This week’s episode comes directly from a listener suggestion. He wanted to hear about our first property investments, and we were only too happy to take the opportunity for a trip down memory lane.
We both talk about our first two deals – in the Wirral and Leeds for Rob B, and Kings Cross and Tottenham for Rob D. Find out how much they cost us, what profit they’re making, and most of all…do we regret buying them?
Rather than being self-indulgent, we hope these will serve as useful case studies – and a reminder that if you’re just getting started, you don’t need to be fixated on getting the absolutely perfect deal on your first try. Ours certainly weren’t perfect, but without them we wouldn’t have learned what we needed to get us to where we are today.
Resource of the week
Another book this week: Shark Tales by Barbara Corcoran.
Barbara took a $1,000 investment and used it to build up the biggest real estate firm in New York City, and this is the story of how she did it. Even if you don’t reach the same scale, there are plenty of lessons.
Barbara was also interviewed on Entrepreneur on Fire, which is well worth a listen.
This week’s news
An estate agent in the Daily Express said that the London property bubble isn’t going to burst any time soon…but we’re not so sure.
We talked about it in relation to “the ripple effect”, and whether the best value is currently to be found outside the capital.
Mentions this week
We also mentioned that we’re both going to be interviewed separately on Entrepreneur on Fire in the coming weeks, which we’re ridiculously excited about. If you’ve not listened before, check it out – there’s a new inspiring story about an entrepreneur’s journey every day.
Tell us what you thought of the show!
What do you think about our first investments?
Did it make you think differently about making the plunge into your first investment, or did it prompt you to think back to your own?
Just let us know by leaving a comment below!
If you enjoy The Property Podcast, please leave us a review on iTunes
Reviews are really important in helping other people to find the show, so by way of thanks we read out every single review we receive.
Rick: Welcome to the Prosperity Podcast.
Rob B: Whoa, whoa, whoa. Rick, what’s going on? The Prosperity Podcast?
Rob D: This is unacceptable.
Rob B: We’ve been your biggest fans.
Rob D: We’ve been defending you.
Rob B: This is retake 97 Rick. This is outrageous.
Alright were going to have to call it a day. I’m sorry but the people have spoken. We now have to listen they’ve been proven right we’ve been wrong. Rick, you’re fired.
Rick: What you’re getting rid of me? I don’t even like property anyway.
Rob B: Tell you what Rob he’s a feisty one isn’t he?
Rob D: Feel a bit shaky. Not a nice way to start an episode but you’ve got to be cruel to be kind sometimes. For the greater good of the podcast.
Rob B: You have. But the people have spoken; it’s what they all wanted so ladies and gentlemen it’s Rick’s last show. You’ve got your way, but anyway. Before we dedicate the show to Rick let’s move on with the Property Podcast episode 19.
How are you Rob?
Rob D: I am, I’m alright, I’m alright. If we manage to recover sufficiently from that and get our composure back then we’re going to be having a really great episode this week cause were going to be opening up and sharing our first steps in property. Cause a couple of weeks ago we talked about our goals and we’re focusing on ourselves again today by talking you through the first properties to be ever bought. And if you stick around through the self indulgence we’ve got another really great book recommendation as our resource for the week.
Rob B: We have to point out the self indulgence has been requested. We’ve had more than 1 listener who’s gone [00:01:24] a few people now have actually said “Guys the information is fantastic but can you give us a tangible example of how it could work?” And it’s going to be interesting because your first investment will never be your best. You’re probably going to see that from what were going to go through however there’s lessons you can learn. So hopefully from our mistakes and we’ve got right you can learn a lot from this episode so I’m really excited about it.
It’s been quite a busy week gone and week upcoming. Myself I’ve been to a wedding, we had a search of appointments I don’t know if its summer and people have got time off now and they’re just booking in to come in to the office and visit our MP and put their plans together. Also we’ve got a big interview each later today rob haven’t we to report?
