Adaero Property

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?

The mid way point of 2020 is here, can you believe 6 months have gone so quickly? And in those 6 months our world has quite literally changed. What lessons will you take out of half one and what will you choose to focus on and implement in half two?

Just as we were about a week or so into lockdown, I shared a post with the quarterly review that I do, and it was very well received by those who read and completed it. So here we are again, another quarter of the year elapsed, this one like no other we have every experienced with a full 3 months in lockdown- managing immense change in our businesses, homeschooling for the first time, making new decisions, creating new routines, adapting, assessing what we truly value and so on. 

Timeless research has proven that humans are purposeful beings, in other words we need a meaningful purpose to strive for. It’s so important to stay connected to our vision for what we are striving for with our property investing, and reviewing a logical time period like the previous quarter is a great way to do that. In amongst all of the uncertainty and reactive challenges we have worked through during lockdown, it could be easy to lose our way or fall into a mental fog with no direction. In a time like this it’s more important than ever to acknowledge our progress in 2020 so far and reassess our direction moving forwards.  

Reviewing each month and quarter is about investing past experience into future preparation and focus – ie your past decisions, successes, failures, lessons. That’s where the good stuff comes from.

I’ve been using a 6 Step review process for a couple of years now and find it to be a powerful way to positively acknowledge incremental progress, and to extract the gold that will pay future dividends. I learned this from entrepreneur Peter Voogd and I consciously do this at the end of every 90 days. It only takes 30 mins, a small investment in your future self. 

Give yourself the gift of reflection this week by answering all the questions under each of the 6 headings.

Section #1 – OVERVIEW

• What went well, what didn’t?
• When was I in my zone, when wasn’t I?
• When was I at my emotional energy peak?
• What caused me peace of mind?
• What frustrated me?
• Did I do what I said I was going to do?
• What systems have I put in place?

Section #2 – PSYCHOLOGICAL

• What have been my biggest breakthroughs?
• What have been my biggest frustrations?
• What have been my mind-shifts?
• What have been my biggest disappointments?

Section #3 – TACTICS

This section looks at what were my top 5 wins from last quarter: financial, family, adventure…?

Getting down to business metrics ask yourself:

• Did I hit my business income goal last quarter?
• What were the top three marketing campaigns or sources of income last month?
• What were my top income producing activities?
• What are the biggest ways I’ll be producing income this next month?
• How did I add value to the marketplace, could I have added more? 

These will likely be related to your highest values but only you will know.

• Did I leverage technology?
• Did I maximise my reach?
• What will exponentially grow my reach this next quarter?
• What did I do to stay adventurous and feel fully alive?

To help keep you going with the nitty gritty march of each day it’s important to mix it with the things that energise you. In previous quarters this would have included things like getting in a game of tennis once a week, or maybe a mini break with Mrs W. This last quarter however it’s been related to exercise, creating outdoor chillout space and trying new local food delivery options, like some great authentic tapas last weekend, yum.  For those with freedom in their highest values this will be particularly important, however it will be massively challenged compared to previous summers. We will all need to be creative about what little things we can do from home/locally to create mini rewards during the months ahead. Whatever it is, choose something and schedule it.   

If you aren’t consciously making a decision to put things in your diary that will keep you alive and vibrant, even in these times where less free movement is allowed, you will become complacent.

Section #4 – RELATIONSHIPS

I love this one:

• Who did I connect with and reach out to last quarter?
• Did I take care of my current relationships and did I reach out to people who can cut my learning curve in half- i.e. people who I can partner with in some way that’s relevant to your business?
• Did I leverage partnerships?

To add to this, based on what’s currently happening, who can you make a conscious effort to connect/reconnect with virtually? My wife and I have really valued engaging in more family and friends zoom calls based around coffee mornings or drinks evenings.

Section #5 – TEAM

Think about questions that will help with your team review:

• How was my team engagement?
• How was my speed of communication?
• What feedback can I give them?
• What do they need in terms of skill development?

If you have a team, what can you do to help assure and engage them in during these uncertain times?

