Time to turn the microphone around as Helen Pollock, The Content Doc, returns to pose the questions as I sit in the guest seat for a change.
Listen as I share my own story of going full-time in property with you. Despite being a little sketchy on some the exact dates, I share what I did and some of what I learned along the way.
From the ‘Eureka moment’ to ‘Going big or going home’ memories and everything in between!
Finally, some top tips and from the heart sharing with a view to helping others that might want to follow a similar path...minus the mistakes!
I hope you enjoy it and thank you so much Helen for enabling it to happen.
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Transcription of the show
Time to turn the microphone around as Helen Pollock, The Content Doc, returns to pose the questions as I sit in the guest seat for a change.
Listen as I share my own story of going full-time in property with you. Despite being a little sketchy on some the exact dates, I share what I did and some of what I learned along the way.
From the ‘Eureka moment’ to ‘Going big or going home’ memories and everything in between!
Finally, some top tips and from the heart sharing with a view to helping others that might want to follow a similar path...minus the mistakes!
I hope you enjoy it and thank you so much Helen for enabling it to happen.
Property Chatter
Helen:
Hello, and welcome to the Property Voice Podcast with me, your host ... Yeah, you might have realized it's not Richard Brown today, it's Helen Pollock, the Content Doc. And there's a very good reason why Richard isn't interviewing today, that's because he's our guest. There's nobody better to talk about working full-time in property than Richard.
Helen:
So, some of you may know a bit about Richard's background and how he came to be working in property full-time. Some of you may not. But I know that Richard's got so many valuable experiences to share. So, without further ado, let's welcome our guest today, Richard Brown, the Property Voice. Hello Richard.
Richard:
Hi Helen. How are you doing?
Helen:
I'm good, thanks. How does it feel to be on the other side today?
Richard:
Weird. It feels weird. But it's great that you're doing it, so I feel a lot more comfortable. Thank you so much for agreeing to quiz me on my own show. But anyway, it's great, thank you.
Helen:
My pleasure. And as I said, I know that you've got so much to share that listeners will find really valuable, so let's crack on, I'll start quizzing you.
Helen:
So, first of all, some of your listeners might not know what your background is. So, before you started going into property, what were you doing?
Richard:
What was I doing? Do you know what? Every time I ask a guest that question, they're like, "What? Shall I say when I was born and where, and all that stuff?" And I was like, "It ought to be a bit more specific", but some of it can be quite relevant. I like to say I came from a working-class family. I think my dad would say he's aspiring middle class. And so, whilst he had a news agency, for example, and he ran an insurance area broken, my mom was a legal secretary and then retired with a bit of RSI. So, that was the upbringing, if you like.
Richard:
And the relevance of that is I guess I was taught hard work from a very early age because, for example, in the newsagents, being the eldest son I basically ... I had two paper rounds and sometimes three obviously when somebody didn't show up. So, I guess I had a bit of a work ethic from an early stage, which was a small business, obviously a news agency, if you can call it that, and then the real grind of it of doing newspaper rounds, so that was that. And that them carried on, so every time through school, and college, and university, mainly college and university, I always had jobs, part-time jobs, summer jobs, Christmas jobs, jobs. And so, work ethic is very much drilled into me from that stage. And money wasn't awash, let's say, from those years, and so that was another thing, there was a bit of scarcity, I suppose, that I learned.
Richard:
Needless to say, I was fortunate enough to be able to go to university and have my education paid for by the government, which I was privileged, of course, to be in that place. It's not quite the same these days, of course, by any means, is it?
Helen:
No.
Richard:
But I had the opportunity of getting a decent education and I really took that. I started training in accountancy after leaving university, so I seemed to be quite good at numbers. My best A-level was accounting, and I got an A in accounting. By the way, I reckon I should have taken accounting, aardvarkism, and something else beginning with A because I also took economics, but I got in E in economics in A-level, so I don't know what happened there. I just put it down to a bad day.
Richard:
But yeah, I was always pretty interested in numbers, and always pretty interested in people. So, the accountancy, if you like, gave a good background in both, but probably more so the numbers than the people. And so, actually, I made a switchover into leasing and asset finance, which is financial services. And I was working for a subsidiary of HSBC bank, as is now, back then, and I think I found my environment, professionally speaking, at that point. It was really good, there was a lot of numbers and a lot of people, so that worked.
Richard:
Made my way up, if you like. That was the first part of my career, financial services, really. And so, the relevance of that, of course, is I had a decent financial background. I could read a balance sheet, I could talk about things like discounted cashflow, and all of that good stuff. In fact, I wrote a white paper, that's a bit of a clue, actually, because writing was something I wanted to do from an early age but didn't really do anything about it for quite a long time, so hold that thought.
Richard:
So yeah, lease and asset, financial services. The irony is, I was in business-to-business financial services, as I mentioned, but my personal finances, I'll be very honest with you, were absolutely shocking. I was not clever. I rolled the dice a bit, let's say that. My pension wasn't in a great shape, and I put it into the wrong place, wrong type of investment. Despite having my tuition fees paid for at university I left university with a lot of student debt from living expenses, perhaps over living expenses, so I carried a bit of debt for actually more than a decade, from the student years. And just a few things that probably didn't make the wisest decision.