Rob D: Yeah with Mr John Lee Dumas from Entrepreneur on Fire, this is another of those really brilliant things that come about somehow as a result of doing this podcast. It’s another podcast; we linked through it before I linked again in the show notes. That we’re just huge fans of them we listen to it every week, it’s a daily podcast so we listen to it most days actually. And were going to get to be features on it so that is a really exciting moment and it all come about because of this podcast.
Rob B: We’re really honoured to be in the podcast because it’s one of the biggest in the world over a quarter of a million people download it every month. It’s absolutely huge it’s a podcast well worth listening to because there’s some really fantastic people been interviewed on there and somehow we’ve managed to squeeze ourselves into.
Rob D: yeah bonus.
Rob B: and also if that wasn’t good enough the fantastic Rightmove have featured us.
Rob D: All thanks to @RightmoveAddict on twitter, that’s Andrea Morgan. She got in touch we had a lot of back and forth and she ended up interviewing us for the Rightmove blog and it tells the story of how this podcast came to be and a little more about us. And it’s really great to be there on the blog of a resource that we use so often. So thank you very much to Andrea for that.
Rob B: It’s the biggest property website there is in the UK so to be interviewed in those is a real honour so it’s been awesome the support you’ve given us has only allowed us to do these things. So thank you for continue listening in your thousands and we do appreciate it. We love doing this and were happy to carry on because the support is fantastic. It’s nice to say please do keep your reviews coming because these things are coming about because of the reviews you’ve left and people have taken notice. So please continue to leave your 5 star reviews because that should keep people finding us, it will allow us to do these exciting things so thank you very much.
As we do always I’d like to thank two people in particular this week both of them called Chris so it’s nice easy one for me. The first Chris says “I found this podcast by accident. Very helpful and refreshing content. The format is simple, paunchy and friendly. The American voice is enough – don’t worry we sorted that one Chris- regional accents would be better.” Stay tuned Chris cause you’ll see what’s going to happen next week, but that’s my own emo he says. “It’s fantastic, helpful, thought provoking. A great help to me; a self made landlord property developer who’s making it his way by watching others mistakes and learning a lot and also a bit of luck.” So thank you Chris that’s a really nice review.
And ChrisB2013 says “A great podcast it’s full of really useful information, good advice. It’s really great that they took the time out to do this podcast which I know many people find interesting and ultimately a great source of inspiration and using everyday language. Highlights the pitfalls and best practices which ultimately benefits the landlords and tenants. Thank you guys.” Well super! Thank you Chris and Chris lovely reviews and prove that we also listen to them as well.
Rob D: And yeah it makes us feel really great to read those and really spurs us on. We’ve taken episode ideas directly from the iTunes reviews from the past so if you do have anything that you want us to cover in the future like we’re going to today then let us know in the iTunes review or let us know by contacting us through the website.
Rob B: But for now rob shall we get moving on to the news?
Rob D: Yes
Rob B: In the Express this week there’s an article put together and it there was an agent and he’s explaining why he thinks the property London price bubble is going to continue. He talks of Cyprus money now coming in to the country so we’ve had a lot of Russian money and Chinese money and money from Singapore, people all are coming into London and buying. Now Cyprus that’s happening too because since the crisis over there a lot of people are bringing their money back into London cause they see it’s a safe haven. And he uses another argument to say that this will continue and the property price bubble in London will move forward and onwards.
Interesting Rob, I’m not so sure. I know it sound for me to be negative because every time there’s a price bubble people always say “Its different this time, the prices will continue.” and that’s a typical tell tale sign of a bubble when people say “Oh this time it’s different.” What do you think?
Rob D: It’s interesting actually that it talks about this whole Cyprus thing being under reported. It said in the article we don’t hear that much about it relative to the impact that that is having on wealthy Russian investors and stuff wanting to move their money around. And I thought that was just me being out of the loop cause I was abroad but it seems like there has really been underreported and yet another driver of that ripple effect that you talk about a few weeks back having all these money plunked into the middle of London is like having ripples going out a whistle way into the rest of the southeast and beyond.
Rob B: It’s another interesting reminder of that but whether it will continue I just don’t know. I don’t see that being a massive crash in London but I do feel like at some point were starting to hear lots of good news stories about help to buy and prices and activity and so forth in the rest of the country and it feels to me like London might start slowing down or maybe coming into a little bit of a standstill and the rest of the country might catch up. Which in my mind is no bad thing because London has just been romping away from the rest of the country to a ridiculous extent in the last few years.
