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Land Purchase Considerations

If you are looking to purchase land, there are several important items to consider.

    1. What is the cost of the land? If I pay $1,000,000 for 10 acres to build a shopping center does that cost fit within my budget? Or is $500,000 the most I can pay and still have a profitable project?

 

    1. Does the location work for the intended use? For example if someone is trying to build a convenience store is the site in a high traffic area? Or if someone wants to build expensive homes is the location suitable for million dollar homes or is it too close to commercial uses?

 

    1. What jurisdiction is the land located in? The City Limits? Is it in the Extra Territorial Jurisdiction (ETJ) of the City? Is it in the County? The jurisdiction that the property is located in will dictate which rules and regulations need to be followed. It might be advantageous to be in a particular jurisdiction (City A vs City B) rather than another. There may also be state and federal laws that will impact the property as well.

 

    1. If the property is in the City, what is the zoning category assigned to the property? The zoning category dictates the land use allowed on the property. If a property doesn’t have zoning or if a zoning change is to be requested then that will add to the time and cost. Something to keep in mind is that zoning change requests are not always approved.

 

    1. Deed restrictions are private agreements and restrictions specific to the land in question. They are noted in the deed, and restrict the use of the real estate in some way. Deed restrictions can be attached to property whether it is zoned commercial or residential and are in addition to local, state and federal rules. Deed restrictions can be more restrictive than other governing rules.

 

    1. Have utilities been extended to the site? Utilities would include water, wastewater, electricity, natural gas, telephone, and cable television. Water is the most important. Water and wastewater are typically the most expensive utilities to extend to a property. There are other ways to get water service such as drilling a well or for wastewater constructing a septic system. However these solutions also involve ongoing maintenance and a limited lifespan.

 

    1. Is any portion of the property in a floodplain? If so then the build-able or develop-able area of the property will be reduced. This in turn typically will reduce the value of the property.

 

    1. What are the topographic conditions of the land? Is it flat or is there slope to the land? The more steep the slope the more it will cost to develop the land because of the necessary cutting and filling of the soil. In general flat land is preferred although a hillside location for a home or office can provide a very nice view.

 

    1. Is there roadway access to the property? If so is there an existing driveway and curb cut in place or will this have to be permitted and constructed? How likely is it that a permit can be obtained at this location or is there already a driveway nearby which might diminish the chances? Is the roadway in a state of disrepair? If so then what are the chances that the roadway will be repaired and how might this affect my planned use?

 

    1. An easement is a legal right to use another’s land for a specific purpose. Are there any easements on the property that might restrict or otherwise unduly affect my ability to improve the property? Examples of easements include public utility easements which allow utility providers to install and maintain utilities. Easements can also be the means of providing access to properties that do not otherwise have roadway frontage.

 

  1. A lien is an encumbrance on one person’s property to secure a debt the property owner owes to another person. Before purchasing property it is important to determine through the Title Search and Commitment process if there is an outstanding lien on the property. It is best to have the property owner take care of liens before the buyer closes on the property because it is easier to leverage a lien being released.

How To Sell A House And Lot

There are times you think you are incompetent doing some things that are not your field or expertise. On this venture you come to prove something to yourself. Selling a property is crucial but if done with proper documentation, legitimacy, good faith and consent of both parties buyer and seller, transaction will complete in due time.

In my own venture, it took around ten months more or less to sell a house and lot of the transfer of property from parents to heirs of a clean title. You can seek the assistance of a broker, a lawyer, or a realty firm, among others, to help you with the processing of papers. Each office takes two, three or a month to stamp approval or release.

In the process of documentation, you need a set of photocopies of applications, receipts, affidavits, claim stubs, and other certificates. Label them in safe folders and keep in a bag so any time an office requires a copy, you have one available. Should a file be lost, certified true copies could be sought from the proper government offices.

Here are three steps from Attorney Glicerio Alarkon Jr. (San Beda College of Law), of whom I sought help for my papers.

“1 Settle the estate tax where the property of the decedent is located at the Bureau of Internal Revenue.

