From Ford Motor Company to Motorbiking across Nepal. That’s only part of the journey that Richard or Rich Parker has been on over the past 15 years or so.
Starting in property as a hobby, Rich steadily accumulated a supplemental income stream but without a clear plan. That all changed after reading just one book...which you will hear about in our discussion.
Since then, title split single let’s lead to student HMOs and more recently a large commercial building sublet to businesses have expanded his reach and skillset as he stepped out to become full time in property.
These days Rich gets to enjoy a 3-day week, a commitment to lifelong learning and self-development. This is built on the principles of freedom, choice, lifestyle and control. Not bad for the boy from the working class home as I’m sure you will enjoy hearing about too!
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Transcription of the show
From Ford Motor Company to Motorbiking across Nepal. That’s only part of the journey that Richard or Rich Parker has been on over the past 15 years or so.
Starting in property as a hobby, Rich steadily accumulated a supplemental income stream but without a clear plan. That all changed after reading just one book...which you will hear about in our discussion.
Since then, title split single let’s lead to student HMOs and more recently a large commercial building sublet to businesses have expanded his reach and skillset as he stepped out to become full time in property.
These days Rich gets to enjoy a 3-day week, a commitment to lifelong learning and self-development. This is built on the principles of freedom, choice, lifestyle and control. Not bad for the boy from the working class home as I’m sure you will enjoy hearing about too!
Property Chatter
Welcome to the Property Voice Podcast. Helping you to navigate safely through the world of property investing. Get the low down and updates, insights, and outcomes on all matters property with a splash of entertainment along the way. The Property Voice, a voice to trust among the crowd. Now, let's gets started with your host, Richard Brown
Hello, and welcome to another episode of the Property Voice Podcast. My name is Richard Brown, and as always it's a pleasure to have you join me on the show today. Well, I'm very pleased to introduce you to another guest on the Going Full-time in Property series that, obviously, we're underway with right now and we're going to hear in a minute from Richard or Rich Parker, who is a member of my community and I've got to know him pretty well over the last year or so.
And he's an engineer by background and really started messing about I suppose with property as a hobby, as a side-line interest until there was one key event that changed his perspective. It was actually a book that he read so listen out for that in the share. But he's managed to turn, if you like or convert a hobby which he did set up professionally but didn't treat it that seriously, as a bit of a side-line into a full-time activity where he's now been able to take full control. He has a lifestyle, he has choices, and he has freedom as how he spends his time. The sort of experiences that he enjoys and the education that he wants to throw himself into now.
So let's just get into the conversation. You can hear the full story. How he's gone through different strategies and the approach that he's taken to realize that lifestyle choice, control, and freedom by going full-time in property. Okay, Rich. How are you doing? You okay?
Yes, I'm fine. Thank you, Richard. How are you?
Brilliant, thank you. Brilliant. Thanks for joining me today on the podcast. I'm really excited to have you on the show. I know a bit about you and your backstory but I really thought it would be a good idea to share that with our audience. So, Richard Parker, just to give your full name but I think you probably prefer Rich but that's up to you but-
Yeah, that's fine.
Yeah, no worries. I think let's just start this off. Why don't you just tell us a little bit about yourself just so that people have got an idea of who you are, and where you come from, and where you are in life if you like? And we'll get into your story because I know that you've actually managed to achieve going full-time in property and love to hear more about that. So if you can just tell us a bit of context and background to start us off that'd be great.
Okay. So right now I'm 56. I'm married. I've got twin daughters that are 31 now and I became a grandfather a couple of years ago, which was quite exciting and a bit daunting if I'm honest. In terms of kind of the property-related stuff. So I was an engineer with Ford Motor Company. I did an apprenticeship with Ford which I really enjoyed, and I really enjoyed being an engineer. I traveled the world solving problems, making bug stuff which was really exciting to do and I just loved being in a manufacturing environment.
Then I got divorced after a few years and was living in a property that had some land adjacent to it, and I'd never really thought about getting into property but I just thought there was an opportunity there. So I decided to put in planning for two flats, and being an engineer I did all the drawings myself and all the paperwork myself. And I think about that now and I had no idea how I did it, but I did. And I successfully got planning permission for two flats and I got them built. I then went and got a couple of buy-to-let mortgages. So that gave me some additional funding and then I just started ... I thought, "Actually, there's some money to be made here and I'll go out and do some more property purchases."
So I was in the process of doing that. I'd got maybe one more property I think after those two flats and then the credit crunch came along, and I absolutely stopped buying property. I completely focused on ... Which I enjoyed, my engineering career and I was doing still a lot of traveling around that. So really I just put property on the back burner, but then after about 2013 I thought, "I need to start getting back into this." Property was starting to move forward again which was exciting to see and decided I was going to start buying some more property.
So fast forward to now, I've now got a mix of your basic buy-to-let properties, single families in them. I've got some student HMOs and more recently, I've just bought my first commercial mortgage using my SAS pension which I transferred out of my blue chip company pension scheme, and very excited about that and I'm really looking forward to I think the future of the potential opportunities that's going to come along in the next 12 to 18 months.
Yeah. Very good context, thank you. So with that sort of ... It was a title split, was it? That first project that you did?
Yes.
Yeah. So what made you do that? What was the driver? What made you think of the idea even? At the time.
