Show Me The Money

By Matthew Moody | Property Investing

I love this clip and I think anybody serious about property should love it too.

After all, what is anybody in property investing for – unless they want a little piece of the pie.

We don’t go through all the heartache, the blood, the sweat, the tears, the disgruntled tenant, the broken toilet, the boiler and central heating going on a saturday night in december, the kitchen flooding, the non-paying obtuse tenant, the tax return, the worry, the stress, I could go on and on and on…

No, we don’t go through all of this for the good of our health.

We do it so that one day we can see the money (cashflow) coming trickling through, then roaring through.

Of course, if you have HMO’s, you’re pretty much going to see this roaring cashflow straight away – but always remember to keep some in reserve for a rainy day (!).

Enjoy this classic clip and make sure that you ask somebody everyday to “show me the money”.

“Not in my back yard” property investing

By Matthew Moody | Property Investing

There comes a time when people need to stand and be counted, yet often a lot of what seems to come across from the media is talk about how the vunerable in society are being used and that we should all stand against the vultures of capitalism.

A case in point merits further explanation on a place dear to many seasides visitors, Southend.

Apparently developers are moving in on large victorian houses which front the sea, trying to buy them and then converting them into flats or worse still – multiple-occupancy homes. (I clearly say that tongue in cheek as this blog is all about HMO’s and more!).

An MP bemoans a company that leaflet drops targetting these areas (one elderly gentleman threw his in the bin), a local says – why don’t they refurbish the high street and the office blocks that have been left standing – lets have a moratorium on new-buildings.

Alas, I fear that none of these folks in their misguided attempts to do “the right thing” fully understands the meaning of “not in my back yard” and here is where it shall be explained.

Not in my back yard actually stands for:

• No progress
• Idiotic decisions based on emotion or money; not fact nor reason
• Many cooks poking their noses in, getting paid and moving on
• Bureacratic planning laws impeding progress
• Yesterday’s property left to rot whilst tomorrow’s property is yet to be dreamt up – at the expense of today’s property being under lock and key.

Everywhere you see it – whether it be a new block of flats, a neighbours garage, a schook, a runway or even a wind-farm.  The people that extoll the “not in my back yard” mantra are the people that are impacting the rest of society – not the other way around.

Harsh words perhaps but lets face the facts.

• councils approve planning applications based on their own “local” plan.  This is often put together by “professionals” and “amateurs” who have no overall strategic overview over what they are agreeing too.
• the grants offered to turn empty derelict buildings into modern tenanted buildings are infrequent and often poor.  And even if you do get them, they often come with many onerous terms and conditions which hampers, rather than helps.
• the focus on a quick buck is always the media angle on this but why would a development company enter into a development that lost them money?  That just wouldn’t be good business sense.
• the British-way seems to be more and more to be jealous, suspicious or plan envious at anybody who is running a successful business.  Why is that?  If somebody has taken massive action, then all credit to them.

So, lets all look to the future and work together to figure out what needs to be done at a local and national level to turn this once great country of ours, back into the bastion of civilization and respect that it used to be.

Rather than “opposition” groups, lets have “co-operation” groups; rather than “not in my back yard” groups, lets have “change for the better” groups.

Property Investment Outlook 2015

By Matthew Moody | Property Investing

An Outsourcing Case Study

By Matthew Moody | Property Investing

Managing Yourself or Outsourcing to The Professionals?

I’m known for being hot on systems but if you are just starting out or if you have properties yourself, what can you outsource and what should you keep in-house?

When I first got started, I managed everything:

• Marketing
• House administration (ie utility bills, insurance)
• Tenant administration (ie rent, paperwork, viewings, moving in/out)
• Accounts receivable
• Account payable
• Maintenance
• Business development
• Book-keeping & Accounts

And a whole heap more that took time and effort to do.

And the thing is, nobody is ever going to be great at everything – it isn’t possible.

It took me two months to figure out that it would be better for somebody else to take on the jobs that I wasn’t good at and let me focus on the things I was good at.  It actually took over five years to properly set up our systems and processes to allow me to hand 90% of the business to outsourced and in-house staff.

