Month: October 2018

Have you ever set a goal to read/listen to a book a month? Maybe you get through books quickly and go for 2 a month? [I’m talking non-fiction, learning related books as opposed to fiction].

We get so many great book recommendations from friends and mentors in the property investing community that it’s hard not to want to read everything.

I’ve always been a little envious of those who can read super fast as I’ve typically been a pretty slow reader. Looking back I realise that one of the reasons for this is a desire to go back over and really understand what I’ve read, and probably take some notes.

Since audible has come along it has helped many of us consume way more books than we previously thought possible. However, the challenge is it also means we go through a book so quickly that whilst we get a little entertainment, we can leave a lot of the true value from the book on the table.

Thankfully I have this niggly tendency, I referred to above, to want to understand what I choose to read to an implementable level. So whilst it slows me down it actually helps get the most out of the book. So when I heard the following 3 tips from Darren Hardy recently they really resonated with me. I take no credit for these (other than taking the time to share) but I keep them in mind to get the most out of my reading and thought others out there may appreciate them too.

TIP#1: READ WITH PURPOSE

When choosing a book, have a problem or key skill in mind that you are focused on mastering. Have a defined issue that needs solving then read with a mindset focused on finding those answers. You must then of course apply what you find out.

TIP #2: START WITH THE WHO

Instead of perusing the personal development section, find an expert in the area you want skill development in, then go deep with the content from that person – articles, books, videos etc

TIP #3: ACT NOW

Get out and do the things as soon as you have actionable advice. Act now and try it, review, try again and tweak things. Try to get good at the thing intentionally, push for excellence.

Can you see how if we apply this shift in approach to the books we read the outcome will be far greater?

One of the books we have really read with purpose and acted on this year is Profit First by Mike Michalowicz. If you’re interested, this will transform the way you handle your finances, both business and personal.

What books have made a big impact for you this year after reading with purpose and acting on what you’ve read?

This week marked a memorable milestone on the SA journey for Chris and I – we handed back our first three Rent-to-Rent flats!

In June 2016, after a few months of our heads were swelling with the ideas of several different exciting property strategies, we committed to focusing on Serviced Accommodation. A few weeks later, after multiple phone calls, viewings and rejections, we finally thought we had a tiger by the tail – our first R2R secured in the West End of Edinburgh.

This is the flat that marked the beginning of our SA journey. The unit we cut our teeth setting up for serviced accommodation – we managed to take what felt like an excessive number of hours to kit out the property (even though it came partly furnished), we had the place redecorated, we shopped around for living room items and we even bought and ironed new curtains. Photo evidence of the curtain ironing included.

At this point we hadn’t yet done a course (that came a couple of months later), but we were committed to taking action so jumped in. We thought we couldn’t go wrong with Edinburgh, our fine capital that brims with tourism in the summer months and still has a steady year round visitor and business travel trade. How could we possibly go wrong?

Without writing war and peace, here are a few of our key learnings that we hope can help serve those getting started in serviced accommodation:

• One bedroom city centre properties are one of the hardest types of SA unit to make profitable, Why you ask? The location and the size means the typical audience these properties serve are couples or friends on 2-3 night breaks. And for that market there are loads of options and competition from cheap hotel rooms to cheap one bed SA units run by the owner on a very lean model.
• The nature of multiple 2-3 night stays means more cleaning and linen costs per week (ie 2 or 3 changeovers vs 1 per week from a booking of 7 nights plus).
• August was amazing, but any wannabe can make money in Edinburgh in August. What happened in Oct, Nov, Jan and Feb wasn’t pretty, but we remained optimistic.
• As we scaled up to 4 R2R units within a few months, we soon realised that the booking revenue quickly exceeded the VAT threshold, meaning hello to an immediate 9.5% additional cost (at the point of breaching £85K, 9.5% is the rate on the flat rate VAT scheme for the first year)
• When you rely on booking.com to fill your beds, it gets pretty expensive to handover 15% of the booking revenue. Particularly when you know you have to also absorb 9.5-10.5% for VAT (which you SHOULD set aside each month in order to have ready to pay the VAT bill each quarter, or you face a large and unexpected bill).
• The nature of these one time city visiting guests meant we were capturing little to no repeat business and therefore direct bookings (and the associated savings) were going missed.
• We jumped in before fully understanding the legislation ie flats require planning for SA in Edinburgh and although it is somewhat of a grey area at the moment in regards to how it will be enforced, we just didn’t want to sit on wrong side of planning.

Reading the above may be enough to turn off those thinking about getting started in SA. That is absolutely not the intention. We have absolutely no regrets, this is the experience that got us started, from which came the lessons that led us to pivot and grow. I think it was Bill Gates who said that,

‘Early success is a lousy teacher”.

Had we been a run away success out of the gates, we probably would have over-invested into a location and model that was not sustainable. But of course we didn’t know that until physically testing it. [Quick caveat – our experience in the location mentioned doesn’t mean all one bedroom city centre SA units across the UK don’t work. I’m sure there are many locations where it does work, when you know the audience you serve and how to serve them.]