2 Secure a new title under the heirs at the Registry of Deeds or Land Registration Authority.

Before securing a new title under the heirs at the Registry of Deeds, you have to pay the transfer tax at the City Hall.

3 After all these steps, the property is now ready for sale!”

So after the lawyer’s advise, here is how the papers got processed selling a property. To save on brokers fees, I worked on my own selling a house and lot.

Initially, before step one, real property taxes must be paid every year, but if taxes have accrued and the interest charges are onerous, owners can claim and wait for a tax amnesty or pay in installment. Keep real property tax receipts.

In step one, once the estate tax have been paid, the Bureau of Internal Revenue will issue a certificate authorizing registration. From here, you can go step two.

Other documents you may need are publishers affidavit, an extrajudicial settlement of estate, tax account numbers, government identification cards, valid identification cards, and a special power of attorney from the Consulate General of the country where the other heirs reside if the heirs are living abroad. For example, our extrajudicial is from the Consulate General of the Philippines in San Francisco, California, USA. Also, death certificates of parents, and sometimes, birth certificates of heirs from the National Statistics Office have to be prepared. Save some money for notary fees and transportation, among others.

The last step is the Deed of Sale. With this, the seller should pay the capital gains tax. Payment of the property can be made in cash or check. However, verification from the bank is necessary, if payment is in check. You will need a lawyer to help you during this transaction. Also, you will need the bank’s assistance for safety. Should the money be of material amount seek the help of a police officer.

8 Factors to Consider Before Buying Land to Build Your Home

In this time of economy recession one major challenge that people, especially those in the cities battles with is their rent. The thought of a phone call from landlords or agents has led many to developing high blood pressure.

I know you have been thinking of building your own house. I know you are fed up of having to give excuses and explanations to your landlord all the time because of rent. I also know that the times are hard; the economy is at a slow pace.

Building your own house is good as it takes certain responsibilities away from you. It is a major achievement in some parts of the world when you move into your own home. But I would want you to consider some factors before embarking on your new home projects.

Given below are 6 factors to consider before buying land to build your home.

1. Knowing a genuine land / owner

This is a major reason why many have ignored the thought of buying land to embark on building projects. The stories of litigations over lands that saturate the space are enough to discourage many from giving thoughts to buying land to build their own home.

The world has always witnessed the existence of good and bad. Everything that is good always has its bad version. Our ability to identify the good at all time is what makes us a winner in the game of life.

It is not every land that is offer for sale that is not genuine and vice versa but whatever the case may be the buyer must ensure that due diligence is observed. Desperation should be avoided when trying to buy land for any projects.

Fraudsters often take advantage of the desperation on the part of the buyer to dupe them of their hard earned money. Take your time to ask the necessary questions and ensure you get the right answers before making any commitment.

Where you are not satisfied seek help from professionals. To be candid, do not ignore professional counsels in all your land dealings. Do not be penny wise pound foolish! Where you may need to spend money for professional services do not take it to be waste of resources.

2. Proximity to major road and highway

It could be frustrating sometimes when your abode his not easily accessible to friends and family. And a situation where you have to spend several hours to get to the major road in your town/city could impact negatively on your health.

Precious time can be saved when your land is not far from the major road and highway in your location. This can impact positively on the time spends on daily activities and engagements.

Thoughts like the nearness of the land to the major road around and the major highway in the city are crucial when thinking about buying land for home projects.

3. Proximity to office or place of work

That you have become a land lord is not a reason why your work or business should suffer. This is an important factor to consider before embarking on a building project. I have seen people who have to abandon their business in the city because they moved to their own house in a remote part of the state.

Thereafter they would not be able to make money the way they have been doing before becoming a landlord. Houses that are in far remotes areas could be let out pending the time the owners would be buoyant enough to shoulder the challenges of living there without any regrets.

4. Proximity to electricity

Electricity is an essential factor to be considered when planning to build your home. Running a home without access to electricity could be very costly and frustrating. It will impact negatively on your budget. It may even impact negatively on your health.

It may not be readily available in your proposed estates at the time of buying the land but it should not be far from its vicinity. The cost of installing electricity to the site should however be friendly and easily affordable if it is to be installed in a short time.

