The Secret That Could Save You Thousands on Every Property Deal | Simon Zutshi

The Secret That Could Save You Thousands on Every Property Deal | Simon Zutshi


– In this video, I wanna
share with you a secret, which took me 11 years to
learn but when I learned it, I was able to double my property
portfolio in just one year. So my name is Simon Zutshi. I’m the founder of the
Property Investors Network. I’m the author of Property Magic, the Amazon number one
property best seller. And I’ve been investing
in property since 1995. And teaching other people
to do it since 2003. In this video, I wanna share with you some really valuable information
that’s gonna help you pay a lot less for every
single property that you buy. So as someone who’s new
to property investing, if you could learn this secret
I’m gonna share on the video, it’s gonna save you thousands
and thousands of pounds of every property you buy going forward. So please do take really good
notes, you’re gonna learn a huge amount by watching this video. So in the last video, I talked about the most important thing
that you need to know to be a successful property investor. And that is, what makes a great deal? So thank you, if you’ve watched
the video and commented, if you haven’t, you might
wanna go back and do that because some really valuable
information in there. But on this video, once we
know what makes a good deal, I wanna talk more about how do
we actually find great deals. And the secret that I’m
wanna share with you is about buying from motivated sellers. Now, when I first started
investing in property, I said I didn’t know what I was doing, I stumbled my way through
and I probably found a couple of motivated sellers by chance. But it was very much by
chance, I wanna make sure that you’re very conscious, you know exactly what
a motivated seller is. And in this I’ll explain
how do you find them. So first of all, what
is a motivated seller? Well, it’s someone for whom
the speed and certainty of the sale is more important than the amount of
money they actually get. What this means is they’re
gonna be flexible on the price, and all the terms of the sale. So let me give you a couple of examples to kind of understand
a bit more about this and show just how valuable it is. The first true motivated seller I found and actually did the deal,
was a property in Nottingham. This guy contacted me, and unfortunately, he was in a situation
where he had lost his job. He owned a house, and he taken out loans to keep paying his mortgage because he knew if he
didn’t pay his mortgage, he’d lose his house. He’s very proud man, he
lived on a council estate he bought the property from the council. Everyone on the estate knew
him and so for that reason, he didn’t wanna sell his
house conventionally. But because he couldn’t keep
up with all the payments, he knew he was gonna get repossessed. So he was desperate for someone like me to come and buy his house
and clear all of his debt. So I sat down with him, and I understood what
was important to him. Confidentiality was important,
speed was important. He wants to declare debt and
get some money left over. So we worked it out on a
piece of paper, I said, well, if I could give you
this would that work for you? He said, if you could do that
assignment in a timescale, I’ll be delighted. And I did it, I was
able to buy the property very, very quickly. And at the time, I used none
of my own money as well. And this was a situation where I was able to buy this property 36% below the market value, that was according to
the Wickes valuations that we got a third party
independent surveyor who valued it for us and
it was a 36% discount. Now before that, I would have
thought nobody is gonna sell their property at such a discount. But it’s important to put
yourself into the shoes of the other person and
understand what their problem is and see if you can come up
with a win win solution. Now, I got a lot of
equity in that property, it was a great deal for me, but it was also great for the seller, because the solution of
me clearing all the debts and giving some cash in hand was better than him getting repossessed,
having the embarrassment and the stain on his credit rating, and the inability to finance
things in the future. So it’s about finding that
ethical Win Win solution. Now, let me give you another example. So I had a contact with a
property, a lady in London and she was in a situation
where she had this property and again, she was in a
bit financial difficulty. She wanted to sell the property and she’d actually gone
into her local newspaper, and she’s seen an advert
of someone saying, we’ll buy your house fast for cash. And that’s a great way of
finding potential sellers. So she called this company
up, and they come around, they looked around and they
agreed to buy the property. Now there’s one of the companies
that bought a big discount, and she was okay with that. Her and her late husband had purchased the property
many years before. So what she was selling it for was more than she had bought it for. And she wanted to sell the
property because unfortunately, her husband had passed away. He was the one who previously
dealt with the property and whilst they lived there together, when they first got
married, they’d moved out, they were renting it. And he looked after all
the financial situation. When he passed away, suddenly she had this
property she hat to manage, she didn’t enjoy doing it,
she didn’t know what to do. She just wanted to sell the property. So she’d gone in newspapers,
she wanted to sell quickly, she didn’t wanna go to an agent. And this company said they’d buy it. Now this company wanted to have what’s called vacant possession. They didn’t want any
tenants in the property when they bought the property. So what they did, they said, look, you gotta get rid of the
tenants, which she did. And she said, well hang on, how
am I gonna pay the mortgage? They said, don’t worry,
when we buy the property we’ll clear all the mortgage arrears because once it was empty, she
couldn’t afford the mortgage and the arrears started to build up. The mortgage company started
to contact her and said, Look, why are you not
paying your mortgage? You’ve gotta pay. And she was really worried about this. But the company buys it, like don’t worry, we’ll take care of it for you. Now, this dragged on for a
few months, which is not good they were supposed to be buying quickly. And for some reason,
