Structure
Structure and Strategy are the two most important concepts in property.
Structure refers to the many ways you can structure firstly each property as you purchase it and secondly how you structure your overall portfolio.
Structuring the deal…
You have many choices when structuring an individual property deal. Do you accept a gifted deposit knowing you will pay a higher interest rate? Do you put extra capital in to ensure the deal is cashflow positive? Do you pay a higher upfront costs in order to secure a better interest rate? Do you purchase the property in your own name, a company name or that of a trust? We will structure each deal in a way that protects your cashflow.
Structuring your portfolio…
Once you own the property questions like: When to refinance and how much do you take out? Which property to refinance? Do you fix the rate of 50% of your portfolio, when do you sell a property and when do you renovate an existing property?
A quick example of how structuring can make all the difference;
“We had £35,000 to input into a property but we only wanted London property. We sat down with Simon our Portfolio Manager who told us that rather than investing the normal 15% required for deposit plus costs (around 5%) or £63,000 we could utilise the discount they had secured of 13.5% discount and structured in a way acceptable to the lender that we could actually purchase the property for around £17,325. I would then have to put aside enough to cashflow the property for a minimum 2 years which was a further £6000. This enabled me with around £25,000 to buy and hold the property and effectively ‘Set and Forget’ as the strategy goes. £25,000 versus £63,000 that’s £38,000 extra is your pocket.”
Your Property Club Team can help…
We are here to help with all the structuring questions and more. It can be a minefield when it comes to structuring your portfolio. Different lenders have different criteria, solicitors have their specific requirements. That’s why it’s so important to have a professional on your side; someone who will stay up to date with the latest and bring all the experts together. The team at Your Property Club have dealt with literally hundreds of clients, each with their own special needs and at just about every different step along the portfolio continuum.
