David Clouter presents Riding the Property Cycles

The following is a recording of a live webinar. That means the audio has limitations and the questions from the audience were in the form of text which David answered. Most of the questions were read out by John so that David could respond.

This recording is not the full presentation that David delivers live. The webinar was set up to focus on some key points or key topics that David covers in the longer presentation. The next opportunity to listen and debate with David the full presentation, join us on 13 Dec 2015. Full details can be found at the link: https://events.bizzabo.com/2016Plan. Do click on the agenda tab to see what the day has to offer.

To find out other times and locations when David might be next delivering the full presentation, contact John using the form below the video. A copy of the slides is attached so listeners can better follow the conversation.

Feel free to grab a copy of the slides which David presented.

Cycles-Webinar-23-11-2015

[contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Message’ type=’textarea’/][/contact-form]

Rent To Rent (RTR) and HMO from the ground up

Kev Winchester delivered a great talk at the August 2015 London Real Estate MeetUp. If you missed it, watch for a future date when Kev will be presenting again. If you were there, I am sure you are applying some of Kev’s top tips for HMO and R2R success.

A copy of his slides in PDF format are attached. Enjoy.

Kev Winchester’s HMO presentation – London Real Estate MeetUp (full set) 11-08-15

Events.Bizzabo.com/PropertyFortress if you are interested in the next monthly meeting. An agenda, who is attending and how to book is at the link.

Top 10 UK cities for Buy-To-Let (BTL) investing

Picking the top 10 metro locations; a public discussion

In a report from Lucian Cook, Savills’ Director of Residential Research, he makes the point that house prices, inflation adjusted, are below where they were 10 years ago. Yes, after stripping out inflation, house prices in 145 local markets are below where they were in 2005. Of the 179 local markets in England and Wales, only 34 are at or above the price levels of 2005 without inflation. Lipstick on a pig? Making a losing bet look like a winner by adding inflation? Or still a savvy opportunity if you understand the economics?

Backing up a bit, what is the bigger picture? When people ask about house prices in the UK, is it a sensible question?

The key message in Lucian’s report is that the UK housing market is made up of many micro markets. The UK is the sum of four (4) countries (England, Wales, Scotland and Northern Ireland. Trends in one do not automatically map to trends in another.

The report only focus only on England and Wales (E&W). Mostly because of how the data is collected by external entities. Zeroing in on the E&W housing market you find is the ‘ market’ really an amalgamation of the local markets. The local markets are more closely aligned to the economic trends in each community. That means there could be  179 ‘local’ answers to how the market is doing. And that is just in England and Wales.

If you were allocating investment funds and distance from your home did not matter, focus on local economic indicators and demographic trends to predict success. Forget the conversations about the UK housing market as if it is one thing. Stop looking for hotspots. Forget today’s interest rate or what LTV a lender will offer. It is the economy and the demographics at a local level which drives your future investing success. As they say, location is the only thing you can not correct once you own the property. Price, condition, financing and seller motivation really do not make up for a bad location longer term.

Pick 10-12 ‘communities’ which you believe should be on the list of the top BTL investment locations in the UK. Post your list in the comments. Even if you can only come up with a few please add them to the discussion. The wisdom of crowds implies that we can find the answer even if no one person knew the answer before the exercise started.

I will add to the discussion as I find more information that is relevant.

Enjoy the two quotes from the Savills report.

“The UK housing market is an amalgamation of local markets with different drivers. Understanding what the future holds at a local level requires an understanding of where each market sits in the housing market cycle and the underlying pressures on housing.”

“Despite widespread concerns over the cost of housing, Land Registry figures indicate that on average house prices across England and Wales have fallen by 16% on an inflation-adjusted basis over the past 10 years. Prices are below their level 10 years ago in real terms in 145 of the 179 local markets covered by the index.”

Crossing The Trend-Line
Lucian Cook
24 June 2015

Your network is your net worth

The title of this post is something I picked up from a real estate seminar speaker some time ago in London. Assuming you agree, at least to some extent, here is what you can do to improve your net worth.

In 2010 a friend published a book which I read from cover to cover. Back in the ‘old’ days  I would read paper books with a highlighter ready. I remember the section that explained a simple way to tap the hidden value of the neglected contacts you have accumulated over the years. The section screamed out as being highly valuable and extremely easy to implement. The book is From Crew to Captain: Making the Transition from Working for a Big Institution, to Working for Yourself. David Mellor is the author. David is a consultant these days who works with start up companies. He came from the world of commercial banking and then early stage start up investments. The section in the book that spells out the methodology for working with your network is available on David’s website. I have made a copy of the key points here. I will be interjecting some of my own comments.

