If Today Was Day 1, What Would You Do?

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If Today Was Day 1, What Would You Do?

Postby NickD » Thu Oct 30, 2014 2:20 pm

Greetings All,

Having recently returned from a lovely trip to Spain during which I had time to turn my phone off, sit beside the beach and ponder the meaning of life (as well as thinking how great Air bnb is), I considered the following:

Many of us, through design, accident or coincidence, have followed a property strategy over a considerable period of time. If it works, the temptation is to keep going down the same route i.e. if it ain't broke, don't fix it.

But what I wondered was IF you started again from day 1 but knowing what you now know, what if anything would you do differently on your property journey? I don't mean looking back with hind sight and saying you would have invested 100% in areas that have produced the best returns over 10 / 20 / 30 years, but more in terms of strategy and how you run things day to day.

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Re: If Today Was Day 1, What Would You Do?

Postby Rob H » Thu Oct 30, 2014 5:39 pm

Good post Nick. Actually I was pondering a similar thought last night in bed in relation to perhaps how I should have managed the letting agents that i started from nothing and subsequently sold off.

In terms of starting from day 1, I would be much more businesslike with tenants in terms of payment arrears. I've been much too lenient, too many times and without exception have had my understanding and goodwill repaid with realistically unrecoverable bad debt. Arguably bad debt is inevitable in business but there are good and bad ways to manage it. We have now adopted a pretty much zero tolerance approach and say so up front to new tenants.
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Re: If Today Was Day 1, What Would You Do?

Postby Jo King » Thu Oct 30, 2014 9:57 pm

Well, don't tell Deric but I'd have married George Clarke :D

But I only want him for his amazing spaces ;)

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Re: If Today Was Day 1, What Would You Do?

Postby Nick » Fri Oct 31, 2014 6:03 pm

Nick,

I've been pondering my answer, because it is quite a complicated question to answer, because you specifically rule out hindsight, and avoiding mistakes. I've made plenty of mistakes, but by the rules of your question I can't avoid them.

I've always run my business, not as a property business, but by the general business rules & practice that I was trained in whilst working in FMCG. I have no regrets about this, and I certainly wouldn't change that strategy even though it means that I missed out on a number of financial dodges in the 2000 - 2007 period.

Rob raised an interesting point about ethics. Over the years I have done tenants massive favours, just as Rob describes. In almost every case they were not appreciated, and later on the tenant proceeded to rob me, sometimes of substantial sums of money. I undertook a charitable housing program with the Salvation Army, and whilst we managed to turn around several people's lives, an equal number chose to stomp all over the help that they were given. My costs have been way beyond the donation that I thought I was committing, and I would be very reluctant to commit my business to direct charitable work again. That is not to say that the ethics issue is all one way - there is a lovely nurse called Claire out there somewhere who lost her deposit because she was Jointly & Severally in a tenancy with a bitch called Annabelle. With the due reflection of 20 years I would like to give Claire her deposit (with interest) back, because it wasn't her fault Annabelle was devious. There are good people and bad people, and I wish I could alter the law more in favour of the good people.

If today was Day 1 I would have to say my prior experience is of no value. I learned my trade when the Telex machine ruled, and I remember a group of us going to the mail room in wonder to observe what we couldn't believe was true - a fax machine that could convey a piece of paper to the other side of the world instantly. If today was day 1 I would fall back on the age old foundation of business - I would be building my contacts, and advisers. I would build a network of people who thought like me, and would help me act like them.
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Re: If Today Was Day 1, What Would You Do?

Postby keith » Fri Oct 31, 2014 11:50 pm

Easy Purchase 5-6 small terraced Houses in Lincoln for what I paid for my decent sized house.

Used the rents to buy my bigger house over about 4 years, then reinvested the rents s and what i' be paying on mortgage in More properties.

I reckon by know I'd have about 40 properties worth 4 Million or so so now sell all but mine and buy land and properties in Crete - Prices are at I reckon as low as they can go.

retire job done
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Re: If Today Was Day 1, What Would You Do?

Postby Jo King » Sat Nov 01, 2014 1:11 pm

Although Lincoln seems to be experiencing some small growth & falling unemployment it's Interesting you would choose cheap areas with low capital growth and have more houses/tenants/hassle for your money.

I just wonder if the capital growth has been more or less over the period you've owned it than 4-5 houses in Lincoln?
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Re: If Today Was Day 1, What Would You Do?

Postby keith » Sat Nov 01, 2014 6:34 pm

1980 Small terraces £6000 each now £100,000 each not a bad return,

the bigger house I had went from 23,000 to 260,000 recently

The Let house in Lincoln Bought in 1990 for 42,000 is now worth about £150,000
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Re: If Today Was Day 1, What Would You Do?

