The Property Voice Podcast - Series 2: Property Cycles - Series 2 Introduction
We are surrounded by cycles of various types in our everyday lives and that extends to property. Join me as I unfold and unpeel three of the key cycles we need to be aware of, if we are to be successful property investors. The property cycle, the property investment lifecycle and the property portfolio cycle are what we will be covering over the course of this series. In addition, as we settle back into our series format once again, we have Your Voice and the Shout Out to look forward to as well. But what of Casa…if there any love left for her I wonder?
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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
Start to think about the different cycles that we encounter as property investors and consider making plans based on how they impact upon us.
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Send in your property stories, questions or moans to podcast@thepropertyvoice.net and we will try and feature YOU on the show too!
If you would like to, grab yourself a copy of the book: Property Investor Toolkit (link in Resources above)
Get talking!
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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.
To be honest, I have been a little preoccupied with delivering a new property training programme called iKickstart over the past 6-8 weeks and so this has probably pushed back the start of series two a touch. Now though, it’s high time that we get cracking with series two I think. But I am going to ease you into the theme gently by covering an overview of the series here today, before some more detailed episodes in the coming weeks.
In addition, I plan to have an extended Your Voice segment, as I weigh up a listener question from one of our most loyal and supportive listeners – Sanjay.
Finally, in the Shout Out, I would like to come back to my story with Npower and fill you in a little on that as well.
So, let’s get on with the show and Property Chatter.
Property Chatter
It is possibly a little overdue that we finally get to start in series 2, nevertheless, we are here and so let’s set the scene a little this week before we get into the heart of the matter over the next few weeks as I said.
Cycles exist all around us – our body clocks, our calendars and the changing of the seasons on a personal level and of course business, political and even social cycles we can probably identify with as well. The same is true with property and property investing, we have some clear cycles to work our way through.
There are, however, more than one cycle that we need to concern ourselves with in property. Whilst there may be more than I plan to share, I intend to cover off three specific types of cycle over the course of this series, namely:
The Property Market Cycle – which looks at house prices and to a lesser extent rents over a period of time
The Property Investment Lifecycle – which is a cradle to grave, or as our US cousins like to call it: soup to nuts view of how a property moves through a cycle from acquisition to exit and everything else in between.
Portfolio Cycle – which if the property market is a macro view and the property investment cycle is a micro view, then the portfolio cycle is a midi view if you like. It considers a collection of different properties over an extended period of time of ownership, stating with growth and acquisition, through to consolidation and finally to exit.
So, my plan is to unfold and unpeel the layers that make up these different cycles and try to make some sense of them as they relate to us as individual property investors.
In addition, to me giving my insights, I am also going to be joined by a number of guests or as I prefer to call them, subject matter experts. By adding in some different inputs and experience in short bursts as we did in series one, we will get a wider perspective and some very good insights. I already know this having already recorded a couple of these interviews ready to roll them out for you.
So, in terms of a preamble, that’s pretty much all I wanted to share with you today at least. I am setting the scene and whetting your appetite for what lies ahead in the coming weeks.
We shall see how the property market does indeed seem to follow some fairly predictable cycles and importantly consider how we can both capitalise upon and defend our position as a result.
In terms of an individual property lifecycle, there are some very clear and practical steps that are followed when we look to add invest in property. So, this will be quite a practical how-to type of section in the series.
Finally, if all we have or intend to have is a single property, then the idea of looking at the property portfolio cycle may sound a little surplus to requirements at first glance. But stick with this as we shall see how having a portfolio can bring to pass so many positive things into our lives and equally allows us to provide for others as well. If you had small horizons, then this last section of the series may help to broaden them out somewhat.
So, more next time but for now that’s all…let’s instead pay some attention to a listener suggestion in Your Voice.
Your Voice
Sanjay is back! Sanjay, as I mentioned at the top of the show, is a very loyal listener, and I like him so much for that fact alone! However, more than that, he is very creative in his thinking and is often sending me ideas for the show, which I like him for all the more I can tell you! Today’s Your Voice is stimulated by one of his latest contributions and I am more than happy to oblige, particularly as many other investors have at times wrestled with this same dilemma.
