Month: September 2017

Another packed out week races by bringing September and Q3 to a close.

How’s it going for you?

How are you tracking against your 2017 goals? What might you need to review, tweak, stop doing or double down on?

This week we spent Tuesday with our fellow Scottish VIP’s. Another fantastic afternoon where we shared ideas around the lunch table and heard from Kevin Whelan about the overwhelming benefits of a SSAS when it comes to investing. Thank you to Aniko for another hugely productive mentoring session- Chris and I have come away with more clarity on our guiding vision and with another handful of meaningful actions to work on.

I then spent the last two days of the week in Devon to view our development site and meet our Architect with our Development Discovery team. This was another two hours well invested with a mentor, Alan Christie, and one of our power team professionals. Big thanks to our Architect Rebecca Fearnley, of Fearnley Lott Architects, who talked us through the pre-planning process she is skillfully managing on our behalf.

There were a number of key learns so I thought it might be helpful to share them here. I know not the most exciting topic but hopefully some useful nuggets there for those interested.

[First as a bit of context, we already have detailed planning for 11 apartment units and we have made the decision to optimise our site by increasing the size of each unit, adding a few more units and adding garages for each. To do this we have invested some time and funds into a pre-planning application.]

Key learning points about the pre-planning app process:

• In short, the purpose of a pre-planning app is to reach a point of agreement in principle before submitting the new application. However, the pre-planning decision is only the opinion of one person, it then needs to go to statutory consultation.
• You are allowed up to three meetings with the Planning Officer to get to this point.
• In our case, after presenting revised drawings at the first meeting, the planner came back with a few comments to address on design, scale and massing (meaning the 3D projection of the building) and a revised Affordable Housing (AF) contribution. These are items our architect can help us tweak in order to satisfy the comments. For example, one of the ways to reduce the perceived ‘mass’ of the building is to sink it 0.5m into the ground.
• By increasing the number of units we will naturally attract a larger AF contribution. We learned that the usual policy in rural areas (although it varies slightly around the country by Local Plan) is that you can add a gain of 5 units to the site before triggering AF. In other words if you are starting with five units on a site and looking to create 10 in total, you would typically be clear of AF contribs, but if you are creating 12 then expect an AF contrib.
• If it is a commercial building you have bought to demolish and rebuild or convert, there is a new policy in place called vacant building credit that can be used.

Vacant building credit was introduced to promote development on brownfield sites. It allows the floorspace of existing buildings that are to be redeveloped to be offset against the calculations for section 106 affordable housing requirements (whether financial contribution or provision). It applies to any building that has not been abandoned and is brought back into any lawful use, or is demolished to be replaced by a new building. http://www.michelmores.com/news-views/news/planning-briefing-vacant-building-credit-and-reductions-affordable-housing

• If AF and section 106 contributions are looking a bit heavy you could look into providing the council with a viability report, which is essentially a worked through calculation showing the magnitude of contributions being requested by the council are too high and result in the site no longer being economically viable. Councils are reasonable and understand that developers need a margin of around 20%. The viability report will be sent to the District Valuer to consider alongside the plans.
• An intro to SAPs – SAP stands for ‘Standard Assessment Procedure’. It is the only official, government approved system for assessing the energy rating for a new home. SAP calculations are a requirement of the Building Regulations, and are required for all newly built dwellings in the UK. We learned that oil is not the most efficient and the best way to pass the required thermal modelling is with mains gas or air source heat pumps. The heating source will need to be built into the viability, and of course design, and you will need to know this when you go in for planning.
• On cladding – obviously a topic under close scrutiny following recent events. Any cladding on a building needs a BBA certificate to prove performance testing. We are looking at cladding options from approved manufacturers like Trespa

If you are anything like me you might find reading and interpreting legal documents just a little bit painful. Chris and I are about to take on a nice block of five flats to rent for our SA business – very exciting but lots of admin involved before the practical stuff kicks in.

On Friday morning I spent two hours with our commercial lawyer to chew through five documents relating to our commercial lease. This is our first rodeo as it relates to commercial leasing so eagerness to learn kicked in and our solicitor happily turned the meeting into a mini masterclass by explaining the main leasing concepts and terms in language easy enough for my simple brain.