Rob D: It’s really interesting rob because we didn’t talk about this article before we’ve started recording and my views are almost identical. I do think the value now is outside of London. I don’t think London will crash I just think it’s going to slow down. Now I can’t say when because nobody knows, it could push on strong for two years before it starts to slow down. But I feel there’s so much value now outside of London at these commuter towns that you can get to London within an hour. In London you might get a one bed apartment for 300,000 or you can get a detached house 40 minutes away from London. Some people will still want to live in London but a lot of people are going to say “well actually I see the value, I’m happy to commute, I want to live outside of London.” And I really do feel that’s what’s going to happen.
Rob B: You buy for different reasons don’t you. All these foreign investors are buying because London’s safe and London will always be safe even if you’re not getting a great yield. If you’ve got a decent property in London you’re not going to struggle to rent out. I suppose like the equivalent of buying a share in a really massive company like Tesco or something like that, you’re not going to get the highest yield but its going to collapse you feel pretty safe. Whereas the value, the things that maybe other people haven’t noticed and the things where there’s most growth potential are going to be outside London. I was reading in The Economist this week about York which I didn’t even realize is only like a two hours by train from London and apparently that’s really booming with lots of new jobs and lots of tech initiatives. And so you can see there’s so much more potential for growth there if prices have been held back by regional trends. Whereas London is going to hit the ceiling at some point isn’t it?
Rob D: There’s something I said a few weeks ago in the podcast that really believing is true here that when people start talking about an area being the ultimate hotspot, the place to get your money in you’ve already missed the boat. And I think because everybody’s banging on about London, London, London the best side of the growth is probably past now and the best time is probably 2008 if you’ve got in there you would have seen a tremendous amount of growth. I think were both in agreement its probably going to slow down at some point in the near future whenever that’s six months, a year, two years and the rest of the UK will play catch up. But let’s see we’re on record now we put it out there let’s see what actually transpires.
Talking of investments Rob that’s what we’re looking at this week on our own.
Rob B: We are. That really leads nicely on chart topic of the week which is our property investments. Were each going to share our first couple of purchase and like you said in the intro it’s not just self obsession we do get asked about this a lot. And the idea with this episode is we’re going to talk about what we did, were going to talk about why we made the investments we did and how we feel about them looking back now.
And hopefully if you’re in a position of just getting started you’ll hopefully be able to relate to some of the things we were thinking about and from listening to our stories you’ll realize that you don’t have to absolutely nail it with amazing deals right out of the gate. If you have been investing for a long time and you’re more experienced then maybe it’ll prompt you to think back to your first deals and how you feel about in retrospect now as well. So hopefully there’ll be something for everyone as a result of us sharing our stories.
Rob do you want to go first and talk about your very first investment?
Rob D: Sure. My first and second investment actually came very close together but they were very different. The first investment was the property I used to live in, I’m originally from Liverpool but I spent the majority of my life living on the place called Wirral. and the property I bought when I chose to live in it was a very large two bed apartment over 18sqft, very close to the shoreline The River Mersey so good area, nice place to live. Bought I was thinking emotionally. I wasn’t thinking best yield, best tenant demand and so on. I was thinking this is a nice place to live because I was buying with my heart not my calculator; that’s the first thing I should say.
At that time it was when you combine with very little money down it was a crazy days pre-credit crunch I bought at 95% mortgage and the property was just over 100,000. I moved out after the credit crunch so I bought just prior to it and moved out just after. And I notified the bank that I was changing the property to a buy-to-let mortgage. So you have to ask their permission but at that time they seem pretty happy to do it. I think one of the big things was the credit crunch is so scary that they were just like as long as you’re going to pay the bill somehow we don’t mind, so they were pretty open to change.
