The 44 Most Closely Guarded

Property Special
4th
Secrets
Rob Moore & Mark Homer
Edition
 The 44 Most Closely Guarded Proper ty Investing Secrets

The 44 Most Closely Guarded

Property Investing Secrets
Mark Homer & Rob Moore

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The 44 Most Closely Guarded Proper ty Investing Secrets

www.progressiveproperty.co.uk
www.robmoore.com

Other books by Rob Moore and Mark Homer can be ordered from
Amazon.co.uk or in audio format from iTunes or Audible

Cover design by Thom Luter

Photography by Roland Eva
© Copyright 2016 Rob Moore and Mark Homer

All rights reserved. No part of this publication may be reproduced,

stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without
the written permission of the authors.

Note for Librarians: A cataloguing record for this book is available from
Library and Archives Canada at www.collections Canada.ca/amicus/
index-e.html

Printed in Peterborough, Cambridgeshire, UK

ISBN: 978-0-9559712-7-3
www.progressiveproperty.co.uk

Progressive House
Units 8, 9 & 10
Cygnet Park, Forder Way, Hampton
Peterborough, PE7 8GX
+44 (0)1733 898557

Email: rob.moore@progressiveproperty.co.uk

Facebook: www.facebook.com/groups/progressivepropertycommunity
www.facebook.com/ProgressivePropertyInvestment

Instagram: www.instagram.com/progressiveproperty/

Twitter:
www.twitter.com/robprogressive
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 The 44 Most Closely Guarded Proper ty Investing Secrets

For everyone who wants to be something, for those who want to make a
difference and for those who have the courage to stand up for what they
believe in. This book is for you.

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 The 44 Most Closely Guarded Proper ty Investing Secrets

If it wasn’t for you

If you’re anything like me, you probably just want to dive into the nuts
and bolts, and you don’t want to read long Oscar speech style thank yous.
So let’s keep it simple – thanks to Mark, co-author of this book. He didn’t
actually have anything to do with this 3rd edition, because he’s too busy
buying property. But the foundation of the secrets, tools and techniques in
this book are from the 10 years and 20,000 plus hours he has personally
dedicated to the property investing community.

And thank you. Yes, you. You’re committed, focused, passionate, you’ve
taken a risk buying this book, you could have bought the cheaper, more
flimsy ones out there, and you may not know us very well yet. You’re
putting a lot of faith in us.

I’m very grateful to you for that; humbled and honoured to share this
journey with you, and I’ll give it everything to add value, inspiration
and support to your life as a successful, property cashflow investor and
entrepreneur.

Let’s get straight in.

Rob Moore & Mark Homer

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The 44 Most Closely Guarded Proper ty Investing Secrets

Contents
What Others Have Said About “The 44 Secrets...”.................................12

Section 1: Introduction..................................................17
- **Special Upfront Offer**

#1. What You Can Expect From This Book?..........................................18

#2. What’s New?..................................................................................24

Section 2: The Fundamentals Of Property.................37

#3. Why Invest?....................................................................................41

#4. Pension Or Property - What’s The Best Plan For Retirement?............55

#5. The Law Of Compounding..............................................................65

- The Law Of Least Effort

- The Rule Of 72

#6. Why Property & Not The Lottery?....................................................69

#7. Why (& How) Property Is Free, Now................................................81

#8. Potential Pitfalls & Risk...................................................................83

#9. Due Diligence..................................................................................97

- Fundamental tip No.1

#10. Interest Only Vs. Repayment Mortgages......................................103

#11. Why Would Anyone Sell BMV?...................................................109

#12. The Property Buying Process........................................................117

#13. Network, Mastermind & Relationships.........................................129

#14. Strategy & Vision.........................................................................135

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 The 44 Most Closely Guarded Proper ty Investing Secrets

Section 3: Strategies & Secrets To Profit In Property.....147

#15. Multiple Streams Of Property Income..........................................149

#16. R.E.A.S.O.N.................................................................................153

- **Fundamental Tip No.2

- **Fundamental Tip No.3

#17. C.A.S.T.L.E.D...............................................................................167

- **Fundamental Tip No.4

#18. Your Goldmine Area...................................................................191

- **Fundamental Tip No.5

#19. R.A.V.E – 4 Ways To Profit..........................................................197

#20. Finance Fundamentals.................................................................201

#21. Creative Finance & JV’s...............................................................221

#22. Yield & Return(S) On Investment..................................................239

#23. Leasehold Vs. Freehold (Houses Vs. Flats)....................................247

#24. Never Sell (Buy-To-Let)................................................................251

#25. Buy To Sell (Flip).........................................................................255

#26. Cashflow Strategies.....................................................................265

#27. Letting, Tenancy & Management.................................................281

#28. Protect The Downside.................................................................295

#29. Finding The Deals (Marketing).....................................................303

- **Fundamental Tip No.6

- **Fundamental Tip No.7

#30. Dealmaking & Negotiation.........................................................345

- **Fundamental Tip No.8

- **Fundamental Tip No.9

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The 44 Most Closely Guarded Proper ty Investing Secrets

#31. Joint Ventures.............................................................................365

#32. Exit Strategies & Tax (How To Pay Less Or None).........................373

#33. Why Most Fail, Don’t Start or Get It Wrong.................................391

#34. Leverage.....................................................................................399

Section 4: What Are You Going To Do Now?...........417

#35. Time: Your Most Precious Commodity.........................................419

#36. To Know And Not To Do............................................................425

#37. Your Next Steps..........................................................................427

#38. Are You Sitting On An Asset?......................................................431

#39. About Mark & Rob (The Full History)............................................437

Bonus Section: 5 Fast Starts To Successful Psychology...455

#40. Take Action; Start Now..............................................................457

- **Fundamental Tip No.10

-**Fundamental Tip No.11

#41. Anyone Can Do It.......................................................................461

#42. Be Realistic (& Unrealistic)............................................................467

#43. Expect The Unexpected...............................................................471

#44. Never Give Up............................................................................475

#45. We Believe In You......................................................................479

#46. Your Turn: Your Figures & Projections.........................................481

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 The 44 Most Closely Guarded Proper ty Investing Secrets

Appendix 1: The Law Of Compounding...................485

Appendix 2: Interest Only Vs. Repayment...............487

Appendix 3: Want To Learn More?...........................489

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The 44 Most Closely Guarded Proper ty Investing Secrets

“What others have said about “The 44 Secrets...”

“As a direct result of one of the many secrets in the book, I purchased a
property in Brighton & have made £27,000 in 3 months, all whilst having
a baby daughter! Rob & Mark actually do what they teach rather than
the so-called ‘Gurus’ who talk the talk but still work in Sainsbury’s at the
weekend. If you have any interest whatsoever in setting yourself financially
free you have to read this book now.”

Neil Asher, MD New Insights: www.life-coach-training.co.uk

E-mail: neil@life-coach-training.co.uk

“Mark & Rob made me £21,000 in my first deal, saved me £1,350 in stamp
duty, found and completed on the property with an instant tenant after
just 76 days and I did not have to do anything except sign papers.”

Richard Bellars, Inner Action Coaching: www.inneraction.co.uk

E-mail: richard@inneraction.co.uk

“What a well-written and inspiring book. I was quickly able to apply some
of the techniques I learned from it to acquire an investment property,
which will generate profits for many years to come. I now look forward to
mirroring the success of Rob and Mark, and having a substantial portfolio
of income-generating properties in the not too distant future.”

Richard Clifford: richard.clifford@gmail.com

One of, if not the best investment I’ve ever made! This information is not
only timely and informative, but it actually works. I’ve learnt more from your
book than all of the courses I’ve attended. I wish I’d have read this before
spending £7,000 on property courses! I’d be a few steps closer to my dream
of becoming financially free! I’m looking forward to reading the next one,
and making a killing off the ‘Property Crash’! Keep up the good work.”

Dan Atkins: www.atkinsinvestment.co.uk

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 The 44 Most Closely Guarded Proper ty Investing Secrets

“I just couldn’t put it down. I read the whole book cover to cover in less
than 5 hours. I now realise you can make money in a boom or a crash and
not to listen to anything the papers say! This book makes me want to go
out and get cash and invest NOW. For very little money you can build a
portfolio worth millions of pounds.”

Adam Sargeson: adam_sargeson@jpress.co.uk

“Gents, I have just finished this book and I must congratulate you. My
synopsis would be “An holistic approach to Property Investment for long
term financial security. I personally followed your model and bought 3 local
properties which have proved to be excellent buys.”

Gary Moore

“I’d been playing with the idea of investing in property but didn’t know
where to start. This book helped me to deal with the negative thoughts
around the whole idea of what I’d previously seen as a bit of mystery
known only to those ‘in the know’. Rob Moore and Mark Homer certainly
are in the know and they’re happy to share that knowledge with the
reader. This is not about making money quickly but about how to build a
sustainable long-term income using property as the foundation.

Highly Recommended”

Mr. Geoffrey N. Crawford

“Forget Rich Dad, Poor Dad. Each book cover to cover in about five hours.
Just the sort of Entrepreneurial books I like to read and I’ve read far too
many. These books are a cocktail (and I mean that in a good sense :-)) of
real world experience in the UK property market.”

I. P. Haskell

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The 44 Most Closely Guarded Proper ty Investing Secrets

“Forget Robert Kiyosaki’s Rich Dad Poor Dad - that’s old hat!. This book,
by two young property entrepreneurs gives a fantastic insight into how
to make property investment happen. The guys are realistic about growth
prospects sand take a sensible medium-to-long-term view of the asset class
as they walk you through the knowledge and skills required.”

P. J. Kennedy

“It’s a fantastic book that explains in plain language and with the
fundamentals of one of the best vehicles for wealth creation. It will take
you by the hand in your property investing and business journey. It dispels
all superstitions around property investing, mostly in the current financial
climate. Highly entertaining and a huge return on investment. Rob and
Mark really have spilled the beans with this book. I wish I had had this book
twelve years ago when I bought my first property.”

Ricardo Pelayo

“Having spent time with Rob and Mark personally, they’re fantastic guys,
with huge amounts of knowledge. Many people would charge thousands
for the information in this book! Go get it now, you won’t regret it. I
certainly didn’t. The knowledge in here is well on the way to helping set
me financially free forever :)”

Paul Stebles

“Brilliant book to get you started in the world of property investing - easy
to read and understand. Once you know Rob and Mark you can tell that
this book passes on so much of their own knowledge and expertise which
they have learned along the way, helping those that follow their methods to
succeed without having to learn lessons the hard way ~ worth every penny!”

Tracey Woods

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 The 44 Most Closely Guarded Proper ty Investing Secrets

“This is an inspirational book that is crammed with advice based on the author’s
own experiences for people who are interested in property investment. The
presentation of the material in short chapters and with key learning summaries
at the end of each chapter promote effective learning. I particularly like the
inclusion of the worked examples that include numbers (£, yield, % etc.),
which aids understanding of the material. I thoroughly enjoyed reading this
book and have already purchased the second book written by Rob Moore and
Mark Homer ‘Make cash in a property market crash’.”

Penelope Pitstop

“A brilliant book for getting an honest, down-to-earth and practical guide

to property investing. There is so much hype out there that this book is
great at cutting through and getting to the core of good, sound property
investing. Definitely worth a read!”

Gill Alton

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 Section 1: Introduction

Section 1: Introduction
The original version of this book was written in 2007 by the two people
you see named on the front cover. That’s us. Hi!

Rob is the tall one with the crazy shirt and slightly red beard. Mark has hair
on his head and not on his face; it’s a pleasure to meet you.

The 3rd edition unofficially outsold any other property book 5 to 1. Within
this book you get a combined 21 years of on the ground, frontline, in the
trenches experience of the reality of property investing, presented to you in
a unique and interactive way. Well that’s the feedback we’ve had, anyway.

Now, this 4th fully updated, semi-future-proofed edition has been updated
with so many more nuggets of information for you.

And so throughout the course of talking to you, we flick between I and we.
This must surely break all literary rules, but we feel this is the best way to
get across the voices of both of us, and to give you alternative perspectives.
Mark is much more the ‘data-head’ and Rob is more strategic & vision
focused. These opposing traits and areas of focus can help you tick all
boxes and cover all areas of successful, cash-flowing property investment.

If you want to read more about us, the authors, because you may not
know us very well yet, you can go straight to the back. It’s all there, and
Mark has taken the bits out about Rob’s ego, because this book isn’t about
him, it’s about you.

But for now, enough about us, let’s get down to business, starting with a
special something for you on the next page.

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Section 1: Introduction

**Special upfront offer**

Bonus No.1 -
Progressive is a supportive community, a movement, and not a faceless course
selling machine. As a thank you for investing in your Entrepreneurial education
through this book, we invite you to join our online Progressive community for
free, usually £9.95 per month. The link is below, please join now before you
read on, where 1,000s of active Progressive Property Investors are discussing
and supporting each other in everything property related:

www.facebook.com/groups/progressivepropertycommunity

Bonus No.2 -
Joint Ventures (JVs) are the big thing right now, to invest in deals with
other people’s money and none of your own.

When you get a minute, go to the page linked below, and there we have
the Progressive *Be Your Own Bank* Joint Venture Blueprint – the 7 steps
to successfully nailing the JVs and getting other people’s money in your
bank for business and investing, without banks.

Plus you’ll find a 40 odd page document specifically detailing how to find
financiers and Joint Venture partners who will fund your deals, where to
find them, how to ‘sell’ to them gently but effectively, the different types
of partners, and a whole lot more, for free. It’s our way of thanking you, and
a way we can stay in touch with each other:

www.beyourownbank.co.uk

And when you get further into the book we have another special, no cost
gift for you. Not telling you what page it is on, you need to read it all…

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 Section 1: Introduction

#1. What you can expect from this book?

This book, with the companion book, ‘Cash in a Property Crash’ has been
designed to be the most comprehensive guide ever written for making
profit and passive income from property investment, and to be accessible
to most people.

A big claim perhaps?

We are by no means professing to be the biggest pair of ‘Gurus’ the world

has ever seen. We’re both still relatively young (which is why you can do it
too), having started in our mid 20s (now in our mid-cough-30s), with over
55 years left in the property business, learning everyday; a very exciting
prospect. Our aim is to help you leverage this experience to shortcut your
route to your financial and investing goals, dreams and cashflow.

Despite already owning or co-owning pushing 600 properties, we

continually pursue more knowledge, growing and learning as property
investors. We’ve read most of the other property books out there; 23 in
fact, on the subject of property alone. Rob reads/listens to over 120 books/
programmes a year, and has dedicated his life to continual learning.

But there seemed to be a gap for the entire step-by-step process of property
investing, mixed with the real life experiences of those professional and
‘on the ground’, with some support to hand hold over the roadblocks and
challenges that arise on the journey, that is often lacking in other publications.

Since 2004 we’ve invested over £7,300,000 on training and education,

all over the world, in multiple fields, a lot of that specifically in property
(but not all at once, because Rob started with almost £50,000 consumer
debt). We now have a minimum £140,000 a year budget for training and
education, each. 30% of it pays a 919% Return on Investment (ROI) (Mark
worked that one out!). 70% of it sits on the ‘shelf’ (meaning people do
nothing with it). You can probably relate to that?

What we aim to give you is a leveraged amalgam (Mark’s choice of

word) of all the reading, the investment in training and education, the

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Section 1: Introduction

‘shelf development’, the missed opportunities, the mistakes and the big
(sometimes accidental) wins, that have built a portfolio of almost 600
properties, worth 8 figures, and a £10million-a-year training company, all
from a start of £300 (that Rob put on a credit card) and a tiny kitchen-
diner in Rob’s first 2 bed house. And all focused on how you can actually
apply this experience and various money making strategies in your own
life, most relevant to your vision. All wrapped in a book or two. Condensed
and detailed.

Simplified. And more than just the concepts; the specifics, the non-
sugarcoated, to the point reality.

The on the ground experience that gives you that last 5% that is the
difference between a fluffy concept that ‘sounds about right’ and a
strategy you can cut, paste and apply to get exactly the same results, in
quicker time, with less risk.

After all, that’s how we’ve done it. We got to the people actually doing it,
stalked them desperately, sought out the very best when books and courses,
like you’re able to access now, didn’t exist, paid them huge amounts of
money, and copied them: property, business, sales and marketing experts.
And we gave them £10,000s. And as painful as it was, and as hot as
those credit cards got, it worked. And it was the only way. Most things
we did on our own without training, support and mentors, failed. Most
things we ‘leveraged’ the experience of others, worked to a degree, with
us refining how we could implement the knowledge in our local investing
area aligning to our specific vision.

So we wanted to write a book for you, to save you the mistakes or the
£10,000s in errors that you wouldn’t have been able to/couldn’t predict,
because you don’t know what you don’t know. And if you think what
you read is valuable enough, we may have the chance to work together
personally. After all, if a pair of upstart 20 (now 30) something year olds
can do it, then so can you, right?

You really can, and we believe in you.

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 Section 1: Introduction

If, after reading this book, you feel that we have not lived up to this, or that
there has been no realisable value in what we have written, we will give
you your money back, no questions asked.

Actually we probably will ask why, because your opinion matters to us, but
we’ll still stand by our guarantee.

Why would we offer a money back guarantee on a book?

It’s a commitment we are willing to make to prove to you, before you start,
that we feel there is so much truth out there that you are not being told
and that if you don’t educate yourself the right way, it could cost you a lot
of time and money in your life. We don’t want that for you.

If you do decide to return it, please send it back to Progressive Property

where we will refund your investment. All of our details are at the front
and back of the book.

The fact is that you have put your hand in your pocket, even if it is only
a small investment (in yourself), and that says a lot. Thank You. We think
you’ll want to use this book long into the future for reference to build your
portfolio. And you should. You might even enjoy it too.

Check out what Heather Self did:

“My property investments which are quite small by your standards! :-)

However, I was inspired by the ideas in your book because although I had
often thought about investing in property, I never actually got as far as
DOING anything about it until you and Mark made it sound so simple
(though not always easy), in the ‘44 Secrets’.

Basically I have adhered quite closely to your rules and I now have a definite
strategy for my investments with specific criteria, (eg. No more than 3 miles
from my home, 2 or 3 beds, have a certain ROI etc), which have to be met
before I will consider a purchase. I have just completed my 8th purchase
and I bought my first property in May 2008.

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Section 1: Introduction

Property Purchase Price Comparable Property

1 72k 85k

2 70k 85k

3 £64,950 £79k

4 £70k £90k

5 £57k £85k

6 £70k £95k

7 £90k £125k

8 £41, 950 £67k

Of course some of the values of the earlier ones may have gone down
but it doesn’t matter because they are all cashflowing positively and I will
not be selling them. 3 are on variable rates so are giving particularly good
yields at the moment though I do realise that eventually the rates will go
up again, and I am budgeting for this.

I buy in the areas where the properties are at the lower end of the market
and where there are always going to be plenty of people who will want
to rent.

I have made some errors and haven’t always got my deposits out particularly
with regard to the more recent purchases. One of the mortgages was
expensive and I shouldn’t have agreed the deal because of that but I have
learned (hopefully) from my mistakes and at least I’ve made a start.

I still work as a teacher for 3 days each week. I now purchase jointly with
my eldest son who is 21 and as soon as my youngest son is 18 he wants
to be included in any future purchases as well. Of course I NEVER intend
to sell!

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 Section 1: Introduction

That’s about it except to say a BIG thank you to both you and Mark because
I don’t think I would ever have made that first purchase if I hadn’t read
your first book. Both of your books are so user friendly, easy to read and
explain the property purchasing process clearly and simply. I know that if
I can do it anyone can. I wanted to invest in property to secure the future
for my family so I was already motivated, but it was the ideas in your book,
which gave me the confidence to take the necessary

ACTION.”

Thanks again, Heather

Use it as a manual. Use it as a guide. Use it as a checklist of dos and don’ts.

Use it to motivate and inspire you to take action. Use it as a warning as to
what, and who, to watch out for. Use it as a beer mat. Or use it to reach
the Jaffa cakes on the top shelf of the cupboard.

Just make sure you USE IT.

“To know and not to do, is not to know - just go.”

- Rob Moore

And if at the end of the book you still think to yourself:

‘I don’t have the time/money/experience/desire.’

‘I’m not sure I can do this?’

Or if you feel you need more personal help, support, a community to help
you through the challenges and the negative people, then get in touch,
we can help you.

Fair enough?

But you must read all the way to the end of the book to qualify for this,
and you will be very glad that you did! There are a couple of surprises for
you there, too.

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Section 1: Introduction

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 Section 1: Introduction

#2. What’s new?

We believe that there should be more practical, how-to training and
education in property investment to enable you take personal responsibility
in a changing world, control and secure your passive income and financial
future (not get rich quick); hence writing this book. If we can go from a
couple of young upstarts to multi-millionaires in property, you certainly
can too. Especially if you follow our proven systems, processes and proven
paths we’ve trail blazed for you.

We intend this book to fill the educational void for you that we felt there
is (was!) in property education. A one stop property investment shop. We
intend that you will be able to take what you’ve read here and go out straight
away and get the same results, in your own way and to your own vision.
Believe us; you really can if you choose, decide and commit, right now.