Here’s how I did it:

Year	Outsourced Task	Why
Year 1	1) Annual accounts and tax returns straight away. 2) Gardening & cleaning after 6 months 3) Maintenance	1) Whilst I understand numbers, I haven’t got the energy to do them myself. 2) By doing it myself, I knew the time and standards required 3) No enjoyment so why do yourself?!
Year 2	1) A Property managed as a test	1) First manager had conflict of interest; second manager rescued things!
Year 3	1) Marketing for tenants online 2) Book-keeping 3) Management of portfolio 4) Opened up lettings business	1) Tested a PA on marketing tasks.  Then outsourced lead generation. 2) Moved to accountants. 3) Gave management to manager. 4) Systems and people already in place so made sense to expand where we could.
Year 4	1) Developed systems in all areas 2) Expanded lettings business	1) Expansion = slippage without standards.  Systems created for consistency in portfolio 2) Systems = Expansion.
Year 5	1) Accounts Payable / Receivable 2) Bad debts 3) Office 4) Apprenticeships	1) Outsourced to Experts who are unbiased and professional. 2) Still trialing different companies. 3) Home and Work. 4) To assist with administration/customers

This is only a snapshot but allows you to follow a logical progression and consider how your business can benefit from outsourcing.

Outsourcing and modifying systems never changes but you can quickly get to grips with the right ones for you by understanding the organization you need to run your business for you.

We cover this and much more in many of my programmes as well as in my book.  For more 1-2-1 assistance, why not work work directly with me to build your systems and processes to world-class level in just 6-12 months.  Look at the Mentoring section for more details.

Retire Through Property Investment Within 10 Years Pt 1

By Matthew Moody | Property Investing

Property investment can be a complicated process especially if you are a novice in this area of investment. Investing in property is not a get rich scheme like other people may think. It requires you to gain knowledge on the foundations of investment and property; and then to learn the strategies to effectively put them into practice.

This means that you must be experienced in the techniques, systems and strategies that make property investing safer for you to try and ensure that your chances of everything working out are much higher. If you jump right in – you will get burned. You have been warned!

The following are tips I heartily recommend you consider to lead you on your way to smart property investing:

1. Plan your goals.
Consider your long term and short term goals if it is either for retirement or making money in property investment. Before deciding to invest a large amount, meticulously plan everything starting from choosing the property to determining the perfect location. Consider whether you need a company to trade through. Set up these entities and put your plan in place.

2. Educate yourself.
Before you dive in; ensure you research and educate yourself. Soak up all of the information that is freely out there but also invest in the latest books, courses and audios that focus on your particular strategy so that you can become the best you can be – without having the experience of doing it yourself. Once you start investing in property, then it is extremely important that you invest in continuing your education and learning new tactics and tips that will help you in your business.

3. Choose an area.
The investors who focus on certain areas are the investors who in the long-run benefit. Following a scatter-gun approach may mean that you end up with more properties but as they are very far apart you will risk inefficiencies in management, maintenance and travel. Choose and focus on one area and make that your golden goose.

4. Determine your chosen strategy
Do you want to refurbish and flip properties? Do you want to rent out to multiple people? Do you want to focus on the social housing market? Do you want to buy small 2-up-2-down properties and put in long-term tenants? Have focus and do not deviate.

5. Develop a power team.
In any financial venture, it is important to ask the help of experts and financial institutions for wealth and knowledge. The proper assistance is the key towards investing. You should always have a power team comprising of experts who can lend their expertise and professionalism.

6. Rent the property.
If you have a vacancy – you’re losing money! Always always always have your properties rented out! This is the only way to have a steady income. For every day your property isn’t rented is more days vyou losing money. Ensure you are using the most up-to-date tenancy agreement to protect yourself and your tenants.

7. It’s the long game that counts.
Property investment is a long-game and whilst you can make good short-term profits; you need to look out 10-20 years in the future. It’s essential that you are consistent and persistent. You have to follow and stick to your plan because you can become wealthy overtime. You may have a boiler fail one year that could wipe out most of your profits. But over 10 or 20 years – what will the overall house value have risen by? Planning out the future is the key to property investment.

8. You must learn to analyse properties quickly.
You will acquire this skill over time through experience. However do not get yourself caught up in the trap of “analysis paralysis” or literally overthinking everything.
Ask significant questions such as how much the property is really worth, can I get a discount off the asking price, what will it rent out for, how much will it cost me to convert it etc?