Armed with several pages of notes I thought there would be others in the community who would appreciate a summary of these learns. There are differences between commercial leases in Scotland v’s England so it’s good to know which ever side of the border you live on. This post may be dry stuff and not relevant for many at the moment but there are so many valuable nuggets here that could really help, so it may be worth filing for later reference.

In no particular order, here are some worthy points related to each document you might find helpful:

SOME BASIC CONCEPTS

• Commercial Leasing in Scotland is unregulated by legislation, it is only affected by 3 Acts. They are generally drafted by the landlord’s side and therefore have more freedom to skew their way. That’s why it’s necessary for the tenant to review with their solicitor clause by clause and ensure it is fair and equitable. It’s all about respective negotiation.
• In England there is more statutory protection for tenants in commercial leases.

THE TITLE

• The first thing to do is review the landlord’s title of the property to rent to ensure they do indeed own it and can let it. There is an obligation for the tenant to comply with the Landlord’s title so you need to check there are no unusual conditions that pass on to you as the tenant. If there are any planning conditions in the title i.e. affordable housing contributions etc you’ll want to make sure these have been paid.
• The lease must be registered with land registry to be binding- by doing this the tenant is protected if the landlord were to sell the building during the lease i.e. if so you could still continue leasing under the original conditions if sold to a new owner. Registering the lease also protects the landlord from financial breach by the tenant.

THE OFFER DOCUMENT

• The offer is the overall contract that dictates the structure of the other documents i.e. the lease itself, the deposit guarantee, any personal guarantees and licenses to occupy (we will be using a license to occupy for a few of the flats in the beginning so we can use them as they become available – essentially pay as we go until all five flats are available and the lease will properly commence).

THE DEPOSIT AGREEMENT

• Whatever deposit amount has been agreed will be held by the landlord’s solicitor for the duration and can only be withdrawn by the landlord if the tenant is in arrears.
• Interest earned on the deposit will be returned to the tenant at the end of the period.
• The deposit amount varies and is negotiable, as is the term for it to be held. It is reasonable to propose that after two to three of leasing with no arrears a deposit is returned. Otherwise it is cash tied up not working.

PERSONAL GUARANTEE

• It is common that a personal guarantee for rent liability is requested by the landlord, however it is typically either one or the other of deposit or PG.
• Essentially this means the tenants are personally liable for the rent during the lease period.
• It is reasonable to request that after a few years leasing with no arrears that the PG is removed.

LICENSE TO OCCUPY

• These documents are typically a lot of words to say that it is not a lease. These are for short term arrangements, have no statutory protection and can have immediate termination

THE LEASE

• The lease itself can either be FRI – Full repair and insuring where tenant is responsible for the entire fabric of the building, or an internal repairing and insuring lease only – self explanatory.
• You’ve all heard of the 4P’s of Marketing. Well for a document to be an actual lease it must contain what lawyers refer to as the 4P’s – Properties, Parties, Price and Period. Without any of these it will not comprise a lease.
• When you see a generic lease presented with the term “put and keep” – hopefully your lawyer will spot it but if not ask that it is taken out as it can be incredibly onerous in regards to excessive and unnecessary repairing standards.
• In a commercial lease there is no obligation for the landlord to do an inventory so the tenant must invest in this to protect themselves. The inventory equivalent in the commercial world is called a Schedule of Condition.
• In regards to insurance, the landlord will insure the building because they own it and the tenant is then required to reimburse.
• If the building were to burn down the lease is essentially put on ice and there is an obligation for the landlord to re-instate the building and put the tenant back in, at which point the lease would recommence. If this is not done within 3 years then both parties are clear to walk away.

If this has been helpful, great, I’d love to hear it. Likewise, if you have any other nuggets on leasing to add please do as the more learning the better.

I’m riding the Virgin East Coast train back home for the second time this week after two great property meet-ups.

Tuesday was our monthly Development Discovery meeting in Sheffield where we got together for group work on progressing our development site in the south coast. Next step will be a site visit and meeting with the architect about revised drawings to optimise our site – very exciting.