Section #6 – LEGACY

• What did I work on that was legacy focused? In other words something that you work on now but won’t get paid until long into the future, or something that you don’t reap the benefits for until way later, ie creating things that you value but that you get paid 6 months or more down the road. Note that if you just do this kind of work for the rewards/benefits you will lose steam, it’s important to engage in legacy work for other reasons, for something bigger than you. As a side example, part of my family legacy work last year and ongoing now is taking conscious time with my boys to teach them one key life value each month.

Peter Voogd recommends spending 80% of your time on profit making activity, creating systems etc that makes sure you have the money coming in for you and your family now. Then 20% of your time on legacy focused things. Eventually when you have built the business you want you can switch focus to investing 80% of your time on the legacy side of things. Isn’t that an exciting prospect? To spend 80% of your time on something that helps a cause you believe in or adds value to the world in some way, and not worry whether it pays you or not.

Conclusion

I challenge you to invest 30 mins each quarter to do this. WHY? Because high achievers always ask better questions, and they are always investing their past mistakes/lessons into their future preparation.

Hit reply and let me know if you complete the review for yourself.

With a title like that you might be thinking, ‘What on earth is he talking about…leverage your future self?’. Well, bear with me and I’m confident it will make sense and pay off for those who read on.

Firstly, Happy Fathers Day to all the Fathers out there. On this day of showing appreciation to our fathers, I encourage you to answer the following question in your own mind – 

What is a lesson, piece of advice or example from your dad that has shaped you into the person you are today? 

For me, it’s been the lessons of work ethic, entrepreneurial endeavour and family focus that I have absorbed through my Dad leading by example, and in him sharing his stories of business.

So back to the quirky title of this post, and it leads on from this theme of getting advice. For this week’s post I wanted to revisit something I wrote and shared around this time last year. Instead of thinking about advice from your father, or a mentor figure, we’re going to delve into advice from your future self. The two techniques I’m going to share will require you being a little more open minded and certainly being proactive….if you’re interested, and if so I’m confident it will serve you well. They come courtesy of Darren Hardy, one of my favourite authorities in the personal development and business leadership space.

As we fast approach the midway point of 2020, I am turning this exercise on myself in thinking about the second half of this year and beyond.

TIP #1: YOUR BEST MENTOR IS YOU 10 YEARS FROM NOW

Here’s how to leverage that concept – add 10 years to your current age and fast forward in your mind to that time. Visualise how you are living out your best life ie what you have already accomplished, what you are now working towards, how you speak, how you act, what behaviours you demonstrate, what choices you make.

The you 10 years from now, knows exactly what to do right now. So, if you’re up for it, take the time to visualise the future you, and in your minds eye ask questions of your future self and take your own advice.

As Hardy advocates, “Your goal is to live up to the person your 10 year future self knows you can be.”

So in the context of your own property investing journey, what does this look like? Are you wondering what your next move should be? Are you re-setting your goals based on our new reality? Or maybe it’s your first move in property that’s the question. You might be wondering what property strategy to allocate your time, energy and resources to. The answers will come by asking yourself things like how you want to be involved in your property business, the kind of conversations and activities you want to engage in, and how it all aligns with your highest values and your financial goals. Only you can answer those questions and in particular your 10 year future self will know what to do now. Give it a go.

[By the way this is a more customised take on another effective exercise you may have heard about where you can visualise your own private boardroom of advisors and you choose whoever you want sat round the table ie Branson, Gates, Bezos, Buffet, Huffington…. and you imagine what advice they would give you.]

TIP #2: GIVE YOUR FUTURE SELF A GIFT

This second tip is super effective for helping you deal with tough ‘in the moment’ decisions. For example, you’ve got an hour scheduled in your diary to call and email leads to generate direct bookings to your serviced accommodation properties – you could get stuck into those calls or you could start google researching various search terms to ‘kid’ yourself you are busy.

Everyone will have their own version of this in their business and personal lives. In the moment you are doing battle with emotions to overcome this and give your future self a gift ie in the example above it would be the gift of more direct bookings. In other words you want to be thinking, how can I be a hero to my future self by doing X task in the present. 

A simplified example might be that even though you are tired after cooking a big meal for the family, by clearing the kitchen before bed you can wake up to a fresh start the next morning (your future self will thank you for it,  especially when the head is a little dusty from the night before 🙂 ).

What you’re doing is flipping the conversation in your head so that instead of the task being drudgery in the moment, it feels honourable because you are not putting off something your future self will have to deal with later.