This book will reveal all: the good, the bad and the downright ugly about
property investment. You simply must read this before you even think
about investing your time or money. Do not part with your cash until you
have finished, whatever you do. Chain yourself to the sofa and don’t get
up until you’re done. Get property right and you could end up on the rich
list, get it wrong and you could end up on a banks repo list.

If we had learned the ‘secrets’ (there are no real secrets, just things most
people don’t know that are secrets, that are secrets to them, but not those
who know the secrets that aren’t secrets) within this book before investing
(and looking back, we’d have paid thousands for it), we would have saved
ourselves many mistakes. Mark wouldn’t have lost over 50,000 Euros in
a deal in Bulgaria in the early 2000s. We wouldn’t have bought those
overseas, off-plan, new build properties on the other side of the planet
(this experience has created the Progressive, what NOT to buy model;
R.E.A.S.O.N). We would have saved hundreds of thousands of pounds in
deals left on the table and missed opportunities.

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Section 1: Introduction

No regrets though. We’re often asked if we were to start again what

would we do differently. Seeing as we have an 8 figure property portfolio
and have become multi-millionaires at a relatively young age, why would
we do anything different?!

These mistakes are part of our journey. We paid our ‘entrance fee’. We
needed to, as painful as it was. We all do. But you can leverage us, and
the costly mistakes we didn’t know how to avoid, because we didn’t
have proper ‘training’. It didn’t exist back then, and this is the void that
Progressive exists to fill. You can benefit now from the dues we’ve paid -
our humble, fun, crazy journey - and learn from our mistakes, in the hope
that you can get it right from the start and make property investment
pay you a handsome passive income and create a life-long pension (even
quicker than we did). And save a wad of wasted cash in the meantime.

Jon Woolley did exactly that. A Progressive VIP community member with
24 properties and £4,900 NET cashflow per month from his portfolio, at
the age of 21!

At 19 years old, before he started, he was working at a BP Garage, and

then he worked at Burger King. He told us that he felt he was really letting
himself and his family down, as his dad had him reading entrepreneurial
books at age 12, invested in him and supported him in working for himself.

But he lost his way. Within one year of becoming part of the Progressive
community, investing in his education and taking action, he had bought
a portfolio of over 20 houses and garages for a 70% discount, had them
rented out, flipped 2 properties for cash, bought a brand new Audi TT –
and did all of this with a Joint Venture (JV) partner’s money!

Much quicker than us, not that we’re jealous ;-) We’re just honoured to be
part of his journey.

You can watch his full story here, click on his name at the top:

/www.progressiveproperty.co.uk/real-successes

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 Section 1: Introduction

What you won’t get from this book

You won’t get unrealistic get-rich-quick-sitting-on-a-beach-drinking-Pina-
Colada-in-Marbella-and-come-back-a-millionaire BS.

It doesn’t exist. Seriously. Sure, there is the shortest route to success, and
we give you that straight-line approach in this book. But that straight line
has hurdles of its own that you must go through, or over. The easiest way
to do that is by being guided by someone who’s been there, not wishing
they weren’t there.

“You have to work hard enough not to have to work hard”

- Richard Templar

We won’t delude you about this. If you’re not prepared to work, you’re in
the wrong business.

That’s the bad (real) news. The good (real) news is that if you treat property
as a business, leverage wherever you can so that others are doing the work
for you and helping you to achieve your results using their time, build a great
(leveraged) power team, leverage the Progressive Community, pick the right
strategies for you, and make the fewest mistakes possible learning from
others who’ve been there, then you will actually succeed way beyond your
goals, and possibly dreams; certainly quicker than you’d have ever thought
possible. Just like Jon, and many others we’ll talk about in this book.

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Section 1: Introduction

You won’t get unrealistic dreamy fluff, but you won’t get grumpy sceptical
moaning either – a healthy small dose of both at the right times is perfect.
Call it ‘positive paranoia’. You won’t get reams of boring stats or a book
full of stories about us and our egos – a healthy small dose of both in
between facts and strategies is what you’ll get.

Our disclaimer:

We have taken care to make the figures and specifics in this book as
accurate and relevant as possible at the time of writing/editing; and of
course we hope you understand that these can change dependent on
market and economic forces.

The content, projections, figures and indications contained in this book

are based on opinion and cannot be relied upon when making investment
decisions. As with any investment, property values can fall as well as rise.

The authors offer this information as a guide only and it cannot be

considered as financial advice in any way. Please refer to your Independent
Financial Advisor (IFA) who is qualified to give you complete advice based
on your circumstances.

The authors Rob Moore and Mark Homer are not qualified to give
mortgage, legal or financial advice. Please seek legal and financial advice
from a qualified advisor before making commitments. Neither its authors
nor ‘Progressive Property Ltd,’ or any other Progressive companies, accept
liability for decisions made based on the content of this book.

Of course that was necessary to get out of the way and it is something
that you know already. This book is a guide and you have ultimate choice.

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 Section 1: Introduction

About Rob & Mark

At the end of this book, there are a few pages that tell you about us in a bit
more detail. Because this book is for you, we thought that the back is the
best place for them. What we do think is relevant to you now is how we
got to where we are and how you can do the same. If you want to know
more about who’s talking to you in this book, go to the back now and read
the full story. If not, here’s a short introduction (radio edit):

Mark

Mark bought his first Property in 2004:

“I started buying small houses because I realised that the smaller properties
(under £125,000) in our area were growing in value quicker when compared
to anything over £150,000. I saw it as a reduced risk to chop my money
into smaller properties rather than buying expensive ones, and knew that
most people want to rent cheaper houses rather than 5 bed mansions with
swimming pools and cinema rooms (which I couldn’t afford anyway).

Having spent ages researching (I have a bit of a habit of over-analysing

according to Rob) I found one street in one area that I felt was seriously
undervalued compared to other streets in the same area of the same type.

I must have bought most of this street and was only spending about £3,000
on a full refurb. I was buying the properties at around £75,000 and was
able to add a lot of value to them.

The more ‘minging’ they were, the more money I made.

I was getting them cheap anyway, because I was negotiating good

discounts, and I was convinced that they were worth up to £100,000.

I will show you exactly what I did to achieve this, in this book.

I wanted to get all of my money back out of the properties so that I could
keep buying more on the same street without any extra cash. I wanted to

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Section 1: Introduction

‘recycle’ my cash and have ‘no money left in’. I put them all on the market
at the same time for what I thought they were really worth. I then got a
surveyor round to value them and gave him the comparables of my other
houses that I had recently put on the market. I had a couple that were not
valued as high as I wanted, so once I got a surveyor who valued one of
my properties at the price I wanted, I got him to value all of the others. He
valued them all at the price I believed they were worth, and a new market
precedent was set.

As a result I was able to remortgage these properties almost instantly after

revaluation and get all of my money back (deposit, all fees and refurb
costs) and extra cash on top, because of the discount I got and the value I
had added by doing some small refurbishment work.

I kept going until I had pushed the value of the whole street so high that I
could not get the properties as cheap anymore. But that was fine because
I owned a load of them and they were all free!

And sure enough, as I had predicted, the market grew and the properties
continued to go up. In 2 years the properties I bought went up by 50%.
Then they went down by 30% after the crash, then they rose up and in
2015 were worth almost double what I paid for them. Even through the
biggest crash in history, according to many.

But better than that (and my main consideration) is the cashflow, which
came in month after month after month, on the same day of the month,
passively. I now own 100s of these types of properties that have been
paying me passive income each month, many for over a decade now. I buy
once, and earn forever.

The equity is great, and I know that, in time, the mortgages will erode
through inflation and the values will continue to rise, but I also see equity
as a protection against a downturn.

Rob will tell you, I’m a bit paranoid and always look at numbers
pessimistically. We’ll detail all this later.

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 Section 1: Introduction

I knew I now had a *system* that I could replicate and scale up, both in
our local area, and then in other areas in the future. All I had to do was
locate the areas that were undervalued with good rents using the model,
software and system I had built and tested, and buy as many as I could
using the same strategy. I like to rinse and leverage a strategy as much as
I can, for as long as I can, once it is proven, because the hardest work is
at the start.

I’ve been using this model since 2004. We call it the BRR model (detailed
later). I bought 20 properties in 2006 and 30 properties in 2007 using this
model before the crash, and refined it in 2008 to buy another 550 or so in
the next 7 years, and counting, including large multi-lets and commercial
properties such as pubs, clubs and office blocks which I convert to flats. I
can invest in one ‘block’ now that will covert to 40 separate ‘units’ (flats)
or more, to leverage my time and scale up our property business; all while
still following that same BRR system our mentor back then taught us, and
I refined for my local markets. We reinvest our own profits, or use other
people’s money, depending on the balance between deal flow and cashflow.

“I like to test, test, test, protect, replicate then aggressively scale up”
- Mark Homer

Since the downturn, and after an initial panic on my part, Rob says it’s
all about mindset, I say it’s all about reality ;-). No-one was able to sing
Kum Ba Ya holding hands in a circle and wish the recession away), the
properties we were buying became much cheaper - £65,000 for the same
house we’d pay £90,000 for, and the yields and cashflow shot right up.
The lending costs reduced, and as banks slowed with lending, we accessed
more and more private funding sources.

I now spend a lot of my time buying commercial property (perhaps the

subject of once of our future books), office blocks, old pubs and bank
buildings, analysing data and KPIs for all our businesses, scrutinising over
cost savings (which I love so much I wrote a book about ‘Low Cost High
Life’) and helping our MD of Progressive Lets grow that business. It’s our

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Section 1: Introduction

8th business now, and the 6th that is an off-shoot of buying our 1st buy to
let in 2003/4 and directly related to property investment.

The properties and businesses now bring in many millions of pounds a

year. To be honest I would never have believed it - in 2007 when Rob and
I partnered, starting from Rob’s little 2 bed house when Rob was over his
head in debt. He had these huge (what I thought were dreamy) plans of
many property businesses and many millions (millions - a term I think quite
frankly is overused and generic). I didn’t really believe him, but played
along, as I was just looking for a few properties, some future security, and
not to have a boss to answer too. I guess by default I felt property was
my best chance. Oh, how things can grow if you just stick at it, because
we didn’t really do anything ground-breaking except start, keep going
(which most do not), constantly test, measure and tweak, keep investing
in ourselves, and give things a go once the downside was protected.”

www.markhomer.com

Rob

Rob started investing in property the week before Christmas 2005, having
thought about it for 4 years without doing anything about it.

Every year in those 4 years my Dad kept prodding me to buy a house in a

new development down the road from his pub on Eye Road.

Me: “I can’t afford it Dad. And even if I could, I wouldn’t have a clue what
to do and how to buy a house.”

Dad: “Just give it a try, the prices keep going up, you’ll make money. I’ll put
half the money up.”

Me: “But I don’t have any money.”

This continued for years, and those new houses on Swan Gardens went
from £50,000 for the smallest ones when the plans were unveiled, up
to over £150,000 in less than 10 years, and virtually doubled before the
recession of 2008.

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 Section 1: Introduction

£100,000 left on the table because I said ‘I can’t’. Expensive word.

Expensive attitude. And as my Dad always used to tell me, “Ignorance isn’t
bliss son, it’s ignorance.

Within 3 months of learning the BRR strategy from Mark and a mentor
of ours, I had already remortgaged my house that I (finally) bought with
Dad (4 years late, but not too late). My house had gone up from £125,000
to £170,000 in 2 years to the end of 2007. The funny thing is that I had
made £45,000 in 3 years doing nothing at all, from that one property. I
made money while I slept. I made money despite my own many property
and business shortcomings. And as you’ll read in the back of the book, I
never made that amount of money in 3 years as a full-time artist, working
14 hours or more a day. I now know a lot of people in the Progressive
Community who start with a similar story and in a similar position, yet I
thought I was the only one.

I was an ‘accidental investor’, as are so many people who own their own
house. I didn’t even know that I was literally sitting on a goldmine, and
that one house would help me build an asset base worth tens of millions.

Now anyone who doesn’t know our world might say that it was all because
of the boom years. Actually Mark and I bought our first 20 properties pre-
crash and they are the worst 20, and not because we didn’t buy well. The
crash that hurt so many people was the biggest guardian angel we could
have hoped for, because in any market correction there are as many upside
opportunities as there are downside challenges.

I didn’t even buy that first property at a discount; I was really good at
negotiating the full asking price ;-) And that is what I paid because I loved
it and really wanted it! Maybe you can relate to that, and maybe you’re
smart enough to know why that was dumb of me! My Dad helped me raise
the deposit. My diligence and market research went as far as: it’s next door
to Mum and Dad’s pub, I want it! And they saw me coming. But despite my
haste, lack of diligence and knowledge, I still own that house to this day
and it’s been paying me monthly income since I moved out and rented it,

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Section 1: Introduction

in 2007. That’s seven years of passive income and I’ve never lifted a finger
to collect that rent and it just keeps coming in on the first of the month.

When I remortgaged this house my repayments went down from £750 per
month to £550 per month and I released £26,000 cash. This was because
I had not got the best rate at that time of purchase (I was not in good
credit and I didn’t know what I was doing) and because I went from capital
repayment to interest only. A good decision? Well, there’s a whole chapter
coming up on it.

With that single remortgage I paid off a chunk of my consumer debt

- credit cards and loans (which saved me around £1,500 per month in
interest payments - like I said, I didn’t know what I was doing!) and with
what was left I bought another 7 properties, with Mark, in the space of 4
months (and the amount wasn’t even enough for one deposit). We had 20
in 12 months, 50 in 24 months and as I write we have over 650 individual
property units that we’ve bought or sold. All from none of my own money.

We have never stopped buying property together and I can’t see why that
would ever change. We’ve invested in the booms and the busts. We’ve
seen the full cycle and grown Progressive every year to a £10million+ a year
training business with its partner company, Unlimited Success.

I literally went from being the best part of £50,000 in consumer debt to
having a portfolio that could fund the rest of my life (before the crash
kicked in, when things changed), all in less than 9 months. I am certainly
nothing ‘special’. I was no expert at the time, and Mark had most of the
knowledge back then. The one thing I am proud of is that I was decisive. I
found the strategy that worked back then, made sure I understood it and
could make it work and then I took immediate action. All the mistakes
were necessary, and even action through mistakes is better than inaction.
I have never looked back, other than to reminisce about how much better
life is writing this 4th edition. They say money doesn’t buy happiness; it
frickin’ does!

But more about the money later.

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 Section 1: Introduction

In all honesty, partnering with Mark was the best thing I could have done,
and I’m really grateful to him and all he knows and does.

I had no experience, no knowledge, no money, and many failed attempts

at setting up my own business behind me. I was able to leverage his
knowledge, shortening the time it took me to get to a foundational level
of knowledge and experience. I was able to watch, listen and learn every
day, being around the right people schmoozing with Mark’s rich friends
pretending to know what I was talking about. As the education proved that
it could make me money, I became more hungry for it. I stopped spending
my money on liabilities, sold the possessions I didn’t need, and re-invested
into as many courses on property and property related subjects as I could. I
was making money learning, and learning to make more money. It was the
most exciting thing to know that this worked, that I could do it, and that I
had an ability to create money.

Since the crash, and the building of our portfolio, I’ve taken a backward step
on physical buying and day-to-day operations, because Mark does that, and
quite frankly I found viewing properties boring. My focus now is on growing
the businesses we have and striving towards our vision of global financial
freedom. I get to do the strategic and visionary things I love, things I’d do if
money didn’t exist, and it’s all thanks to property investment.

It’s weird but fun being retired. I don’t have to work and neither does my
family for 10 generations! Yet now I don’t need to, I choose to, to grow an
even larger vision and legacy. I also play golf every day with my son, who
is the unofficial World Record Holder for the youngest ever person to get a
hole in one, at just turned 4 years old! He beat me getting a World Record
by 32 years! Again, this priceless time is all thanks to the passive income
from property.

I really had no idea that you could package deals, write books, run courses
and trainings, build communities and develop so many (fun) ways of adding
value to the world, and bringing in many millions of pounds with more free
time, and then give a load of it away without having a heart attack!

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Section 1: Introduction

This all just spun off buying properties well and having people spread our
message as well as a desire to help you do the same. We have over 50
staff at Progressive growing all the time and we will run over 550 events
this fiscal year. The Progressive brand has also grown into the personal
development and business world, lettings, public speaking and online
eCommerce, all with similar vision and values. And it’s the most fun thing
to run businesses that require no work yet inspire you every day.

Don’t worry I’ll share the strategies on how you can do the same in this
book, and our other publications.”

www.robmoore.com

So, that’s the ‘brief’ introduction about the two of us. Hopefully that has
helped you feel excited over what you are about to learn now. What you
are about to read, if applied and continued, will absolutely guarantee your
future financial success, security and happiness.

Bring it on? You want it? Well, here we go…

One more thing: a huge thank you for buying our book, it really means a
lot to us.

36 | www.progressiveproperty.co.uk
 Section 2: The Fundamentals of Proper ty

Section 2: The Fundamentals

of Property
In this section, we cover the fundamentals you need to get you going and
keep you going, buying property. Some of this might seem logical if you
have some experience, which is just fine, because it is very important. It
won’t be a bad thing to go over it again and embed it in your subconscious
now, so it becomes a habit and you find yourself doing it without even
thinking about it.

“To know and not to do is not to know.”

– Rob Moore

Much of this section is new for the 4th edition of the book, as we’ve had
more years of experience and testing these fundamentals.

However there are many things that are regarded as fundamental, or

‘basic’, that many investors either ignore or simply do not understand.
Fundamentals are fundamental.

You wouldn’t believe how many supposedly experienced investors have

come unstuck ignoring the basics or overcomplicating things. Perhaps we’ll
share some of those real stories later.

Mark has been applying fundamentals since 2003 and made tens of millions
doing it. Once you’ve mastered a fundamental, you can keep utilising and
leveraging it, often for decades. The longer you do it, such as buying the
same types of single lets in the same types of areas, the easier it gets,
the faster and more decisive you get, and therefore the more money you
make, both quickly and sustainably for the long term.

Warren Buffett has 11 main fundamentals that he’s been following for
seven decades. Andreas Panayiotou, a mentor and friend (and billionaire)
bought/built/developed 7,000 flats; virtually the same types in the same
areas, over and over, and cashed them all out before the recession.

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Section 2: The Fundamentals of Proper ty

Fundamentals work.

Constant change and distracted impatience don’t.

More of the tricks, secrets and specific strategies come later in the book.
You will need the knowledge in this section before moving on though. You
wouldn’t build a house without a foundation, would you? Remember this
is your money at stake.

If all of this is new, then be excited because you are about to embark
on a life-changing journey. Be excited that you’re about to save yourself
years of mistakes that we would have loved to avoid, and warp-speed the
knowledge that took us 128,480 combined hours (yes, Mark worked that
out) and over £700,000 to compile.

The world is a different place right now. Gone are the days when it was
easy for anyone who watched The Property Ladder to be a property
investor. The novices have been scared off. The first time buyers (FTBs)
can’t get finance. Due to personal circumstances some vendors are in pain
and motivated to sell. Public confidence ebbs from low to false. Spending
is still not at the pre-crash levels, and people are still scared despite it
being many years ago. Debt is still high. Panic and fear are still rife. With
each new budget announcement or threat of interest rate rise, people
procrastinate for one more year.

And perhaps, before you picked up this book, you got sucked into all this?
You believed what you read in the Daily Mail, and despite your positive
thinking you just couldn’t convince yourself that ‘observing the masses and
doing the opposite’ was the right thing to do.

Or perhaps you believed there IS a BIG opportunity, but you’re scared.

What if it gets worse? What if prices go down again? How do I protect the
downside risk and take this opportunity. What if I get it wrong?

Because you do know that this could be the biggest contrarian opportunity
to make cash in property, don’t you? More millionaires are made in times
of recession than any other time (Google it).

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 Section 2: The Fundamentals of Proper ty

“Be greedy when others are fearful and fearful when others are greedy.”
- Warren Buffett.

Despite having experienced a significant recovery, with prices in most areas

back to pre-crash levels or higher, and the growth part of the cycle still to
come, people still think the time is wrong. But that’s wrong.

The only time is NOW – it’s never too late to start but always too
late to wait.

Even if that start is simply reading this and other books, getting your
knowledge up and taking small steps daily.

But it’s gonna be difficult, right? Property investing is for the professionals.
It’s risky, and you could make big mistakes. That’s why you’re reading this
book, because a part of you, no matter how small, believes that you could
get the results of the wealthy. You have something about you. You want
to know more and you were destined for more. You just don’t know how
yet? And if we can do it, you can do it too. If you’d been a fly on the wall
in Rob’s little 2-bed house we named ‘Progressive House’ and had spiky
hair and suits that were too big, you’d have seen your chances as good!

When Arnie decided he was going to be a movie star, he didn’t know how. In
fact, he was a terrible actor. His first attempt, at a live sitcom was not going
to be nominated for any awards. He didn’t need to know how, because he
just knew he could. If one person can, anyone can, right? He was so sure,
without any evidence (or talent) whatsoever; that he went around telling
everyone he already was an actor already, when he wasn’t (yet).

