How to Find, Fund & Supercharge a Profitable Commercial Property Portfolio

Transcript

Speaker 1 (00:00.142)
I think there's a lot of myths around commercial property in terms of it's too expensive, it's too complicated, and that just couldn't be further from the truth. It's a fantastic diversification strategy. Probably the number one lesson I've learned by being in property for so long is if that you buy at the right price, you buy at the right time of the cycle, the only way is up from there. So we're in this amazing window of opportunity where there are reduced prices and motivated vendors. And as we all know, that is a real key to sourcing good deals.

Speaker 3 (00:31.534)
Hello, good afternoon and welcome. This is a webinar being arranged today on a very interesting subject, how to find, fund and supercharge a profitable commercial property portfolio. Very interesting to be thinking about building wealth in multiple ways as we advocate here at Wealth Builders and of course commercial property being a hugely popular way to do that. Today's going to be shared webinar. So we're going to be having

contribution from Susie Carter speaking very specifically about the whole world of commercial property. And she'll tell you a little bit more about her background. I'll dive into the wonderful world of, of SAS for those people who've heard of it. That's great for those who haven't be prepared for a bit of an eye opening. Finally, we'll have a contribution from Johnny and one of his team talking more specifically about the wider use of SAS and funding.

to sort of give a bit of a turbo charge boost to what's going on. As we wait for Susie who's just having a technical issue or two, why don't you say hi to us and let us know you can hear us and see us clearly and let us know where you're dialing in from. you know, I'm Kevin from Surrey, know, Johnny's from Manchester.

I believe you have bended me there. Skipton, Skipton.

Well, I love New Yorkshire, Johnny Falls, New Yorkshire. Hi guys. You know, so anyway, just let us know where you're from so we can get ourselves sorted here and looking forward to sharing that. they will have a running order. Then we'll have an opportunity to do a quick poll to see if you're interested in finding out a little bit more because in, I suppose, 90 minutes, we're not going to be able to share with you anything more than enough of an interest.

Speaker 3 (02:24.91)
to satisfy a little curiosity, but in the end, probably 90 years worth of experience can't be diluted into 90 minutes. But we will have a Q and A session at the end. So whether you're asking a commercial property question, a SaaS question, or a funding question, we'll pick those up at the end. And my colleague, Dan, will be managing that. So say hello, Dan, just so we know that you're in the room with us.

Hey everyone, yep I'll be checking in on the chat box so any questions feel free to answer.

We've got Tracy who's used to seeing life in Skipton anyway. So how are we doing from a Susie point of view, Dan?

Yeah, this is in the background.

So

Speaker 3 (03:08.266)
Okay, that's great. And hope you enjoyed your half term Susie with the kids yesterday and looking forward to you sharing. So why don't we get the show on the road and introduce Susie Carter, who will tell you all about what she's going to share with you today.

Thanks, Kevin. Hi, everyone. Thanks for having me. Had a few little dramas getting into the Zoom room, but you know, these things happen. So,

section as it does a little

makes it

Yeah, it's all good fun. So yeah, lovely to see you all today. So yeah, I'm going to kick today off in terms of commercial property. So a little bit about me. I'm a child surveyor. I've been involved in commercial real estate now for actually about just over 30 years, which is quite scary. I've got a corporate background. I left the corporate world in 2015. Latterly, was a

Speaker 1 (04:01.326)
director of the UK's largest property company managing a massive portfolio of shopping centers. But I now I'm an investor of my own right. I've got about a five million pound portfolio and I help other people invest in commercial property. So that's the Commercial Property Academy. I have various courses, which I won't go into now, but if you haven't listened to my commercial property podcast, I'd love you to subscribe to that because I have an episode every week and talk to you about

Commercial property from an SME perspective. yeah, do look out for that. So now is a fantastic time to invest in commercial property. Commercial property, think, when people come to me to work on commercial, I think there's a lot of myths around commercial property in terms of it's too expensive, it's too complicated.

It's only for really sophisticated investors. And that just couldn't be further from the truth. Obviously, you do need to know what you're doing. But it's a fantastic diversification strategy. And we're in this fantastic window of opportunity at the moment, where prices are much lower. They've been very low for the last couple of years. And probably the number one lesson I've learned by being in property for so long is if that you buy at the right price, you buy at the right time of the cycle,

Obviously then you can make money because the only way is up from there. So we're in this amazing window of opportunity where prices are low and therefore there are reduced prices and motivated vendors. And as we all know, that is a real key to sourcing good deals. So I'm going to talk to you little bit more about that today. So taking each of our topics that we're going to talk about, kind of finding, funding and supercharging commercial portfolios, I'm going to talk to you a little bit about finding commercial property.

So probably the first thing to say about this is that, you know, we want to make profitable investment decisions and therefore, you know, it's really important not to scatter gun invest and to be highly, highly strategic. And probably with my corporate background, that's my starter for 10 with commercial investing, with all investing actually, is kind of where do you want to get to start with the end in mind? So if you have certain targets,

Speaker 1 (06:10.39)
or if you have a certain lifestyle that you want to achieve, then let's start with those and work back. And also, you know, in commercial, there's so many different types of commercial property. If you think about commercial property being anything occupied by a business, you can see how many different sectors there are in commercial. And so it's really important not to be too scattergun.

and to be highly strategic. if you want to be hands-on with your investing, you can certainly do that in commercial. But the beauty of commercial property is you can have really nice long leases, where a lot of the repairing responsibilities are handed over to the tenant. And so if you want that type of property, obviously you need to find areas and types of property where you can achieve that. If this hands-off income is a real benefit of commercial.