This is not rocket science, it’s the essence of delayed gratification. You’ve heard it before packaged in different ways but more often than not we need reminding of what we know more than we need new information, and sometimes hearing it from a slightly different perspective is what it takes to finally action it.

I recall a quote I first heard from Dan Pattrick, of Dapatchi, which really resonated with me, and it follows the same message. Here’s the quote –

“Do something today that you will thank yourself for tomorrow”.

Can you imagine the positive ripple effect from being intentional about living that quote each day?

What are you going to do today as a gift to your future self (and if you have kids, as an example that will shape them)?

Aren’t the months flying by? This week I was hosting some of the monthly Platinum Mastermind sessions – two fantastic days working with great people serious about progressing their dreams through property. 

I have to admit I love masterminds. I have been part of different mastermind groups since 2014 and have found them to be hands down one of the biggest competitive advantages in my corner. 

If you’ve read ‘Think And Grow Rich’ by Napoleon Hill then you will know that being part of a mastermind group has long been identified as a common denominator amongst many of the world’s most successful people. 

If you haven’t come across the term before then here is a brief explanation – a mastermind is essentially  a group of like-minded individuals working together to improve- whether it be their business, trying to make more money, or achieving something else important in their life. In his book, Napoleon Hill described it as,

“the coordination of knowledge and effort of two or more people who work toward a definite purpose in the spirit of harmony.”

He went on to say, “no two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind.”

This ‘third mind’ is what makes a mastermind group so powerful in helping it’s members access a higher level of thinking, its the collective intelligence at work. 

Billionaire steel tycoon Andrew Carnegie credited his entire fortune to his mastermind group. Thomas Edison, Henry Ford and Harvey Firestone had their own small mastermind group.  And these groups aren’t just for business people, one of the most famous mastermind groups of all time was the ‘Inklings’, an authors’ group with members like C.S. Lewis, J.R.R. Tolkien and Owen Barfield.

All of these now well known names understood this powerful concept that Tony Robbins has referenced many times, “The quality of a person’s life is most often a direct reflection of the expectations of their peer group.”

In the same sentiment, here’s another fitting quote I read just last night in MJ Demarco’s Millionaire Fastlane book, 

“When you associate with people who empower your goals, you create a wind at your back and build momentum. Positive people nurture your growth, sooth your failures and invest in your dreams. Good people are conduits to your dreams, not just in motivational fuel, but in extending your opportunity reach.”

SO, HOW DO YOU GET THE MOST OUT OF A MASTERMIND?

The 3 steps below summarise key points I’ve learned and observed having been in around mastermind groups over the last 6 years.

#1: Invest in yourself and become part of a mastermind group

• Sounds obvious but it has to start somewhere, and it comes as no surprise that studies into the wealthiest show the no.1 place they like to invest is back into themselves (ie their development).

#2: Open your mind.

• There is always more to learn, and too often people get caught up focusing too much on what they already know, or have maybe heard before, rather than being open to the new ideas or subtle nuances that can make a big difference.  This is often one of the biggest things that hold people back. As you get more and more experienced there is a danger that you can feel like you know everything and that can close you off to learning from people that maybe aren’t at your level yet but who are doing some things right, maybe in a different and unique way and what will happen is you’ll still be stuck doing the same thing in the same way and won’t be open to new shifts and new breakthroughs. The true value is in the one idea you can implement straight away and get a massive return. 

So an open mind and being an eternal student of the game is key. 

#3:  USE WHAT YOU LEARN

• Sounds obvious and simple but it’s essential. As referred to above, a mastermind is not about tons of new content but each time you attend, it’s about picking out and actioning the one key idea to get a return, then everything on top of that is gravy. It’s then about putting the conditions around you to keep taking more of the right kind of action. 

By way of anecdotal examples, I remember back in 2016 I’d first heard about capital allowances around the same time from two different property mastermind groups I was part of. Actioning that one piece of knowledge more than paid for my investment to be part of those groups. 

I was listening to an entrepreneur podcast last week and the host gave an example about the power of masterminds for him – he wanted to be around other software entrepreneurs so found a suitable mastermind group to join. In the first session he heard about start up grants being offered by Stripe and Amazon and by taking action on that one idea he had successfully won a six figure amount in grant funding to support the development of his software. That clearly paid for his mastermind several times over. 

