What’s stopping you from investing in property, or more property? Is it a lack of finance? If so, you’re probably looking at things the wrong way. Here Mark Homer, Co-founder at Progressive Property, fires out 5 quick tips for your joint venture pitch.

It’s no secret that joint ventures (JVs) are the key ingredient for building a healthy property portfolio. What is more of a mystery, however, is how you actually secure JV partners.

While the property experts are all shouting about the importance of JV deals, you’re left wondering how to make yours a reality.

Never fear, it’s all about the pitch, and we’ve got five top tips for nailing yours right here.

It’s likely you only have a brief opportunity the first time you meet, at a networking event for example, to capture their imagination and grab their attention. Make sure you do so with something unique and compelling. Bear in mind, too, that investors invest in people, so you are an essential part of the deal. Be likeable.
Private investors are pitched to every day. Clarity is always better than persuasion, so make them aware of the need to do business with you. Identify their pain point and actively promote a remedy. Speak in their language and focus on being understood.
Offer them a unique solution. A profit share in the cashflow and equity. Differentiate yourself by your unique value – what can you offer that no one else can? (Investors aren’t keen on ‘me too’ ideas).
Every investor is sold on perceived capability. You can build this by displaying positive examples of your determination and ability to get the ‘job done’.
If a potential JV partner is interested, offer to buy them lunch so you can talk more about your property investment proposal. With any luck, this will be the start of an everlasting and successful JV relationship.

Bonus tip

Don’t be afraid to show your passion and enthusiasm – it could be the difference that makes the difference and gets you another conversation.

Damon Walford, Chief Development Officer at alternative lending industry pioneers, ThinCats, shares his thoughts with Finance Monthly on how SMEs can get the right mix when it comes to funding.

Alternative funding offers access to finance that ticks many boxes; from faster turnaround times, to flexible rates and a more in depth probing of the story behind the application. It also provides an ideal avenue to supplement private equity, venture capital, Angel investors and crowdfunders.

Alternative loans for business are more accessible when equity is part of the mix, especially in cases of business acquisition, refinancing and property development. Lenders like to see an element of entrepreneur equity as “skin in the game”, but there is an important place for 3^rd party equity which may be on a different scale to that of the entrepreneur, providing meaningful impact on the risk profile of any loan.

Where appropriate an equity and term loan mix will:

Reduce risk of the debt provider as any security available is against a smaller loan;
Reduce funds required to service debt;
Provide all financers with additional comfort regarding the proposition;
Generally reduce costs of both debt and equity finance due to decreased risk.

ThinCats has huge experience in this area, and has successfully financed a range of projects where a mix of funding has provided the ideal solution. In one case, an MBO team wishing to acquire a business with justifiably high goodwill had their own equity but there was still a funding gap. This is often covered by a deferral of part of the purchase price, but in this case 3^rd party equity was the best solution.

Where a sound business may have suffered a financial shock, e.g. bad debt, an equity mix can be the saviour. ThinCats has funded just such a company, where the balance sheet value needed reinstating with equity, but a cashflow-based term loan was also appropriate given underlying trade. In this case, it was impossible to finance wholly on debt, too expensive purely through equity, but very viable to provide the mix.

A property developer had a project ambition that they couldn’t fully fund through their own resources or with the highest Loan to Value debt commercially available. 3^rd party equity was used to bridge the gap providing a structured debt & equity solution.

Most deals of any size will have an element of equity and debt in them, often provided by the entrepreneur, but 3^rd party equity is key to getting certain deals financed.

WILLIAM ACKMAN, Activist Investor and Hedge-Fund Manager

We all want to be financially stable and enjoy a well-funded retirement, and we don't want to throw out our hard earned money on poor investments. But most of us don't know the first thing about finance and investing. Acclaimed value investor William Ackman teaches you what it takes to finance and grow a successful business and how to make sound investments that will grant you to a cash-comfy retirement.

The Floating University
Originally released September 2011.

Sinayo Securities is an independently owned and managed, broad- based BEE. Specialising in South African listed company’s equity sales and trading, the firm provides top quality services to institutional investors.

Driven by the desire to see black women rising up, proving themselves and making a significant footprint in the sector, Sinayo was born out of the notion of addressing the lack of black women leadership in the stockbroking industry. Sinayo Securities began this process by being the only member of the JSE with a 100% black female shareholding and a Level 1 BEE rating.

Founded in 2015, the company is a relative newcomer to the JSE, yet it understands that in order to be significant and have a sustainable long-term business, outstanding service, integrity and significant partnerships are paramount to achieving success. Part of this success was the announcement in late 2016 that Patrice Motsepe’s investment group, African Rainbow Capital (ARC), had bought a 49% stake in Sinayo Securities. The synergy of this deal fits ideally with the company’s vision, namely to challenge the conventional mind sets of investors by providing leading insights on high-growth pan-African markets.

Services

Currently, Sinayo Securities specialises in listed South African companies’ equity sales and trading.

The firm provides institutional investors with quality research and exceptional client service through being insightful, responsive, and connected, while having a deep appreciation of transformation responsibilities.

We have an experienced dealing team that is supported by an accomplished independent back office to ensure compliance and timely settlement. Various products and services have been introduced, including quality third party research, unique corporate access, corporate finance and mentoring and coaching of young black investment professionals.

Education

Sinayo Securities believes it has a core responsibility to be a role player in the South African transformation process. The firm has created a graduate training programme, called Project Funda. The aims of the programme are to further black talent, particularly in terms of research and leadership in the financial services industry; to create positive experiences that will lead to improved

engagement and retention; and to produce graduates that are team players for its company and clients.

