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  • Property-a-holics

    3 things: 3 threads that deserve a reprise



    Welcome to Day 18 - the penultimate day - of our "3 things" month of themed content featuring exclusive content to help landlords navigate the year ahead.  

    For today, Property Tribes presents three posts that we thought deserved a reprise.  There is now 9 years of great content on this site, and as each new discussion is added, golden nuggets sink lower out of site. 

    So I have dug through the archive and found some threads that I think are just as important today as when they were posted.  I have chosen a selection to show the wide range of topics that are discussed here and how there is so much we can learn from, and be inspired by others who went before us:

    1. Gusmac from What advice do you wish you received when you first started out in property?

    I think a lot of the specifics will depend on the area and market in which you operate, but for me the key points would be:

    1. Make a plan! Set aside 3 months for research, talk to people, read books/forums, talk to agents, build a team (engage a solicitor, an accountant and a good mortgage broker (good ones are a font of knowledge, and will share their experience and help keep you right), and talk your plans through with them). Use this time to work out what you'll buy, where you'll buy it, and run some numbers.
    2. That said, make sure you start! It is all to easy to get caught up in the spreadsheets and analysis, and never actually buy anything.
    3. Open a separate bank account - use it only for the property/properties.
    4. Start with vanilla BTL - by all means have goals and grand plans, but when you begin, buy something simple that will rent easily - you will learn a lot this way with minimal risk. (Also, if you're not happy/comfortable with your team, then change them - you'll now know more then you ever did before, and you need them to be aligned with you. I changed my accountant after year 1 as we just didn't click).
    5. 'Buy for cashflow - capital gains are gravy. Treat it like a business - you need cash to survive day-to-day; it is no use to you if it is tied up in a property and you can't access it when you need it.
    6. You make your money when you buy - every thousand pounds you save on the purchace price means 1. the lower your deposit, 2. the lower your mortgage payments, 3. the more income you make each month, and 4. the more cash you'll release if you remortgage.
    7. When you view, look for what will rent; don't try and imagine your sofa in that living room!
    8. When you view, make a rough estimate of what redecorating needs to be done, and make sure you have the money.
    9. Know your market; know what rents well in your area and is in demand [agents will help you here - ask them how many potenitals they have registered for each size/type of property]
    10. If you find a good property, don't be afraid to make a cheeky offer (but follow through if it is accepted, otherwise you'll lose all credibility with the agents). Talk to the vendor and agent, find out why they're moving, do they need to move quickly, do they understand that you aren't in a chain and can complete quickly if necessary! You may be embarassed the first couple of times, but it soon becomes second nature.
    11. Keep enough money in contingency to cover voids, repairs or breakdowns - a new boiler can be a thousand pounds, and you can't tell your tenant you'll replace it at the end of the month when you get your paycheck from your dayjob!
    12. When you buy, you or your agent needs to get on to the council to see if you can get an exemption from council tax while the property is up for rent. Take meter readings and contact the utilities/council with your tenant when they move in and get the bills in their name.
    13. Try to get a tenant before you decorate - they may not be able to move for a couple of weeks, and if you can take a week to tailor the decor to their taste (and you're decorating anyway!) then they're more likely to stay, thus avoiding voids/re-tenanting costs.
    14. Protect the deposits - if you use an agent, make sure you and the tenant get a copy of the paperwork.
    15. Spreadsheets - you can never have too many! Make sure you track your financials, and don't solely rely on an envelope of recipts at the end of the year, or only the statements sent by your agent.
    16. Run the numbers - sometimes it is better to pay a higher mortgage rate and pay no fee rather than get the lowest possible rate that comes with a fee. I tend to buy on a 2yr fixed rate at around the 60-80k range, which will rent for 500pcm - the extra I pay per month on a higher rate product is normally less than the fee, even with a slightly higer cashflow on a lower rate product, when I come to remortgage - note this may not be true on a higher purchace price.
    17. Communicate! Call your agent/solicitor/accountant/broker every 6-8 weeks to touch base and talk through where you are and where you're going (I got 2 of my houses off market at a great price via my solicitor and one of my agents, just because I called to say hi!)
    18. Ideally, get a guarantor/RGI for the tenants - this will depend on your tenant market. Understand things can go wrong (this is covered above by Paul and Fergus!) and don't try to deal with it alone! Talk to your team, ask on the forums etc - I only knew section 21 notices had changed due to this forum!
    19. Pay your tradesmen quickly, ideally the same day. You'll soon find they can fit you in if you need them at very short notice, which also keeps your tenants happy.