Richard:
So, I had this contrast and in my professional career I knew how it went, and I was giving advice almost how to work with numbers and money, and stuff, but personally I was a mess, really. And I think I'm being very honest about it here because it's not the same today, fortunately, and so I can shame myself, my former self, because I managed to sort that out. But back then, of course, being in financial services you couldn't say, "I don't know anything about money", you had to pretend you did, and I think maybe some people can resonate with that.
Richard:
But needless to say, just to finish the pre-property bit, I went into ... I had a meandering path. I managed to step out of full-time employment once, and then went contracting, so I was a contractor for a while and the intention was to start my own business, and I migrated to run a couple of companies. I did okay, so I had, what I call it, my real life MBA by running a couple of businesses in industries I didn't really know that much about when I started. One was a call center, one was a technology center, then it was a security, online security business, or eCommerce business.
Richard:
So, I taught myself several industries from the inside, and that was quite good as well because you learn about business and, obviously, running a business, all the different disciplines. Sold those, didn't make a fortune but did okay. And then, tried to be a consultant with mixed results, I think, in all honesty. I was trying to advise small business owners at the time, and I remember seeing probably between 70 and 100 small business owners, and I would say this is the experience I had there, is that probably only one in 10 were really making it. I think a vast majority were just getting by, and some were probably on the verge of collapse, so that was a bit of an eye-opener to watch that. And I only just got by, I was a small business person myself, so I can resonate a lot with people who have that struggle.
Richard:
Needless to say, I was feast and famine, the whole project side of things of consulting, feast and famine, and eventually I decided that I would probably be better to go back into full-time employment. And so, a crazy man by the name of John Chitty at Oracle took me back, probably I was unemployable already by then, but he took me back into the leasing and asset finance industry, financing software, and things like that. And I did a couple of years with him, I don't think he regretted the decision, but I didn't stay that long. I went to work for other companies like Microsoft and Siemens on the financial services side of things.
Richard:
Before, well, I had one bad experience, but I don't know if you want to talk about that, what led me into property, but that was the pre-property preamble, which is probably quite a longer than you imagined story, actually.
Helen:
No, that's great. And really interesting to hear about that disconnect between your business life where you were great with finance and your personal life where the finances weren't quite looking so great. And also, the consultancy, that's so interesting that you estimate that around only one in 10 of these small businesses where you carried out consultancy work were actually making it. I think many of us think that a job, or a small business where we're the boss are going to be the answer financially, and I think what you've just demonstrated is that's not the case, actually.
Richard:
No, I was just going to say, it certainly can be the case, but I think the statistics can be misleading. If you've probably read Millionaire Fast Lane, for example, books of that ilk, you talk about the only way to get rich, really, is for having your own company, having your own business, and I'd probably large ... I wouldn't largely agree with it, but there's truth in that. But at the same time, there's a survivor bias. So, there's a lot of businesses that don't make it, or if they do they struggle along and bounce along the bottom, so that's a reality.
Richard:
What was the quote I heard the other day? People will work 80 hours a week for themselves so they don't have to work 40 hours a week for someone else.
Helen:
I suspect many of our listeners can relate to that one. So, moving on from that point, you've talked us through your history, your education, and your early working life, how did you come to start investing in property?
Richard:
Apart from ... I was an accidental landlord in the mid-'90s, and I didn't know what I was doing, Helen, in all honesty back then. I got a job with a relocation, and so I was living in Slough and I got a job in Manchester. And so, I went up to Manchester and I just thought, "Well, just rent a place out." I don't know why, I just thought, "Rent the place out." And I got an agent because I was in Manchester, and got some tenants who said they want to stay there forever, more or less.
Richard:
And within six months, probably less than six months, actually, within the first few months there was a major repair, there was a water tank which exploded somehow, it caused quite a lot of damage, so that wiped out at least a year's worth of rental profit to think that. And the other thing ... And it was quite stressful because I was away and I didn't really know anything about what I was doing, and the other thing is the tenants who were going to stay forever decided to move on. So, foolishly, actually, in retrospect, in hindsight, I decided to sell that property.
Richard:
I made some money out of it, from a capital gain point of view but, do you know what? I used to go and look at the value, but I stopped doing that a few years ago because it would cause pain, so that was a regret, if you like to sell that property. But fast forward to the mid-noughties, so this wasn't that long ago, really, so roughly 15 years ago. I was working probably with my friend John who I just talked about, I'm not sure of the exact timing, but I went for a sneaky pint after work one summer's evening, and I was in the beer garden and I was on my own, and I was doodling on a napkin with a pen. You're going to think this is bizarre, but I was doodling compound interest on portfolio growth on this napkin, because I understood the concept in a business-to-business sense, and I was starting to think of it in a personal sense with property.
Richard:
And I call it my Eureka moment because it was, it was like, "Oh wow, this is it. What have I been doing all my life?" I didn't understand this. And I was even working in a sector where you do work with those numbers. And needless to say, I took a decision that I was going to get into property from that experience, but it actually took another four years before I finally did get into property. And ironically, that four-year delay cost me probably about £2 million in gross property value.