At this time, I was thinking of leaving Ford Motor Company, which is where I was an engineer and I was getting a little bit frustrated and I wanted to do something on my own and I thought about going out and doing consultancy because certainly the training that Ford give you is absolutely second to none. It was fantastic training and as I said I really enjoyed working with the company but I just wanted to do something myself. So I had an inkling to do some consultancy but I wanted some financial buffer there that would allow me to do that.
So by having some property, not necessarily even initially I was going to rent them out. My thought was just to sell them and have that cash buffer, but I realized I didn't have to sell them, I had sufficient funds by renting them out and certainly once if got some ... Sorry. Some buy-to-let mortgages on them it gave me that financial buffer that I was able to use to go out and set up a consultancy business, which I did and I loved doing that for quite a number of years.
Yeah, I knew that about you and I was wondering if that was going to come into the mix. So having the extra income stream, it wasn't at that point in time that let's say a full job replacement income by the sound of it?
No, no. It certainly wasn't. At that time, I was on a good salary with Ford and I needed to replace it. At least partially. But I wanted that pick and choose situation. So for a period of time, I was consulting with a number of businesses and then as I got to know the business owners of some of those I was consulting with they asked me to get more and more involved in the business until one of those particular businesses said, "Look, we want you to come in as general manager." Which I did and kind of went full-time and within a year, I was managing director running the business for them.
So that was really then the start of me running businesses for other people, which again, was really exciting. So since then, I've had a number of directorships where I've been running businesses which I did up until really I would say a couple of years ago. I read a very interesting book that, to be honest, changed my complete outlook on what I was doing and that's when I decided that I wanted to go full-time in property.
Oh, you can't leave us with that. "I read a book but I'm not going to tell you the title." I mean, what is this great book that you read that changed everything?
You know, I'm an absolutely prolific reader or listener of books, and also podcasts but this particular book was called The Millionaire Fast Lane by M. J. DeMarco. A lot of people reference it. I mean, I can talk about it a bit more later on if you want but I read this book and it's a book about really ... Even though at that time I'd been through consultancy and I was running businesses as a director I was still an employee, and what the Millionaire Fast Lane talks about is that really it's all about taking control of your life and your assets, and that the real way to do that is to effectively have a business. A property business, for example, or any other business but it's really about you having a business, you're in control of your destiny, no one can change or take away what you're doing and I read that book and within six months of reading that book, I'd left full-time employment and gone full-time in property.
Wow. That's interesting. I mean, I love that book, by the way. I think he's very contrarian, isn't he? M. J. DeMarco and-
The book-
... Outspoken.
Yeah, yeah, yeah, I mean, the book is very American, it's very American but if you go past that and just understand the message of what he's trying to communicate. Equally, another thing that he talks about is trading time for money and my last particular employed role involved me driving an hour and a half each way. So I was spending three hours each way commuting and I was getting more and more fed up with this, and it was all driving. If the traffic was bad, it was sometimes two hours to get to my job and an hour and a half home.
I didn't completely waste that time because I did one of these things which I tell people to do which is about turning your car into university. So I became a big listener of audible books during my journey, which is a great time to get education. But I was just spending so much time, you know? And I actually did an exercise where I added up if I kept doing this how much time a year I was spending driving and it was turning into months of my life. And I just went, "This is just got to stop."
So in conjunction with the time that I felt I was wasting, plus this boost or suggestion that I should really make property a business, a full-time business, that's really propelled me to do what I'm doing today.
Yeah. So much there we can unpick. As a matter of interest, have you read M. J. DeMarco's follow-up book?
Unscripted?
Yes.
I have. I think there was a lot of repeat content in there. I didn't really enjoy it. I've actually got it on my bookshelf just behind me because I did buy that as a hard copy, because with me, although I listen to audible books what I tend to do is I'll listen to an audible book, if I think it's a really good reference book I tend to get the hard copy after and then go through it and make lots and lots of notes. I love scribbling over books. I don't keep my books pristine, they're all bent and battered where I scribbled all over them.
But yeah, Unscripted I'll be honest I ... Maybe because it just didn't have that impact that the first book had for me. So maybe that's why I didn't enjoy it, but still, again, it's a very good book. That's the one.
Yeah, I'm showing it because it happens to be the TPV Book Club book of the month. So I'm doing exactly what you've just highlighted and actually ... In fact, ironically I was just going to show you some of my scribbles but, you know, just stuff like that. I've highlighted some of the quotes.
Yeah. Yeah.
It's pretty like you. Because we're going to have a review of the book at the end of the month I kind of need to know what I'm talking about, but-
It's still a very good book.
No, it is and in fact, I suggested people skip the first third if they've read Millionaire Fast Lane because a lot of it's a repeat or even a rant. Because that's what I was talking about with M. J. Anyway, I'm digressing a little bit but here's the point I definitely agree with is that taking control of our own destiny seems to be the light bulb moment that Millionaire Fast Lane triggered in you in so far as switching from ... Because you'd already made one switch, hadn't you of course? You'd gone from full-time employee with Ford Motor Company to consultant and interim director working for other businesses. So you'd stepped into the ... From employee to self-employed if I can say that?
Yep.
And it sounds like you made the switch to go full-time in property and be a business owner outright. Is that right?
