Water, water everywhere!

So it's day 3 in the Big Brother household and we see the housemates all trying to sort out who's going first in the shower .....

Well we don't want that do we? So what do we need to do to avoid that from happening fellow property developers? That's right - plan, measure, execute! Ensure that all the showers, baths, taps and other water outlets will be able to be on simultaneously and fully without so much as a drip of a loss of pressure. THAT is perfection in the world of plumbing. One that can only be a property developer's dream, executing the perfect pressure and flow to allow all inhabitants of any accommodation block equal access to water at any time of day or night.

So today was the day of the water pressure discussion. It has to happen in each and every development ever done. In fact, ignoring or avoiding THE waterworks discussion can, just as at the doctors, make you feel you as if a vitally important detail in your overall examination has been missed.

When researching water pressure (and by the way only water pressure geeks will truly be able to relate to the power of the pressure here) you need to find useful and reliable websites to guide and teach you. One I came across today was this one: http://inspectapedia.com/water/Water_Pressure_Measure.php

A SUPER helpful website with what looked to me like questions taken from my 'O' level maths exam.
For example (and I quote):

"Example of variation in building water pressure:

• Incoming building water pressure is 80 psi at the street-side of the pressure regulator.
• The pressure regulator is set to 60 psi and installed on 1/2" diameter building water supply piping
• The building has four apartments and in each apartment simultaneously people are running multiple plumbing fixtures, drawing water out of the system so fast that ...
• The dynamic building water pressure drops to 20 psi when all of these fixtures are operating. Even though the pressure regulator is set to 60 psi, when water flow in the building exceeds the capacity of the incoming water main to deliver water at that pressure, the in-building water pressure will drop to a lower number." 

QUESTION: If Mary has a shower in apartment 2, and Tom in apartment 3 is making a cup of tea, whilst Frank from apartment 5 is washing his car,  what will the water pressure be for Jane when she comes back from work and wants to have a bath?  And what is the solution to her low pressure problem? 

 (That'll keep you guessing my friends ... the answer is at the end of this section). 

Yes, the world of water pressure creates questions like this in many of the great plumbing minds of this industry. And that is why a water pressure (and flow, mustn't leave old flow out) measurement needs to take place early on in your development master plan. We are having ours officially measured in two day's time. And hopefully it will be good enough to pass our ordinary level property developers exam. 

PS the answer is A solution to this problem may be the installation of 

a WATER PRESSURE BOOSTER PUMP.

I'm back!

After a few months of feverish productivity and a number of HMO projects under my belt, we have some exciting news about our latest development. Over the last couple of years my writing to my blog has been much less frequent due to all this business or should that say busy-ness? However, today, although it is no particularly notable date I have decided to resurrect my writing and let you in to a little project secret - we are starting on a commercial conversion! This is our first commercial conversion of an office block to a block of 6 x 1-bed flats in the centre of Hanley, Stoke-on-Trent.

The building is about 2,100 sq feet and was previously used as an office. We are working with a couple of other investors on the project and together using our combined skills, knowledge and expertise to create a fantastic new block of accommodation in Stoke-on-Trent. So far, we have the building, we have planning permission and we have a builder lined up. But we need more money! So funding the project and getting into the nitty gritty of the building project plan is our next step. This is our first Joint Venture with our new partners and one of the key aspects of our partnership is going to be agreeing roles and responsibilities. I think it's always a good sign when there's plenty of regular communication and dialogue from the start, which we have had from our JV partners - even on a Friday night after a few bevvies (him not us)! One of the most exciting yet nervewracking aspects of a new project is that there is always masses of learning from the start. Although you don't know what you don't know, I have found that nothing is unrecoverable, and actually most learning is wonderfully applicable in the future. So this will enable us to do bigger and more expansive (yes I did write expANsive not expENsive)  projects later. Commercial conversions, here we come!

Generation rent

[This article was written in January 2015]
Over the last few weeks, my DH and I have spent many happy hours discussing the state of the UK economy and the world economy (as you can tell we live exciting lives). These discussions have tended to take place over a leisurely Sunday breakfast when we are padding around in our pyjamas. Over a smooth cup of freshly brewed coffee it makes for a relaxing yet stimulating start to the week!

Although neither of us has studied economics to any great depth, we both have a good grasp of certain key economic theories which I think has helped make our investment journey a more confident one. I would definitely advise anyone involved in property investing to study the 'Big Picture' and understand what the economic risks and opportunities are within the world today.