The good thing that happened to that property is the mortgage changed eventually to standard variable rates. Now Standard Variable Rate for those people who don’t know is you often got a mortgage and it’s on a maybe a deal for a couple of years or five years you often fix it in a discounted tracker or you actually fixed the rate. We’ve got another episode on mortgages coming out in the future so I’m not going to tell that much detail now but what happens after that rate is it moves to standard variable. The standard variable rate was better than the discounted rate I’ve got when I bought the property so the mortgage now is roughly 240. So I’ve rounded these numbers slightly just to make the examples easy. And the rent is 475.
And when I moved out which is nearly five yrs ago now that property was rented. The same tenant who moved in is in there now. Dream tenants and I have to say if you’ve not invested in property that doesn’t always happen. So I don’t want to give you the wrong impression that you’re going to have tenants that live with you for half a decade every time. They’ve been great, very little problems. and actually because the property itself was relatively new when I bought it, it wasn’t a new built but it was only a few yrs old, it’s not had any issues, I’ve had the washer dryer need repairing once or twice but other than that it’s been pretty straight forward for me. The management charges on that are quite low as well.
So that was an interesting one but then I moved out. After moving out within a few months I went and got my first, I suppose what you could call a real buy-to-let because it was intentionally bought. And as I was working in the industry property prices have come down, credit crunch has just finished. I wait, later, later, early 09 I targeted Leeds. So Leeds is a city I know well so the research side of it was easy for me cause I lived there for a few years so I knew Leeds. And for those of you who know Leeds its near Clarence Dock, if you don’t know you can just quickly Google it; it’s in the city central it’s a walk to the city centre. because I’ve worked in the industry I manage to buy below market value so at that time the property value was around about somewhere in between 110 and 120. I would probably say 120 but I just want to be conservative for this example.
I got the property for 87,000 because there was a lot of them reserved and the developer needed to move them on cause it was a scary time in the market back then if you’re think back I know things have settled now with property prices moving but back then you have to be very brave to invest. I’ll give you the rent now because it’s gone up since I bought it. The rent now is 700 the mortgage on that is around 203 it was bought on a 70% loans to value, that one so its 87000 purchase price. Because it was a new built it was 70% mortgage cause most new built mortgages at that time you could only get 70% I know you can get a little bit higher these days but at that time 70%, as I said not a great time you have to be a bit brave while I could see the value there. And then service charges and ground rent come in at about 90£ per month. So all in all I’m off about 300£ a month’s profit on that every single month.
So that’s a really good strong investment and its one of the better ones I’ve ever done actually considering the second one I did. The first one you would not go out and buy on those figures now, buy for a hundred with a rent of 475 cause you should try to achieve better than that. The second one well for 87 with now a rent of 700 so you can see the difference, its vast difference. And I was looking this morning Rob at Rightmove before we came on air and these properties in the same block and there’s only a couple on the market and the two beds in the same block are now starting at 140. That’s an asking price so you might not get 140 but there’s nothing that’s been sold on the block for the last couple of years which is pretty interesting so I didn’t have anything on the land registry so I just loved to see if there’s anything registered recently in the WOS.
That’s investment one and two, very different. One you could say was quite a boring, nothing exciting deal and the numbers are not that great. The second one you could say is a bit of a wow deal, it’s like woof there’s some really good numbers there.
Rob B: We’re going to come to a summary at the end when I’ve talked about mine but if I could just ask you a couple of questions while I think about all those. The first investment it was interesting saying that you kind of bought with your heart because it was somewhere that you were living and that’s going to be similar to mine as you’ll see in a minute but I thought maybe that could be the reason why you’ve had the same tenant in there for a long time and you’ve got really strong rental demand because you bought it because it was a nice place to live and if you thought that then chances are a lot of people are going to think that’s a nice place to live as well. So that might not actually be a bad test to use when buying anywhere because well is it just the numbers look good or would I actually want to live here and it seems like thinking about that has accidentally stood you in quite good stead even though the numbers aren’t spectacular at the moment.