Yeah, that would be true, Richard. For me, I just really enjoy management. And I don't mean that in the sense that I like being a boss of people, but I just really enjoy some of the theories behind management and leadership particularly. I did my MBA when I was at Ford and was very fortunate that they funded that, and I still use some of the information that I learned during my studies for that today.
But I think another thing that prompted me to go, or made it easier for me to go full-time in property is that when I actually bought my first properties, so going back 15 years. Even though it was on the side I decided to set up a limited company from day one and I remember a friend of mine who was an accountant and he said, "Well, why are you doing this? You don't need to do this. It's going to cost you more money." And I just said to him, "No, because I don't know where this is going to go at some point in the future and I want to run it professionally." Again, perhaps being an engineer I was a professional in a professional business and so therefore, doing property, it wasn't going to be like ... It kind of was a hobby but I didn't want to run it like a hobby. So I set up a business, and I put all the controls and the formalities in place to run it as a business even though the property was really a part-time business while I worked full-time employed.
Understood. That makes sense. So just to plug in a couple of gaps there in the story. So you started ... There's a bit of background noise here. I don't know if you can hear that or can you?
Yeah, it's okay.
I hope this is going to come okay on the audio. Someone's doing a lot of clear up in a garden. I might need to switch to a different connection. Anyway, you started with the title split. You were still an employee, then you stepped out into the consulting in the interim kind of role and then eventually, you stepped into full-time in property. But just talk us through from that first property purchase up until stepping out full-time. What did you do? What did you do in property during that period of time?
So in that period of time, I would say I almost exclusively stuck with single buy-to-lets that a single family would go into. So it was really a case of ... It was almost an ad hoc approach I would say, it wasn't very disciplined at all, which being an engineer obviously doesn't really ... Isn't the way I do things but it was really a case of if an opportunity came along and the numbers worked, I would buy it. But I wouldn't say I was really hungrily out there looking for properties. It really was just a case of at this stage, I had no ambitions to become full-time in property because I honestly thought I would be an engineer for the rest of my life. I say again, I really enjoyed what I did.
Just a little of a aside for people listening to this. If you really enjoy your job, it's one of those things that you can kind of justify putting off developing your property business quite easily because you can just say, "Well, it's just a hobby and some point in the future I'll pay it more attention." If you don't enjoy it what do you do? I think then you're much more hungry to escape from what you're currently doing, but that wasn't the situation for me.
So for me, in terms of the properties that I was buying, sometimes a friend would point them out to me and he would say, "Look, I've seen this property. Are you interested? Would you like to go for it?" But it was a very, very laid back approach, and if I bought one property a year that was probably unusual. And I'd go, "Well, okay. I've got another one. That's fine. That's in the bank. I'm going to continue concentrating on what I really enjoy doing at the moment."
That's interesting. So it was more opportunistic let's say in that early period of time. When you got to the point then of being able to step out, were you able to have full income replacement at your previous level, or was there a shortfall or a gap as such to fill?
So one of the things, I think when you step away from full-time employment you realize that you haven't got the expenses that you had before. You're not buying the suits, you're not spending the fuel, you're not traveling. There's just a whole different ... Well, a whole amount of things that you're just not doing anymore. Lunches and things like that. So I didn't need to replace the full income that I was earning previously. I just needed enough to enjoy the life that I was doing and it did allow me to do that.
Also, I'm in a very fortunate position that my wife had a very good job and I knew that ... When I said I was going to do this she said to me, "Just go for it." I knew that if I had absolutely no money coming in we could pay the mortgage and we could pay the bills, or I wouldn't have the holidays and things like that but I knew that I would be able to survive. It didn't come to that, but I had that life raft as it were that if things went really, really badly then I knew we could pay the bills. And I also because I'd been buying quite slowly and some of the properties that I had repayment mortgages on even though they were buy-to-let, because my mindset was, "I want to keep paying these down so that I'm debt-free as I get closer to completely retiring."
I knew that if things were really difficult for me financially I'd sell a property, and it would pay the bills. So in that sense, I didn't have that fear of, "Oh, if it all goes completely wrong within three months I'm in trouble." I knew I was fine. So that was a big relief and also it just made it easier actually for me for going full-time in property.
A lot of people, they seem to think that they have to have a direct income replacement and you've just made the point really well, actually. And there's also potential tax benefits, by the way, under certain structures. I'm not giving any advice I'm sure you wouldn't. So you don't necessarily need as much as you thought you did. I was in a similar place myself when I went full-time and I had a runway and in that runway period my wife was also earning and that provided an income stability, much like you.
So I think it's great if you've got two incomes and you can perhaps go ... You can even go part-time initially yourself and then one of you could step out and then the other one goes part-time, or the other one steps out. You can go in progressive stages. I thought the other thing that was interesting that you said is that essentially you got some contingencies in there, which is that you've got equity in your existing portfolio and you said you could sell one but you could also refinance one presumably. So that would give you an alternative way in case it didn't work out, but you said it didn't work out that way. So what did you do and how did that unfold to make sure that you didn't need to dip into equity or perhaps lean perhaps on your good lady too much?
Well, one of the exercises I did, I did actually ... I drew myself up a complete budget, went through everything I was spending my money on, and it had a, "Well, this is what I must spend and this is what I would spend if I've got the money coming in." Certainly to cover everything that as a minimum I needed to, but I also had some funds that allowed me to do those nice to have things.
