So, my podcast producer and I are about to go on our respective holidays…separately OK? In the meantime, I have prepared some ‘holiday shorts’ to keep you company whilst I am away. Over the next few weeks, I plan to share some forum poster, YPN magazine reader and podcast listener questions that I have answered recently and been collecting.
Today’s question comes from a frustrated chap by the name of Dino, who works full-time and has had a tough ride over the last 10 months. He asks the question: Is the whole property investment thing a waste of time?
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Resources mentioned
Property Deal Tips & How to Reach me By Telephone
Free Dom Tokens…might be worth something one day: Dominium referral link
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Transcription of the show
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 again today.
So, my podcast producer and I are about to go on our respective holidays…separately OK? In the meantime, I have prepared some ‘holiday shorts’ to keep you company whilst I am away.
Over the next few weeks, I plan to share some forum poster, YPN magazine reader and podcast listener questions that I have answered recently and been collecting.
Today’s question comes from a frustrated chap by the name of Dino, who works full-time and has had a tough ride over the last 10 months. He asks the question: Is the whole property investment thing a waste of time?
Let’s hear the story and see how I answered then…
Property Chatter
This comes from Dino…
Apologies in advance, as this is a (long) rant.
Probably not in the best mindset at the moment, but I've reviewed what I've achieved over the last 10 months and realised I'm seriously out of pocket, have lost hundreds of hours of my own time and have pretty much nothing to show for it.
So the question is, is trying to be a BTL investor whilst holding down a full time job even possible? And if possible, are the returns really worth it, as if I'd taken on a Saturday job and invested the wages from that, plus the money I've lost into a pension, I'd be far better off today and when (if) I finally come to retire.
Story: So I've always been interested in property and with a friend bought a cheap property back at the end of 2006 (great time to buy!) after many years of talking about it. Property has been more voids than rent and today is probably just about worth the cost of purchase and refurbishment. Friend has had no real interest in it and if it could be sold. I'd get rid, as it's a bad investment.
So last year, I decided to take this seriously and go it alone. So, after much reading, listening to podcasts, googling etc, set up a ltd co with my wife. Basic reason we don't need the income now, so it was a long-term plan to provide towards an early retirement with no intention of taking any real money out before then.
Things started well - from a conversation with the managing agent of the original property, we bought a property that was being refurbished direct from the developer at a BMV price. That's currently rented out, with good yields (although 1st 6-month contract, so will see long term), so everything started well, albeit handed on a plate.
Since then, I've carried on listening to podcasts or reading books in every spare minute. I'm constantly on Rightmove and mailing lists of a number of agents. From a lot of initial work, narrowed our interest down to three areas, two which are <15 minutes from home and one which was <1 hour. I've got all the usual instant Rightmove alerts on and have spent countless weekends driving or walking round looking at the areas.
The problems has been moving forwards from there.
Although I've had a number of viewings, I've had just as many where the only viewings available are 9-5 Monday to Friday, or something new comes on the market, I manage to arrange a viewing for a Saturday, only for it to be sold before the viewing comes round.
Despite all of that, have made offers on a few places and a few months ago, had one accepted on a repossessed flat. The mortgage company had a panel of solicitors and the chosen one has been pretty useless, including a two-week period when I couldn't get an email response or even anyone to answer the phone. Turned out my conveyancer was off sick, but would have been nice if the main reception had answered! The legal stuff has therefore dragged on for many weeks and, inevitably, a higher offer has now been made, at which point the solicitor decided they were ready to exchange and complete this week, but the vendor is going with the higher offer.
So, after 10 months; a 1,000 miles (been keeping the log for tax); no idea how many hours spent searching, researching & pricing; books bought; courses bought and; just over £3,000 in valuation, mortgage and solicitor fees, I've got nothing to show for it. Scratch cards would have been a better investment.
So, can this actually be done whilst holding down a full-time job, having a family etc? Viewings are limited to evenings, calls to agents, solicitors etc are limited to lunches (when they're usually not available) and research is every night in between.
