PROPERTY INVESTING | STARTER COURSE |

Lesson 5 -
Viewing & assessing?

Knowing what to look for when viewing a property can be the difference between success and failure. However you need to understand that it's more than just the bricks and mortar.

Prefer to read this lesson as a pdf?

Don't Be Fooled

Take time to asses a property correctly, some problems need a closer look

Whats The Deal?

Almost every property has potential. What will you do with the property you've just viewed?

Make The Assessment

You've seen its potential, you understand the risks, now make the assessment in full

let's play a game...
Spot the difference...

there are 6 in total, and one of them may surprise you!!

Ok, so how long did you look for, and be honest?

  • 30 seconds?
  • A couple of minutes?
  • Longer?

Well, we have a slight confession to make; there are only five mistakes to find, the sixth, the surprise we alluded to was us leading you up the proverbial garden path.

This is not a cruel trick intended to waste your valuable time but rather an indication that you should take your time when viewing any property, there will often be aspects that may not be clear right away.

The 6th issue may have been anything from an old boiler, outdated wiring, damp, subsidence, perishing roof, broken window mechanisms etc. etc. etc.

These can be costly if not taken into consideration. Our suggestion, if you opted 30 seconds above, is to adopt a more prudent approach and take that extra time to investigate things when viewing your chosen property. Yes, we appreciate this was a mere spot the difference; however, is it in your nature to rush things? Understanding your weaknesses help turn them into strengths.

Have no fear; we are here to help guide you.

We have a ‘property essentials pack‘ available to purchase on our website, this includes a full and comprehensive checklist of what to look for when viewing property. This is also something we discuss in great depth on our ‘Property 101 training course too.

So,

What is it that you should look for then?

Regardless of your approach, strategy and long-term plan which in turn will determine what and which property you buy, the following list needs to be taken into account.

If you intend on buying a ‘turnkey’ type property or fully renovating throughout, you still need to be aware and/or budget either way.

We have put together a checklist overview of the main aspects to consider when viewing a particular property:

Be More Than Punctual

Arrive 15-20 minutes early so you can assess the area somewhat, you would be surprised what you can determine in as little as 15 minutes, look at the neighbouring houses, their curb appeal, the cars in the street and note the other residents.

Did you notice them?

Note other boards, To-Let and For-Sale signs.

How are the neighbours?

Note the curb appeal of the closest 5 or 6 houses on either side, this is something you will be unable to change, but it will give you a clearer indication of how the neighbours live.

time for a change?

The condition, standard and age of the kitchen and tiling. The implications of replacing and my best guess to when that would be necessary, and at what cost?

room for a little one?

Note the overall size and layout of the bedrooms but in particular the smallest bedroom.

be at one with nature

The size of the gardens, the areas of grassed, paved and fenced parts, and the number of trees or large shrubs.

Whats the deal here?

It's a 2-bed now but could it be a 3-bed? What is the potential of the property and how can you add value?

did you notice that?

Anything else significant, noticeable or unusual that jumps out at you?

Draw an Imaginary straight line

Take note of the roofline, guttering, fascias, windows, doors, and anything else visible during this time. Are they straight and secured well?

is there curb appeal?

Mark the curb appeal out of 10 and mark what you believe its potential is next to that mark, make sure that the potential is realistic and falls within your budget.

Good condition?

The condition, feel and operation of all the doors and windows. The condition of carpets and the presence of underlay. The walls and ceilings and their coverings – artex, woodchip, wallpaper, freshly plastered etc.

would you Have a bath in that room?

The same as above applies to the bathroom.

a warm front

The age and type of central heating system installed.

power up?

The age and type of consumer unit installed – this is more commonly known as the fuse box.

Free parking

The driveways or parking areas.

papered over the cracks?

Any signs of damp, mould, flaking paint or large cracks in walls.

is this what you want?

Take into account the work that is required and ensure this meets your criteria and strategy .

Assessing The Property & It's Potential...

There are a lot of suitable properties available so you must adopt patience here; if this particular property does not suit your needs, then another will come along and more than likely sooner than you think.

The best thing about being an investor in this instance is that detachment can be applied.

You do not need to fall head over heels in love with a property; it just needs to stack up on paper.

And that brings us nicely to our next point… If you read our blogs, you’ll be aware that one of us here is an avid ‘exceller’, if there ever was such a thing or if that’s even a word? By this I mean I am partial to the odd spreadsheet now and then.

Assessing the property and it’s potential really is a simple task. By simply inputting some basic numbers into a purpose made spreadsheet, you will be able to determine the properties suitability and potential rather quickly.

The spreadsheet will show you your cash flow, return on investment or yield if that’s what you prefer.

Small but relevant detour here: You do need to understand that a properties potential and, of course, it’s suitability is much more than just mathematics. There is a whole other assessment needed to ensure that the location is suitable, there is a strong enough demand and that you’re not buying a property in an over populated ‘landlord’ area too.

Now, you’ll find out in a later lesson the approximate fixed (ish) costs of purchasing a property, and these will already be inputted into your spreadsheet as a constant.

The trick is being able to if, in fact, this is the case, determine the refurbishment or renovation costs and input these into the spreadsheet. If this is not something you can do, you can either be generous in your guesstimations and accept the consequences, get better informed or better yet take a builder along with you.

Most refurbishment companies or experienced builders will be able to make a pretty accurate estimation from walking through the property and discussing your needs.

HOW THE ANALYSIS WORKS – CALCULATING THE PACKAGE COSTS

As mentioned the predetermined costs will be fixed within your spreadsheet.

All you need to do is to input some basic figures and adjust these until the desired result is given indicating the price you are prepared to pay for the property...