Because one of the things that you realize as soon as you go full-time in property that you can give yourself a lot of free time if you want, and obviously, that suddenly means holidays. And whereas you'd probably have one big holiday or maybe even two big holidays a year if you haven't got children, suddenly I was at an opportunity where I could have four or five holidays. Not all big holidays but, you know, if I wanted to I'd go away for four days and I should add here that also my wife retired a few years ago. She's a number of years younger than me but she had an opportunity with her employer where they were just getting rid of a lot of staff and she had many, many years' service and she took early retirement.
So at 53 she retired, which is fantastic. She still thinks she's poor and, obviously, that's not true and she was an accountant. So she is really always looking at the money, but now I've got her gainfully employed at looking at my numbers and it's very annoying sometimes having someone in the same office saying, "You do realize how much money you're spending this month. What's going to change next month?" And I went, "Hang on. I thought I was running the business and now the accountant is saying to me you do realize how much money you're spending because ..." And it was not always some I really worried about unless things got really tight and then somehow I would always dig myself out a hole.
Well, there's so much there. You've got a accountability partner there haven't you, literally, with your wife?
Yes.
In the accounting role. So some of the lifestyle queues you've given there. So you were able to take trips and more holidays, and have more free time as a result of having this changeover. But what did you do? What were the strategies that you followed once you stepped out and became full-time in property or how did you go about things? It sounds like it wasn't quite the same as the more opportunistic acquisitions that got you started.
So having always bought standard buy-to-lets I then decided ... I'd been hearing a lot of things about HMOs. House and multiple occupancy and I thought, "That ..." People were saying about the amazing revenues that you could obtain from these. So I thought, "Okay, maybe this is something I need to look at." So I went and bought a couple of HMOs up in Preston, completely away from where I currently live. They were very good prices and they had a massive ... Well, they still have a massive student population in Preston, but I'm not advocating to everyone they should go and buy in Preston but for me, a few ... It worked for me.
Although, that said interestingly enough I did make a massive faux pa with the HMOs for students and the reason I say that is that at the time I bought them, this was just when there was a change in the way that ... The expectations of what students had for the properties. A lot of them had been in student halls and the universities a really upping their game in terms of the facilities that they were offering. Particularly on the new build student halls that the universities were creating.
So they had their own room, everything was brand new. Particularly had on-suites. Lovely new kitchens and things like that. So I bought a couple of student HMOs thinking a quick paint over ... The local agent said to me, "Oh, we'll get students in there no problem." Bought the properties, took them over, nothing. Absolutely nothing. Really, really had a trouble of letting them.
So then I started to research the HMO strategy a bit more and this is when I realized that everyone was really upping their game. So again, to cut a long story short we went in, we put on-suites, or off-suites. So not attached to their room but it's exclusive use for the person in that room. We put them in both of the properties and they let no problem at all, because particularly in student HMOs they're now expecting particularly their own bathroom. That's what the youngsters want and what I hear from the market and from the agents that I talk to is that they can let on-suite rooms all day every day, but the ones that really struggle are the properties that haven't got that facility.
And many landlords, as I experienced in Preston, they'd been in the market for many, many, many years. Had practically spent no money on their properties and suddenly all these demands were coming along about what they needed to do to the properties and they just went, "not interested." And they decided to exit the market.
So that was a real big lesson learned for me in terms of changing strategy. So I'd been with one strategy working through in terms of just, "I know this inside out. I'll go for another strategy. Well, it can't be that different can it?" Well, yes, it can. So that was a lesson learned for me there. So what I would say to anyone out there is that if you've been following a strategy or you're going to embark on a new strategy, it really is important that you understand the customer demands for that kind of strategy because it won't necessarily be the same as what you're used to or what you think it might be. So that was really important for me.
So then I bought those student HMOs. They're working really well now and then I decided having taken my pension funds from Ford I decided to create my own pension because I wanted to be in control. Again, kind of picking up on another aspect of the M. J. DeMarco learnings and I decided to set up my own SAS pension, out the funds in there, and what I've done since doing that is I've lent some funds to ... I loaned some funds to a developer. I've got a first charge on the property, which is important I think. That's going along fine and the next charge of funds is about to go out soon.
And secondly, ever since I had set up a SAS pension I've really had this yearning to own my own commercial building. So I was very fortunate that about two or three weeks before lockdown actually happened I saw a commercial building that was up for auction, and I want online and I had a look at the price and thought it was a very good price and it wasn't really miles away from me. So I'd seen this building before and I was very, very interested in it. So I went through the process, the due diligence, got the legal pack, discussed it with my solicitor, et cetera, et cetera, and I just looked at the numbers and went, "I think this is something that I've got to go for." Because I had the funds in my SAS pension.
So we're progressing, I'm going to go to the auction. It would be my first purchase at auction. So ignoring everything I've just told you about make sure you check your next strategy out, but I'd done the numbers and I thought, "I know this can work." And also, it was fully tenanted with business occupiers on three year leases. So I thought it was a fairly safe bet. So we went through the process, I was going to go to the auction, then lockdown was getting worse and it was like, "Nope, no one can attend it's going to be live online." Then that went out the window and the it's just going to be, "Right, it's everyone can dial in and listen to everyone else's auction." Then it went to, "Sorry, no. We're going to ring you only for the lot that you're interested in and then you can bid on it."
