Below Market Value is the new black. Everyone and his dog are jumping on the bandwagon. I’ve seen so many people promising to help me find and buy property with no money down that I’ve lost track (and interest). But there’s often a piece of the jigsaw missing in their schemes. You need a finance broker who can perform quickly and reliably, and you need the education to be able to use them effectively. Soni Finance claim to be able to do just that, and their training course aims to show you how.

Soni are specialist brokers, and their marketing is strongly focussed in the field of discounted property. In case this is all a bit new to you, let me run through the basics of BMV. Take for example a very simple situation:  you have found a property worth £100,000 that for some reason is being sold for £70,000. In the ‘old fashioned’ world of property, you’d pay a deposit on the mortgage and buy. This would be roughly £12,000. To get your money out and realise your profit, you’d have to sell up.

As I say, that’s the old-fashioned way. It’s not a great business strategy if you want to build a portfolio. Your cash will be tied up, and when it’s gone you can’t buy any more property. So how can you get the cash out? Simple – you re-mortgage. This is pretty easy. You go to a broker and get a new mortgage, or alternatively you go back to your existing lender, cap in hand. With a bit of luck, you should be able to get all your money out and borrow another £15,000 over and above the full £70,000 you paid, based on the example above. Because this money is borrowed not earned, there’s no tax to pay. After costs, you’re likely to end up with a bit over ten grand in your pocket. So in summary, you’ve bought a property and been paid over ten grand to do so. This property – if you’ve chosen wisely – will also pay you a regular monthly income from the rental profit. So you’ve bought something for nothing that pays you money. The goose has started laying golden eggs.

But is it really that simple? Yes and no. In principle, the example above is perfectly realistic and achievable.  So where’s the catch? It’s still a relatively old fashioned way to buy. There are two major disadvantages to the process I’ve described. The first is that there’s still an initial 15% deposit. If you’re buying loads, or you’re just cash poor, you’re not going to have this money lying around. Secondly, the re-mortgage might take you months or even a year to obtain, depending on the restrictions your lender imposes.

Soni Finance work by streamlining that process and using every trick in the book to get your cash back out of the deal as soon as possible (£10,000 in the example above). Essentially, their process is pretty simple, and it involves two key stages. Firstly, they lend you the cash to buy the property directly. This process is usually called ‘closed bridging’. At the same time, when they prepare the re-mortgage they pick a lender who’s willing to let you re-mortgage straight away. So you buy the property for cash using somebody else’s money. Then you immediately re-mortgage it to get their cash back, and get the property settled on a long term mortgage product. There’s no fuss, no mess and no delay. It doesn’t require a deposit and it doesn’t tie up your funds in the deal. You’re not waiting around for your money back, and as a result, you’re free to buy as much and as fast as you like.

Is it a good strategy? Yes it is. Is it the only sensible way of buying property? No, there’s loads of different ways to invest, and BMV is just one way to proceed. Is it vital to know BMV techniques? Yes, if you’re a serious investor. Do I invest the Soni way? Sort of. I use ‘open bridging’, which typically completes more quickly and gives me the freedom to sell on quickly and cheaply if I want. Having said that, I will be using closed bridging once I’ve finished negotiating a deal with my private backers. (Contact me using the details below if you want to be in on this deal.)

The Power of BMV As A Route To Finance Freedom

In short, the Soni system works with whatever method you use to buy below market value properties. You can buy from developers, the public or at auction. But Soni seem to source many of their own deals from developers.  They give a few tips and tricks in this regard during the course. But there are only so many hours in a day, and you can’t expect to learn every detail of a business plan in a one day course. However, what you can expect to get is a really good understanding of the power of BMV as a route to financial freedom. Minesh loves to tell the story of how he got started. His first deal was for over one million pounds, and he withdrew 68 grand cash back in 28 days. He was then free to rent out the properties and enjoy any long-term capital growth that results. Can you do this? Sure you can, if you’re able to source the units. Is there any fundamental reason why you can’t source such a deal? No, absolutely no reason. Is there a good chance that someone who’s willing to learn, of average intelligence and with plenty of motivation could also do this? Absolutely. Can you do it? I’m afraid the answer to that question is entirely down to you!

Soni go into quite a bit of depth about their rent-to-own system. This is likely to be of interest to anyone who hasn’t come across this before. Buying BMV property is one thing, making cashflow out of it is another. I know that sounds bizarre, but many BMV properties don’t attract enough rent to cover the mortgage, and you need to have an exit strategy to deal with this. If you want to source properties from developers – a method which has huge advantages in terms of costs, scalability and reduced administration – then you need a way forward. Your exit route may be to hold the property for long term rental income – but that only works on higher-yield properties. Otherwise, short void periods and a couple of maintenance call outs will soon put paid to your profit margin.

Innovative Exit Strategies

Conventional rental is fine if you can afford to top up your cashflow from your wages or remortgage monies – but with a large, established portfolio of lower-yield properties, that’s not going to be an option. Of course, you can try to sell the properties as soon as they land on your books, but that might not be as simple as it sounds. You’ll be very likely to find it hard to shift the property if you’re competing against a lot of other vendors – and possibly the developer as well. You might find that you have to give away a big chunk of the profit to get a sale in a reasonable time frame. As an alternative, you can let the property and put it up for sale at the same time. The problem with this is that you’re reliant on the tenant. You need one that is happy with people nosing round their home at short notice, and also with the knowledge that they’re going to get kicked out as soon as you’ve got a buyer. Needless to say that’s not likely. All in all, the above approaches have all got major disadvantages. But what if we look at an alternative approach? What if the tenant and the buyer were the same person? I know that sounds a bit bizarre, but let’s look at a few fictitious examples.