Helen:
Wow.
Richard:
Yeah. Probably excluding capital growth, it may include some rental profit, but round about £2 million that four-year delay cost me. And that was, effectively, the what I did in the first year multiplied by the four years I'd missed out, that's what happened. And here's the thing, I thought I needed a load of money to get going, and that's the main reason why I waited. I also wanted to get educated. Took a bit too long getting educated and, ironically, by the time I got educated I realized I didn't need as much money as I thought I did. So, I was like, "Oh gosh."
Richard:
So, that was a catalyst really, because that really started me wanting to share my knowledge in property as well because there was a mess around that time, I don't know if you were looking at property around about the mid-noughties, but it was like the Wild West. It was like the Wild West in terms of values, and people saying they're remortgaging, and assignable off-plan deals, and 125% loans, and all of that stuff. And then, loads of bad advice, and actually downright illegal advice as well. So, I decided that ... well, part of the reason it took me so long to learn is that I had to wade my way through all that stuff.
Richard:
Meanwhile, the property crash arrived, didn't it? So, my first investment actually coincided with the property crash. Fortunately, I guess, I was on the right side of it rather than the wrong side of it. So, I bought my first property proper, as I like to say, in about 2000 and ... it was 2009, first few properties in 2009. And so, they were effectively ... I always try to add value to property, that's something I recognized, so always did something where I either had value inherent, for example, with a discount, or I could add value in some way, for example, by refurbishment, or changing the use, say, from single lets to HMO, or things like that.
Richard:
So, that became my strategy, BRR was my filler strategy when I got started, then refurbishments, doing small developments, I wouldn't call them large developments, very, very small stuff, and trying to add value and recycle money, because I didn't have lots of it. When I first started, I had £10,000, which was from a bonus from work. That's the personal funding I had available when I got going. So, there we go, that's how I got started.
Helen:
Wow. That's so interesting. So, from that point, what strategies did you adapt, and how did you scale up?
Richard:
Good questions. I mean, quite a lot of different strategies, in a way, to be honest with you, Heather, and I don't necessarily advocate this for everyone else. So, if I tell you part of the reason why I pursued a number of different strategies, it was also to educate myself. So, for example, I'll get into it in a second, but when I got into serviced accommodation I did it because I wanted to educate myself about the strategy more than anything. So, you guessed it, I did a bit of serviced accommodation, but before that I was doing mainly ... I did a little bit of flips, which helped raise money for some of the BRR, buy, refurbish, refinance, where you add some value, you put a tenant in, you refinance it and you pull some money out.
Richard:
A lot of the gurus, or certain people in property would say you can fully recycle your money from a BRR strategy. I think it was possible, but I don't think it's as possible now. It possibly is under the right conditions, but I think largely you expect to leave some money in the deal. And so, you have to top up that fund, and the basic ways to top it up are through your own personal fundraising, savings, bonuses, friends and family, or stuff like that. Or alternatively, if you flip along the way you can hopefully generate a profit, and some or all of that profit can stay in your next deal.
Richard:
So, did a bit of flipping, did a bit of buy, refurbish, refinance, did a bit of serviced accommodation, started to get a bit more adventurous, went up to HMOs, went for a bit of planning with HMOs to get the sui generis status, if you like. Then I started to do a little bit of the same but in different countries, just because. So, I do actually have investment interests in four countries, including the UK. So, UK, USA are the big two, and then also Portugal and Brazil. The latter two because of the ... particularly, my wife is Brazilian, speaks Portuguese, so that's a big help. Probably wouldn't invest in those areas without my wife, frankly. But the USA and the UK, apart from the USA is like 50 countries, it's not actually one, it's crazy. But there we go.
Richard:
So, diversified across geographies, tenant types, single let, mainly working tenants, lets' say, and then the serviced apartments, I think I'm getting most of them. It was only recently, because you were saying about scaling, it was only recently, in the last two and a half years or so, where I would say I really scaled up. And in that time I've moved into conversions, commercial conversions in particular, and some ground up development as well. And it's interesting, you'll probably ask me what changed for me, I don't know, maybe you will.
Richard:
From a strategist's point of view, I got to conversions and developments, and I've currently got something like seven projects on the go with now that I'm working through at different stages of development.
Helen:
Well, you were right, I was going to ask you that. Thanks for stealing my thunder. And how's that gone? How's the scaling up gone? I guess, you know, what are the different things that you now need to consider?
Richard:
Well, there's a lot of different things, and how it's gone is mixed, frankly. So, I scaled very fast. There's three big things you need, I think. I think the first one is your own belief, and your own mindset. And sometimes there was a bit of a glass ceiling. In fact, that occurred more than once in my career, or my business life, you hit this glass ceiling and you just put a limit on your capabilities. And so, one lesson I perhaps would suggest to people who are there is I used to say things like, "I can't do that." And more recently I've been saying, "How can I do that?" So, just reframe the same ... I don't know how to do it, but rather than say, "I can't do it", because I don't know, I say, "How can I do it."