5. Proximity to telephone / internet networks

The world today revolves around technology, and telephone and internet are major drivers. However it is not unlikely that these services are yet to be operational in several places.

Living in areas without telephone and internet access is like living on an island. In this global village that we live you will do well with good telephone and internet access without which you are not accessible, and cut off from the world of information.

6. Proximity to Bank/ATM

You will always need cash to run your life and home. Especially in an environment where e-commerce is still unpopular and many businesses still rely on traditional method of selling, there will be dependability on cash all the time when you are in your new home.

Unlike in the past when you can keep cash at home for as long time as possible the current security challenges faced by many countries does not allow the storage of excess currencies at home.

Access to a bank or an ATM would take off the burden of keeping and accessing cash as at when due, because without access to cash one could be stranded in the home. A situation where one will have to travel hours before accessing bank or ATM services should be avoided when conceiving the thoughts of building your own home.

7. Overall cost of building and living in your new home

This is what will determine whether you will be able to build and maintain your proposed home. The cost of land, building, and that of providing basic amenities should be given adequate consideration before embarking on the projects.

It could be frustrating to own a building in a place that is not easily accessible by road. Cost of maintaining cars, providing security and electricity, could make one to relinquish the status of a landlord too soon.

8. Comfort of family and dependents

You will not live in your new home alone. The comfort of those who will live with you in the home should be put into consideration. What is good for you may not be good for your spouse and or children.

It will not be fair to deny your children access to good quality education because you now live in your own home. The impact of the proposed area on their health and emotions should also be of concern to you.

These 8 factors to consider before buying land to build your home if religiously followed will not just save you money but it will also safe you from unnecessary stress.

I would like to hear from you also as your opinion can help many of my readers out there. Kindly share your thoughts about this post via the comment box below. And if this post will help someone around you feel free to share to your social circle

Your Perfect Guide To Financing Property Development

If you happen to be a property investor, a developer, or a landlord, there’s an array of commercial land and development financing options to kick-start your project. However, for many commercial realty investors, the alternative investment market is pretty complex and large. So through this post, we’re attempting to simplify commercial property financing options for investors like you who’re looking forward to developing their own commercial properties.

Commercial mortgages

Commercial loans are used for purchasing commercial properties, such as offices, warehouses, and shops. Broadly defining, these mortgages will work like their private counterparts only. That is, a commercial mortgage will work to spread the cost of any large purchase over a specific period of time-generally, a fixed number of years.

The plainest commercial finance type will be leveraged by existing businesses that want to invest/buy in their own premises; a place where a business is currently operating. One typical example is of a dentist who’ll want to buy a specific piece of land within the clinic’s premises. However, if the dentists can’t pay for that specific piece of real estate straight away, then the dental expert can avail oneself of a number of commercial mortgage options-for example, commercial bridge financing.

If you don’t wish contributing cash yourself, then it’ll be, sometimes, possible to get close to 100 percent financing by putting in additional security. However, for getting full financing, you must have a powerful trading record and a solid history of operating within the premise (where you’re looking forward to investing). If you talk of the businesses, then it’s easy for an established business to get a commercial fund; however, for a start-up, getting commercial mortgages is difficult as the lenders have to face a lot of risks.

Buy-to-let mortgages V. commercial loans

Now, there’s one more situation where a commercial loan will be suitable; according to this situation, landlords-having large property portfolios-will make the most of business loans whenever they’ll want to buy a lot of properties. Having such a portfolio, you’ll combine a lot of properties within one single mortgage. By doing so, you’ll be able to cut arrangement fees and even leverage economies of scale.

Such a commercial mortgage is different from a buy-to-let mortgage in terms of scale only. So this setup can be leveraged by only those landlords that have multiple properties. This specific mortgage type is never meant for those individuals who’re looking to acquire their first ever rental property-for them, it’s the buy-to-let mortgage option.

So that’s it, readers. If you’re looking forward to getting a commercial mortgage loan for land and development finance, you’ll have to touch base with some of the finest alternative financing lenders in the market. That’s because they’ll be the ones to cater to your commercial property financing needs easily and, most importantly, quickly.