So this is why we start with the end in mind with our investing and we basically plan our exits before we've even started. one thing that you'll hear me repeat a couple of times during this webinar is about multiple exits. The beauty of commercial property is that you can plan multiple exits. So one might be, for example, letting the property as is and number two might be subdividing the space.

Number three might be changing the use or repurposing it. Whatever that is, it's super important with commercial that you have those different exits and you've planned them all upfront as well. And also kind of what type of property income are you looking for? Because I really like this really simple model. I can't take credit for it, unfortunately. But if you think of cash flow as basically replacing your income,

then say you were working in a job, it would replace your salary. That's cash flow. Profit is basically replacing your bonus and equity is your pension. And so the really important rule with regard to this triangle is not to skip the gears. So if you haven't got your basic living expenses covered, I see so many people move into profit strategies, know, repurposing commercial into residential. But actually, people just need to get their cash flow covered first. And you can do that very happily.

Speaker 1 (08:19.258)
commercial. I'm going to give you a few strategies how you might look at doing that today. you know and so this is why I started with the end in mind is really important if you're looking for cash flow then you can buy deals for cash flow and you know it just helps your sourcing to be more laser focused. And talking of laser focus because there's so many different types of commercial property and I would highly recommend that you niche your strategies because you can spend a lot of time trying to find out information on different areas and different types of property

Whereas if you have like one to three niches, you start to be really specialized in certain types of property and certain types of location. And it just makes your sourcing so much more straightforward. And you build relationships in your kind of target area and you find those needle in a haystack opportunities where you get higher than average returns, which a lot of the time the masses just don't know about. you know, whereas lots of people are piling into HMOs or service accommodation.

there's certain really niche strategies in commercial where, you know, maybe they're not quite so well known and where you can actually really specialize. And this is my kind of little model. There's a whole webinar I've done on this. It's by basically call it micro niching. It's about finding those kind of those, those niche opportunities. And what we want to do in commercial is we want to buy property where it kind of is future proof. So we want to look at the trends in the market and obviously

Business tenants are the tenants in commercial property. So we want to make sure that, you know, we're buying property that ticks the future trends, that those businesses will continue to thrive. Or if they don't, there's kind of multiple exits where we can repurpose the space. We want to invest in locations where, you know, there's particular specialisms, or there's opportunities where the economy is growing in those areas, or maybe the kind of population is growing or whatever else you're kind of looking for.

And then we want to kind of apply our strategies, you know, to add value, to make money out of the property. And I'm to talk to you about those today. And then also, you know, where the available finance is. So what happens when we're in a down market like we are in commercial is that commercial finance tends to retract slightly, but there are certain types of property that lenders really, really like. if you, and I'm sure Johnny will talk to us about that later, know, multi-let space.

Speaker 1 (10:41.902)
They really like industrial at the moment, for example. And so you can actually niche your strategies according to what kind of finance you can get. And you can get higher loan to values and better rates on the type of property that the banks favor. So, you know, this and this kind of niching strategy is super, super important when you're finding space. And commercial property is all about supply and demand. It's all about

Finding properties where there is good tenant demand, which means you can get good leases, longer term leases, good rents, future-proofed space and future-proofed properties where you're going to see some capital value growth over time. That is the absolute key. And you can find that information out by kind of niching strategies, really getting to know local stakeholders, local markets, and just by continuing your knowledge growth in those areas.

So just some examples, this is a big example, but finding industrial space where you can split it into smaller units. The banks really like this strategy at the moment. And taking secondary offices, I've seen so many secondary offices in auctions at the moment and on the market. Obviously, with the change in working patterns, it's really changed in terms of what people are looking for. So subdividing this space into small.

workshopy type units which can be used as offices but can also be used things like for beauty therapists or for different types of small businesses. Really nice little sector that one. And banks, know, lot of the banks are offloading space and so therefore you can repurpose this space into offices, retail, restaurants, cafes, you know, there's quite a few uses that you can repurpose this space into. So, you know, in terms of your sourcing, there's so many different ways that you can source commercial property.

But there's probably three main ways, I think, at the moment that are where actually if you focus on them and, you know, start with the end in mind, work out strategically the direction of travel, you can start to find some really nice deals. So first of all, it's through agents. So you may or may not know that a big chunk of commercial deals at the moment, or always actually, are done off market, probably a bit more down south than up north. And they're off market for various reasons, but quite often local agents have a

Speaker 1 (12:57.58)
of investors that they want to deal with, they know that they can sell the deals and therefore they tend to have this little black book. And if you can get into this little black book, build your credibility with commercial agents, then you'll get deals before the rest of the market know about them. Also in terms of auctions, there's a lot of commercial property in auctions. Bit of a top tip for you if you look at auctions where

Perhaps it's maybe a residential auction where there might be a commercial property that's been put in there and it's kind of a bit out of place. Very often there's not buyers for the commercial space and you can pick it up for better prices. And then using packages like Nimbus Maps, Searchland, Land Insight to do direct to vendor marketing. Because at the moment what we're looking for is motivated sellers. Sellers where they want to sell and therefore are more motivated to do a deal. And really that is the key.

at the moment. You'll probably see that a lot of commercial pricing at the moment is actually quite expensive. Agents are definitely starting to talk the market up a bit wrongly in my opinion. I still think that the window of opportunity is going to be open this year. But finding motivated sellers, so for example, I happen to know that in 2019 there was a lot of commercial debt taken out on five-year loan terms and a lot of that is maturing this year.