We have a huge amount of gratitude for our SA management agent who helped us get things set up in the early days and patiently taught us lots of operational insights that helped us set up in the out of town areas that we later pivoted into.

The days of seeking to quickly add vast numbers of SA units has been tempered in favour of quality growth. Our portfolio is now smaller, but as a whole far more profitable. This is where the old adage of ‘Revenue is vanity, profit is sanity’ really rings true.

Everyone in our team felt like month end really crept up and was upon us quickly this September. As we enter the final 90 day sprint of the year this week, what are you doing to review where you are up to and where you want to be when 1st Jan 2019 arrives?

I just spent 45 mins reviewing goals that were set at the beginning of the year and creating a plan that will bring a win for the quarter ahead.

Something I’ve been working hard on this year is to act on the wisdom that here is real power in advance DECISION making when it comes to simply getting things done. It’s a massive productivity hack because most of the energy and stress of your property entrepreneurship isn’t actually “doing stuff”… it’s deciding which stuff to do. Figuring it out, eliminating alternatives, prioritising… that’s the stuff that wears us out.

That’s why people like Steve Jobs wore identical clothes every day. Less decisions. I think Mark Zuckerberg does the same – ie by having a wardrobe of jeans and tees of the same colour/design.

Whilst it takes being really intentional, I’ve found that by using pre-decision on a Sunday night to get clear on the week ahead it avoids second guessing in the moment of each day. I learned this from a productivity coach years ago and practice the advice each week. When Monday comes it’s then just a just a matter of doing. Following through on what you said you would. You already decided. The hardest part (deciding) is over.

No need to second guess. No need to hesitate. Just get it done. Execution is everything.

So why not apply this simple yet powerful approach to finishing the year strong this Q4?

You may or may not remember I wrote a 2 part post in week #2 & #3 of this year about goal setting and implementing, link below

LINK BACK TO WEEK #3 POST

Here are four key steps from that post to help you DECIDE NOW what your Q4 will look like and how to stack the probability of success in your favour!

For each main goal/project run through these steps:

#1 What specifically needs to happen…to get started? To continue? To finish?

#2 How can you measure progress? (ie no. of viewings/offers per week. Booking revenue, occupancy by month..) When answering these questions think about what can be ritualised/repeated.

#3 What deadlines need to happen within 12 weeks? Think it through and allocate deadlines you can put into your diary.

#4 How can you stack multiple layers of accountability onto this project. In other words, who all can you inform, involve, make a pledge to etc that will help you follow through on your promise. Think mentors, family, advisors, peers).

12 WEEK PROJECT PLAN
The final stage to this is creating your 12 week project plan where you literally create a grid with 84 – 91 days and then populate it with dates, specifics and deadlines (as per your answers to the Q’s above) to work to each day and week. Schedule this stuff in using the mechanisms that work for you, phone, outlook calendar, a wall chart or whatever. Allocate sufficient time and protect it in your diary.

And there you have it.

Here’s to finishing the year strong

[Image credit: Unknown)

The question of ‘which is better – HMO’s or SA?’ seems to be coming up more and more in conversations lately. I thought this week’s post could serve not so much as an instructional piece but more a prompt to invite some engaging conversation/debate that we might all consider and use to arrive at increasingly informed decisions.

Here’s a bit of my own experience to get the conversation going:

Like many property investors, I started out with the humble buy-to-let and focused on that for a few years. When I began considering HMO’s in 2011 they felt like a big step up from my previous experience but it was the exciting and natural next step. After making the transition into HMO’s I don’t think I added any more BTL’s, they felt somewhat the poorer cousin afterwards. Terms like ‘higher and better use’ were starting to make sense and seem much more appealing.

I added a couple of HMO’s in Scotland and then later did a few in England so have experienced both systems, albeit at arms length as they were being and remain fully managed.

After feeling like I’d plateaued with investing, Chris and I joined forces and we discovered serviced accommodation (SA). Now SA is the exciting route for us and HMO feels like the somewhat poorer cousin.

However, there is no right or wrong answer, so here are a few starting thoughts from my/our experience to open up the healthy debate:

GOOD THINGS ABOUT HMO’s

-The cashflow can be dramatically higher than single lets

-Once set up and fully occupied with ‘good’ tenants, HMO’s can deliver high and steady cashflow

-Transforming a standard house into a multi-let property can significantly force the capital value allowing you to refinance out all or most of your original seed funds

-Using local specialist HMO agents can make it a hands free investment

-Successfully setting up an HMO in areas where there are high barriers to entry ie licensing can give you a competitive advantage

CHALLENGING THINGS ABOUT HMO’s

-You are exposed to multiple bad tenant issues under one roof at any one time ie damaged rooms, rent arrears

-Exposed to Section 24 if not held in a Ltd Co

-The profit often lies in having the final room or two occupied so a few months of some vacant rooms can leave you breaking even or worse, subsidising the property

-One bad tenant ie a combination of arrears plus room damage can leave you massively out of pocket

-Setting up an HMO in areas where it’s easy to launch a ‘me-too’ product can quickly mean areas become saturated

GOOD THINGS ABOUT SA

-A good month with an SA unit will dwarf a single let in terms of profit, and often be much larger profit vs an HMO too

-SA provides access to the incredibly powerful tax break that is Capital Allowances, since SA serves as a qualifying commercial trade/activity

-With SA we don’t have tenants, only guests paying by the night and in advance, therefore no issues with arrears or hard to remove tenants

-SA is an incredibly versatile strategy meaning that it can not only complement many strategies to help supercharge other avenues, but it can even help you out of difficult property situations by way of short term cashflow, access to a tax break and so on.

