Hello, everybody, welcome to the next module active strategies. I'm the open seat man, the author of the property apprentice how to earn while you learn. And welcome back to the course. And welcome back, Adrian. Thanks so much for having me. I'm really enjoying this.

I hope everybody else is too. So last time we talked about passive income strategies is to focus for long term, giving you a salary, in inverted commas every month that fills your pocket, pays your bills and makes it financially free. Today we're going to talk about active strategies. These are basically as it's called active, you have to do something is a bit of work involved and they're one time searches. So this is not something that Feels a pocket every month, but you see one time profits, but also nice. Profit is always good.

So let's see what we have available in this context. So, most important property is of course, location, as we said, but let's assume these two properties are in the same location right next to each other. So location is not a factor. And these two properties are for sale and you investor, you don't want to, you know, move there, stay there, but just invest just from your gut feeling. Which of these two would you buy as? Well as the as the person to live in it, I would want to buy B but in terms of opportunity to do something with it, then a makes a lot more seems to have a lot more potential.

There's no right or wrong answer since I didn't give many parameters, obviously. Especially the Price, but most likely I would see a as a far greater opportunity to, because b can be pretty expensive. They've tie up nicely the renovation or even new builds, who's going to pocket the profit the seller. Whereas if I buy a totally get it for a very low price, I have to do the renovation, spend time and effort, some money. But once it looks like be in the same location, I would have paid a lot less than b. And I can sell it for the price of B and POC the difference.

Right. So that's in terms of how we think when we talk active strategies with my profit. Okay, cool. So, it's not a strategy in itself, but I somehow have to present it in certain contexts because you can show would use to be in the principal also, when you talk about the passive income strategies we discussed last time. But it's not always possible I sometimes if I get a rental yield of 12% and have to buy at market value, I'm still good as long not above market value. But at market value in a good market is a good passive income I can do but for active searches, I would definitely like to always buy below market value.

Or From now onwards, I will always say DMV, so I don't have to pronounce it long words. So, I saw you make money when you buy not when you sell, and that's exactly the principle of DMV. So we should look for 20 25% sometimes you can get 30 or more. If you're very lucky. But the Usually, you can get 40% sometimes from auctions because when the bank for sales forecloses your property if you're lucky, you can snap up the property from the seller this time already before the bank closes it you forget to know about it. If not, the bank will foreclose and sell it.

But what does the bank want Really? Lets the bank just once they're there, their capital bank wants their money back. They're not into the business of making profit from property with a price increase. They don't even want that. So they just want their money back. So if the $300,000 property has a outstanding loan of 200,000 the bank can sell it at 200,000 at the auction, and they got their money back, and they're happy and you got a 33% discount on market value.

And the bank doesn't care because they want their money back and it's tough luck for the seller who got foreclosed that he loses this hundred thousand but you're the one who gets it right. So that's the principle behind this any kind of desperate seller how to find them this future module but a desperate seller really wants to sell fast will sell below market value. Did you actually call this property agent before you left Singapore even. These are a property agents who give them a ridiculous offer. Before we left Singapore I was allowed. You can do it in your admin center or something like that.

Well, you know, I'm sure I could Yeah, just a local agent there. Same thing. Just get a Saturday newspaper, buy all the property outside. Choose one that is for sale, not for rent. And whatever the agent wants, ask some question intelligent questions on location condition amenities, schools, blah, blah, blah. So you sound kind of serious.

And then whatever he wants for it. Take a calculator minus 30% and that's for the offer. He says hundred thousand you have a 70 the offers on a 40 your 405 for whatever and just see how he or she reacts I think there's a house for sale two doors down so I'll ask about that one. Maybe not too close to your house where they come to, to knock on your door every day after them since Who knows, maybe they say yes. Then you might actually buy it 30% below market you just sell for 10 below market easy. My soul and this is to basically I don't distress sells or distressed property like the one just now in the picture to eight.