Deluded? Perhaps. Crazy? Certainly, a little bit. The rest of the story is history.

“If you think you can, or you think you can’t, you’re right.”
- Henry Ford

“If you don’t believe in yourself, why should anyone else.”

- Felix Dennis

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Section 2: The Fundamentals of Proper ty

So as of today you are a property investor. It’s what you do. You’re on your
way not in your way. People will take you seriously, and your results will
come. Enjoy and know that just by reading this it is all starting to happen…

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 Section 2: The Fundamentals of Proper ty

#3. Why invest?

Why not just spend your money on cars, conservatories, holidays,
handbags, sex and drugs, feed ebay and online gambling addictions and
waste the rest?

Go and join the lottery winners who won it all, spent it all, and ended up
in more debt 3 years down the line (there was one chap who lived just a
few miles from us who did exactly that). Oh, and don’t forget your one in
3 squillion chance of success (or 14,000,000:1 actual figure – you guessed
it, Mark found that out).

After all, you only live once and you can’t take it with you, right?

Wrong!

The only sustainable way to be able to do all the above (without having to
work) is by generating residual passive income. Passive income only comes
from assets. You only acquire and hold assets by investing.

Without investing in assets, you’ll always be exchanging time for money.

Without investing, your income will be directly related to your hourly
worth. You’ll always be tied to working, and never get a residual return on
those hours you work. You’ll only earn more by working more: there are
only a limited number of hours in the day, and you’ll be ‘set’ at an income
level that will take years to grow out of, if ever.

And how sad is it that most people spend their whole life working to ‘earn’
the time and money to do the things they want to do, yet because they are
so busy working they can’t ever do the things they love to do.

And then they die.

And that is how our society sets us up. Work hard. Earn a living. Do it for
55 years. And then have no support, not enough money to retire, and
none of your life left. Then die. Sad, but true for most.

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Section 2: The Fundamentals of Proper ty

To free your time to do the things you love, you need residual income from
assets, and not earned income from a job. Investing is about building an
asset base, investing your time and money at the start so that you can reap
the rewards in the future through a continual income stream.

Build assets that you can set up once and earn on forever, like property.
Assets that have life-long income streams, that are inflation and future-
proofed. Assets that once set up can be virtually self-maintained.

People work to free up time, but working takes up time. They work more
and more to try and keep up with bills and debt, and end up filling the
time they are trying to create with work, meaning they have less and less
time. It’s an inescapable loop that is self-fulfilling. The ONLY way to break
the loop is to change the habit. The ONLY way to free your time is to have
income without ‘spending’ your time.

The 3 levels of investing & 4 areas of financial

control or monetary wealth
There are 3 levels of ‘investing’:

Level 1. Saving

Level 2. Investing

Level 3. Speculating

You can’t gain financial freedom just doing one of the three, and you need
to follow each one in order to gain one of the 4 levels of ‘financial control
or monetary wealth’:

1. Financial stability

2. Financial security

3. Financial freedom/independence

4. Financial opulence

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 Section 2: The Fundamentals of Proper ty

1. Financial stability

Your basic human and survival needs are covered through passive income
from assets. Examples: mortgage, travel, food, basic living.

You still need to work for the finer things in life, but you could survive if
you lost your job or ‘earned’ income stream.

2. Financial security

Basic survival needs, plus some humble comforts all covered by passive
income from assets. Examples: TV/entertainment, gym, all direct debits
covered, some going out disposable cash, etc. Usually 150% of the
financial stability figure.

3. Financial freedom/independence

Desired lifestyle covered by passive income from assets. Examples: extra

holidays, savings pot, some additional investments, consumables, school
fees, nice cars and a bigger house. Usually 200% to 300% of the financial
security figure.

4. Financial opulence

You can do what you want, when you want, where you want and with who
you want, without ever worrying about money, all covered by passive income
from assets. Examples: Travel 1st class, set up a charitable foundation, go to
the most exotic locations, drive the best cars and park them in underground
garages, wear the bling and hang with the super-rich. OK I’m getting a bit
carried away here, but it is very possible with a clear investing and asset
building plan backed up by viable, sustainable strategies.

Statistically, more than 99% of the working population have at one

point in time thought about taking the first steps to financial freedom/
independence and achieving a vehicle to self-sustainability, yet so few ever
achieve it. These statistics are not good.

At Progressive it is our lifelong vision to help you to financial freedom/

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Section 2: The Fundamentals of Proper ty

independence, by “investing for freedom, choice and profit”. With our

overall group company vision of “global financial freedom”.

This is inherent in our mission and one of the big reasons for writing this
book. We believe anyone can achieve financial freedom/independence; the
trouble is not everyone does.

Don’t get us wrong, we do have personal motives for helping. We want

testimonials. We want success stories. We want to grow the Progressive
Community further. We want to help your friends and family too. Perhaps
we might JV with you in the future like we have with many of the
Progressive VIP Community members. We want to achieve our vision of
global financial freedom and we need your help.

So go out there and make a success of yourself. We’d love to have a

small part in that. Perhaps you might allow us to promote your story to
inspire others. You can be part of our success and help us grow, whilst
also growing yourself.

Like Nick Hague.

Nick has raised over £600,000 of JV finance, using other people’s money,
and has 2 property JV partners in the Progressive Community. He has a
portfolio of well over 20 properties and net income enough to replace his
corporate job, which he did.

Now it’s not just people who start with low amounts of money that have a
real desire and need to become successful in property investing. Nick had
a good job working for a developer, and an expensive lifestyle to maintain.

Then when the crash kicked in, he got made redundant which came as a big
shock. His redundancy package was not what he had hoped and the funds
were dwindling fast, so he needed to do something about it, and fast.

Nick learned the same system that we’ve used since 2003/4, and has total
financial freedom/independence now. He is also training others - he’s now

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 Section 2: The Fundamentals of Proper ty

a mentor in the same VIP community that helped him achieve his goals,
running a deal packaging business with his partners that did over £24,000
in one month, and has his own brand, which we’ve no doubt he’ll leverage
for more passive income.

You can watch an interview with him, and many others, on this page:

www.progressiveproperty.co.uk/real-successes

We believe everyone has what it takes to gain financial independence. You

probably know that there’s enough money in the world for everyone to be
a millionaire, so it begs the question:

‘Who’s got my bloody money?’

In reality, there’s a simple *system* you can follow, a system we’ve tested
and tweaked and refined, a system that we’ve learned from our mentors
and trainers and refined over 128,480 hours, and continue to develop and
innovate, that can give you financial stability, security, independence and
ultimately opulence.

Investing, like everything, is a learned skill, not an inherited fantasy.

Investing is the only route to financial and time freedom. Working never
gets you there, because although you could have money you simply won’t
have the time to enjoy it, and your living expenses will always creep up
to consume all the extra money. Ever set a goal of how much would be a
good monthly figure to ‘earn’, only to get there and need (want) more? We
know plenty of poor people with expensive toys, upping their expenses at
a faster rate than their (passive) income; and it doesn’t make them happy
or ‘wealthy’.

Investing in property, in your power team and community, in your

education and training, in your knowledge and experience, pays the best
rate of interest and return.

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Back to the 3 levels of ‘investing:’

1. Level 1. Saving

2. Level 2. Investing

3. Level 3. Speculating

Level 1. Saving

Save enough money to pay off all your debts, with the biggest one first to
reduce interest compounding, and once in the black, save enough money
to be able to invest for a return. Savings alone aren’t enough to build
financial freedom due to low interest and high inflation. As soon as you
start to live from savings they diminish, and money from earnings will
only come for as long as you can work. But it is the essential first step to
financial control.

Level 2. Investing

Invest money at first in low-risk vehicles. At this stage you can’t afford big
gambles or losses because you don’t have enough capital and equity to
cover them, so you invest in property and/or some diversified stocks that
pay a return. Make sure you invest in what you know, as knowledge is the
biggest factor in reducing risk.

As you receive ‘interest’, ‘rental income’, ‘dividends’, and so on, you save
some to build your protection money, spend some to get used to the
increased lifestyle, and reinvest some to compound your return. As you
compound your capital and return you increase the risk and diversification
of your investments, leading you to step 3.

Level 3. Speculation

Speculation pays a higher return, but with higher risk. You invest time
and money in bigger property projects with a higher upside, invest in
businesses (and other more volatile or specialised vehicles) with 10x return
potential, but also the risk of losing all your capital. Most novices and get-

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rich-quick-wannabies speculate at Step 1, and then blame it on the vehicle/

market/course provider.

People become wealthy not because of their earned income, but because
of their investments. Take a look at the Times Rich List, sure, not all of them
have their primary income from property, but all of them have property
and every single one of them uses property to grow their wealth.

Think of a wealthy person you know. Do they have a big house? Do they
own an office? Do they have holiday homes? We don’t know any successful
person who doesn’t.

Lord Sugar, guest and partner at the 2011 Progressive Property Super
Conference said this about young property investors like us:

“While I was stupidly messing around with the FA, these young property
guys were making a fortune. It was a waste of my time and talent.”

Lord Sugar sees technology as the risky part of his business, and property,
in which he has a JV with his son in his company Amsprop, as the secure
part of his business. He had over £300million of property as a part-time
property investor when he said this, likely to be half a billion or more now.
Tells you something, right?

Property is a vehicle that is going to increase your income every month

through cashflow and capital growth, whether you are Lord Sugar or Lord
of the Manor, whether you start with £millions or you start with £50k of
consumer debt and no knowledge.

You can do it too.

Knowing that you do have a choice, what choice is it for you now?

And what if you were to lose your job? As soon as you lose your ability
to work (through burn out, illness, injury, loss of motivation, family
commitments, lack of desire, laziness) you no longer have income. You are
only as ‘wealthy’ as your last month’s pay cheque. So therefore most people

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on the planet are less than one month away from personal bankruptcy.
Property has given us 10 generations of future wealth, without having to
work another day should we choose; what vehicle can beat that? And yes,
we’re biased, as no other vehicle has given us such results, in such a short
period of time, with such forgiveness for mistakes.

According to the moneysavingexpert site, the average person in the UK

has £15,960 savings and according to UK debt statistics an average debt
of £28,968. Figures do vary slightly from source to source, but a consistent
theme is that the average person has almost twice as much bad debt
as savings. The average person under the age of 34 only has around 2
months of savings before they totally run out of money. These are seriously
worrying statistics, and if you fit into these, you must do something now.

Another thing that really hit us was the relationship between money and
stress. We looked at all the people we knew: our parents, friends, mentors,
business associates and so on. We realised that those who were stressed were
the ones who were working longer hours, and much ‘harder’ for their money.

In fact the richest people we know (some billionaires) work less than people
we know who don’t ever get to six figures. We’re talking a few calls, emails
and the odd board meeting per month. And lots of holidays. Our great
friend Neville Wright, who build and sold Kiddicare, in our home city, for
£75million, and has a net worth of £100million, is constantly travelling
around the world, taking his family with him, writing his autobiography,
sharing his experiences, living the dream and loving it. He hasn’t ‘worked’
for many years.

What if you could earn money without working so hard? What if you
could earn money without doing something you hate over and over and
over, and without most of the stress? You can imagine what people who
read the tabloids thought about that. Of course, stubborn as we are, we
ignored them. We shall deal with ‘pub talk’ later.

Our lives have changed dramatically since investing in property, business,

and our personal financial education. We owe it a lot, and succeeded in

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spite of our flaws, because property is so leveraged and forgiving. What

else goes up so consistently despite mistakes you may make?

We have grown to have a burning passion for property investment, not just
because it is a great business, but because it enables you to do all the other
things you love to do, were born to do, and will create your future legacy.

Your Turn: Exercise to change your life

Using the right investing systems, leverage and vehicles correctly you too can
work your way through the 4 levels of financial control or monetary wealth:

1. Financial stability

2. Financial security

3. Financial freedom/independence

4. Financial opulence

Are you ready to get started now? Let’s do it.

Write down now on a piece of paper what your total outgoings are. Include
everything and don’t kid yourself. One of Mark’s top tips is that it is better
to kid yourself by overestimating expenses and underestimating profits,
than the other way around.

Do it now.

Take some time to do this properly. It is important.

My current total living expenses are:

_________________________________________

Now write down what that figure could be reduced to if you were required
to cut your costs to ‘survive’.

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My total reduced living expenses are:

________________________________________________

This is level 1. Financial stability.

Now write down the required amount on current lifestyle to get to level 2.
Financial security.

My financial security figure is:

________________________________________________

Now write down the required amount on current lifestyle to get to level 3.
Financial freedom.

My financial freedom figure is:

_________________________________________

You will be able to stop work, do something you love and know all your
monthly bills will be paid for. You will have enough income to do the
things you want to do, and reinvest some to compound the effects. You’ll
be surprised how quickly it compounds into financial opulence.

Take for example; your monthly outgoings are £2,000 per month. Your
target financial freedom figure might be £5,000 per month.

To replace this ‘earned’ figure with passive income, you might only need 20
rental properties churning out £250 net each, or 10 multi-lets churning out
£500 net passive income. There are many other strategies that can get you
there even quicker. This is very real and possible, even if you start off with
just a few hours a week of time input, and you don’t start with much capital.

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Just like Alan & Alison Graham.

When they started back in 2008, they could only spare around 5 hours
per week each. Alison, a GP and Alan a head teacher PhD. Both busy.
Three children to look after. Both had good reasons not to get into another
vocation. Both already successful.

Mark ran a mentorship for them back in 2008 when he used to do one-to-
ones, and they got themselves educated, as well as getting out there and
taking action. They viewed many properties and forged great relationships
with estate agents locally.

In their first year, starting on a combined 10 hours per week, they built a
portfolio worth over £1million. At the end of that first year they both went
down to part-time, and set up the Buy-to-let Doctors, to help other doctors
build property portfolios. They hired Estate Agents to work for them and
never looked back.

It was great to see their development starting so fast with just a few
(focused) hours per week. You can see their story on the Progressive
Property YouTube channel.

www.youtube.com/user/progressiveproperty

Of all the investment vehicles we have looked at (and we have looked at

many and invest in many) property is the best, in our opinion, from the
following viewpoints:

The leverage that you can attain through property is like no other investment
vehicle available. We explain leverage in more detail later on. You can
leverage your money a minimum of 3-4 times over with just a standard 70%
mortgage, and that is without factoring in any growth on your portfolio.
That leverage can become infinite when you build your knowledge and
experience and learn how to invest with other people’s money.

Stocks and shares do not enable the average investor to leverage their
money; nor do savings accounts. You earn only on your money invested,
not the bank’s money (all explained later).

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With inflation currently somewhere near 3.7% the value of your money is
going down at more than 3% per year.

Yet the cost of food, petrol, travel, many commodities, and general living,
seem to be on the rise at a far greater rate than 3%!

A half-loaf of sliced white bread from Tesco has gone up from 60p to 93p
in a very short period of time. Prices of electricity, gas and other fuels have
risen at an annual rate of 20.9%, the fastest pace since February 2009.

Households only saved just 6.4% of their disposable income in the first
three months of the year, down 0.5% from the previous quarter. The
continued rising cost of goods and services means that the UK’s 26 million
households would collectively need to spend an extra £33 billion just to
enjoy the same standard of living as 12 months ago!

Immediately cash is worth much less every year, so at least 3% of your 0.5%
interest has just been eaten. Damn it! You end up being poorer every year.

Currently the cost of living is going up at a greater rate than salary rises, so
more money is lost to the expense of general living. Many people’s salaries
have actually taken a hit in the years since the crash, to compound the
relative loss. Annoying.

Then there is tax. Oh tax. Bloody tax. The Government charge you tax on
interest gained at your tax rate of up to 50%, so that eats another 1-2%,
leaving you with less money than you had last year.

So if anyone tries to tell you that leaving your money in the bank will make
you a nice tasty sum each year, then I’m afraid that they are wrong (or
on narcotics). They certainly don’t have any. Leave your cash under your
mattress and you are losing around 5% per year at the moment (and going
insane with paranoia).

Interestingly, as inflation goes up, and the value of money goes down, the
value of property continues to rise. They have done (tracked by Nationwide)
since 1952, where the average property was less than £3,000, and tracked

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back to 1088 by Mark Homer, where the average land and property values
combined in the UK were worth just under £1million. Tracking forward
since these historical dates, property has gone up more than 10% per year,
every year, on average, which is net more than 6% deducting government
inflation figures. Property has survived all the busts and recessions, lasts for
100s of years and consistently gives both capital and cash flow.

You earn an income right away from a property. With a pension (discussed
later) you will have to buy an annuity and the first payment will be made
some time in the next 40 years (if you are alive to benefit from this).

You can leverage using O.ther P.eople’s M.oney (OPM) to invest in property,
detailed in the leverage section. You cannot borrow in the same way to
buy a pension fund or other investment vehicles. The yields are generally
lower from a pension pot and you are in total control of the properties
that you buy.

The government increase taxes year on year to repay their national debt.
Many of our greatest assets have been sold off (British Gas, BA, BT, Jaguar,
Aston Martin) and the last point of financial return for our government is
the tax-paying public.

That’s you my friend. And your family.

When you actually work it out, some people (mostly employees) pay
upwards of 70% of their money in taxes, it’s staggering. Tax on what
you earn, on what you buy, on what you sell, on services you provide and
receive. On what you eat and drink. You pay tax on places you go and
methods in which you travel.

Think of a car: we pay tax on our income to raise the money for it. We pay
tax to the bank for saving it. We pay tax to buy it. We pay tax to insure it.
We pay tax to tax it. We pay tax to put fuel in it. We pay tax to fix it. The
bigger the car we get the more tax we pay. We pay tax to drive it to some
cities. We pay tax when we drive it too fast. We pay tax to park it. We pay
tax to park it 5 minutes longer than we said we would park it.

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You get the picture. Investing is the only way to future-proofed, sustainable
wealth. End of rant.

Summary

The only way to achieve financial independence is to invest. The

government won’t look after you. Savings aren’t enough. Stashing
cash under the mattress will make you paranoid. Pensions are dying.
You control your future; no-one else will. Assets produce recurring
income to free your time to do the things you love.

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#4. Pension or Property - what’s the best plan

for retirement?
Should you invest in a pension or bricks and mortar for your retirement?
The long-term trend and growth in house prices coupled with great buy-
to-let yields are making property an appealing option for many people. But
why not invest in pensions instead? Won’t the Government look after me?
Won’t my pension see me right into my old age? Which is the best and
why? Let’s look into the facts.

Things are not as they used to be, particularly as paltry annuity rates
undermine the chances of getting a decent income from pensions.

Get a good job. Work hard for 55 years, pay into your pension. Retire and
your company will pay you for your service until you die.

No fluff alert: No-one is going to look after your future but YOU.

Cons of a traditional pension:

Access & Returns

Returns from private pension companies are uncertain and your money
is locked away until you reach age 55 at the earliest. And on retirement,
most people have to use their pension savings to buy an annuity to provide
an income for life, but because of increasing longevity, these are often
poor value.

Although this means you can’t be tempted to dip into the fund to pay for
luxury holidays, it also means that your money is tied up, so if you’re really
stuck for funds, it will be inaccessible.

It begs the question: just what do some people define as “retiring well”
for Heaven’s sake?!

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Investment risk

As your pension is invested in various stocks and shares, there is an underlying

risk associated with these investments. Your pension could decrease rapidly
if things go badly and you could lose money in the short term.

Control

Most pension companies employ fund managers to invest on your behalf

who often have a rather opaque fee structure (even though they and
the regulator may say different) meaning investor’s savings and pensions
can be slashed by thousands of pounds at a time. There seems to be
little incentive to reduce fees due to ‘structural deficiencies’ in the fund
management industry.

What this means is investors end up paying many times over the quoted
annual management charge because additional and hidden fees for
administrative costs exist, charges for buying and selling (on top of the
performance fees for the fund manager) are added later.

We have also noticed that property funds rarely perform in the same kind
of way, which we know we are able to achieve with direct investment of
our own money into property. After speaking to people in the industry
we understand that the large gains are often made and hived off into
companies separate to the main fund which the investors dont have a
share of. This ensures that returns are lower for the investor and perhaps
more consistent, which is a key objective (often at the expense of overall
returns) of many managers and the IFAs that do the selling to the investor.

Cost of annuity

Although an annuity will offer a guaranteed income throughout retirement

there is a cost involved. You could live well beyond the pension fund, and pay
for the privilege, especially if you want to include a pension for your partner.

The truth is most people in the UK won’t retire comfortably. Most people
also seem to agree that pension stability and security are relics of the past,

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and confidence in pensions is very low. Gone is the industrial age. You
can’t get your money out of pensions like you can property. You can’t
really control it (unless it is in a SIPP or SASS). You usually can’t gear it and
you can’t leverage it.

So forget it.

And stop listening to the people who advised your parents. How did it
work out for them so far?

Decreasing the value of your income

You will often get an option when you take out an annuity to have your
monthly payments track inflation.

If you opt for this option your monthly income will be a lot lower but will, in
effect, remain at the same level in real terms throughout your retirement.

Death

A pension stops when you die. The income stops immediately. In most
cases even if you pass away only a few months into drawing your pension
all the money from your pension will no longer be available.