So there's potentially some motivation where prices have reduced, rents have reduced, where you could potentially be writing to people that maybe bought their properties five years ago. You can find motivation at different parts of the life cycle, where, know, when people, you know, if people inherit commercial property or divorce or illness or whatever, refinance is another one, maybe a dilapidated property. So there's lots of different ways of finding motivation in commercial.

sellers, but the key is really trying to sniff that out to find some really, really good deals. So that's finding. So what we want to do is we want to start with the end in mind. We want to be highly strategic with our sourcing. So rather than being really scattergun, we want to make sure that we're very, very targeted so that we know what we're going for and then we can become the specialism in that particular niche. Now funding, I'm not going to talk about too much because we have two much better specialists at this than me in Kevin and Johnny.

Speaker 1 (15:11.714)
But I'm just going to cover some of the ways that you can fund commercial property. So first of all, obviously, you can get private investors. So angel investors who come in and you offer a rate for a private loan with various forms of guarantee. Very similar to residential, obviously. Obviously, the banks, and Jonny will talk about the banks later, but commercial finance, different types of commercial finance, depending on what you want to do.

Also, JV partners, so similar to angel investors, other than you kind of get into bed with them, you have a percentage share of a business or of a property and you work closely with them. One party might bring the funding, the other one might bring the expertise or whichever way around you want. There's also vendor finance where perhaps the seller of property might put the property in.

And you provide the expertise or the time where you might actually want to be adding value and give them a percentage of the profit on the back end, especially where planning is required. Sometimes vendors are quite keen to do that because they don't want to do the work themselves. They want to work with somebody who can do that for them. And then lastly, pensions. You can invest in a SIP or a SAS pension. You can invest directly in commercial property. And Kevin will talk to you about that in a minute. So I'm definitely not going to tread on his toes there.

And you know, there's some games you can play. I'm sure Johnny will talk about this later, but you know, there's certain types of property, as I said, that commercial finance really, really likes at the moment. So it's really key to kind of sniff those out and to find them. And Johnny will tell you, I'm sure all about that later. And then lastly, supercharging your commercial investment. So what we want to do is very similar to any type of investment that we invest in is buy at a price and then add some value if we possibly can.

And then obviously either refinance that out or just have that as equity in the property. And we do that through kind of asset management in commercial. And this is the kind of calculation in terms of investing, calculating commercial vows. So very unlike residential where you're looking at bricks and mortar values, what you do in commercial is you apply a multiplier to the rent. So the way this works is that the higher the rent is on a property as an absolute rule of thumb,

Speaker 1 (17:29.196)
the higher your capital value will be. So the name of the game is to try and increase the rent as much as possible. And then this yield is basically the multiplier that you apply to that rent. We call it the all risks yield. So a value will apply it and will basically look at all the bundle of risks associated with that property. And then they will work out kind of what that yield is going to be. They will use comparable evidence for that. And, you know, it's a little bit of an art, not a science, this yield, but it basically reflects the risk.

And what we want on commercial properties, as said earlier, is looking at multiple exits. There's so many different ways that you do not have to just convert a commercial property to residential. There's plenty of ways you can add value just by keeping it as commercial. And I call that the easy money. Now, obviously, that's super tongue in cheek because we all know there's no such thing as easy money with investments. But what I mean is that you don't have to do complicated development projects in commercial. You can actually do paper-based asset management strategies where you can add value.

So some ways that you can do this is you can let a vacant property. So given our calculation, if there's no rent on a property, then obviously it's more difficult to value, it's worth less, and it's more risky. So this yield will be affected as well. So purely by letting a vacant property means that you can add value. Equally, if you could extend a lease, for example, or change a lease some way and a tenant will stay in there for longer, again, it becomes less risky and you can add value that way.

You can also add income to the property anytime you add rent to a property, you're adding value so you can add advertising hoardings or do an extension or subdivide space where you get higher rents. Lots of different ways you can do that. You can change the use. So you can do some development, but you don't necessarily have to, but you can bring more profitable uses in. And you know, really number five is just

buying well, it's the absolute number one key for me is just buying at the right price. So ignore asking prices and make sure that you go for, make sure that you work out exactly what you can afford. And just an example of a client who recently done a deal like this, they basically bought this property at auction and they just by letting a vacant unit and doing a title split, literally that's all they've done.

Speaker 1 (19:48.152)
They've actually added 350,000 pounds of value within six months now, and they haven't done any development. They actually spent 3,000 pounds on some white paint. That's literally all they've done. I know we haven't got loads of time, so I could go into this in lot more detail. But this is the kind of deal I'm talking about with the easy money. It's about not having to do complicated conversions and actually

doing these paper-based asset management strategies. So I'll leave it there because I know that Kevin and Jonny have got a lot to talk about. I just want to tell you a little bit about my board. Just very quickly, I've opened my board, which is a six-month program. It only opens every six months. There's lots and lots of information here, but basically my board is a six-month program. You get personal support from me. So if anybody's interested in that and interested in exploring commercial any further, then obviously we're very happily sending the information out after this event.

or can scan that QR code and contact me further. Over to you, Kevin.

Hey Susie, that was a whistle stop tour through commercial property. Of course. But as I said, right at the beginning, you know, 90 years worth of experience isn't going to be translated into 90 minutes. And we saw there's lots of questions. We'll get to the questions. We're going to shuffle the questions to the end and Dan will kind of manage that process. But it's what, what I sort of picked up there was really the power of niching, the ability to tap into a black book.

a big black book that you've got and a big black book I've gotten, I'm certain Johnny's got. And it's just great to be part of an environment where people are being connected and they're thinking like-minded, which very different from kind of traditional thinking of being in jobs where everybody's protecting themselves, like children protecting their homework in many respects. So I'm going to just switch gears a little bit and share a little of my expertise more on a kind of an alternative way of funding.