Mr & Mrs J. are teachers from Hungary. They’ve just started work in the UK, and hence have no credit rating here. They’re also not sure they want to stay, but they don’t want the upheaval of moving if they do decide to stick around.

Mrs W. is in the process of getting divorced. She knows she’s going to get a substantial settlement, but it will take 1-2 years of fighting to get the money. She’s used to a high standard of living, and doesn’t want to compromise on the standard of the flat she moves into.

Mr J. suffered a serious health problem last year. He was unable to work for 6 months and ended up getting repossessed. He’s a highly paid IT consultant, but despite this his credit rating and savings level don’t allow him to get a mortgage.

All these people would love to buy, but can’t. If they were offered a way to buy a property after a period of renting it, they’d jump at the chance. The key to capturing people like this as buyers is to offer a rental contract with an option to purchase at the back end. That’s a win-win situation. The tenant gets to own their property in the end, and you get a fixed income for a couple of years and then a reliable purchase. This is the ‘other half’ of the Soni Finance system. It saves you all the bother with conventional tenants and with fighting to sell in a crowded market.

Before You Book Up…

Having said that, there are a couple of things about this course that you need to be aware of:

Firstly, the day is almost entirely focussed on Soni Finance’ own product range and techniques. There’s a reason for this, and it’s simple: For the type of deals they do, the structure and techniques they advocate are ideal. I agree that when you balance price, speed, convenience and ease of qualification, it’s very hard to find a system that works better for their trading system. Overall, therefore, this course is advocating a sensible strategy that works. Yes, Soni Finance does make money supporting you in this strategy, but they’re not trying to disguise that fact. I’m certainly not saying that there’s anything wrong with their approach, but don’t come to the course thinking you’re getting a totally independent market overview. If you want to part with your cash for the course on this basis, you’ll be likely to learn a lot of info that’s very useful, particularly if you’re new to BMV. However, the day is to some extent a sales and education pitch for the firm and their property techniques. You need to be clear that you’re happy with this as a deal when you book onto the course. Don’t say I didn’t tell you! At £495, the course is mid-priced. If you run your deals through Soni, they offer you a delegate’s discount scheme and your money back on the course when you’ve financed your first million pound’s worth of property through them.

Secondly, if you’re looking at dealing with Soni Finance as your broker, you need to be aware that running a decent course and advocating a business plan that works is not the whole story. Your financial affairs will be heavily dependent on their advice, professionalism, competence and customer service. You need to make your own investigations into them as brokers. To be clear, this review covers only their course, and not their performance as a broker. I don’t use them, so I can’t comment on their brokerage services.

So if anyone can use Soni without going on the course, is there any point paying for the training?  As I see it, the benefits are as follows: if you’re new to this game, it takes far more than three or four paragraphs to get the subtleties of BMV across and get you mentally ready to start implementing it; if you’re an experienced investor, there will probably be the odd new tip or idea that you’ll pick up from watching the presentation. It’s up to you whether you think this is worth £495 to you!

Looking at this strategy in the round, it works well as a system. I’m not trying to sell it as the be-all and end-all of investing, but it has the following advantages:  Low investment, high potential gain, low(ish) risk and a highly scalable business model. It’s much less of a pain in the neck than conventional BMV. I’m almost tempted myself!

Soni do cover the basics of sourcing from developers, repossessions, negotiation, sourcing from the public and tax advice. My personal expertise is in repossessions, and I’d say the information given was pretty cursory and some big improvements can easily be made. However, this isn’t a repossessions course – it’s primarily a finance course. If you want some very specific sourcing education, you’ll have to go on a different training programme. However, once you’ve got the whole idea of BMV firmly in your mind, you’ll be able to develop your knowledge of your chosen sourcing style. The information they give on the sourcing methods should be seen as introductory only.

The course was run at the Crown Plaza hotel near Heathrow. Road links are good, but rail links are poor, with a long haul out of London and a long, awkward walk or bus journey from the tube station. This is a comfortable and fairly luxurious venue, and catering is good, although the food did run out at lunch. There were about 25 people on the course, which gives plenty of opportunity for individual interaction and questions. The atmosphere was great, with a really engaged audience. Soni Finance and their support team are friendly and approachable and their presentation style is engaging and personable. They put a lot of humour into their work, and it makes the whole experience of investing seem fun and exciting, which is extremely important in my view. If something’s boring, would you have the patience to do it for long enough to get rich?

The presentation finishes up with a system they operate for recruiting sourcers. I don’t want to go into too much detail, but suffice to say this offers a way in for people who don’t want to actually buy in their own name. They also do a bit promoting the LogicL system, which I won’t cover here.

‘Taster’ Courses

You may like to know that they also run a series of free ‘taster’ courses at various networking events. This full course is very much an enhanced and expanded version of the taster events. So it’s strongly recommended that you visit a taster first. This will help you work out if you like the people and the strategy. If you’re not interested after the taster course, then it’s probably not something you will want to take forward. Furthermore, attending the taster course will of course help you get your head round the ideas more easily, as you won’t be starting your training day with no knowledge.

In summary, the day is very useful for the uninitiated and will probably contain a few useful techniques and valuable nuggets of information for more experienced investors. However, it’s very heavily focussed on the ‘Soni Finance way’. Don’t come to it thinking it’s a comprehensive introduction to property investment, or a balanced and neutral overview of the brokers available in the market – it isn’t. The main thing you’re likely to gain from attending the course is a really fundamental understanding of how you can use a BMV buying system to meet your financial needs. That is just the start of your journey towards BMV business success. Afterwards, you would be well advised to take further training in the sourcing techniques you choose to use.