How To Raise Finance For Your Property Investment

Raising Finance

There are many ways of investing in property, even if you don’t have any money. Lease options and Rent to Rent are two very popular strategies. You can create a lot of cash flow by packaging and sourcing deals for other investors for a fee. However, it doesn’t mean that if you don’t have money, you can’t invest in multi-million pound projects such as developments, commercial conversions or normal BTL properties worth a lot of money.

There are people out there who are waiting with their cash to invest in your deals instead of having their money in their bank where they’re unlikely to get much return. Money loses value every single day and after paying taxes, they may just break even or make a loss. That is why they look for new opportunities. Some of those people are cash rich and time poor, meaning they don’t have the time to find deals. These investors are looking for people like you to find and negotiate deals so they can finance it and share a profit with you. You need to start hanging around with these sorts of people; tell them what you do and build a relationship with them at the networking events, exchange business cards and after the event follow up with everyone the next day via email. You can say things like: “Hi Mr Smith, it was a pleasure to meet you at the property networking event yesterday. It would be great to meet up with you to discuss further business opportunities. Please let me know when you’d be free to meet up.” Or you can say things like “There is no free lunch, but there is when I am in town.” It all depends on who you deal with. This is just a simple example. If you are good at writing emails you can develop it, but try to keep it short and to the point. Remember: dress to impress; you can never get a second chance at a first impression. Who you hang around with is who you become and your network is your net worth. If you told us how much five of your friends made annually we could predict your salary.

We will name a few places and products where you can raise money for your property investments. Even if you have a lot of money and you start investing, you will eventually run out of money one day. That is why it’s very important to raise finances and use other people’s money instead of your own. All successful people do the same – they don’t use their own money.

Joint Venture (JV)

This is a very good way of building your property portfolio quickly with minimal risk and no capital required. JV partners could be people who you meet at networking events. Some have a lot of time and will bring you good deals, whereas others are very busy but have a lot of cash to invest. If you are working with private investors they will have business experience that can help you. This will be very beneficial when analysing deals, legal issues, profit and loss etc. It is much easier and quicker to build a property business with partners than by yourself. Before entering in any JV agreement, make sure you do your due diligence on the person you are dealing with and consult with your solicitor. JVing with other people has positives and negatives so you need to analyse it before you enter such an agreement.

For a joint venture to work, you need to choose the right partners; each partner needs to bring something different to the partnership. It’s important to have clear documents that outline how the partnership will work so you know who is responsible for what. You need to be honest and open with each other.

I (Damian) experienced bad partnerships many times and lost a lot of money in business but it wasn’t their fault – it was mine. You need to take responsibility for yourself. If I had done enough due diligence on the people I was partnering with I would never have gone ahead with the deal. But I am happy that it happened as it was a good lesson and I will never make the same mistake again. It takes time to find good partners and you might be lucky and find a good one in the first place. Remember there is a golden rule in business: trust but verify! I have done many good deals with my current business partners and it would never have happened if I didn’t go to networking events. Shane and I travelled all the way from London to Florida just to network and meet new people who we can do business with. That is called sacrifice; we do whatever it takes. Do today what others don’t, to have a tomorrow that others won’t.

You can also JV with your friends and family; you provide the deal and knowledge whilst they bring the money required. Once the work is done, you share the profit 50/50. There are many different ways of structuring JV deals. For example, there might be people who are not interested in monthly income but investing money for capital appreciation. So instead of sharing the profit 50/50, you take the cash flow every month and they take the equity. The amount the house appreciates in value will benefit your JV partner, but make sure you have an exit strategy in place so you don’t have situations where they want to sell the property but you want to keep it.

Remember that 50% of the deal financed by a JV partner is better than 100% of nothing.

Crowd Funding

Crowd funding is getting more and more popular. There are a lot people with a good business plan and models but with limited finances. Raising money from banks is difficult and bridging is expensive. Many investors look for opportunities where they invest their money for a share in a company or project in return. It is very common in this day and age to start big developing projects where there are few investors that fund the project together to build apartments, and once it is sold they share a profit equivalent to the proportion of the money invested. In some crowd funding projects, anyone can invest money and get, for example, a 10% return on their investment. Quite often there are hundreds of people investing in one project. This is an extremely powerful strategy and it’s now even used to raise money for start-up businesses and movies.

