Property Networking Finally

Career Networking 

A lesson I have learned in recent years, is the importance of a network.17 years as a Landlord and I finally realise I needed help.

Looking at my work/career network, this should have been apparent many years before.

My work/career network has been successful because of the amount of help I have received. Work wise, I get 9/10 jobs through people I know going out of their way to help. With me, the saying, “It’s not what you know, it’s who you know” is very true.

To friends and colleagues who have helped me out, I massively appreciate it! I am nothing career wise without my career network!

Property Networking 

12 months ago, I started to build my property network by going to PIN (Property Investor Network) and  seminars. This didn’t last as I went to a property course in October, then had a 10-month break.

My lack of property network is a factor in my slow progress.

With time for reflection, I have realised that being around other property investors, would help with my progress.

My issue with networking is that I am an introvert and am uncomfortable with people I don’t know. I am the tool who goes red when I see someone I know at Tesco.

I am that person who can barely string a sentence together when speaking to a group.

Even meetings over Microsoft Teams are uncomfortable for me as I have realised with my new job. I can feel myself colouring up as soon as I get asked a question.

This is feeble I know but it is what it is. Naturally, I am a shy introvert who likes to keep himself to himself. The problem with this is that it won’t get me where I want to go.

Getting comfortable at being uncomfortable is something I keep hearing so I will give it a go.

Forcing myself to be comfortable is exactly what I have been doing over the last few months. The meetings over Teams are getting easier and I can now string a full sentence together without going beetroot.

The PIN meetings I have been going to over the last few months are getting easier. I am learning a massive amount from people who I wouldn’t normally associate with.

I need help from other property investors, and I need to build my property network.

Learn From my Mistakes

Doing property on my own has led to many mistakes so try and build your property network early.

As I have found out, you can only learn so much from a book. You need to get the knowledge and put it into action. Being around other investors might give you that kick up the ass you need.

If you are interested in becoming a property investor, get around other more experienced investors. From my experience, it will save you a lot of time and you will reach your goals much faster.

You might think that meeting total strangers isn’t quite for you. You might think that getting comfortable at being uncomfortable is a load of s**t.

If on the other hand you are not quite where you want to be work wise or don’t get to do the things you want to do, why not try something different.

If you would like to see my Property Networking attempts in 2019 have a look at https://duffmoney.com/2019/11/01/property-crash-course/. 

Spread The Word

Last week marked a very important day. On September the 10th, it was World Suicide Prevention Day. Here are some Global statistics:

  • Every 40 seconds someone takes their life, that’s around 800,00 people per year
  • Every year, suicide is among the top 20 leading causes of death globally for people of all ages
  • For each suicide approximately 135 people suffer intense grief or are otherwise affected. Which is approximately 108 million people annually being profoundly impacted by suicidal behaviours
  • Suicide is the leading cause of death for people ages 15 to 29 and for every suicide that results in death, there are as many as 25 attempted suicides.

That is every 40 seconds a preventable death occurs. Every life lost represents someone’s partner, child, parent, friend or colleague.

Due to worrying about money, I would say I have had mild mental health issues. Some anxiety and stress. Fortunately, I would say I am fairly stable, but I am aware of how important mental health is and how some of us are seriously affected by it.

Spreading the word is all about raising financial awareness. It is why I write my Blog ‘DUFF MONEY’ every week.

As I have demonstrated with mistake after mistake, I am no expert on finances and am in no way handing out professional advice. I am definitely not an expert on mental health I am just aware that we can all help each other.

Since immersing myself in finance and personal development, I have noticed more and more how little the people around me are looking at their personal finance and their financial futures.

It took me 35 long years to get to a point where I could learn from my mistakes. I couldn’t stand my own negativity any longer and this pushed me towards self-development.

Instead of thinking bigger picture or long-term, I was always short-sighted. I was always looking for a quick way to make money, but this isn’t realistic at all.

Well it didn’t work for me anyway as I tried many times to make quick money from single shares, premium bonds, e-commerce, football bets and many more that I have mentioned previously.

This type of short-sighted approach is likely to get many people that we know into debt. You might be one of those people who spend more than they earn and end up in consumer debt with a high interest credit card.