As of now, Chris and I have literally just left a brilliant weekend ECA event (Elite Cashflow Accelerator) with our Progressive VIP tribe so we could catch our train back to Edinburgh. Our heads buzzing with ideas, inspiration and excitement for next steps. Here’s a few highlights of the speakers and some of their wisdom that resonated with me:

• Samantha Brown on the power of networking – 1) have a 20 second intro prepared that you can use when at networking events that covers name & company, something relevant you’ve done this week, something specific about what you do/offer and something to build intrigue in what you do. 2) Mindset re-frame – don’t see networking as ‘getting out of your comfort zone’ but rather  ‘INTO THE ADVENTURE ZONE’.
• Shaz Nawaz – ‘Every man is entitled to order his affairs so that the tax is less than it otherwise would be’- actually a quote from Lord Tomlin but neatly captures the essence of what Shaz can help us do.
• David Clouter – brilliant talk, what a career to learn from -in addition to giving us a brief history of the money and the banking system he left us with 15.5 millionaire hacks – my favourite is point #9 INSPIRE TRUST – deliver on promises, make win win situations, be honest at all times, admit mistakes, keep confidences, share credit and acknowledge contributions.
• Lloyd Girardi and Andi Cook – wow – three yrs, 116 properties built/in the pipeline, £20M GDV, £120K/mth cashflow. Lloyd’s mindset reframe – analogy of a jigsaw puzzle dropped on the floor being like property development – the pieces facing up that we can see are like the pieces of the process we know, the pieces facing down that we can’t see are like the parts of development we have no idea about but can fill the gap with the right education and power team. Instead of struggling to find BMV property, why not do BBMV ie build below market value.
• Mark Homer – shared with us some inspiring case studies of big commercial conversion projects he’s completed and is working on – many great nuggets of wisdom shared in relation to focusing on one geographical area so you learn what works and test the market by starting with smaller projects and then scaling the model up,  increasing density, clever design to add rooms where no immediate windows exist, business rate tips and so much more..
• Jamie Madill – The secret sauce to raising £10m in JV funds …… run your own property event.
• Dillon Dhanecha – loved Dillon’s humorous story of mistakes and lessons on his journey to make a difference and feel fulfilled, really resonated – an inspiring message around bridging the gap between commercial profit and social impact. He firmly believes that no investor should ever run out of cash so he shared with us his model to consistently turn assets into sales, into profit and into cash.
• Liam Ryan – 2016 VIP of the year inspired us with a summary overview of the Business Income Blueprint system created and refined over the years by Rob and Mark to help them build a business that generates over £30M revenue.
• Terry Waite CBE – wow, we were privileged and moved to hear Terry’s story of surviving five years being held captive in Lebanon. In that period of extreme difficulty he chose to never give up hope. He shared that suffering is part of life but suffering need not destroy. Out of it can come something creative and brilliant. What an inspirational man to reflect on his experience in such a way!
• David Siegler – was our brilliant and witty presenter who seamlessly hosted the weekend for us- thank you.

Huge thanks again to David, Hannah, all the excellent speakers  and to all the Progressive team for a brilliant event. So great to meet so many awesome fellow VIP’s and thank you for having us on stage to share some of our journey so far.

Here’s to everyone’s continued success.

As I sit on our villa sun deck in our final few hours on this paradise island before we depart for home, pulling out my laptop to type again feels fairly alien after a week of digital detox.

The title of this post captures the intention we had for this trip, and whilst it may sound sickly sweet to some, it’s been the ideal way for my wife and I to mark our first decade of marriage. To reflect on the accomplishments in our family life and business, and to dream up ideas and goals for our next decade together. Our aim for the week was always to disconnect from the reactive demands of our usual busy, but enjoyable lives, so that we could completely reconnect with each other and the bigger picture, free from distractions.

If I were to have a bit of a rant a la Rob Moore’s occasional podcast episodes, it would be this: Do our smartphones rob us of higher level connections with our friends and families? Do we prioritise the second screen over the beautiful, giant world right before our eyes?

