Month: April 2019

These past couple of weeks I’ve been allocating time to read through the latest Local Development Plan for the area I live and invest in. It’s not for the faint hearted, we’re talking 200 plus pages! In whatever part of the UK you invest, the local authority will have prepared and published a vast amount of research that will significantly help inform your property investment decisions. Reading through your Local Development Plan (LDP) and speaking to the Housing Department of the Local Authority is a great place to start.

This little post will help explain what the LDP is, what you can expect to learn from it and importantly, where you can get your hands on it.

WHAT IS IT?

Planning authorities are required to prepare a Development Plan to set out a planning strategy and policies to guide the future development of their area. The Development Plan explains where new developments such as housing, business and retail are likely to be supported and where certain types of development should not occur. It provides a framework against which development proposals can be prepared and assessed.

WHAT YOU CAN EXPECT TO LEARN

Here are some key areas of insight you can expect:

*The spatial strategy element of the LDP sets out key locations for growth – this will highlight where the majority of new development will be in the county and reflect the geography of opportunities for the location of new housing.

*These plans will point out the areas of housing construction, and with that comes potentially new schools, employment opportunities, community centres and renewable energy projects, as well as infrastructure and associated works.

*The Local Housing Strategy will highlight housing unit requirements per annum and the reasons why.

Population / Household Change – Referring to National Records of Scotland or The Office for National Statistics will provide population projections in your area along with household growth, which will either provide comfort or otherwise in regards investing in that area.

*Economic Development / Tourism – A member of the Economic development team will hold a calendar of all your regions events and key contacts, which should enable you to effectively target potential guests in respect of the tourist market.

*Health and Social Care – this part of the plan brings some understanding of the projected demands for healthcare with existing services will highlight projects like community hospitals and possible care villages.

WHY IT’S ALL RELEVANT TO YOU

*If you are choosing the strategy of single let or HMO’s you will want to better understand the population growth patterns, potential reasons for demand and the most suitable areas based on this.

*If you are developing apartments or houses to sell, you will want to understand the areas where such developments are required and where planning policy will encourage it rather than hinder it.

*If you are operating Serviced Accommodation, you will want to understand the Tourism trends in the region and other potential reasons for a sustainable demand in short stay accommodation (ie what development is bringing contractors to the area?)

*If you are planning to invest in commercial or mixed use property, you will want to understand the plans for each respective High St or industrial area in your region. You will want to understand what mix of commercial use class the Councils want to encourage or minimise and how they want to make their town centres viable.

A bit of upfront reading and understanding of your local area could have massive benefits to your investing.

WHERE TO FIND THE LDP?

If you simply google ‘Local Development Plan’ along with the name of your local Authority area, you’ll be able to find the page of your Council’s website where these documents are published.

As a final note, I’m sure being in touch with all the above is similarly of interest to you as a resident in your local area.

With Easter weekend comes a time to be with family, friends and usually a lot of chocolate. Whether or not you’ve been schooled with the Christian story that Easter carries, its a great message for all of us and Darren Hardy reminded me of this with his Good Friday video. He reminded us that as terrible as “Good Friday” was (the day Jesus was crucified), it had to happen for us to get the joy of Easter. In other words, the ultimate sacrifice was made in order to deliver salvation.

Whilst this post is not here to preach, I did want to share the analogy that Darren Hardy was making because it’s a powerful one – and that’s the analogy of the Easter story with the journey of success, and the shared parallel of sacrifice. As he put it, ‘sacrifice is good, because as painful and terrible as it is, it has to happen for you to get the joy of success’.

Life experience has shown us that there is no silver bullet. You cannot achieve success without sacrifice. To get the muscles of an athlete it requires massive amounts of discipline, careful diet and consistent training. To build up a property business that pays you handsomely it takes working on your mindset, educating yourself and taking massive and consistent action. It takes sacrificing other things in life, saying no to other choices.

This brilliant quote from James Allen (author of ‘As a Man Thinketh’) sums it up-

“There can be no progress, no achievement without sacrifice. Success will be in the measure that one sacrifices.”