Rob D: It clearly is a factor because it’s a nice leafy street and as I said a short walk to the waterfront you can get there within a minutes’ walk so it is a nice place to live and it’s a big apartment so I could see why the tenants wanted to stay there in a 475 a month its probably no surprise. Could I get a little more in the rent? Probably but again it’s that opportunity cost, if I moved them on and it takes me 3 or 4 months to find a tenant for extra 25£ a month say it’s not really worth my while cause I’m taking a knock on three 475 during that time. The rent actually has moved up since they first moved in you just got to be careful on that I think. We’re not robots so you’re never going to only be able to buy with a calculator there’s always going to be some emotion involved. The Leeds had had 2 or 3 tenants in the same time but that’s not excessive and its always rented really quickly that doesn’t worry me too much because if you bought in a good area with good solid fundamentals which should be doing its standard procedure then you should always get tenants even if they moved on, should never take too long.
So yes I definitely agree with your point. Would I invest in that particular one now? No. But do I regret it? Absolutely not, no it got me started.
Rob B: And Leeds still got those fundamentals it’s not a city that I know very well but I know that there’s an oversupply problem at one point and values did kind of fall in the crunch and they’re rebounding now. But what kind of research did you do before buying, did you go from like knowing nothing about Leeds to doing a deliberate campaign of research about buying that particular investment or was it are you were aware of beforehand?
Rob D: The answer is I did know the area. I had to live in that particular part of Leeds so I was familiar with the area. I knew it was walking distance to the city centre and I remember because I lived in Leeds pre-credit crunch so a few years earlier and I remember the cheapest apartments, I knew they were flying up everywhere but the cheapest one you can get into we’re sort of 150 and they were awful. So I remember the prices, half decent two-bed was way over 200,000. After the credit crunch it just seem like there’s so much value in it because to be able to pick a two-bedder in a really nice block for 87 it just screamed value because that effectively meant that they were 50% or less than where they were and I just felt like as often happens with any boom or bust.
The boom accelerates too far but the bust comes too far the other way as well so it overshoots both ways and I felt that the amount of rent return for that particular apartment where it was and what they were selling for only a yr or so earlier it just screamed value to me numbers wise. If I’d listen to a vast group of people I would never have bought that as that would have been emotion. The numbers it just said to me this is just strong, they can’t stay this low forever. The fundamentals were there, the rents was strong and even if the prices rose on the back of the rents, which you could argue that’s the only reason why they’ve gone up, they were still going to move forward in pricing. So yeah I was really happy with that one.
Rob B: And you’ve got a hell of a yield on it which is a bit privy about what were going to be talking about next time. Alright shall I talk about mine then?
Rob D: Yeah I’m interested in hearing your story Rob because I know where you’ve bought but I don’t know the ins and outs so it’d be quite interesting to hear what you’ve done.
Rob B: The first one I started out buying as my own home as well exactly the same as you. And it was a one bedroom flat in Kings Cross that I bought in 2006. Back in 2006 it’s kind of hard to imagine now but the market was ridiculous, it was like the peak of the mania and I was trying to buy my first place and everything, like you have to view things the second they came on to the market or they’d be gone. You have people calling up and cancelling viewings because someone would have snapped it up without even seeing it. And you’d have things which are going to like sealed bids and it was just nuts. I was buying to buy something in the middle of all these and at that time I was working full time, I was often working very late into the evening.
So I was looking at Kings Cross because it was really well connected to trains and night buses from any part of London so that was kind of the criteria that I was looking at just for somewhere to live. And in Kings Cross I found this ex local authority property which no one seemed interested in even though the rest of London was going nuts. No one was viewing this place even though it was in an amazing location, the rooms are huge and it was really cheap comparatively. I think the reason for this for the lack of interest was that it was right on the edge of an estate that about 5 yrs previously have been really notorious, like you’d Google the name of this place and the craziest newspaper articles would come up about all the stuff that’s been going on there. I think that really put people off but if you actually went there you could see that it’s been totally cleaned up, they’ve pout a lot of money into it, it was a totally, totally different place.
So it didn’t bother me cause I knew that they sorted it out and I was just buying somewhere to live on and I knew that I’d be happy there but I did still consider the resale part of the equation. I knew that if I wanted to sell it on it would be something of a problem because an ex local authority on the edge of an estate it’s not going to have the same appeal of a three minute walk away there are all these beautiful Georgian terraces, it’s never going to have that kind of appeal. So I knew that would be an issue when it came to reselling but I was okay with that.
