Before we get started, those of you who follow me on social media may have noticed that we have had some pretty exciting announcements recently, and I’m really excited to say that I’ll be launching in July a brand new membership called The Money Circle. The membership is all about helping female entrepreneurs to get clarity and take action on their personal and business finance. It’s going to be amazing for people who have side hustles, and people who run their business full time. It’s going to be a community where you can take action, receive some amazing content from me, and will take you through different steps that you can do to get clear on your finances.
There’ll be a weekly ask me anything call in the membership for that added accountability we all need. Every single month we will be adding to the membership zone some simplified content, and that will focus on getting results in a clear and concise way. The whole idea of this is that we take all the overwhelming topics around money and put them into some monthly simplified content for you to then start taking action around. We’ll have some guest experts coming into the membership and providing you all sorts of business tips and presentations. You’ll also have access to discounted tickets to some of my events coming up and meetups, as well as so much more. The amazing thing about this is it’s just going to be £27 a month, which may sound ridiculously low, and it’s specifically kept really low because I want it to be available to as many people as possible that are on the start of that financial journey.
Of course there will still always be opportunities to work with me on a one to one basis, but it’s really important to me that I can educate and empower as many women as possible to be financially resilient. And this is the way that I have chosen to do that. If you’re as excited as I am about this and want to jump into the Money Circle membership, I’ve created a waiting list which is where you can secure the opportunity to be a founding member at the crazy price of £27 a month.
Onto this week’s episode. There’s just no way that we could cover an entire series about investing without covering the important topic of property. For some of you who have read some of the previous episodes and who follow me on social media will know that I’m currently in a sales and marketing mastermind with Rob Moore who is a serial entrepreneur. I’ll be interviewing him next month, which I’m so excited about. Rob’s company Progressive Property is all about helping to educate people about how to invest in property. Through Rob’s mastermind I’ve met a couple, Amy Rowlinson and Dan Hulbert. The three of us were talking recently about the differences between investing in directly property versus other general investments, and I thought they would be great guests to interview to talk about some of the concepts about how to invest into direct property. So in this particular episode, I wanted to cover some of the pros and cons, some of the risks and traps, and some of the different ways of investing into direct property.
We talk about;
- Having the right mindset when investing in property
- Having a team of people behind you who know their stuff
- Amy’s 13 years worth of residential landlord experience
- Building a rental property portfolio
- Deep dive into the aspects of property investing
- The potential risks and pitfalls of property investing
- The different ways to invest in property
Amy and Dan deliver training courses called Practical Property Training. And they also host the Property Vault network event, which is held in the local areas around Graves End and Kent. They have also released a brand new property podcast this year called the Property Vault podcast, which you can catch on iTunes on a Wednesday mornings. For anybody who’s thinking about investing in property, I would definitely recommend that you go and check them out.
Listen to the interview
Welcome Amy, I’d love if you could start by telling us a little about yourself and how you got into property investing.
Well, it was by accident. When I became a mum I wasn’t working and I was doing various other things like volunteering, and there was a particular award that I was put forward for, for one of the volunteering things that I was involved with. I went to this award ceremony and I got head hunted at the ceremony, and they persuaded me to get back into work. I began working for a project management company, which was involved in property. So I became involved in property there for a couple of years and then I decided that actually I wanted to do it myself, and I wanted to invest in properties. I’d been an accidental landlord at that point for 10 years because we’d kept hold of a property that we had before, and we rented it out. But back in September 2016 I saw an advert in The Metro and it was how to find bargains and make money with property auctions.
I went to that seminar which was fantastic, and they upsold me a two or three day course, and then upsold again to a two year program. It was really interesting because I decided to turn my accidental landlord status into being a professional property investor. The first thing I did after getting the education was to convert the existing property we had into a house of multiple occupancy and increase the profit that way. Since then I’ve gone on to buy seven more properties in my own company name, and then through that began circuit networking with other professionals in property.
I met Dan Hulbert two years ago at an event in Victoria and we got chatting. He helped me with some floor plans, I helped him with some marketing, and we kept connecting for various things, and since then we’ve taken it from strength to strength. We have 50 to 70 people who come to the network event every month, and we run training together, coaching, and mentoring. We have also just launched the podcast, and another business that we’re just setting up as a whole term key portfolio builder, which is to help people source, design, and manage properties.
Mindset is really important in any financial decision making process. I’d love to know; what was your mindset around money growing up? Did your parents talk about money with you?