Maybe the seller is not distressed he has no financial trouble buy the property certainly was distressed in the condition it was in. So we either find distressed sellers or distressed properties out to find so distressed, distressed property is just one that is very good in some sort. have different habits obvious. Yeah, I think Iran down property, bad condition. Yeah, I think if the cell is distressed because this job can't pay his mortgage, then he will be in a very bad state of mind. Now, don't have a misconception don't have to misconception that you're exploiting people.

I think some people feel bad and doing that. You're helping them they're willing to sell at this price and you're willing to buy at this price. In order maybe not to lose the property or not to get foreclosed to sell low, because if you don't buy somebody else, so that's nothing to feel bad about it. Yeah, the property is distressed, then obviously, I mean, you know, my old smelly carpets been on furniture, the walls not painted, it's looks ugly. It doesn't take a lot of capital and time to to fix up some issues maybe they want in a task but normally they don't come as hard as this one is to put in some renovation for buy a few pockets of paint. And within two or three weeks, it'll look totally different.

And then you can decide what you want to do. You can literally come to one of these fetches as a flip it means resell or you can keep it for passive income. If the numbers for the rental is good, that civilization then watch Very important here is that you have to know how much you can sell it for and how much your renovation approximately costs before you enter into the deal, right. So how can you do that? Guess similar to rentals it's like the comparable styles to look for like if it's a roof if we're refurbishing, we need to look at other houses that will be similar condition once it's once it's fixed up and see how much it sells for and renovation costs. I guess this could have a tradesman could have tradesmen quotes before you But yeah, it's like I mean depends on the time.

Frame you're in. If you're a little bit of time you can get a quote otherwise a bill by I guess rule of thumb, you kind of know proximately after at least some experience, certain item costs for the renovation. For sanity, right, same as for rental, you can look at comparables on the market. Ideally, those that were sold not to be sold was this can be fictitious prizes that they want, but never can get, but it was actually sold recently. Let's say within the last six months, then you have a reasonable indication of how much good cell phone or you can put your eyes same thing as for the rental. You don't own it, what do you sell it for?

And see what I got calls or not. But, boy, it could be as simple as a value match if, if there was a proper valuation done. This could be by a value or in Scotland for example, when you want to sell a property, you have to get a valuation first and then we'll have a precise idea how much this property is worth and how much bV you're buying it for. Because it's written by 10 reports but only spotted I'm not an ignorant so any of these methods you can use to ensure that if you want to resell it quickly after the purchase that you can sell it and if you buy 25% below market value, you can also sell it it's not it's not like in stock, right install. Maybe some people that teach I don't know whether you do that or not but this sale, buy, buy low, sell high He'll say buy low sell low, but not as low as affordable.

If you sell value today, just less if you buy 25% below and he offered at market value, it might take a long time to get rid of it. But if you sell 10% below, still do the deal for new investor and then you can probably get rid of it relatively quickly and you still have a handsome profit. Yeah. And definitely for active strategy, you need to consider that for passive strategies. You should also strive to buy below market value to the extent possible as well. Force appreciation.

Appreciation means the price go up of your property. Now this can be done by two ways, either for the market to channel market in that location to up which over a period of time, it probably will. But this might be long time frames that we're talking about here years. If you want to go increase the value of your specific own property, you can also force it to go up and that's what we mean by this actually forced appreciation. So you have your property you bought it BMV according to the strategy number six. And how can you make your property more worse?

What do you think? Well, you can do some sort of cosmetic renovation, they could add a garage for instance, if it doesn't have a garage or a carport. If it's a if it's a unit, you could give it a garden area. If you own the whole bulk of unit she could give each ground floor unit as its own garden space. could finish a basement and convert it to bedrooms. Yeah, all good examples in general, basically, it needs to be i'd value to it somehow.