Richard:
And then, something magical happens when you reframe a negative, "I can't do", a limiting belief, into more of a ... what would be the opposite of a limiting belief? Unlimited [crosstalk 00:21:15]
Helen:
Limitless belief.
Richard:
Limitless belief, thank you. So, if you reframe it as a limitless belief, two things happen. One is your own subconscious starts working on the problem, because you posed it as a problem, and then the second thing is, and this is getting woo-woo, and I know sometimes we talk about woo-woo, but the Universe knows about it as well, and then suddenly things start to happen which you think, "How could that be?" People start coming into your world that could answer that problem.
Richard:
So, one is the mindset and the belief, and this breaking through the glass ceiling. But fundamentally, once you've got the belief, that's not it. You don't just stand there and wait for the Universe to give you these great opportunities. So, the next things are you need the opportunities, and then you need the funds to undertake the opportunities. You can't do anything without those two things.
Richard:
And then, after that, you need the team, and you need the skillset, and you need all of the good things, the professionals, if you like, to make it happen. And so, when I said mixed, I got pretty much ... So, I broke through the glass ceiling, then I was getting opportunities, then I was getting the funds to be able to take advantage of the opportunities, manifesting, whatever you want to say, but that was happening. And of course, what I knew at the levels I was working at was a certain level, and what I needed to know as aI moved up in scale was different.
Richard:
And so, stepping out, I stepped out quite big time, and Damien who I was working with a while ago, as you know Damien, we had a phrase, which was: go big, or go home.
Helen:
Yes, I remember.
Richard:
So, we went big, and we went home. So, pushing out too far too soon, I think they call it overtrading, can have a detrimental effect, so just be careful about that. So, I think today, now I've got a more professional team around me, I understand things a lot better, and you know things that are going to take longer, they're more complicated, and dealing with planning, and things like that, is much more complex. The principles of project management are the same, and yet the level of detail is that much different.
Richard:
So, there's lots of different elements to larger projects, but you grow into it. I just wish I'd had grown into it a little bit more leisurely than I did. So, I've got my stripes and my battle scars over the last few years through that growth, but actually it's now put me in a really great place to keep going.
Richard:
I think it's important at this stage to say that growth is not for everyone. And accelerated growth is not for everyone. I think I'm on a bit of a mission because I've now got a goal to develop a legacy. And the legacy's not for me, or even my family, although don't get me wrong, my family are very important to me and they will be well looked after, it's actually beyond me and my family now. So, I'm on this mission, so that's part of the reason why I'm scaling and continuing to scale and push myself, and push limits and boundaries. Like I say, it's not for everyone, because it depends what your personal goals are and what you're trying to achieve. It also depends on your resources and your risk profile, lots of other factors too, but I think I've given you a bit of a clue about my risk profile from some earlier experiences, so it suits me.
Helen:
Absolutely. So, I guess it's probably a good point to move onto what your biggest mistakes have been. And I know you're a very honest person and you will not hold back. What were those crazy, "Ah-ha" moments along the way that you could share with your listeners?
Richard:
Yeah, thanks Helen for that, yeah. This is the schadenfreude bit, isn't it? So, I mean, I think not having the personal financial education from an earlier stage would be the first one. But, of course, I was ignorant to that, to a large extent. I shouldn't have been, but I was. So, I think getting educated with personal finance at an early stage is very, very important. And I'd 50-odd, I'm mid-50s now, so I've been full-time, well, I've been working in property for the last 10 years, 11 years, and imagine if I'd had started when I was 21, or something, you know? It would have been a lot different, so that's the first thing. I could have been better equipped.
Richard:
The second thing, probably, is selling that property that I told you about, where I started as an accidental landlord, that was in the mid-'90s, so over 20 years ago. And if I'd held onto it for a bit longer, I probably would have started sooner as well, and that would have created a snowball effect at an earlier point in life. I think getting the education, I got the education, financial education, and then property education as well but it took a long time, so I think that four-year hiatus between what I call my Eureka moment and actually investing needn't have been four years.
Richard:
Now, I'm not saying people should just leap and just jump into the first thing they see, sink or swim, or try and ... crash courses and pay too much for education, I have a strong view on that was well. Invest in yourself, absolutely, but there's some things you can do relatively low cost, certainly to get a foundation, so do that. I took too long.
Richard:
And then I think, probably, let's say I perfected ... maybe not perfected, but I got the cookie cutter working pretty well from, say, 2009 until roughly 2017/18, and so I decided to scale, but not really scaling with the right tool and structure ... team and structure, sorry, is what I meant to say, with the right team and structure in place, and probably grew too fast without the right team around me. And so, there were some growing pains, there were some growing pains during that phase.
Richard:
So, they're some of the key lessons, I suppose. There's probably more, I made loads of mistakes, I think. One of the benefits, perhaps, of being an old dog who's made a load of mistakes is that you can impart some of that wisdom. I say experience is learning from your own mistakes, and wisdom is learning from other people's mistakes, so I've got a bit of wisdom.