Whereas you can leave property to your next of kin who will benefit from
the tenants paying rent, and the increasing capital growth, for decades
and generations to come, minus some IHT (Inheritance Tax), which can be
strategically reduced or even negated.

Two very close family members put faith into their IFA (Independent
Financial Advisor) to invest their money securely, as they approached
retirement age. They didn’t want high risk, in fact their specific requirement
was low to low-medium risk, and this is what happened:

Their investment via their IFA was placed into what was meant to be, a
low/medium risk product. The details of the product didn’t say who it
was backed by, and the IFA didn’t tell them. The investment, £105,000,

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was over 50% of their total investment pot. This was important to them
coming into retirement.

The first they even knew of the Lehman Brothers was when they received
a letter to say they’d lost the £105,000 that ‘they had invested’. They’ve
been fighting for 4 years now with the ombudsman that they were mis-
sold the product by their IFA, and as of yet have not had a penny back.
It had been a product that was only guaranteed whilst Lehman Brothers
were solvent.

So, it’s not smart right now to invest your savings or future capital into
a pension that you don’t control (SIPPs and SASS are different as you
can invest in property or other assets directly enabling you to control the
outcome). They’re not always as safe as the marketing would have you
believe, with governments and corporations spending/losing them, and
inflation eating away at them.

The continuing rising cost of goods and services means that the UK’s 26
million households would collectively need to spend an extra £33 billion
just to enjoy the same standard of living as 12 months ago.

So, sure, this is a stark reality, and for many at the lower end of income,
the cost of living is becoming unsustainable, being ‘forced’ to rent, and to
accept smaller spaces to live in.

But there is a huge, contrarian and little-known benefit of (high) inflation

and pension instability/reduced confidence, especially relevant to you as a
property investor. If you didn’t know this before you’re going to love it –
you’ll find a way of getting actual ‘growth’ in a falling market. Inflation is
detailed later.

Anyone who does have a bit of cash has a bit of a problem too at the
moment. Interest rates at an all-time record low for a record amount of
time might be good for borrowers and property investors, but it’s bad news
for savers, and most people who don’t/can’t invest.

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They may have been relying on income from cash investments, which have
now disappeared. Banks trick people into believing they are getting 3% or
more, but the reality is often 0.5%-1% from a Cash ISA and 0.2% from a
typical instant access savings account.

How do you replace that loss of income? What if you don’t know where
and how to invest? Let’s not be fooled, this is not only a problem for
people who don’t earn much money; it’s also a big problem for people
who earn lots of money. Perhaps even a bigger problem for them, and
a reason why many people like you are looking into property and other
leveraged investment vehicles, and taking personal responsibility for it.

Why would anyone hold cash at a net negative figure when property can
give them double digit returns, and that is just cash on cash, without any
form of leverage? We will be covering turning double digits into even
bigger (but still low-risk and realistic) returns utilising leverage models,
later on.

Although on the surface a financial decision, people often invest for an

increased quality of life for the future. And the big spanner in the works
now is the ever-increasing age of retirement.

People’s long-term plans are in need of modification, and everything they

have done for the last 30 years to increase that quality of life is slipping
away for many.

Here are some facts:

• Annuity rates - which determine how big an income you can buy with
your pension pot - have more than halved in recent years.

• 20 years ago in 1989, a pension pot of £50,000 would have delivered

a single 65-year-old man a pension income of about £150 a week.
Today it would buy just under £65 a week. That’s less than half the
money to survive in a world where things cost almost twice as much.

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• Panorama found that paying £120,000 into one HSBC pension plan over
40 years would result in £99,900 being taken out in fees and commissions.

• In 1989, a 45-year-old person saving £200 a month for 20 years until he

or she was 65, would have been expecting a pension pot of £206,967.

This would have been expected to produce an annual income of £32,443

based on the annuity rates of the time. Today, however, the reality is that
he would end up with a pension pot of less than half what he’d have
expected at £101,144. This will buy him an income of a mere £7,140 a
year, or just under £600 a month, at present annuity rates.

Retirement used to be something to relish. You could look forward to

settling down after 40 or 50 years of hard graft, sitting back and enjoying
the twilight years of your life.

Not anymore. We now live in a world where retirement is a luxury fewer

and fewer can afford.

Here are some interesting pension performing statistics worth sharing:

• 99.7% of over 65s in the UK do not have pension plans.

• 88.2% reaching retirement age will live off the state pension, which
will not be enough.
• £824 a month is needed to be saved today if a typical 30 year old
wants to retire at 65. With the average UK salary at £25k, that’s almost
half their monthly wage.
• This increases to £887 a month if they start 1 year later at the age of
31, and a 40 or 50 year would need to save significantly more.
• A 30 year old today retiring at 65 and relying on the state pension
would only get £7,500 per year/ £145 per week.
• A £30k pension pot gives only £35.81 per week.
• The average shortfall of pension savings facing UK citizens is 37%.
• 29% of the UK population have no savings, 46% are held in low

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interest bank accounts and 65% of adults are not saving for retirement.
• 7/10 Britons think it will not be feasible for people to leave work and
live on a pension for 30 years.
• The FTSE 250 companies are cutting contributions to defined benefit
schemes on average by 10%.
• Pension fund deficits amongst FTSE 100 companies are so large, 1/3
will not ever meet them.
• Within FTSE 100 companies, £2 of every £3 is spent on past deficits
rather than current employee benefits.
• 1/3 of working Brits do not know where their pension is invested.
• Almost half of working Brits never review their pension plans and 38%
of those who do select the default option for their scheme.
• A £100,000 pension pot will only buy an annuity income of just £5,750.
• The long term challenge of low wages means people in their 30s & 40s
are unable to save for a pension.

So, what’s the answer.

Property, of course.

With bricks and mortar you have complete control and can invest how
much as you want (especially with joint venture finance). You can gear
your investment, so if you purchase a £100,000 asset with a £30,000
investment, a 10% increase is £10,000 whereas a 10% increase on a
£30,000 pension (without leverage) is only £3,000. Age is irrelevant and
you can ‘touch and feel’ your investment. The fact you can take your
money out at any time and pass it on to your family upon death (with
good tax planning) is a major benefit.

New pension revolution

But, what if you’ve already invested in a pension? What if you want to
jump at the chance to join Britain’s growing army of landlords seeking a
reliable income stream and capital growth?

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Let us tell you about the startling new revolution in pension and what it
means for you.

The liberalisation of the entire concept of UK pensions recently underwent

the most massive and radical change in over 100 years.

You see before the change, most pensioners were forced to buy an annuity
at age 55. The recent policy change will be one of the biggest game
changers in the growth of the property market for a decade.

An annuity is essentially an insurance product which you buy with the lump
sum in your pension that then pays out say 5% a year until you die. The
bad bit, as described above, is that it dies with you and all the capital is
usually lost.

One reason many smart investors choose property is that you can pass the
capital on. This ‘death of capital’ represents very poor value and is one of
the reasons pensions have had such a bad reputation.

But here’s the big change: At age 55 pensioners can take all of the money
from their pension and invest it in whatever they like. They can take 25%
tax free, but now they can take the rest out and invest it or spend it on
whatever they like (!)

And guess where the smart money is going to flow?

Property.

And what’s that going to do to property prices?

Well, lower buy-to-let mortgage rates, and higher rents, will help make the
maths and cashflow stack up for many would-be ‘grand-lords’. Lending
is getting more competitive and so low-cost mortgages and appreciating
property values are becoming the norm.

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Top Tips & Dos & Don’ts

Here are some top tips and some dos and don’ts for investing in property
using your pension money:

1. Invest locally. Get to know your local (highest demand) area and your
returns, control and cashflow will increase.

2. Leverage your funds with bank finance to get 500% more cash on
cash returns.

3. Buy cheaper properties (middle ground with capital growth potential)

with higher yields (cashflow) and lower risk.

4. Don’t go in blind. Get educated, do your research and diligence, do the

numbers stack and make financial sense towards your property goals?

5. Create multiple streams of income from different property types such

as single-let, multi-let and commercial property conversions.

6. Utilise the many new government tax-saving strategies, such a removal

of planning permission and capital allowances.

7. Shop around for the best mortgage. Don’t just walk to your nearest
high street but speak to a reputable independent mortgage broker
who will advise and get you the best deals.

8. Haggle over price to negotiate a discount as you will have a greater

advantage over owner-occupiers who will often be in a chain, and
make great relationships with estate agents who will send you the
very best deals.

9. Know the pitfalls. Have a cash-buffer for rate rise, large maintenance
bills or longer than expected void periods.

10. Start now. It’s never to late to start but always too late to wait.

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Summary

Rely on the state pension and you’ll be the one in a state! The
objective of any pension is to avoid poverty, not to create a decent
or comfortable lifestyle in retirement. To do this you need to invest
in inflation-proof assets. Your returns are multiplied when investing
in property many times, whilst still investing in a risk controlled and
safe way. We have never seen the value of a property drop to zero
like some companies do. Embrace the recent pension changes to
avoid annuities, which offer poor value and replace them with high-
yielding, high cashflowing & good capital growth properties to fund
your retirement.

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#5. The law of compounding

Money attracts Money.

It is said that like attracts like, and money is no different. Einstein called
the law of compounding the 8th wonder of the world. He believed it was a
law, and that is what we would like to discuss here, if that’s OK with you.

A great analogy is one of a bet on a golf course: betting £1 per hole and
doubling your bet on each hole seems like a fairly innocuous challenge.
However that £1 bet compounded over each hole turns into £256 in 9 holes.

Quite a compounded effect isn’t it? Well, that’s nothing. After hole 15 that
amount has compounded to £16,384. Look at how much more money is
being attracted now, in a shorter time, because of the compounded effect.
Once you get to hole 18 the compounded total is £131,072.

Property assets work the same way. Cashflow and income work the same
way too. Your time input into this business rewards you the same way.

It is just this straightforward - the more time or money you invest (wisely), the
greater the return you will get. And the beauty of it is that it all started from
£1, but it was not spent; the returns were re-invested (and compounded).

A water lily also obeys this rule, it seems. Each day it covers double the
water surface it covered the day before. The first few days it covers very
little, and the results are not visually or tangibly obvious. But after 30 days
it has covered an entire pond, regardless of the size of the pond/lake.

The law of compounding states that the maximum benefit comes the
longer you are doing it, so remember this:

“You have to work hard enough not to have to work hard.”

- Richard Templar

Most people, and those who don’t succeed, don’t give compounding a
chance. Most people stop, give up and change course just before the time

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when compounding kicks in and starts to pay them back. You wouldn’t
plant a seed, come back the next day and shout “Where’s my frickin’ tree?”
Of course you know that in order to see the fruits, you’ve got to grow the
roots. If you want to manifest the visible, you’ve got to master the invisible.

We live in a world of instant gratification. We see YouTube videos with

10million views and get seduced by what seems like overnight successes
and celebrities, and pictures of before and after 6 packs and miracle cures
all tempting our desire for shortcuts. This is an unrealistic fantasy that
tempts us because we don’t have a clear vision, and therefore get lured
by distractions that look easy. The long term reality is poverty, lack of self-
worth and fulfilment, because each time you start again, having invested
time into growing the roots but seeing no shoots, you have to go through
the entire seeding, planting and fertilising process all over again. Because
you keep impatiently demanding your tree but never see the shoots, you
lose your confidence in your ability to create wealth/success, and you look
for further shortcuts to save you. And so the cycle continues.

The deeper the roots, the higher the tree grows towards the sun, the wider
and more radiant it’s leaves spread, and the more seeds it produces for
future forests (generations).

The law of least effort

The law of least effort, also known as the 80/20 Principle, is a law that
governs maximum results from minimum input. This is the real, achievable
and sustainable ‘get rich quick’ scheme. Instead of looking for shortcuts,
look for the richest most nutritious soil, nearest to the sun, with close access
to water, the best fertilisation and protection from pests, experienced
horticulturalists to advise and pass on their experience, and you will have the
shortest possible route to the maximum gain that will sustain generations.

Those ‘overnight successes’ invested time growing their roots to position

themselves for maximum compounding and reach. Those 6 packs came
from smart diet, the best exercises performed in perfect form and with the
best personal trainers to motivate, inspire and hold accountability.

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The Rule of 72
This law, or formula, demonstrates the law of compounding very well. We
use it here for purposes of illustration and to show the impact of the law
of compounding, and of course you could use this in many of your future
investments.

To estimate the amount of time required to double an original investment,

divide the most convenient ‘rule-quantity’ (72) by the expected growth
rate, expressed as a percentage.

For instance, if you were to invest £1,000 with compounding interest at a

rate of 9% per annum, the rule of 72 gives 72/9 = 8 years required for the
investment to be worth £2,000; an exact calculation gives 8.0432 years.

We like playing with this. If we add some relevant property figures to this
equation it starts to get very interesting:

You buy a £100,000 property for £75,000. This is possible at any time of
the market if you find ‘motivated’ sellers (analysed later).

We know that property grows at an average of around 10% per year

(source: Nationwide house price statistics). You can put in some figures
based on your expectation of growth or your attitude to risk.

It would probably cost you about £3,000 to £5,000 in cash; explained

later. We can use the rule of 72 and put our figures in like this:

5% growth: 72/5 = 14.4 years to turn £5,000 into £10,000

8% growth: 72/8 = 9 years to turn £5,000 into £10,000

11.74% growth = 72/11.74 = 6 years 48 days to turn £5,000 into £10,000

Once you start adding leverage to this, borrowing against a bank or a

private investor, or Joint Venturing with OPM (Other People’s Money),
you’ll very quickly see just how powerful, fast and compounded this can
become. More on that later.

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It doesn’t matter where you are in your current position. If you have very
little money (or quite a lot of debt) you can still apply this law. Everyone
starts somewhere, whether £1 or 1 lily. You just obey the laws and keep
going, and it happens.

As we shall discuss frequently as we go, always be looking at how you can

leverage what you have and compound it to make very large sums of money. If
you have equity in your home, or know someone who does, then you can start.
If you don’t then you rely on knowledge and strategy and compound that.

Don’t we always hear people pointing out how the rich get richer and the
poor get poorer? Well, this is generally the case as they are attracting more
of what they already have; be that wealth and abundance or bills and a
scarcity ‘there isn’t enough’ mentality. You won’t attract more wealth until
you can learn to manage what you already have.

Compounding gives momentum, and works moving forwards or backwards.

It takes 80% of the fuel a rocket holds to get it off the ground, and the
remaining 20% to go through its space voyage and back to earth. Ever-
growing percentages of money attract ever-increasing amounts of money.
Ever growing debt attracts ever-increasing amounts of debt.

In fact, the rich have a problem with too much money: they can’t reinvest
it fast enough, because compounding is compounding, and because they
reinvest it, more money comes in. Yes, the rich do get richer.

Summary

Money attracts money. Invest and re-invest and watch your money
multiply like Gremlins (just add water). By holding on to your proper-
ties for the long term, you can reap the effects of compounded capital
growth and rental income, and even inflation erosion. Understand
and apply the law of compounding and build a solid foundation that
you can live from, for the rest of your life.

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#6. Why property & not the lottery?

Now we are starting to talk about property and the benefits over saving and
other investment vehicles. Very nice indeed. We love talking about property.

You know, so many people tell us that they have been thinking about
investing in property for years and years, but have never done anything
about it (for whatever reason). Here are just a few we’ve heard first hand:

“I haven’t got any money. If (when) I had more money I could invest.”

“Other people don’t want me to. My Mum/Dad/mates think I’m insane to

even think about it.”

“My area doesn’t work {south} {north} {Scotland} {Ireland} {London}.”

“The estate agents told me everything is going at full asking price.”

“I’m too {old} {young} {scared}.”

“I can’t afford to give up my nice lifestyle.”

“It’s too risky. Rates will go up.”

“I don’t have the time. I’m just too busy.”

Thing is, if you’d trained over 300,000 people in property like we (Rob,
Mark, Progressive) have, you’d have heard them all many times over too.
You’d have also seen the evidence that these reasons/excuses/stories don’t
define success. Anyone can, not everyone does. And we will show you
how you can, no matter how many stories or challenges you face.

Lack of time is the biggest excuse. Time is the one thing we all have that
is equal, so why are some people billionaires ‘working’ 3 hours a day or
less, like most that we know, and others working 15 hours a day for £5 per
hour? We all have the same 24 hours in a day, right? The key difference
is leverage.

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Someone exchanging their time for money can only earn on their time.
15 hours x £5 is £75 a working day. But if you had 10 people earning
£10 per hour, working for you, and you got paid £5 of that, then their
8 hours a day would earn £10 x 8 x 10 = £800. You earn £400 on other
people’s time, per day, instead of £75 working on your own, per day.
And you create 10 jobs and so contribute to the flow of money and your
local economy, which will, in turn, flow more money your way via more
employment, reputation, referrals, addition related jobs and income
streams, consultations and so on.

If you had 100 people working for you at £10 per hour, and you earned
just £3 on each £10, then their just 5 hours a day would earn £10 x 5 x 100
= £5,000. You earn £1,500 on other people’s time, per day. 1,000 people
at £10 per hour, 8 hours a day and you earning just £1 on each person
equates to £8,000 passive income to you, per day. That’s why billionaires
employ thousands of people, and those who employ thousands of people
are billionaires.

But money is a taboo subject, especially in the UK.

“Money will change me and people won’t like me.”

“I’m not educated enough. I don’t know how to do it?”

“Money makes you a bad person.”

“What if I lose money?”

“The market is going to crash. I have been saying it for the last 10 years,
d’ya know wha’ I mean?”

Well only one is actually right ;-)

Money moves from those who don’t make it important to them to those
who do make it important to them. Money moves from those who value it
least to those who value it most.

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So what makes property so good that we keep on shouting about it? And
what do we know about other vehicles of investment to compare it to?
Here are all the reasons nicely broken down for you:

The basics: first and foremost property [shelter] is a basic human

requirement. It is just below the need for air and food, and on a par with
the need to interact with other human beings. It is way above the need for
money, cars, designer clothes, handbags and matching shoes, the latest
golf clubs, cosmetic skincare products, botox and body part augmentation.

As long as we’re alive we’ll need housing. We will always need shelter from
the cold and the rain and the snow and the wind.

So what? What does that mean in investment terms for you? It means
consistent and perpetual demand. Demand drives the economy. Add to
that the fact that we are an island here in the UK, and the population
is growing year on year - what do you think is going to happen to that
demand? You guessed it. It’ll increase. We’ll talk about demand later.

Touch it, feel it

Property is tangible. It is real. You can see it, touch it, visit it, walk through
it, and as a result control it much more than many other investments.

With shares in companies you do not have that added security. Look at the
dotcom crash and the fall of the Nasdaq. Look at Marconi and Enron and
Lehman Bros. Many of those so called multi-billion dollar companies were
so intangible that their true values were highly volatile, questionable and
easily hidden. Many of them were ultimately proven to be speculative and
worth very little.

The control-freak in you and me

Anything you can see and you’re close to, you have a certain amount of
control over. If your dog is on a lead you can guide her, pull her away
from the kids that walk by, and scoop up the mess she leaves behind. No
analogies intended. Other dogs can even follow her trail and sniff exactly
the path she has been down.

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OK, let’s leave the analogies alone.

Take a speculative company based in someone’s bedroom in Taiwan; how

can you control that? How can you feel comfortable about your money
being in companies you will never ever see?

The answer is that you can’t. As will become very apparent, anything
that can’t be reasonably controlled will not provide you with the kind of
investment you want (if you are looking for mid to long-term financial
independence/freedom/opulence, that is), even if you buy them well.

Property vs. shares

Pound for pound, stocks and property perform quite closely, unleveraged.
Some will tell you that property will outperform shares every time and
others will tell you vice versa.

In our experience it is far easier to utilise leverage in property. We’ve met

many people who have told us that you can make 6% per month on shares by
renting them out; all you have to do is turn your computer on once a month!

Funnily enough they sell these educational packs that take 2 people to
carry them at big seminars and charge thousands of pounds for them. They
would tell you that now, wouldn’t they?

Out of all the people that we’ve met who have bought these, or been
exposed to them, we have never actually met anybody who has made
them work or given us evidence that they have worked. Even many of
these ‘Gurus’ don’t seem to be doing it themselves, they’re selling the
shovels rather than digging for gold. The best strategy is to be doing both.

You cannot go to a bank and ask for a loan for £100,000 to go and put
on the stock market, on trap 6, or all on black. Interesting, isn’t it, that for
hundreds of years banks have queued up to loan the average Joe or Jo
money against a house, but no-one will touch anyone (who is not Warren
Buffet) with a bargepole to lend money to invest in shares.

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How about some figures? With property, a non-expert has the ability to
borrow, gear and use other people’s money (OPM). Low barriers to entry
like this mean anyone can get started without 7 year degrees. Take the
example of £25,000 (savings, equity, pension release etc).

You can either buy £25k worth of shares or use that lump sum to buy a
property worth £100k, through a 75% BTL mortgage (depending on loan
to values at the time), with your £25k making up the deposit (let’s not get
into loan to values or buying costs yet, we’ll do that later).