How can we add value some of these examples you already gave? Very good. Especially think adding additional bedrooms but also in the cellar or an attic or whatever it might be. So you will have increased your size, the flow area and basic property the price goes by floor area Plus location but in the same location, of course, big property small was in a smaller one. So can increase the size the floor attic. You can also try to utilize that space, for example, underneath the staircase, that might be nothing and you can turn it into a storage room or something that also that's pleasingly utilized space then you could do things like well my friend is doing for you know, jacuzzi chandeliers and that kind of stuff, then definitely This is was more and whence for higher price if you want to rent it out, or you could also turn your buy to let into HMO instead of having one tenant two or 345 instead because as I mentioned HMOs Commercial details are residential and they are valued differently which I will go into detail when we discuss about financing later.

So, this will increase the market value of your property, which you could either sell or pull out equity in equity loan or rent out. But in all of these cases this investment you have make into the renovation or furnishings should pay back and then you can flip or rent always obviously, your decision in terms of what strategy you pursue. So, just want to be simple, but can be very effective strategies. Any okay? And for this one, again, you're you're identifying the property and the strategy in advance so you're buying the property knowing exactly what you're going to do to it and what the value of the property is after you've done yes for that, yes and no. Yes.

When you buy new property, you should know exactly what to do with it. And whether you would want to apply these spreadsheets and if yes, what do you want to do with it? I know you can also do it for old property in your portfolio. While you know, maybe it doesn't perform so well and you want to increase the rent or you want to pull out more equity. Let's say you do renovation for 10,000 which increases the value by 30,000. Before you sell it or before you before you take an equity loan on it and get evaluation from the bank.

So then the 10,000 gives you a 30,000 return then it was was doing info with one also as well. Okay, okay, so this one goes in the same direction, might be looking for distressed properties and or distressed sellers. You can buy a totally rundown or trashed property like the one in the initial picture labeled a refurbished resell you have to know in advance as always. I know somebody who only does this strategy course he doesn't want to be bothered with tenants. So he only basically fix and flips properties, buys distressed properties, fixes them up and resells them pretty quickly. After the renovation is done, again.

Just couldn't be as I mentioned early on, done all set auction for banks at an auction, you have to be careful of two things. When you buy property at auction, firstly, who is the seller? It could be the extra owner, because he simply has chosen the auction as a route to try to get a higher price. Then an agent or property portal could give him and if you pay more, that's not a good property to buy at this option. If you want to get the ones that sell for less so if you know your pricing and you don't have a lot of time to check, but usually auction of course in advance they will give you I mean, it's not only the auction date if you get to know which property is on sale. They have an auction catalog up front that you can check and do your research.

Due Diligence upfront second thing when you look for distressed properties or sellers at auction is done all. Now when you buy a property in a normal transaction by an agent or direct from the owner you will have certain obligations they have. And you have and certain things have to state, let's say the size of the property, right? Because you're not really able to measure it yourself. The condition you can assert by looking but if the property is let's say 2000 square feet And the buyer tells seller so if the seller tells you it's 2400 square feet and you buy it, and you find out later, that is only 2000 where he told his 2000 for you are certainly aggressive in swim and you can maybe Amanda's sale contract or the price or whatever the court of law might decide that you are entitled to no such thing as an option.

It's you by what you see what you get, and if it's inaccurate, tough luck. No progress possible. So you need to be careful and do your due diligence before that and whatever way you can do that with a solicitor all usually they have this information in information packs a new option that gives you this information. And if you don't want to check the size you can check the size of the property if you don't and later find out it's not true Tough luck. So be aware is that generally the case in all countries that options are final and no regresses well Yes, I know. Yes.

Definitely. UK also in Singapore we have basically adopted the UK law here. I pretty much believe Australia and the US as well. Yeah. Okay. So just let me quickly Okay, might not get through everything here.

Before Next 12 minutes. So I just finished up this spreadsheet number eight, and then I think okay, I'll let you go and we'll continue with number nine in the next section. Okay, so continuing with distressed properties and sellers gives you the opportunity to buy the lead. Why does the buyer seller actually should seller do that? Because he needs cash quickly. If he could wait, then he would not sell be able to offer money market price and wait until somebody buys that he needs it quickly.