1. Input the asking price

2. Check that your constants are still accurate, solicitors, SDLT, broker etc.

3. Input the refurbishment or renovation costs

4. Input the current mortgage rate, this can easily be obtained from your broker, but ours is pre-determined based on experience. By implementing your plan as we discuss on our 101 course, you will already have a good idea of this.

5. Any sourcing fees or external fees that are out of the usual scope need to be added in the highlighted fields.

6. The rental income should be researched and inputted.

 

Inputting the basic figures above will give you all the information needed, the trick now is to adjust the asking price so that your figures represent what you are trying to achieve. For example an X% ROI, a £X/month cash flow figure or an X% yield or even a mixture of all three.

Obviously, you need to assess the comparables accurately as you do not want to overpay for a property just because you have hit your target results If the property can be purchased cheaper then you will obviously yield better results.

What I tend to do is play with the spreadsheet a little by adding in the average sold price for that area or street to see what the results are. Once our pre-determined figures are achieved, and we are confident that we would be getting the property for a fair price we take off a few thousand (exactly how much is down to you) and make our offer on that basis. We then have room for negotiation in within our figures. 

This is, of course, only a brief overview of the essentials needed to determine the value of the property. we do have as part of our ‘Property Essentials Pack’ a comprehensive, yet simple to use spread sheet to walk you through the assessment.

An important note:

We stress not to get hung up on finding the deal of the century and to simply take action, but we also advise patience. As with everything in life, these need to be balanced correctly.

We will now add a mixer to this cocktail by telling you not to get too hung up on price either. 

You will know if the property is right when you find it, if the math stacks up and you are not overpaying. A few grand in the scheme of things is mere pocket change in 25 years’ time, especially when you consider you’re only contributing 25% of the amount. 

The caveat comes when you are either flipping the property or buying to maximise profit to recycle your cash. In this instance every pound saved on the purchase is a pound back in your pocket.

Bonus Lessons

For those interested in finding out how the buying process works and what to look for when viewing your property check out these bonus lessons to get started. Also included is our foolproof guide to finding suitable tenants.

Lesson Summary

Here's a summary of this lesson and your next steps to take ACTION!

You must take action right now. Go! Go! Go!

Regardless of your approach, strategy and long-term plan which in turn will determine what and which property you buy, there is much more to consider alongside.

There are a lot of suitable properties available so you must adopt patience here; if this particular property does not suit your needs, then another will come along. The best thing about being an investor in this instance is that detachment can be applied. You do not need to fall head over heels in love with a property; it just needs to stack up on paper.

The trick is being able to if, in fact, this is the case, determine the refurbishment or renovation costs and think through these numbers up front. If this is not something you can do, you can either be generous in your guestimations and accept the consequences, get better informed or better yet take a builder along with you.

We stress not to get hung up on finding the deal of the century and to simply take action, but we also advise patience. As with everything in life, these need to be balanced correctly.

  • The way to get that confidence is to have a clear process for assessing a deal.
  • There is more to assess than just numbers. To ensure that the location is suitable, there is a strong enough demand and that you’re not buying a property in an over populated ‘landlord’ area too.

  • Don’t be too concerned on term BMV when searching. Technically your buying, you set the market value – so by definition, it’s impossible to buy below market value.
  • Assess the comparables accurately as you do not want to overpay for a property just because you have hit your target results If the property can be purchased cheaper then you will obviously yield better results.
  • Have patience. But don’t stand still. Keep looking.
  • When you’re assessing a deal, it makes sense for you to calculate market value in exactly the same way: using similar properties, that are very nearby, and have sold recently.

  • Be conservative in your estimation, and always look for anything you might have missed. Nobody gives a property away cheaply because they’re feeling generous: if you think a property is worth much more than the asking price it might be a bargain, but there’s more likely another hidden factor that’s holding the price down.

1.) If you haven’t already and your confidence is low when viewing and assessing properties joining our Property 101 course as a new investor, will give you a huge head-start. We’ll give you an in-depth rundown and share our spreadsheets, tools and checklists with you which makes assessing viable properties easy.

2.) Grab a pen a calculator a computer and a strong cup of coffee and get looking for some potential deals. Once found have a go and run through a ‘mock’ evaluation and assessment. Try this using the images and information given about a property and make your best and worst case scenarios. This will give you much needed practice and experience for when you go and view the real deal.

3.) If you’re at a point where you have ‘Offers on the table’ you’d like to pursue, then fast-track with our Property Tour and Analysis Course – here we’ll give you a real look inside our properties and run through the entire analysis and evaluation with you. No stone left unturned – take what you learn, see how we do it and apply it to your deals. It’s almost plug and play.

"Nothing's beautiful from every point of view"

5/5

- Horace

WHAT OUR CUSTOMERS ARE SAYING...

About David

If you’re a property investor, you’ve likely heard of David Tarn (WiseOwl Property). His list of credentials is lengthy, and if he really wanted to, he could go on and on and on about his accomplishments.
But when people list out all their accomplishments in their bios, they risk sounding a little egotistical. This isn’t Davids style. Sure, you might impress a handful of people with all those laurels, but many people who read the bio will end up feeling either intimidated or annoyed. Think about it, why do you want to read about how great someone else is, don’t you see enough of that on Facebook?
To minimize the egoism that comes with talking about yourself, here are David’s accomplishments without sounding like bragging. David has been investing for almost 15-years and has built a hugely profitable portfolio. He owns a self-start lettings agency, mentors, trains and coaches very well and rides an enduro mountain bike like a pro. He is 1 part executive, 1 part entrepreneur, 1 part mentor and 4 parts proud dad. Too many parts, maybe that’s the maverick in him?

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