Month: July 2020

It feels logical to do a follow up to the post I wrote a couple of weeks ago titled, “THE CRUCIAL INGREDIENT FOR PROPERTY DEALS THAT MELTS AWAY FEAR AND UNCERTAINTY”.

[If you missed that I’ll put a link at the bottom.]

The core message of that post was to “Stop chasing money and start chasing needs”. I am a firm believer of this philosophy being at the heart of all business, especially in property. 

I fondly recall interviewing my friend Abi in sunny Italy last year as part of the practical case studies to feature in my book Predictable Property Profits- I was featuring her because of a lesser known and powerful strategy she was implementing called Rent-To-Buy (RTB). Several years ago I read about the concept of RTB in the pages of Your Property Network but it wasn’t until Abi really started leading from the front with this strategy that I got to fully understand the true power of it. I had left BTL behind years ago, thinking that HMO’s and serviced accommodation were far sexier and better investments for me. In hindsight, ruling out BTLs was wrong thinking, I’m eternally grateful for the BTLs I do have and I believe that long term single let properties should make up at least some of the portfolio for all serious property investors.  And so it’s thanks to Abi and this RTB strategy that I’m excited about BTLs again.

So how does this philosophy of ‘chase needs’ apply to the RTB model? Before I dive into that it’s worth briefly explaining what RTB is for anyone who is unfamiliar.

The basic premise with the rent-to-buy model is as follows:

-investor buys a house

-investor finds a tenant buyer to rent the house and buy it at the end of a pre-agreed period for a pre-agreed price

-during the rental term the tenant buyer pays market rent plus a top up contribution towards a deposit to purchase the house

-at the end of the term the tenant buyer purchases the house and the investor cashes out with a flip profit and the net cash flow from the previous rental years (see it as a long term flip with two sources of income ie rent and lump sum at the sale).

So back to starting with the NEED. I know this is a powerful approach because it’s how Chris and I pivoted out of a failing SA business (built on guesswork) and started a new SA business that continues to be successful….because it originated from a strong end user need.

In his book ‘The 7 Habits of Highly Effective People’, the 2nd habit that author Stephen Covey writes about is to START WITH THE END IN MIND. This is exactly what we are talking about here and applying it to property.  

So, rather than not knowing where to invest in a house for RTB, and not knowing if someone would definitely take it off your hands, you can melt away all that uncertainty by securing the tenant buyer first. And this is exactly what we’re doing now. 

By literally talking about this concept with a number of people, one of those contacts raised their hand in interest, so I pulled the thread and had several follow up conversations to understand what the need was and qualify them as a serious tenant buyer before even looking at any property. 

In my book Predictable Property Profits I simplify my philosophy into an easy to remember acronym D-I-C-E which covers 4 key steps to remove guesswork. So here’s how I applied those steps to this situation:

D – Find the DEMAND

As explained above this came about through talking about what I’m doing, listening and asking deeper questions.

I- IDENTIFY the solution

I made up a simple process to essentially take a brief of what property would meet my prospective tenant buyer’s needs. In this case it included a specific area, proximity to the schools, kitchen size and layout and bedroom size for the kids. I pulled up half a dozen examples of property for sale so I could capture real time feedback and reference points for my search brief.

C- COMMITMENT in advance

Having confirmed I understood the brief and having done some desk research to gain some confidence that I could deliver, the next step is to get commitment – in other words a commitment deposit or engagement fee that officially kicks off the process. When you do this both parties can professionally move forwards to the next step. 

E- EXECUTE the plan and deliver the solution

With all of this legwork done up front lets recap on where I’m at- I now have a laser focused search brief and a committed end user who has put some money down to kick off the process. 

This execute step is where we are now focusing energy, getting out viewing potential property, analysing and offering with confidence. Attached is a clip of Chris and I out doing some viewings.

IN CONCLUSION

Can you see how these 4 simple steps can remove guesswork and give you certainty in your property deals? By following those steps, the investor knows where and what to buy, and everybody wins. 

This same philosophy and 4 simple steps can be applied to any property strategy. 

What needs will you be searching for to solve with property in the weeks ahead?

P.S. If you missed the post I referred to at the beginning, CLICK HERE

This week I caught up with my friend Mike Cruickshank to record a Q&A session on the subject of self-builds. 

Mike has been in property for 48 years spanning construction, architectural practice, building control with a local authority, property management, self-build timber frame manufacturing (35 yrs), and most recently property investment.

In preparation for the call with Mike I asked community members in several property groups to put forward the burning questions they’d want to ask Mike. Thank you to all who posted questions – you spoke, we listened and on this unedited recording Mike responds to every question that was asked. 

We cover everything from technical questions like is it possible to do …….., how the funding works, material X over material Y; to more subjective questions about design and standing the test of time. 