The course consists of four modules, each with a duration of five days providing students with the theoretical foundation and practical insight into the various aspects of the securities analysis and brokerage industry. The project has seen beneficial spin-offs, whereby a number of graduates have been sponsored or ‘adopted’ by independent companies to further their careers in the financial industry.

Future plans

The firm’s clients are its top priority – for this reason, it is continually expanding its scope and capacity of existing activities. The Sinayo Securities/ARC deal has further bolstered its capital base allowing it to be more competitive and to trade larger transitions and equity baskets. The firm also plans to expand its product offering – it has a number of exciting ideas in the pipeline, including a private client and derivatives offering.

Sinayo Securities has also identified opportunities offshore that will allow it to participate in international equities trading platforms, with access to global equities research. This will facilitate international equity trade execution for both domestic and offshore clients. ‘We, as Sinayo Securities, not only believe we have a role to play in the empowerment of black women in the financial industry, but also to be open-minded and flexible when it comes to the needs of our clients,’ says Sinayo Securities’ CEO - Babalwa Ngonyama.

Building a sustainable long-term business takes time, hard work and innovation. To this end, the firm acknowledges the importance of taking a journey with its existing and future clients on the path to success.

Website: http://sinayo.co.za

Services

Currently, Sinayo Securities specialises in listed South African companies’ equity sales and trading.

Education

engagement and retention; and to produce graduates that are team players for its company and clients.

Future plans

Website: http://sinayo.co.za

Dr Stavros Siokos is the Managing Partner of Astarte Capital Partners - a specialist alternative co-investment platform with a focus on the real assets space. The company, whose team is spread between London, NYC, Zurich and Sydney, identifies and partners with experienced real asset operators, establishing institutional standard specialist asset management businesses in niche real asset strategies that target private equity-type returns. Astarte’s team combines their experience of building multi-billion niche asset management businesses with the know-how of established real asset operators with strong track record in the specific sector. Astarte’s target is full alignment of interests and transparency with only success-based fees. Here Dr Siokos talked to Finance Monthly about the future of international finance and Astarte’s beginnings, achievements and goals for the future.

How did your career path lead you to your current role as a Managing Partner at Astarte Capital Partners?

I was originally educated as a Computer engineer. My first two degrees were pure Computer Engineering while my Ph.D. from the University of Massachusetts focused more on Financial Engineering. Structured approach to the solution of any problem was the best skill that my education gave me. My non-academic career started as a quantitative analyst at Salomon Brothers (later Citigroup) in the mid-nineties. I quickly became managing director, responsible for the global portfolio trading strategies and all pension fund solutions. This period of my career was the best education that I ever received.

My career on the sell side lasted for almost fifteen years. Before the crisis, I decided to move to the buy side, recognizing that the sell side was ready to move into a different stage where entrepreneurship was to be challenged. Later on, I became the CEO of a small boutique asset management firm where, together with the team, we managed to build innovative alternative investment platforms and grow the assets exponentially – from a few hundred million to several billion within a few years. All the above was achieved by raising long term capital from global institutional investors. In early 2015, we decided to create a new platform, based on an innovative and disruptive model. We managed to establish this ambitious plan within a few months.

As a co-founder of Astarte, how did the idea about the company come about?

As an entrepreneur, I am constantly trying to expand my horizons. Our initial goal with Astarte was to create something that was fairer to the investors and will have a significant impact in the world of investing. We were eager to bring together the best professionals under an umbrella of full alignment and transparency. For a number of months, we worked on identifying the optimal team and the fairest structure for co-investments, and the outcome of this hard work was Astarte.

What have been the company’s biggest achievements in the past two years?

For a newly established firm, no matter how experienced the team is, the first couple of years are very challenging. I’d say that our first big achievement is managing to stay on track, since building an innovative and disruptive business in a highly competitive environment is a challenge. However, we managed to launch the firm by simultaneously attracting top talent, long term capital and excellent deal flow, which I think are the key components of any asset management business. Currently, I’m delighted to say that we are in a position where all the important ingredients are in place.

What is your vision for the future of Astarte? What do you hope to accomplish in the next three years?

Our aim, although quite ambitious, is to establish Astarte as one of the leading co-investment platforms for niche real assets. We hope to see private capital working smarter and fairer in the future, with Astarte playing a significant role on this.

What is your brief outlook on the future of international finance?

We are living in an ever-increasing regulated environment where restrictions and regulations are creating a very controlled environment that supports large firms and kills entrepreneurship. Margins are shrinking and opportunities are reduced. Thus, it is my belief that in a decade the asset management market will only consist of huge players and a limited number of niche strategy participants.

Jose C. Garcia is the CEO of Carlisle Management Company. After graduating from George Mason University my MBA, Jose began looking at different options within the Washington DC investment banking community, which is where he first encountered the life settlement industry. The unique quantitative nature of the industry, paired with its practically untapped potential managed to peak Jose’s interest. There he found an asset class, built on the foundation and valuation methodologies of the Life Insurance Industry, with a minimally correlated investment performance in a market that was still inefficient, it was like a dream come true. Jose began working for a small DC firm that specialized in the origination and structure side of the business. Over the next few years, he helped grow the company to an industry leading position all the while collecting an amazing set of relationships within the space. Fast forward nearly 20 years, and he’s overseen the purchase of more than US $5 billion in life settlements and helped a myriad of companies and institutional investors build custom tailored investment products that meet their specific needs.