Helen:
Absolutely. So, do you know what we haven't asked, or I haven't asked you? What was the date, or the year when you actually managed to go full-time in property?
Richard:
I should know that. I'm really rubbish with dates. So, I was working for Siemens Financial Services at the time, and so I can probably peg it from my CV. I think it was round about 2012, maybe something like that. And that first year was an interesting one because I stepped out without a full safety net, again, a clue to my risk profile. So, I put my hand up for a volunteer redundancy at work, and they said, "Put your hand down." And I said, "Please, what's the package?" "There's a box over here with your name on it, you're okay." And I said, "No, but really, what's the package?" But the last thing you should do in a redundancy situation is ask what the package is because you don't end up with the full benefits, necessarily, that you could do.
Richard:
But it didn't matter to me because, by then, I had a few buy to let and HMOs. I had an income stream, I think it was about three grand a month, something like that at the time, and I thought, "Well, this is it, this is my moment." That wasn't full income replacement, I was earning a six-figure salary at the time including all the bits and bobs that you get added onto it. I also realized that I didn't need to earn that much money personally, with some adaptation.
Richard:
So, I put my hand up for the redundancy and I worked out with the money I had coming in, and the money from the redundancy, I had something like ... I think it was six to nine months of runway to make a fist of it, if you like, in my first year. And Helen, I missed, because it was month 11 when I got the equivalent earnings to the previous year from full-time employment. So, I had a two months below the water before it kicked in in month 11, and that was mainly because I did a flip, so I did a flip to actually bridge the hole and it took a bit of time for that to happen.
Richard:
And then, after that, everything's been pretty good. The income's been there, it's growing steadily, I like to add assets to the portfolio and try and retain as much as possible, and it's gone really, really well. So, I think stepping out was, as I say, you'd have to check my LinkedIn profile when I actually left the financial services for the exact date, but I think it was about then, so it would have been roughly three or four years into investing proper.
Helen:
Great. Okay, so the other side to your now well over a decade of investing in property, and around eight years of working full-time in property, we'll check that on your LinkedIn profile later. You must have plenty of tips and advice for either newbies to property investing, or people who are just considering it at the moment and don't really know where to start. What would be your top tips at this juncture?
Richard:
For newbies in particular?
Helen:
Mm-hmm (affirmative).
Richard:
Okay. I always say ... I mean, a lot of it depends on circumstances and your drivers, what are you trying to achieve. So, I always say ... I tell you what, if someone gave ma £1 every time they said, "What strategy should I follow?" I would be a very wealthy person, but you don't start with strategy, that's the point. So, you start with what you want out of life, I always start there. So, I say, "What do you want out of life? What do you want your lifestyle to look like? What do you want to do with your time? Who do you want to spend your time with? What's important to you, what values do you have? And these are sometimes tough questions, and especially if you're 18 years old, or something, you don't necessarily know all of those answers at that point.
Richard:
But generally speaking, what do you want to ... And if you can't think about your whole life because you are only 18, 21, 25, 30, and you've got a lot of decades ahead of you, then maybe you don't have all the answers, but you could say, "Well, what does it look like in, say, 10 years?" So you can project forward a shorter period of time. So, I'd start there, which would be: what do you want your future to look like? And then you can work back from there and you say, "Where am I now?" You kind of get this, what I call, this gap analysis.
Richard:
So, you go, "Well, that's what I want it to look like, that's where I am now." It could be measured monetarily, could be your lifestyle, it could be your asset base, it could be things and causes you want to support in life that you want to achieve, and so you have this gap. So, I always talk about ... one of the biggest tips is to plug your gaps. Well, one of them is to get from A to B, that's a gap, but other gaps are, well, you might not have the funding, you might not have the knowhow, you might not have the time to ... or all of them, or some of them. And so, plugging your gaps is paramount. So, once you've identified where you're going, what are the gaps that you actually have?
Richard:
And then it's really to set out a plan of how you're going to plug those gaps, bridge that A to B gap as well, and achieve what you want to achieve. So, that's just the business speak, get your goals in place, and get a plan in place, and what resources do you need and how could you get them? But then I think there the other side of it which is much more about your mindset and your way of thinking. So, there's types to the mindset, there's the knowledge part and then there's the belief part, and either one can trip you up if you don't have it right, so I think I'd really major in on that.
Richard:
And so, I'm very much into personal development, I'm very much into what I call the principle of lifelong learning. Even this old dog, I love to find out new things. My kids teach me things, I love it but they do. I went pescatarian at the start of this year, and that's largely influenced from my children, they're all grown up and activists in terms of saving the planet, and everything, which is great, and that teaches me, so it keeps me young as well.
Richard:
But I think given the knowledge, so with someone really starting out, particularly if they're at the younger end of the scale, I would say a couple of things. One is: tune into some decent podcasts, go onto some ... read some magazines, get a couple of books in the property space and get yourself a core level of education, knowledge, and I'd spend about three to six months doing that. I would normally say network as well, right now that's kind of difficult, physically at least. You can virtually network, and hopefully when things open up you can physically network as well. Leave your credit card at home for that period of time, and just get this foundational knowledge, and just go out and explore without an agenda, without needing or feeling a pressure to do anything, because it's amazing, because when you feel you've got money burning a hole in your pocket, or you've got time just slipping through the sundial, is that the word? It's not a sundial is it? The thing with sand in it.
