is all surveyors stopped. I had three remortgages and one purchase going through in March. Everything stopped. So all the valuations of those just didn't happen for about 10 weeks, And in fact I had a valuation immediately after we came out of lockdown and the surveyor put on this quote. It was for a big block of flats. I'Ve got seven flats up in Halifax And I was expecting the valuation to come up, maybe 900 850. It came in at 750 And they said because of COVID market might change.

So, actually you know the surveyor had already down valued the property because of that So surveyors are being cautious lenders, not lending mortgage brokers and estate agents. All went home, weren't working, So the whole market stopped Now normally in the spring time. At that time of year. There's normally a bit of a boom, but that couldn't happen. So when we came out of the lockdown, I think there was a real relief for a lot of people and suddenly the market went crazy. You had all the people who were trying to get transactions through during the lockdown. All of those pent up demand came through. You had a bit of a natural boom in the summer. Then you had things like the CIBIL loans and bounce-back loans. So there was lots of money sloshing around in the economy. That meant people had more money to buy property.

And then also people who have got money in the bank are worried about what might be happening and think. Is it really safe to leave money in the bank? I had a number of people who are not really in property, they're fellow speakers, other people on other wealth creation strategies, contact me and say Simon. I've got some money in the bank, I'm thinking about putting into property. What do you think I need somewhere safe to put it, So, I think that's definitely stimulated the market and caused this mini boom.

And I must admit this: mini boom has gone on longer than I expected, And then also we had the government who realised that market was going to fall. I mean the Bank of England predicted a 16 % drop in property prices due to the COVID-19 pandemic and the ensuing recession. So the government bought in things like the stamp duty holiday, where they said actually, if you're buying a first time, property or you're moving from one to another home, no stamp duty on purchases up to 500,000 up until the end of March 2021. So this was a real stimulus And certainly a lot of people thought well. You know if I don't have to pay stamp duty, it's a great time for me to go and buy property.

So this stimulated the market. Let me tell you what's happening here in Birmingham and actually it's different all over the country. Obviously, But here in Birmingham properties were going like hotcakes things were flying off the shelf. Things were going for more than the asking price, So the value kept on going up and up and up And what happened was people were making crazy offers? Now, that's all very well if you can get a valuation at that crazy offer, but increasingly what's happening right now. More and more properties are coming to the time where actually they've been sold at a price, often higher than the asking price surveyors are going out and saying. This property is not worth this much' cause surveyors are all being very cautious.

Now it's an interesting point when you think about the UK property market and valuation surveyors what the surveyors think the sentiment of people like the Royal Institute of Chartered Surveyors they're, the people who do the valuations on behalf of all the banks, If they think the market's Coming down, they are going to be very pessimistic and cautious with their valuations, So they are going to lower property at a lower value, But they don't realise - or maybe they do, but that's actually a self-fulfilling prophecy ,'cause. If it's the surveyors, who are valuing the property down, they are causing the property market to come down.

What this means is property sales are starting to fall through Now in the UK property market we see one in three sales fall through. Naturally, I think we're going to see an increase in sales falling through, So that's going to cause properties that are technically sold. Coming back onto the market, More and more properties coming on And I've seen, certainly in my area, more properties coming on and not enough buyers. I'Ve heard some other property traders talk about, there's a real shortage of property. There was, but not now, Things are starting to change And I think we're going to start to see the market to tip and start to come down. Now. I think that the stamp duty extension the holiday until March 2020. We will see a whole load of transactions that people are trying to get through early March, So that might keep the market going a bit. The government might just decide to extend that beyond March 2021, And so what that means is that maybe it might save the market. Otherwise, I think we could see a real drop-off in prices in April 2021.

We also heard in the news very recently that actually the government is being prompted Rishi. The chancellor is being prompted to maybe change the Capital Gains Tax that investors have to pay Now. What kind of effect is that going to have? Well, it depends what comes in in the budget. Obviously, These are only suggestions, a proposal at the moment the media is making a real fuss about this. I don't know if it's actually going to happen And I've said to a lot of my clients. Look don't worry and panic about something that could happen Worry about things that are actually happening in the market. The reality is, there's lots of property on the market that is not selling. There are sales falling through. I think we're going to see the property market dipping and starting to come down. When is that going to happen? Look, I just don't know when that's going to happen.

Nobody knows when that's going to happen, But we think it's going to happen sometime soon. So what does that mean for you? Well, it's important to keep updated on what's happening. I suggest you subscribe to this YouTube channel so that whenever these videos come out, I'm going to give you the very latest of what's happening in the market, But I'd also get ready for a property market crash in 2021. I think that's going to happen. So what does that mean If you're an active investor right now and you've got equity and property and you're thinking about releasing that equity to buy more property? I would get it done right now. There's no doubt in my mind that lenders in the UK are getting very nervous.

We've seen some of the higher loan to rate loan to value mortgages offers being pulled, And actually I think it's going to get difficult to borrow money going into 2021. So if we want to release money, I can't give you financial advice, but if you already plan to do that, you might want to get on with that and do that very soon. And I don't know about you, but I'm going to be watching the UK property market very closely 'cause, I'm getting ready for the property crash. 2021. I think it's going to happen. I think it's going to happen very soon and it's going to be a great opportunity. That means there are going to be more sellers than there are buyers. There might be people who want to buy, but if they can't get the finance they're going to really struggle to do that.

So what that means is strategies such as vendor finance and purchase lease options and exchange and delay completion are going to be strategies that we're going to be able to use in the market in 2021. There'll be a lot more sellers open to those creative finance strategies because they need to sell their properties So stay tuned to this channel. I'M going to keep you updated with, what's going on, I think it's going to be a great opportunity to invest in property. In 2021, If you like this, please, like the video subscribe to the channel, I look forward to seeing you very soon.

Invest with knowledge, invest with skill.