By 2008, the financial crisis was underway, and the lessons being learned meant that all asset classes, his company’s included, were under enormous pressure to improve the transparency and security of our products and structures. It was apparent that if you wanted to retain the confidence of your clients and continue to grow a healthy business, one needed to do so in the most reputable and well-regulated way possible. After looking around the world for the most appropriate places to conduct business, the company discovered Luxembourg and knew that this would be right place for them. Luxembourg’s stringent regulatory environment and plethora of top level service providers meant that Jose and his team could build an organization with a reputation for excellence, both in product development and investor services. Since they settled in Luxembourg, Carlisle has kept very busy designing, developing, implementing and managing investment vehicles within the life settlements space for our global base of clients. Here Jose tells us more about the company, the investment fund landscape in Luxembourg and the recent implementation of AIFMD.

What’s the current investment fund landscape in Luxembourg?

Luxembourg continues to the one of the fastest growing international financial centers in the world. The last 10 years have yielded a very appealing investment environment supported by solid regulatory structures and a stable political setting. Luxembourg has always been regarded as a front runner in terms of the evolution of their investment and banking regulatory standards and legal framework. Its reputation as the leading investment fund management hub across Europe remains unchallenged. Luxembourg domiciled funds are distributed in over 50 countries worldwide with over 70% of foreign funds distributed in Hong Kong and Japan originating in Luxembourg, according to the ALFI (Association of the Luxembourg Fund Industry).

In addition to the regulatory environment, Luxembourg provides an advantageous environment, in many instances, from double income tax treaties with a multitude of countries to many investment and corporate structures to achieve each objective. Another large appeal to Luxembourg is the plethora of top level service partners with physical presences here in Luxembourg. From the large accounting firms to the world’s most reputable administrators and custodians, Luxembourg has no shortage of viable candidates for every aspect of the financial operations process.

Looking into the near future, what do you anticipate for the sector?

With the recent implementation of AIFMD, regulation across Europe has become even more robust. As a regulatory leader, Luxembourg was amongst the first European members to implement the new regulation which increases oversight across several functions such as compliance, risk management, and KYC/AML, allowing investors worldwide to gain confidence in this Fund center. Features like this and the country’s pioneering attitude, keep Luxembourg as a leading Investment Fund centre.

In addition, due to Brexit, we have already seen several firms transfer part of their UK operations. Recently there were articles published that financial giants, like Blackstone have chosen Luxembourg for their new European hubs, clearly sending a message to the financial community that Luxembourg is well positioned and poised for further growth.

What has been happening with Carlisle since we last spoke in July 2016? Are there any exciting projects or achievements that you’d like to share with us?

Carlisle has continued its stellar performance track record while maintaining high-quality standards and commitment to transparency. As the Life Settlements industry evolves and becomes more efficient, Carlisle, as investment manager, must continue to lead the way and adapt to new circumstances. Thanks to our relationship network, our efforts in stimulating supply are producing positive results. In addition, demand in this growing as well, which will allows us to enjoy above average returns for a longer period of time.

Due to the recent financial crisis and the current financial market stagnation coupled with increasing interest rates, many investors are concerned about an upcoming market correction. Carlisle is in the process of launching a number of closed-end funds, aimed at further minimizing correlation to traditional financial markets and economic indicators. Many of our clients have demanded this solution and Carlisle has raised to challenge. In the fall of 2016 we expect to launch the LTFG Absolute Return Fund I, on a closed-end format, which will provide protection against future market corrections or financial crises.

How would you evaluate your role and its impact over the last year or so?

I see my role as a corporate and industry leader. My role is to provide the strategy for Carlisle and lead the charge to achieve our objectives, while furthering the efforts and the message of the Life Settlements Industry. I have the benefit having contact with many of our investors, other industry leaders, service providers and regulators, hence providing me with several points of view, which uniquely positions me to guide the company. For several years now, I have been seeing that life settlement supply and growing concern for another financial correction would play an important role in investor behavior. Supply, because many funds are beginning to hit capacity and corrections because the stagnation of financial markets along with increasing interest rates are changing investor psyche and behavior. For this reason, in the last year, we have begun working with several companies in the US on direct to consumer marketing campaigns in order to increase senior education and stimulate supply. Finally, due to the growing concern investors have, Carlisle is now launching closed-end funds, in order to minimize correlation on traditional financial markets, which will provide investors with a refuge to weather any approaching financial storms.

What challenges would you say you and the firm encounter on a regular basis? How are these resolved?

Most of the challenges we encounter mostly deal with regulatory changes, such as AIFMD implementation or FATCA, and supply restrictions in the life settlements market. Regulation is something outside our control, and all we can do is meet it with an open mind and implement all necessary functions to comply. In reference to supply within the life settlements market, we are a industry leader can help lead the way to increasing consumer education and awareness. Through participation in industry events, and direct to consumer marketing campaigns we can make a difference and improve supply in the market. Determination and consistent effort, is key to ensuring that our efforts have a positive return.

What further goals are you currently working towards with the company and do you have a particular vision for the future of its services?

The main goal of 2017, aside from our continued to commitment to our investors and industry, is to launch the LTGF Absolutely Return Fund I, which will provide investors with a way to allocate to the life settlements space through a closed-end format. Many investors have voiced their concerns over a new financial recession and Carlisle has heard the message loud and clear. The Closed-End Funds will provide investors with a cash-in, cash-out investment vehicle where all incentives are aligned, while providing the same level of quality and transparency that our investors have come to rely on.