So when it actually came to the day of the auction, lockdown was really, really in process here. The death rates were going up. There was a lot of fear around the world, quite naturally. And I think this made a lot of property potential purchasers nervous, because when we did the open day before lockdown there must've been 15/10 people looking at this building. I thought, "This is going to be some real competition." But, actually, during the auction, I just got the sense that there wasn't many people bidding and it was only about three or four of us. So I decided I'd follow a strategy of I wouldn't bid until the last moment.
So three guys had dropped out and there was just one more person bidding and then I came in with my bid and we did several bids, and I literally made my last bid, because my wife was sitting in the room with me and she said, "No more. Stop. That's the last one." And I said, "Yep, it's going to be the last one." Didn't say that to the guy at the other end of the phone at the auction house. So I bid and I didn't get a counter bid and so I was successful in winning that auction lot, and it's already cash generative right from day one which is absolutely fantastic. So I'm really, really pleased and the more I'm now educating myself about commercial property, I just think, again, there's some real opportunities there. I think I'm going to find it quite exciting and that's definitely something I want to look to try and gain more commercial property now.
Yeah, I mean, I obviously know about that because I know you and we've been working together over a period of time now. By the way, on the commercial property front, you were a little bit modest there. I know that you did talk to people to get input and council, which is part of your learning and your extra due diligence. So you're probably a little bit humble there in the way you explain that, but I know that you went out and reached out to a couple of people to make sure that you got inputs from different perspectives before you went into that newer strategy.
I mean, absolutely, Richard. I'm not backward at coming forward when I don't know things. So if I've got people in my network, and I'm very fortunate that I have. If I've got people in my network that have this knowledge I'm afraid I will be a bit of a pain and I will constantly ask them questions and say, "Well, what about this? What do you think of that?" I mean, one of the things that was interesting, and I know I talked to you about this, that on the form that we had to ... For the auction for the commercial property they said, "Would you put down on the form what your maximum bid would be?" And being new to auctions and I spoke to you and I said, "Is this normal? Would you do this? Do you think this is a good idea?" And we came to the conclusion, no, it wasn't.
And, obviously, if the line had dropped down that's why they asked you to do this. If the line had dropped they said, "Well, that's it. You won't be able to bid anymore." But I just, I don't know, I just didn't like the sound of it so I decided not to do that.
Yeah, very wise I think. So we've covered a bit there. So you've covered different types of property strategy, you diversified your interests. We just glossed over the point that you utilized your pension fund from Ford and created your own SAS pension fund. Small self-administered scheme.
That's right.
You're not the only person I'm talking to in this series, by the way, who has latched onto that as analysis venue but would you just talk a little bit about the whole SAS pension side of it and what difference it's made, and perhaps what you've learnt, and how you're still educating yourself around that?
So the way I got into finding out about SAS pensions was I had one of the pension houses actually contact me and said, "Would I be interested in taking a SIPP." And the idea would be to transfer out my pensions fund into a SIPP and basically invest it into the stock market. I'd had some personal previous experience with the stock market and I'll be honest, I wasn't very successful and I think that's because I'm ... You could say it's basically borderline reckless and gambling, and it wasn't a huge amount but it was several thousands that I'd lost and I just went, "That's it. Stock market's not for me."
So when this guy said, "Put your money into a SIPP and we'll invest it in the stock market." Separately I'd also had a private SIPP myself after I'd' left Ford Motor Company that I'd continued to pay it into, and that had been invested in the stock market and when I came to look it at to do a final transfer that had lost money. So I was like, "Absolutely no way am I investing in the stock market with my pension fund." Because it's fine if it's a big pension fund like Ford Motor Company. Obviously, they've got big people managing the whole pension fund but it just wasn't for me.
But thanks to this guy, he just said to me, "Do you know what your transfer value is?" And I thought, "Well, I have no idea what you're talking about." So I found out what the transfer value was. I could take it all out in a big lump and he said, "Contact Ford and find out what your transfer value was." Well, I did this and when I got the figure I almost fell over because I just couldn't believe how much money it was. Even though I'd left quite a few years before, I'd been with Ford nearly 25 years. That pension pot had kept building and it was very, very healthy but I wanted that control.
So I then went out to find someone that I could use to set up my SAS pension, and you have to do that. You can't just do it yourself. There's all sorts of controls that you have to go through and I selected a particular accounting firm that I'd been recommended. They went through it with me in quite a lot of detail and they almost had the authority to say, "No, you can't do this. We don't think this is right for you." But they were happy with my justification and with my experience that it would be right for me to do. So I set up my SAS pension.
So now I'm using those funds to invest in property, and extension of what I am already doing. I think the key thing I would say though about a SAS pension for people who might be considering this, and they'll know there is a lot of talk particularly in property circles about SAS pensions. A SAS pension is like running a business. Number of us, we've all worked for blue chip companies and if your normal pension review was like mine, which is you got your letter, "Oh, okay. That's what it's worth." Fold up the letter, you put it in the draw and you forgot about it for another year. A SAS pension is not like that. SAS pension is about you taking control of how those funds are invested. You can invest in passive investments, but what I would say is you shouldn't be passive about your SAS pension. You should be looking at this regularly and really running it like a business. You wouldn't run a business and just not worry about it for six months. You'd be on it all the time, and having a SAS pension I would say to people is very much like that.