9. Negotiation skills are critical.
In property investment, the difference between a good deal and a great deal can often be just a few percentage points. Learning the art of negotiation is thus a skill that will set you up, not just for investing in property but also for wider life. Learn all you can, take some courses and then practice, practice and practice some more.

10. Build a business
Investing in property is not like investing in shares. You need to develop a business over time that serves you and your lifestyle in the best possible way. You should focus on the different elements of running the business. Whether its sale and marketing, operations, research, finance or governance; building a solid business will prove to be the answer to longevity and stability for you.

Property investment can be a risky venture if you get it wrong. Therefore, it is necessary to follow the correct strategies to ensure that you are venturing down the right path.

With these skills in place, you can therefore plan out the next 10 years and how you can retire through property.

There are many plans you can choose but if your aim is to “retire” from a day job, then property investment can be the way to do this slowly but surely.

Watch out for Part 2 coming soon where I take you through two examples of how you can effectively “retire” from property within 10 years.

Recession-Proof Cashflow Strategies

By Matthew Moody | Property Investing

In today’s market with uncertainty only a capuccino away, interest rates potentially on the rise, rumours of a capital crash costs seemingly doubling over night, it is crucial that you implement cashflow strategies into your portfolio.

But what is cashflow and how does it impact me?

At its very basic, cashflow is the money that you have left after all of your income has come in and all of your expenses have gone out.  It can be very easy to overlook when things are doing well – but when they aren’t, it’s crucial that you focus on ensuring a positive return at the end of every month.

Cashflow Strategy 1: Rent Your Properties

This strategy is very simple but you’d be surprised at how many landlords allow one of their properties to become vacant.  This may even be you – do you have one, two or more vacant properties right now draining your cashflow?

If so; your immediate priority should be to get this rented – even if you have to take a short-term hit.  By this I mean, if you have lower the rent below what you really want in order to get your property filled – then do it.  I’ve taken hits of £50 to £200 on a month sometimes to get a property full but this short-term approach will ultimately serve you well as the added cashflow (even if it is slightly negative) will ensure that the portfolio as a whole should be cashflow positive.

Top Tip: A lot of landlords now are using the Local Housing Allowance to boost rents because often, they will pay more than a private tenant – such is the demand for social housing now.

Cashflow Strategy 2: Manage Your Expenses

This one is crucial and could make or break you very quic

Every expense needs to be justifiable and beneficial to your long-term aims.  It is also worth reviewing all major expenses at least quarterly to investigate what you can reduce.

So, perhaps your long-term aim is to buy 3 properties this year but so far, you’ve only bought one but you’ve been to 4 networking sessions a month.  STOP!

Networking is highly beneficial but it needs to be tempered with the right objectives – for instance, I generally allow around £100 in expenses for every networking meeting I attend outside of my immediate local area (20 miles or less) because this is the true cost after mileage, parking, subsistence, networking fee, drinks and kebab on the way home.  You get the picture.

So far this year, I’ve saved over £250 per month by switching my utilities to another provider; £50 in subscriptions I never used and another £150 through cutting out some networking sessions/meetings that were not productive.

Top Tip: Set a target for yourself of £100 savings and see how easy it is to reach this figure.

Cashflow Strategy 3: Lease Options

This is another way in which you can release additional cash flow from your properties.

The brilliance of this strategy is that the tenant you are appealing to is somebody that ultimately wishes to purchase the property from you.  They are highly unlikely to default, they’ll normally pay over market rent plus they’ll give you a nice deposit of 3-5% of the purchase value when they move in and they’ll pay around 20% every month in additional rent payments towards their deposit.

That attached to their longer-than average tenure (so no voids) together with their willingness to look after and maintain their new home means that this strategy is already starting to be implemented by many savvy investors.

Why This Strategy?

• Larger Deposit
• Above Market Rent
• 20% Additional Rent Payments Towards Deposit
• Long-Term Tenants

Top Tip: Advertise for Rent to Own clients FIRST before going and purchasing a house.  This way, you are secure in the knowledge that you have a number of leads that you can offer the property to.