Sanjay realised and quite correctly noted that I don’t have ‘a patch’ as it is known. Or in other words, I do not exclusively invest into a concentrated location, which some come to know as their Goldmine area.
So very broadly, a patch could be defined as a clearly identified area, be it a town or city or even a county say, where investment activity is concentrated. It need not be where home is, especially for newer investors based in London and the south-east, it could be quite a distance from home in actual fact. However, distance is one of the factors that we shall consider in dealing with the question a little later.
Sanjay was interested in the pros and cons of having a patch or not and so here is a quick overview of how I see these respective approaches to property investment.
First, let’s look at having a patch, what are the pros and cons?
| Pros | Cons |
| Concentration of local knowledge potentially to street level | Concentration risk factors, Blackpool, Burnley & Middlesbrough are examples of towns or cities that suffered and declined over the past 20 years or so for differing reasons |
| Building good local trade and service contacts to provide consistency and reliability | Local may not always be better and in certain areas, choice may be limited to a small number of lower quality options |
| Economies of scale benefits by reduced travel cost and such like | Being closed to opportunities further afield |
| Becoming known as a go-to person in the local area, potentially gaining a competitive advantage in the process. Suits a more self-managing landlord approach probably | Reputation and brand is great when it works well, however in smaller areas everybody will know your business and potential mistakes could get magnified resulting in a negative effect |
Now, let’s take a quick look at the no-patch alternative…
| Pros | Cons |
| Diversification, or spreading your risk i.e. not having all of your eggs in one basket | Maybe not winning big, should you find a new hotspot |
| Driven by micro-level deal commercial drivers rather than macro-level area stats | Missing some of the subtle aspects of a particular location that could |
| Suitable to an outsourced and / or systemised approach, lends itself to a more passive investor approach (or forces it at least) | Hard to maintain consistency of service and standard across a portfolio due to having different people implementing the systems |
| Open to more opportunities with less of a boundary fence around your thinking | More time and risk involved in due diligence and deal qualification |
| Interest & variety that maintains motivation | A lack of focus and disorder can creep into the business potentially causing mistakes and leakage |
A short and sweet comparison then, maybe to skim the surface of the point rather than deep dive.
I guess which one is best will depend…
- It will depend on personal preference and style
- It will depend on ability to focus in a certain area
- It will also depend on the end-game of the investor as well
As for me, no I don’t particularly have a patch. I have properties spread across the UK and some overseas as well.
Why was this? Well, initially it was where I could get deals that met my fairly stringent criteria for a start…there weren’t loads of diamonds on my doorstep. It was also down to my personal preference and style. I like variety, I prefer to outsource and I fully planned to be more of an arm’s length investor with other interests and activities to spend my time and energies on.
However, I would say that it is starting to change now, just a little bit. I have recently concentrated some of my more recent investments in the east and west midlands for example. That is still too broad an area to be considered a patch, but it does start to open up some opportunities to capitalise on some of the benefits of having a patch.
I don’t think I am ever likely to concentrate fully in one area, for a start, I don’t like the idea of the concentration risk. However, I do see some merit in having some pockets of interest, if not an out an out patch.
It could be different for other people. For example, if what you are good at is speaking to vendors to get great direct to vendor deals, then it would make sense to concentrate on a particular area. Similarly, if you want to get the best deals from an agent, then it pays to see and be seen locally to not only help to build the rapport but also to concentrate your purchasing power into a small area for maximum return.
So, I guess in conclusion, I am not fixed in what is the right or wrong way to go about this. Your direction, chosen strategy and personal skills & preferences will to a large extent make the decision for you I would suggest.
So, there you go…I am sitting on the proverbial fence in terms of an opinion of what is best. However, I do know that what is best for me is no patch and I stand by that.