Let’s assume the stock market doubles in 5 years (which it hasn’t). Your
shares would give a rough compound rate of 12% per year - £25k to £50k
in 5 years with a big back wind and lots of luck going your way.

Put that same £25k into property in the same timeframe at the same 12%
per year, and the value of the £100k property will have doubled to £200k.
Plus all the net cashflow for 60 months, which should, as a minimum ,be
£150 net per month, going up to minimum £350 net per month in the 5th
year. That would roughly work out to be an additional £15,000.

Of course, neither asset class gets that growth every year in a predictable,
linear fashion, which for property brings huge advantages, which we’ll
discuss later in the book.

To the average, even novice investor, property offers the best solutions and
risk-reward balance. I know that there are people who really are experts in
the stock market who are making cash and using other people’s money to
make that cash. But these guys have been doing it for 30 years. They are
real and proven experts and not ordinary people starting out.

History

History tells us that property is one of the most sound and powerful
investment vehicles available.

Since records began on house prices through Nationwide in the 1950s,

property has performed remarkably well, doubling in value every 10 or so
years as an average. This is with the most recent crash/correction included.

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In fact, you can track land prices all the way back to 1086. William the
Conqueror commissioned a survey to work out which land was being used
for in England (and by whom), for taxation purposes. This survey provides a
great point to compare modern day property values and the land and property
price growth that has taken place. It is estimated that since the survey property
values have increased at over 10% per annum. This represents around 1,000
years of data, and if history is seen as a good long-term predictor of the future,
then this has to provide some clue as to what should happen moving forward.

Using history and fact as an effective gauge, it tells us that property is, has
been, and therefore is likely to continue to be, a superb investment.

You wouldn’t believe how excited Mark gets over 1,000 years of data! His
spreadsheets would set on fire. Mark even once had a spreadsheet for all the
attributes his ideal woman should have. Gemma, his current fiancée, does not
know about this! Mr. Paranoid and his spreadsheets are the best of friends.

Anyway, history is not a guarantee of what is to come, but it is possibly

the best indicator of what is likely to happen over a long period of time.
This is what we, as investors, need to know.

Demand for property is currently high

‘Demand for housing is increasing over time, driven primarily by

demographic trends and rising incomes’ according to the Barker report.
With the typical family unit breaking up much more frequently; larger
families, higher divorce rates and a huge influx of migrants - demand is
outweighing supply at around 120,000 homes per year.

In fact in 2012, 250,000 houses was the target to keep up with current
homes and around 100,000 new houses were built. There hasn’t been one
year since where more houses were built than needed, so the problem gets
worse (better).

This lack of supply pushes prices up as competition gets greater, in prices

and rents.

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Market movements

In the UK we have a far greater chance of property investing success than

the vast majority of the rest of the world. We experience strong property
ownership rights and in general our property market is very strong. In
Europe and in many other parts of the world this is not the case, where
properties don’t really go up and people rent for life.

In Australia properties are negatively geared for apparent tax benefits. In

the US where the crash hit really hard and where there is so much land,
demand is relatively much lower. In the UK long-term demand is based on
an acute shortage of properties.

Opportunity is massive but most people will miss it all and wonder what on
earth happened. The secret to buying property at 20-50% below market
value (BMV) is still unknown by the majority. And of course that is great
news for the contrarian investors, and down to the 80/20 Principle. The
details of cashing in during a crash (past or imminent) are in the sister
edition of this book, ‘Cash in a Property Crash’. You can find it on Amazon
or the Progressive website.

Affordability in the market

“Aren’t properties just too expensive for first time buyers at the moment?”

Well yes, house prices went up significantly until 2008 and many FTB’ers
(first time buyers) were priced out. This is great news for those of us who
are buying, because there is less competition.

Then if things weren’t bad enough for FTB’ers, post crash has got even
worse for them, because the banks have stopped lending them money,
and they now can’t get on the housing ladder. High prices, low lending,
they seem to lose both ways.

Post-crash rents rocketed, then stabilised, and now are on the steady rise,
increasing yields and cashflow for investors – the FTB’ers have no choice
but to rent, which creates an increase in demand and decrease in rental
supply. They have to pay more because of a scarcity of houses for rent.

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In fact in one of our prime investing areas there are over 15,000 people on
the waiting list for a council house.

As a side note: between 2004 and the back end of 2007 we personally
experienced very strong growth in our own portfolio. Obviously good,
right? However, what miffed us was that our rents across the board
had not gone up a penny in that time. There’s always a lag between the
increase in property values and the rise in rents. Between November 2007
and March 2008 our average rents shot up by 20%! They’ve steadied since
then, up around 4-5% a year on average. Add to that the reduction in
interest rates, lower cost of finance and lower buying prices, and that gives
you a significant increase in cashflow.

The market has to adapt to this. As much as people (and the press) might
scaremonger, it is highly unlikely that, all of a sudden, all first time buyers will
be out on the streets. There is evidence to suggest that people are living in
smaller (and smaller) properties in this country, as the availability of property
decreases and prices rise. This has forced the market to adapt to provide
ways in which first time buyers can afford to get on the ladder and reduce
living costs. Examples include shared ownership, Lease Options, 2 + 2s,
serviced apartments, installment contracts and renting by the room (which
creates great opportunities for investors to get even more cashflow).

The average size of homes in London and Tokyo are extremely small
compared to the rest of the world, but this wasn’t always the case. They
have had to adapt over time as social and economic climates evolve. These
provide difficulties for those that look for problems, and opportunities for
those who look for solutions.

For an example of market adaptation, look at the change in residential

developments: we have smaller plots, where gardens and plan footprints
are compensated by additional storeys. Many houses are now ‘town
houses’ with 3 floors as opposed to 2. Many of the bedrooms are smaller,
beds are being made shorter, garden plots much smaller; yet prices are still
going up.

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This shift of living in smaller and smaller square footage has allowed prices
to continue rising whilst not pricing people fully out of the market. People
who have already bought have benefited from these increased property
values, and older houses continue to rise more than other assets that age,
because they still have long-term utility and the construction and space are
better than newer houses.

What if you had built a portfolio of your own 10 years ago, or bought
double the amount that you have now? Think about it.

And remember, we live on a very small island. Land will always be at a

premium, especially when compared to countries like the US. As much
as the space it is the tight land control in place in the UK, with much of
the land preserved and protected. This should keep driving the price of
property upwards, taking into account corrections every 15 years or so
(that you’ll want to be ready and waiting for), enabling investors like us to
continue to gain long-term returns.

Growth in buy-to-let in the UK

The UK rental market has grown significantly since the introduction of

Assured Shorthold Tenancies (AST) and buy-to-let mortgages in 1996.
Between 1995 and 2003 the number of people needing to rent doubled
from 46,000 to over 93,000, according to the Barker Report.

This means more tenants for investors like you. This trend has continued,
with demand for the right types of rental properties in the correct areas
remaining strong. We give you the R.E.A.S.O.N and C.A.S.T.L.E.D models for
this later.

Another effect of continuing buy-to-let growth has been the increased

difficulties first time buyers face when buying property. This has fuelled
rental demand even more, as more of the population need to rent for
longer periods before being able to buy.

Increased levels of personal spending, borrowing on credit at payday loan

rates and instant gratification has led to people saving less, and so they
don’t have the deposit monies available to gain a mortgage.

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Mortgages are now being offered over longer periods as a natural response
to reduced affordability. The old maxim of a 25year mortgage is now being
stretched with more than a quarter of lenders offering terms for up to 40
years. Split mortgages can also be obtained where up to 5 people can
share the ownership of a single property.

Despite this, mortgages are not as easy to come by any more, so the market
adapts again. Now you have private investors, professional moneylenders,
bridgers, Angels and V.Cs (Venture Capitalists) replacing the gap in the
market that the banks used to own. Remember money simply moves from
those who value it least to those who value it most.

Many of these offer competitive rates, faster access to funds, easier

applications, more personal touches and more flexibility on terms. Just like
it was in the good ol’ days, as some of our older generation mentors tell us.

Back in 2008, when everything changed in the world, as I (Mark) was

looking for guidance, I had a frank, somewhat penis-envy style conversation
with one of my (£100m+) mentors - happens to be a JV partner too:

“Mark, back in my day, if you wanted fowwwlding (folding; his term for
funds/cash) you asked your bank manager.

“If you have a good relationship with him, he gives you fowwwlding, and
you go and play. If not, you go hungry.”

Because it was 2008, I (naively) asked the same question everyone does now:

“But the banks aren’t lending now.” I said confidently.

This was his reaction:

“Mark, haven’t you listened to anything I’ve been showing you? The world
of ‘computer says nooooooooooooooooo’ applications processed by
Katherine Tait & David Walliams is dead. It’s owwwver.

Finance is going back to the good ol’ days, like it was in the 60s, or as far

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back as the Wild West. You want fowwwlding? You build relationships
with real people, not faceless banks. That world is now the past.”

At the time, because the crash was so raw, I didn’t fully get what he meant.
But a few years later and the picture is now so clear. We now raise finance
from high net worth’s (HNWs), VCs (Venture Capitalists, Commercial
banks; all of whom the rates and terms are as much determined by the
relationship, as they are the ‘creditworthiness’ of the borrower.

When things become great for the FTB’er, they’ll be harder for you, the
investor. From 2001 to 2007, when Property Ladder was popular on TV,
you had every amateur, owner occupier (OO) and FTB’er ‘buying-to-let’ or
‘tarting and turning’.

When the man in the pub is telling you to get into property, you know it’s
not the best time. Sit on your hands! You’ll get outbid by naive competition
and over-emotional homebuyers & amateurs. There’ll be too many of them
flocking to properties that no-one is looking at now. You’ll have to adapt
and look for profit elsewhere.

Enjoy this time while it lasts, because it won’t last forever. You best fill your
boots while you can my friend. If you look at the past cycles then the next
crash is likely to be between 2020 & 2024, and most likely around 2022.
That gives you many years yet to:

1. Cash in now at the base of the growth spike

2. Get great knowledge ready for the next crash

3. Build a war chest of cash for the next crash

All of which you want a few years to do. And guess what, that time is now?
Possibly the perfect time? Certainly the right time for you to start, right now.

Rental increases

On average, rents in the UK have doubled every 9 to 12 years through

history, and we have one of the most competitive buy-to-let mortgage
markets in the world, regardless of what part of the market cycle we are in.

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Interest rates are relatively low anyway, and with the crash they’ve fallen
off a cliff. According to many predictions, swap rates, Libor rates and so
on, interest will stay low for a while. They’ve stayed low for much longer
than most economists predicted. We all know they’ll go up, but there’s
no signs yet that they will go crazy. And whatever they do there is always
opportunity in the challenge. For sure we will be lending money and
moving more of our wealth into cash/liquid investments when rates rise, to
balance the cost of lending and the reduced yield.

All great evidence and positive news for property investment, don’t you
think? Provided you can ‘observe the masses, and do the opposite’.

More importantly, we think, is that property gives you freedom and choice.
Just as we explained the benefits of investing over spending and saving,
property is the vehicle that will allow you to live the life that you choose.
It has given us this; the greatest gift of all. Because your properties will be
growing year on year, over time without you having to work on them, as
will the income. And as inflation erodes your debt, you are free to do as
you please, with all the money you need and more to live a life of security,
freedom and then opulence.

Summary

Property is tangible and real. You can see and control it. It is secure
and much less volatile compared to other investments. Rents are rising,
interest rates are low, private investors are financing the mar-ket, supply
is low, demand is high, prices are low, yields and cashflow are high.
History and demand all point to a great future for property investment.

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#7. Why (& how) property is free, now

Expanding on the theme of leverage, here’s how utilising leverage makes
property free right now, and for the rest of your life:

1. The bank lends you the principle to purchase the property.

2. A private investor/remortgage of existing property covers the deposit

(or the entire principle without a mortgage).

3. Tenant pays off your mortgage & deposit interest (& capital).

4. Inflation pays off your principle loan(s).

5. Your (good) tenant pays for your repairs and maintenance of your
property for you.

6. Your letting agent manages the property for you.

Other people’s money is used to purchase it. Other people’s time is

used to manage the process, both one time (purchase) and ongoing
(management). Other people’s money is used to pay off the debt/cover
the interest. Other people’s money is used to pay your profit, and inflation
erodes the debt down over time, therefore paying your debt off for you.
And so the property is free!

Of course it takes knowledge, strategy and experience to achieve this;

hence why you’re reading. All will be revealed as you read on. And even
if you have to put a few thousand in yourself, and interest rates rise and
cashflow reduces, you still get hugely leveraged returns on your money
that can’t be matched anywhere else.

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#8. Potential pitfalls & risk

There are, as with any kind of investment, potential banana skins that you
should be aware of, if you want to make your investments work for you
(for life).

There’s always a risk to investing, and we’re not here to kid you about that.
But there’s a risk to everything, and perhaps the risk of not investing is
even greater to you and your future.

“If you don’t risk anything, you risk everything.”

- Rob Moore

If you are totally averse to any risk, perhaps investing and business is not
for you. Find a safe comfortable job (and let them make you redundant).
Get a safe secure pension (and let them spend it for you).

You see many people will not tell you this. You could accuse us of being
negative here, but we believe in the ‘warts and all’ approach, because it’s
all about setting your expectations at the right point and being realistic
from the start. Positively realistic! Guess you could say we have ‘positive
paranoia’. In the early years Mark was very paranoid; great to analyse deals,
reduce mistakes, hedge against risk, but ultimately meant procrastination
and perhaps slower progress. Rob was the polar opposite - totally naïve
and green. This was great for dreamy vision, belief, making quick decisions
and failing forward fast, but inherently more risky and prone to mistakes.
Which one was right? Answer: A mix of both - ‘positive paranoia’.

‘Positive paranoia’ is being risk averse enough to question and analyse

decisions, get data and proof, learn from those who’ve been there and
done it, question everything, protect the downside, watch what people
do rather than listen to what they say, but then decide, act and go for it.
And keep going.

If you know ballpark figures for your investments (purchase costs,

maintenance, rentals etc) and what you can realistically expect, then there

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shouldn’t be many flies turning up in your soup. No major surprises; no

financial disasters. Get 80% data/stats/evidence (because you can never be
100% sure) then go for it.

“Be greedy when others are fearful, and fearful when others are greedy.”
- Warren Buffett

“Sanity in investing is overestimating costs and underestimating profit.”

- Mark Homer

The potential pitfalls of investing in property are as follows (and you should
know them before moving forward):

War/acts of terrorism/Kamikaze

Yes, it seems ridiculous, and yes it probably is, but there is a very slim
chance that there could be a major war or other disaster that is not covered
by your household insurance or mortgage provider.

If there is a war or act of terror, then we’re all likely to be hiding in bunkers
living on tins of beans and condensed milk, rather than worrying about
collecting rent.

Ok, so we are messing about a little here, but there are paranoid people
out there (you know who you are - stop hiding with Mark!) and we said
that we wanted to cover everything. If you want to be completely sure
then read your insurance documents and mortgage terms and conditions.

The ‘market will crash even further/again/soon’

If you want to read some specific details about what happens when ‘the
market is crashing’, when London is burning and when all the rats are
running out of town, you can read the sister book ‘Cash in a Property
Market Crash’.

It is especially relevant if you want to make money right now, but you’ll
need to be quick, it may not last and you’ll want to get stuck in. Not for
the faint-hearted though.

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First of all, we have to stand up, put our hands in the air and tell you that
we didn’t go through the ‘crash’ of the 1980s. We were 0 and 1 years old
when that kicked off and we didn’t experience it first-hand. We are always
learning and look forward to the next recession/crash to implement our
contrarian strategies and invest our war chest, and also to keep learning
new ways of investing, growing and making a difference.

So before we go on a rant, let us give you some specific figures about the
‘worst time for property in history’. And this is not because we believe one
way or the other that the market will or will not continue to grow or to
drop, but to look at the market as a whole, and the benefits and potential
banana skins of each part of the cycle.

According to www.communities.gov.uk, the market as a whole did not

drop through the 80s, as an average. In fact the lowest growth year was
1982 at 2.5% and the highest was 1988 at 25.6%! Even post current
crash most areas were at worst 20% down on peak, still at least 60% up
over the last decade. In fact, most areas of the UK are back up over 2007
peak levels, many areas as much as 20% more, especially London, that
seemed to continue to grow through all parts of the cycle.

In the 90s property did go down 4 years in a row between 1990 and
1993. The market never went down by more than 3.8% in any one of
those 4 years and averaged over 2% per year over the 4-year period (10%
less than the market had gone up in 1989 alone). You can find this data
yourself or through Nationwide and Halifax who collate it all.

The point is markets do crash and correct, and with that comes huge,
contrarian opportunity, but as with virtually all aspects of life, people are
over fearful or over greedy. The crash wasn’t actually as bad as most people
perceived; the market did recover like most people feared it wouldn’t. But
conversely, the boom didn’t/wont last forever, and it won’t be good forever.

“You need to plan for the worst when the market is bullish,
and plan for the best when the market is bearish.”
– Mark Homer

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But the property market (as well most markets) always recover. They have
since 1088. Corrections are almost always ‘over-corrections’, so when they
do start to go up, they often do it big style. Double-digit yearly growth is
not unheard of.

So the sensationalist ‘crash’ was not half as catastrophic as people believe,

or as the newspapers reported. It also shows that with a mid to long-
term holding strategy, one year’s growth can wipe out 5 years or more of
downward movement, as it easily did.

Remember, newspapers are there to sell stories, and that is it. That is how
they make their money. They appeal to the masses; they exaggerate both
the good and the bad, using headlines as bait to get you to buy newspapers
rather than comment on fact.

The media, and population as a whole, is absolutely obsessed with

property here in the UK; it’s major news, it’s as popular as semi-naked
celebs. Everyone thinks they’re experts, be it the Sun Editor or your friend
down the pub.

This is obviously a good thing. We all want to own property here; it’s the
new handbag dog (except it’s not new at all). In other countries, and let’s
use Germany as an example, property ownership is far less prevalent;
lending criteria is far more stringent and far larger deposits are often
needed; many more people therefore rent and the papers don’t write
(scaremonger) about it all the time.

So we must put this into perspective; opportunity is there but what sells
papers is not necessarily real. Be positive, with a healthy but small dose of
scepticism. Read the publications that are specific to property and business,
not mainstream media. Observe the real experts on the ground doing it,
and learn from them. Question everything, and then trust once you decide
or get the proof you need from the right sources. Look at the facts and the
ulterior motives of others to make your judgments, and trust yourself and
your instincts.

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We find the following publications and resources useful for furthering your
knowledge in property specifically:

• The Economist for economic analysis

• The Financial Times for economic news
• The Communities and local government website for housing data
• The Halifax, Nationwide, Land Registry and Rightmove for house
price data
• The Business Channel
• Biographies & autobiographies of successful people
• Articles by industry experts
• Your Property Network or Property Investor news
• The Progressive Property Academy

The commentators for these publications and websites are knowledgeable

on the subjects on and around property, and base their news on facts
rather than sensationalism, and subjects relevant to you.

Stick to the reputable sources and avoid the rest. Reinvest that time into
things that you can control, that you can leverage and get results from.
The average person spends half an hour a day reading or watching the
general news. That’s 9,100 hours every 50 years.

Just think what you could do, and how many properties you could buy,
with 9,100 hours! That’s about that same amount of time it takes to be a
world expert in most subjects.

It’s fundamentally important to only listen to (watch and learn) those who
know what they are talking about and can give evidence to back up their
knowledge. Those who are getting clear and proven results in the specific
niche you want to learn. You wouldn’t give your baby to a butcher, or hire
a personal trainer who just had a triple heart bypass, so don’t leave your
investment decisions in the hands of journalists, or people who don’t know
what they’re doing, but have false confidence in their (lack of) knowledge.

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There are so many people who are still waiting to say “I told you so” when
the market crashes or rates go sky high or the government changes the
rules and buy-to-let won’t work or whatever. They have been waiting years
and decades and missed out on complete financial independence in that
time. In fact, they’re missing out on it right now, aren’t they?

“Don’t wait to own property, own property and wait.”

- Mark Homer

In times of market downturn, skilled investors will make money. Skilled

investors will make money regardless of the marketplace.

Whilst a market is ‘bullish’ and riding high, investors who have a good
portfolio will experience healthy capital growth and benefit from an
increase in the value of their property. They may be buying a little less and
building their war chest ready for when the market goes South. Then the
average punter panics and wants to sell immediately, taking a hit on any
losses and making them real. This is blindness and it is at this time that the
savvy investor can pick up properties at discounted prices, thus making
his or her profit in equity from day one; immediately at purchase, and
reducing the downside risk and further drops. They often buying through
the downturn rather than all at once, known as ‘pound cost averaging’, to
negate risk further.

Either way the educated investor wins. The sheep get skinned and lose their
wool and are left out in the cold going “baa”. So don’t sell your property in
a downturn, and buy as many as you can. Hold. Rent out and let them regain
value and rise again, because they always do. Think long term. Don’t panic
when everyone else is. Keep clear on your strategy and vision.

Rents, vacancies and voids

A drop in rents and vacant properties could damage your profit in your
portfolio. These are very real factors you’ll want to protect against as much
as you can.