So if you want something that you can just forget about, maybe a SAS pension's not for you. But if you want control and you will run it like a business, then I would definitely recommend a SAS pension to people.
You're right in what you say because the ... I speak to some people and it's like, "Well, you can get hold of your pension." You literally can't get hold of your pension, you can just control how it's invested. Obviously, you can get hold of some of it when you're 55 and then the rest of it you can take out later under the rules and regulations that exist.
But I think what I thought was really interesting, and you've done this, is did it create a step change to support your property business? Perhaps as a leading question. In other words, did it provide an alternative source of funding to enable you to do things that maybe you wouldn't have been able to do otherwise?
I mean, it's not at the moment but it will provide an alternative source of funding. So I've got my property business that I've got my existing property portfolio in. Right now, I'm not drawing out any earnings from that because I'm in a fortunate position, I don't have to but I think that will change this year. I'm going to start drawing some earnings from the property business. The pension pot as I will call it, I'm going to try and leave that untouched if I can so that it can grow and grow.
So at some point in the future if I want to dip into that and by that I start drawing, not the initial 25% but I want to start drawing a pension from my SAS pension then that will give me a second stream of income that I can draw on at some point in the future. I could draw on it now actually, because obviously, I'm over 55 but I don't want to do that. I want to try and allow it to compound in terms of the rent that's going into the property and also to try and buy more property so that I'll have a good revenue stream in the future when I start needing to draw on it.
But the other important reason for me why I wanted to set up a SAS pension is that with a normal pension, the way it works is the pension, it comes to you, and obviously, if you're married it goes to your wife, in my instance., but when I die, the pension is reduced by 50% and when my wife dies, the pension's gone. That's it, it's finished. The great thing about SAS pension is that I can bring in my children and at some point in the future when they're old enough grandchildren to be trustees of the pension fund, and it will become intergenerational. So the revenue or the income rather that's coming into the SAS pension, they can then start to draw on at some point in the future.
So it's really about legacy, which is a big reason a lot of people take on a SAS pension and that was a big driver for me I think I just ... When my first granddaughter was born I suddenly thought, "I want her to be able to do things that I could've only dreamed at when I was quite young." I mean, my parents ... I was born in a council house. My parents, one was a shopkeeper, a shop worker and my father, after he came out of the war went into the docks and then became a postman. So we weren't a wealthy family by any means, but I want to make sure that my children and my grandchildren really have got an opportunity to do some really amazing things in life. And you know, I've really enjoyed what I've done with my career and what I can continue to do today, but yeah, it was the legacy thing that really I think for me said, "I need to do something different here." And that was a big driver of the doing the SAS pension.
Indeed, indeed. And it enabled you, I think, if I'm right in thinking that you bought that commercial building, didn't you? With your pension fund.
Yes, I did.
Yeah. So it allowed you to buy a property that you probably wouldn't have been able to buy without access to that sort of funding. So I won't embarrass you by asking you the figures but I also know, by the way, that that deal seems to be the property that keeps on giving. There seems to be opportunities after opportunities, because I know you bought it as a long time buyer and holders income on your pension but your mind's been racing about utilizing space or repurposing, or things like that.
Whenever you buy a property I think always have a plan B, you know? It's one of the things that you often talk about, Richard. My plan B for the property is that if at some point I wanted to I could clearly turn it into residential. I think that would be acceptable, but the other thing is it's got enough land that it could be extended. So I think I could increase the size of the property to make the number of business tenants more in terms of quantity, but really I've looked at one of the ... It's got a very big, big boardroom that is hardly ever used and I've just immediately looked at this and gone, "Well, that could be another office even if I made the existing tenants a small room so that they could still have client meetings outside of their office suites if they wanted to." And that should generate seven or £8,000 extra a year. So immediately that would generate more income. So, yeah, I've already got the architect working on some schemes for me about what we can do and see whether it's financially worth doing.
Oh, I'm glad to see you've got an architect doing your drawings for you these days. We've spoken a little bit about working..
It's been a while since I've got the technical drawing board out. So, yeah, which is what I did those two flats on but, yeah, we can't nowadays then yeah, I'll leave that to the experts.
Well, and it's actually a serious note because I know you and I have spoken in particular about working on the business versus working in the business. So doing your own drawings whilst you were capable would be an example of working in the business, and I think just to cue you up, what's your view on that now? What's your view on on versus in the business?
As you say, Richard. I've really struggled to step away from the coalface as it was, because again, I'm very fortunate that I'm very capable. I can do electrics, plumbing, decorating, building. I've been fortunate that through my life I've learnt a lot of skills, and in some ways, I enjoy doing it and it's been very, very difficult for me that when I'm let down by a trade to not just step in and do it myself. And I've worked some silly hours in terms of doing that.