In the end I bought it for 177,000 and I don’t remember what the asking price was and I didn’t negotiate very cleverly, I knew nothing about negotiation at all, as I’d said there was like zero competition so I got something off the asking price, definitely. And I lived there really happily and then 5 years later I wanted to move out so I got consent to let from my lender and I rented it out to a couple of student from UCL.
And that’s still rented out to students now and it’s generating a rent of over 1300£ a month and if I wanted to I could put that rent up and when these tenants leave, I’ve got brilliant tenants at the moment when they leave I might put the rent up. And by pure fluke Kings Cross as an area as a whole has had a lot of investments over the last 5 years so it’s worth substantially more than I paid for it now and so there’s equity that I could tap if I want to. And I can’t imagine ever wanting to sell it, I’m hoping the reason I can’t imagine selling it is because it’s such a brilliant rental unit. I don’t know it could be that there’s some emotional attachments tied up in there as well being my first home. But that’s one where I definitely bought it for me and then got very lucky that it turned out to be a good investment property as well.
Rob D: So before I ask you some questions on that lets hear about your second one and see if it’s a similar story again to what I did.
Rob B: Well this is where we diverge I think. This is my first intentional investment and this is 18 months later or so and by this point I’ve been doing a lot of reading online, going through forums back then there was a forum called Singing Pig which was really popular and I was thinking a lot about different investment strategies. By now I was actually running my own business and I was trying to scale that and I had really, really limited time. I knew I wanted to buy somewhere I was really interested in property but my main concern was buying a rock solid, reliable income stream. I just wanted to buy somewhere and not think about it ever again, I just didn’t have the time but I just wanted to be in property because I knew that it was such a great long term form of generating wealth.
That kind of got me to the idea of buying specifically to let to housing association and the idea with that is they’ll guarantee the payment of the rent for 3 or 5 years so they’re essentially, they’re renting it on to people who are receiving housing benefit but they’re taking care of everything. They’ll take care of all the management and whether they get paid by the tenant or not whatever happens they will you the rent guaranteed on the first of the month for either 3 or 5 years. And supposedly they’ll return it to you in the same state that you gave it to them, but that’s the test here.
I did a lot of reading about this, vie got some advice from a couple of people. I spoke to the housing association to find out what there’s a demand for and I specifically bought a two-bed ex local authority flat in Tottenham to rent to them. I know a lot of people don’t like flats but I like flats; there’s less maintenance. I like ex-local authority flats because they’re big and they tend to be cheaper and the service charge is sometimes a bit more predictable than with a private company. So I bought this flat for 135,000 two bedroom flat and it was a probate case but for some reason the sons who are selling it had just put in a new kitchen and carpet so I didn’t really have to do anything to it at all. That now rents for 754£ through the housing association, my mortgage is 320, my service charge is about 100£ its quite a lot a month and so it’s making me a profit of about 350£ a month. And I could have done better with that but at the time I valued consistency of income and lack effort above everything else so it made sense for my circumstances back then.
Now I’m at the point where my contract with the housing association is ending soon so I’ve got to decide whether to let it to them again or take it back. I’ll probably actually take it back because I know that if I rent it privately I would have a potential to make about another 300£ on the rent and I’ve got more capacity to deal with anything that comes up. Obviously I’ll have the risk of voids and I’ll have to have agent fees coming out of the 300L but it will end up more profitable. I bought it for a very specific purpose that purpose isn’t so relevant for me now but I think I can still make it work for me in a different way.
That’s my first and second investments.
Rob D: I know Kings Cross really, really well so I know what you mean by that boom. Here that’s gone crazy our own people proceeds to the meeting to that area so I know, I’ve seen it myself since I’ve been in London. Did you know that was going to happen?