Definitely not, it wasn’t talked about. There was definitely a sort of scarcity value in the house. We weren’t poor, actually we were sort of well off; both my parents worked all the time, but when I was very little I spent quite a lot of time with my grandparents and they always told me don’t touch money, it’s dirty and especially coins are very filthy and mucky. And I still have that issue with copper coins. I don’t actually like to touch them, which is from being that child and being turned told to drop it or don’t touch it. Growing up with money, we didn’t have a huge amount and, for me, that spurred me on. I worked from quite a young age all the way through my GCSE’s and A levels, and then I was so convinced that I wanted to, I worked all the way through university as well.
I didn’t want to not have money, and I was very generous with it. I was always spending on other people, and so for me it was a case of I knew how much I needed to work for it, but I didn’t retain it. But I did come out of university without debt, which was great, because of working all the time. I guess for me it was always being in control of money that was important.
Does that influence how you teach your kids about money?
Definitely. I mean, I feel that they are lucky because of this transformation in me over the last few years in terms of taking control of my finances, particularly as a woman. I’d let my husband deal with all the money in the household, and didn’t take any responsibility for it, but then for the last few years, I have become so much more educated around money and understanding it. I think I’d felt that it wasn’t my role, but it should be, everybody should be aware of money.
So I’m so pleased that now the kids are seeing me as a role model, both my son and my daughter, and see that it’s something that I’m in control of and I’m aware of. My daughter has just turned 16 and she spoke to her peers about how financial issues and literacy should be taught in schools. That was one of my proudest moments because she understands about investing, about taking control of income, and creating a passive income. I didn’t get that knowledge when I grew up, but I feel it is something that should be part of growing up. For me it’s one of my greatest goals to help them understand that taking control and being aware of your finances is so important.
Why should people be thinking about investing in property?
Well, it really depends, because as you always say, it’s important to know what your why is in life, and what is it that you’re looking to achieve. You work backwards from that to what business model will fit with that strategy. So in property it can be one of two things; either passion for property, or wanting the cash flow to free up time to follow a different passion. So it’s understanding what it is you want from investing in property and whether that’s cash flow or long term capital, and you set it up right at the start according to where you want to be. We always say the two people that you need to speak to first is a tax adviser so that you’re structuring your business the way you want it to be, and then after that you then speak to a mortgage broker so that you can understand what you can actually invest in.
Would you say it is important when you go into property investing to think of it as a business transaction; for example thinking about whether to buy through a company or just go and buy a property and rent it out?
It’s crucial, absolutely. Property is a business and it should be treated as a business. It is a huge amount of money that you are investing and you need to treat it as though it is. A lot of people think it’s a hobby, but it’s not. There’s lots of things that you’re responsible for as a landlord and you are personally criminally liable for any issues that arise in a refurbishment, for example. So ultimately it should be structured right from the beginning as a business, whether you buy it in a personal name or in a company, that’s for you to speak to your tax adviser about. And thinking about your why; is it something that you want to leave as a legacy? Is it something that you are going to just be doing short term because there are different things you may be doing in the near future? Definitely speak to the adviser about your own situation.
You start to build your power team once you’ve got an understanding of what your end goal is, and we’re really talking about how you want this structured for the next 20, 30, 40 years, or whether it’s going to be something that you put in a different tax structure so that the children are involved. That’s something you need to start right at the beginning. You’ve got your mortgage broker so you know what you’re able to achieve right now, and then you start looking for the rest of the power team. And this is something that we really focus on in our one day course; talking about all the different people that are required in that power team before you even set foot in looking at properties. So before you even go to view a property, you have all of these people in place.
Talking about preparation; how can somebody get started and what do they need to think about when they’re preparing to invest in property?
Well it goes back again to thinking about the overall strategy and then what business model is going to suit that. There are lots of different opportunities in property, for example you can do ‘rent to rent’, which is a system where you don’t actually own the property, but you rent the property from a landlord and then you have legal agreements. The mortgage company of the landlord understands what you’re doing, and then you can then rent it out subsequently to other people. That’s quite a popular model because you don’t have to take ownership of the property, but you can still make money on that system.
Then there are basic ‘buy to lets’, which are generally smaller properties. They’re the ones that you let out to families or couples. And then you’ve got your larger properties, which are the houses of multiple occupancy (HMO’s), and these are designed for up to maybe six people all on a separate letting agreement. And then of course you can have much larger HMO’s.