If you are part of a mastermind group, what is one big idea you took away from your last meeting that you have implemented/are implementing?

Last week I posted the question “WHAT WOULD BE YOUR BIGGEST QUESTIONS TO ASK AN ARCHITECT/DEVELOPER?”

I then caught up with my developer friend Kenny Martin for a chat and to discuss some questions that had been requested by a number of people in these property communities. We thought it would be fun, and helpful, to record the conversation to share with other property investors who are considering development.

Kenny and I were on the same mentorship programme and various courses back in 2016/17 and since then he’s accomplished  a lot. He has always run his own architect practice, Block Architects, and pivoted into developing his own sites with JV partners a few years ago. He’s now developed 60 houses and counting so knows a thing or two. 

I picked out a handful of the questions to put to Kenny and we recorded the whole thing. 

Below I’ve captured a topline overview of our discussion and if you’d like to dig into more of detail you can watch the recording (link at the bottom).

Q. WHEN IT COMES TO INITIAL DESIGN – HOW MUCH DOES A DEVELOPER RELY ON THE ARCHITECT?

A. In many cases the developer often relies on the architect too much. A developer can’t expect the architect to understand the specifics of the business model behind the end use of the building. At the beginning of a project, and before any drawings are done, the developer and architect need to work hard together to hone in on what the business plan is (ie the desired end building and how it serves the people using it) and how that will impact the building design.  It really does depend on the experience of the developer because the experienced ones will know this stuff already. 

To help clarify what is being delivered by an architect it’s wise they use a fee appointment document at the beginning of the project – this will outline what is required and what is being provided. 

As a developer you need to understand the varying degrees of service available from the architect and you need to understand what it is you’ve actually paid the architect to do. 

For Kenny’s full response watch from around min 16. 

Q. WHERE DO YOU FIND THE LAND AND HOW DO YOU CALCULATE HOW MUCH IT IS WORTH?

Kenny said it all comes down to relationships and networking – letting multiple people know what you are searching for and the proactive process of asking for referrals. Kenny refers to a number of referral sources and types of people he speaks to around min 29.

In regards valuing the land we joked about how the go to formula of yesteryear of a third for profit, a third for build and third for land is something that just can’t be applied these days. Clearly there are so many variables and appraising a site is no mean feat. 

Having established realistic comparables from other houses built in the last few years Kenny will work backwards from the GDV to establish the land value. There is a fairly involved appraisal process he goes through to establish key aspects for example: a build cost from the foundations up, ground works, foundations and utilities – and these will all be specific to the site. (For more detail on that watch around min 39. ) 

Q. WHAT KEY THINGS HAVE YOU LEARNED BY MAKING MISTAKES?

A. Be sure to invest the time to build solid rapport with JV partners and a clear understanding of what each other wants and brings. Outline the roles and responsibilities within the partnership as it relates to the various parts of the project. 

Kenny also points out as a learn is that whilst developers can be attracted by the upside of selling what they’ve built, it’s important to also think about creating the opportunity for future recurring revenue. In other words, not to sell everything you develop but retain some assets to let for ongoing income. 

What’s important, is it about the lumps of cash or is it about creating freedom through cashflow?

(For more on this part of the conversation watch from about min 56.)

Q. WHAT SHOULD AN INVESTOR/DEVELOPER LOOK FOR IN AN ARCHITECT AND WHAT ARE THE TOP THINGS TO ASK WHEN LOOKING TO WORK WITH ONE?

A. Don’t make a decision based on price but rather look to understand what the value of their service is. You’re looking for value rather than a transactional price

-Ask for testimonials and references to see their past work – you want to assess their ability to deliver the quality that suits your project on other sites they’ve done. Physically walk round buildings of their past work)

-Get a feel for what people who use the building think about it – that will give you an idea of how well the architect met the brief. 

-Assess their communication ie willingness and time to respond

(For more on this part of the conversation watch from about  1h 3 min.)

Q. I’M LOOKING FOR AN ARCHITECT WHO CAN WORK WITH ME AS PART OF A TEAM AS WE MOVE INTO DEVELOPMENT PROJECTS, SOMEONE TO HELP WITH GUIDANCE RATHER THAN JUST A TRANSACTIONAL AGREEMENT. ANY SUGGESTIONS?