Cashflow Strategy 4: Mixing It Up

Look at ways in which you can mix up the rental income from a particular property that you own or are considering buying.  You don’t just have to have one income coming in per property – you could generate multiple incomes from residential and commercial clients.

You can make substantial returns from small shops with flats above them, dividing a larger property into flats, getting planning permission for a corner plot build, renting out garages or parking spaces, providing corporate or short term lets – the list is endless.  You just need to sit down and think of some ideas outside of the box.

Here’s one I am currently trailing which is working great.  I own a lot of large detached houses with garages.  I’ve been renting these out successfully for the last couple of years for people who want to store a classic car, a sought-after motorbike or just general household junk.  I’m getting £20 to £40 per month for each garage – it’s not a huge amount but I’ve just increased my yield by up to £480 per year!

Top Tip: Look at any unused space in your property or garden and figure out what you can use it for.  We’re considering turning an old out-building into a small flat at the moment.

Cashflow Strategy 5: Sourcing

This is for a time-rich person who can go out there and start doing some deals.

Perhaps you haven’t got the funds to buy right now; perhaps you’ve got a good marketing system going and too many leads to know what to do with them, perhaps you want to build some cash up before you get investing yourself.  Either way, sourcing property for other buyers is big business.

You can do this in a number of ways:

• Sell on unqualified leads
• Sell on telephone qualified leads
• Qualify and Package a deal
• Package a deal with “lock-in” agreements and financing

All of these will give you varying levels of fees from £50 up to 3% of the property’s value at the top end.  It’s possible to make a very good living just sourcing and passing through deals to other clients.

Top Tip: Focus on one particular type of sourcing and become very good at that.  A niche market will always outperform a broad market so keep it focused and the customers will come.

Cashflow Strategy 6: HMO’s

For me, the holy grail of property investing and where the real cashflow returns are always made.

Take a property and rent it out by the room to young professionals.  You can expect to double or triple your yield instantly and the good thing is you can even do this on small 3 bed houses.

Let’s look at an example:

3 bed end terrace worth £125,000 with 3 bedrooms (2 doubles, 1 single) and 2 reception rooms.

What I would do is rent out four rooms, keep one aside as a communal area and take rental income of £1472 to £1645 per calendar month.  Take approximately £100 per month per tenant on bills and on an average 85% gearing, your monthly cashflow would be £497 to £670 per calendar month!

A lot of people believe that its hassle to run HMO’s and I have two comments on this.

Firstly, is it worth the hassle to take a 3 bed terrace from a 5% to a 16% yield?  I think so.

Secondly, it does take some time and effort to set up in the beginning but once you have a HMO running, it’s no more than a couple of hours per week per house.

Top Tip: Buy a 2-storey property with 4 bedrooms and 2 reception rooms giving you 5 bedrooms to play with for less than £200,000 and you will make at least £500 per month minimum.

Summary

Property investors have always been in the market for the long run.  But why not make great cashflow at the same time?   Ignore the negative press, lenders tightening up loans and the testing times ahead.

Instead, work on your cashflow in the next 12 months and keep your properties ticking over, then by the time of the next property boom, you’ll be a very wealthy player.

In the words of Jerry Maguire “show me the money” and the cashflow will keep you going.

Show Me The Money

By Matthew Moody | Property Investing

I love this clip and I think anybody serious about property should love it too.

After all, what is anybody in property investing for – unless they want a little piece of the pie.

We don’t go through all the heartache, the blood, the sweat, the tears, the disgruntled tenant, the broken toilet, the boiler and central heating going on a saturday night in december, the kitchen flooding, the non-paying obtuse tenant, the tax return, the worry, the stress, I could go on and on and on…

No, we don’t go through all of this for the good of our health.

We do it so that one day we can see the money (cashflow) coming trickling through, then roaring through.

Of course, if you have HMO’s, you’re pretty much going to see this roaring cashflow straight away – but always remember to keep some in reserve for a rainy day (!).

Enjoy this classic clip and make sure that you ask somebody everyday to “show me the money”.

HMO Management Service

By Matthew Moody | HMOs

Cashflow = K + S + RP

By Matthew Moody | Property Investing

Is No Money Down Dead?

By Matthew Moody | Property Investing

Provocative?  Crazy?  True?  False?  Not sure?

