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Article > Property is a Game - You Can Only Play to Win!



Article kindly supplied by

Matthew Moody

http://crackingthepropertycode.com

 

There’s only one winner and one loser in the property game – and that’s you!

Come what may, your fortune or losses depend on how YOU act NOW – not what John Smith down the road thinks about where the property market is going. In this article, I will share with you about how many investors are going wrong – and where the next opportunities may be.

What is the problem with the current market?
One of the main strengths (and thus correspondingly its main weakness) is that anybody can enter the property market, buy a property and start renting it out.

Whilst this is great in that anybody can become a successful property investor, what I tend to find is a lot of people are not building a business, they are building a noose around their necks.

Most of the investors I speak to have no business plan, no marketing plan, no sourcing plan, no systems nor structures and are unfocused on where they need to go. It is critical that anybody that wants to build a sustainable business in the property market puts in place processes and systems for the future.

I work with individual investors to identify their strategy through a thorough analysis of their business and goals. I may then partner with investors to help build their business through our sourcing and educational solutions

My core USP is: Property + Systems + Cashflow = A Property business

Matthew Moody - Cracking the Property Code Event


Why are the current strategies not working
Most property investors I speak to have their head in the sand. They are frightened by the media circus, the negativity found from professionals and are mixing with the wrong set of people. You need to change this today by accepting responsibility for your actions, brainstorming solutions to the issues you face and ensuring you have a reason for being in the property game. Its no longer enough to find a deal, send it on to your broker and expect them to find a great product at a low interest rate from a lender who is keen to lend to you. In today's market, you need to have access to the best and most experienced professionals who have survived the last recession and have the contacts to allow you to succeed through this one. My strategic partnerships bring 150 years of property experience to the table – if you need an expert, I will have one. If you need finance, chances are if I can’t do it, nobody can.

What is the critical problem right now
Many people are still fixated by no money down schemes or offerings. Whilst I don’t deny the viability of this strategy, I question its validity in a downwards market and whether this can form the basis of a sustainable portfolio in the long-term. The problem right now is you are still chasing a dream which hasn’t existed for a few years now and really, you need to wake up and smell the roses. Yes, property is still an extremely good viable long-term investment but you need to be prepared to – dare I say it – leave some money in a deal – if the cashflow is strong enough and gives you a good cash-on-cash return. Its no longer enough to go chasing large cashbacks on houses that at best just about wash their faces and at worse, will leave you with a nasty cold for a long time. The only thing that matters in any business is cashflow.

What are the core components for running a successful property business
Strong systems and processes linked with a strategic vision that gives you massive cashflow every month. Lets look at two different investor strategies and see which one you think will work in the long term:

Investor A has 30 houses around the country that he bought over the last 3 years. He has a mixture of new-build and resale units with varying yields of 3%-7%. His portfolio spans a radius of 300 miles and he rarely gets to visit all of his properties. Instead, he has agents that fully manage them and averages occupancy of 85%. His cashflow is negligible because even though his properties on paper yield good returns every month, the ground rents, service charges and outsourced maintenance drain away his cash. He is hoping for long-term capital appreciation but already knows that in reality, it will be 5+ years before his properties are back to the same valuation prices he bought them at.

Investor B has 10 houses in two towns local to her that she’s bought over the last 10 years. She manages them all herself and has a handyman that works part-time for her maintaining the properties. She owns 9 little terrace houses and 1 new apartment. Her occupancy is in the high 90’s and her yields average 7% but her on-costs are lower as her properties are mainly freehold and maintenance is preventative rather than reactive. She makes good cashflow each month and isn’t too bothered about capital appreciation as she is paying down two of the small houses every month on repayment mortgages.

Matthew Moody - Cracking the Property Code Event


Which investor would you rather be?

Investor A is 3 months away from going under; Investor B has a sound system in place with established processes that allow her to make good cashflow and occasionally treat herself.

Put in place the processes and systems to enable you to generate cashflow but not at the expense of adding cost to the business. For example. I have a marketing system for generating dozens of tenants leads per day that I couldn’t turn off even if I wanted to!


What strategies are you following today?

There are several that spring to mind. Many people have talked about them before but the proof is always in the walking and not the talking. Multi-Lets, HMO’s, Professional Houseshare etc. I’ve talked about this all day – many “experts” say they are hard work and a hassle; most of them have never managed or set foot in a HMO so they wouldn’t know. If your HMO is full, then you can manage the property in less than 2 hours per week. If you’re making say £150 per week per full house; complain all you like about hard work; nothing was ever delivered on a plate…

High-yield single let
There’s only one type of single let you should be aiming for – and that’s a high yielding 9%+ property. Anything less and you are massively subject to the vagaries of the interest rates, unexpected maintenance charges and management fees. Whether its rented through the LHA, private tenants or corporate lets, do your homework and go where the yields are. Oh, and buy at least 5+ in an area so you can maximise economies of scale.

Commercial/Businesses
Im not talking about dead office space here – these are bona fide businesses operating in commercial territory. Whether its hotels, bars, nightclubs, care homes or whatever; if it’s a business, its successful and generates good cashflow, there are methods of financing and buying to add to your asset base.

Finance
Nothing else matters but gaining finance to support your business. I have made it my priority and key focus to get the building blocks in place to ensure that when others are falling by the wayside, I can continue buying. Do you have access to instant refinance, refurbishment, asset financing, open bridging and open doors at many lenders that do not have a high street presence? I do and you can get access through me.

Overseas
I have seen massive drops in overseas asset pricing which makes them extremely attractive to purchase – and with similar commercial mortgages available, now is the time to get in and start generating cashflow. With yields of 15-20% in some areas, provided you perform due diligence and buy in a concentrated area, this adds another diversity to your portfolio which will reap benefits in years to come.

What do you think the next 12 months hold?
I forecast that lending will become a more bespoke individual decision rather than the mass-market “the computer says no” approach taken by many of the high-street lenders today. I have already seen encouraging signs of it with lenders who want to meet, greet and touch you and understand your business, your vision and help support your goals for the future. I also believe that being part of the right community will become even more beneficial with the lines clearly drawn between the amateur investor and the professional investor.


Matthew Moody - Cracking the Property Code Event

Results – achieve the results you want in your property business

Purpose- know your purpose and why this is important to you

Action – take the right action to move your property business onwards and upwards

Cracking the Property Code Live is the culmination of 10 years in the making and brings the very best educator in the property sector to share with you his key to success.

Spend the day with Matthew learning how to create a business that is profitable, sustainable and Learn:

  • 1 world class speaker
  • How to understand if the path you are on is the right path for you
  • How to choose two property strategies that work for you
  • Which systems to use and which ones to ditch
  • Which three marketing strategies you need to use
  • How to have more time, and make more money
  • Exhibitors will also be there with trade specific knowledge

BOOK YOUR SEAT NOW


 

Rachel Clarke & Matthew Moody at the PIN Christmas Dinner

About The Author:

Matthew Moody has been investing in property since 2004 and been involved in the HMO market, educating, sourcing, management and coaching people for over 9 years.

He is one of the UK’s top HMO experts and the founder of www.yourhmoexpert.com a website dedicated to providing property investors with free information about investing in high quality professional HMO’s.


 

 

 

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