For me personally I tended to avoid credit cards and used loans for purchases that were outside of my budget. That was the budget I didn’t even have until the last few years.

I am definitely not into anything extravagant, I just tended to spend more than I earned as I didn’t have any form of financial planning.

UK consumer debt is only going to increase according to an article in Moneyweek (April 2020). There will be a big surge in consumer debt as locked-down workers turn to credit cards and overdrafts to tide themselves over.

There have been many stories in the media about the likelihood of a recession when the Government furlough scheme ends.

If we have massive amounts of consumer debt, I can only see pain in one form or another. This is where self-development and financial awareness come in.

With self-development, I honestly think there is a solution to the majority of everyday problem’s we all face. I personally haven’t got all the answers, but I firmly believe they are out there.

Since about April 2019 I have been trying to spread the word. I say trying because my delivery has been very poor. Not only am I a bit of an introvert, I was just learning the basics so didn’t fully understand what I was trying to preach.

I wanted to tell people close to me what I was learning and did tell them, it just came out wrong and not how I had imagined.

It would come out in conversation and I would get some information out but also forget some key points. After a few attempts I decided to hold off on spreading the word until I was a little more polished in my knowledge and delivery.

What I have realised though is how important it is to raise financial awareness. Most people I know have no interest in financial planning.

This isn’t how it should be as we need to look after ourselves now and in the future. By putting some work in and putting a bit of planning in-place, we are helping ourselves, our future selves and most importantly, our family.

Even if I only encourage 1 person and encourage them to invest regularly in an ISA or buy 1 or 2 rentals, then it is enough for me.

If you are already investing for your future and know what you are talking about, why not encourage the people around you?

What if you have read a self-development book or a finance book that made a positive difference to your life. Telling some of your family and friends about this book might get a mixed reaction.

Some of the lads down the pub or girl friends who you drink a few glasses of wine with, might think you are mad and have a good laugh at your expense. What if, on the other hand you change someone’s life?

That book you told them about inspires them to make some big life changes. They manage to get out of debt in 2 years and don’t get anxious anymore.

In 5 years, they have 2 rentals and have started to invest in an ISA for when they finally reach retirement.

With some serious momentum, after 10 years they have 5 rentals and have been investing £500 pcm into their ISA. In my humble opinion, this scenario could literally change someone’s life and make a massively positive difference to their life and the people around them.

To summarise:

  • Fully understand that the industrial age is over, and YOU have to look after YOU
  • Become financially literate
  • Push hard towards FI (Financial Independence)
  • Spread the word – it will improve your financial literacy
  • Spread the word – it will make you feel good
  • Spread the word – it will help you to make a positive difference to the people around you

On the theme of spreading the word, please see below for x2 books I HIGHLY recommend:

  1. Think Like A Monk (Jay Shetty) – if you are struggling with any anxiety or stress or any other negative emotions, this book will give you some words of wisdom from a monk’s perspective.
  2. Live on Less and Invest the Rest (Andrew Craig) – this book is excellent if you are thinking of investing into an ISA or SIPP and need a little guidance.

 

 

 

 

6 Months-notice period

A section 21 Notice is used when a landlord requires the tenant to vacate a rented property by a specified date. It must be used to legally terminate an Assured Shorthold Tenancy (AST).

As of 29th August (2020), landlords must now provide at least 6 month’s-notice period, prior to seeking possession through the courts in most cases (www.gov.uk).

This is only relevant if you have problems with your tenant. They might not be paying their rent or they could have caused damage and you just want them to leave.

With this in mind, due diligence becomes even more important as landlords hope to avoid nightmare tenants.

To help me with the vetting process, I am going to use a local letting agent (Lettings Express) for rental no.5.

They will do all of the credit checks and take care of all the legal side of things (up to date information on the 6 month-notice period for example).

In addition to the ‘Let Only Service’ they will provide, they are also going to produce a detailed Inventory Report.

This is an extensive (time stamped) report that gives a full schedule of condition of the property prior to any tenant moving in.