In addition, in 2017 a group of industry members launch the Alliance for Senior Health Care Financing, as a coalition to raise awareness of life settlements within the Senior community. Life Settlements – the sale of an in-force life insurance policy for a market value return – is an immediate way for seniors to generate resources to pay for their long-term care needs. Life insurance policy owners have a lawful, protected property right to sell their life insurance policies for a fair market return in order to meet the increased cost of health care and retirement. Carlisle has joined this coalition as a founding member, in order to help improve the life settlements industry.

What lies on the horizon for you and your company in the next 12 months?

The next 12 months are poised to be another monumental year for Carlisle. As exposure and investor interest grows, we plan to use the momentum to bolster our already formidable footprint in the marketplace and form new strategic partnerships that will enforce our firms forward thinking philosophy and help us remain at the forefront of the industry. Direct to consumer marketing campaigns will continue to increase senior education and awareness, which will provide us the necessary supply to continue growth. Launching a series of closed-end funds will meet our investors’ demands and allow us to reach new investment community sectors. It is our intention to continue playing a strong leadership role in the life settlements industry. The market continues to evolve and Carlisle is extremely well positioned to take advantage of upcoming trends and opportunities.

Website: http://www.cmclux.com/

By Daniel Mason, Managing Director UK, Prophix Software

Headquartered just outside Toronto in Canada, Prophix Software is a leading developer of innovative performance management solutions, designed to automate financial and operational processes. Thousands of finance leaders in nearly one hundred countries use Prophix to empower their organisations and gain valuable insight into business performance. Prophix and its partners deliver superior value by combining high-end functionality with low cost-of ownership and fast implementation. Daniel Mason has been with the Prophix organization for just over 7 years, having spent a total of 17 years working within the corporate performance management sector. He is currently responsible for Prophix’s UK operations, including sales, marketing and professional services.

Here Daniel explores the modern finance function, the skills finance leaders need to recruit and offers his views on how organisations can prepare for the future by investing in their finance teams.

You can’t handle the truth

The truth of business comes out in the numbers. Not just revenues and profits, but headcount and staff turnover, customer churn and marketing reach.

Finance has historically been the natural home for numbers in an organisation. But recent reports show that finance teams are struggling to keep up with the growing demands of modern business. A lack of data literacy, continuing reliance on manual tools, and poor collaborative skills, are seeing the finance function side-lined as business transforms in this data-driven age.

The challenge is more acute now, highlighted by the capabilities brought by global connectivity and new technology. But issues of skills development and technology investment in finance are not new.

I’ve been working in the finance world for the last 17 years and the same issues were apparent when I first moved over. Prophix was founded on the recognition of some of these issues 30 years ago. Yet still, many – perhaps most – finance teams have not changed their practices. Why?

Barriers to progress

In my experience there are three things that hold the finance function back.

The first is a lack of resources. Even though IT was born out of the finance function in many organisations, investment in IT for finance has long been hard to secure. Because it doesn’t have a visible ‘front line’ effect on sales, it’s often overlooked.

The second is the knowledge base. Too few finance professionals have been on a mission to grow their skill base and expand their knowledge beyond its current bounds. The reasons for this are sound: the realities of operating a modern finance function haven’t left much room for personal development. But breaking the cycle of all-hands-to-the-pumps manual processing requires that time to step back and analyse the current processes.

The third reason is a lack of soft skills across the function - particularly communication. This isn’t about lazy stereotypes of finance professionals. It’s about formalised training in building collaborative relationships and releasing staff to have the time to go and build them. While other functions have moved on in this regard, finance has all-too-often remained static.

Building maturity

It’s possible to begin to quantify the problem, or at least recognise just how widespread it is amongst finance teams. The global analyst firm Gartner created a ‘Maturity Model’ to map the transition from historical finance practices to new. That means moving from a messy world of manual data manipulation, isolated in its own silo, to being truly smart about data, and providing strategic insight across the business.

In this Maturity Model, Level One represents those unaware of corporate performance management (CPM) tools – the term for technologies that enable more automated and integrated data handling in finance and beyond into business operations. Level Five represents companies making best use of data – connecting across departments and driving business strategy.

What’s interesting about Gartner’s analysis is that in the most recent update of its research, no companies were found to have reached Level Five. That’s no companies, of any size.

At Prophix, we work primarily with mid-market companies. We, and they, often expect that the largest global organisations will be significantly more sophisticated. But it seems not. It seems all finance teams in every size of organisation might be facing the same barriers to progress.

The ideal modern finance function

These barriers aren’t just bad for the finance function. They’re bad for the business. Finance’s requirement to look backwards as well as forwards puts it in the strongest position to drive strategy within the organisation. By underinvesting in skills, development and infrastructure to advance the finance function, the business is missing out on better insight, evidence-based strategy and enhanced day-to-day decision making.

There are three core areas where investment can unlock a transition of huge value to the organisation.

The first is what might be called ‘Smart Compliance’. Finance teams invest untold time – and sweat – in the production of mandated reports of one form or another. Still today, most organisations produce these reports through manual manipulation of spreadsheets with very poor repeat-ability and little robustness. The skills of manipulation required for a particular task are often locked in the head of a single individual, and audit trails are incredibly hard to produce.

Technology can remove the burden and often manual process of compliance through “Smart Automation”, which not only frees up human resource, but dramatically increases transparency and reduces risk. With time freed, finance teams can start to address more forward-looking issues of strategy and operational readiness.