Kenny suggested to start local and ask for referrals. Look for the architects who have experience in the same kind of developments you will be doing. Bear in mind that some architects will do ‘at risk work’ ie putting time into things without a guaranteed fee/payout so do respect that the architect will either require a fee or a stake in the project. Kenny very honestly pointed out that a fee rather than a stake in the project is going to be the cheaper option for the developer. (check out min for more detail). 

(For more on this part of the conversation watch from about 1h 9 min.)

As promised, to hear Kenny’s full answers and get all the detail from our conversation check out the RECORDING HERE Whilst a long video there are nuggets sprinkled throughout. 

Was that helpful? What follow up questions might you have on this topic?

Have you read the Millionaire Fastlane? If you’re not familiar with it here’s a one sentence summary I found online- ‘The Millionaire Fastlane points out what’s wrong with the old get a degree, get a job, work hard, retire rich model, defines wealth in a new way, and shows you the path to retiring young.’ I first read this book in 2014 and I decided to pick it back off my bookshelf recently and read it again. I loved it back then and have to say I’m getting even more from it now. 

There is a section I was reading this week about choices and it really struck a chord with me because we are all faced with numerous choices in relation to how we work through and out of this covid induced economic situation. That’s why I felt it worth sharing this distinction from the book, and I hope it resonates with you also. 

The author, MJ Demarco, uses the analogy of a steering wheel to help describe the choices we make in life. He tells us that our steering wheel (ie choice) is the most powerful control we have in life.

WHAT IS THE BUTTERFLY EFFECT?

Can you see how it is possible to make a choice this instant that can forever alter the trajectory of your future? Well you can, and it can be the difference between poverty and wealth. 

The Butterfly Effect is a theory that in simple terms says this – minor changes (choices) can result in large differences in a later state.

To explain the concept visually, think of it like a golf club hitting a golf ball – when the clubface is straight the ball goes straight and travels towards the hole. However if the clubface is angled a fraction of a degree, the ball’s trajectory lands far off the course (sounds like one of my golf shots). 

This illustration shows us that a bad choice can set your trajectory off by only one degree today, but over the years the negative impact is magnified. It’s fair then to say that the opposite is true, we can make decisions and take actions today that create more of the future we want for ourselves. 

The message of Darren Hardy’s book The Compound Effect essentially says the same thing, that the key to success in anything in life is harnessing the power of the Compound Effect, which means the effects of small, everyday choices will compound over time, leading you to success—or disaster, depending on your choices.

So why did reading about the Butterfly Effect again resonate with me this week? 

Here’s why – Whilst everyone will have their own unique set of challenges that have come about due to covid, your knowledge, context and network will also bring a unique set of opportunities. And with that I believe we owe it to ourselves to get going with the opportunities right now, to be proactive about implementing, to be innovative in our property businesses.

Two weeks ago I wrote a post about screwing up – essentially about giving yourself permission to go take action without over worrying about making some mistakes along the way. That’s a choice we must make to get started, and keep it progressing.

Think for a moment about some of the choices you can make right now, and the positive or negative future impact.

The choice to binge 20 hours a week on netflix or to allocate that time into your personal development.

The choice to watch loads of educational webinars or to focus on and implement just one.

The choice to read a personal development book and implement what you’ve read, or just to skip onto the next book on your list.

The choice to double down on finding direct SA bookings, or to simply rely on the OTA’s.

The choice to create a healthy eating regime and exercise routine, or not.

The choice to keep up meaningful communication with family and friends. 

The choice to ask your customers what else they need right now.

The choice to get really clear about the future you want or not give that any thought.

The choice to become wealthy.

The definition that MJ Demarco gives to wealth is as follows- wealth includes 3 things: 

1. Meaningful relationships with friends and family
2. Being healthy and physically fit
3. Freedom

To get this freedom it requires the choice, and the subsequent actions, to make income independent of your time. 

So circling back to the opportunities in front of you now, what choices and actions can you make this week that will create an income stream in the future that is independent of your time?