The report will include numerous pictures and detailed descriptions on the condition of the property. The report covers things like:

  • Grass / lawn
  • Garden / grounds
  • Exterior windows
  • Interior windows
  • Carpets / flooring
  • Kitchen
  • Oven
  • Kitchen appliances
  • Light fittings
  • Smoke alarms

Etc etc…

The professional services offered by Lettings Express, will hopefully get me a decent tenant so I don’t even have to think about Section 21.

A bonus is that if things go South, I have everything on an inventory report from the start and this will help me deal with the legal side of things if I manage to get a tenant from Hell.

This will help if I have some issues with the DPS (Deposit Protection Scheme) also. Imagine I don’t have an inventory and the tenant from Hell leaves with x2 month rent arrears (roughly £1000) and also gets their deposit back.

Although I have been a Landlord for 18 years, overall, I have been an average Landlord at best. Working with a Lettings Agent who manages over 500 properties has shown me how to be more professional and I have learned a few things that I will use going forward.

If like me, you manage your own properties, I would work alongside a Lettings agent. They can help you find a tenant and make sure you are legally covered. It is very easy to get left behind with all the legislation changes that have happened over recent years.

If you have a portfolio, they could manage it for you to make it more passive. You can also learn from them as they are likely to have a proven systemised business model that you can benefit from.

DUFF PROPERTIES LTD

My 2nd Limited company was formed on September the 9th, 2019. Up until today, I have had zero properties within my company. Not the start I was hoping for.

This is the right time for me to set up my 2nd LTD company. It is a very straightforward process that I recommend if you want to build a portfolio. I am not an accountant or FA so seek professional advice before you set up a limited company if you are not sure of what you are doing.

Talk to your accountant and ensure you are aware of the basics. Start with tax and ensure you know everything you need to know about tax and if you are going to start a property business ensure you are aware of property tax.

I went on the Companies House website and started my Ltd Company within 30 minutes. I chose the name and decided on the SIC Code 98000 (Property Management) and I was ready to go.

DUFF PROPERTIES was set up for tax efficiency initially, but I also knew it was what I wanted to do as my full-time occupation.

Let me reflect for a minute and go back to late 2019 as I was pushing hard for rental no. 5. By November 2019, I had released money from rental no.4 and was ready to start bidding for my next rental. I had also been to see >50 potential properties as I was determined I would make up for lost time.

Right at the end of the year, a bid was accepted on a street house that I had been bidding on for 5 months. It is a potential HMO 6 miles from where I live, and I was going to rent it out as a Single Let initially but was open to switching it to HMO further down the line.

When I first had my eyes on it, the property was up for £110,000 and I eventually got the vendor to agree to £82,500 5 months later.

My confidence was increasing as I thought that BMV (Below Market Value) was the strategy for me. Not only was it BMV but the cashflow was excellent when I done my due diligence.

I would be making £300 pcm after expenses initially while I was doing Single BTL’s. If later on I decided to convert it to HMO, I would be looking at an £800 pcm profit after expenses.

Going into 2020 I thought rental no.5 was a formality. I was very wrong.

I received the survey report from my Financial Advisor. See below:

A retention of £6,500 has been applied

for the following.1). There is evidence of rising damp to several sections of ground floor walls and penetrating damp to sections of internal wall and ceiling to the first and second floors. The applicant must obtain a fill timber and damp report from an approved PCA member identifying the cause and remedial works required, together with an estimate of costs. These works should be implemented within 3 months and, upon completion, a minimum 20-year insurance backed Guarantee provided, a copy of which must be forwarded to the lender.2). The corrugated asbestos sheet roof covering one storey rear addition are in need of replacement. The applicant must of obtained in full report from an approved PCA member detailing the remedial works required, together with an estimate of cost. These works should be implemented within 3 months.3). The timber decking within rear yard id rotten and slippery and needs to be removed for safety purposes. These are small gaps within the party walls within the roof space. The gaps should be filled to comply with current Building regulation Requirements, ie. to provide a minimum 60-minute fire resistance. We shall proceed to offer on this basis providing all the remaining information has been received. Please note a re-inspection will be required which will incur a £100 fee.

Other than the rising damp that was an issue, what jumped out was the £6500 upfront fee I would have to pay on completion. I would get the work done then get the money back, but it wasn’t the point – I couldn’t stretch on my budget.

Putting this additional £6500 into the ROI calculation meant that my new ROI was 12.2%. Still decent enough but the initial outlay was my biggest concern.