Helen:
The hourglass.
Richard:
That's it, the hourglass. Through the hourglass. It's not as pressurized as you think, so take your time. Get yourself educated, you don't necessarily need to spend tens of thousands of pounds on a property mentorship, or anything like that. And I think the other thing is, from a personal development point of view, is about belief. And when I say about belief ... well, might, actually, there's many different components, but I think the limiting beliefs, and having a can do attitude, being solution minded, being pragmatic. A bit of hard work is probably going to help you out as well, by the way, to begin with. Certainly, you have to work hard initially to not work so hard later, so that's definitely a principle.
Richard:
So, there's a few things there for the newbies in particular. And I've got a lot of resources, as I'm sure you know, Helen, that people can plug into which are either free or low cost. I think my book, Property Investor Talk, it's on three quid or something. Actually, my articles in YPN are free, subscription-free, just need to write into us and ask to be put on that mailing list, you get all those. So, I'd do that to begin with, but I'd really work on mindset, the belief because ... And here's the thing ... we talked about this before. Did we talk about the 1% club? Did we talk about that?
Helen:
I've certainly heard a mention of it before. But yeah, we haven't talked about it in this episode, so let's run through that again.
Richard:
So, to be in the 1% in the UK, on average, there's two measures of the 1% I'm referring to here: one is by income, and one is by wealth or net assets. Do you have an idea of what sort of income level or asset value you might need in either case to be in the top 1% of the population approximately?
Helen:
I can't remember, so you'll have to refresh my memory.
Richard:
It's £160,000 a year, and I think it's £3.2 million net assets. And so, that's to be in the 1% club. And that's just by wealth. And, by the way, when I talk about 1% club, it's not only by wealth, it's also about the way you think, and doesn't always have to be financial, so it's just a way of thinking, it's a way of being almost, as much as anything. But if you want to be in the 1%, or if you want to have that kind of mindset, then you actually have to think like a one-percenter, as I call it. Ideally, you need to associate with one-percenters. They say we're a product of the five or six people closest to us, whether that's scientifically proven, I don't know, but there's a lot of merit in ... we're influenced by our environment. We're influenced by people around us.
Richard:
So, I think surround yourself with the right type of people, get as much positive input, positive energy. People who have actually done it as well, I would say that, because there's lots of so-called experts who haven't really done it, so just make sure you find the right people to associate with. And that can be just people who are committed to personal growth, that's what I mean about 1% from that point of view. So, it could be someone who's not financially in the 1% but has the mindset and attitude and commitment level of being in the 1%. And I think our own mindset and the environment, or people that we associate with, are the two biggest drivers, actually. And this doesn't just apply to young people, it applies to all of us to get that right.
Richard:
So, put yourself in the right environment, associate with the right people. Flip that lid off your head and put some good stuff inside that brain, from reading good books, and it isn't just books these days, there's all sorts of media and content that you can learn from, invest in yourself, and certainly leave the credit card at home for a while.
Helen:
Absolutely. So, we are talking in the middle of the coronavirus pandemic, and I know as an aspiring investor myself I wonder what changes we might say in the property market, both now and after, hopefully, the pandemic passes. What would you say to people who might be worrying about whether now is a good time to invest and what potential changes there might be in the marketplace?
Richard:
Sure, okay. So, as far as potential changes in the marketplace, who knows? That wasn't the answer you were looking for there, was it?
Helen:
Well, I guess it's what or is there anything that we can do? [crosstalk 00:41:06]
Richard:
I'm just playing with you. Really So, I meant who knows in a ... I was being a bit ironic, but I have my own opinion about what might happen, but I might be proven wrong. So, for example, I do think there will be opportunity ... I think commercial and retail will be decimated, but probably on a staircase type of model, because there's so much government support that's being put into business, let's say, and individuals, there's the job furlough scheme, there's the ... oh, I've forgotten what they are now, there's the grants for the hospitality sector, there's the bounce back loans, or the civils loans.
Richard:
There's a whole range of different, unprecedented level, actually, of financial aid, and not just going into the large banks and everything, which is what happened primarily in the global financial crisis, roughly when I started investing. This is going into the hands of small businesses, and larger businesses, and individuals, but we will be weaned off it. And as we're weaned off it there will be, unfortunately, winners and losers. But I think some of the losers might be more in the commercial, retail, hospitality sector.
Richard:
So, I see an opportunity from or, maybe a horrible thing to say, but I think change of use from commercial and retail into residential could be an area for an aspiring investor to look at over the next months or years.
Richard:
I think residential will probably largely bear up, if not thrive, to some extent. I think there might be a blip, there might be some unemployment and that might affect things, but even with unemployment that creates opportunities for investors with, say, benefits, tenants even. So, I think you can hedge a little bit there.