There’s also the capital way; you can buy to ‘flip’, so you can buy a property, do it up, and then sell it on. That’s trading, which is a very different business model again. So there are lots of different ways of earning money through property, but understanding what your ultimate strategy is and what you’re looking for and then finding the business model that fits is really key. So either investing on property on a capital or cash flow basis.
Absolutely. And I imagine there’s the consideration of how hands on you can be, or want to be?
Yes. The word passive income is so misunderstood in my opinion. People think passive income means you don’t have to do anything for that income, but that’s not what passive income is about. Passive income is about investing, in this situation, a considerable amount of knowledge and time and money. So yes it is passive income in that you don’t have to go and physically walk into an office, open the door and get paid at the end of it, but you’re still working hard all the time to maintain that asset that is providing you with the passive income. So I think this term passive income just gets thrown around, and a little bit misunderstood.
What are some of the pitfalls of being a landlord in your experience, Amy?
Well, obviously in property you are providing somewhere where people can live, and you are relying on that trust that they’re going to keep that property in a good state. Not all of them do of course, and there are currently ways of managing that and dealing with people. But for me, the biggest issue is that you’re responsible for the welfare of those people who are living in your properties. All of mine are HMO’s, and there are lots of legislation and regulations for those properties. I have to follow really strict regulations, but I think that should be standard. I wouldn’t want anybody to be in a property that is not safe.
For me it is a big responsibility and I take it very seriously. And even though I have managing agents for the properties, I still keep in touch. So it’s not a hands off business, it’s a huge responsibility.
I’ve been asked in my community about the risk of investing in property in terms of companies that they hire not complying with regulations. How can people avoid falling into those kinds of traps?
It’s really about making sure that you are educating yourself and understanding what the legislation is in whichever business model you follow. You need to have a good understanding of what legislation there is and that you’re adhering to it. You can join the National Landlord Association or the Residential Landlord Association and they’ve got loads of texts and various PDFs that you can download. There are communities online and that you can join, and going to network events will also help.
Another question from my community; What is the best way to finance a property?
Oh that’s a vague question really! A fairly common way is to look at taking out a mortgage on your existing residential property to leverage some of the capital that’s sitting in your property to then use that to buy or put a deposit down for a new buy to let property. That way you are then leveraging the money that’s sitting in equity to buy another investment property.
Using other people’s money is a very popular way of investing in property, and as long as you’re giving them a decent return then there are lots of ways of doing that. You can go to lenders and peer to peer platforms for example. So if you don’t want to actually buy property then you can go to a peer to peer lending platform and invest in somebody else’s project and get a return on it. So you don’t have that responsibility of being a landlord, but you’re still investing in property.
As with everything, get it checked with your solicitor and have proper loan agreements drawn up for the period of time, the amount of money that you’re lending, details about the interest, and what the penalties are if it isn’t paid.
What are the typical costs that somebody would need to think about when buying property, for example things like stamp duty?
Well you’ve got conveyancing, which could be vastly between different solicitors. There may be surveys that you may need, and think how much work is going to be done on the particular property. It’s something that we talk about when we do our one day discovery day; when you are viewing a property, you are coming from three different perspectives;
- The builder’s knowledge
- The investor’s mindset
- The end users functionality
And so when you are looking at an investment property, you need to think about what you are going to be doing with it. That will make a huge amount of difference in the return on the cash that you’re investing in that property; the amount of work that’s going to be needed to do the refurb and setting a budget for that. We recommend that you take your builder with you on a viewing so that you can understand how much is going to cost you to do that refurb to get it to the standard that you want for the end users functionality. And then you really can understand whether that is going to be a viable investment or not.
Is there a good time to be investing in property?
Oh, it was yesterday! People will always need a home to live in, and to rent somewhere. As with any investment, in property there are rises and falls, but if you see anybody who’s serious in property, they will be almost oblivious to the big picture and just concentrating on what the demand is for the particular investment that they’re following. So yes, they take advantage of market crashes and property then becomes a bit of a buyer’s market for investors, but serious investors tend to just use those as good opportunities when they come up, rather than focusing entirely on those moments. So I’d say don’t worry about timing.
We were talking on the podcast last week about behavioural finance and how human emotion can impact on how we make decisions. I think that just sums it up completely doesn’t it; don’t worry so much about timing.
In terms of the rental market, it’s very much a case of people still need somewhere to live. Just make sure wherever you’re looking to invest that there is that demand.
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