Credit Cards, Loans and Overdrafts

When we started our property journey we had no money and a lot of debt. Our favourite source of investment at the time was credit cards and overdrafts as we didn’t know many people who we could raise the money from. Most of our credit cards were maxed out, so we had to increase our credit limits. Our first property investments came from none of our own money! When you have no money you must start thinking outside the box as you have little choice. These tips came from our mentors, they showed us how to do it and what to say when talking to the banks as this is very important. If you tell your bank that you need money to invest in property then you can forget about them agreeing.

From being broke, we both achieved financial freedom in just one year of investing in property. It all came from knowledge that we acquired from our mentors, books and creativity, so we managed to crush the myth that you need money in order to make money! If you want to master the property game, you need to have the knowledge to be creative. That is how winning is done. Most of the multi-millionaires and billionaires are self-made; they started from zero or debt, so anything is possible. You just have to believe it, set up a plan on what you want to achieve and how you are going to get there; for your dreams to come true you first have to wake up! You can have anything you want in life, you just have to be hungry and believe that you can have it.

Sylvester Stallone (Rocky Balboa) is a great example of a self-made millionaire. He started from humble beginnings – he was evicted from his apartment and was homeless for a while. In March 1975 Stallone saw Muhammad Ali fighting against Chuck Wepner. After that fight, he went home and started writing a script, taking inspiration from both the fight and the autobiography of Rocky Graziano to start writing Rocky Balboa. Stallone attempted to sell his script to multiple studios with the intention of playing the main role in the movie. Although receiving enormous amounts of rejections, which went on for several months, he never gave up. He was finally offered $350,000 just for the rights to the script without him playing in the movie. He refused to sell it unless he could play the main character, so after a substantial budget cut to compromise the producers agreed to have him as a star, and the rest is history. He could have just taken the $350,000 which for him at that time was a lot of money, but if he did he wouldn’t be where he is today. That shows determination. There was a time in his life where he had to sell his dog for $50 because he didn’t have any money to feed him; after his success with the Rocky Balboa script, he bought his dog back for $15,000.

Angel Investors

There are a lot of places to go where angel investors spend their time. All you need to do is search on the internet for the closest one to your area. Millionaires and billionaires come to these places and look for people with great ideas for a new business where they can invest their money for a share in the company in return. More importantly, not only will they invest, but they will also give you all the support you need, which is priceless. They usually have their own power team that has expert knowledge in marketing, branding and selling. Of course, you must know everything about the business and have a great pitch that will attract the investors to persuade them to invest in your company or project.

You need to make sure you know your numbers; know everything about your competition, if there is any, and have a great unique selling proposition (USP). Having a mentor that has already achieved what you want to achieve is precious! I (Damian) have invested and started many companies before property investing. I invested all the money I saved from my part-time jobs and I lost it as well as getting myself into debt. The main reason I failed in both businesses was because I didn’t know what I was doing. I had no guidance or a mentor to tell me how it needs to be done, what needs to be changed and what it is I was doing wrong.

When I started property investing, I had a mentor from the beginning and that is why I succeeded and I have done it in a very short space of time. I knew exactly where I was going and I knew that I had the support if I needed it. Every successful person has a mentor; imagine a footballer in the English Premier League or an athlete without a coach. Do you think Usain Bolt, the fastest runner on the earth, would be where he is today without a coach? We have paid a lot of money for mentoring and coaching, but with angel investors you can receive investments and free mentoring for a share in your business.

Family and Friends

There are a lot of people such as friends and family that have money sitting in their bank accounts without getting much return on their savings. Believe it or not, but money goes down in value all the time; inflation kicks in and prices go up. What you could buy for £10 ten years ago you can’t buy anymore. That is why it’s very important to invest in assets that appreciate in value. If you get a good deal, you can ask your friends if they would like to get 10 % return on investment on their money. I am sure they will like the idea as in the bank it’s unlikely they’ll get more than 1%. How you give it back is flexible; once the property is refinanced or pay them interest each month. It all depends on the individual and your agreement. Once they get their money back after the first deal, this will prove you can be trusted and they are likely to lend you money again.

