Month: June 2018

Have you ever heard the phrase that ‘often we need reminded more than we need new ideas’?

Perhaps the points I’m sharing in this post will be new ideas but hopefully they will be serving as reminders to take some specific actions.

In my own property interactions this week I was reminded of 2 legislative issues causing turbulence in the property space right now, or at least on the near horizon. The key thing however is that, viewed with the right perspective, these issues will bring huge opportunities for the smart investor.  

Here are TWO pieces of property legislation causing some challenges, yet bringing with it big opportunity:

#1 New Energy Efficiency Standards in the Private Rented Sector

As from the 1st April 2018 there is a requirement for any properties rented out in the private rented sector to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020.

Why is this an opportunity?
Since 1st April 2018, it is illegal to rent property that has an EPC rating of F or G. It is estimated that 20% of the private rented sector falls into this category. This rule applies to tenancies but not if using the property for serviced accommodation. If you own a property in this category you either need to invest in potentially significant upgrades, or understand how to operate it as serviced accommodation (SA).

Look out for a load of F and G rated properties hitting the market because landlords can’t let them and don’t know what to do. See the opportunity to negotiate the price down (both for purchasing and for R2R) yet optimise cashflow using SA?

#2 Changes to HMO legislation in England

i) At the moment HMOs in England only require planning permission if it will be for 6 or more rooms. The most common number of HMO rooms is 5. As of October 2018 planning permission will be required for 4 or more rooms.

ii) Unless your property is in an Article 4 area, you currently don’t need an HMO license unless the property extends over more than 2 storeys. As of October 2018 you will require an HMO license if the property is more than 1 storey.  With licensing comes expensive requirements to meet like fire separation between floors, fire doors, minimum room sizes and more.

Why is this an opportunity?
It is estimated that an additional 177,000 HMOs will become subject to mandatory licensing in England as a result of this extension. Of that there will be a proportion of owners who don’t want to invest in the changes needed to upgrade and so put the property on the market. Once more, see the opportunity to buy (or R2R) bigger properties at discounted prices and operate them as SA (where the same HMO requirements don’t apply)?

With turbulence comes opportunity, and as you can see applying the strategy of serviced accommodation solves many of these challenges.

The big question is, what are you going to do to act on the opportunities?

These are just 2 reasons why SA presents a much bigger opportunity than first meets the eye, and why its is a must-have strategy in the investor’s toolkit who wants to optimise profitability and flexibility in the face of legislative changes. Join our online training to learn more about how we are using serviced accommodation, in conjunction with other strategies,  to de-risk our property investments, buy with confidence and maximise returns.

When I was out jogging this week I listened to a great podcast episode by Peter Voogd on the subject in the title. I think it’s a great guide for how we can all allocate our money, which is why I wanted to share my notes from the podcast here with the community.

 

So, here’s a summary of what successful people spend their money on:

 

#1 They invest in themselves

This could be anything from books, seminars, training, mentorships, anything to sharpen perspective and cut their learning curve in half. Things that can save you time, money, energy, perhaps save you from failure or making the same mistakes that someone else had.

 

In business speed is super important and you want to pay for speed. A smart person learns from their mistakes, as all successful people do, but those wanting world class results learn from other people’s mistakes so they can shorten their learning curve and not waste as much time making the same mistakes. When you get some skin in the game it forces you to level up and take action.

 

Jim Rohn wisely advocated “to work harder on yourself than you do on your job. If you work hard on your job, you’ll make a living, if you work hard on yourself, you’ll make a fortune.”

 

That’s why investing in yourself is top of the list. When invest in yourself on training and mentorships, it’s the fastest way to become more efficient…more intelligent, so you know not just where to invest but how to make more money.

 

When Chris and I made the decision to invest in mentorship in 2016, in 2017 we had a breakout year. It wasn’t a coincidence. As Peter Voogd points out, “If you think personal growth is expensive, try mediocrity and regret.”

 

All the prominent people in the personal development space will advocate that you  should always be investing in yourself. Authorities like Tony Robbins, Brian Tracy, Darren Hardy…and many more typically suggest we should be investing at least between 5-15% of our income back into ourselves.

 

#2 They invest back into their business

In other words re-directing a proportion of profits back into the business. For any business looking to grow, some investment back into it is necessary. This could be anything from marketing to staff, to systems or a new strategy. Voogd recommends the amount you choose to be re-invested is related to a specific strategy and a plan rather than just a set number of a percentage, but don’t reinvest to the point of cutting other parts of your company short. It’s also crucial to invest in a team that aligns with your vision and values – he advocates that business owners should be producing growth not maintaining things, anything that maintains the business should be systemised and delegated. You’ve heard it before but the biggest thing is to be able to work ON your business, not just IN it. Ultimately reinvesting can help you establish your business as a leading provider in your space whilst also putting you on track for continuous gradual improvement.