    Tarquin from the same thread:

    Things I wish I'd known when starting out

    1/ Always use a property inventory and take photographs (make sure tenants sign them) before tenant moves in.

    2/ Never become too friendly with tenants... It always turns out awkward.

    3/ Buy the worse house in the best street (goes without saying).

    4/ If you intend to let to Local Housing Allowance clients, completely change your business plan..... Leave plenty of money available for absconders, wrecked houses, clawbacks.Make sure if your letting yourself,you know you will need to be spot on with the paperwork and also become a part time social worker. (This is only my view )

    5/ Surprisingly for first time landlords, keep away from auctions, you are not experienced enough yet to know the pitfalls, eg subsidence , knotweed, etc. 

    6/ Know that whatever anyone tells you, (even if they claim to be the oracle of the letting world) It's all guesswork.... 
    No one can guarantee what will happen in the property market in the next 5 years let alone 20. All we can do is take educated guesses. Be cautious at first when investing until you get the handle of things.

    7/ Try to have a life outside of letting and investing, (hard if your keen) but a must if your in it for the long term.....

    8/ Never underestimate the power of networking, (not brainwashing ,buy my product sessions), but real interactive , mixing with like minded professionals. The information you can gleam from just small chats from others doing the same thing, is exceptionally important. Not only does it give us inspiration, it gives (even old timers) new information which we may not hear about elsewhere.

    Jonathan Clarke from the same thread:

    There are many elements to being successful in property and in a perfect world you would like to become an expert in all of them. But the simple fact is you cant because the more you grow the more watered down your time comes. Even with one property its hard to be an expert so to do everything when you have a dozen or so is impossible. So you have to delegate. Then you have to decide what tasks to delegate. That is about getting a balance between cost/ skill / time. Its a constant conundrum.

    Property is a hard structure. Its not emotional. It will stand for 30 years or more come rain and shine and still perform for you providing you service it and look after it. I can look at decor and like most people I can paint a wall if I choose to But I don`t know how to detect a PCB fault in the stomach of a boiler. So I need help on that one. But its still a mechanical problem and the cost/time / skill is quantifiable to a certain degree.

    What is the biggest variable. - Tenants!

    They are human and not so fixable as a boiler or a dripping tap. In 30 years they get upset / get drunk / lose jobs / split up from partners / become violent / get depressed.
    They may wear a suit and talk nice when you first meet them. But that is because they want your house. But you literally only scratch the service when you meet them and on that basis you entrust them to live in your £100,000 asset AND you also trust them to pay you maybe 10K a year in rent to do so. Scary. 15 minutes chat is not enough to decide that i feel. 

    When you interview for a tenancy you do all the background checks yes but may spend only 15 mins in their company. That 15 mins is often a distraction as they are looking at the property maybe and not talking to you. You are both sizing each other up maybe but thats not realy enough. But it takes time out of our day and we dont want to become their best mate so we like to keep it short and sweet dont we. Its human nature. Any longer appears intrusive and can be come uncomfortable for both parties. But it should be a requirement I think for both sakes.

    In the early days even though i consider i have good interpersonal skills i believe i didnt spend enough time with the prospective tenants and i should have done. People waved £1500 cash in front of me and said they could move in tomorrow. I went with the flow as i was already looking at the next property to buy and sidelined the tenant as just part of my mechanical business plan. They were just an occupational hazard. But if you dont get tenant selection right then 4 mths into your 30 year relationship with that property you sometimes have to say 

    Houston - we have a problem.

