Looking back I’m often struck by how many mistakes I made at the start of my property investment career. If there’s one thing I regret it is not learning more about the industry sooner. Instead, I learned by trial and error which, when you’re dealing with houses, is an expensive way to get an education. By my calculations, by not taking part in training early on I lost out on seven years and £100,000 cash. This is quite a bold thing to claim but read on and I’ll explain the context.
[0.26] My story
[1.30] Focussing on below market value property
[3.00] The seven golden rules
[3.20] A lost decade
[4.27] Picking the wrong location for investment
[4.45] Assessing a property’s value
[5.38] Learning how to invest in property
[7.00] Putting it all together
[7.48] Join our FREE training
I started my journey in 2005 when I first invested in property. In the last 11+ years, I’ve been involved in a wide range of property deals. I’ve looked at a lot of different areas in the industry. I’ve researched a whole host of different areas and locations. I’ve met a lot of great people; clients, peers, industry experts… I’ve worked with refurbishment teams, land development specialists, HMO specialists, mortgage brokers, solicitors and accountants.
It’s one this I love about this industry; you get to meet and work with a wide range of people.
During these 11 years, my experience and knowledge have grown radically as have the contacts I have made.
Looking back at what I was doing in the first few years investing in property and comparing it to what I do now is useful. It helps me learn from my mistakes.
I made a lot of them back then…
The right property training course could have saved me seven years and £100,000 cash. Allow me to explain.
Below Market Value (BMV) Property
Firstly, in the seven years between 2005 and 2012 I was very focussed on below market value (BMV) property.
At the time, investing in BMV property made a lot of sense.
For a start, the discounts allowed me to actually buy a property, do some sort of refurbishment, refinance it and then move on to the next one.
Sometimes the discount was correct because I had valued the property correctly. Other times the discount existed only on paper; the property never achieving what I had anticipated. This would be because I had valued the property incorrectly or because there was a chain. Or sometimes it was because shortly after buying a house there would be a change in the local area that affected prices – something I hadn’t anticipated.
When I bought my first few houses I didn’t know what areas to buy in and I picked my investments based mainly on discount.
This meant that my portfolio spread across a wide area, all the way from North Manchester to North Wales with a lot in between. There wasn’t really a plan to it and I was self-managing, meaning I spent most of my time in my car.
When I look back at my property portfolio as it was back then and compare it to what I have now, they’re wildly different. The reason for this is simple, now I go about things in a very different way.
In the decade I’ve worked as a property investor I have learned a lot.
By 2012 I had introduced a lot of additional criteria that I apply when I am looking at investments. I also started to work with a lot of different investment strategies and although I still invest in BMV property and buy to lets I shifted my focus and no longer concentrate all my energy on that model.
The Seven Golden Rules
Discount, of course, is always an important element of any property deal but there are other, equally important elements to consider as well. This is something I really didn’t know when I first started out.
So for any deal, as well as looking at a discount, you also need to examine the area, your tenant profile, the rental yield, the potential for capital growth, your exit strategy, the potential to add value and finally, at the discounts that are achievable.
It is these seven things that now form the foundations of all our property deals which we call the seven golden rules of property investment.
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A Lost Decade
Since 2012 our portfolio has grown significantly. We’ve grown our joint ventures and our business radically. This has been because we have opened up to other potential strategies.
The seven years I spent investing in my properties prior to 2012 was of course not a decade but it was a ‘lost decade‘ in terms of lost deals, failed transactions and a lack of focus and it’s time I will never get back.
I wish I’d learned more sooner. I had known what other property strategies existed; if I had had a mentor to teach me how to look at deals differently; if I’d had someone tell me not just to look at buy to let but to consider HMOs, developments, conversions, corporate lets… I could have changed earlier, done more profitable deals and made a whole lot more money.
Picking the Wrong Location
When I say that the right property course could have saved me £100,000 cash I don’t mean in lost profit. What I mean is that in that time pre-2012 I would have easily made that and probably more (over what I did make) if I’d approached the property deals I did in the way that I approach deals today.
So a few of the properties I bought, I bought in the wrong area and as a result, the value of those properties has increased by very little. Some of them have increased by only a couple of percent over 10 years and this is what can happen when you choose the wrong location.
Colleagues of mine that spent the same amount of time investing in property, over the same years, but in different areas, have seen their properties increase in value by 20% and 30% over the same time frame.
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Assessing a Property’s Value
Other properties I’ve bought I’ve certainly over-paid for. This is simply a case of not knowing how to value a property.
At first, I didn’t know how to compare one price with another. I didn’t know what I should look for in comparison properties.
For the first couple of years I had no experience whatsoever but in 2007 I worked for an estate agent. This gave me a little more experience in valuing property that certainly helped.
But it didn’t help me look at investing in property from an investor’s viewpoint, but only from an estate agent’s.
So, an estate agent will look at a property and think: “Well, this property is on the market for X. These are the comparable properties. These are the sold prices. So the average value is going to be Y.”
An investor, on the other hand, has to think differently. The estate agents formula can still be used as a guide but at best it is only a starting point.
So, as an investor, I need to know what price I need to be paying to make the deal work for me. To know this I need to ask myself further questions about a property’s value such as, “will it give the right return on investment? Is there enough value in the deal for me to see enough growth to exit the property within a short space of time if I need to?”
Learning How To Invest In Property
I think about property very differently now from when I started and my investments are a lot more profitable. That’s why I said that the right property education, the right property training, or mentor, can really help you shortcut that learning curve.
You can, of course, pay nothing for training. You can spend a lot of time looking at different blogs, reading articles, watching videos. You speak to colleagues; to people in the industry.
But to make a success of investing in property and to avoid expensive mistakes early on you are going to have to spend some time on your education.
In property, a good education is going to save you a lot of money, make you much more, and save you a lot of time.
Instead of blogs, you could do a structured training course or get yourself a mentor. There are lots of different training programs available for you to choose from depending on how you prefer to learn. There are video courses if you prefer to watch. There are written ones if you prefer to read.
There are regular property seminars up and down the country which can be great places to learn new ideas and meet new people.
For more information see our article on the many ways you can learn how to invest in property.
It depends on what is going to suit you…
But if you get the right education and the experience that comes with it; if you meet the right people (and can leverage their contacts) then your results are going to skyrocket. I’ve no doubt about this. If I’d done this at the beginning of my career I would have made a lot more money.
Putting It All Together
Hopefully, this gives you an idea as to why an education in property can be very helpful.
If a property training course isn’t right for you because you don’t have the funds available to invest then you should still be making use of the free resources that are around. Go to websites like propertyinvestmentsuk.co.uk and have a look at the free articles and watch the videos and presentations.
You should also get out there and start to build up your experience. Speak to as many people as possible and build up your contacts. Got to networking events, speak to people in your industry. Speak to your peers.
That’s how you get started.
And of course any questions, I’m always here to help so feel free to ask in the comments section below or feel free to drop me an email.
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