One discussion we  recently had was around what is often termed 'Generation Rent' - i.e. people who are unable to afford to buy their own property and therefore can only and possibly will only ever rent. [The phrase has also given rise to an active movement lobbying for more legislation to support tenants http://www.generationrent.org/]. However, I would like to widen the definition of this phrase to demonstrate that to a lesser or greater extent we are all generation rent - unless we take definitive action to change that status.

I still work one morning a week at the local University, which I regard as interesting, fun, and informative. I enjoy teaching and love the contact with students and I am passionate about my subject area (Early Years). So it is rather nice to find that also once a month I get a payslip and an accompanying deposit into my bank account. Aren't I being rented once a week by the University? And my car is on a PLP plan  (personal lease plan) that means I don't own it, but I can drive it nonetheless as if it were mine. And many of our buy-to-let mortgages are interest-only which means we are effectively leasing the properties to rent out to other people (the only additional benefit is that we get to keep any capital growth).

There are many benefits to renting. You don't have to take full responsibility for the capital item if it goes wrong or needs certain repairs. If you want an upgrade, its fairly easy to transact (yes you may have to pay more per month but that's the price of improvement). You can plan your finances much more easily and with certainty. There are a lot of benefits to renting. However, many people feel fearful and powerless when renting, They feel that they have few rights and no options. This is simply not true, particularly when it comes to housing. Let's face it, if you are in a job, you yourself are being rented by your employer! If you can use the situation to your advantage, I can see that being rented and being a renter may actually end up being a pretty savvy way to financial freedom!

The Cinderella effect

Me at the end of a long day 

Ever felt that you were slogging your guts out to no avail? Ever wondered where all those hours went sorting out other people's problems, keeping a watchful eye over your expenses, or bringing up children? The way you use your time TODAY has a massive influence on how you live your life TOMORROW.  As a property investor I have had more times than I care to admit to when I have had to spend time doing things I really did not want to do but knew that NO-ONE else was gonna do them!

Whether that's been arranging a mortgage, sorting out renovations or advertising for tenants. I have painted properties, lifted carpets, cleared out mess, moved bins, called endless tradesmen, managed money, worked with tenants, sorted out paperwork, and done many more other glamorous activities!

Oh yes,  I have at times got my hands VERY dirty. As time has progressed though, I have been able to be much more hands-off by using other people's skills and expertise. I now have a *wonderful* mortgage broker, who is just so cool! I call him and tell him what I want, and low and behold a few hours or even minutes later, he comes back to me with the best possible options for the property I want to buy.

I now also have a team of builders and tradesmen I can call on for specific jobs. I use an agency for some aspects of lettings (I am still holding onto this part for dear life)!! I have a brilliant accountant who tells me each month what my profit and loss is, so that I can plan for cashflow and further investments. Recently I have even met a couple of people who might start to source property for me, so that I can focus on building my property business! WOOO!

At the end of a long, hard week, I do sometimes wonder where the time has gone. Balancing this business with family needs, volunteering commitments and some leisure and exercise time is not easy. However, I came across a great quote from Joshua Kennon http://www.joshuakennon.com/  that made me realise that the small, seemingly insignificant things I do on a daily basis are building my future.

Everyone thinks life is one upward, smooth trajectory.  They think of Cinderella in her big castle and forget that she spent decades scrubbing floors, being beaten, and locked in a cold room.  Between “Once upon a time” and “Happily ever after” a lot happens.  Not all of it is good.

- Joshua Kennon

Real research

I have been asked recently where you can find information on an area when undertaking 'desk research' for your goldmine (or potential) goldmine area!

So here are a few ideas:

Checkmyarea paints a fairly accurate financial picture across different social groups.

Fix my street which is a somewhat hilarious and useful tool for seeing the problems as neighbours perceive them!

Stats-wise Neighbourhood Statistics takes some beating but to get the most from it you'll need to get familiar with undertanding the nitty-gritty and finding the most appropriate datasets down to LSOA level (Lower Layer Super Output Area). Some datasets are as far as a census behind whereas others are very recent.

Walkscore gives an area a rating on how 'walkable' it is - useful if you have no access to a car or there is limited public transport. My town gets a 'thumbs up' and is described as 'very walkable'! 

If you have come across other useful sites that give 'insider info' about what it's really like to live there, please do get in touch!

Tasty morsels

Although I was only a 'B' grade maths student at school (mainly due to algebra and geometry) I think had we studies statistics more I would have definitely got an 'A'. I think statistics are very interesting actually (8 out of ten property investors say they find this too). Particularly when those stats have an impact on the numbers in your bank account. Which is always the bottom line.

So, I was pleased today when into my inbox dropped a plump survey carried out by Mortgages for Business (savvy lot they are). This one, focusing on the behaviours and intentions of the property investor. Not the tenant (as per my previous post).

I liked the report because as well as words, it included pie. And as I read it at a time when I was feeling particularly peckish,  the idea of consuming pie while learning something appealed quite strongly to me. Also I like the fact that they refer to Vanilla quite a lot, which is one of my favourite flavours. I suspect the person writing this report was either a) on their lunch break when they wrote it or b) about to go on their lunch break and visualising the menu: 'steak and kidney pie and ice cream for pudding'.

Follow the link above and see if you can find any more foodie words embedded in the report. It will only make you hungry for more ...

What do tenants want?..

I came across this fascinating study carried out In September 2012 and thought I'd share the information with you! it is always useful to understand your market more!

(http://www.finders.co.uk/news/2013/01/what-do-tenants-want/) 

Here is the article:

Context: Ages & Segments

The 600 respondents skewed towards the younger age brackets: 42% were below 30 years old and 75% under 40 years old. About 9% were over 50 years old and a further 3% over 60 years old. We have to assume this is a typical breakdown of those in rental accommodation although a research bias may be at work, eg younger people might be more willing to complete an online survey.

57% of the survey defined themselves as living alone or with a partner, 22% were families and the rest were a mix of sharers, post-graduates and corporate tenants.

The big question: Are you a “reluctant renter”?

The results are fascinating: 40% of the survey said ‘yes’ and 60% said ‘no’. However, as with most research, the headline answer is misleading. We asked why people are renting reluctantly and found that 35% of them (so that’s 35% of the 40% who are reluctant, which is 14% of the total sample) are more ‘frustrated buyers’ than ‘reluctant renters’ as they are waiting for the market to fall, in the process of buying a house or ready to buy but unable to find the right property (Figure 1). The latter reason may be indicative of the relatively strong sales market in Oxfordshire.

The remaining 65% of the 40% (or 26% of the total sample) are those ‘reluctant’ people you might have been reading about in the press. They tend to be saving for a mortgage deposit or struggling to agree a mortgage. Mortgage lending criteria have changed dramatically in the recession and now it is the younger, first-time buyers who are feeling the effect.

 

 

Why are 60% of the survey happy to rent?

The main reasons being that they like the freedom to move; they are not ready to buy; or they are getting to know the area. Interestingly, 22% of this 60% say they can live in a better property by renting than by buying a home, which could be a reflection of both the increased standards of furnishing and the fact that sales prices are still beyond many people.

What do you look for in a property?

We are firm believers that good furnishing attracts the best tenants, but even we are surprised that ‘Lowest rent possible’ only comes 5th in priority (Figure 2) and that the cleanliness and quality of the interior is more important. Even though many tenants are saving for a deposit, they still want to live in a clean, comfortable and stylish home. This supports the long term trend of the past 15 years of ever-increasing aesthetic expectations among tenants. The answers about gardens and schools may be reflective of the relatively young age of the respondents. The low score on ‘nightlife’ is ominous for Oxfordshire’s leisure industry!

 

 

Would you like a long tenancy?

Some stakeholders (eg think tanks, charities) in the rental industry are advocating long, European-style tenancies of 5+ years, but our survey does not support this. Only 6% of respondents want a tenancy agreement beyond 3 years and 80% want an agreement between 6 and 18 months. It could be that we are really a nation of homeowners – or aspiring homeowners – and so a 5-year tenancy is not part of enough people’s goals.

What would make you stay in the rental sector longer?

It makes sense that ‘Investing to keep the property in good order’ and ‘Swift repairs’ are the most popular answers (Figure 3) as these directly affect the quality of life in the property. The desire to personalise the home is understandable but a very difficult area as individual tastes can negatively affect the re-letting of a property. Any ‘personalisation’ must be agreed in detail and in writing between tenant and landlord. The option to ‘Rent to buy’ (where the rent goes towards a potential purchase) will suit a minority of landlords and a formal contract is required.