    So the advice I wish i had received was to spend longer on the person who is going to live in your property. They can make or break your business potentially. They can make or break your will to grow and expand as well. Get it right and it gives you confidence to buy more. Get it wrong and you can lose the will to live and throw in the towel as you can do without this kind of headache. Lets stick it in a building society because the lady on the desk smiles sweetly each time and is never confrontational . Yes 2% interest is fine. I dont really need 20% return on each £1 i invest do I :-) 

    I got it wrong in the early days. Not because i didnt have the skills so much. I did. But that why i was so annoyed with myself. I didnt use those skills because i was lured by the cash too much and the desire to move on to the next one too quick. So I had to clear our some tenants who were a mistake. I was brought up to pay my bills on time. I realise others were brought up only to pay if the court orders you to pay and even then balance up whether going to jail is the better option

    If you dont tenant find yourself look very carefully at the letting agent who is finding your tenant for you. They may be brilliant at organising spreadsheets and getting your gas certs done on time but are they good with people. Do they have the right manner or do they wind up tenants who then leave or stop communicating or stop paying rent out of spite. Or do they wind up us landlords because they do not understand our mindset ( note the Fergus Wilson incident ) Pay 5% management fee and you may get what you pay for. Pay 10% and you may save that extra 5% outlay many fold down the line. One months void or non payment of rent is all it takes to close that gap

    Tenants need properly interviewing as if they are going for a job.
    I used not to and paid the price
    I do so now and it has paid off

    So the advice i wish I had received when starting out is: 

    Spend quality time on tenant selection

    2. From "Who said anyone had the right to give up?"

    While facing challenges in life ….

    ..

    Look around....

    .

    Consider all options....

    .

    Then GO for it!.

    .

    You've gotta stick your neck out!.

    .

    Be creative! Use all your skills and positive attitude!.

    .

    In the end, you will succeed!.

    .

    Attitude is the little thing that makes a big difference... a real big difference !!



    [Image: CaJKay1W0AAiRuZ.jpg:large]

    3.  Lee Wright from Where does your passion for property come from?

    My passion for property started when I was quite young, about 15 years old. I grew up on a council estate in the north west, no father around but I met the local football coach and started playing regulaly. After some time I realised this guy was super smart and had a really good outlook on life and I wanted to be like him! I became a sponge and soaked up everything he said over the next 3 years. One of the things he said to me still really sticks in my mind

    "People will always require three things; someone to bring you into the world, somewhere for you to live and finally someone to take care of you when you die. Provide any of those 3 services and you will do ok"

    I used to say to him that I wanted to be a property investor and I wanted to have 5 houses by the time I was 30 years old! That was quite a tall order for the teenage me with no GCSE's trapped in a poor area with not alot of job prospects. I didn't know how I would achieve it but I knew I wanted to do it!

    At 18 years old I joined the military and eventually had enough money to buy my own house at 23 with my then partner and I lived there for a few years and totally forgot about my property investment ideas! We eventually split up and couldn't decide what to do with the house - this was post 2008 and with no equity in the house I offered her to walk away and sign the house over to me which she happily did! I obtained CTL and put it up for rent just to see how it went. About 12 months later I realised this was a really easy way to make money and those old ideas tucked into the back of my mind of becoming a property investor were all of a sudden thrust into my conscious and I googled "property investment forums" guess what popped up!? PT!!!

    By this point (18 months ago) I was out of the military and working in London and had some money about me, I contacted a few people on here for advice and they were all very helpfull - one even took me under his wing as a sort of unpaid mentor and I still have weekly contact with him! I also decided to read everything Johnathan Clarke posted on here and contacted him - he told me "the first 5 are the hardest, get 5 and your momentum will carry you forward" so I set about that. I decided to follow his stratagies and I picked my "10 streets" and jumped in getting my second tenant to complete all the work (which is still on going) for a slight reduction in rent - this has worked out really well.

    I am 30 in July this year and I am just in the middle of a full refurb on my 3rd property so it looks like I will miss my 16 year old goal but I don't care! Im well and truely hooked now!

    Oh and my old football coach? He is a paint and decorator and now works for me when I need him which is an amazing feeling - I owe this man so much and the least I can do is pass the fruits of his labour back to him.

    Bonus:  Nick Tadd from Anxiety or depression in property and landlordism

    The term entrepreneur implies qualities of leadership, initiative and innovation in manufacturing, delivery, and/or services.

    Based on the above a Landlord is a service provider and an investor is someone who shows initiative to see an increase in value - to which they both come under the realms of entrepreneur.