Sell Liabilities

What do we really mean by selling liabilities? A liability is something that takes money out of your pocket, e.g. if you have a car that is worth £10,000, it will go down in value every single year plus it will cost you money every single month. Car insurance needs to be paid, road tax, petrol, MOT test, car maintenance and repairs. If you sell the car for £10,000 and buy a property below market value, you can refinance the property after 6 months and buy a new car or you can get a new car on finance as you will have a passive income from the house you bought. Every single month the rental income will pay for your car without you physically working to pay for it, so instead of having just a car, now you have a property plus a car that is paid by the asset you have acquired. What would you prefer?

Bridging Loan

A bridging loan is a very good method if you need to borrow money for a property that you want to buy very quickly. It only takes a few days for the bridgers to accept your application and lend you the money; in some cases 24-48 hours. If you borrow for the first time and pay back successfully the next one will be much easier and quicker because they know that you are reliable.

Bridging loans are mainly used by investors buying houses at auctions where you have to complete the purchase almost immediately. You cannot do the same with a standard mortgage company. Bridging loans have very high interest, from 1-3% per month or more in some cases. You need to know your numbers and have an exit strategy in place as it’s a very risky loan. If you have never taken out a bridging loan, make sure you consult with a financial advisor beforehand or somebody that has experience in bridging so they can make you aware of the potential problems that can arise.

Social Media Groups

There are a lot of property investing groups on social media that you can join for free. You can ask questions, gain free advice and find potential business partners. You can even sell and buy property deals, subject to how active you are in the forums.

Before buying anything, make sure you do your due diligence on the person that is offering the deal and on the property they are offering. We had many deals that came our way but when we did our due diligence we found out that many of these properties were on Rightmove and Gumtree, revealing that we were not being offered a discount or, in some cases, they were trying to charge us above market value!

Seminars and Networking Events

This is our favourite way of raising finance, as most of the deals we have done and money we’ve raised came from people we met at seminars and networking events. Some people we know say that we are lucky because we manage to sell a deal or get a deal financed that made us a lot of money. But guess what? If we were sitting at home watching TV, playing PlayStation or going to the pub with friends, we would never have met the sources and our business partners. It’s all down to our hard work and the time we spent building relationships and our network. Your network is your net worth and it’s not who you know but who knows you.

You first need to invest some money into the relationship before you start to do business with anyone. We invite potential business partners for dinner, for example. Is food free? No, it isn’t! Is transport free? No, it isn’t! You need to pay for eating quality food, for petrol or a train ticket. People who say you are lucky forget about all the sacrifices, costs and hard work. Business relationships are similar to dating. You shouldn’t ask for sex on the first date; it’s the same in business. You need to meet multiple times and build a relationship with a potential business partner before you do any business together.

Private Members Club

There are many different types of private members’ clubs. If you are a fan of cars, you could look into a Ferrari or Lamborghini private members’ club. You don’t necessarily need to own one to be a member. People who can afford these kinds of cars are definitely the ones with money so it could be a huge benefit to hang around with them and build relationships that could add value to your business in the future.

There are also yacht clubs, gentleman’s clubs, luxurious concierge services where you pay a monthly fee of anything between £50-£200. You get access to the best clubs in your city for free where you don’t need to wait in a queue. Impressive restaurants and sold out VIP events from the world of music to theatre, film, sport and art. There are many different private members’ clubs to choose from – it all depends on what you are looking for and what interests you. You can find more information about private members’ clubs online.

High End Gyms

The gym is a perfect place to network with people. There are reasons for that. First of all, you will see the same people every single day or at least 3-4 times a week because if you want to keep healthy and fit you need to work out on a regular basis. When you meet someone every single day and you make eye contact with them they will remember your face, and eventually you will start talking to each other. You will share weights, benches and equipment together and if they like you, you might even come to the gym with them at the same time and work out together.