During these lockdown conditions it can easily feel like we don’t have any big completion points to report/celebrate at the end of a week in our property businesses. For instance Chris and I have a commercial property that’s been sitting, waiting to be refurbished for an incoming tenant but there has been no progress for weeks due to the restrictions and the contractor not being able to work. 

Every now and then I like to revisit previous posts I’ve written, to see what I was writing about in the same month but a few years ago. The key message in this post jumped out as one to share again – it has served as a great reminder for me this week and I hope it does the same for many reading it now. Here’s an extract from that post 3 years ago to provide the context,

“When I sat down to write our weekly post, at first I felt deflated that we don’t have some exciting new achievement to share, then I realised that’s not reality, the journey is made up of hundreds of little steps. The reality is that whilst there have been no big milestones hit or new deals done, Chris and I have been working steadily on our business goals…we’re analysing new build development sites, in discussions about leasing blocks of apartments and continuing to manage operations of a successful SA business.”

The feeling of “we’ve got nothing big to share this week”, that I was writing about back in 2017, got me thinking that there are likely many other property investors/entrepreneurs out there feeling like their goals are distant and things aren’t happening fast enough, especially with the constraints of lockdown. So I wanted to share some helpful mental reframes that I’ve learned over the years from a business psychologist mentor. This post is a bit of a deeper dive on understanding the quirks of our mind to help on our way to wealth, freedom and sanity.

An intro to entrepreneur psychology self-diagnosis

There are four ways entrepreneurs typically trip themselves up:

1. Hesitation and self doubt – it’s the #1 form of self sabotage
2. For productive people, they can get the sense of never feeling finished or good enough
3. Getting distracted by new opportunities/what others are doing
4. Questioning your own vision/goals i.e. am I even working towards the right thing?

I’m referencing these because it’s key that we understand our psychology so we don’t get caught out by any of these.

The other common pitfall for ambitious entrepreneurs is to fall into black or white thinking (called “splitting”). In other words we can hold ourselves to impossible standards and when we inevitably fail to meet those, we write ourselves off/mentally beat ourselves up. An example might be pushing yourself in all areas of life but still not feeling like you are winning, like the ultra entrepreneurs you might read about or hear on podcasts.

On a smaller scale it might be as simple as putting in a solid week of action taking towards your goals but not feeling like you’ve achieved enough at the end of the week (I used to get this a lot, but I’ve worked on how to manage it).

HERE ARE SIX WAYS TO HELP COMBAT THIS ALL OR NOTHING THINKING

One big antidote to this is to re-frame our thinking to recognise that incremental progress is the ONLY progress. The reality is that the titans we read about were not overnight success stories.

Splitting (or black and white thinking) happens because we fail to plan for incremental progress. The journey HAS to be rewarding for us to be congruent about our ambition.

If you can relate to any of these mental pitfalls then use these 6 exercises below:

1. Journal and plan out your goals – figure out what it would be like being in the trenches working towards your goal, with all the in between steps, and brainstorm how you can make the journey itself feel better (i.e. more fulfilling and fun). This kind of thinking helps us prepare for the opposite of black and white thinking, it shows us that realistically there are many steps involved.
2. Ask yourself, what would it feel like to be 50% done? What would it feel like to get started? (think- what can I do to make the answers to these questions feel better?)
3. Write out baby steps building towards the much larger projects (ie this can be straightforward with a refurb on a BTL but also more straightforward than you think on a larger conversion project).
4. Commit to three specific actions that you are 100% in control of completing each week.
5. Always set your commitments to the most courageous and important work (i.e. not just the easy stuff you would do anyway- THIS IS HUGE)
6. Get used to celebrating incremental (week by week) progress.

These exercises will help you understand that getting into the thick of things and being ‘in the process’, rather than at the destination, is the fulfilling thing. For property entrepreneurs, and indeed any entrepreneur for that matter, this is key as big goals aren’t achieved every week.

Ultimately the goal is to be comfortable working towards things. Success is a practice not a destination.

I hope posts like this serve to help you through the slower periods and encourage you to keep taking meaningful action. It’s not purely about the end destination, it’s about continuous steps in the right direction and reflecting back every few weeks to see how far you’ve come, and feeling good about that.

When you look back on the last seven days, what did you progress with your own focused efforts that you can recognise as a win for the week?