That's why he's okay to sell BB at less cash but gets a quickie on solar distress building. The seller might not need money but the condition is bad. And for whatever reason, you might not want to do the hassle of renovation himself and take the profits rather give it to somebody else and just don't bother about it as a people are different they think differently if they want to give the profit to you and take it Yeah, you're different people value different value things differently so the hassle of renovating all the time commitment may be too much for someone but not too much for someone else, right? It's just a hassle. Once you see that HMO that are bought in Salford that are presented to you earlier. I bet it was a big hassle to renovate such a big house and change it from a family home into a seven bedroom on suites HMO I'm sure it must have been a big hassle.

But it was not my hat's off. I just paid somebody to do project management and they report once to me send me the picture on the progress and no progress. I don't pay progress or pay. So it took me and I didn't even want to pay every week, but I just did a standing order. So I had nothing to do with it. Yeah, okay.

So the outsourcing as well as important. So anything can be done by as long as it's factored into your calculation. Basically, such project manager costs 10% of the building value. So the building value was 50,000. So I had to pay 55,000 at the end, but at seven It was my time not to do it and I'm in a different continent anyway. So just price your renovation is 55 instead of 50.

When you do your calculation, and then that is ticked off and the project manager for them sort of thing. Is that just a real estate agent? Or is that someone particular for construction? People, I mean, it could be a part of a property agent, but it's not a normal property agent. Some agencies, the bigger ones, they all fall professionals who specialize in project management to do building project, renovation to supervise that kind of thing. So, I hired such a professional to oversee that contractor that we hired to do the renovation.

Yeah. That's all when you do renovation. If you ever done renovation yourself Also, if you're watching this porno to yourself, a lot of contractors give you unrealistic timeframes to get the deal, or they don't manage it. Well. That's why you can hire a professional day on days to make The work or the budget and then give you an order, say Oh, but we also need this or we also need that. And we need 500 more here and one dollars more there.

And so try to make sure you have everything covered or get a good recommendation for good contractor in your area. So you don't overspend either over or under doing the specifications of what you want. Sometimes you have to do yourself. Of course, you can't do that if you don't live in a place. Structural, important cosmetic metal face and make sure if it's done, it looks nice. And you can't get emotionally attached to the property.

And don't follow your strategy that you device for it. Let's say flip it. It's so nice that you actually want to keep it I one of my students at in my class and you know That's exactly what happened to me. And it's like kept this property. So decide now what do you want to do with it? Let's get rid of your emotions either rent out or sell but do whatever was right in terms of numbers.

So it can happen. So what was your What was your point about cosmetic this? I mean, you have to see whether you have to do structural renovations. Certainly that would have been a case in the property a early on right? structural that you need to get engineers you need to get maybe some architects you need to get potentially building permits from the authorities. Whereas if you do cosmetic, like painting or changing a window Did you just go and do it So as a general rule, do you want to avoid structural renovations?

Or is it more just understand it and price it in the letter? Okay. And when you did your created your HMO that we saw in Scotland, where it was the the seven bedrooms is putting on suites into each bedroom, is that cosmetic? Or is that structural? probably still cosmetic, adding bathroom in. You're not changing load bearing walls.

So anything by potentially could get into structural depending how you got to shift the walls on the bedrooms in order to accomplish that. So that's not definitely right. for that one. Okay. It depends I'd be good. Any other questions?

Nope. Okay, so yeah, just nicest timing. Let it go for today. Adrian, thank you very much. We have learned for eight strategies and six modal calm. And I'll see you soon.

Thank you very much. One One quick question. You can't like these all combinable. Right. So it's just a matter of, you know, these are just things to keep in mind and property that's distressed that also could be an HMO. So, this is what I mean.

These are combined, you can buy a passive income property BMB or even as distressed or you can add value, force appreciation, by the flip it or whether we have a VTL old one in your portfolio. Look at these are not singular spreadsheets per se in itself are they combined