The main reason that we mentioned high end gyms and not just any gym is because this is where wealthy people go to exercise. Wealthy people won’t go to any local gym as they like luxury and great customer service – everything they need is in one place from nutritional guidance, private medical care, spa treatments to DNA testing to determine what exercise suits them best. They also want to hang around with other people who are successful because who you hang around is who you become.

High end gyms have very expensive joining fees, which could be anything from £400-600 and a monthly fee of around £185-240. The most expensive one in London is in Knightsbridge, which costs as much as £2000 to join and £500 per month. There are a lot of gyms to choose from that are also very good and attract successful people and cost much less. David Lloyds or Virgin Active gym will cost you around £70-90 per month. High End gyms cost a lot but sometimes it is money well spent. If you can find someone that could finance your project of £500,000 to £1,000,000 or JV with you, isn’t the £200 per month worth it? Some people spend £3 on a coffee every single day, £3 x 5 days= £15 per week! In one month, that’s a cost of £60. What if you could save this money instead and put it towards the gym membership that will be much more beneficial and healthier than your daily coffee?

There are many more places where rich people spend their time. A charity ball is a good place to go as people spend a lot of money there bidding and raising funds to help the less fortunate.

There are very cheap and also very expensive ways of raising money. Everyone’s situation is different. You might be able to pay the £200 for the gym membership or you might prefer to go to free seminars or networking events. If you keep working hard and you are out often meeting new people, you will build your network and you will find the people who you are looking for. It might take you slightly longer than the more costly route as it may attract wealthier people, but you will still make it as you might meet someone who knows somebody who has the money and would like to invest it or get a better return than the bank is giving. We had to choose the cheap route as we were in debt so didn’t have the money to join expensive clubs. We are a living example that you can build a big network without spending £200 per month on gym membership. We met most of our business partners and investors at networking events and seminars, but we worked really hard to build those relationships.

Buying a Property With Tenants

So, as a buy-and-hold landlord, you’ve found a property to purchase that already has a tenant in place. Is this a good thing? It can be.

Ideally, the value of buying a property with a tenant in place is that the property is already cash flowing and you have income from the day you close on the property. However, you don’t want to take that for granted. So how do you know for sure?

    1. Ask the seller for all rental contracts. In this type of purchase, the tenants and contracts pass to any new buyer and the new buyer must abide by the terms of the contracts already in place. Often, seller rental contracts are very bad or even non-existent. You want to know the details and you want to see them before closing on the purchase. The seller should be giving you tenant information, but be sure to see what they have agreed to in writing – what they have signed, if anything – because you are legally bound by their existing contracts.
    1. Ask for documentation of tenant payment history. Do they pay on time? Do they pay at all? Part of the value of purchasing a property with tenants is income stream. Does it actually exist? Taking on existing tenants can be a real benefit, but it can also be an eviction nightmare. Does the seller have any kind of documentation to prove what the tenant performance has been?
    1. Be sure the tenant’s security deposit transfers to you at the time of closing. The tenant’s security deposit belongs to the tenant, not to the landlord. That’s why any time a property is sold with the tenant living in it, all contracts the tenant signed are still enforceable and any monies they put down to live in the property must transfer to stay with the tenant. Money to cover certain property damages can be withheld from the security deposit when the tenant moves out, but any security deposit money taken before that time or used for other purposes by the landlord is stealing. Be sure the deposit transfers at closing so you have money to cover tenant damages and/or to return to them when they move out. You, as the landlord are legally bound by the terms of the rental contract they signed, by the way, so you will be responsible to refund their security deposit and/or pay damages when they move whether or not you received it from the seller at purchase.
  1. Be sure the tenant is informed of the sale and where they should begin sending their payments after you’ve closed. Too many times the tenant continues to pay the old landlord (because they aren’t informed they have a new landlord) and you can be left with no payment and/or trying to get what’s rightfully yours back from the seller. Not a great start with your new tenant.

Don’t be disappointed if negotiations take extra time on a purchase with a tenant because of the need to provide these additional documents. The most important thing is to be thorough. If there are holes in the deal, you want to close them before the purchase, not be taken down by them afterwards.