Richard:
So, I think residential will bear up a big stronger than, say, the commercial sector, so that's the kind of looking forward bit. I'm probably seeing maybe some changes in trends like homeworking, look at you and I, where we're both from our homes having this call over zoom, like thousands of people at the moment. And my wife works in HR, as I probably told you before, and she's been doing lots of surveys. She's responsible for 55,000 people, and they're largely really enjoying working from home. There's lots of merit in it, and people kind of want to stay with it as far as possible. There's some challenges with that, childcare and being on your own, and not having the right equipment, and working at the kitchen table with the kids screaming around you, and stuff like that. It's not always idea.
Richard:
But I think there'll be home working, different trends like that. There'll be some downsizing of large offices, and maybe a bit more of a push towards regional bases which, by the way, people might move out of cities and look for green space, outside space, maybe even work from a laptop in Bali, who knows? So, I think there's going to be some trends like that. The question I will say is, "Well, so what?" With these changes, so what? And as an intelligent investor, that's the question you're always asking, "So what? What does that mean to me? What can I do with that information?" I'm not necessarily going to give all the answers, but I think ask the question, "So what?" And what do you make of it yourself?
Richard:
But the first question you asked me was ... Oh yeah, change because of the pandemic, et cetera. So, here's the thing, the last time we had anything of this scale was before pretty much anybody's lifetime, or certainly living memory, Spanish Flu, roughly round about the First World War, was the closest parallel we've got. We've had other localized pandemics, and we've had some global pandemics but on a smaller scale, but on this sort of level in terms of scale and reach, it was the Spanish Flu was the last thing, and no one can remember what happened then, pretty much, because even if you are 100 years old and were round about when it was, you wouldn't remember what happened.
Richard:
So, we can learn from back then, and I have done some research, and there was a relatively shard drop, and then I'm doing more of a tick these days, I think it's going to be more of a tick recovery rather than a V recovery. So, I think there is a short sharp shock, but it will recover. It won't take necessarily as long to recover as the global financial crisis, maybe, so that's my just prediction.
Richard:
But here's the thing, whether it's a pandemic, or a global financial crisis, or an oil crisis or an ERM, exchange rate mechanism collapse, or any other crisis that you might want to mention, just ordinary recession, change happens, we go through cycles. So, whether it's the economic cycle, or property cycle, something will happen and everyone will go, "Well, I didn't see that coming." But guess what? We go through these cycles. And roughly, at least once a decade, we'll see something happen of a significant scale.
Richard:
So, the thing with being a property investor in particular, and developer, is being able to survive these shocks and prepare ourselves for them. So, I always talk about making our property portfolio bulletproof to a recession. So, there's various ways you can do that, I probably don't have time for it in this discussion, but if anybody's interested I've got some resources around that. We should prepare ourselves in what we do, so that we can survive some of the hard times, and they will come. But, by the way, out of hard times also comes opportunity. So, you want to take the opportunities when they arise, and you want to protect the downside in the good times, so that you can survive the downside when it comes around full circle again.
Richard:
So, whether it's a pandemic, global financial crisis, or any other apparent shock to the economy or the property market, expect it, it's going to happen, and be prepared. Be prepared in a positive way, but also be prepared in a defensive way, is what I would say.
Helen:
That's fascinating to hear you say that, Richard. I know quite a few people who are very successful in property now, and something that really strikes me about all of them is they don't see these global crises as too much of an issue. What they don't exhibit is fear. They look for the opportunities. That's how they see a challenge is, "Okay, so where's the opportunity?" And also diversifying, whether it's your property portfolio, or whether it's a wider investment portfolio, makes total sense."
Helen:
So, you know what? I think we're coming to the end of our interview today. Is there anything else that I should have asked you that I haven't asked you? Certainly, where can people access information might be a good ...
Richard:
I'd do that. But I'm just thinking if there's something that I really feel I should say. It's kind of a reinforcement in some respects of something I did say earlier, but I think know yourself. Know what you stand for, what your values and principle are. And be an oak tree, put firm roots down so when a storm comes along, and this is a metaphor you can use for yourself and your own character, and your personality, but also for your business, your property business, so I want to just leave, maybe, with that parting thought of an oak tree that it's very rare you'll see an oak tree that's blown over by a gale, because they stand for a century or more.
Richard:
So, I would say that's probably the biggest principle of all. But know yourself, and then really try and associate with ... this is the most important thing, there's so many partnerships and opportunities to develop, and learn, and collaborate in this industry sector, but I would try and work with people you really resonate with. And the way to really understand that is first to understand yourself, so really get in touch with yourself, your values, because there's going to be plenty of opportunities, plenty of collaborations that come your way, and plenty of opportunities to take people's services, actually, but try and work with people who resonate with you guys.
Richard:
So, that's probably the bit I wanted to stress more than anything. Sorry to go on a bit longer. But I think probably, this is the Property Voice Podcast interviewing the ... what would otherwise be the host, you probably know where yo find a lot of this stuff. So, obviously our website, ThePopertyVoice.net. And I think if you want any of the resources I've been referring to on and off throughout, the recession proofing, or the YPN subscription, things like that, just drop an email, admin@thepropertyvoice.net, Karen, and delightful Karen who helps me, has been for a number of years now, will gladly point you in the right direction.