But one good thing I would say that for me has come out of this lockdown, it's really made me kind of press the reset button. I've always been very much one of these people that is always flat out. I've always been a flat out person in terms of just working weekends, because I don't find it too much of a chore. I kind of enjoy it but this lockdown has really made me reset and I think I would ... I had this objective of only working three days a week and actually, because of lockdown I think I'm there now. So I've really stepped back and I'm quite happy to just get trades out and if they can't do it when I need them to do it I will just see if I can find another trade, but now I think I'm leaning a bit more patience of, "Well, okay. If you can't do it then. If you do it in a week's time, well, that's fine." Whereas previously I would've gone, "I can't wait for a week." And I would just go in and do it. So I think, obviously, what's happened with COVID-19 is absolutely terrible but in that sense it's been a real reset for me.
Yeah. I mean, sometimes it takes that kind of catalyst, doesn't it? For us to get it. We've been talking about this idea for some time and I know it's been an aspiration of yours to work less and spend more time on other activities and interests that I know you have. We're all on our little journey. We've all got our little mindset issues or paradigms that we're working to and we need to step away from that, and it's not necessarily easy to do. but I guess it sounds to me like you've utilized what is obviously not a good situation with COVID-19, as you say, press the reset button and rethink how you go about that. I'm really pleased to hear that, by the way.
Another thing I've been able to do as part of that reset in terms of physically doing work is because I want to understand all the opportunities around utilizing a SAS pension I've really been educating myself with online information and webinars, and courses, and things like that about what it is and is not possible to do by utilizing a SAS pension. So I've really taken the opportunity to do that rather than, obviously, where we've not been able to go out I've been doing a lot of home study. Interestingly enough, one of my daughters who's a midwife, she's currently doing her master's even though she's a full-time midwife and it's like, "Well, what have you been doing today?" "Oh, I've been writing notes and educating myself on a SAS pension all day. What have you been doing? "Oh, I've been doing my essay for my master's degree." So it's been quite funny that although my daughter's 31 and I'm in my 50s we're still doing schoolwork together.
Well, I'm definitely a proponent of what I call lifelong learning and upgrading our skills and our knowledge. So you get a massive thumbs up from me, as does your daughter. But I guess that cues us up nicely really to what have been the lessons that you might have learnt as you've gone through this journey? Because it's been probably an evolution over I think you said 15 years of maybe when you started in property. What have been the key lessons and takeaways? Which also perhaps plays into a little bit of tips and advice that you might be able to share with others.
Well, I've obviously already mentioned about if you decided to change strategy it's really important that you educate yourself about the customer requirements around that strategy. I'm not so sure I would say it's a learning but it's something I'm trying to maintain which is although I said I'm quite a driven and flat out kind of person, it's easy to go, "Oh, I need more, more. I just need more and more. Let's buy as many properties as we can. Unless I've got 300 properties I'm not going to be happy."
I've tried to not get into that mindset because I think there is a point where you just go, "You know what? This is enough for me." It is very much about having that ... It's so used so often, but that work-life balance which I think is really important. And again, going back to M. J. DeMarco's book and he talks about the three Fs, which are family, fitness, and freedom. And if you are just constantly going, "Oh, I need more, I need more." Well, you don't get that freedom. It can obviously affect your ... Not just your physical health but your mental health because you just get no respite. And what's the first thing that falls by the wayside? Well, you don't see ... You know, different for me because my children are grown up but you don't go to the school plays, you don't see the shows because, "Oh, sorry. Daddy's got to work or he's away on a project."
So for me, I would say the biggest thing I've tried to maintain is that saying enough is enough. I'm quite happy where I am. I don't need 100 properties. As long as I'm at a financial level where I can do pretty much what I want. I'm not going to be going out buying Ferraris whenever I feel like it, but to be honest, that's not something that really interests me. But so long as I have a good life and I am able to have lots of holidays, lots of life experience is what I'd say. I'm not talking about going and sitting around a pool for two weeks. I like to go and have life experiences. I've been to Vietnam on a Vespa. I've been to Nepal on a motorbike. I went touring in Nepal with a group of people, complete strangers but I wanted to have that experience. Interestingly enough, me and my wife, I just said ... We watched a program about Antarctica and I said, "That just looks amazing." And then we looked at the price and it's like, "I'm not quite sure I'm there yet." Because it's big money. But for me, it's really about life experiences now and so long as I've got the income that will allow me to do those things, that's absolutely the most important thing.
I mean, that a great, I mean, to hear that and obviously you talked about taking in advice and stuff like that especially if you're switching strategies. I guess, you know, probably starting to think about drawing to a conclusion. Are there any final thoughts or takeaways? I'm also going to ask if people might want to connect with you how they could do that, but are there any final thoughts and takeaways that as you've been through the journey over the last 15 years or so that you could pass onto others that you haven't already shared already?
I think I've pretty much covered everyone that I wanted to say, Richard. Yeah, to be honest, if I add to that I don't think that it's going to add great value. As I said, for me, it's about getting to that level where enough's enough and I'm quite happy with that because that's now, again, coming back to the idea of freedom. It's not only about traveling but it's given me the freedom to educate myself about lots of things that are going on in the world. Lots of things that have previously gone on in the world. So, again, I'm really an avid person of learning now is what I would say that I think is really important.
If people want to get in touch with me then the main way to do that is via LinkedIn. I think it's Richard P. Parker on LinkedIn. I'm not really on Facebook. I don't like Facebook and I'm not into Instagram and all those other things. LinkedIn is the way that people can get in touch with me if they want to and I'll obviously respond as best I can.