    Having said that, what are you, a Landlord or an investor? Arguably both, but which one comes first in your world? The answer to this opens up a different set of mannerisms and approaches, both of which will lead to their own failiure points and stresses.

    But either way the biggest problem, not only in being an entrepreneur and/or a Landlord, is 'other people'.

    Other people cause the most harm. 

    Most people don't do it because they want to cause harm (although there are a few that do), but because your world does not factor in their world.

    Thoughtless. Two worlds colliding.

    I have Bi-Polar disorder (it used to be called artistic temprement!), but having been told I have it, it has come to my conclusion that everyone on the planet has it.

    Bi-polar, by its nature, is a 'wave of emotions' high or low, but so is love/hate, happiness/sadness, optimism/pessimism, and we all have them. But because we are human and have particularly well-developed neocortex, prefrontal cortex and temporal lobes, which enable high levels of abstract reasoning, language, problem solving, and culture through social learning, we rely on the people around us to propel ourselves or our thinking forward.

    Without this we would do nothing. We wouldn't be 'Human Being'.

    Entrepreneurs, by their very nature, will always 'do things differently' - they will always be 'being'.

    But it will come at a cost - other people. Other people will always make that journey bumpy. Not because they want to (although there are some that do) but because they don't understand. It's those two worlds colliding again.

    In effect this is good, because it questions the process, and that will always deliver a better ride. 

    In time.

    Recognising this cost is the first step to enlightenment.

    Other people will always question, they will force the voices in your head (aka your conscience) to question itself and, sometimes, this will get the better of you, you will begin to question yourself, and if this is becoming 'too much' then it's best to 'down tools' and do something else for a short while.

    This does not mean that you're weak, or what you are doing is wrong - it means that what you are doing is right.

    So, is there anxiety or depression in property/landlordism and/or being an entrepreneur - YES, lots of it, it comes with the job, as much as a good racing driver will crash cars, but the high of racing will always overpower the lows of crashing.

    I have Bi-polar. Some days I just want to disappear, some days my clarity of thought is priceless. But one thing I do know - I don't want anything to change.

    'They' have tried me on different medication, some of it made my condition worse, some made me numb. But what I found helped was disappearing up mountains!

    [Image: 12814362004_dfa0fa83ff_b.jpg]

    No internet, no phones, no people. Nothing but a base instinct to stay alive, nothing but a base instinct to achieve without anyone to hold me back - I will live or die at my own hands.

    When I get back from these trips I do feel very rested, not rested as in relaxed, but rested so I can cope with people and, ultimately, myself.

    After-all it's you who controls you.

    __________________________________________________

    If you are committed to learning and growing in 2018, get your FREE tickets to the Landlord and Investment Shows:

    Landlord Investment Shows for 2018 announced

    Catch up:

    1st January -   Launch of 3 things campaign: John Rae lessons

    2nd January -  3 things: Stephen Johnson of Shawbrook Bank

    3rd January -   3 things: Michael Dent of PropertyData

    4th January -   3 things: Neil Cobbold of PayProp

    5th January - 3 things: 3 ways to save money in 2018 

    8th January - 3 things: Paul Shamplina of Landlord Action

    9th January - 3 things: Frank Webster of Finders Keepers 

    10th January - 3 things: James Davis of Upad 

    11th January - 3 things: Martin Skinner of Inspired Assets 

    12th January - 3 things: Sean Hooker, Prop. Redress Scheme 

    15th January - 3 things: Phil Stewardson, Developer

    16th January - 3 things: Tom Evans, new LL/Meditation Guide 

    17th January - Denise Naylor, Landlord of 30 years 

    18th January - 3 tips for 2018 from the Residential Landlords Association

    19th January - 3 things: 3 landlord insurance tips for 2018

    22nd January - 3 things: Jason Harris-Cohen, Landlord/Buyer 

    23rd January -  3 things: Deserving of landlord gratitude ...

    24th January -  3 things: 3 must attend events - Spring 2018

    SEE ALSO  -      Landlord planning - list of eventualities    

    UP NEXT -          The Property Tribes Essential Book and Reading List    

    DON'T MISS -     Some advice and a sense check? 

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