 

Warren Buffet says ‘reinvesting your profits is the best and only way to build real wealth’.

 

#3 They invest in assets that make their money work for them

To secure their future they make sure they are continuously investing in assets that grow and compound their money. Financially successful people don’t really care so much about impressing other people with their money, they live below their means so they can invest their money and increase their wealth. If you only trade time for money, you’ll work until you die. The key is leveraging your (and other’s) money. This point is preaching to the converted in the property community.

 

#4 They invest in memorable and inspiring experiences

I love this one. Interestingly, Voogd cites a CNBC study that highlights how those in the ‘7 figure club’ are pretty practical when it comes to spending their money.  CNBC surveyed over 500 millionaires, and it found that the biggest annual spend was on home improvements and holidays/experiences. He reminds us that we can’t put a price tag on good experiences and memories. The beauty of this fourth category is that it can create a virtuous cycle – ie when we spend money on experiences for loved ones it not only creates wonderful memories but it inspires us at a different level to continue to produce results and create a life we are proud of for our family. However, getting the order of these investments is also key, ie not to go too big on #4 until no.s 1-3 are taken care of.

 

Hopefully this serves as a powerful reminder of how to allocate your money when you start making a bit.

 

Closing notes: This weekend we spent 2 nights away as a family sampling another providers serviced accommodation. Having written this post it’s reaffirming to see that we were investing in category #4 by creating fun experiences and memories as a family – we explored Crail where we took in the food festival and sampled delightful freshly cooked crab and steak from vendors on the harbour wall. We taught the kids how to catch crabs with a line over the wall in the seaweed, and we saw Scotland’s largest defence bunker (built to survive a nuclear bomb). Today we wondered round St. Andrews and whilst in a bookshop my eldest son spotted the book pictured above, now on his pillow. Investment category #1 both for me and my son 🙂

 

I’d love to hear any other thoughts on key things that successful people spend their money on.

Quite often it is not new information that we need but rather to be reminded of what we might already know. One of Darren Hardy’s daily messages this week reminded me that wisdom is earned through awareness. I shared this concept in week 40 last year when I first learned about it.

 

To elaborate a little, what this means is that in order to ‘grow through life’ rather than just go through life, we have to pay for wisdom with our attention. We must force ourselves to assess our observations and insights from each day and each week. Without doing that we go through life missing out on the subtle opportunities to learn and grow.

 

For a number of years now I’ve been capturing 3 lessons learned from each weekday. 99% of these new learns that I capture each day are typically words of wisdom from books, mentors, and other external resources. However, on hearing Darren’s message again this week it reminded me to consciously add more self observations from the day. For example things I may have learned in the act of trying things, doing and making mistakes. When we consciously document these insights it embeds the lesson in the brain.

 

When reflecting on our days like this it can be like finding little nuggets of gold as it relates to the mini lessons that could help continuously improve your property business.

 

The last couple of weeks, and in particular last weekend, have probably been our busiest ever in the SA business thanks to the Edinburgh marathon, a bank holiday and an international golf tournament (all on top of our usual contractor stays). With all our properties filled to capacity and with multiple same day changeovers it was a great opportunity to stress test operations. As can be expected in the hospitality industry, multiple challenges did show up and were effectively dealt with.

 

We are emerging with new learns at different points throughout our operational process that will help us refine things things from payments, to linen logistics, emergency maintenance provisions (and multiple trade people) to waste collection management and beyond. The minutiae that can only be picked up over the course of time and in the act of doing but with the right reflection can teach us so much.

 

While we are continuing to learn in our SA business, Chris and I have also been reflecting and learning from the process of putting ourselves out there and delivering a webinar on the 3 step strategy we are using to DE-RISK PROPERTY DEALS AND BUY WITH CONFIDENCE – FOR MULTIPLE EXITS AND HIGHEST RETURNS.  If you are looking to become the kind of property investor who can enjoy the holy grail of monthly net profit cash flow PLUS periodic lump sum cash injections​​…then we’d love for you to join us on our next webinar. Email me directly if you’d like like to find out when the next live webinar is going out – tsen@adaeroproperty.com

 

To close this weeks post I wanted to share a topic related side note – when speaking to my eldest son recently about seeing mistakes as feedback to learn and improve from, he shared with me a brilliant acronym for the word FAIL that they learned at school… it goes as follows:

 

First

Attempt

In

Learning

I really liked that and was delighted to hear they are learning about growth mindset at school. Armed with this wisdom, my son made me a very proud Dad this afternoon by standing up and wakeboarding on his first outing. He’s not yet 10, and after 2 failed attempts (face plants) he nailed it and rode out a full minute.

Have a great week all and be sure to do some positive FAIL -ing.