Most investors won’t tell you about the bad things that happen in property as “it’s bad for business” for them.
They want you to think everything is perfect because they have ulterior motives.
Well, here’s the truth: things go wrong.
Most of the reality TV programmes will have you believe buying property is easy as smacking your offer down on a rundown house, the house is transformed before your very eyes and voilà, the property is sold.
Do this a couple more times, and you’re a millionaire Rodney!
Perhaps you’ve even been to one of them property investing seminars which will give you the secret of the overnight-meditate-sip-pina-colada-on-a-beach-and-wake-up-rich strategies?
Well here’s the truth. They don’t exist. Yes there will be challenges. Yes everything will take twice as long. No it won’t be easy.
But the reward will be HUGE.
So we thought we’d give you a heads up on some big lessons and problems we’ve had so that you can avoid them
And save you a big chunk of wasted cashish.
Property Investing Lesson No 1.
Test everything and everyone (twice) and expect problems.
Letting agents, estate agents, accountants, web-designers, JV partners: you name them; most of them don’t deliver, and if you put all your eggs in one basket you could end up with your hair randomly falling out.
Mark spreads a small amount of our properties across a few letting agents to test them. And not just them, but to benchmark them against the ones we are using that are currently good.
He does the same with refurb teams, insurers, suppliers, agents: and he is always testing them against each other and measuring costs, performance and value.
Our advice:
If you expect problems before they happen, it’s not being negative, it’s being smart. You are able to predict them quicker, sort issues before they become problems, and ultimately reduce them.
Property Investing Lesson No 2.
Everything costs twice as much and takes 3 times as long
We test new letting and estate agents and refurb teams monthly, as well as suppliers and other service providers. Even when we have it down to an art, when everything is systemized, we find great partners to work with, we still we hit snags that end up costing us time and money, this is inevitable.
Our advice:
When you plan, double everything! Time it takes and what it costs. And when it comes to cashflow projections and yields, knock 20% off your calculations and if you are buying from a ‘property sourcer’ reduce the cashflow to less than zero and the equity to not much more than actual value.
Property Investing Lesson No 3.
It’s harder when you need it, and easier when you don’t
When we started investing and again when we started Progressive, we worked like dogs. We needed the cash, and it was hard to squeeze out of each deal. Now that we don’t need the money anymore: we get deals for 40K that are worth 85K with land on the side and tenants ready. Deals we would never have dreamed of [and probably not known how to handle] when we started out.
Our advice:
Work as hard as you can upfront, and understand that everything you do, even the failures and mundane tasks that you underestimate, all lead you to the ultimate path of ease and least effort in the end, as long as you keep going, because that is the way the world works.
Push is hounding the agents for deals they are protecting for someone else, or doing 2 years of dingy networking events to 11 people…
And pull is the agents ‘pricing the deals for you’ and giving you them before even the manager sees them, or getting 50K – 150K for a 1 hour talk: because you are the known expert in the field of investment
Property Investing Lesson No 4.
Everyone turns bad
This might sound negative: it’s not, its simply life. We all grow. We all change, and in then end, only the most closely aligned and trustworthy people will stay with you for the long haul. Great letting agents will turn lazy.
Consultants will get bored and be onto the next exciting thing. You’ll grow and people won’t like the change. Tenants will move on.
Our advice:
The way to be prepared for this is to expect change and plan for it. You see when you are realistic about this, and investing in general, it actually gives you a huge strategic advantage: you’re always on the look out to anticipate change before it gets stale and actually you preserve more relationships that way.
You stay ahead of the times and you stay fresh.
So there you go.
If you take our advice you’ll save and make big money.