Postby Jo King » Sat Nov 01, 2014 7:04 pm

Its interesting as I did some DD on Lincoln for a friend selling a property recently. I remember it being very cheap there in the 90's.
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Re: If Today Was Day 1, What Would You Do?

Postby LisaOrme » Sun Nov 02, 2014 11:07 am

Without a doubt I'd have sold more. I thought property was about volume but I don't think it is. I'd aim for a much smaller portfolio of quality unencumbered properties.

It's ironic as a mortgage broker to go against gearing but I would. Not initially in the acquisition stage but certainly quicker than we are doing.

We did buy to sells to enable us to buy more properties, now I'd do buy to sells to clear the mortgages on a smaller number.

If I started with a million I'd definitely buy just one property cash in a high growth area like London or Sandbanks and let time do its magic but starting with a million wouldn't even happen in hindsight so I'd do the above.

Luckily I'm now aware of it and am able to correct my course and that's the plan for the next few years.

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Re: If Today Was Day 1, What Would You Do?

Postby Nick » Sun Nov 02, 2014 12:29 pm

Lisa,

Leverage works, but works in both directions. Borrowing allows you to make bigger profits, and bigger losses.

Buying a smaller number of more expensive properties allows you to leverage your time.

Every successful property investor that I know is seeking to take their portfolio upmarket, and to pay down their debt:

Nick wrote:Do you have an exit strategy (retirement plan)?

Glenn Armstrong wrote:60 properties, no mortgages, 50k cash flow per month
selling some off some to pay down others when capital gains allows


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Re: If Today Was Day 1, What Would You Do?

Postby NickD » Thu Nov 06, 2014 12:22 am

Greetings,

As I posed the question I suppose I should provide my answer too...

First, I would focus on one geographical area that I got to know in forensic detail, accepting other areas may see higher growth / better yields.

Second, I would outsource more of the jobs I really dislike and would install systems for others.

Third, I would purposely build a mixed portfolio including higher yielding commercial and resi for shorter term income, more traditional buy and hold in better areas and would probably allocate a higher percentage to longer term land banking / planning gain / mixed use on 10 year tenancies.

Fourth, I would do more JV's.
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Re: If Today Was Day 1, What Would You Do?

Postby Nick » Thu Nov 06, 2014 8:34 am

NickD wrote:
Second, I would outsource more of the jobs I really dislike and would install systems for others.

Fourth, I would do more JV's.


Funnily enough about 4 years ago I set out to do exactly this. I had sat back and reviewed my business and my life, and set about exactly these 2 objectives. Without trawling through the details of why, the last 4 years have taught me that it isn't that easy, in fact I would say that I comprehensively failed, and I have returned to Old Kent Road without passing GO & without collecting £200. I have restarted, buying Paddington Station and a couple of Utilities & things are going better second time around.

A fifth item which hasn't been mentioned is personal and professional development. I received some extremely high quality development from my employer (cue SG) including expensive spells at the LSE, Bradford & Cranfield Business Schools and some very expensive courses (I know I picked them :D :lol: ). Since I started paying with my own money I have been less generous than my erstwhile employer, next time around I will be more generous.
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Re: If Today Was Day 1, What Would You Do?

Postby Steve Griff » Fri Nov 07, 2014 1:46 am

Did I mention I worked for Heinz? http://www.heinz.co.uk/

Taught me all I know about pebble dashing :)
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Re: If Today Was Day 1, What Would You Do?

Postby Jo King » Fri Nov 07, 2014 8:26 am

NickD wrote:
First, I would focus on one geographical area that I got to know in forensic detail, accepting other areas may see higher growth / better yields.

Second, I would outsource more of the jobs I really dislike and would install systems for others.



This resonates with me because I know very well that doing thorough DD on my chosen location for Students has reaped rewards when others who invested in students accomodation in the same city have failed.

And if it were day 1 I would have more in this location because its also excellent for other types of property. However, one of my easiest and best investments has been over 1000 miles from home and I dont regret it for a moment so I dont necessarily think staying in one location would be more financially rewarding or any easier. As you've identified here Nick, its about good delegation and having good people to delegate too - not easy.

I do believe a mixed portfolio is the way to go and I would definitely develop good relations with a property management company, which takes time and commitment. No matter how able you are, one day you will have situations where you are not able to deal with that emergency or crisis - you will almost certainly regret not having someone to call on.
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Re: If Today Was Day 1, What Would You Do?

Postby fenderiba » Tue Jan 27, 2015 1:10 pm

Nothing as usually
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