CHALLENGING THINGS ABOUT SA

-It can take a while to find your feet in regards figuring out what market you serve and running smooth operations behind it all

-Running SA yourself in the early days can feel like a multivariable beast of a business

-Being a newer strategy on the scene, there are not yet a vast selection of lending options for SA, often meaning less experienced investors have to seek more creative avenues

As Chris and I near the home straight with our current refurb to SA (well Chris is doing all the technical hands on joinery, tiling and project management etc, while this week I ordered some furniture and artwork ;)), we can only feel more and more convinced and confident about our commitment to growing our SA business. (By the way some updates are attached showing kitchen being fitted, bathroom going in and tiles being laid).

Based on our experience so far in SA, it really does feel like (when done right) you can have your cake and eat it. For all the reasons mentioned above and more.

As I mentioned previously though, I don’t feel like there is a right or wrong answer to this debate as it will have everything to do with the kind of investor you are, a whole range of preferences, how you want to allocate your property business time, what resources you have to put in, your interests, your location and so on and so on.

Clearly, both can be great, and both can be challenging. Ultimately why not have the comfort of both income streams?

Now it’s your turn, please share your experience or thoughts on one or the other. I’d love to see this thread become a helpful resource for everyone out there trying to figure out which avenue is optimal for them now.

Over the last couple of weeks I’ve had some fantastic interactions with people I have been able to help in one way or another. Whether in a small group or in a one-to-one scenario, these conversations have been both engaging and rewarding. In reflection on though there was often a common denominator where, if time had allowed in the conversation, I felt I could have maybe helped a little more.

It’s natural to hear a lot of people talk about the challenges of moving their big goals forwards (ie their property investing goals) in amongst all the pulls of daily life. I know it and feel it too, just the same. However, there is one subtle tactic I learned a couple of years ago that has really levelled up what I can get done in the time I have to allocate.

For those in the early stages of their property journeys, with so much to think about what with new learning, new terminology, property legislation etc, this little tactic, may just be your new secret weapon.

And this is it….

To separate decision making focus from action taking focus.

This one small mental practice could just be the missing link to helping you get more of the important things done for the day, and still have sufficient downtime.

Let me explain how it works. Decision making focus is very different to action taking focus. Trying to combine the two during a work session can be OK, just don’t expect to produce a load of quality work in that time. On the other hand, if you do want to complete a lot of tasks, here’s a simple and logical way to do it.

DECISION MAKING FOCUS VS. ACTION TAKING FOCUS

Decision making focus is the kind of brain power you need to draw upon when weighing up options and prioritising. Lets take for example planning out your work day/week. Action taking focus on the other hand is the brain power we access to simply get on and execute a task swiftly when we know what we have to do.

Have you ever sat at your desk at 9am, opened up a few emails, then tried to think about what you’d like to get done, what needs to get done, then opened a few more emails, then tried to start a written project of some sort, only to realise 90 minutes have evaporated and you don’t feel like you’ve accomplished anything? We’ve all done it, and it doesn’t feel good.

Property investors who like their Return On Investment calculations will appreciate this quote from Brian Tracy,

“Every minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent Return on Energy!”

This quote has always made sense to me but it really came to life l when I understood the psychology behind it – ie learning to separate my focus by a) using decision making focus to plan the day the night before ie consider all the variables, the people, the implications etc to chart a plan of action based on everything I know; and then b) when the day begins have confidence in my previous decisions and focus purely on executing the task.  

If you let decision making focus creep into an action taking session it can lead to second guessing yourself, opening a different piece of work, then something else reactive, typically resulting in unfulfilling chaos. It’s pretty much what multitasking is and why neuroscientists have proven that task switching is exhausting – it literally uses up oxygenated glucose in the brain, running down the same fuel that’s needed to focus on a task.

By giving yourself permission to focus on action taking, and actually doing the thing for an unbroken period (ie 45-90 minutes) not only do you get so much more done, but you feel great about it too. So, invest a little time to make the decisions and set your objective for the focus session ie the specific completion point you’re aiming for over the hour ahead, then switch your focus to action taking and go do.

Yes there will be days with more distractions and reactive stuff than usual, and you actually need to plan for chaos time too.

You may well be reading this thinking what! That’s it! That’s so simple. And it is, but I’ll close the post by borrowing a passage from Darren Hardy –

“as Jim Rohn would say, “What’s simple to do is also simple not to do.” The magic is not in the complexity of the task; the magic is in the doing of simple things repeatedly and long enough to ignite the miracle of the Compound Effect.”

What simple little tactics help you get things done?