The obvious place to start is your existing network of family, friends, neighbours and people who you have worked with in your career thus far. What I suggest you do is collect all the names on an excel spreadsheet (particularly the work contacts) and classify them 1 – 5.

Start with Excel, Numbers or the Google Docs equivalent. The key here is to get started collecting the names. Add the basic contact details in the sheet like a phone number and / or email address. Maybe the LinkedIn URL for the person.

We are building a scorecard. A KPI that we can come back to to measure progress. Picking up with David’s instructions, you assign a number for each contact. Between 1-5 with the specific number’s meaning highlighted below:

  1. People you are convinced will buy from you at some stage in the future.
  2. People you are pretty certain will buy from you but you are not quite so sure.
  3. People who realistically are never going to buy from you but you like them, they are well networked, and they are useful for market intelligence.
  4. People where you really have no idea whether they are potential buyers or not.
  5. People you consider to be irrelevant in your new world.

Having numbered them, you should immediately archive the 5s; the 4s and the 2s. The next stage is to create a diary system where by you get in touch with them every other month; the 3s you do the same with but on a quarterly basis; and the 1s you find a reason to be in touch with once a month without irritating them.

While the suggestion is to use a spreadsheet, the above archiving and contacting the 1s and 3s could be better handled in a CRM. Something that lets you make notes, schedule follow ups contact when you have made a commitment to get back to a person and similar. If you do not have experience with a CRM, start with the spreadsheet and create a column for notes. When you have more experience and can appreciate the benefits better a CRM will become the obvious next step. Note: a good CRM will let you integrate email and other communication so it is easy to collect the history for each contact. It will also work across the devices you choose to use in your professional world. Back to David’s instructions:

By the end of Year 1, you should only have 1s and 3s left. The 2s will become 1, 3 or 5s, same with the 4s. The 5s have already been archived. You can still be reactive towards the 5s, but you cannot afford to spend time on them; you have to spend time on those who are the most relevant.

So, you are operating a funnel and focusing on the people who have the best fit for what you are doing. This does not make someone a good or bad person. You are not being told to ignore family or friends. You are being told that if you want the success you desire, if you want to reach your goals, you have limited time so focus on the people who are most aligned. Healthy business relationships come from working with people who share a common goal, objective or business interest.

You also need to have enough time to add new and highly relevant people to your network. There is nothing to stop you getting on and doing this now! You don’t have to wait as you know who they are.

As you go to meetings, network or connect with people online, add new names and use the same filter to put them into one of the 5 buckets. People will move around based on changes in circumstances. Invest the bulk of your business development time into the 1s and 3s as suggested above. Let your network define your net worth and watch it grow. If you want to see the full article and learn more about David, follow the link  

Book list for real estate investors

People ask me what books to read so they can get started with real estate investing. I used to name a few titles off the top of my head. A while back the topic was discussed on a couple of property forums. I, like a number of other seasoned investors, provided our favorite titles or author’s names.

Over at the Property Bookshop, Jayne Owen has captured the detail and presented it in a useful format. The Property Investor’s Favourite Books is a list of 71 titles when I wrote this post. Take a look. Pick one up and read it. If you do not understand something, post questions with a reference to the page in the book and you will get answered.

Some of the books Jayne has read and then written a review. Click the review link to find out what she had to say.

A new public service from the UK’s Companies House

Companies House holds data on UK companies. That information is stored in a register which the public can access. This transparency is the trade-off for companies being able to conduct business in the company name. As opposed to a partnership where the partners are personally liable. Consider it a bit of a balance so people can find out who and what they are dealing with.

In the past you had to pay to access the information beyond the superficial. Now you can access all the information for free. As the time of this post, the service is in beta. It will be fully rolled out as testing is completed. To quote Companies House:

“…all public digital data held on the UK register of companies is now accessible free of charge.”

No idea what this will do to businesses like duedil.com and others who have been charging for information.

Check out the video introducing the service.

When ever you are thinking of doing business with a UK registered company, look them up. This is part of your due diligence.