Let me tell you – the landscape for property investing has changed beyond all recognition in the last 8 years.  Back then, anybody with a pulse could roll along, choose a nice cashback deal, find a liberal lender, buy the property and get a nice cheque in return.

Never mind that:

 ·         The cash was a loan! 

 ·         The property did not cashflow and every month needed supporting

 ·         The cash had already been spent on a holiday to Benidorm! 

 ·         Often, the proper due diligence was not done and the investor ended up with a real dog!

This wasn’t and isn’t property investing – its property speculation or worse – gambling.

I was at a launch event when I got talking with Martyn Roberts (BBC’s “Homes Under The Hammer” property expert) who was telling me about investors he meets on his programme who ignore his advice and still buy a dud.  Martyn is a professional investor and has been involved in hundreds of property sales – why would you not take his advice?  The guy that bought a bungalow £50,000 over market value at auction thinking it was a house didn’t and now has a problem.  And Martin even advised him not to buy this but he did – and thinks he got a good deal.  Another guy wanted to buy a property for his son, so he turned up to an auction, bought something and then found out that because there is a big difference between an N1 and an N2 postcode (or may’be it was somewhere else in London – I forget), he had paid £50,000 more than he should have done!  That coupled to the fact that his son didn’t want to live there made it a bad deal – or did it?  Nope, the buyer thought he had got a good deal and was going to refurbish it and then try to sell it….  Wonders never cease.

Don’t get me wrong; you can still invest in property and release capital – but you need to have a plan to utilise this money correctly.  On a daily basis, I see so-called deals with discounts of 30%, 35% or even 40% off what – a list price, a real price or a RICS valuation?

Given that surveyors have been instructed to down-value by 10% in the general market, any so-called discount needs to take this off right away.  And if its a private sale, surveyors are viewing these with a great deal of suspicion and down-valuing these as well by 10-20%!

But what about the experts who help us?

People are chasing a dream which property gurus seems content to sell you but are they truly walking the walk or just talking the talk?

Does anybody tell you what to do with the property once you’ve bought it…?

The time for amateur investors chasing no-money-down deals is over. 

Just look at what’s happening with the government schemes for landlord registration, more red-tape and regulations, tighter control over lending and requirements for landlords to attend training and certification – where are you going to position yourself to succeed in the future and who are you going to associate with?

The questions you need to ask yourself are:

 ·         What is my primary aim and objectives for my business?

OK, so you know you’re in property but what is your ultimate primary aim?  Do you want to be the next Donald Trump?  Do you want to live in an island in the Carribean (incidentally, anybody see that one in Montserrett for sale for $400,000 last night?).  May’be you want to earn enough to pay for the kids schooling?  May’be you want to retire to the south of france in 10 years time and run a guest-house!  I don’t know what you want but you need to start here.

·         What skills and experience do I need?

This is going to be really useful for you when approaching banks, joint venture partners and other industry professionals.  Get your CV in order so that you understand it, create a biography if it makes sense for you and then start identifying how to use this past experience in your property business. 

·         What core competencies should a property investor have – and how do I rate myself against them?

·         How am I managing my time?

Lots and lots.  We’ve identified at least 20 key skills that you’ll need as a property investor.  These range from financial management to selling to marketing.  Some can be outsourced, some can be shared but you need to understand what your KEY skills are and how these compliment the people you are working with.

Big one this!  You need to do a time and motion study for the next 7 days, cluster your time into sections such as negotiating deals, researching deals, portfolio management, marketing, family time, watching tv etc.  Then tot it up and look at the percentages – there’s a fine line between what you think you’re doing and what you should be doing.

·         What is my current situation – and what are my future goals?

The main one to start focusing your mind right now!  Look at where you are today from a portfolio value and cashflow perspective.  Then look at where you want to get to and how you can break this down?  It helps if you split it into categories such as single let, HMO’s, land, development etc.

What if you need more help!?

It’s my mission to bring the worlds of business and property together and help investors everywhere to build a profitable property business.  As part of our service, we can provide a Strategic Needs Analysis review of your current business to help you understand where you need to change and where the quick-wins as well as the more mid-to-long-term strategic objectives lay.

If you want to be part of a business-minded community that just happens to be in property, then make sure you keep an eye out for our new HMO100 Mastermind £=mm2 coming soon..