The Property Voice Podcast - Musings: Everything changes, nothing remains without change
The only constant is change. Everything changes, nothing remains without change, as the sayings go. However, how much change can we cope with, or should we seek? Should it be ‘evolutionary’ or ‘revolutionary’? What is the right balance between stability and change in our property investing journey? These questions are considered in the context of some real changes in my own thoughts and property investment experiences of late…listen in and find out what and why…
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Resources mentioned
Property Investor Toolkit – here is the book link on amazon.co.uk & amazon.com in case you would like to get yourself a copy to accompany this series
Today’s must do’s
Considering in your property investing journey, have you got the right balance between stability and change and if you are looking at change, the right type of change approach: evolution or revolution? Make sure you don’t face extinction though a lack or fear of change, but at the same time, don’t change just for change’s sake either.
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Transcription of the show
Hello and welcome to another edition of The Property Voice Podcast, my name is Richard Brown and as always it is a pleasure to have you join me again on the show today.
One of my favourite songs from the 70s era is David Bowie’s Changes, which seems to me at least to be about change and reinvention…something that Bowie is famous for and a requirement usually in an enduring pop career.
How is change & longevity of pop stars such as Bowie, Madonna and even more recently Lady Gaga relevant to us as property investors…let’s find out with Property Chatter…
Property Chatter
Ch-ch-ch-changes as Bowie sings in his song suggests that both he and his surroundings were going through a change around the time he wrote the song. Record has it that his wife was pregnant with their first son and of course the man was adopting different artistic directions with his musical career with his alter ego, Ziggy Stardust for example.
I don’t intend to elaborate too much on Bowie’s musical and creative influences. However, I wanted to make a reference that we can anchor today’s theme to…that of change.
Change has been on my mind a lot and it also prompted my Motivation Monday quotation this week: “Everything changes, nothing remains without change.” A quotation from the Buddha, as I will refer to him, in the ease of pronunciation…which is easier than saying (Siddhartha Gautama), the original name of the founder of Buddhism!
This mantra is also the chosen words that my daughter has tattooed on her leg and is something she has embraced too. So, this is very much close to home this week.
So, what is this change thing all about then?
Well, we all go through and face changes in our everyday lives that’s for sure. We also go through and are faced with changes in our property investing journey too. I mentioned in my Motivation Monday piece that accepting and embracing change is a key to survival and growth and I stand by this. If we do not adapt and change, then basically we start to deteriorate and die instead.
This is one of the reasons why I like to read and study so much…I like to stay current and up to date with what is going on around our property world as this helps me to adapt and grow.
OK, so this is all somewhat hypothetical right now I appreciate, so to make things a little more tangible…there has been some changes of late in my own property investing journey that I would like to share…perhaps drawing some conclusions as a result.
So, what has changed then?
Lettings & Management
You may recall from the first series of The Property Voice Podcast, me saying that I had a strong opinion as an investor rather than just that of a landlord. The difference being simplistically, whether we manage our own properties or not. Now, nothing has really changed in my general attitude – I value my time too much to become a fully hands-on landlord for sure.
However, what has changed is my approach to outsourcing per se. Until recently, I was pretty much settled on using letting agents exclusively to manage my properties on my behalf and I manage the agent instead.
This still makes sense to me until I reach a certain scale of my property portfolio. However, as my portfolio grows, I have been challenged to consider a different approach to using letting agents exclusively. Now, instead of blindly going with an agent, I have started to notice the variation in standards and service across different agents and more importantly, the impact this is having on my properties and tenants. Whilst I have some very good agents helping me to manage my portfolio, I also have some indifferent and even downright bad ones. This is starting to cause me some issues in managing my portfolio consistently.
Right now, I can just picture some of the people that I have debated this topic with rubbing their hands with glee. However, before we and they get too excited, I am not totally shifting camp here…I am evolving my position based on my own changing environment…the very point of today’s episode.
However, now that my portfolio is of a certain size and composition and in particular with this variety of lettings types, it starts to make sense to consider an alternative approach. For this reason, I am weighing up a two-stage migration approach, where I will start to take greater responsibility for the direct management of some of my properties…in particular the HMOs.
However, I am not becoming the next HMO Daddy I can tell you…sorry Jim but you seem to be far too hands on and stressed for my liking. No, instead I intend to migrate eventually to having my lettings managed in-house…delegated not outsourced and but also managed not done by me too!
As a stepping stone, I shall use letting agents for the heavy lifting…tenant find and referencing. I shall also use an external property manager on a time-based charge structure before the economics justify the 2 or more dedicated staff positions that I envisage will be required to fully manage the portfolio properly.
This is the key, a gradual migration or evolution as a result of how my portfolio has grown and changed. This was an ‘aha moment’ from a recent review of one problem property that emerged in my portfolio in all honesty, however the idea has been in my mind for some time longer as a general plan.