Speaker 3 (21:45.418)
And what I'm going to do, just bring my PNL and just show that. Just let me know if you can see that. So what I want to talk about is how to find kind of new sources. Johnny will talk about traditional sources and you heard from Susie that finding and funding, then fixing or filling or flipping, all of those things are very important. But the reason why it's really important to be in charge of your funding and not be at the mercy of what the market is doing.

is because you're not in control of that. know, rates go up, rates go down, bank margins change, bank underwriting changes, but being in control of your finding, as Suzy said, and niching and being in control of your funding are equally important skills. And all I would say just from my experience as someone who's been involved in funding from a private investor point of view and funding from a SaaS point of view, I'm only going to talk today about the SaaS.

But if you're interested in finding more about how we help anybody turn themselves into irresistible magnets for private investing, just put private investors in the chat box and we'll find that later and send you details of that, which will be launching out in the second quarter of this year. Anyway, I'm going to talk to you about a source of funding, which in my opinion is the most overlooked and undervalued

ever. And the reason it's overlooked and undervalued is because most people think the word is a bit boring. Right? So it's talking about pensions, your pension and other people's pensions. And we know that most people who've got a kind of a pension, 95 % of the population have got one, but they don't like them very much. You know, they're confused, they're distracted. There's so much

of a feeling which is negative and for me the fundamental one is a lack of control and just as I talked about the need for sustainable funding, controlling your pension is really quite critical if you're interested in commercial property especially and what gets my goat as a poach-a-turn gamekeeper in this space as a qualified IFA is I see too many people not being in control and allocating that money to a third party where typically those fees

Speaker 3 (24:12.206)
or 2 % which can sound a lot but if the average stock market performance is say 6 % that's a third of your money going to somebody else. Now, Susie, I like you, like like a joint venture. I love a joint venture but I'm not sure I want to be in a joint venture where somebody else is taking a third of my money, they don't put any money in, they don't take any of the risk and they have no accountability if it goes wrong. I'm not sure it's a great joint venture. I think for me being in control and using that money for what?

You want to do yourself is really, really powerful. Now, Susie talked about different forms of property, different ways of creating value. And of course, whenever you're looking to create more value, you start with an open mind. And when you have an open mind, you learn new language and the language I want to share with you is the language of the small self-administered scheme. No, I get it. It wouldn't win any marketing prizes is not very sexy, but what it basically means is a pension you

own and control. So you unlock that vault for yourself. Now the technical nature of why it's called small self-finance scheme not relevant except it's for business owners and business owners only and allows you if you've you plus a maximum of 10 so no more than 11 people you can pool and combine your money and get so much control and so much bang for your pension buck and I'm going to tell you a little bit more

Why that's important because traditionally you put money into a pension, you allocate it to a third party, usually some kind of advisory person or people, and you can't touch that money till you're in your late fifties and that date's moving in 2028 to age 57. What if you could access that money today? What if you could take pension money you've thought you put in a box that says do not disturb till I'm 60, you could get that money now.

And state pension going back and back and back. It's not even 65 now is it? 67. So getting control now when using money now is a way to build your wealth. And I'm going to share with you, although I know seven strategies for how to use SaaS to build more wealth, I'm just going to talk about three. And by the way, it does take a while to get your head around SaaS. So don't worry if you don't get everything that I'm sharing with you today, but just try and find enough to get curious.

Speaker 3 (26:40.33)
see whether or not you'd like to know a little bit more. So the three strategies are going to share with you are buy, bridge and borrow. And like Susie, going to give you some examples and like Johnny, we're going to give you some examples to try and bring it to life. The buy strategy means you take the pension and you grow tax free the value that you have inside the pension. So use it to buy assets. Here's a client of mine, Mark, who had a corporate background, kind of really looked at his pension statements he said every year.

wished it were better and put it back in the drawer again. That ring true? Some of you maybe anyway, in his life, there were four people that were meaningfully involved together himself and his wife, his business partner, their wife. Now normally pensions are for one person. You wrote your own vote. Well, actually somebody else is rowing it for you. Four people together, put that money together, gives you more money. More money means bigger deals and a Mark and his family and

business partners, family were interested in commercial property and not just doing one thing based on the sum of money they each had, but combined that money. And what were they able to do? They bought commercial offices, did commercial to residential projects, bought a shopping center in Colchester in fact, and got so good at using their own SaaS. Mark wrote a book, even wrote a book before I did and talked about other people's SaaS and showing people that they can use their money and pool it.

and combine it with others too. real genuine joint ventures. But just to widen that, there's so many aspects of property that a pension fund can participate in, in the buy strategy. So the pension can actually buy it for you. One, industrial units, retail and leisure. And of course we know there are different kind of benefits and enhancements from the government to try and support that area of business. Very growing area of apartments and apart hotels.

Lots of people buying old bed and breakfasts and turning them into a part hotels often called crusty properties from crusty people. Interesting one. Susie mentioned title splitting. So, so many different ways you can create value, but the pension pays for it. And that's just incredible rather than you having to find the money and pay money to a bank or an institution when you can use your own money. Nothing wrong because you can combine your pension with

Speaker 3 (29:05.346)
bank funding and Johnny will explain more. But the bridging side is really about turning your pension into a bank. And here are two bankers, Chris and Tracy, who worked for Lloyd's bank. They had quite substantial final salary pensions. They put them together, all them together. And as you'd expect with bankers and accountants, pretty cautious. It took about a year to get their head around. Most people take about 90 days.

to get their head around SAS. They took a year. That's fine. But what they wanted to do was control their pension and get into property. They didn't know how. if you imagine, you know, they had the money and they wanted to expose that into property. Well, what happened there? Well, instead of buying properties, they didn't know how. They were connected to somebody called Christopher, a real person who himself was into property at 150 rooms in the Northeast.