Rob B: No. No clue. The thing about Kings Cross is it kind of had the fundamentals; it’s so well located that something had to be done with that and they were moving Eurostar at that time it used to run out of Waterloo and then they moved it to Kings Cross, that is part of that. There’s a whole redevelopment of some [00:25:47] and it’s like well you’re not going to want all these French tourists and business people stumbling out into Kings Cross and into all the prostitutes and the boarded-up buildings and everything else so. It was obviously something’s going to happen at some point but I didn’t care I bought there because it was convenient for me and got very, very flukey with everything’s that happened afterwards.
Rob D: On a complete side note if you’re not from London go visit St Pancras station it’s one of my favourite buildings it’s beautiful. Back to business though.
That’s really interesting because as we were talking about before when its common sense a lot of people seem to overlook commonsense principle. So we were both saying just outside London now it just seems commonsense that the property prices will move because there’s just such a vast difference in value. And it seems you applied the same principles at Kings Cross because it is zone 1, its transport links are fantastic, it’s really central. So why is it cheaper than everywhere else it doesn’t make sense, it’s almost like it was so obvious that people overlook it and there’s so many people follow herds and that’s why people who are now coming into the market late into London and start piling into London where maybe they could have look just outside. And I’m not saying they’re making a mistake though it’s just that sometimes the simplest things are the easiest to miss.
Rob B: I consider myself lucky that I have my own reasons for buying there cause I couldn’t have trusted myself if I’ve spotted that to have the confidence to go for it just as a pure investment.
Rob D: I’ve already answered this in my first investment but would you have done your first investment again and I think this might be a different answer. If that was going to be [00:27:13] looking back at what’s happened, would you have said yes id absolutely do that deal again or no I wouldn’t?
Rob B: Yes I absolutely would but I don’t know if I would have done, if that makes sense. So with hindsight it was a really great idea but if I’d been in a different situation I don’t know if I would have the confidence to do that because the interesting thing about both of those places I’ve talked about is that I bought both of them when I was totally alone in the market. The Kings Cross was when all these madness was going around and this place was just ignored, I was the only one who showed up to see it. And when I was buying in Tottenham that was when the credit crunch had hit and no one was buying anything and again it was a very unfashionable area so that’s a kind of a scary place to be. Its potentially rewarding place to be but you kind of know that you’re either ahead of the game or spotting something that no one else is or you’re just being really stupid. Its going to be one of the two and those were the case of both of mine and so I think I was lucky to have it forced on me cause you’ve got to be a little bit brave.
Rob D: My answer is different on the first one I don’t regret it at all because it got me started. But would I now go out and pay that money for that type of investment with that type of return? No way. But do I regret it? Absolutely not because it makes me a profit every single month the tenants live there from day one. It’s like I don’t even know it anymore because it runs so easily.
Similar to your second investment any regrets or do things differently I know you sort of touched on that already but how would you do it?
Rob B: It makes sense for me at that time I don’t know if I’d do it again now because I wouldn’t be specifically looking for something that was so kind of so predictable. I mean at that time I was very risk averse and now I wouldn’t be so scared of the potential of voids or anything else and I wouldn’t mind if I need to sort things out I’ve got more item in my hands and more flexibility. If I was doing it again I wouldn’t do that I’d be able to get a higher return for my money in another type of investment and I think I’d probably negotiate harder as well. Looking back it was such absolute dead time for the market and like I said it was a probate case, they needed to do something with it. I probably could have driven a much harder bargain, and so that’s a regret ;I certainly didn’t over pay but I think I could have taken advantage of being one of the very few people looking to buy property at that time and really got a good deal in some way. We’ll come to this in the summary in a moment but I think that’s just knowledge. At that time I didn’t know the power that I had and now I do so I’d do things differently.
Rob D: Let’s generally summarize over both of what we’ve learned. I think we’ve gone personal today we’ve given you an insight into our beginnings as property investors and maybe we’ll do an episode in the future where what we’ve gone on to do since cause we’ve actually gone to invest in different areas and done different things from how we started so I mean that would be an interesting episode. But looking at out very beginning in property investment I think have no regrets. Your first investment will never be the best deal you’ll do, it’ll probably be one of the worst unless you’re Rob and you buy in Kings Cross. You will learn a lot. We’ve said this before but you can read the books, listen to the podcasts but when you take action and do it for real you’re going to learn, you’re going to learn more than any of these. It’s the best education you can have. So as long as you’re cash flowed well don’t worry about it not being perfect just keep going. So anything else Rob you’d add?