there were some delays. Until she got the call. The day she was supposed
to be exchanging contract, her solicitor called her
and said, I’m really sorry, they’ve pulled out. Now I don’t know why they pulled out, I don’t know who it was
but for some reason, they said they’d buy this property and they pulled out of the sale. She was understandably devastated. She was very panicky because she said, If I lose this property, what will the knock on
effects be on my own home? And that’s what she was
most concerned about not losing her own home. So very quickly, she went
out she found some tenants so they were students, she put
them in at a fairly low rent, she could have got more, but speed was really important for her. And then she wanted someone
else to buy the property and that’s where I came in. So I found out about this
property, I spoke to her. She was very sceptical at
first because she’d been burned by this other company who were by the sounds of it totally unethical. But anyway, she did
wanna sell the property. And I said to her look,
sounds like a great property. but I don’t know if you should sell it, sounds like a good investment to me. It was a full bed maisonette
in southeast London. She was renting it for 1100 pounds. Now the rent could be far more than that. But she just put some
students in really quickly. And she explained situation. She said, look, I wanna
avoid repossession. And she told me what had happened. And I said to her well, hang on a minute, how much is your mortgage? She said her mortgage payments
were only 700 pounds a month. So I said, well hang on
your mortgage is 700, the rent’s 1100 there should
be some extra cash there. Why don’t you see if the mortgage company will take all of the rental
income to not only pay the current mortgage, but also
pay off some of the arrears? And she said Simon, will that work? I said, well, I don’t
know, but it’s worth a try. So rather than just buying
the property from her, which is what she wanted
to do, I was trying to find an ethical solution so that
she didn’t have to sell it, because she’d retain the property. So she spoke to the mortgage company, they came back and said yep. As long as we get the
full 1100 each month, we won’t repossess you. So she called me she was over
the moon, she was so happy, because she was worried
if that got repossessed, the knock on effect on her own home. So she’s really happy
and I said, well, look, well done, congratulations I’ll just keep in touch
you if that’s okay. So I sent her a text message
every month to say hey, how’re you doing? And then she texts me
back one month and said, Can you give me a call? So I called her up and I
said, hi, how you doing? She said, well, okay, but I’ve decided I wanna sell the house. And I said, are you sure? Because we talked about it and we agreed it was
a pretty good property you should probably hold on to. And she said, well, I know that’s the case but what I didn’t tell you last time Simon is that I hate going to the house. Every time I go to the house, it reminds me of my late husband. He’s passed away now, we
used to live there together. And it’s really emotionally upsetting. So I just wanna sell the house. And I said, okay, well, how
much do you want for it? And she said, look, Simon,
I like you to buy it because you helped me out and I’m happy to sell
it for the same price that the company was gonna pay me before. Now this was a full bed
maisonette in London, It was a few years ago now and I don’t do much investing in London. But I’m showing this example because many people think, oh,
I live in a expensive area, it’s not gonna work here. Well, this works everywhere, if you know how to find
these motivated sellers. So the property was worth
225,000 pounds at the time, and she was prepared to sell
it to me for 162,000 pounds. That’s a 27% discount in London, there are motivated sellers everywhere. And I said to her, are you really sure? The house is worth more than. She was like, I know
it’s worth more than that but you helped me out I like you Simon, I just wanna get rid of it. Now, I always try and find the
best solution for the setup, I was getting a really big
discount, which was great. But on a bit more digging, I found out the owner had a
mortgage on this property, and it had what’s called
a redemption penalty. So when you take out a mortgage, it’s only for a certain period of time and if you repay it within a certain time, they’ll charge you a penalty. And so she had a penalty of 7000 pounds if she sold it before the
November of that year, and this was in the August. So I said to her I’ll
tell you what we’ll do, I’ll exchange contracts,
I’ll clear all of the arrears you’ve got no risk of being repossessed, I’ll take over responsibility straightaway so you don’t have to worry about it. And then I’ll complete the
sale on the first of December. So once you’re beyond
the redemption penalty, what that meant was, buying for 160, which was just gonna clear
the debt by just exchanging give a certainty and then
having to lead completion. Not only was she gonna clear the debt, but instead of having
to pay the 7000 pounds to the mortgage company, she
was able to take that money and put it in her pocket. So she gets an extra 7000 pounds
that she wasn’t expecting, doesn’t cost me anymore it’s just less money that
goes to the mortgage company. And that’s what I mean,
when I talk about coming up with a win win that works
for everyone involved. So they’re a great deals everywhere, if only you know how to find them. So let’s consider how do we actually find these motivated sellers? I’m gonna talk about five different ways. So the first way is
working with estate agents. Now estate agents, obviously
have lots of people on their books who are
wanting to sell property. The problem is most of those people are not gonna be motivated
enough to work with us. And if you go to an agent say, Oh, can I have your motivated sellers? Or can I have the properties
below market value? They’re gonna think you’re an idiot, because they’re used to
people saying to them, I wanna sell my house for
as much as I possibly can. But there are certain ways
you couldn’t work with agents. And in fact, there are five questions, you can ask agents to get
them bringing deals to you. So I’ve actually prepared a PDF document you’ll see it below the video, you can click on that and
download the five questions to ask agents to get them
bringing deals to you. So I highly recommend you do that. So agents is one way. But actually, I prefer