And he'd run out of money before he run out of his own ambition. What do you think happened? Well, Chris and Tracy built that relationship. And again, don't forget, but in private investors, if you want to know how this connection happened and how you can be like Christopher, super, super attractive to private investors, then he gave them a return on their money. an interest return, as you can see that money flowing to Chris.

and to Tracy and they got knowledge. got to look over Christopher shoulder to see whether they enjoyed property, whether it wasn't just a single loan or a project. And Christopher of course himself got a return on the properties and acquired more property. he built his wealth. So both sides created value from something that didn't exist before. And that's the real power of the multiple ROI's that come.

from the kind of combined effect of using your pension. Now, if you've got a pension, you could do that. But if you don't and you're a successful developer, of course, you could put your picture in the Christopher area and be someone who's attracted to that. Now, nine loans later, so this power of multiple loans because Chris did what he got, what he wanted, Christopher got what he wanted, and they just kept going round and round and made that all worth.

Speaker 3 (31:29.976)
They've now become joint venture partners in commercial projects themselves. So very, very powerful. What about the borrow strategy? Well, uniquely in SaaS, no other pension. You can't say to your personal pension provider or your workplace pension, can I have some of that money now? They will say absolutely and unequivocally, no, you can't. It's not your money. It's in a pot that somebody else manages, hands off. But in this case, we've got

Award winner, a client of mine as well called Toby and his wife there. And they won an award for SaaS investor of the year for the simplest deal you could possibly do. And all they did was they borrowed. You can lend up to 50 % of the value of your pot. So if you combine pots, that means 50 % of a bigger pot. He loaned give or take a hundred thousand from his pot.

and bought this property on the left-hand side, is a dilapidated property. And of course you already know, don't you, that a dilapidated property can't get a mortgage on it. Not even Johnny can get you a mortgage on a dilapidated property. But because he bought it outright in cash, he was able to secure that. And therefore, one would argue, removed some of the competition as well. But because he knows his area, he niched, as Susie has been recommending.

then he knew that the local council were willing to lend up to 40,000 pounds interest free to bring this property up to scratch. And that's what he did. So by using his pension and a 40 grand interest free loan was able to turn it into the property that you see there in the middle, which adds approximately a thousand pounds to their income. Now hear this, the pension gave them an income today, not

Later today, because the money was loaned from the company, from the pension rather to the company, company bought the asset. So the asset sat outside of the pension. He just paid himself an interest rate. So he became the lender and the borrower. And in many respects with commercial property, our clients become the tenant and the landlord. So the money's going in a virtuous circle, building your wealth, not exiting your life and diminishing your wealth.

Speaker 3 (33:52.526)
So, you know, super tax efficient way, SAS says, income tax free, corporation tax free, capital gains tax free. There are certain inheritance tax benefits, which I won't have time to go into today, much more tax efficient from an inheritance point of view than any other pension. But the key thing is, you know, in order to really take some time to explore it, are you eligible? Well, you need a limited company. And of course we've seen a proliferation of property people.

creating limited companies since the government's interventions. And as long as you've got good knowledge, good skill, and you've got £50,000 either on your own or with others, or you could put that kind of money in from profits you're making from a company, the Inland Revenue who approve each scheme will give you an approval to go ahead to take control of your own pot. Well, what would that pot be made up of? Well,

any kind of personal pension, workplace pension, a SIP and we've done hundreds of SIP to SAS transfers and we haven't done any SAS to SIP transfers because anything a SIP can do, a SAS can do better. Anyway, even older people like me, you can take any pension that's in drawdown, not an annuity, but in drawdown that can be moved as well, drawdown to drawdown. So pensions can start their life over here and be moved in.

to assess creating a family trust fund like a family investment company on steroids to allow you to grow your wealth as tax efficiently as is possible. you can't do though, and I must make a cautionary note, you cannot use public sector pension. So if you're a doctor, a dentist, a nurse, a fireman or fire person or firefighter, I think, you cannot move that money. There's no money there. That's simple. I mentioned annuities. So if you know,

Father yourself or parents have got annuities, can't do that. And generally speaking, most final salary schemes, you cannot move unless you've really got a lot of experience and that's all been changing in recent years. And what do wealth builders do in this regard? Well, you know, we're the biggest national independent broker of SaaS in the UK. We focus on helping people understand what needs to be done. I think there's no more powerful

Speaker 3 (36:11.734)
way to give people the confidence to do something with good education. Like Susie talked about, you need people around you, a great environment around you. So we make connections in our Facebook groups, our WhatsApp groups, our clinics, our site visits, our open days and build a massive community over 5,000 strong. Now, if you're interested in SAS, then we are the definitely the right people to know. So we're not an administrator.

where like any good broker would be like a mortgage broker match you to the right administrator to do the paperwork the compliance works you don't need to master that but at the lowest possible price so with that being said if you would like to know a little bit more to see whether you are eligible then you can QR code that or click on that link and I'm sure Dan will put that into the chat box for you and if you qualify you can have a call with us to know a little bit more but in the meanwhile

Let's hand you over to our friend Johnny who will talk about what broking means when it comes to working together with SAS and him and his colleague will share with you more about that.