I hope that brief overview helped to get the argument flowing, why not drop me a note with your perspective…have I missed any glaring points that would make it a nonsense or no-brainer even. Podcast@thepropertyvoice.net to start a conversation or drop a comment on our Facebook page instead, that’s Facebook.com/ThePropertyVoice in case you hadn’t guessed.
Thanks again Sanjay for your suggestion and keep them coming…as with all of you, I like to hear what’s on people’s mind and am happy to try to cover a wide range of property subject matter in the various episode styles that we have too…let’s hear from more of you out there. For now, though, let’s leave it there and bring back the Shout Out once again.
Shout Out
Nobody’s perfect right, me included I hasten to add? If you recall, a few weeks back I shared my story about how difficult it was to make myself heard by the giant energy provider, NPower. The story seems to have reached a conclusion now and so time for an update.
I left it last time with a trail of unreturned correspondence, meanwhile being pursued for a debt not die to me. I was extremely frustrated.
However, it seems that Npower do have some actual humans working for them after all. Well, there was at least one I finally heard from called Neil via their Twitter support service.
Now, it was exactly plain sailing still, for example the debt collection agents had both said they had forwarded my emails and attachments to Npower and yet Npower claimed never to have received them. However, let’s give it up for Neil as he apologised to me and promised to get to the bottom of things. And sure enough he did do that!
The bills were corrected – hurray!
I had a small charge remaining to me but they agreed to write that off – hurray!
They called of the dogs – hurray!
And finally, when I asked them if they would be prepared to pay compensation, not to me personally, but instead to a small school in the middle of the Amazon, they agreed and paid £100 to support them – hurray!
You see, some of these large companies have a focus on systems and processes and to a large extent that is understandable too. It helps them to be efficient and therefore reduce their costs, which hopefully get passed onto us in turn.
That said, it is people that really make the difference I find. I found Neil, perhaps a little late, but it seems not too late. So, to all the Neil’s of this world that try to bridge the gap between what the system says and what the customer says, I salute you. Here’s to Neil and all others like him…could we just have a few more now please big utility companies?
So, I am happy to close the loop and the door on the whole Npower saga with a positive end.
Before I go though, I would like to give a bit of a shout out to this little school in the Amazon. I was fortunate enough to visit it a few months back on holiday. Maria, the teacher and the students are a real inspiration I can tell you. The environment is tough out there and the kids have to be brought into school by boat. In fact, until fairly recently, Maria used to drive the boat herself. Now that’s her son’s job!
There are now 3 classes a day, there used to be just the one teaching all ages the same thing effectively. However, what was the most inspiring thing was hearing the children tell is what they wanted to be when they grow up. Teachers, doctors & vets, firemen, game rangers, business people and just the odd footballer really did reveal the belief and confidence that they have instilled into them.
However, funding and therefor resources are scarce as you may imagine. So, I have decided to run a 10Km on 7th November to raise money for this school. I would be grateful if you would support me in this effort…trust me, I have never actually ran this far before in my life, despite being an active person. That, along with the fact that I am nearing 50 and am recovering from an Achilles injury means that it is a genuine challenge. More so, as the planned event that I was going to run in November was oversubscribed and so I could not take part. So, instead, I will be training and running pretty much alone on that Saturday too. That’s motivation and commitment lol If you would to know more, or possibly even plegde a donation, then please take a look at my fund raising page on Facebook, which is called HelpFundraiser (all one word) https://www.facebook.com/HELPFUNDRAISER
It would mean a lot to me, but it would mean a whole lot more to those kids I can tell you! Thanks.
Ok, so that’s all we have time for today then. I have introduced series two for you and more besides as we get back to the original format from series one once again. I hope you liked that. Talking of liking it, how are those reviews coming along on iTunes…I have not managed to look for a few weeks…it would be a great surprise to see a few more when I do, so you know what to do don’t you?
Meanwhile, you can always email me personally at podcast@thepropertyvoice.net and the show notes will be over at the website www.thepropertyvoice.net
But right now at least, all that remains for me to say is: thank you very much for listening again this week and until next time on The Property Voice Podcast…it’s ciao-ciao