There are so many benefits to self-building that Mike will explain, not least is the fact that self-builders typically build in an average saving of 29% vs buying a finished house. Then of course there is the end result of achieving something incredible, having the internal layout exactly as you want and the energy efficiency. What’s not to love. 

With PM Boris Johnson recently announcing the most radical reforms to our planning system since the Second World War, many would argue there’s never been a better time to get into self-building – whether building a new home for yourself or as a small private developer.

If you are in any way interested in self building, put aside 60 mins to take in the full interview with Mike.

And if you’d like to explore things further then do check out additional information from Mike here: https://selfbuildsuccess.krtra.com/t/XL92j6FwCorK

I have huge respect for, and affinity with, those who are committed to using property investing to create more of the life they want. We are kindred spirits. This is the journey I’ve been on since 2007 – it’s what I strive for and what I find great joy in helping others with too. 

Every month I am fortunate enough to be in the position to mentor people on their property journeys, by facilitating powerful mastermind groups. I absolutely love holding mastermind days, the magic that comes from tapping into the group intelligence to help overcome obstacles or add fuel to the fire of opportunities….there’s nothing like it.  This week I worked with two such groups and there was a very clear and obvious theme underlying both days that needed to be addressed. It was one of uncertainty – uncertainty about which property strategy to focus on, about where to start, about how to start…and a range of other secondary questions that flowed down from these. 

This is where knowing about and implementing a simple but powerful change of perspective can melt away that uncertainty. I wanted to share with you a snapshot into what we were talking about because I’m confident that either you’ll learn something new, or you’ll be reminded of what you already know that you can now go out and use.

THE CRUCIAL INGREDIENT

To help explain this I’m going to quote from MJ Demarco’s Millionaire Fastlane – “The winning premise of business is simple yet often forgotten by most business owners: Businesses that solve needs win. Businesses that solve problems win profits. Selfish, narcissistic motives do not make good long term business models.”

The most important message in the Fastlane book is this – “Stop chasing money and start chasing needs”.

Those seven words you just read really can change everything, especially when applied to property. [I know this from personal experience because it was the key change that allowed us to pivot out of a failing SA business and start a new profitable version of SA.]

So how does this all relate to property and the mentoring conversations I was having this week? 

Well let’s put into context the quandary many find themselves in at the beginning of their property journeys – ‘How do I make money from property when I don’t have any to invest?’ Or ‘How do I know where to start?’

This is where the perspective change outlined above comes into play – to answer questions like these we have to switch the focus away from chasing money and instead focus on chasing needs. 

This powerful pivot in focus led us into productive conversations during the mastermind session that shone light on the path to making that first bit of income through property deals – for example we discussed:

• Finding niche audiences that require short stay accommodation, matching them up with existing serviced accommodation operators and charging a fee.
• Finding time poor investors in your area and offering your time to source, analyse and deliver shortlisted property opportunities for a contingent fee if they invest.
• When it came to questions about finding and working with JV investors we discussed how the same principle still applies ie by asking questions to figure what needs/problems the investor has in relation to their cash in the bank that you could help solve with certain property deals. 

In my own property endeavours I’ve also been practising what I preach this week. A conversation 10 days ago with someone I know, unexpectedly led to them expressing interest in the rent-to-buy concept that I was explaining to them. Fast forward to now, having had a couple of well structured conversations, I am now in a position with a very clear search brief and a committed tenant buyer who has paid an amount in advance to engage us to find their future home. Any uncertainty about where to buy, what to buy and for who has now completely melted away! Chris and I can shortlist, view and make offers with confidence and clarity.

I hope this subtle yet powerful distinction can serve those reading this as it has for me – this change in approach really is like moving out of the dark where you were trying to make decisions with no information and feeling fearful; and into a well lit path with the information you need to make optimal decisions and feel confident.

What I am touching on here is the core philosophy that guides everything we do in our property businesses. It guides how I mentor others and its what I wrote about in my book Predictable Property Profits. If you’re interested in reading further into this you can win a copy of my book, and 6 others I highly recommend, in the book giveaway competition I have running until Thursday 16th July. 

Enter here to win 7 must read books for property entrepreneurs

In closing, ask yourself, how can you ensure this crucial ingredient of serving a real NEED is present in your property deals?

Ever wondered what other successful people spend their money on?

A couple of years ago I shared my notes from a podcast about this by Peter Voogd. I think it’s a great guide for how we can all allocate our money, which is why I wanted to share this again now.

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 there is a good chance that you’ll 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 put some skin in the game and pay for help 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 you 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 10-15% 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, reinvesting a proportion of income will be 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 or 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 like the most successful out there.

Closing notes: This weekend self catered accommodation opened up for staycations and we spent 2 nights away as a family on a mini break to a secluded place with wooden wigwams- an amazing weekend of family fun outdoors. Having written this post it’s reaffirming to note that we were investing in category #4 by creating fun experiences and memories as a family. 

Which of these 4 categories will you be investing in next?