Appreciate that. Thank you Kevin, that was awesome. There was one comment, a pick up on that said, even Johnny won't be able to get you the lending. Well, you know, he'd be surprised. You'd be absolutely surprised. And I say, there's a saying that we always leave. If we can't do it, it can't be done. So give us the backstop and at least you know then, you've spoken to us and it's not achievable. Look, it's not achievable. So, you know, cracking stuff. Carrying on in a similar format from commercial property.

and Art Toe is a little bit into the SaaS world as well. So thanks for that kind of introduction into the SaaS space. Have I got Tyler with me?

Speaker 4 (38:00.942)
Yes, I'm to you,

Owen? I can hear you buddy, can hear you. I won't be able to see you but I assume you are there as well. So quick introduction to myself. or Money Mogul could be the stage name. I own a business called DNA Financial Solutions and you know, give a for myself, my sins over five years and similar timeframe to be fair is also one of our great colleagues, Tyler, senior commercial finance broker and big specialist into the SaaS space at DNA.

going to go through how to leverage your SaaS pension for property finance and really where it is that you can kind of draw the line. I'm going to cover off some similarities between actual commercial lending and also the types of lenders that will operate within the SaaS space too. So what's a SaaS pension according to lenders? In general terms, it is just simply the vehicle that is acquiring the property, just as it would be for a limited company, an LLP,

a trust, you're purchasing your own name, the SaaS according to lenders is in essence, it's the vehicle. So providing you're meeting the terms and conditions of the SaaS, then the lenders will actually lend. And we'll go through who the lenders are and who does what, how SaaS lending actually works. Now, ultimately, yes, you can only use 50 % of the value of your SaaS pot to be able to lend with, but it really does help out when it comes to leverage. And we're gonna come through some.

really interesting case studies live case studies in terms of like they have just completed so it's really live and relevant and then of course the actual deep dive into the differences on commercial. So what you've got in the commercial financing space and according to lenders you have investor focused lending which is in essence you're not going to be trading a business from this premises you personally your companies are not going to be there and then you do have owner occupied lending.

Speaker 2 (39:56.014)
the two different types of commercial lending. I want to kind of make it very, very clear. It may not be if you want to acquire a property, let's say, in an own occupied space that the SAS route is the right route, but this is the conversation you would have with your pension experts. And that's not us. No, we are the lending experts within the SAS field, but not the actual pension framework. So when it comes to regulatory considerations, we're working on behalf of the lenders to ensure we're doing what they want.

which may be different to actually what is in essence allowed and the people obviously managing your SaaS itself. So just kind of bear that one, bear that one in mind. So I suppose, yeah, quick question for you Tyler, just to kind of bring you on board. And this is the kind of the rules and the limits from a SaaS point of view when you're actually borrowing money, obviously from your SaaS and then from lenders, just a rough guide on the rules and limits if you can.

Yeah, of course. So of course, think one of the, one of the big ones has already been touched on there with, of course, you can only lend up to 50 % of your, your SaaS, your SaaS's value. So of course, easy numbers, if you've got 400,000 pounds in your SaaS, then you'd only have to be, obviously be able to borrow up to 200,000 pounds. I mean, the next, um, the next point that you've come onto with this kind of irrelevant deposit requirement, and I don't know if you've accidentally just, uh,

Just pinged off ever so quickly, I apologize, I'll bring it up in a second.

the slides up and that's absolutely fine. You can still acquire properties even with 25 % deposit, but there's some key considerations there. Of course, the type of asset, the type of property, and of course the amount of income that that property generates will need to cover any lending up to that borrowing amount. I know that the next point on there was the impact that leverage plays as well with investing in property, whether it be commercial or otherwise, specifically commercial.

Speaker 4 (41:47.15)
a little bit of a, take a little bit of an example here. If you look at acquiring, let's say an office space within your SaaS and that office space might be purchased for half a million pounds and it generates 50,000 pounds worth of, of, of gross rent per year. So working with a 10 % yield, is, is quite good for commercial property in the market. You go ahead, put that 500,000 pounds into that property with no finance. You'll generate 50,000 pounds.

If you'll have other costs come associated with it, that's okay, that's fine. The alternative is what if you look to, of course, look at institutionalised finance, commercial term finance, wherein what if you split that £500,000 and you split it between two separate properties, both that you're buying for £500,000, both that run at £50,000 worth of gross income generated from the leases to give you £100,000?

Just want some quick figures very, very quickly on my calculator here. And if we were looking at borrowing half a million pounds to support the million pound total purchase for both of those properties, you might be paying somewhere around the seven and a half cent interest rate, just as a conservative idea. We'll come on to some more, more case studies a bit later. Well, you'd be paying 37 and a half thousand pounds worth of interest to a lender, but you're generating a hundred thousand pounds worth of revenue. So again, just a very brief, quick example there how

You can use that half a million pounds in two different ways, benefiting from leverage by going and acquiring a couple of assets that are going to appreciate certain than just the one.

So from a obviously the actual loan to value, the interest rates, the lending criteria in general, it is slightly different when it comes to commercial properties. And of course, like what I touched on before, if it's owned and operated as a business from yourselves or actually if you're purely just the investor, it will obviously change differently. But, know, give me just a rough breakdown on this particular section from the loan, the interest rates, like what are I suppose lenders kind of expecting?

