In the latest episode of Deal Finder’s Corner, Guillaume Black had the honour of hosting Shimon Rudich, who is not only a property expert but also a respected writer, international speaker, and charity fundraiser. With his extensive background in property investment, Shimon brings a wealth of knowledge to the discussion about the property market in the UK.
In the world of property investment, making mistakes can be costly. While many may shy away from investing during a market downturn, experienced investors like Shimon Rudich, a Senior Partner at MS Law Solicitors and a property educator with over 20 years of experience, know that such times can offer unique opportunities.
Shimon sheds light on the prevailing market trends and shares invaluable insights that can empower both seasoned and junior property investors.
“Ugly Duckling” is one of Shimon’s standout lease option creative strategies. Photo: Unsplash
Pros of Investing in a Down Market
- Reduced Competition: During a market crash, the number of property investors decreases, resulting in less competition and potentially more accessible deals.
- Lower Property Prices: Property prices may experience a decline, while rental income often remains stable, creating an environment conducive to profitable investments.
- Creative Opportunities: Properties in negative equity or those requiring refurbishment can be purchased at a significant discount, opening doors for creative and lucrative investment strategies.
Cons of Investing in a Down Market
- Reduced Valuations: Property valuations may decrease, which can impact the amount you can borrow from lenders.
- Increased Interest Rates and Fewer Mortgages: Banks tend to exercise caution during economic uncertainty, offering fewer mortgages at higher interest rates.
- Reduced Room for Mistakes: In a market characterised by uncertainty, mistakes can be less forgiving, particularly concerning remortgages.
The Power of Lease Options
In a down market, one remarkable tool shines through – the lease option. This approach offers several compelling advantages:
- No Mortgage: Lease options don’t require a mortgage, simplifying the purchase process.
- No Surveyor: By avoiding property surveys, you can save both time and money.
- Generosity in Offer: Lease options allow you to extend a more generous offer than the property’s current market value to the owner.
- Minimal Upfront Cash: Apart from legal fees, significant initial capital isn’t obligatory.
Despite the evident potential, many investors fail to adequately explain the concept of lease option to vendors resulting in the deals fail through. Therefore effective communication and negotiations skills are crucial to be able to execute these types of deals.
Debunking the Myth of Long Lease Options
Contrary to a common misconception, Shimon believes that longer lease options don’t necessarily mean a more significant profit. Sellers typically don’t want to wait years for their money, and investors often don’t require such extended terms.
Shimon’s Advanced Lease Strategies
With a keen eye for unconventional opportunities and a knack for turning challenges into advantages, Shimon’s strategies are bound to inspire and transform the way you approach property investments. His innovative thinking and real-world examples provide a roadmap for achieving profitability even in the most challenging market conditions.
Strategy 1: The Ugly Duckling
This strategy targets unmortgageable properties (i.e. without kitchen or bathroom) that need minor refurbishments. By offering a fair price and investing in repairs, you can transform these properties into profitable assets.
What to look for in Property Filter:
- cash buyer only
- negative equity
- on market since a long time
Strategy 2: Slice & Dice Option
In cases where sellers won’t lower their asking price due to mortgage commitments, purchase at the requested price and convert the property into multiple units for increased profitability.
What to look for in Property Filter:
- large properties (150m2 +)
- built before 1914
- 4+ beds
Strategy 3: The Impossible Deal
Identify properties with motivated sellers seeking solutions to their financial problems. Restructure their finances and gain monthly profits through interest-only payments.
What to look for in Property Filter:
- negative equity
- and or most reduced
- and or fallen through 1-many times
- and or on the marget since a long time
Strategy 4: Storage Millionaire
Hold land with future development potential, such as for industrial or commercial use. Create a cash flow with current storage rentals while planning for future development.
What to look for in Property Filter:
- commercial
- industrial
- check anything not moving
Strategy 5: EDC with the Council
Engage in an Exchange and Completion with the Council for properties in need of structural repair.
What to look for in Property Filter:
- keywords “structural”, “cash only”
- property 50%+ below average comparable (play with the criteria, depends on the area)
- include/exclude auction
Property investment is a business; it’s either about making money or making excuses. In a down market, opportunities abound for those willing to learn creative strategies. Seek knowledge, and you’ll find the path to property investment success.
To delve deeper into these strategies and explore detailed case studies for each, don’t miss the latest episode of Deal Finder’s Corner, where Shimon Rudich presents invaluable insights and practical examples that can help you navigate the world of property investment with confidence. Watch the full episode here to unlock the secrets of property success in challenging times.