With these questions floating in the back of my mind, the goal I set myself this week was to eliminate the constant flow of digital conversations for 168 hours – 7 days. I was unsure about putting my phone on airplane mode when leaving Edinburgh airport knowing it would be that way for a week, but I also saw it as a worthy challenge – to see if after years of ‘being available’ if I could completely disconnect, like I did 10 years ago when we came away for our honeymoon.

I’m proud to say that the self experiment has gone swimmingly well. The headspace I’ve been able to access has given way to wonderful conversations with my awesome wife and opportunity to dream about the bigger picture and longer term ideas. These are things that we rarely give ourselves time and permission for back in day to day life, unless we are intentional about scheduling them in.

Here’s a brief summary of some of the life enhancing things we’ve been able to read/do/discuss over the course of the week:

• Daily morning exercise whilst watching inspirational speeches on goalcast (brilliant)
• Time to meditate for longer than when at home
• Time to reflect on our first 10 years of marriage, and to think about what the next 10 years will hold- what we want to be, do, have and who we want to help our kids become
• Time to dream about long term goals for Adaero Serviced Accommodation and capture ideas about developing new business arms
• Time to listen (start to finish) to the book ‘Start With Why’ by Simon Sinek, and use that inspiration to capture my own notes on creating a clear set of values and beliefs that can guide our company and attract people to us
• Time to read a book about family values and note down ideas to enhance our own family economy with our 3 boys

It’s been a blissful privilege to liberate myself from calls, texts, notifications and emails for a full week. The time disconnected from a device has been a gift in so many ways but it’s also served to highlight how saddening it is to see so many couples who are on this dream island with us, but have their heads buried in their phones rather than being engaged in meaningful conversation with their loved one(s).

I am somewhat apprehensive about opening the floodgates of text and email inboxes come Monday morning but I couldn’t be in a better frame of mind to deal with it.

If you can give yourself the gift of disconnecting fully like this every now and then, I can highly encourage it. See it as an investment as it will pay dividends to your wellbeing, your important relationships and your business.

P.S. Wishing a very happy birthday to my business partner Chris

There’s nothing like the positive pressure of a real deadline growing ever closer to focus your attention and efforts. Especially when the deadline has a hardstop that’s non-negotiable. What’s done is done when the timer goes.

I hope this post is helpful for anyone who has a little inner perfectionist, or for those who ever reflect on a week and question if they got enough done.

The theme of this week’s post is so front of mind for me as last Sunday I set an ambitious week of outcomes with the aim of disconnecting come this Saturday. I really mean disconnecting too. My wife and I are celebrating our 10th anniversary by returning to the same paradise spot we went  to on our honeymoon, and I will be challenging myself to disconnect from the rest of the world for a week.

Many of you may have heard Parkinson’s Law which states that, “WORK expands so as to fill the time available for its completion”.

This is exactly why deadlines can bring out the productivity ninja within – we have to push hard whilst simultaneously adjusting our satisfactory completion points for tasks.

When in this state, you can find yourself drawing on extra reserves to push things over the line.

You find you can be a little more decisive when it comes to completing something (i.e. saying that’s good enough).

It calls for an attitude of what gets done gets done. Yes we can strive for excellence, but don’t get caught up trying to be perfect, accept imperfection and aim for done. I’ll admit that I envy those for whom this comes easy. I have to fight an inner desire that wants to go for perfection.

To list a few of the main objectives completed this week, we (Chris and I) have:

• Set up a new SA unit from scratch
• Accommodated some new contractors
• Got our SA booking website to live testing stage
• Engaged in strategic conversations with JV partners
• Refined some systems with cleaners and linen providers
• Progressed a host of admin related to various SPVs

The deadline effect has really kicked in this week and a fair few extra hours have been clocked. However, as one of my coaches reminds me, if you know you have a special occasion coming up where you will be switching off and recharging then it’s OK to push hard so that come Saturday when I leave, I can give myself permission to feel disconnected.

Just think how much we’d get done if we went on holiday every month huh?

As a double bonus, the high leverage thing about down time is that we can use it to gain an unfair advantage. If I seed my mind with the thought and question of long term goals, then go have fun, great ideas will come and I just need to note them down then get back to the fun.