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In the last 2 recessions, rents actually increased. From 2003 to 2008 rents
didn’t increase at all (locally, in one of our main buying areas). From 2008
to 2010 they went up 20% when the crash really set in. They’ve been
going up steadily over 4% a year since. With demand so high for properties
now, vacancies (in the right areas and with the right types of properties)
are rare. Our portfolio rents on average in 9 days from completion for 3.1
years per tenant, with an average yearly void of just under 7 days a year.
Later in this book you will learn how to buy the right types of properties in
the right areas, rent to the right tenants and use the right letting agents;
all de-risking voids, high maintenance and bad debt.

Negative equity

Negative equity occurs when the value of your home/property is lower

than your outstanding mortgage; or the mortgage is higher than the value.

In 2009 the Bank of England reported that between 700,000 and 1.1 million
households were in negative equity (and a few of ours were too). Bad for
those in that situation, contrarian opportunity for investors like you.

The media create such a big hoorah and it is portrayed as a disaster. This
coaxes novice investors or OO’s to sell, and they cement the loss. Same
thing happens in the stock market – fear influences bad decision making.

Negative equity is not an ideal situation, but it’s only going to be a problem
if you are trading (buying and selling) properties. As long as you don’t sell,
and you buy for income and cashflow, then variations of value don’t matter
to you. In fact, if the capital value of your properties went down to £1, but
the rents maintained (or strengthened), it would be largely irrelevant, as
you buy for cashflow (income) first and primarily, and get capital (equity) as
an added benefit. This of course is highly unlikely to happen.

If you trade properties, flip them, or buy to sell, you will be using the drop
in the market to buy at a discounted price, so you won’t be in negative
equity: the bigger the discount, the greater the risk protection.

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The properties in our portfolio that dropped into negative equity are now
the best cashflowing ones we have. They are a better ‘asset’ to us than
some of the properties with more equity in them. We’ll hold out for the
long term, and if we do ever want to sell or remortgage, we can make that
decision when the time comes, when the values have corrected (which
interestingly have gone back up out of negative equity and above 2007
levels between writing the 3rd & 4th edition of this book). As long as the
assets are cashflowing, you have the choice.

As with every downside, there’s an upside benefit.

The tenant does not pay the rent

Across almost 600 currently rented properties, less than 25 are in any kind
of arrears with rents. We’re not going to kid you, it does happen, it’s an
operational cost and commercial reality of being a property investor, but
it can be radically minimised with increased knowledge and experience.

“The best way to reduce risk is to increase knowledge.”

- Rob Moore

If your cashflow is good, as we’ll teach you later, then this reduces the risk
of vacancies and arrears. Factor it to your figures in advance: Expect 2-3
weeks void a year, factor in 4-6 weeks in your figures and keep that cash as
a contingency. When you start your results won’t be quite as good as the
professionals with decades of experience, so factor this in too.

If you have the contingency, you probably won’t need it, but you know
what happens financially when you don’t have any reserves, don’t you?
Details of how to manage this process comes later.

Interest rate rises

Now this one we do have to watch, as many people who were around
when the interest rates almost tripled overnight (or so my Dad recalls! -
Rob) will tell you.

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This is one of the biggest fears (common of course; it’s hardly popular) of
the investors we help and talk to, even taking into account how low rates
are now, and how long they are projected to stay that way.

We all know rates will rise. They’ve been (artificially) low for many years,
protecting assets and investors, but that will change. In fact, the rates
are and will always be in constant change, so plan well enough ahead.
See the upside in every apparent downside (upside of high rates is high
returns on cash/liquid investments, more repossessions to invest in etc),
and the downside in every upside (rates too low for too long may give false
expectation and delay inevitable fall out).

If you want to get an idea of what interest rates may do over the longer term,
you can look at www.swap-rates.com. Mark enjoys analysing this, Rob feels,
like the weather report, they are as wrong as they are right (after all none of
these experts of websites predicted rates would stay so low for so long).

These look at the future predictions of interest rates based on LIBOR rates,
base rates, Euribor rates, Gilt rates, historic rates and trends. Don’t worry if
most of those don’t mean a thing to you, they are just useful tools to look
ahead and to see where the experts think the interest rates could be going.

That aside, it’s really quite straightforward and sensible to think about fixing
your mortgage rates on (some) of your properties. Your protection strategy
will depend on your age, experience level, exposure and attitude to risk.
Investors under 50 might think about getting lower rate variable mortgages,
but saving the difference that you would have been paying on a fix as your
own personal insurance policy. You offset the lower (short term) cost.

You can get competitive 3-10 year fixed rate mortgages depending on
future predicted rate movements. Some of these can actually work out
to be cheaper than some variable rate mortgages, though historically
variable rates are cheapest over the long term because you aren’t paying
an insurance premium.

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If you want a good property investment broker, we have many in our

network. Join the Progressive Community now, introduce yourself, and ask
for some contacts, we’ll be happy to help:

www.facebook.com/groups/progressivepropertycommunity

It is smart practice to ‘offset’. Use different lenders for different properties

where possible, as different lenders have different rates and adjust to rate
rises differently. By doing so, you are spreading your risk over a larger
lender market, thereby reducing overall exposure if one lender goes
bust, gets taken over by government, tries to call in loans, or if rates
significantly change. Plus certain lenders will offer better deals at better
times depending on their growth strategies and the company’s view of the
market that owns them.

Doing the same thing between fixed and variable rate mortgages, buying
with big discounts, and on occasions taking lower loans to value (LTV), all
reduce risk.

We will go into this in much more detail later. This is the most effective
way of allaying fears when it comes to potential interest rate rises, and has
you protected no matter what happens, as much as you can be.

Of course with every change comes opportunity, and remember as stated

earlier, you can profit very nicely by helping people out of debt when the
interest rates rise, and you can get increased cashflow when interest rates
fall. Every upside has a downside and every downside has an upside.

Naysayers, ‘friends and family’ and ‘guru-bashers’

Anyone who hasn’t done what you are looking to learn, be, do and have,
should be politely smiled at, thanked for their feedback, and then ignored.
Everyone will have an opinion on what’s wrong about what you’re doing;
even people who don’t know you, and it can distract or derail you from
your goals and vision if you let it.

Now it’s not all negative, and feedback from smart people, experienced
people (in other fields), or people who really do have your best interest

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at heart, should be taken graciously and evaluated. But cutting through

people’s own guilt and shame projected onto you, their own ulterior
motives, resentments, failings or bitterness is something that many new
investors struggle with.

These mostly come in the form of well intentioned family and friends who
have zero relevant experience, friends and family who make out they have
your best interests at heart but don’t, general naysayers and neg-heads
who are always negative about anything, anyone and everything, or guru-
bashers who chop up anyone who looks like they are getting ahead.

The energy that is sucked from you from the above demographics can
drain your inspiration, make you doubt your path and even create self-
image issues. You cannot let this happen. You can spend less time with
these people, or read/be exposed to less of the negativity, you can choose
to discuss only matters which these people have knowledge, and save
your property and business talk to those who have knowledge and are as
inspired as you are. Or you can cut many of them out of your life. This has
to be your choice, but having trained over 300,000 property investors in
the UK alone, this is one of the top 3 things that hold most people back
from their vision, greatness and passive income.

Your own (un) (realistic) expectations

Most people’s expectations aren’t accurate of themselves and the path

ahead when they start. You can’t expect it to be, because you’ve never
done it, so how could you know. Plus everyone is unique with their own
unique past and vision, and so everyone will progress or succeed to
differing degrees and speeds.

One of the most demotivating and disempowering things you can do is

compare yourself to others, with the exception being that you are inspired
by others’ results and therefore more motivated and self-confident of
achieving the same. So, only compare yourself to others for inspiration and
accept that you are unique and so is your journey.

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Expectations that are ‘too realistic’ can slow your journey. You then
compare your slow results to others and start to doubt yourself. If you’re
not challenging yourself to grow, to do things you’ve not done before,
take some uncomfortable (though not suicidal) risks, then nothing will
happen. This is what you have mentors for. This is what Progressive helps
you with - accountability. To be inspired and guided by those who’ve done
it, and to have someone or a community of people there to guide you
through the uncomfortable change required to progress.

Expectations that are ‘too unrealistic’ or a fantasy of how it will be that

can’t/won’t/doesn’t happen (quick enough), create polarising negative
emotions of impatience, desperation, emotional reactions and change of
heart/mind/strategy, resentment, vulnerability to get rich quick, and so on.
So maintain a balance of realism and optimism.

“It does takes time to make money in property, but not a lifetime.”
- Rob Moore

If anyone can do it, you can do it too. Follow and stay on the trodden path,
and success will be yours.

Overwhelm, confusion, procrastination

The 3 most common emotions that hold people back from moving
forward. In the book ‘Multiple Streams of Property Income’ a strategy
that Rob innovated called ‘70-20-10’ helps you apportion time to the
right number of property strategies. These emotions come from lack of
vision and understanding what is most important to you in your life, why
you are in property in the first place, comparing yourself to others, being
affected by negative external factors, or over-analysing due to a very low
risk threshold. Mark has struggled with/suffered this in the past, and he fits
into the many personality types that are known for it.

This is what Mark does:

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“The way I get over these 3 emotions is to research and analyse proven
data and history, ask/get mentored by people who’ve done it and know
it, protect the downside risk asking myself “What’s the worst that can
happen?” Get 80% of the way ‘there’ or confident in the decision (because
you can never get 100%), and then just f’in do it! And if I’m still not sure,
I ask Rob and he decides in a nano-second and I go with that.”

Wrong types of property, wrong area

Property can get you on the rich list or get you on a repo list. The specific
types that make money and lose money have been systemised and modelled
for you later in the book (R.E.A.S.O.N & C.A.S.T.L.E.D).

Summary

Know and beware of potential pitfalls before you invest. Balance

realism and optimism, do your due diligence and set your
expectations at the right level. Know the risks upfront by increasing
your knowledge, and determine your attitude to risk depending on
your age, income and outcomes. You are the one in control. Do not
listen to those who don’t have experience, smile, say thank you and
ignore. Find and get mentored by those with proven success. Use
Mark’s system for proactive analysis and once you have made your
choices and you’re happy: take immediate action.

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#9. Due Diligence

Due Diligence simply means ‘The investigation and verification of the
details of a particular investment’.

It doesn’t mean analysis paralysis, or needless extensive research, but it

does mean keeping well informed, and not taking anything at face value.
Get your research and analysis to 80% sure, protect the downside, then
do it.

DD, analysis, research, deal evaluation are all topics of delight for Mark. The
right balance of diligence and action reduces risk and increases your bank
balance. And Mark gets to create another spreadsheet to fantasise over.

Diligence is absolutely vital when going into any investment. Due

preparation and research should be undertaken (or undertaken for you
utilising someone else who knows how to do it) before you buy a property.
Too many stories of lost deposits, overseas and off-plan disasters or crooks
running away with money, when the ‘victim’ could have saved their money
with a few minutes or hours DD; so you have to take responsibility for your
actions, decisions and results.

In property the following factors need to be considered, planned for,

researched, and contingencies put in place for potential worst-case scenarios:

• Market conditions (cycles)

• Interest rates and economic growth

• Demographics and your area to invest

• Location

• Property size

• Property type

• Property condition and potential refurbishment

• Property valuation

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• Finance nuances

• Comparable prices

• Cost of repayments

• Running cost of property with contingencies

• Remortgage strategy

• Demographic and lifetime value of tenant

• Tenant management

• Growth strategy

• Exit strategy

• Tax strategy

• Competition

• Imminent regulation/law changes

• Political changes and implications

• Inflation

• Sold comparables

• Reputations

• Credit and security

• Things you don’t know yet and can’t plan for

Look at the prices

What are properties selling for in your area? What are they on the market
for? If you want to find out what prices properties are selling for visit www.
rightmove.co.uk. This is a great resource and has a sold prices section.
You can also use www.nethouseprices.co.uk, though we find Rightmove
is more complete. Even better is to ask estate agents you are viewing with.
They have real time data and can tell you to the week or month (quicker
than data reaches Rightmove or Land Registry) what price a property sold

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for and their opinion (with obvious biases) of how strong the market is.

You should know what properties are selling for. This is the only true
indicator of real property values. Forget ‘desk-top’ valuations and guess
work. Even official valuations can be wrong by up to 10%.

All sold prices of comparable properties should be collated. If you put in a

spreadsheet the asking price and sold price of a property similar to the type
you want to buy, you’ll soon have real and live data to base your purchase
price and revaluations on, to check surveyors are accurately valuing your
properties, and track growth in your area of your specific types better than
any aggregator website ever could.

Rightmove

Rightmove is a great resource for the prices that properties are put on
the market at/for. If you find an area where properties are selling at
considerably below the asking prices, then there might be something
going on there that you want to be a part of. If they are all selling within
a week for full asking price, you know to move on because prices and/or
competition is high.

Save these sites to your website favourites. Have Rightmove as your

homepage. Search Rightmove 3-5 mornings a week (early because most
people haven’t yet viewed and you can book viewings first). Are there
properties that seem to have been for sale for months? Are there reductions
in asking prices? Anything that seems low priced relative to similar types?

A website called www.propertybee.co.uk enables you to track this history

to spot deals that stick, and it plugs into Firefox.

Mark’s version 5 of his deal analyser, which 10,000s of property investors

use every day to anlayse deals, rates and mortgages, is possibly the best
tool in the UK for property purchasing analysis. You can get it free for a
limited time and as a thank you for investing in Progressive. Go to the App
store by searching ‘Property App’ – our gift to you for buying this book.

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If it costs anything, email me at: rob.moore@progressiveproperty.co.uk

and I’ll make sure you get a free version.

Imagine being able to analyse any deal on the go, whilst inside viewing it
or waiting outside in the car, in around 40 seconds, using software on your
phone that has the most complicated, detailed algorithm, based on almost
600 property purchases, yet is so simple to use in the palm of your hand.
It also gives you great credibility and confidence from estate agents who
can see that you can analyse deals quickly, do not mess about, and you can
get deals that are cheaper because you can confidently offer first and fast,
knowing your numbers are right.

Back to house prices…

Jump in your car and drive around your area. Are there many ‘For Sale’
boards? Are there many in any one particular area? Are there many that
seem to have been there for months? Keep checking regularly. Mark loves
to just drive around and see what looks interesting (partly because he
has lots of sports cars, and partly because he loves looking for property).
See if there are any disused properties, hidden plots of land, commercial
conversion opportunities, or if he can talk directly to any owners.

A great resource for values of towns and cities is https://www.checkmystreet.

co.uk. There you can find the average price of the average house in a given
city. This helps you work out average yields in an area by comparing prices
in cities versus the rent you might achieve. Areas vary considerably and this
is important. You should be looking for gross yields of 8% upwards, finance
depending. And the best research is your on the ground knowledge of your
local buying area, which we will teach you how to find later.

Is the market moving?

Much of what we have just explained will help you to get a feel for market
movements. Make sure the estate agents you speak to are local as markets
move in micro-economies. Ask them how many properties sold last month?
This month? How is the market compared to last year? Ask them if many

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are selling under asking price, or if they have any vendors with ‘motives’
to sell quickly. If there are, what areas are they in? You can get all of this
information out of them simply by building some rapport and going on
some viewings. Techniques on the specifics of this come later. Remember,
they need you because they make money out of selling houses to you, so
don’t feel you are a burden or that they are not interested in you; they see
£ signs in your eyes.

What are the agents/surveyors talking about?

Make it a habit to talk about property and the market to those on the
ground and in it every day such as brokers, conveyancers, letting and
estate and commercial agents, surveyors and fellow successful local
investors. Collate all this information into actionable steps by looking for
commonalities, trends and changes.

Is there a demand for tenants? It is all very well having researched through
all of the above, but if your property will not rent out in 3 months then
forget it. Estate agents with their own lettings departments might give
you the information you need, and independent letting agents may have a
similar or differing view. Ask the letting agents what types of properties in
what types of areas is there high demand in that they could rent out all day
long. Ask them the areas with the highest rents to lowest cost ratio. Tell
them humbly how many properties you plan to view this year and would
ideally like them to go to one letting agent.

This becomes easier and replicable with every deal you buy, so if you don’t
really like research, don’t panic, with each property purchase much of this
will become ‘intuition’ and second nature due to experience. If you do,
don’t get carried away and use it as an excuse not to do anything but being
really busy doing nothing.

**Fundamental tip No.1:

Balance is vital. Diligence is important but analysis paralysis is a disease of

progress. Do your diligence, get 80% accurate, then take fast and decisive
action and get perfect later. Start now.

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Summary
Remembering leverage and the law of compounding, keep your
investment mortgages to interest only. Your cashflow will be higher,
it will be easier to get mortgages, and if you re-invest saved capital
you will build a multi £m portfolio from a single property.

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#10. Interest only vs. repayment mortgages

This one sparks a great debate and thus warrants its very own section. You
will probably know that nearly all investment mortgages are interest only,
rather than capital repayment. You only pay off the interest on the loan
rather than the loan itself.

Firstly, if you try to get repayment mortgages on buy-to-let, you probably

won’t. It’s not that you physically can’t, but the rent must be comfortably
more than the mortgage, around 125%, for you to get a mortgage from the
bank (for them to grant it). So you’ll need the deal of the century, or a much
bigger deposit, because the repayments will be around one third more.

Secondly, the average repayment loan (mortgage) will take you 25 years
(can be 10 years and up to 40 years) to pay off. When you do eventually
pay it off you will have paid off around 2.5 times the value of your property.
Yes you will own your property outright, but for a £100,000 property you
will have paid roughly £250,000 for it after the 25 years (at the time of
writing, depending on interest rates).

That additional £150,000 is a lot of tied up capital that could have been
invested, leveraged and making you much more money. It’s capital you had to
find/pay as you go, therefore reducing your cash flow and re-investible funds

This is known as ‘cost of capital’. A good example is the use of cash or

finance to purchase a car. Many people will tell you it’s foolish to get a car
on finance. If it creates bad debt that you can’t afford to pay, then of course
it is. But let’s look at how you could have ‘cost of capital’ by buying it cash:

Let’s make the assumption that you can easily afford a car costing £25,000,
cash or finance (If you can’t, it’s a liability).

Option 1: You buy it on finance. You tie up a £5,000 deposit and raise the
rest through finance, costing you approx. £425 per month on a repayment
loan for 60 months depending on interest rates.

You have left £20,000 to invest.

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Option 2: You buy it cash. You have zero repayments and zero cash left
to invest.

Option 1: You invest the remaining £20,000 and with it, using your
increasing knowledge, you can plausibly buy one property per year with
the same capital. For ease of figures these properties are worth £100,000.

Compounded equity at end of year 5 (based on 5% growth): £168,461

Go to the back of the book to the appendices if you would like to see how
we arrive at this figure in more detail.

Option 1: Money made: £168,461

Money spent on repayments: £425 x60 = £25,500

Total profit deducting car loan payments: £142,961

Option 2: You save the £425 per month repayments and it takes 47
months to accrue the same £20,000 to invest. This leaves around one year
to invest. You invest the £20,000 and buy one equivalent property for
£121,550 (£100,000 Property + 4 years growth).

Equity at end of year 5 (or year one for this strategy): £24,309

Option 2: Money made: £24,309

Money spent on repayments: 0

Total: £24,309

That’s a difference of £118,652. A big ‘cost’ of not having the available capital.

So, back to property and interest only vs. repayment…

In 25 years you would own your property outright with a repayment

mortgage. In 25 years all of that money you’ve paid towards your repayment
mortgage will actually be worth much less (relatively) than you paid for it. The

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£250,000 could have gone down in relative value by almost three-quarters.

Quick aside: don’t be fooled by ‘official inflation figures’. The actual rate
of inflation figures can be (are) much higher. In our current economic
conditions the price of food, commodities, petrol and general living are
on the way up, alarmingly so, far more than the government may openly
admit. Taxes are increasing too, and wages are not going up in line, so
every year your money is worth a lot less, if it isn’t invested.

The average figure of inflation over the last 59 years has been 5.8%. A
good source for this kind of information is www.statistics.gov.uk

We can actually work the impact inflation will have almost exactly using
the ‘Rule of 70’. It is like using the Rule of 72 in reverse, and it’s a quick
way of working out the time in which it will take the value of money to
halve, knowing the figure of inflation.

Picking up on the example from the previous page of £250,000;to

determine the time for money’s buying power to halve, simply divide the
‘rule-quantity’ (70) by the inflation rate. Let’s look at some examples:

Inflation at 2%: 70/2 = 35 years for £250,000 to halve in value

Inflation at 4%: 70/4 = 17.5 years for £250,000 to halve in value

Inflation at 6%: 70/6 = 11.67 for £250,000 to halve in value

Here’s a real example. Picture this: Imagine this.

My (Mark’s) Uncle bought his first property in 1967 for around £3,500 in
Halesowen in the West Midlands. He decided to take out a 25-year capital
repayment mortgage at 70% loan to value (or around £2,500). He put
down the required £1,000 (from money from my grandfather) and slaved
away each day paying £17.87 a month in repayments. In those days one
pound was worth a lot more, and his mortgage payment was about 40%
of his pay. He had to go without holidays abroad, meals out, even clothes
for the kids to make ends meet, such was life (hard) in those days.

