Is No Money Down Dead?

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..