Richard:
And, of course, reach out to me. I'm always happy to give people a pointer. And that might be to a resource I already have, or it might be to a person if it's not me, but just reach out. So, go to the website, ThePropertyVoice.net, and maybe the email. And obviously, if you want to reach me personally, it's podcast@thepropertyvoice.net. But if you want the resources, admin, you want me, podcast.
Helen:
Brilliant. Well, thank you so much for allowing yourself to be submitted to my interview questions. And I'm absolutely certain that your listeners will have got so much from this, so thanks again.
Richard:
No, thank you, Helen. Actually, before we go, I think it's important, because we talk about values, and I know you share a lot of these values yourself, but you've got some exciting news yourself, haven't you, looming, I believe?
Helen:
Yes, I have. So, I'm just about to launch a joint venture. I'm a business book coach, and I've joined forces with a business friend who we share the same values, that's how this all came about. She is a layout designer. And it was actually my suggestion when we realized that we were both being asked regularly by clients about the other parts of the book publishing process, and I suggested that we might want to come together and offer a complete solution for self-publishing a business book, from concept to completion. So, it's called The Biz Book Foundry, it's www.bizbookfoundry.com, and delighted to have a chat about people's book ideas if they'd like to get in touch.
Richard:
You're so prolific, actually, at the moment, both in delivery and also communicating your message on some of the social media platforms, and you deliver an awful lot of valuable content just in that area. I know you do a couple of challenges, I don't know if you're still doing those, from time to time, where you give over content. I've attended one myself, it was good, I can speak with experience. So, I wish you all the best with that, Helen, you definitely deserve it. I've known you now for a few years, we've worked together in a number of different ways, including with some of the book stuff.
Richard:
So, if anybody is interested in ... because, by the way, just to put it in context, a book is like a giant business card, isn't it? It's this authority that you can have in your sector, or in your niche. So, if you want a giant business card, probably not the best analogy either, but if you want a bigger profile, then maybe get in touch with Helen and Catherine with The Big Book Foundry, and I'm sure they'll help you out. Good luck with it.
Helen:
Thank you very much.
Richard:
Welcome. Are we done?
Helen:
I think so.
Richard:
Okay. Bye.
Helen:
Bye.
Richard:
Bye
I hope you enjoyed the interview with our very own Property Voice, Richard Brown. There were a few things I'd like to pull out of our interview. First of all, I was really struck by Richard's life before property, which started off with a strong work ethic, even as a young lad with part-time jobs. And then I was also really struck by the fact that Richard worked in business finance, but actually his personal finances were a bit of a mess for a while there, which might be a bit of a surprise.
So Richard's first foray into property was as an accidental landlord in the mid-'90s. And there were a few teething problems, and Richard sold that property, which I think I could detect a hint of bitterness about even now. So then in the mid-'90s, Richard became aware of the power of compounding and had one of those light bulb moments. And in fact, Richard feels that he took a bit too long over his education in property and estimated that the four year delay in taking action as a result cost him something like 2 million pounds. So that's something to bear in mind if you're thinking about getting into property.
And then in 2009, Richard bought his first few investment properties, and then he managed to go full-time in property in 2012. He's used a variety of strategies, and his first point with regard to choosing a strategy is to make sure that it's the right one for you and your goals. Richard said when he was talking about his rapid scaling up in 2017 to 2018, "Growth is not for everyone, especially accelerated growth." So overtrading can be a temptation and really ought to be avoided.
So I hope you found that useful. I'm sure you did. I think the biggest two takeaways for me are when Richard talks about the 1% of really wealthy people in the UK and what sets them apart from others. And he felt that the first part of that equation is mindset. So how can you flip negative self talk? Instead of saying, "I can't," what can you do to flip that round to, "How can I?"
And the second part is the importance of people and the environment around you. You need to surround yourself with people who are positive, who have the same values as you, who you resonate with, who have actually done what you want to do. And that would set you out and set you in good stead.
And if you wants to have a look at the show notes, they are, as always, on The Property Voice websites, www.thepropertyvoice.net. Now, Richard did tell me off because I forgot to mention that my next free 5-Day Get Unstuck With Your Book Challenge starts on Monday the 13th of July. So if you would love to write a business or a non-fiction book, but you just don't know where to start or perhaps you've got stuck somewhere along the line, please do sign up, and we'll help you out. And I will give Richard the link so that'll be in the show notes, too. But for now it's thanks for listening and goodbye.
Thank you for listening today. Not head over to thepropertyvoice.net for more inspirational content and get updates through our mailing list. Join us next time on the Property Voice Podcast. And if you enjoyed the show, please don't forget to rate us on iTunes.
That's all from me this week, remember if you want to talk about anything from today’s show, or just talk property investing more generally, email me at podcast@thepropertyvoice.net, I would be happy to hear from you! The show notes can be found at our website www.thepropertyvoice.net
Thanks very much for listening again this week, so all that left to say is ciao ciao!