This operational readiness forms the basis of the second major step. In an accelerated world, getting good information at speed is critical to good decision-making. Given the resources, finance can be the home of “Operational Intelligence”, giving leaders and departments the insight they need to improve decision-making. Analysis can be made available in near-real time against external events.

Of course, sometimes organisations need to look well beyond today and it is improved “Foresight” that forms the third pillar of improved service from finance that can be unlocked with investment. Planning stops being an annual trudge through budgets and likely expenditure, and becomes a process of acquiring and qualifying strategically valuable foresight. This delivers increased accuracy of forecasting, multi-dimensional modeling, resource correctly allocated to sales expectations and much better reconciliation of cross-functional planning. Imagine being able to quickly realise multiple future scenarios and explore the impact of different factors and decisions on the organisation’s success.

Partnering across the business

The ideal finance team should be seen as finance partners, having the trust and understanding of all departmental managers. It’s not enough to simply have the skills and collect data, analyze and report it as required. Since almost everything a company does is ultimately routed through finance, finance leaders need to be able to cooperate, partner and work efficiently with the teams and departments that report to them.

This highlights the importance of investment well beyond technology and systems. Skills remains a big gap in the finance function, both technical and more general.

The technical skills gap is in systems thinking, and financial planning and analysis. With so much effort devoted to manual processing, teams have lacked the opportunity to go beyond the immediate challenge and start to look to the future. There has been little opportunity below the most senior levels to examine operations – both in finance and the wider business - and consider improvements. Freeing time through automation creates this opportunity and the skills gap rapidly becomes apparent: even when the tools are available, teams don’t have the skills to apply them to their maximum potential. For this reason, investment in CPM should be paired with investment in up-skilling to maximise the benefit.

The softer skills gap is in communication, though perhaps calling it a ‘soft’ skill underplays its importance. To deliver the most value to the business, finance teams need to get well beyond the borders of their function and learn to communicate effectively, gain mind-share within departments, and socialise ideas. Building trust across the business will allow finance to enhance every department’s capability with better insight and support for improved foresight and operational decision making.

The truly modern finance function features a mix of skilled individuals who understand new technology, and who are able to interpret data, come up with a solution, point it in the right direction, and then are able to take that information and communicate it effectively through the organisation. Finance leaders need to look at training the people they have, but also at recruiting individuals who bring this mix of skills. People who have the financial intelligence and commercial acumen to understand the data, and see what’s going on within an organisation, and who are confident interacting with their colleagues and communicating information and ideas.

Preparing better for the future

At Prophix, we see lots of finance leaders who are happy with a large team dedicated to manually processing data. They don’t want to grow their role. They don’t want to embrace change. Until a risk is realised, or competitive advantage is lost. By then it can be too late – for the finance function, which has lost its role as the arbiter of truth. Or in the worst cases, for the business.

Finance leaders with ambition need to get closer to the CEO and push the business case for change. They shouldn’t just be signing off big-ticket investments in all the other areas of the business going through rapid transformation, it should be part of that transformation. Performance management may be thought of as a low priority because it’s a ‘back office system’. But extensive research shows that companies that invest in performance management generally outperform their peers 2:1 within the marketplace. The business case for change is strong.

Investment is just the start though. As Gartner’s Maturity Model shows, building a truly modern finance function is a journey, and one that all organisations are still on. 70% of organisations are still only at Level One, not even aware of how much better things could be.

Delivering the business benefits of a modern finance function requires continuous evolution, review, and investment. It's not a one-off project and it certainly can’t be addressed purely with technology. Skills and talent are absolutely crucial, both developing existing talent and recruiting the right new people into the organisation. People who blend technical skills with systems thinking and the confidence to deliver that value across the organisation.

As with any journey, the starting point is to assess where your company is right now. At future-of-finance.com we have developed a comprehensive audit tool that will give you an immediate idea of your position and provide you with a 17-page report with practical guidance on what to do next. So get going today.

Read more at www.future-of-finance.com

Below Rob Moore Co-founder at Progressive Property discusses with Finance Monthly how to buy property the correct way, how to get a bang for your buck, and how to avoid risk.

There are two types of BMV properties: those that can make you money, and those that have been ignored because they are money-draining duds. This second kind are the BMV properties that you should never buy, of course, but it’s easy to get drawn into buying something cheap which will in fact cost you far more of your time, money and effort than it is worth.

The below market value properties you want to find are those that other investors haven’t ignored, but have missed. These are the properties that have fallen under other less observant investors’ radars, and which are ready for you to swoop in, sweep up, and make huge profits on.

First off, what does “Below Market Value” actually mean?

“BMV” properties and the valuation process

According to the Royal Institute of Chartered Surveyors (RICS), market value is “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in arm’s-length transaction after property marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

Now that’s a hell of a mouthful!

In principle, a valuer will compare the property to other similar properties in the area, alongside its estimated level of demand, transferability, scarcity, and whether it can fulfil its duties as a comfortable environment in which to live, and come up with a price estimate using this combined evidence.

Investor Peter Jones hosted a recent Progressive Property podcast on the subject, and during the episode he suggested that the current valuation system in the UK may be flawed. Peter said that the properties which valuers will compare the property they are valuing to have often been sold “with compulsion”. Distressed sellers who have a property on the market for reasons such as divorce, job loss or financial difficulties are among the reasons as to why a property may be sold through compulsion – which contradicts the RICS’s definition.