Using the Companies House website, see what you can learn about the company’s track record. Check the list of directors for the company. When did the individual directors first become associated with the company? Who might have left already? What other companies have the directors have been associated in prior years? Given access is now free, why would you not want to check first? Oh, and Google the directors by name to see what else turns up in the wider web. Plug their names into Facebook. Some less than honorable people will use a friend or relative as a director of the company while they will exercise management control behind the scenes. What you can find on social media can save you a lot of grief later.

For 2014 there are some regulatory changes impacting crowdfunding. A little history and then some things to ponder.

It is fair to say that in the past, crowdfunding was mostly about pre-selling products or events. Maybe someone wanted a walk-in role in a movie that some artist was trying to fund. Or someone else wanted a device to mount their iPhone to a tripod so video would be captured without shaky images. I bought a Glif on Indiegogo. It was fun to watch the campaign develop and then see my purchase arrive in the mail. Kickstarter is another platform that has wide success.

The key to the past was the heavy restrictions on anything that provided a financial returns. Initially, there were no platforms that could put offers in front of members of the retail public where the opportunity involved a financial investment (loans or equity). The USA passed the JOBS act and then the SEC was left to figure out how to implement the new law. Some loan platforms were created as loans are somewhat easier for the consumers to understand. In the UK some crowdfunding involving the sale of equity has taken place while the laws are being updated. The UK’s FCA will take over control in April 2014 and it is expected they will be publishing new guidelines for the sale of shares in early stage companies when the promotion is to the retail public.

Looking forward, what is possible for real estate investing? Good question and something I expect to explore. There are times when trying to get first mover advantage is bad for your health. Even Google was late to the search game so being first is not a guarantee of success. That said, being in the market and learning as you go does increase the odds of making smart moves as the marketplace evolves.

I have signed up with Bank To The Future so I can launch a new company on their platform. I intend to sell shares to the UK public as well as offer rewards for those who want to be a supporter without an equity investment. The details of the company are evolving as the business plan, the financials and the video are produced. I formally signed up for the Bank To The Future incubator so I am on a 4 week timeline to have all the pieces in place.

Day 1 group shot

The only lead item that seems fall outside of the 4 week cycle is the process to obtain HMRC approval for the SEIS program. For those who do not know, SEIS is a government tax incentive for start up funding. If both the company and the investor fit the detailed requirements, the investor can obtain 50% of their investment back after month 4. This means it is almost like buying shares at half price. Or similar to paying full price at the shop when you buy and then receiving a rebate back in the poste once you submit proof of purchase.

If you run the math, an invest who buys shares that qualify for SEIS tax treatment are facing a downside of only 14% if the shares become worthless and an upside without UK capital gains if the company does well. There is a video I can point you to that does a good job of explaining things or there is the HMRC website. The application packet ready to mail is below. Yes, HMRC uses paper for this process.

SEIS application

Watch this space for further updates.

Welcome to 2014

Insanity: Doing more of the same which got you here and expecting the future to be different.

How was 2013 for you? If 2014 was largely a repeat, would you be happy a year from today? If you expect a different outcome by 01 Jan 2015, what actions are you planning which will actually change the outcome?

Changing the future does not have to be hard and you do not need to make radical resolutions. Change is a requirement and knowing what to change helps a lot. Care to share?

For me, 2014 will be about finishing. Finishing the work in progress to launch a property fund and receiving HMRC approval for a listed UK REIT focused on the residential real estate sector. Lots of work yet a rather simple goal to focus on.

[This post was created on 01 Jan 2104. Due to pilot error is was not posted correctly until 03 Jan 2014.]

Link

The info graphic below comes from a removal company. I think it does a great job of framing the topic of people moving home. As property investors, our economic success is pretty closely tied to how the greater public uses housing. If ‘location, location, location’ is the mantra that defines real estate investment success, understanding the people who actually use and set the benchmark for residential real estate values has to be a core skill.

I also want to use the infographic as an example in critical thinking. Just because someone says something or publishes it does not make it correct. Even when the information is correct, be careful about the conclusions and insights you draw. Being able to recognize opportunities implies a degree of skill with seeing things that others miss.

Removals are surprisingly interesting - Armishaws

What are the interesting observations that you can take away from the graphic after a short reflection? Which prior thoughts or assumptions were validated? Which of your beliefs have been challenged or shown to be faulty? Any new questions pop into your mind? Use the comment section below to share observations, assumptions and questions below. Critical thinking is a skill and it will improve through use. Give it a go.