Deck 1

Question 1

What is property sourcing?

Answer 1

The process of finding properties (often below market value or with strong rental yield potential) for buyers or investors.

Question 2

What does BMV stand for and mean?

Answer 2

Below Market Value (BMV): Properties sold at a price below their true market value, often due to motivated sellers looking for a quick sale.

Question 3

What is an off-market property?

Answer 3

Properties that are not listed publicly or on property portals (Rightmove, Zoopla, etc.) and are often available through private networks or direct to vendor negotiations.

Question 4

What does DTV stand for and mean?

Answer 4

Direct-to-Vendor (DTV): Approaching property owners directly, without agents, to negotiate a deal.

Question 5

What is a sourcing agreement?

Answer 5

The legal contract between the sourcer and the buyer/investor outlining the sourcing fee, responsibilities, and terms of service.

Question 6

What does BTL stand for and mean?

Answer 6

Buy-to-Let (BTL): An investment strategy where properties are purchased with the intent of renting them out.

Question 7

What does Buy-to-Sell (Flip) mean?

Answer 7

Buying properties with the intention of renovating and selling them at a higher price.

Question 8

What does HMO stand for and mean?

Answer 8

House in Multiple Occupation (HMO): A property rented out by at least three people forming more than one household, with shared facilities (kitchen, bathroom, etc.).

Question 9

What does leasehold mean?

Answer 9

Buying the right to live in a property for a set period of time, rather than owning the property outright.

Question 10

What is a lease on a property?

Answer 10

The legal agreement between the buyer and the landlord that specifies the length of the lease and the rights and responsibilities of each party.

Question 11

What is a freeholder?

Answer 11

The landlord who owns the property and the land it sits on.

Question 12

What is a services accommodation?

Answer 12

A property rented on a short-term basis, similar to holiday lets or Airbnb, often yielding higher returns but with more management involved.

Question 13

What is Rent-to-Rent?

Answer 13

A strategy where a person rents a property from a landlord and sublets it, typically to tenants or as serviced accommodation, generating a profit from the rental difference.

Question 14

What is subletting?

Answer 14

Subletting is when a tenant rents out part or all of their rented property to someone else. The original tenant remains responsible for the lease with the landlord.

Question 15

What is rental yield and how is it calculated?

Answer 15

Rental yield is the amount of money a landlord earns from rent, expressed as a percentage of the property’s value. It helps measure how profitable a rental property is.

(Annual Rent ÷ Property Value) × 100 = Rental yield %

Example: Let’s say you want to buy a house at £200,000. The monthly rental income will be £1,000 which is £12,000 a year.

(12,000 ÷ 200,000) x 100 = 6

6% rental yield

Aim for above 5%

Question 16

What is gross and net rental yield?

Answer 16

Gross rental yield is the percentage of income a landlord earns from rent before any expenses.

Net rental yield is the percentage of rental income after deducting expenses like maintenance, insurance, and property management fees.

Question 17

What is ROI and how is it calculated?

Answer 17

Return on investment (ROI) shows how much profit an investor earns from a property compared to what they spent on it.

(Profit ÷ Total Investment Cost) × 100 = ROI

Example: Lets say the annual gross profit is £12,000 but the net profit is £6,000 after landlord fees.

(6,000 ÷ 200,000) x 100 = 3%

Aim for above 5%

Question 18

What is capital appreciation and depreciation?

Answer 18

Capital appreciation is the increase in the value of a property over time, allowing an investor to sell it for a higher price than they paid.

Capital depreciation is the decrease in a property’s value, often due to market conditions, wear and tear, or other factors, which can lead to selling it for less than the purchase price.

AKA: Capital Growth

Question 19

What are the calculations for capital appreciation?

Answer 19

CurrentMarketValue − OriginalPurchasePrice = CapitalAppreciation

(CapitalAppreciation ÷ OriginalPurchasePrice) x 100 = Percentage Appreciation

Example:

200,000 − 150,000 = £50,000

(50,000 ÷ 150,000) x 100 = 33.33%

Question 20

What are the calculations for annual capital appreciation?

Answer 20

Capital Appreciation:

CurrentMarketValue − OriginalPurchasePrice = CapitalAppreciation

Annual Capital Appreciation:

CapitalAppreciation ÷ Number of Years Held = Annual Capital Appreciation

Annual Percentage Appreciation:

(Annual Capital Appreciation ÷ Original Purchase Price) x 100 = AnnualPercentageAppreciation

Example:

200,000 − 150,000 = £50,000

50,000 ÷ 3 = £16,667

(16,667 ÷ 150,000) x 100 = 11.11%

3 - 5% good
6 - 7% strong
8% + very strong

Question 21

What is a void period?

Answer 21

The time a property is without tenants, generating no rental income.