There are two other strong reminders we can draw out of this Easter weekend:

#1 take the time to acknowledge, celebrate and appreciate the people in your life who have made sacrifices for you. All those who have nurtured and supported you to be who you are today have no doubt sacrificed something to contribute to what you are now, it might be family, teachers, coaches, mentors…you fill in the blanks.

#2 Think about your own resurrection this Sunday. What’s your version, your new lease of life to move forward with? The changing of the seasons is a great queue and a metaphor to jumpstart certain things for yourself. Brighter, earlier mornings are great for some early exercise and longer daylight hours are great for productivity. Think about your habits, your schedule and how you can re-energise your actions towards your 2019 goals.

I listened to a Peter Voogd podcast this week where he shared 3 things that all elite performers do. Here’s a quick summary that might inspire your ‘resurrection’:

#1 They protect their mind

– this relates to what they put in their mind and who they let in around them

-a big part of protecting their mind is by having a powerful morning routine, because a morning routine either sets you up for an amazing and productive day, or just another day. If you ‘guard the door of your mind’ and do the toughest things first, the rest of the day is easier. If you don’t you will just be reacting and won’t be in control. [HINT – think about when you switch your phone on and let your mind get bombarded with messages and notifications. The minute that happens, whose agenda are you really on?]

#2 They get active and increase the strength of their body

-’when you’re stronger physically, you are stronger mentally’

-being active can be anything from walking through to high intensity workouts, do something that works for you to be active in the morning at least 5 days a week. It will help you be more focused and resourceful in your work day.

#3 They reach out to people, or have a circle of influence/advisory board that help them level up and play the game at a higher level

-this links right back in with point one about protecting your mind by having the right kind of people around you

-surround yourself with people that help you think bigger and give you the belief that will help to keep taking big action and making those necessary sacrifices along the never journey towards success.

 

Where do you need to pay the price of sacrifice more in order to obtain the promise you seek?

This week I was lucky enough to hear Dan Pattrick speak again to an audience of property investors. Dan is an incredibly successful and values led property developer and his firm Dapatchi currently has tens of millions of pounds worth of development under construction.  [I’ll put a link to the summary of that last talk that I captured at the bottom of this post, if you’re interested- It’s called 8 Success Principles From An Inspiring Property Entrepreneur].

There were 20 points in total that Dan shared in this recent presentation and I’ve summarised 6 of my favourite here.

#1 DON’T BE AN INTERIOR DESIGNER

Whilst you might have aspirations of being the next Kelly Hoppen or Ashley Hicks (Interior Designers), when it comes to creating a home for others it’s what the end market needs and wants that’s important, not what you like. So to this end, speak to a range of selling/letting agents in the relevant area to understand your end user first.

#2 PAINT EVERYTHING WHITE

Following on from point #1 there’s no point painting everything in expensive F&B Elephant’s Breath when there’s every chance it won’t be to the taste of your end user. From a cost saving point of view, painting walls, ceilings, skirtings etc all white not only saves money on the cost of the paint (fancy colours do cost more), it saves a massive amount of time. Because decorators don’t have to do endless amounts of ‘cutting in’ to border contrasting colours, it saves a vast amount of time and therefore labour cost. In addition, having a blank canvas (ie all white) provides the opportunity for the new owner to put their own stamp on the property.

#3 USE EXPENSIVE UNDERLAY, NOT EXPENSIVE CARPET

I love this point, and it’s a learning I’ll incorporate going forwards. A quality underlay will make a less expensive carpet feel more premium. If you’re letting the property, especially if you’re using it for serviced accommodation like we do, then you’ll know that carpet damage is highly likely. If it’s an inexpensive carpet it’s going to be less painful to replace it when required.

#4 AGREE A FULL SPEC WITH YOUR CONTRACTOR BEFORE WORK STARTS

In other words, define as much as you can in advance and agree a very detailed schedule of works. This upfront investment in attention to detail will remove ambiguity and help keep the project on budget. For larger projects (ie over £100K) you will likely require a JCT contract with insurance.

#5 MISTAKES WILL BE YOUR BIGGEST COST

In other words, having to double back and retrospectively correct something will have a big impact on both your timeline and your project cost. The key things to get really clear on are:

-Building regs

-Fire strategy

-Sound requirements

To avoid the painful retrospective work, consult with the relevant experts and members of your Council before work starts so you can work to the appropriate requirements from the outset.