So, what are the changes here? My portfolio and the agents who manage them…or in other words the environment or ‘ecosystem’ in which I operate has changed on the one hand. Equally, the change in thinking resulting from some recent experiences, or if you prefer quality and service inconsistencies, has come about at a similar time.
For me, therefore, it is more an evolution, than a revolution. It is a natural progression as my portfolio has matured and makes more sense at this point in time and also with my personal circumstances, than it may have done before. In time ahead, it will no doubt evolve further, as I develop my own internal ‘lettings agency’.
So, that’s one big change in my thinking. Had I not reached this conclusion now, then I suspect the future could have been difficult for me. For example, with issues arising with property maintenance, too many voids or tenant turnover for example. Left alone these issues could become significant and potentially damaging to the health of my portfolio. Going forward then, I imagine I will change again to having a more dedicated internal team. This will have meant I will have moved from full outsourcing to a hybrid model and then finally fully insourced management of my portfolio over time. I do however believe that in my own case each approach is right for the given stage of my portfolio’s maturity and crucially my personal, business and lifestyle preferences, which should not be overlooked.
So, what else has changed lately then?
Well, this idea of evolution and progression can be applied to both my property investing strategy decisions and also my working approach and style as well. In fact, these latter changes have been taking place gradually for some time now.
Property Strategy Development
In terms of strategy for example, I am a believer of mastering one or two things at a time, rather than taking on lots of different approaches simultaneously…unless we can systemise and delegate some of the tasks that is.
To illustrate, whilst starting my property investing journey with refurbishments to either refinance or sell, I have since added additional strategies such as HMOs, holiday lets and lease options for example. I have to admit that at times I did try to take on too many different strategies at the same time, but now, with greater experience, I am more pragmatic and will only add different strategies once the existing ones are fully bedded in, working and understood. I recommend this approach to the more haphazard ‘throw a lot of muck at the wall’ approach say.
Our strategy development is therefore also evolutionary…as we gain more experience and learn our trade, we can systemise, delegate and then perhaps consider another one to learn and apply.
Partnerships
Similarly, with the way I work my property business, this has changed as well. I used to be very much a solo investor but more recently, partnerships seem to be the way to go. I can see that by cutting a cake into two does not automatically mean accepting half of one…instead, the cake can get bigger; leaving me with half of what has become greater than one instead!
I have always been a believer of leverage, however, I am getting it more and more that true partnerships have a greater place to play and not just purely leveraging external service providers. When people have some real ‘skin in the game’ as it is called, we can achieve a result where 1 + 1 is greater than 2, I am finding.
This has again something of an evolution in my thought process and approach; however, in this case it could have been a more of a revolution instead I think. Had I started with partnering in the first place, then I believe I could have grown even faster than I have done. Don’t get me wrong though, I have always had elements of partnership going on. It’s just that more recently these partnerships have taken on a greater balance of distinct roles and ‘equity stake’ in the projects that I am involved with. Maybe the right partners were not there before, or maybe I was not the right partner before now even?
Concluding thoughts
Of the three different changes that I have shared today, which are lettings & management, strategy development and latterly partnerships, I would say that the first two are probably and should be more evolutionary. However, it is the last one where the revolution and hence the step-change is most pronounced and possibly the most overdue as well I think. I guess I managed to catch it before it was too late and faced extinction at least…
So, there we have it, some real changes to my thoughts and also in the practical management and application of my portfolio. These do bear out what Buddha was saying I believe…’nothing remains without change’ and that is certainly true in our property investing journey I would say.
Returning to how we can use this to learn and grow then, we should constantly keep a check on our own expectations, attitudes and beliefs. We may need to re-evaluate and reassess these from time to time and maybe adopt an evolutionary or revolutionary approach to change if we want to survive and thrive that is…
Finally and on a slightly cautionary note, I can guess we can at times try to change too much, too often. There is enough natural change to be concerned with and as I hope is clear, some deliberate changes that we initiate at the same time. However, how much we seek these changes is something to be careful with. Whilst change is inevitable as said, we may struggle if we remain in a constant state of flux…we do need some stability to allow the benefits of the changes we bring about to flourish I would say. And so then, just as the Earth and our natural environment rely on a balance and order, so too should we rely on the right balance between change and stability…not too much in either direction if we can possibly manage that Utopian ideal I wonder?
So, how about you…have you experienced any changes in your approach to your property investing? I am all ears, so do let me know by email at podcast@thepropertyvoice.net or why not drop me a note on our Facebook page: Facebook.com/ThePropertyVoice
That’s it for this week then, everything changes, but right now what has not changed, is that the show notes will be over at the website www.thepropertyvoice.net however, I can’t promise how long for obviously...
Thank you very much for listening again this week and until next time on The Property Voice Podcast…it’s ciao-ciao