Rob B: I completely, completely agree it’s like I think your second investment is absolutely blinding mine wasn’t as good I think over the two we both could have done better but it just doesn’t matter at all I don’t care because we got started and that’s the important thing. Going a few yrs into the future you can say that the money that both of those have made for us since we wouldn’t have had that if we hadn’t started and you just learn so much by doing. I’m hoping that hearing our stories will kind of be really helpful for all these people who, I’ve heard from a few people recently who said they’ve got real analysis paralysis they’ve been doing all these reading and they just don’t know what to do and they’re really fixated on getting the absolute best deal. Just don’t worry about it too much. The first one won’t be incredible but you’ll start and starting is the most important thing.
Rob D: So which leads us nicely into the resource of the week Rob because that’s also a story of someone’s journey. Barbara Corcoran there’s a TV program in America called Shark Tank which is very similar to Dragons’ Den so its where entrepreneurs come in and pitch their business ideas and try and get investments. She’s one of the sharks, I was going to say dragon, she’s one of the sharks on the show. She used to run a real estate company over in America a states agent as it should be over here and she started with very little money a thousand dollars and turned it into multimillion pound business. Really interesting book, did all that thing you can learn from property investment within the book but I think it’s just very interesting to learn about property in general. And I know it’s the American market but again there’s things you can take away from it, there’s talk of when there’s boom and when there’s busts. You’ll really enjoy the story, its quick, it’s easy to read so that Shark Tales by Barbara Corcoran you can find it in the show notes if you go to the website for this episode which would be thepropertypodcast/19 go and have a look. Buy the book if you think it might be of interest but I certainly enjoyed it and I know Rob I can certainly recommend you picking up a copy too.
Rob B: Yeah sits on my Amazon wish list right now. I haven’t read it but I have heard her interview on Entrepreneur on Fire so were going to be in good company cause she’s been on that before and we will be shortly. And she had a really great interview on that so I’m interested to hear more about her story and if you’ve not heard of her before she’s absolutely huge. She sold her agency now but if you go to new York and look at any for sale board it’s all Corcoran, they absolutely own new York so she’s done really, really well and her story there’s certainly going to be a lot to learn even if you don’t aspire to that kind of scale.
Rob D: Go and buy it you’ll enjoy it and we’ll also link to her interview as well because that was a really good interview that’s how I found her as well. That’s the resource of the week.
Before we leave you a couple of things to mention: go look at the website its improving all the time, it’s taunting, it’s up, giving it a good spruce its ready for the summer so have a look at it its really coming on there’s lots in there now, lots of resources, a lot of the resources of the weeks we mentioned it before you can go back and find it all in one place. And also there’s a button now for voicemails. We desperately want you to leave a recording so we can put a show together, don’t we Rob?
Rob B: We’ve got some listener questions, some left over from our live episode and some voice mails we’ve had already and we really wanna do a listen to questions episode very soon so please do. If you’ve got any kind of questions head over there, hit that button and record it for us if you screw it up its fine you can do it again and we’ll play that out on the show and answer everyone’s questions in one of the coming weeks.
Next week though we are talking about yield. Yield explained is what we’re calling that because the term gets banded around all the time in property, you hear about gross yield, you hear about net and you hear about thing like return on investment, ROI as well. So we’re going to be explaining once and for all what all of those are, which ones we prefer and when it’s appropriate to be thinking about each of those. So that does going to be yield in next week’s episode.
Rob D: As Rick is leaving us I think it’s only right Rob that we let him exit the show in a bit of style. He’s given us a good run, he’s got us to episode 19, twenty onwards were going to do something different but he was there at the beginning we can’t knock him from that so let’s give him the outro.
Rick: And now the end is near and so I face the final curtain. My friend I’ll say it clear, I’ll state my case of which I’m certain. I’ve lived a life’s that full. I’ve travelled each and every highway. And more much more than this I did it my way.