Over on the Property Tribes forum, there are so many great Landlord contributors to learn from that I thought it high time that I should “curate” some of their wisdom in an easily digestible form.
My first Landlord to get this treatment is Jonathan Clarke, of Milton Keynes.
Jonathan first became involved in property investment in 1983 and his strategy has evolved over the years.
He’s one of those people who, whenever I read what he’s written, I think “Damn. I wish I had written that!”. He has such a pragmatic and intelligent view on everything, and it is obvious that there is tremendous humanity in the way he approaches his property business. It was really hard to choose just three of his many brilliant and insightful contributions, but I came up with these:
In this excerpt from a post written in January 2011, Jonathan explains how he approached investing in property.
Failing to Plan is Planning to Fail
1) Educate Myself – Watch , Read , Talk , Network, Listen, Absorb
2) Get my Mindset right – Scaredy Cat into a Fearless Lion
3) Action – Get stuck in and get down in the dirt and take a few bruises
4) Review – Adjust – Adapt. Make mistakes. That`s life –
5) Don’t be cry baby. Pick yourself up. Re-join the game stronger fitter and wiser.
6) Repeat Steps 1 to 5
I invest in Buy To Let Houses and Flats ranging from 1 bed to 4 beds. The 2 bed houses/flats I prefer.
I occasionally pay cash but more often than not get a 80% LTV BTL mortgage ( used to be 85%)
I invest now ( not always in the past) purely for cash flow and aim principally for the Hard Core LHA market.
I aim for 10% yield and to borrow at around 5% and make 20% ROI. Double that if we get a bit of capital growth one day
The LHA rates where I am are pcm – 1 bed £525 2 bed £650 3 bed £750 4 bed £1050
Prices I would pay are between 1 bed 65K and 4 bed 125K.
I look to cash flow each £300 pcm net.
I look for BMV beat up properties with not enough in them to attract a developer/trader but a bit too much wrong with them to attract the soft core or novice investor.
I then will leave them as they are for now and find a tenant to match on the same day as completion.
I will aim to get access between exchange and completion for the tenant to make it habitable and then move in on same day as completion. This cuts down voids to the bare bones.
I find tenants who are motivated to move in as it is. They have come to me in the past from a hostel, their mates sofa, their rehab unit, local mental health facility, their tent, their car, their ex partners, the street.
It may look a wreck to you and me but to them it’s a palace and freedom and a fresh start.
I aim to find a tenant who has property maintenance skills or knows someone who does and a positive attitude towards doing it up in return for a roof over their head.
I let them do what ever they want to it to make it more habitable. Flexibility is the key.
Sometimes they pay for everything sometimes I pay for just for parts. I use my interpersonal skills to negotiate a good deal for them and a better deal for me.
I have had kitchens /bathrooms/water tanks/radiators/carpets/laminate/redecoration all for nothing.
I put a lot of time and energy but little cost in getting the set up right at the outset. It pays dividends long term.
Someone has just left me after 5 years. I had just £300 maintenance costs during that period. I visited him once a year.
My tenants stay with me long term. If their circumstances changed they tend to stay with me.
4,5,6 years is common. I upgrade or downsize them to order. I’ve had 5 in a house chain once!
I aim to use one of the LHA vulnerability criteria to enable payment to be made to me direct from the council. A support worker assists me with this.
I am not a social service but I believe in giving someone a home if they repay me in looking after it and sorting out the paperwork effectively
It’s a symbiotic relationship. I scratch their backs they scratch mine. I set the boundaries and the ground rules.
I have an odd bunch of several `past their sell by date` eccentric but experienced one man band multi skilled maintenance staff. All self employed.
I have young keen up and coming lads who turn out at midnight but don’t know what a call out charge is!
I have a list of 24hr call out back ups for emergencies heating/plumbing/electrical.
Spread the load so you are never caught out.
I oversee everything personally. No one but you has your best interests at heart. Be a control freak.
Put your heart and soul into it but don’t go for burn out.
Take time out to relax and revitalise.
Have an end game.
This is an extract from a post where Jonathan gave some advice to a new investor. I love his analogy of the “property buffet”.
My starting point is simply a love of property.
Think of it as an all you can eat buffet. The first time you go you fill your plate up as high as you can with everything because you think you will miss out if you don’t. The plate overflows everything gets a bit soggy and you spill gravy over the side. After your 5th buffet you realise you don’t have to cram it all on your plate at the first visit. You can stand back before you dive in – select exactly what you want – see it better arranged on the plate. Enjoy the food more. And if you are still hungry you can go back for more and more and more. You can select something different if you don’t like the taste or you can have the same as before. What do you want from the buffet? What’s your taste?
High yield or Long term Capital growth
Self manage or letting agent
Source your own or buy in a sourcer
Get your tool kit out or call the plumber to do fix that leak
Drive 100 miles to your property or 7 mins on your doorstep
Burn the midnight oil with your books or pass that pleasure on to the accountant
Private tenants or LHA
25% BMV every time or happy with 10%
Abroad or Domestic market
BTL or BTS
Add value or buy pretty
Cash or max out on LTV
Give up your day job or have it as a sideline
10 year goal or 50 year goal
Never sell or sell in 50yrs
Risk adverse or fly by the seat of your pants
Ex local authority or spanking new state of the art flats
Holidaylets or HMO ( neither for me (yet) !)
Positive mindset or the world will cave in tomorrow
Can’t stand talking to people or love to meet them
Can’t grasp the numbers or a wizard with a calculator
Procrastinator or do a deal on the spot merchant
Honest and true or Shady and slippery
Fix rate for 5 years or variables all day long
Get your hands dirty or wont shift fromyour suit / T shirt and jeans
Full time hands on 24/7 or armchair investor
The buffet is endless. What’s your taste? You decide. Start eating.
Satisfy your hunger. Enjoy your meal
PS. My plate consists of those underlined form the menu above. Yours may be different and that’s fine.
There is food for all in the property buffet. Yummy
In this thread, What has been the proudest moment in your property investing career?, Jonathan made this heart-warming contribution:
Whenever I hand over the keys to a new tenant and I see the smile on their face as they relish the prospect of a new home and a new hope for themselves. They are not palaces by any stretch of the imagination. But many may come to me from their friend’s sofa, their aggressive partners, rehab, a hostel, a cramped bed-sit with their baby, a bad landlord.
It makes me happy to provide a safe home for them. The relief and joy on their face is palpable.
They don’t know it yet but I like to think they have found a good landlord. In time I will prove that to them.
For now though they just want to decorate and then sleep! I allow them that freedom. I already have mine.
“I allow them that freedom. I already have mine”.
What a profound note to end this blog on, don’t you think?
If you would like to know more about Jonathan, he was interviewed by the Property Tribes community in a “Spotlight Profile” >>> here.
Follow me on Twitter: @4_walls
Vanessa Warwick is a former TV presenter, turned professional residential Landlord, consultant, and speaker. Along with her husband Nick Tadd, she founded Property Tribes, which is now the U.K.’s busiest on-line Landlord and investor community. Nick and Vanessa have just launched their new tech product, Yulpa, an on-line “property office/filo-fax” that helps you organise and manage your entire property life in one place. It comes with an iPhone app that does auto due diligence on any property being considered for purchase.
Vanessa and Nick advocate the use of technology and digital and social communications in property, and speak at events all over the U.K. as well as consulting for the BBC on property. They invest mainly in flats London and family houses in the South East and are also big advocates of holiday lets, having two upmarket holiday lets on the South Coast that achieve above-average occupancy thanks to the couple’s web efforts and vertical marketing strategies.