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In 1992 he made his final mortgage payment to the bank, which was a
great relief, the £2,500 mortgage he had was now £0. Obviously by then
the value of a £1 was much less as inflation had reduced its value hugely
over the 25 years. I decided to ask him a question:

“If you had decided to take the mortgage out in 1967 on an interest only
basis (the bank wouldn’t have let him but let’s say they did, because you
can now) and the monthly payment had reduced by about £4 to £12.50
what would this extra money have meant to you?’

He replied, “A huge amount. For a start, it would have been one more
holiday a year for the family and probably a lot more.”

Then I asked, “And in 1992 when you made your final mortgage payment
how long would it have taken to clear the remaining £2,500?”

“Well it would have been one pay cheque - I hadn’t really thought of it
like that.”

The reality is that inflation had reduced the real value of his mortgage (as
it will do again over the next 25 years) by so much that it had been almost
meaningless when it was time to clear it off. In this story lies a good lesson
about the power of inflation on mortgages for the future.

Forty years ago properties could be bought for around £5,000. £5,000
doesn’t even buy a garage now! Can you see how easy it would be to pay
off that same £5,000 when your house is worth around £200,000?!

If you buy a house for £200,000 today and inflation stays relatively
consistent to the last 25 years, then, like the situation with Mark’s Uncle,
that £200,000 could be worth, in relative terms, what one or two months
salary cheques are in 25 years time.

We’ll discuss in just a second why most people will never actually get to
the end of their repayment term; another reason for taking out interest
only mortgages.

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Capital repayment mortgages are not set so that you pay equal amounts
of interest to repayment on a monthly basis (as you might expect). Because
mortgage companies are in the business of making money, because the
market is so competitive and they know you’ll statistically be with another
lender in 3 years, they make their loans ‘top heavy’ meaning that for the
first few years of your repayment mortgage you are paying off nearly all
interest and very little capital. It is not until you get right near the end of
your 25(+)-year term that you are paying off a decent amount of capital; in
fact nearly all capital and virtually no interest.

The earlier you pay off the mortgage (as many people do by ‘re-mortgaging’),
the more you are penalised. This is the lender’s way of getting maximum
money out of you in a minimum period of time.

They arrange the loans like this for profit. They also add admin and
arrangement fees too. Because the market is so competitive and transient,
the lenders know that in 2-3 years you are likely to have remortgaged and
changed mortgages in the search for a better rate or to release cash from
your equity. People rarely stay with the same mortgage company for very
long nowadays.

In short, you are spending so much of your available and investable capital
on a repayment mortgage which is going down in value over time. It makes
far more sense to invest that money and compound the returns, and let it
go up and up and up.

If you pay an interest only mortgage at 5% over 25 years, you’ll pay

£125,000 (and you’ll still owe the full loan amount you took against the
property, but only to the value of the deflated mortgage). That’s around
half of the £250,000 on a capital repayment mortgage.

That £125,000 that you save by taking an interest only mortgage on a

£100,000 house can be reinvested. Even if it only provided 5 properties
in that time (semi-leveraged), you’d have another 5 properties, 6 in all,
instead of one.

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Assuming 5% growth over those 25 years, and having to pay back the
existing mortgage values, you’d be up between £1.5 to £1.8million in
equity, and £100,000s in net cashflow. These figures are conservative.

So as you can see there is a huge cost of capital (cost of not investing)
involved in paying back a mortgage. If you have money tied up in your
house it could be costing you millions in your lifetime by not investing it.

This is where leverage really comes into play. And remember that you can
take all of this growth incrementally if you remortgage (and not pay a
penny of tax on it). And you can offset your interest payments against your
property related income to reduce your taxable profit!

Where else can you get almost 100% finance for an asset that pays you
income every month and grows in value every year, and have the debt
almost totally eroded over time while the income and value go up and up
and up?

Seriously, you’re in the right business my friend!

Summary

Be diligent. Plan, prepare and research carefully. Know what you are
buying, reduce the risk and question everything. But don’t get caught
up in analysis paralysis, you have to take action and get perfect later.
Your diligence will improve, become intuition and take less time the
more properties you buy.

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#11. Why would anyone sell BMV?

If an investor could buy a property at £75,000 that’s worth £100,000, why
wouldn’t the vendor just sell the property for the higher price himself?

When you can answer that question, you hold one of the main secrets to
mastering property investment, and getting BMV (Below Market Value) deals.

The answer to the above question is all around ‘motivation’. Unlike most
things you buy, property is quite illiquid, and takes a relatively long time
to purchase/sell. Providing a mortgage is required for the purchase which
is most common, it’s likely to take 4 weeks if you’re fast and everything
happens on time, 6 to 8 weeks as standard, 8 to 12 weeks if there’s a
problem that comes up in the searches, and longer if it takes time to
find the right property, or there’s a chain. And it’s not uncommon for the
vendor or buyer to pull out quite last minute, restarting the entire timeline
from scratch.

If a vendor has a strong motivation, and needs the money or the sale of the
property quickly, then the concession they can/will make is in dropping the
price. Vendors who need to sell quickly need buyers who can buy quickly,
and it takes experience (or cash) to buy quickly. This is why the experienced
professionals get the best deals, and if you haven’t yet and you’ve tried, it’s
because the professionals would have gobbled them up way before they
went in the window and before you even got a sniff.

The stronger the ‘motivation’, the faster the sale is required to solve the
problem, and the lower the price is likely to be.

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The 4 stages of vendor ‘motivation’

There are 4 stages of vendor ‘motivation’:

1. Unmotivated

2. Motivated

3. Distressed

4. Desperate

1. Unmotivated

The seller has no reason to drop the price, and so they won’t/don’t. They
won’t move much if at all from the asking price, and would happily take
the property off the market if there was little interest, or just have the
property sat there until the right buyer came along.

One of the single biggest mistake newbie investors make is trying to make low
offers to unmotivated sellers through estate agents. No matter how much NLP
and hypnosis you’ve studied and how many times you’ve seen Derren Brown
on TV, they aren’t going to drop their price, and all you end up doing is pissing
off the estate agent who may end up losing the listing completely.

Your main objective should be to filter completely the unmotivated sellers.

Don’t make offers. Pass on the chance. Let them and the agents know if
things change they can get in touch, but you’re looking for something else
(then let them know more specifically what you are looking for; a property
that needs a refurb, for example).

At least 75% of the properties that will go through an estate agent have
unmotivated sellers. Virtually all the ones in the window have unmotivated
sellers. If you could get every deal 25% BMV, then there would be no real
‘deals’ and the BMV (discount) would be 25% off the 25% off. If it were
that easy, everyone would be buying BMV. It’s not easy, but it is simple
with the right knowledge and systems. And part of that knowledge is
being able to work out very quickly what properties are just going to end
up wasting your time.

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2. Motivated

A motivated seller has a reason, desire or need to sell. There are 7.5 main
reasons, which we’ll cover in a moment. The seller has some burden or
pain, and if you can buy the property quickly, discreetly and you do what
you say you will do, they will likely drop the price.

3. Distressed

A distressed seller has a higher level of motivation. The pain is strong,

perhaps emotionally or as is most frequent, financially. The sale has been
dragging on a long time, previous buyers may have pulled out and debts
may be racking up. Distressed sellers will need to sell the property even
more quickly and so will drop the price even more, or offer more favourable
terms such as option purchases.

4. Desperate

Desperate sellers are the highest level of motivation where imminent court
proceedings, repossessions or other serious matters will occur unless they
can sell very quickly. You will get the lowest purchase price from desperate
vendors but it’s likely you will have to complete so fast that you may
need to purchase cash or bypass usual searches to speed up the process;
something you should only do with experience.

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Reasons why a vendor becomes motivated

There are 7.5 reasons a seller/vendor will become motivated, distressed
or desperate. The Progressive model for these motivations is D.I.S.R.U.P.T

D. ivorce

I. n debt

S. caling back

R. elocation

U. psizing

P. robate

T. enant issues

The .5 in the 7.5 is a break in the chain, which can appear (or cause) in any
of the 7 motivations above. A chain break is where a deal falls through in
a chain of purchases; chain being the sale of a property can only happen
if the buyer’s property is sold to their buyer, and to their buyer and their
buyer. This is common because, as already stated, property is illiquid. It’s a
major purchase involving a lot of money and tight legal controls, and most
people can’t buy their new house until they’ve sold their old one.

D. ivorce

This is quite a common motivation. Apparently 50% of marriages end in

divorce so you don’t even have to cause them ;-) Divorce causes pain and
financial issues. Negative emotions are often associated with the house or
family members financially involved, and the way to settle and relieve the
pain is to sell. The divorce often goes through solicitors and that drags the
process out for months and months, and the fees rack up and rack up, and
this all puts pressure on and the motivation increases, and often the only
way to pay for it all and get rid of all the emotion is to get rid of the house
fast, at whatever price they can get.

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I. n debt

Finance is the most common cause of motivation and properties selling

BMV. It could be that credit cards bills and general debts have racked up,
and so selling the property is the best/only way to pay them off. They may
have tried a remortgage but not been credit-worthy. It could be that there
are second charge loans or worse that they have fallen behind on the
mortgage payments. The closer the vendor is to repossession the closer
they are to desperation, and the lower the price goes in exchange for the
rescue sale.

S. caling back

Also known as downsizing. Sometimes people downsize in retirement

but don’t have affordability issues. You may not get the BMV deal you
want from this type of sale, unless the property has stuck on the market.
The motivation comes when the new smaller house has been found and
purchased, but the vendor is still trying to sell the house they are downsizing
from. They now have two mortgages, and most people can barely afford
one. The longer this goes on, the bigger the motivation grows.

R. elocation

Moving away or abroad isn’t in isolation a strong motivation, but if that

is coupled with a lack of time, then the vendor is either forced to rent or
sell fast. Often work relocation or dramatic life change causes a need or
desire to move away quickly. You either get the deal before they go, or a
year later when they tried to remotely manage it, failed at it and just want
rid of it.

U. psizing

The opposite of downsizing, and often a stronger motivation. Moving up

the housing ladder alone won’t get you the deal of the century, but often
when people move up the housing ladder they stretch their affordability.

I (Rob) bought my dream bachelor pad in 2007 when I was single and had
just learned the secrets of buying properties BMV with none of my own

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money. The vendor, who was in recruitment but a builder on the side,
bought the property, a large Victorian house, and converted it into 2 flats,
top and bottom. He sold the top flat and pimped out the bottom flat like
a boutique London hotel. It had glass block walls, a huge projection TV
screen, wet room bathroom, walk in wardrobe, 3-minute walk to town
and the local bars and clubs; every single man’s dream. I knew the vendor
and he wanted to live out his fantasy and bring girls back to his pad. The
first night he went out when the flat was finished he went to the local bar
and met his now wife! How unlucky is that?! He never got a chance to fully
appreciate his masterpiece.

So he got married, and his wife wanted to move out into the villages. The
vendor had had the property on the market for quite a long time, and he’d
dropped the price a bit, but not enough. The first time I viewed it, being
single, I too envisioned this fantasy of being able to, shall we say ‘leverage’
this bachelor pad. I just had to have it, but being an investor now I had
to get it BMV. So I waited, and then the news came out that his wife was
pregnant and they were having a baby. Great news! Surely they need to
move out fast now, there’s no room for a baby and all his wives clothes!
So they dropped the price again, but still too high for me, and surprisingly,
no offers. Then they found their new dream house, bought it, and had 2
mortgages and a new expensive baby! This pushed them financially and
finally I was able to get the price agreed that gave me a large enough
discount and enabled me to buy the pad no money down. I could hardly
contain myself, and not because of the great price!

The very first night I moved in I lit the candles, put on the chill out moods,
cleaned the flat like no single man ever has, and went out into town. And
guess who I met on the very first night? My future wife! Can you believe
it; cursed or what?!

Anyway, I’m happy to say we are very much in love and have 2 amazing
kids. But the moral here is that upsizing can cause a high level of motivation
if the couple have just had a child, or 2 houses are owned at once, the new
house with the bigger mortgage, and the existing one.

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P. robate

When someone dies, their estate goes into probate, and a designated
executor of the will divvies up the inheritance assets. This is a time consuming
process, over which time mortgages have to be paid by the next of kin. The
government don’t give you grace and will demand the inheritance tax if
applicable, and the family members will demand their share of the estate.
This share is rarely in the form of one house for you, one house for you,
one house for you and so on. It is much more common for the house(s) to
be sold and the money shared. Because each party wants their share and
the process takes so long, motivations increase and there are good deals to
be had by investors. Also, as it wasn’t their house, the pain of selling it at a
lower price is less, they just see an amount of money.

T. enant issues

Any landlord, amateur investor or accidental Landlord who doesn’t know

how to invest and manage property properly will have tenant issues. They
may get the wrong type of tenant, letting agent, or simply not manage
either properly. Then they throw the baby out with the bathwater. Being
an investor/landlord isn’t for everyone, and isn’t for those with unrealistic
expectations, and you can solve their problem and benefit financially with
a discount.

And that’s what buying BMV properties is really all about; solving problems
for vendors, creating value to them, and profiting yourself from the value
you created. It certainly isn’t about trying to get the lowest price by any
deceptive means possible. You are giving a genuine, valuable service in
buying properties in a time and manner only experienced investors can.
You’ve studied, read, learned, trained and invested much time and money
to gain this skill, and it is valuable. Don’t ever let anyone tell you it’s wrong,
and project onto you their envy or lack of understanding. You’re smart
enough to know if you pushed too hard, because you will sense it.

I remember the very first big discount deal Mark and I did together. It was
something like £60,000 for a house that was worth £90,000. It seemed too

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easy. We were just polite and helped the vendor though the sale process,
doing it quickly and efficiently, and we made more in that one deal than
I did in nearly 3 years as an artist. I felt so guilty, it seemed wrong to me.
I shared with Mark my doubts and he sat me down at a computer and
typed ‘repossession’ into a search engine. He showed me all the things
that happen in a repossession: how lenders can come after the debt and
interest for 15 years after the repossession, how the bailiffs can kick you
out of your own house, change the locks, even take your possessions. How
this can be public. I realised then we’d saved the vendor from all of this. If
she could have gotten a higher price they would have done, so they either
felt more comfortable and trusting in us, or our offer was the best offer.

Ethics and morals are not absolute. Go with your instinct and do what you
think is right. But remember the value and service you bring, remember all
the things the vendor will not be able to do and have without you, and
don’t undervalue your contribution. Getting big discounts isn’t right or
wrong, good or bad; it’s the right price for a given deal at a given time.
And if it isn’t/wasn’t, the vendor will pull out anyway.

Very often the best deals come when there is a combination of two or
more motivations on the D.I.S.R.U.P.T model, and don’t forget the chain.
And the more motivated, distressed or desperate the vendor is, the more
grateful they often are when you take their pain away.

Summary
There are 4 main reasons a vendor will sell, known as motivations:
unmotivated, motivated, distressed and desperate. Don’t waste your
time with unmotivated sellers. The closer you get to desperate sellers,
the better your deal will be. There are 7.5 reasons why a vendor will
sell, using the Progressive D.I.S.R.U.P.T model, with a chain break
possible in each; divorce, in debt, scaling back, relocation, upsizing,
probate, tenant issues. Solve vendors problems, take their pain away
and you will get great BMV deals.

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#12. The property buying process

This section is going to explain step-by-step how to buy a rental property
and begin your entrance into property investing. Once you’ve bought half
a dozen properties this will become second nature.

The estate agent or vendor will assume you know all the steps in the buying
process, and rather than learning on the job and therefore making mistakes
in your first few purchases, here are the 24 steps in the purchase of a
property, end to end. You will keep the agent and vendor happy, earn the
right to get more future deals, and reduce the chances of the vendor pulling
out or getting gazumped. Not all of them will always apply, but knowing this
in advance will save you a hell of a lot of time, pain and money:

Your 24-step checklist for buying a new

investment property:
1. Find a property from rightmove (or direct to vendor) which fits your
investing strategy (available capital, high yield, high cashflow, local, good
tenant demand). Does your local market offer good opportunities for long
term buy-to-let investing? Does it meet your income needs? Or to put it
another way, if you lived in another town, would you invest in that market?
If the properties in that town provide good cashflow, with great yields, then
you happen to live in a location where you can make a decent income. If the
values of properties are high in your area, and the rent is not proportionately
high and you are making little to no income, you should look further afield
to find high-yielding properties, which are suitable to your long-term needs.
Once you have the location in mind, you need to break down exactly which
type of property and area within the area you will be investing in, particularly
which tenants you would like to target. It’s no good finding a cheap property
in a council type area where the majority of tenants are on benefits, and
then try to figure out how to find a working tenant, because you “don’t
deal with the DSS/LHA sector”. Your desired professional working tenants
may not want to live in that location. You will do well to focus on buying
investment properties that your desired tenants want to rent and what you
as the investor want in terms of cashflow, return, hasslefactor and desires.

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2. Speak to at least 3 local letting agents to assess if the rental demand

is strong and the agents would want to let these properties. Whatever you
do, don’t artificially inflate the figures to ‘make the deal work’. You’re
only kidding yourself by sweetening the numbers. Be conservative, but not
optimistic with the figures.

3. Contact the estate agent to arrange a viewing.

4. View the property and make notes of any works that need to done:
for every £1 you spend, add £3 of value.

5. Analyse the figures using Mark Homer’s deal analyser software or

your own version. What’s the maximum you can pay & the minimum yield
you would accept? Is the deal really that good? Will you still make positive
cashflow if rates spike? How about if rents decrease? Do you have surplus
cash for unexpected eventualities?

Leverage knowledge of other investors, as it’s the only way to gain the
required confidence to execute subsequent deals. Know this before you
offer and stick to it.

6. Make an offer that works within your figures & use the ‘this is not
an offer-offer’ negotiation technique if you intend not to make an offer
(technique revealed later).

7. Instruct your solicitor if the property is agreed and your offer is

accepted (you can get solicitor contacts in your area for conveyancing
through the Progressive Community).

8. Speak to an independent mortgage broker to get the best product

rates & start the mortgage application process (you can get solicitor
contacts for conveyancing from the Progressive Community).

9. Once the sale is agreed give the estate agent your solicitor & mortgage
broker details.

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10. Contact your solicitor and broker with the property address & the
estate agents details.

11. Your broker will proceed to instruct the mortgage application and
the surveyor will carry out a valuation within 7-10 working days.

12. Paperwork received - Once your Solicitor has received the contracts
from the vendor’s solicitors he can start working on searches, enquiries,
environmental searches and other legal information (search fees are due
to be paid at this stage).

13. Your solicitor will be in constant communication with the seller’s

solicitor throughout the purchase. If you want to find out anything about
the property or ask the vendor any questions ask your solicitor and they
will find out for you.

14. Property valuation will be carried out & your mortgage offer will be
issued within 7 days.

15. Review the valuation to identify if there are any structural problems
with the property (so you can renegotiate the price or walk away).

16: Clear survey - If you’re happy you must sign the mortgage offer and
send it back to the mortgage lender

17. Contact to exchange - Once your solicitor has received all the
information from the seller’s solicitor and he is legally happy, he will be in
contact to discuss the exchange of contracts and completion dates.

18. Exchange and completion date will be set with your solicitor
requesting deposit monies for exchange.

19. Insure the property upon exchange of contracts.

20. Completion date will usually occur 7 days after exchanging contracts.

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21. Refurbishment team - This is a good time to advise your refurb team
that you will be collecting the keys to the property so you can organise
the works.

22. Completion day - The estate agent will contact you to collect the keys
and you will now own the property.

23. Instruct a letting agent to house your tenant either opting for a ‘let
only’ or a ‘fully managed’ leveraged service (& continually check rents are
being paid on time in a separate property account).

24. Remortgage the property 6 months later pulling out your initial funds
to wash rinse & repeat so you can start the process again.

Your detailed step-by-step process to start investing

in buy-to-let
Here is the handy checklist in a little more detail so you’ve got a house-
buying battle plan ready at your disposal:

1. a) Decide how much you want to invest

Do you have equity in your property? Do you have savings or other

investments? Have you sold a business or taken redundancy? The amount
of capital you have to invest will determine your strategy. If you don’t have
much, or any, it doesn’t stop you; it just impacts your strategy and rules,
what you need to learn and the partners you will need.

The single biggest mistake that speculators and gamblers make (which
holds them back from true investor status) is they buy without having a set
of rules. In effect, they don’t know what they are buying and how their
‘investment’ will turn out.

By the end of this book you will have a clear idea of how your rules will
look to you, and what they will mean for you (as long as you follow and
apply all that you read now).