For this reason, consider the market value alongside the questions, “What price am I willing to pay for this property?” and “How much money will this property make me?”

Make sure that it is a cash-flowing property

Not all properties on sale or that are buyable at a value below the market price are going to be great investments. Some of them are cheap as chips for a reason!

For example, it is very possible to pick up cheap, high-quality properties in rural villages in isolated parts of the UK. These could have the most enchanting views and most beautiful designs, but the likelihood of you selling them on or renting them out easily is unlikely. Even properties in apparently desirable areas can cause unexpected selling problems, such as a lack of hungry tenants or low rent prices in the area failing to cover the mortgage.

A good investment property needs to pay its own way, so make sure that any property you consider purchasing is going to be cash-flowing – or have a very good reason if you don’t.

Do your due diligence

Without evidence for a property’s profitable potential, you’re basing your purchases on your gut and hearsay.

Risky business.

To find evidence of a property’s potential, put in your due diligence by visiting the property and checking out the nearby area – or at the very least, send a business partner, colleague or peer you trust. Use a property app to check the price of properties that have been sold in the same postcode over the past year. You can also check rental prices in the same area, and consider employing a solicitor before committing to a contract.

Make sure there isrental demand

No rental demand, no tenants.

No tenants, no rent.

No rent, no money, and a big black hole where the cash you invested used to be.

To give you an idea if there is rental demand in the area for properties such as the one you are considering buying, monitor websites and apps such as Zoopla and Rightmove to check, a) how many properties are currently available to rent, and b) how often the adverts disappear and new ones appear. Too many available properties can suggest oversaturation, and not enough change in the listings can suggest a lack of demand.

Seek out motivated sellers

Property that has been on the market a long time is likely to have a motivated seller.

On an app, such as Zoopla, check the “most recent” listing, but backwards.

If you combine evidence that similar properties are being successfully rented in the local area with the fact that the property on sale has been listed for a long time, you are likely to find a motivated seller. Any property that has not been viewed on a property website or app for a month or more suggests that the seller is going to be more open to lower offers, because the longer their property is on sale for, the more it will cost the seller.

A seller’s keenness – or even desperation – to sell their property offers you plenty of leverage.

Advertise locally

Another way to find below market value properties is also another way to find motivated sellers, but includes the potential for finding properties that haven’t been marketed yet too, thereby accessing them before other property investors in the area.

A targeted advert can appear online, in newspapers, in newsagent windows, or even leaflets if you want to go old-school. Ideally, any adverts should appear in an area that you have already identified as a potentially lucrative spot for buying properties. If you let local property owners know that you are looking to buy properties in the area in this way, generating leads should be simple and turn you into the first point of contact for any property owner who is even tempted to sell, let alone those who suddenly find themselves pressured by unforeseen circumstances.

Don’t take “BMV” at face value

It is hard to prove that a property is “BMV” from a technical standpoint, which is why you must consider other investment fundamentals. It doesn’t matter how cheaply you purchase a property if it isn’t going to make you a profit.

Getting price blinkers can cost you dearly, so make sure to consider your profit expectations, whether it is a short-term or a long-term commitment, how much work needs doing to the property, and so on, before getting fixated on how much cheaper the place is than others nearby.

Don’t buy in the Bronx

Buying in the wrong area is one of the most common mistakes that first-time property investors are likely to make. Many areas may have a reputation for being “up and coming”, with plans for better transport, a new shopping centre, greater funding, and many other exciting possibilities. However, unless plans such as these become concrete – and sometimes, even if they are – they can easily fall through.

Every investment carries risks, of course, but it is your role to minimise the likelihood of loss and increase the likelihood of profits. For that reason, avoid buying property in the reputed “bad” areas of town simply because of their low price tag, unless you have some serious evidence that it is going to make a worthy investment.

Don’t buy properties that need too much work done

Some property investors are so excited by the price that they neglect to consider how much extra work a property is going to take before it can be rented or re-sold.

If you have great builder contacts, then a property that requires some TLC can be a great way to create extra profit. However, there are risks involved when buying a run-down property, so make sure to hire a reliable surveyor to inspect the place and detail any major repairs or alterations needed.

Don’t go through “middle men”

There are often companies and entrepreneurs that claim to be able to provide you with a range of below market value properties. In general, if you allow someone else to source your property for you, you are going to have to pay for the property itself and this person or company’s commission. There is also a question you should be asking yourself: why isn’t this company snatching up this deal-of-a-lifetime for themselves? Is it because there is a catch, and the deal isn’t as fantastic as it is being made out to be? Are there unseen structural problems that even surveyors will find difficult to identify?

For these reasons, try to avoid being taken for a ride by intermediaries and, in the process, maximise your profits.

Don’t be afraid to haggle

The owner of any property being advertised for a price that seems surprisingly low is likely to be keen on a quick sale – otherwise, they would bump the price to a more reasonable level and wait until they found someone to pay it. This offers you some leverage that you should utilise.

Even with low prices, if you are keen to make as much profit as you can – and you should be – then make an offer that’s even lower. If they don’t accept it, you can always take them up on their original offer if the deal is hot enough.

Final thoughts

While some argue that there is technically no way to buy BMV, because as soon as a property is sold then the market price becomes whatever it was sold for, this is splitting hairs and an unhelpful way of viewing the property market.

Buying below market value is finding a property for a lower price than other property owners are selling their own similar properties for. If you can find a distressed seller, or any property that has been overlooked by other buyers due to lack of advertising or some other neglect on the seller’s part, keep the knowledge to yourself, do your due diligence, and get ready to make some serious money.

Latest research from the Association of Investment Companies (AIC) using Matrix Financial Clarity has revealed purchases of investment companies by advisers and wealth managers on adviser platforms hit a record level over the 12 months to end of March 2017 at £777m. This is 11% higher than in the year to December 2015 (£698m), which was the previous record for a 12-month period.

In Q1 2017 adviser and wealth manager purchases reached £246m, the second highest quarterly figure on record. This is 85% higher than the same quarter last year (£133m) and an increase of 25% on Q4 2016 (£196m). The figure for Q1 2017 fell just 10% below the highest ever level of purchases in Q2 2015 (£273.9m), which was boosted by the launch of Woodford Patient Capital Trust.

For the first time, Sector Specialist: Debt was the most popular investment company sector, accounting for 14% of all purchases in Q1 2017. Property Direct – UK, the top sector for the past two quarters, was the second most popular sector with 13% of purchases.

Commenting on the results, Ian Sayers, Chief Executive of the Association of Investment Companies (AIC) said: “It is very positive to see adviser purchases of investment companies at a record level over the last 12 months and demand for training is stronger than ever.

“The Property Direct – UK sector was the most popular investment company sector for the previous two quarters – no doubt due largely to the problems of open-ended property funds last year but it’s interesting to see that the specialist debt sector, which focuses on illiquid debt, has taken the top spot for Q1 2017. It seems that buyers on adviser platforms are becoming increasingly aware of the strength of the closed-ended structure for accessing illiquid assets.”

Additional findings

Following Sector Specialist: Debt and Property Direct – UK as the most popular investment company sectors for adviser purchases were: Global (12%), UK Equity Income (10%), Sector Specialist – Infrastructure (5%) and Private Equity (5%).

Total adviser purchases of investment companies on platforms were £219m in 2012, £400m in 2013, £481m in 2014, £698m in 2015 and £663m in 2016. This equates to growth in total purchases of 202% between 2012 (pre-RDR) and 2016. The slight fall in purchases between 2015 and 2016 is accounted for by the spike in purchases in Q2 2015, when Woodford Patient Capital was launched.

For Q1 2017, Transact remains the most used platform for adviser purchases of investment companies, with a 34% market share, followed by Alliance Trust Savings (23%), which has had a strong quarter, Raymond James (11%), Ascentric (11%) and FundsNetwork (9%).

(Source: The Association of Investment Companies)

British entrepreneurs are being offered the chance to develop financial services ideas in one of the top financial regions in the US, with a $100,000 (£77,000) equity-based grant and a package of support for growing businesses.

The initiative aims to bring up to twelve of the most promising emerging financial companies in the world to Ohio and help them boost their growth beyond the start-up stage. Equity-based grants of $100,000 per firm plus coaching, office space, visa support and a strong business network are all being provided through the accelerator Fintech71.

Valentina Isakina, Managing Director for Financial Services and Select HQ Operations at JobsOhio, said: “Ohio looks ahead to the future by investing in technologies of the next generation. Our financial services sector is one of the strongest in the world, and it is always actively seeking innovative ideas and partnerships. Here people are more approachable and doing business is easier, so these innovative companies will have a better chance to blossom into the financial stars of tomorrow. JobsOhio is happy to support this innovative industry effort.

“Getting beyond the start-up phase is always difficult even when entrepreneurs have a great idea and have managed to get their business going, so the financial services industry wants to give them a helping hand by creating Fintech71. By bringing them here to enjoy Ohio’s support and hospitality, they will make contacts that will last a lifetime and benefit everyone.”

Fintech71 is aimed at start-up and scale-up businesses from all over the world which have matured enough to present a well-thought-out concept to test with a corporate partner or a market-ready business model. The application deadline is July 17 via www.fintech71.com.

The accelerator has a not-for-profit model and will negotiate a customised, entrepreneur-friendly equity-based participation in exchange for a grant of US $100,000 and access to the accelerator program for each of the selected companies. The finalists will be invited to the state capital Columbus to receive coaching from leading experts of the industry from mid-September to mid-November, in order to further develop their business ideas.

Additionally, the selected start-ups will get the opportunity to build relationships with the sponsor businesses, which are well established in Ohio and throughout the USA, and to network with mentors, partners, and customers. The selected start-ups will have access to free office space in the city centre of Columbus, with foreign businesses will be supported with their visa application.

Some 270.000 people, nearly the size of NYC’s workforce, work in the financial industry in Ohio, one of the largest in the USA. Ohio is also an innovative and successful hub for a large number of other industries, including automotive, aerospace, mechanical engineering, and chemicals. The state is among the top five US states for Fortune 500 and Fortune 1000 headquarters.

Fintech71, named as a nod to the cross-state highway I-71 connecting Ohio via its three largest cities, is backed by leading enterprises, banks and insurers from Ohio, like KeyBank, Huntington Bank, Grange Insurance, Progressive Insurance and Kroger, the largest food chain in the USA. JPMChase is also supporting the program, leveraging its large technology presence in Ohio. JobsOhio, the innovative non-profit economic development corporation, is supporting Fintech71’s operations along with its industry expertise, state and national contacts.

“Fintech71 and Ohio are ready to compete on a global scale given the alignment of the state, the private sector and its entrepreneurial ecosystem,” added Matt Armstead, the executive director for the accelerator.