going direct to the sellers. And the way we do that
is by using marketing and advertising to attract them to us. So the first thing is
you might have noticed if you have a local newspaper. Now, newspapers are a dying industry, but people still do read papers and people are advertising in them still. And in the back of your
local free weekly newspaper there’s probably an advert
for least one company saying hey, would you like to sell
your house fast for cash? And what they’re doing is
they’re attracting people who are in that situation. Now, newspapers can be great,
I’ll say a bit outdated. A more direct strategy, rather than a general
blanket newspaper advert is by using leaflets. You might identify a certain part of town, even certain streets,
even side of the street. Where you say actually, that’s the kind of
property I’d like to buy. And you get those leaflets just saying, hey, would you like to
sell your house quick? Not the best use of time
for you to distribute them, get other people to do that for you, and make sure they have
actually delivered them. But that can be a very targeted
way of finding properties in the area that you want. My next favourite method
is actually working with the landlords. Sending letters to
registered HMO landlords the counsellors have the list
of all those people and saying, hey, would you like to
rent or sell your property? Now right now, because of Section 24, which is the new tax changes
that came in in April 2017, we’re seeing more and more
landlords than ever before, who are thinking about selling up early and wanting to retire from property. So contacting landlords is a
great way to find those people. And many of them are thinking about it, they haven’t put their
properties on the market yet. So if you just send one letter, it’s probably not gonna work, you need to have a campaign of letters to build up over time so when that person is ready to sell, you’re the person they think of and you’re the person they contact. But my absolute favourite
way of finding deals is through word of
mouth, through networking through other investors. The two deals I mentioned earlier, the first one I did in
Nottingham, and the one in London, those were both deals
that other people found, they didn’t want them. The first one was a guy
who invests in London, he got this deal in
Nottingham out of his area, he called me and said I’ve
got a deal in your area. Now, Nottingham is not
quite Birmingham where I am, but as close to me than it was to him. So he gave me that lead
under the condition that if I turned it into a deal, I would pay him a 2% finder’s
fee, which is what I did. And I was very happy to do that. The other deal I mentioned
the one in London, it was an investor who
does invest in London but the strategy he wanted to do didn’t fit this particular deal. And so he called me
and I spoke to the lady and when I eventually did the deal, I then paid him a finder’s
fee for that particular deal. And so I’m very happy to
pay fees to other people who are finding great deals for me. And obviously, you can do that yourself. But rather than you having to pay fees, is best for you to get out in your area, find motivated sellers, and
help solve their problem. So the first thing you need to know is how do you find these people
which we just covered? But advertising is not enough, you need to know when they come to you what do you say to them? How do you get them to open up, to be honest to tell you
what’s going on for them, such that they give you the information, you need to find out
how you can help them? When you know what their situation is, then you could try and
work out the best solution. Now a lot of people struggle with this because they don’t really know what to do. So I created this. This is the ultimate strategy blueprint. It’s basically a flowchart. It’s a very simple
document, but a document that helps my students
to understand exactly what should they do in any circumstance, by working through the
flowchart, answering yes or no, it comes to the strategy,
that’s the ideal strategy to use in that particular circumstance. And what this means is by using
this very simple document, you can actually spot deals
that other people would miss. And that’s the final thing
I wanna mention on this. You see, there are lots
of people out there who are looking for deals, and some of them are new to property, some are very, very experienced. But if they find somebody that
is maybe out of their area, or doesn’t meet their criteria,
or is too big for them, or too small for them, they’ll
probably just disregard it. But you couldn’t work with those people that’s what we call a junk lead. So junk lead goes to that
person who’s found it, it doesn’t meet their criteria so it doesn’t really have any value. But to you, it might work for
you it might be in your area might be the kind of deal you do. Using the flow chart, you can identify and spot an opportunity that
these other people might miss because they don’t know
what they don’t know. So educating yourself about
all these various strategies is a pretty smart thing to do to make sure you can monetize all of the
deals that you are finding. So we talked about what
is a motivated seller, we’ve talked about how to
find these motivated sellers. And the reality is once
you get good at this, you’re probably gonna find more deals than you could actually do yourself. Now obviously, you’re gonna
keep the very best deals, but deals that you don’t want. Instead of just disregarding them you can take them and package them up and sell them to other investors. And typically a package deal
is anywhere between three and 5000 pounds. So how would you like to get
paid three to 5000 pounds for deals that you don’t want? That’s what I’m gonna
explain in the next video, the third video in this series
on how you can make money packaging deals and selling
them to other investors. So you might have never thought about this you might be thinking about
just buying deals for yourself, but you’re leaving money on the table. As long as it’s a good deal,
you can sell it to someone else for whom that’s a perfect deal. So that’s what I wanna
share in the next video. If you liked this,
please do comment below. If you’ve got any questions please do share with other
people on social media I look forward sharing in the next video. In the meantime, invest with
knowledge, invest with skill.

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