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
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.
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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.
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.
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:
