Speed and Certainty

You may have noticed how uncertainty has an impact on people's decision making! You may also have noticed that we live in rather uncertain times! If you are interested in creating wealth for the present and a legacy for the future, property will most likely be a key part of your wealth plan. This is why I support and recommend the Property Investors Network - founded by Simon Zutshi. Simon's strategies offer speed and certainty - especially in uncertain times.

Simon's own successful property business is founded on win-win problem-solving. Over the years, he has used his creativity to solve people's property problems with the aforementioned speed and certainty. As the markets in the UK shift, any strategy used to build wealth through property needs to be founded on certain and proven principles - what Simon calls his Five Golden Rules. I share these here on the understanding that they are Simon's copyright. My purpose in sharing them is to raise your awareness of the support structure that is available throughout the UK to those who want to improve the way they invest in property. That structure is called the Property Investors Network, and it currently has 50 meetings all over the UK.

On the evening of January 9th, at the Sandbanks Hotel near Bournemouth, the Bournemouth pin meeting will be hosted for the first time by myself and Mark Waterhouse. We are here to help local investors, and those curious about investing, make a secure step into developing their own property business. Mark is a seasoned investor, and I have helped investors over the last 4 years develop a professional online presence - building relationships with those they trust. If you're within reach, we'd love you to join us.

Whether you can come to our meeting, you can be assured that there will be a pin meeting near you. You can check out the pin map by clicking on this link.

Five Golden Rules

To give you a taster of the quality of education you get from pin meetings and their official training programmes, I'd like to share an introduction to Simon's Five Golden Rules. You can read about these in his No.1 Property Best Seller, "Property Magic."

Rule 1: Always Buy From Motivated Sellers

I was first attracted to Simon's approach because it is ethical. Simon believes in win-win creative problem-solving. It is not about 'what's in it for me?' It's about 'what's in it for us?' He has walked away from deals where the motivated seller wouldn't have a big enough win.

With shifts in the buy-to-let market, there will be an increasing number of existing landlords who will not be able to make a profit (without the right education) from their rentals. This is because of something called 'Section 24' - being phased in over the next couple of years. Section 24 is removing tax-relief on mortgage interest payments. Fundamentaly, private landlords will be taxed on turnover, not profit. This means that many of their properties will become unprofitable. This group of landlords will become what Simon calls 'Motivated Sellers'. They will want a solution to their problem.

Normal home-owners can be motivated sellers too. They may have a property that needs attention, or that may in a state where getting a mortgage is unlikely or impossible, or it may just not be selling. Helping solve these people's property problems is a great way to begin investing in property.

A motivated seller is more likely to be flexible either on price or on terms. Price is not the only negotiable. Check out one of Simon's programmes if you'd like to learn more - and we'd certainly recommend beginning with reading the latest updated version of 'Property Magic'.

An example of Simon's ethics that impresses me is his assertion in 'Property Magic' that we are not always looking for a cheaper price - or what professionals call 'Below Market Value'. Sometimes, a seller has already dropped the price, or is asking a fair price. The key for a professional property investor is to work out whether or not the deal stacks up in the interests of all parties. As long as the buyer (you and me) can add sufficient value, and as long as we follow the other four golden rules, even Section 24 can offer opportunities.

Rule 2: Buy In An Area With Strong Rental Demand

A property can move from being an asset to a liability if we don't learn from experienced professionals and follow their advice. When a property is empty, what the professionals call a 'void', all the costs come out of the owner's pocket - that's a liability. For this reason, due diligence and research is essential before we invest in any property.

Knowing where to look online to assess rental demand, and through building robust relationships with trusted local Estate Agents, it is possible to get to know and understand the territory in which you are interested.

Rule 2 means that you need to get to know the demand in your area. There are many factors that can help rental demand. For example, if there is a strong demand for employment locally, that drives the market. Other facilities and amenities help such as well-performing schools, local healthcare, good shopping, and transport links.

In the Isle of Purbeck, my own specialist area, the local scenery acts as a powerful magnet, overcoming some of the weaknesses of the poor transport links and low local employment opportunities. In other words, rental demand needs to be researched!

Rule 3: Buy For Cash Flow

Simon states clearly that positive cash flow is king. If you've found a motivated seller in an area where there is strong rental demand, the rent must cover your costs (insurance, mortgage, repairs, maintenance, management fees) and then some because the market will change. Great cash flow now doesn't guarantee great cash flow in two years time, so anticipating market changes and mitigating against these is an important part of assessing each potential deal.

Rule 4: Invest For The Long-Term Buy and Hold

If you've done your research and followed the rules so far, you can hold each property. This is Simon's recommended strategy because, eventually, property prices always go up. You can weather the storms if each deal is structured wisely. As soon as you sell a property, its future cash flow capacity ceases - you've crystallised your profit. There are, of course, times when it makes sense to sell (see 'Property Magic' for details) but as a general golden rule, property investing is a long-term investment strategy. You buy once and the property produces cash flow ever more. This is the way to build your wealth to the point where you have a worthwhile legacy to pass on.

Rule 5: Have A Cash Buffer

One sure way to protect yourself from personally becoming a motivated seller is to always make sure you have a safety-net - a cash buffer. Tenants who don't own their property feel differently about the building to you! Damage happens, alongside reasonable wear-and-tear. Somewhen along your long-term strategy, your portfolio will need reinvestment to maintain its rentability.

You can insure against damage, and you can even insure against rental voids, but these all add to your costs. Whatever your insurance, having a source of funds you can dip into in an emergency is not just a sensible property strategy, it is a wealth-building strategy for all types of investing.

Come And Learn More, Get Support, And Find Trusted Partners

The best way to avoid mistakes in property investing, and to accelerate your progress is to get advice from a network of people you can trust. My main aim in sharing some of Simon's insights is to encourage you to try the property investors network meeting near you. If you contact me, I can make sure you get to try your first meeting for free - so reach out and connect with me.

May 2018 be a year where you are rewarded for the win-win solutions you create for you and the people you help with speed and certainty.

Lex