Copyright © More Than Two Publications First Published 2005 First Revision 2007 Second Revision 2012 Third Revision 2014 Fourth Revision 2016 Fifth Revision 2017 More Than Two Publications, Nottingham PVJV2017 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the copyright owner. FOREWARNING THIS PUBLICATION DOES NOT CONSTITUTE ADVICE WITHIN THE TERMS OF THE FINANCIAL SERVICES ACTS OR ANY SUBSEQUENT REVISIONS, ADDITIONS, OR AMENDMENTS. The contents are a general guide only and are not intended to be in substitution for professional advice. All readers are strongly advised to take advice from their solicitor, accountant and surveyor before proceeding with any property purchase. This e-book is not intended to be a substitute for professional advice. No properties should be bought or sold in reliance thereon and readers should only engage in property related activity after consulting directly with their solicitor, surveyor, tax planner and accountant, or other professional advisors. Please visit my website at: www.ThePropertyTeacher.co.uk 2 About The Author Peter Jones is a Chartered Surveyor, an author and a serial buy to let property investor. He has been involved in property for over 30 years having graduated from the College of Estate Management, Reading University, and then qualifying as an Associate member of the Royal Institution of Chartered Surveyors in 1983, before being elected a Fellow in 1992. By the age of 35 he was a Salaried Partner in a well respected firm of Chartered Surveyors, and was managing partner of their West End of London Office. His specialty was commercial property but during the recession of the 1990’s his specialisation became redundant, and so did he. Finding himself with no regular income, and with no savings, but with a wife and 3 young children to support, he borrowed some money from a relative and bought a house to refurbish and sell-on. That was the start of his own property business and, despite starting with none of his own money, he quickly assembled a multi-million pound property portfolio. He now owns over 70 letting units, and lives off the passive income they produce. Peter is still actively involved in buying and renovating property, and regularly flips properties for profit. Peter has written a number of successful property books. The first, An Insider’s Guide to Successful Property Investing, was first published in 2000 and was one of, if not the very first, book of its kind which was written for what we’d now call buy to let investors. On the back of its success he was invited to be a guest writer for Property Secrets, and wrote Spanish Property Secrets, French Property Secrets, and Portugal Property Secrets. He is now a guest blogger for Property Secrets. He has since written a number of other successful titles dealing with UK investing including 63 Common Defects in Investment Property and How to Spot Them, The Successful Property Renovator’s Workshop, and the highly acclaimed The Successful Property Investor’s Strategy Workshop in which Peter describes step-by-step how he built his own property portfolio, starting with virtually none of his own money. Details of his books can be found at: www.ThePropertyTeacher.co.uk He has also written for Property Investor News, Property Auction News and Hot Property Alert, and has been a guest blogger for Progressive Property and LandlordZONE. He is also host of the Progressive Property Podcast. Peter’s blog can be found at www.ThePropertyTeacher.co.uk Please also visit Peter’s YouTube Channel - The Property Teacher And his Facebook page www.Facebook.com/PropertyTeacher 3 Why I Wrote This Book Chartered Surveyor, Author & Property Investor The Successful Property Renovator’s Workshop My name is Peter Jones. I’m a Chartered Surveyor, an author and a property investor. Following the great success of The Successful Property Investor’s Strategy Workshop I was asked whether I could put together a similar manual using my material from my property renovation seminars. This was a very exciting proposition because at that time The Successful Property Investor’s Strategy Workshop was a completely new way of sharing information, dare I say even ‘ground breaking’. Particularly satisfying was that I was able to give the same information I would normally give at a live seminar but at only a fraction of the cost. The Successful Property Renovator’s Workshop follows the same format, being a combination of my slides and reference notes. I have also included “handouts” from the seminar as Appendices. These cover topics that were too far reaching to cover on the day. As with The Successful Property Investor’s Strategy Workshop I have to warn you that some of the grammar might leave a lot to be desired – after all, these are my notes and many of them follow my “speaking voice”. But rest assured that these are the resources I would use if I were teaching you, personally, live! So welcome to The Successful Property Renovator’s Workshop. Over the next 150 pages or so I will give you the benefit of my experience of doing up properties – all that I did wrong and all that I did right, so that you can use it to help you build your property renovation business. And all at a fraction of the cost of a live seminar! 4 In The Beginning But how and where do you start? Don’t freeze and procrastinate Don’t jump in rashly without proper preparation Break it all down into logical steps And……Make A Plan The Successful Property Renovator’s Workshop Congratulations! So you want to be a successful property renovator. However, chances are that you’re not sure how to start, and this can cause potential renovators to freeze and do nothing. Conversely others jump in without thinking things through and make a total hash of it. The answer to both these problems is a full understanding of what is required, along with proper planning. Any large project of any type can seem daunting so the key is to cut it down into a smaller number of processes, or steps. So we’ll start by first looking at the different stages that need to be undertaken to complete a successful renovation project. These are: • Decide on what you are trying to achieve • Decide on the type of project that’s right for you • Decide on your budget • Find a suitable project • Analyse the profitability of the project • Arrange your finance • Buy the property • Organise the project • Find your team • Undertake the work • Sell the property or, alternatively, let it out and/or refinance and take all or some of the increase in value as a loan 5 There are two main reasons why we will probably want to refurbish a property. The first is because it’s a rental property for letting out. The second reason is because it’s a property we’ve bought to refurbish and sell on. If it’s a rental property we’ll probably be trying to make sure that we: • Make it easier to rent and so reduce our voids • Increase the rent • Increase the capital value so that we can refinance and pull our money back out if we want to. If we’re renovating the property to sell it on, we’ll need to be aware of two potential markets: • The first is to owner occupiers • The second is to other investors The standard of refurbishment will be different for both of these potential buyers. If we’re renovating to sell on to owner occupiers then we’ll generally have to provide a higher standard of refurbishment, and conversely, a lower standard of refurbishment if we’re selling on to other investors. The premise behind this is that the other investors will be looking to rent the property out and so a refurbishment for a sale to an investor will be identical to a refurbishment to rent the property out. In that case we’ll be looking to bring the property up to a good, but not exceptional standard and use hard-wearing finishes. If we are renovating a property to sell on to other investors their main concerns will be: • The yield • Buying at a discount, what we could call nowadays below market value. Of course there are always exceptions to every rule and the refurbishment will need to be in keeping with the property, in other words its size, age, character and location, regardless of whether we’re renovating to rent out or to sell on. And in some areas the appropriate market may be high-end tenants, in which case the finish for the rental market may be identical to the finish we would provide for owner occupiers or, in some cases, such as higher end corporate, higher than for owner occupiers. 6 This Is How I Did It This is a very personal view •Based on my own experiences •Based on my own projects The Successful Property Renovator’s Workshop Let me say from the start that this is a very personal view of renovating properties. By and large, with just one or two exceptions, the insight and advice I give is based upon my own experiences. If there is anything missing that you feel should have been included, or if in any situation I describe you have had a different outcome, then I apologise: but by the same token you can rest assured that what is included is not theory, or merely anecdotal.