Yeah. I'm sure people will be really interested and certainly I'm interested in what you've been speaking about. I'll put a link to your LinkedIn profile in the shown notes when this goes out so people can look that up and connect with you if they wish.
Absolutely.
I think it's been fascinating to hear your story. When you talked about you're not into Ferraris, is it ... I don't think Ford make Ferraris, do they?
It's funny actually because when I was younger I was really petrol head, and now it's completely 180 degrees and it just doesn't interest me at all now.
Yeah, I'm similar. I always wanted an Aston Martin, to be honest, but I-
They lose their value so quickly.
Well, this is it. Once you get this investor mindset it's really hard to justify sinking that amount of money into a flashy car and my wife calls them dwarf cars, for some reason. She likes big SUV . So I don't think I'm going to get it passed my co-director. Anyway, I digress. I think some amazing things. I had to summarize a lot what you said about giving you choice and freedom, and obviously, then looking to pass through what you're developing to the next generation and in fact, beyond.
So it's great to hear that story. I'm sure there's a lot more but thanks so much for sharing, Rich. I really appreciate that. I'm sure the audience are going to get a lot out of it. I talk about the everyday people, but even the everyday people that I'm profiling, there's special and I think you've got something special in how you've gone about things. You've got a certain way. So congratulations for what you've achieved and thanks for sharing with us today. It's been great.
Thank you very much, Richard. It's been a real pleasure doing this and I look forward to speaking to you again soon. Thanks a lot.
I hope you enjoyed that conversation that I had with Rich. There's a number of points I've taken some notes of. I just want to quickly summarize really that came out of it. I think the first thing is that starting at an early age even if you're not really sure what you want to do later is not a bad thing to do. So starting at an early age, one was the pension fund he had at Ford Motor Company. So he was preparing for a financial future from an early stage. Whether it was a conscious decision or not, the company pension scheme, it's not necessarily a conscious decision but we talked about that last week, of course, when we had Ian on the podcast.
And the second thing was really ... Well, professionalizing what he did. I thought that was really interesting that he said he set up a limited company right from day one, lots of people don't advise that and to some extent, it's not necessary but I think from a mindset point of view it does get you in the right place. But then there was a catalyst for change and in Richard's case, that was reading a book and that was The Millionaire Fast Lane book that he talked about.
Now I think, you know, he also made the point is if you enjoy the job that you're doing then it's easy to justify staying or sticking with it. So you have to have a reason to change. There has to be this catalyst, if you like. And in Richard's case, it was reading the Millionaire Fast Lane and just realizing that you couldn't really take full control of your life and your own destiny until you'd actually ... You'd literally stepped out and taken control of your own destiny. So I thought that was really interesting, if you like, in the way it came about.
He also talked about building up an income stream as a life raft, and what he meant by that was not necessarily diving full-on into becoming full-time in property right from the off. It was to build up a side-line income which could support and supplement and alternative activity that he could do. He talked about the idea that you don't have the same expense levels if you go full-time in property. So perhaps the income replacement goal that often people have is the income that they're currently on but that snot necessarily true that you need that level of income. He was married. So his wife was still earning so that helps to de-risk their choice of going full-time in property as well.
So there was a number of different things there that I thought was really interesting. I think the other thing is the strategies that he's followed. So he's gone from single lets and he didn't really reveal too much, but he did title splitting which is a great way to add value. Title splitting to create single lets, but basically he went from single lets when he was not full-time, and then when he became full-time in property he went through HMOs. He created this pension fund, was then lending to a developer, he's then bought a commercial property. So he started to expand his interests and diversify his interests as a result of going full-time in property and that will stand him in good stead I'm absolutely sure.
He spent quite a bit of time, obviously, talking about the SAS pension and I know he's got a keen interest in that and he knows an awful lot about it. So if you would like to know more I'm sure you could reach out to him. And we spoke a little bit about working on the business and working in the business, and he admitted that it's something he's found a bit hard because he's very capable. He's a very capable man and so we talked about the idea of stepping back and really leaning on others. And I think the lockdown period has enabled him to rethink that and he described it as pressing the reset button, didn't he? And now he's spending time on home study. I know he's had this interest in life experiences. He's told me about the motorbike trips he's had. So studying and the life experience is definitely something.
And I think the other thing is this, excuse me. He said, "Enough is enough." Didn't he? And he said, "This is enough and enough is enough." So sufficiency. So it isn't always necessarily about getting stinking rich. I think it's sometimes a case of just enough is enough to be able to have a good life. So I thought that was really interesting that came out of the shares as well.
So freedom if you like, lifestyle, choice, and control I guess were the key takeaways. I'm going to share Richard's contact details. Specifically his LinkedIn connection details in the show notes. So if you'd like to reach out and connect with him in any way and just have a conversation you'd be able to do that, but hopefully, you enjoyed that today and we look forward to another guest on another show on the podcast in a week. But you can see the show notes, there'll be a transcription of the interview over at the website thepropertyvoice.net. And if you want to talk about anything from today's show, then by all means reach out to podcast@thepropertyvoice.net and I'd be more than happy to hear from you. But in the meantime, I'd just like to say thank you very for listening once again this week and until next time on The Property Voice Podcast. Ciao Ciao!
Thank you for listening today. Now, head over to thepropertyvoice.net for more inspirational content and get updates through our mailing list. Join us next time in 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!