Speaker 4 (43:50.382)
Yeah, of course. So I know we've already touched on the point of a 25 % deposit means that you can get lending up to 75 % is possible for certain assets. Quite a broad range of interest rates that we've put together there between six and 10%. And there's quite a lot of factors, quite a lot of factors that impact that. The first one, of course, being the loan to value. If you're lending at a higher percentage against a property's value, naturally you would expect the cost of that.

cost of that borrowing would be higher due to the risk that's then put on the lender. We've also got loan amounts as well. You're going to get an economies of scale discount for lending something like half a million pounds, a million pounds, rather than only lending something like a hundred thousand pounds. Because there's quite a lot of lenders that don't want to get out of bed for anything typically under a quarter of a million.

There are some options at £150,000 of minimum loan but when you drop below that you are really creeping up to a 10 % rate in a lot of circumstances. Some of the requirements that are going to be requested

So is this like when I'm asking, so from a documentation wise point of view, you know, accounts, et cetera, what's perhaps going to be different or the same?

Yes. So in terms of having a case underwritten by lenders, their actual genuine document requirements, we're going to have to have documents on the client ID, statements, et cetera. But in terms of that property, one of the key things to consider is the actual lease that's got to be in place. So how many years are left on the lease? Is it not a rolling lease? What type of tenants of course is in there? There's different rates for different assets. So on one side of the spectrum, we can see very, very good things like in regards to like

Speaker 4 (45:34.702)
day nurseries, light industrial, certain office spaces. What's less attractive at the minute is on a real extreme side of the spectrum, let's say a nightclub or certain high street retail, which may have taken a turn over the last five, 10 years from a demand perspective.

I know spot on. So going into the actual, what do these things actually look like? What do the payments look like? The exact interest rates per deal. You what deposit you need to put down and obviously return the actual ultimate profit to your SaaS. Talking through, of course, some like pitfalls that people do fall down and how you actually structure these for clients, Tyler. Starting at the top and I've gone obviously not worst case, worst case scenario as such, but really like where the interest rates tend to reach a bit of a peak.

And you can see there a 10 % interest rate. is ultimately where this fits with a particular lending avenue. And you can clearly see where I've marked out there that where the downside is for lenders in terms of the interest rates obviously going slightly higher. And it's not necessarily doing in this instance down to the purchase price. You know, that's relatively okay. The lease is relatively okay to the actual purchase. The type of property, accounting firm, office, great stuff. think, well, it's bricks and mortar. It's solid stuff. It's not.

light, tinny, industrial, you know, kind of properties. like Susie was saying, that's really attractive for lenders. So it's like, this is purely down to actually a low loan that lenders want to lend, you know, and certainly in the commercial space, they want to lend. And if they can lend a lot of money, phrase bigger being better. Now in this instance, there you go. You've borrowed 80,000, you know, perhaps, you know, topped up as a way, obviously through your SaaS as such as well, because you can then, you know, fund the rest.

68 % lender fee on this one, two and a half percent. The terms five year, it's a fixed on the term, but because it's interest only at 682, what's the kind of the profit side of this one Tyler that you were looking at.

Speaker 4 (47:35.118)
Yeah, just, I mean, just addressing this, this particular case in question, the reason for we probably looking at that, thinking 9.99 % of an interest rate is pretty scary. Multitude of different reasons that can come onto the profit in a minute. It actually still does stack, suppose, a profits perspective for this specific client. The lower loan amount's one thing. The property, although not an incredibly complex quote, this was a, this was a building that was based in Scotland. There's a number of lenders that

do lending Scotland and there's a number of lenders that don't lend in Scotland. Well, that's another key consideration. In this case as well, the client was also, it was a first time commercial investment for the client. had a small amount of residential experience, but that does play a little bit of a part of well even lending a higher amount. In terms of what do we look like from profit perspective on this specific case, if we've got £2,000 worth of gross single and per month.

If we're taking off then the 682.65 over the year, this is a property that will still generate just under £16,000 worth of profit to that client within that SaaS fund. There's of course a large amount of deposit that needs to go into that, but overall looking at it, even though we're at 10 % rate of interest.

So some of the cases still do stop and of course you'll the reductions in interest as you lend more and more money. Yeah. And that was, that was that.

I'm going to flick through the next two just so can, there's lots of Q and A's probably to get through. So I'm going to fly through these next couple of slides. Across the board, mean, you say, the borrowing's significantly more. We're up at 75%, but yet the interest rates dropped 2%. Generally down to, you know, being able to lend a lot more money. Obviously you can give us a two pence on this, but this is ultimately, this was an industrial unit, was an office warehouse that you funded. Location-wise, I'm not sure, but actually in this instance, you know, where does the profit sit with obviously,

Speaker 2 (49:37.326)
£2,119 a month of payment.

Yeah, I this was, this was, we worked on this one, which is a, was a warehouse slash office in Wales. interesting one with this one is of course, we've got a higher loan board amount. We managed to meet a minimum loan of let's say quarter of a million. quite a few more lenders that then start to open the door. And we're also lending up to 75 % lending as well on this, on this particular property. generating an income of 37 and a half thousand pounds for the year.

Just working that in payment, so I suppose if we've got 25,428 worth of this annual interest payment, it's 37.