My FA said I could negotiate a new price but even with a few grand knocked off, I was almost certain that I was ready to pull the plug on the deal.

I went back to the property for one last look. This would help me make my final decision.

After seeing the property again and taking more time to see what work needed to be done, I made my mind up. A new bathroom was needed, the kitchen needed replacing and the boiler looked on its last legs.

With rising damp costing me £6500 initially (the cost of the works would total roughly £6000 and then I would get the retention fee back if you catch my drift), and another £6000 minimum on the internal issues, my initial investment has moved from £27,000 to just short of £40,000.

Granted, it isn’t an ideal start to the year, but these things happen, and my attitude was that DUFF PROPERTIES moves on.

What I can say from this experience is that you really have to keep your emotions out of property investing. I worked out my calculations and was happy with the deal. The rising damp survey came back and messed up the deal. I wasn’t emotional as I pulled out and moved on to the next deal.

Then the madness begins. I get good news and have got a job with BP in Oman. This would be 4 weeks on 4 weeks off and I have got a contract for 12 months.

At this stage, I am thinking that in my time off I will be pushing hard to get rental no. 5. I went away to Oman in January and was back by mid-February.

Although I was only home for a few weeks (2 weeks so that I could fall into a 4/4 rota), I went to see several houses in February, and I had now viewed >100 houses looking for rental no. 5.

Leaving the house at the end of February didn’t go to plan. I didn’t go to Oman for the expected 4-weeks, I went for 11 weeks.

COVID-19 wasn’t just a nightmare for me and my family, it was a nightmare for everyone around the world for different reasons.

People lost loved ones and couldn’t even go and see them at the hospital and there are many heart-breaking stories. I won’t dwell on being in Oman for 11 weeks, I just wanted to highlight a reason for rental no. 5 being so delayed.

This didn’t stop me from thinking about rental no.5. From getting the keys for rental 4 to getting the keys for no.5 took has taken 19 months.

This was 7 months to take money out of rental 4; 4 months of agreeing to buy a property and then pulling out because of the survey; then a combination of work and COVID-19 meant another 7 months.

In that time, I was anxious about COVID-19 but that is a different story. The 18 months, it took to get rental no.5 over the line proved to me that mental strength can be taught. You can go from having a negative mindset to having a growth mindset (Growth Mindset, Carol Dweck).

Rental no.5 is an important milestone for DUFF PROPERTIES LTD. It is the 1st property within the newly formed LTD Company and getting it over the line is massive for me and proved I am ready to get some serious momentum and build an actual portfolio.

Having 5 rentals is no big deal, believe me I know. Especially when you factor in the 18 years, I have been a Landlord. My slow progress is all down to mindset and in my case a negative mindset.

A couple of weeks ago I was on a PIN (Property Investor Network) meeting over zoom and one of the investors was a young lad who looked about 16. He has managed to secure x9 buy-to-let properties in 12 months, so again I know x5 is 100% no big deal.

The big deal to me is the way that I have been mentally between rental no.4 and rental no.5. I haven’t once reverted to a negative mindset because a few things haven’t gone my way.

Both rental no.4 and rental no.5 have been bought BMV. This has benefits like the way I was able to re-cycle the deposit money from rental no.4 and put it down on rental no.5.

What I need to do though is learn that BMV isn’t always the right way to go. There are things that happened that were out of my hands but my obsession with BMV is part of the reason that there was a 19-month gap between rental no.4 and rental no.5.

I am looking for serious momentum and am definitely ready for a year similar to the young lad I met over Zoom.

If I could get another 9 rental properties within 12 months, it would mean 14 properties in total. This would mean £2800 pcm in profit and would push me close to FI.

To do this, I am going to have to build my property network and continue to go to PIN meetings. I will have to learn how to get creative as well to continue and add to the solitary rental property that sits within DUFF PROPERTIES.

The intention of this Blog is to raise financial awareness and encourage the reader to learn from my mistakes.

If you are starting your own property business or are thinking about it, try and have a bit of flexibility. Persisting with BMV has cost me and with hindsight, being more realistic in the way I was valuing properties may have led to more than x1 in 12 months.