Do I commit to the same again for the next year in the hope that one property, providing about £150-200 a month before tax appears, or just accept I'm wasting my time, get a Saturday/evening job that'll pay the same and invest in pensions, ISAs, unicorns instead?
Richard’s Response
Looks like you have been through the wringer a bit there, so I thought I would jump in and offer some support...or alternative advice
You do know the definition of insanity I expect...doing the same thing repeatedly and expecting a different outcome?! So, my biggest tip is to avoid going insane by changing the next 10 months from the last 10 months (and the last 10 years too!).
You are a busy person and it seems that you are time-poor...at least at the 'peak times' when the so-called 'professionals' are at work. So, by definition it would be better if you were to adopt a more passive or outsourced approach.
Let's not forget our 'return on time investment' either...actually you did not, although you clearly UNDERVALUED it if you look at minimum wage. Don't rework the figures right now, but keep that in mind going forward.
So, what would I suggest as alternatives then? Here are some options and I am also attaching an article that might help gain some perspective. [Note: I attached an article on active versus passive investment…write to admin@thepropertyvoice.net and ask to go on my YPN subscription-free mailing list and then you will have access to this.]
Invest in property, but much more passively. Examples include REITs and private finance to other developers. Then, take the accumulated fund from several years and drop it into property directly later...or not! You should be able to at least track average returns from BTL this way and if you are able to channel the investment tax efficiently through a pension or ISA would retain more of the proceeds too.
Or, invest in property directly, but much more passively. Examples include using a sourcer or property finding service to locate properties for you, using Viewber to do the viewings for you, recruit a letting agent or a project manager to manage the projects for you and so on. These all cost something, but in some cases, not as much as you might think, e.g. our Property Deal Tips property finding service is £200 per year, Viewber viewings start at c£30 now I believe, a letting agent might want you to go full-management with them to support arranging new carpets and paint, a project manager is typically 10% to 15% of the budget and a (reputable) sourcer might charge say £3k to £5k for a deal saving you around 30 hours or so of your time just in search, negotiation, etc.
Again, what is your time worth? What is your ideal lifestyle...evenings and weekends pouring over Rightmove, or spending more time with the other half, friends or family?
Don't get me wrong, you will still need to do SOME work even if you adopt a more passive or outsourced approach, not least of which in your due diligence on the people / companies that you will use...and trust me some are not so great, so be careful.
But, here's the thing...it is worth it in the end. Your 2006 property was a bad investment by all accounts, not least of which the timing probably. However, if you want inspiration of what can be done by looking at time in the market rather than timing the market, then I suggest you read Warren Buffett's biography The Snowball instead of spending all those evenings on the portals. Warren is exceptional, no doubt about that, but he had no silver spoon in his mouth yet patiently and diligently started from nothing to become mega-wealthy over many decades. He adopted a 'value investor' approach, which if translated into property simply means hunting for the very few opportunities that will give us exceptional returns. Buy well, invest for income or where there is a CLEAR growth play and do your thorough research.
It should not be a grind, or rather it does not have to be so. How do I know all this? Because that's what I have been doing for the past 10 years or so and can now look back with a sense of perspective on what worked and what did not that's why. I used to have a full-time job, working for a multi-national, and also had a family with teenagers, so I had to make it work around me and my commitments.
There are lots of ways to profit through property...the most important thing is to find the way that aligns best to you and your circumstances, preferences, resources and lifestyle. It is not a one size fits all model...there are more than 50 different property strategies and as I highlighted, more than one way to skin the cat as well.
So, please don't be discouraged. Take a deep breath and a time out...maybe read that book to change the narrative for a week or so. Then, sit down and decide that you won't repeat the pattern and thus go insane. Work out YOUR ideal path, set a plan in motion and step forward with purpose to achieve it. That's my advice at least.
Just ping me a message if you need any further pointers, but don’t throw in the towel just yet...just decide which path is the right one for you.
So, that’s my first holiday short…another one is coming up next week…I hope you enjoy the shorter, tailored podcast aimed at genuine investor challenges.
As a reminder, the show notes can be found over at www.thepropertyvoice.net. Or, 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!
Once again, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.