It's about a thousand pound a month. What I think is quite interesting is like even in this example here, if you were not buying it within your SaaS, bear in mind, there is more lenders that will lend to you if you buy an office in your own name or in a limited company because of the structure is more understandable, let's say for lenders, that it's only ever so slightly cheaper on obviously on the rates and the payments. So, you know, it's less than half a percent different. So, you know, best case scenario, you could be saving a hundred pound a month. But then again,

would that actually play into the advantages of the overall picture that you've got? I know Susie did cover multi-unit blocks. Yes, lenders do love multi-unit blocks. This is quite an interesting one here. Low loan to value again, but you are sub 7%. So it's nice to see something beginning with a six, but you can see, you it's high value. It's high yielding because you know, you've got multi-units paying a lease payments. Low lender fee as well, which is

Speaker 2 (51:20.398)
great to see something that's sub 1 % especially these 3's and 5 % can get bit overbearing. The 3 year fixed and I think when you worked out the term on this one it's 15 years as the term because this was capital and interest payments so ultimately after the 15 year term ultimately that's the loan paid back and I thought that was quite an interesting scenario because there's multiple avenues wasn't there with this one?

starting to, we're starting to break into, to high street lending, especially if we're significantly low loans value. Of course, again, it may be, may be core knowledge. may not be, but if you're trying to invest in property as a, as an investment, not your own business, whether it be in a limited company, personal name or SaaS, the high street generally aren't the one to go to. If you want a maximum amount of leverage with a, with a good amount of, a good amount of borrowing, especially on interest only.

So this was a facility that was taken on a capital interest basis 6.95 % of the client did actually have the option to take a reduction of an interest rate. This was a product that comes with no penalty fees of course to that client is best for them that they monitor the market over the next number of years. Naturally we're going to see rate reductions going into the next 12-24 months. Are they going to be significant?

Um, maybe if we're looking between a one, one and a half percent reduction, then brilliant. But this client was, it was important to them to then tie in in a few years time. Of course, we're still lending in a decent amount of money, quarter of a million. So again, we still need to those higher loan amounts to be able to go to the ice tree. Um, and the lens and the client is happy to take capital interest over the payments. think with this one, it was, this was an interesting one to be, it did bring them that mule to unit block concept. I think within this site, there was a bridal shot.

It was a yoga gym, a beauty salon, there was also an office in it as well, all with various businesses with their own leases in play as well.

Speaker 2 (53:20.974)
Fair work, I mean it's great. Three very different examples, different loans, different lending. Interest rates can be cheaper, like say, but it all depends on timing, the market as well, versus like where are rates gonna be? Commercial rates overall haven't really significantly changed. I'd say well, 12, 18 months really, you since they kind of peaked and they're kind of still plateauing a bit. there should be a reduction at some point, obviously a crystal ball kind of analysis here.

more almost like final contents lied pretty much for us now guys. it is more to highlight, I suppose, the restrictions and the offering now. You of course, I Ty will probably cover this in a bit more detail, but you could go direct to a number of commercial lenders, but the majority of them are not going to understand the pension world, the lending to a SaaS. A majority don't from a commercial perspective. And that's why, you know, we work with the ones and most of them, to be fair, are intermediary only.

The lenders don't actually want to be involved in any form of the advice process in case their teams get slightly tripped up. So they put the ownership on two brokers. And I suppose if you go to a broker, even commercial brokers don't do SaaS. It might be the case of most of them being an appointed representative. So piggybacking on other brokers permissions and they just simply cannot give the advice or be able to support that facilitation. And the lenders probably wouldn't want them to either. So it really takes, suppose, and this is where we ultimately picture.

Our cells as a company, you we do have all the permissions, the PI cover to be able to give the full holistic package of advice, you know, whether it is unregulated or regulated as a financial transaction for us. Some of the banks that are regulated that do unregulated finance would want a regulated broker to do it. So that basically gets rid of 90 % of the commercial brokers anyway, because most of commercial brokers aren't regulated in the sense that they can't give regulated advice. So.

Lots to think of there, lots of restrictions. It really is a case of just ensuring you pick up the phone to my team, Tyler being one of the senior experts at Commercial and SAS to work on. And the final questions, just to kind of tip something into the right direction for Q &As. These are our common ones. I've seen plenty in the chat from you guys to see where things are going. So, you know, is there any restrictions, from a lending point of view from the SAS?

Speaker 4 (55:39.054)
So when we, when we talk about restrictions and talking specifically of lending to separate, to a separate property company, which you, which you hold to an effective loan back, what we're trying to say, one of the big ones, big ones, Kevin's already ticked off all kind of mentioned was a 60 % weighting rule. You can lend money back to your, to your company, as long as it's linked to the SaaS to be able to go on and invest in properties again, as long as it's on 50 % that SaaS will then take a charge over.

that property. So it restricts your access to lending in that, in that front, because you can't go and get a lender to do a first charge mortgage, financial term on that property if it's going to be in that separate country.

Yeah, perfect. I'm to skip on the question. I'm going to straight to personal guarantees. I find this one quite an interesting one, especially in the world of talk to me about personal guarantees.

I would say 90, 95 % percent possible finance we do at ANA one way or another that's not linked to SaaS lending comes with a form of personal guarantee. But interestingly, when you're lending within your SaaS, due to regulation restrictions, the lender can't take that personal guarantee. And there's probably reasonings for that. one of them is if you're only lending up to 50 % of the overall SaaS value, that's how certain lenders are.

comfortable with not taking a personal guarantee because they know that you've got that asset base behind you if anything was to go wrong.

Speaker 2 (57:05.102)
Perfect. Perfect. And then final, final question for you, Tyler, is, you know, let's say I bought a property and it could be a while ago, last week. It's owned by my SaaS. It's unencumbered. So no finance whatsoever on it. But I want to wait. I want to now raise finance on it. Is it possible? How do I do it?

doesn't come to us a surprise that the answer is yes. Interestingly, if we've got a number of investors already even on this call that do have properties held within SASs but they weren't originally aware of ways to finance them or found them restrictive, then now might certainly be the time that potentially we look at raising some finance and go and acquiring another property within the same SAS leverage up to invest in further property and grow that portfolio within that SAS.

Speaker 1 (57:51.118)
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