#6 DESIGN CAN MAKE HUGE SAVINGS

Dan emphasised that this is the one thing that outweighs all other points on a large project. The design of the project must be commercially led from the perspective of analysing the cost to benefit of different layouts. The example that Dan shared was in relation to converting an existing building into multiple flats – by finding a way to add a second entrance/exit to the building it negated the requirement to install an expensive sprinkler system, thereby saving what would have been an additional £30-50K sprinkler system.

 

There you have it, those 6 tips I’ve picked out have the potential to save you £tens of thousands in future projects. A massive thank you to Paul and Dan for the presentation.

On a smaller scale to this but still very relevant, Chris and I were out viewing property for single lets this week and we captured a brief video from one of our viewings. We take a look at a repossession property that to many would look cheap from the outside, but a walk round with an expert builder (our Chris) quickly highlights why many projects like this would require a refurb budget that unfortunately kills the deal.

 

P.S. The link to that first post summary of Dan’s last presentation is http://adaeroproperty.com/8-success-principles-from-an-inspiring-property-entrepreneur/

 

What was the most impactful thing to the bottom line of your business that you spent time on this week?

I clocked up over 4 hours reviewing monthly costs in our businesses and whilst it wasn’t fun, it was very satisfying.

In the last few months I’ve heard several wealthy and successful business people make reference to the equal importance of cost management alongside revenue growth. Revenue growth can often be where the sole focus goes however, particularly in an exciting and fairly high growth space.

I’ve also referenced the book Profit First, by Mike Michalowicz, in several previous posts but I think it will only serve as a great reminder to mention it again. It really is fantastic and a must read, but not just a read, rather a read and MUST implement. The key message in the book is about allocating revenue across 5 buckets (or bank accounts) at the end of the month in order to create profit first and pay yourself first.

One of the analogies that Mike uses in the book is about how we can all be very good at making the last bit of toothpaste in the tube last a surprising number of additional days – ie by not splurging overzealous amounts onto our toothbrush each time and by being diligent to squeeze out every last drop from each corner and crease of the tube. The lesson to carry over here is for us to treat our business operating account in the same fashion. In other words, allocate an amount we need to operate the business with each month and then be extremely resourceful about how we allocate and use that money.

To that end, Mike recommends doing a ruthless review of monthly outgoings a few times a year ie this could be half yearly or even quarterly.

Back to property. We run a portfolio of serviced accommodation properties (both our own and managing for other investors). Because every property will have 4 -5 typical monthly outgoings aside from rent/mortgage (ie gas, electric, wifi, TV license, council tax/business rates) it doesn’t take too many properties to suddenly have tens upon tens of monthly outgoings.

Those 4 hours I referred to above have led, and are leading to, healthy cost savings each month that will compound across the year.

Here’s the exercise, if you’re interested:

-Pull up a list of all the direct debits and standing orders from your business bank accounts

-Copy and paste them into an excel spreadsheet and allocate them to the relevant property

-Go through line by line and challenge yourself on whether the item you’re paying for is still required in the business (ie loads of people have subscriptions they are no longer using)

-For items that you do need like the utilities for a property, check if the amounts are still at a suitable level

-Call utility companies to move onto their best deals

-You will also make savings by moving some bills onto direct debit that currently aren’t on DD

-Use your spreadsheet to track all the utilities and direct debits for each property so you can review again in another 3-6 months

The areas we’ve been able to cut monthly bills have been:

*Broadband accounts – we often set and forget with these but after the initial promotional period broadband providers typically roll you onto an expensive deal so you have to monitor that and move to their current best deal when the time comes (amount saved c.£15 per wifi account)

*Opting out of paper billing with a wifi provider has saved us a few £’s each month too

*Utilities – with up to date readings and a year of usage history you can discuss with your provider the likely projected usage and re-set your monthly payments (amount saved on one of our bigger properties was £235 per month)

*Make sure you have online accounts for your utilities and you are on direct debit, this can save approx £40/year and give you access to the most competitive unit rates

 

So here we are at the beginning of a new quarter and a new tax year – a great punctuation in the year to pause and do this exercise yourself. And of course this doesn’t apply to business only, why not do the same for your personal outgoings?