(Source: JobsOhio and Fintech71)

Here, Damon Walford, Chief Development Officer at alternative lending industry pioneers ThinCats, shares his thoughts with Finance Monthly on the merits of alternative finance.

According to Altfi’s latest statistics, the alternative finance industry has originated a total of £8.7billion in loans, and there are currently almost 40,000 companies benefitting from the funding offered by this innovative and fast-growing sector. But why should businesses in need of funding approach such a platform rather than going down the traditional route of a bank loan? There are many answers to this question, but the overarching sentiment from the many and varied businesses that ThinCats has helped over the years is that it offered them a more personal, accessible and human service than they would have received through traditional means.

In discussing the benefits of alternative business funding, it’s important to set the context as to why the sector thrived so soon after emerging. Not long after it came to exist in its current form, we were struck by the financial crisis and most banks effectively pulled up the drawbridge and shut the gates on businesses looking for funding. Naturally, this created a major problem for ambitious SMEs looking to grow, but equally presented a huge opportunity for alternative finance. By offering small businesses a much-needed lifeline, the industry began to establish itself as a worthy alternative and a decade later, thousands of UK SMEs are testament to this.

One major point of difference between an alternative finance platform and a traditional funder is flexibility. For example, a bank’s lending criteria can be governed by a number of factors that don’t necessarily reflect an applicant’s deservedness of a loan; some big lenders take into account how much capital they’ve lent in a particular sector and a business can be turned down if it has reached its designated limit. Such a stringent approach inevitably results in worthy businesses being turned down for loans. Alternative finance platforms, however, aren’t limited by such criteria and can judge each applicant on its merits, on a case-by-case basis, taking a more personal, realistic approach to the transaction.

Alternative business lending also fulfils a large range of loan types from MBOs and growth capital to cashflow lending, across all regions and industries across the board, from the motor trade to renewables, IT, social care and everything in between. It therefore opens avenues for growth, development and expansion that are not recognised by some traditional lenders.

ThinCats are unique in using a network of business finance specialists who work as loan sponsors to help review borrower proposals. A loan sponsor can be a single individual, but more typically consists of several advisors with significant experience in finance, who are there not just to say ‘yes’ or ‘no’ to a business, but to help loan applicants make their case and be confident in their application. They take on the vital task of presenting the funding application accurately and specifically, allowing the business owner to continue running their business whilst providing investors with vital details on the investment opportunity. And by acting as the primary point of contact for the business, borrowers are given a personal touch which doesn’t always exist within the framework of bank business lending.

Furthermore, ThinCats has developed an award-winning, multi-layered, risk assessment model to give UK SMEs more than just a number crunching, ‘computer says no’ experience, whilst also protecting the interests of the lenders. The credit grading model consists of an in-depth, balanced analysis of a company’s financial health and dynamism, and is complimented by the security grading, determined by the asset to loan ratio. These scores are combined through multivariate analysis, and then professionally qualified by the credit team, giving all applicants a candid and fair opportunity to access funding.

A number of the worthy businesses that have borrowed via the ThinCats platform have been declined by banks, for one reason or another. Take Jack Norgrove, for example. An experienced member of the building and construction industry, Jack identified the promise in a plumbing and drainage supplier in Kidderminster, and put a proposal together to buy it out. When the bank he was talking to declined the deal due to insufficient security, he went looking elsewhere.

He was put in touch with a business consultant, who took the proposal to ESF Capital, major shareholder in ThinCats and sponsor to the platform, to discuss accessing an alternative business loan. The consultant was able to demonstrate that it was a solid business with a good track record and ESF and ThinCats concurred. The loan was listed on the platform and filled on schedule, allowing Norgrove Building Supplies Ltd to officially purchase the business, and immediately start implementing the development strategy, thereby making the most of a profitable situation in a timely manner.

For many business owners who have borrowed through alternative finance, it’s the very different nature of the platforms which offers the benefit and acts as the draw. Alternative lending firms are more independent than high-street lenders and offer more transparency for borrowers and lenders. On such a platform, if your business appeals to investors, you will be able to raise a loan and have it fulfilled. For many borrowing businesses and lenders, this ability to access investors directly is one of the main appealing factors; the social element of being able to witness investors compete on the platform to back your business with a loan, and become an advocate of your brand, and potentially a loyal customer.

A major benefit for businesses looking to borrow is speed. These platforms are generally much smaller organisations than big corporates, so naturally there can be a more hands-on approach from the outset when it comes to dealing with potential borrowers. With a tighter business framework, there are also less hoops for applicants to jump through, and complicated and unnecessary covenants and conditions are reduced. The time taken from a business first contacting ThinCats with an application to drawing down of the loan is a matter of weeks rather than months, enabling company owners to make the most of business opportunities as they arise.

Alongside these benefits, the alternative finance industry is able to offer competitive interest rates as well as flexible terms when it comes to loans, such as a choice of security terms, a range of repayment options or no early repayment charges, which may not be the case with some traditional loan providers.

ThinCats is one of the pioneers of the industry, and has recently had a record month, setting the scene for a record quarter; with an incredibly diverse pipeline of loans in prospect, it shows that the alternative lending industry is incredibly buoyant, and provides opportunities for SMEs and investors across the board.

The developments and investment that have come with strong institutional backing behind the industry has meant that early niggles have been ironed out, and the sheer volume of loans, investors and borrowers demonstrates the strength of the sector. Borrowing businesses can now have peace of mind that the major players offer an alternative funding package that is worth considering, even before approaching a traditional lender.

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