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a) Decide on what strategy to follow

Single-let? HMO? Rent to Rent? Buy to Sell? Deal Packaging? Lease

Options? Installment contracts? Auctions?

b) Decide on your area

We shall discuss the process of diligence to identify your area later in the
book using the C.A.S.T.L.E.D model. For now just know that you should be
sticking to a specific, local area, as close to where you live (or all within as
tight a radius) as possible.

c) Decide on your property type

Most people find property by accident, or are lured by new build and off-
plan ‘developers’ discounts’ and such like, and their emotions. There is
diligence that should be carried out to find the best type of investment for
you, and it is usually ‘an area within an area’. All shall be revealed later.

d) Find your property

Are you going to use estate agents and build relationships? Drop leaflets
in the right areas and to the right high-yielding properties? Will you set up
a website and advertise using Google Adwords & SEO? Ageing technique
(going over ads and seeing which properties are still for sale over a given
period)? Facebook? Debt forums? Biz directories? WOM/Referrals? PR?
Affiliates? Internet marketing? Guerrilla marketing?

2. Assess Rental Demand

The best ways to quickly determine rental demand is to use leverage:

a) Contact 3 local letting agents and ask for their opinion on market rents
and vacancy rates. If you’re buying a 3-bedroom house, see if they have any
3-bedroom houses available and how often they are vacant. A word of caution:
if you ask them whether a certain property will let they will immediately go
into sales mode and convince you to let it through them and quote the highest
value. Be cautious of biased advice. Ask them what properties fly off their
books that they’d like more of. Ask them what areas they wouldn’t go near.

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b) Post test or dummy ads in the local newspapers or on websites such

as spareroom.co.uk or easyroommate.com for a property similar to yours
and gauge how many applicants contact you. If you get a lot of calls then
demand is good, if not, either the rental income you are looking to charge
is over priced or the demand is not high enough. This means more voids
and the prospect of lowering your rent to secure a tenant.

3. View the property

Always view the property yourself until you’ve created a viewings system
that others can follow. Does it need refurbishment work? Does it have
damp? Check the windows (old windows can be expensive to replace) and
check the boiler. Is the property mortgagable? Check the surrounding area.

Never buy a property yourself without viewing it, no matter what anyone
trying to sell you a property 430 miles away will tell you, and no matter
how many of the same type you have bought. If it’s cheap, there’s often a
reason, and you want to find out if the motivation is genuine.

4. Crunch the numbers & make an offer

a) Always run the numbers

This should be done before the offer and before the purchase stage.
Determine the saleable value, the price you need to pay to get all the
deposit and costs out on remortgage, the rental values and coverage
percentage for lending purposes, the ceiling values on the streets and the
cost of refurb.

Have you thought about all, and I mean all, the costs? All will be revealed and
prepare to be surprised (especially if you have bought from some new builds
in the past). Don’t forget Mark prides himself on being an anal numbers geek.

b) Make offer(s)

How are you going to negotiate your desired price and how are you going
to know that the price is of genuine value? This might sound obvious, but
a lot of people wait for the ‘perfect’ deal (that is never perfect enough or

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doesn’t exist), and there’s not much that winds up a vendor or agent more
than a procrastinator.

Make offers. Don’t be scared, that’s why you are doing the viewings! If
you don’t ask: you don’t get (thanks Dad!). You won’t get all your offers
accepted anyway, so you need a good pipeline of offers at any one time to
keep the deal flow going. You should also be making offers whilst finding
the finance, and not once you’ve raised the finance. If you wait until you
have everything you need, you’ll never do anything. It can take weeks or
months or many viewings to build good relationships with agents, and
a few quiet months to fall down the pecking order again. Keep viewing
and looking for finance; you’ll get resourceful and end up doing more
deals. We’ll give you some offering techniques later to balance keeping the
agents happy and not having to buy every deal you offer on.

It’s a numbers game and you’ll get some deals that you really didn’t expect,
and some that will surprise you (at how good they are). Offer on everything
structurally sound, of good yield and in your right area.

And if you don’t really want the property, offer really low :-) Just don’t do
it on every deal.

5. Find a good Solicitor for conveyancing and legal work

There are specific legal requirements to purchasing a property; you’ll need

to find a good solicitor. We know some good ones and some not so good
ones, and we’re happy to pass you the details of the good ones. Most
solicitors will seem quite efficient at first, but the service can very often tail
off when they are comfortable about having your business.

6. a) Find a good Mortgage Broker

This is vital for investors, as specific mortgage products are often required.
They may also refer you to a good solicitor.

b) Get a Decision in Principle (D.I.P) and be ready

Most investors leave this too late. You must have this in place before your

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offer and to keep the agent or vendor happy. Doing everything that is
asked of you by the agent (details of your solicitor, mortgage proof, ID
and proof of funds, sitting in front of their broker/mortgage advisor) can
immediately make you one of their banker investors. It’s also a good way to
jump up the ladder because being fast, efficient and likeable to the estate
agent is more valuable than how many properties you have.

7. Chase the deal through

Keep in touch with the agent and broker to ensure everything is progressing
as it should and there are no problems. Don’t wait for them to contact you.
At this stage the conveyancing process is beginning with the solicitors.

Your solicitor will work with the vendor’s solicitor to do most of the legwork
and tell you what amounts you need to pay and by when.

Your solicitor will check Land Registry that the seller has the right to sell
the property and searches will be carried out to make sure the local council
doesn’t have existing plans to run a motorway 300 yards away from your
shiny new door!

Once all the different types of searches have been carried out, your
solicitor will take you through the contract and the results to ensure you
are satisfied with what you are buying (this usually takes 6 to 8 weeks
as standard or 8 to 12 weeks if there’s a problem that comes up in the
searches). You will then be ready to exchange contracts.

8. Get a survey on the property

This must be done to ascertain the value for mortgage lending purposes.
Whether you do this before you offer or after is up to you. It can be expensive
to get surveys done too early if vendors then pull out. And a survey means an
official RICS certified survey, not a ‘desktop’ valuation or opinion.

9. Pay your deposit over

Required to receive the mortgage; your solicitor will sort this with you.

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10. Exchange on the property

Once application and legal work are completed and relevant fees are paid,
the property will be insured and then contracts are exchanged, at which
time it is too late to pull out (or face the consequence of losing your deposit
and burning bridges with the estate agent).

11. Chase the deal through (again)

Chase and stay in the loop. The agent and vendor will appreciate regular
contact.

12. Get 3 refurb quotes

It is important to get different quotes, as the difference in prices can be

huge. Mark got quoted £800 and £7,500 by two architects for a small
piece of planning work, for the same job! Be strategic and firm with this;
demand the highest possible standard at the lowest possible cost.

13. Instruct the letting agent

It’s important to do it now. Get them working to fill your property before
you own it. Every day a vacancy costs you money.

14. Complete on the property

Drawdown of funds. Your mortgage payments start now. You can house
your tenant and complete any refurb work to make the property rentable.

15. Complete any refurbishment work

(We are assuming that you have good tradesmen at your disposal). Don’t
get your hands dirty here, this is not ‘Homes under the Hammer’ and you
are a leveraged investor not a painter and decorator.

Start this as soon as you can after exchange to save time on your mortgage
payments (which have not started yet). Start too early and your work could
be in vain if the vendor pulls out. Start too late and you could make extra
mortgage payments while the property is empty.

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16. Pay your insurance and gas and electricity safety checks (and perhaps
even council tax for long refurb work).

17. Start your refurbishment works

Project manage it through as quickly as you can.

18. Chase the Letting Agent until the property is let

Hard and fast ;-)

19. House your tenant

Make sure you have an AST (Assured Shorthold Tenancy Agreement) signed
between you and your tenant. The letting agent should have vetted your
tenant properly, taken their deposit and their first month’s rent upfront.

20. Set up a separate portfolio account

Money flies all over the place in property investment so we recommend

opening a separate bank account. Automate all payments in and out
through direct debit if you can.

21. Check rents are coming in from your letting agent.

You’d think this is automatic right? It can be random at times, especially

with LHA (Local Housing Authority) tenants through the Council. Costs can
also be sneakily added.

22. Get your property revalued. If you are finding discounts and using
the tools we’re teaching you in this book, then you’ll be getting your (or
JV partner’s) deposits back out of the deal as soon as you can, so you can
buy more property. You will probably need a different surveyor to value
your property this time, as you will require the higher valuation (value, not
purchase price).

The original surveyor is not likely to accept an uplift of 30%, even when
it really is worth it, because they surveyed it at the lower price just a few
months ago (even if you have added value through refurb). So find another
surveyor who didn’t value it at the purchase price.

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At the moment most banks will require you to have owned the property 6
months before you can apply for a remortgage (this may change with time),
unless it is a cash purchase in and out, or sold to a FTB with a residential
mortgage. It is colloquially known as ‘The 6 Month Rule,’ though not all
lenders have it. So ask your broker which lenders offer which freedoms
or restrictions regarding re-mortgaging. Ensure there are no ERCs (Early
redemption charges) if your strategy is to remortgage and recycle deposits.

23. Organise your remortgage

Just like you did your first one, ensuring you instruct a different surveyor,
and getting as many comparables as possible, as proof.

Receive your deposit back and find your next property with the same
deposit funds.

And that is just the start…

Summary
The best way to sum up this chapter is to read it again :-)

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#13. Network, mastermind & relationships

Your network is your net-worth. And your relationship with that network
defines the amount of money you extract from it. One of the biggest factors
in your success will come down to the long-term relationships and trust you
build, creating goodwill and leverage from your contact base who will work
hard serving you and in harmony with your vision. The more business you
generate for your network, the more money you help them make by giving
them employment or contracts, the more money you will make.

Relationships

Every good relationship you build could be the key to setting up a deal
that will make you money, no matter how insignificant or far removed it
may actually seem. Someone always knows someone who knows someone
who could be the link that you need for a JV partnership.

Everyone you meet knows a lot of people. Are they recommending you or
are they moaning about you? Your network extends far beyond your black
book of valued contacts; it’s anyone who knows anyone who knows you.

The person right in front of you may not necessarily have an immediate
answer that you need now, or £200k liquid capital, but she may have in 6
months, or someone she knows may have, or someone he knows.

Mark’s Mum helped us buy a property and save someone from repossession,
because she always used to buy cakes from a lady at the cake counter at
Sainsbury’s. And it wasn’t even that lady that we bought the house from;
it was a friend of hers who she recommended us to, all based on the
strength of Mark’s Mum’s regular cake buying and kindness :-)

You’re smart, so we don’t want to patronise you, telling you how to do

this - you know. You know when you’ve been great with people and got
everything you wanted, and you know when you got emotional, lost your
cool, shot from the hip or reacted, and you know how ineffective that was.
So put your game face on, keep control of your emotions in public, and be

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very clear and specific who the valued partners you have and need are, and
manage and look after them well, because they will make you most of your
passive income. We are all interdependent, so the key to scalable success
and wealth is how many connections and interdependencies you’ve built
and the value of them.

Network

Your strategy for vast wealth and passive income should be to have a
very clear vision that people understand, and then create the strategy and
partners needed to get there. Manage them well and see them as high
IGV. Your network can and should consist of the very best, and more than
one, of the following:

• Brokers

• Conveyancers

• Commercial solicitors

• Banks

• Private lenders

• JV partners

• Commercial lenders

• Brokers and agents

• Builders

• Letting agents

• Estate agents

• Refurb teams

• Business advisors

• Millionaires

• Billionaires

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• Personal trainers

• Tax specialists

• Accountants

• Business partners and employees

• Specialist consultants (marketing, PR, sales, design, tech etc)

• and so on.

You want to know the best of the best, in any and every area you need to
fill to have a complete business. And of course it never stops growing. This
is the ultimate leverage.

Mastermind

You don’t have all the answers and all the knowledge. A mastermind is a
collective of minds that does. It could be your black book of contacts or the
people on speed dial on your phone, it could be a paid mentor or business
advisor on hand to answer your urgent business and property questions,
or it could be a roundtable of many business people, coaches and peers all
‘masterminding’ to solve your high-level business and property problems
and help you scale.

We are members of many mastermind groups, and wouldn’t see business

as functioning properly if we were without them. You get some of the
biggest insights, benefits and strategic direction from putting great minds
together - letting them create solutions and solve problems. Someone
‘around the table’ or in the group has the answer, a new/different way
of looking at the challenge, or knows someone who can help. You don’t
know to ask the questions you didn’t know to ask, so you get as much
benefit being a ‘voyeur’ on other people’s business discussions, whether in
the same industry as yours or a different one, where you can often borrow
innovations and bring them into your own niche.

For personal and company progress, and the progress of our community,
we make strategic decisions every year to both run and be part of

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masterminds as mentors and as peers. Progressive run the UK’s largest,

yet most personal, property mastermind, the 12-month Progressive VIP
Programme - a mentoring, support, accountability and private finance
property investors network, and the Cayman Legacy, where 5 millionaires
mastermind 8 to 10 high-level property and business people to a national or
global vision and 6, 7 and 8 figure results. We sit as peers in 2 mastermind
groups, one set up by us locally for fellow millionaire business owners to
mastermind business and help with each other’s challenges. Another set
up by a friend called ‘The Syndicate’ - again a group of multi-millionaires
who spend one day a quarter getting together and solving each others
high-level business challenges. These are the most vital, high-level forms
of networks that make the biggest difference to the inspiration, vision and
results of your business and property empire building.

Many of the fellow mastermind members in groups we peer in and groups

we mentor in become great friends and partners, with small ideas and
distinctions making many millions of pounds and a greater difference.
In fact, as I write I’m in Miami with one of the Cayman Legacy multi-
millionaire coaches, Dave Ravenscroft, who sold shares in his business for
millions and now lives in Grand Cayman, which is his base for travelling the
world. We meet up a few times a year and have become great friends, and
he JVs in property with many of our VIPs. 10 or so of our VIP members are
here too, experiencing high-level networking.

Having mentors in your mastermind will accelerate your results. Mentors

are those who’ve been there and done it, are still doing it, and can guide
you through the path of least resistance. Without mentors, Mark and I
would be stuck with a dozen houses or so, at a much smaller scale, with a
longer, harder journey. After initially being a bit tight, and looking for as
much free help as we could get, one of our mentors pointed out that ‘free
advice is worth every penny’.

Our first mentor, who unfortunately is no longer with us, taught us how
to recycle our cash. For the thousands we paid for this knowledge, we’ve
used it in 100s of property purchases and this technique has easily made

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us 7 figures. Not only did we not know how to do it (you don’t know what
you don’t know), we were a bit resistant, perhaps initially out of envy or
fear of getting it wrong. We have James Caan and Andreas Panayiotou
and Neville Wright on hand as great mentors; billionaires and hundred-
millionaires who’ve trodden the path we are going down and can help,
advise, guide, give great contacts and support and make the journey
quicker, easier and less risky for us. Whilst you might not be able to afford
mentors at this level, you should target mentors at as high level as possible,
because you get what you pay for, and having great mentors is one of the
best investments you can make, and ignorance is very expensive.

Relationships, masterminds, mentors and extended networks are another

form of great leverage, perhaps the best forms of leverage, to help you to
your vision, goals and passive income, both making money and making a
difference.

Summary

There are many people involved in a property purchase and everyone

you meet could be the missing link you need for success and profit.
Build an extended network so you have everyone on hand to help
you fulfil your vision, in turn serving them and creating more flow of
money and business. Use masterminds and mentors to solve higher
level problems, pushing you to greater success, creating the ultimate
leverage and passive income.

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#14. Strategy & Vision

The reason many people don’t succeed in property is not because they
can’t, it’s because they don’t know what success looks like. They haven’t
defined the vision, and then employed strategies to deliver that vision.

You wouldn’t get in a car and just drive. You’d want to know where the
destination is before you drive, know how to follow the shortest route,
missing the accidents, incidents and traffic jams, being guided each step
of the way, and then know how to get home. If you just drive you’ll spend
a lot of time and burn a lot of fuel going nowhere in particular. And that’s
how most people are living their life or running their enterprise.

Define your vision

Why are you reading this book and investing in property?

What purpose does it serve your life?

Why is it so important to you?

What do you want your life to look like in 3, 5,10 and 25 years? How do
you want to be remembered?

Take some time to answer these questions now. There is more space in the
back of the book to help you expand these plans.

Define what wealth means to you

Wealth means completely different things to each and every one of us.
Mother Teresa’s definition of wealth is probably a little different from that
of Bill Gates, and again probably a little different from yours. It’s a personal
thing, and for many it’s not all about the money. For some it’s right up
there with oxygen.

In what other areas of your life will passive income from property bring
wealth to you?

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Wealthy investors know exactly what they want, and how they are going
to get it. Some call this law of attraction, some power of focus, some
manifestation. Call it what you will, it works.

And it really doesn’t matter what it is, and how much it is, as long as you’re
happy with it and it will give you the life of your choice. Your strategy is
personal to you, and will come down to what you want for your life and the
lives of those closest to you. Don’t compare yourself to anyone else, or worry
about what friends/family/society projects onto you, just think about YOU.
After all, if you are the best you that you can be, you will serve others the best
as a result. For example, you’ll be a great parent if you are wealthy, happy
and balanced, or you will naturally motivate your staff if you are inspired.

Think now, before you read on, about what you want for your life.

How active or passive do you want to be?

Is property a passion and something that is/can be very important to you,

or simply a strategy to give you the money you want to do something else?

What do you want your portfolio for?

What is it that you want to do with the money?

Do you want wealth to change the world?

To create a higher standard of living for you and the ones you love?

Do you want to set up a shelter or a charity?

Do you want to leave a legacy?

Do those matching shoes and handbags have your name written all over
them?

This is your vision and this needs to be thought about before you get down
and dirty with your tactics and actions. Most people forget why they even

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started business, and end up being a slave to the very thing they used to be
so passionate about. Not sure if you can relate to this? It is the higher vision
that keeps you going when there are challenges, difficulties and it seems
that you’re not progressing. This happens to us all, so the more clear your
vision is, the brighter the light that shines as your guide and the less likely
you are to give up, fall for get-rich-quick schemes or feel demotivated.

Do you want 5 properties? 10 properties? 200 properties? 200 takes a lot

more management than 5, and will require more people, more time and
more leverage.

Do you want passive income of £50,000 per year tax free? Do you want more?

Do you want a portfolio that you can retire on? Are you 28 or 58? (Or any
other age for that matter)?

Do you want to leave your children with a large portfolio that can fund
their retirement, or a big nasty inheritance tax bill?!

Do you want to be a full time investor or do you want someone to do it

for you?

Do you want to travel?

You get the picture.

Peter Singh, another Progressive Community member, created a £6k net

income in a few short months after a 3-year ordeal which involved many
death threats, a £20m VAT fraud and a court case that nearly ruined his
entire family.

Sounds crazy right, well it’s all here:

www.progressiveproperty.co.uk/real-successes

Just click on Peter’s name at the top, and get a box of tissues and a pen
and paper ready.

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We have provided some space at the back of this book for you to write down
your thoughts and motives should you wish. It might be a good idea to write
them down now, in this book, so that you have everything in once place.

Turn to the back of the book and fill in the questions provided.

This is your confidential information. Use it as a reference, a guide, a

rulebook, a checklist, a diary, a goal. And as a useful tool to look back on
to see just how much progress you have made. We’ve been sent dozens
of pictures of people’s own personal copy of this book full of notes and
page refs; more of a manual or life’s mission diary than a simple book. You
could do the same.

If you want to be successful in property you need to have the skill of seeing
your journey before you - your vision happening now. This involves the
following process:

Where are you now?

Of course this sounds ridiculously obvious, but there are many people out
there who could be described as ‘delusional’ when it comes to knowing
where they are – lacking belief in their abilities or over-estimating them.

Now it’s time for you to get real. Honestly evaluate where you are (wherever
it is, is just right for you), the skills, resources and talent you have, and need
help with. Wherever you’re at, know that’s exactly where you’re meant to
be and be excited about the path you are about to forge.

Again, we have a section at the back of the book for you to write this down.

Know/work out your exact financial position to the penny: your monthly
expenses, budgets and cashflow. Know the assets and liabilities (debt) you
have and know your net-worth. Your total net-worth will be your marker
for your wealth and your progress as well as your cashflow.

Know where you want to go - YOUR end goal

You must have a clear idea of where you want to be, as discussed earlier.

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It will grow and evolve; it is just at the very start now. Your goals will
change/evolve, and that is fine. Life is a journey and not a destination, and
each major goal will act as a significant milestone in your life.

The reason that the majority of investors are in financial slavery is not
because they don’t have the ability to make or attract money; there are
many people who make millions per year and are still broke. It is the lack of
a specific plan and strategy. They don’t have rules in place, or at least they
don’t stick to them. They spend more than they earn. They create bad debt
instead of good debt. They lose control and get reverse compounding.

Many buy property all over the place. We personally know an investor who
bought 87 properties, all with good and genuine existing discounts, who
went bankrupt because they were all over the country and he just couldn’t
manage them.

Many do not focus, get a little greedy or grow too quickly or get distracted
once they see progress, rather than sticking to the plan.

Colonel Sanders is a great example. KFC was formed in the late 1950s
when ‘Colonel Sanders’ was nearly 70. We once helped an investor who
was 76 get a buy-to-let investment property. Age is not an excuse and it
doesn’t matter when you start, just that you do. The best and most fruitful,
rich, loving and exciting years of your life could be the ones you still have
left, and you could live until you are 105!

And you are never too young to invest and educate yourself to become
very wealthy either. There are many great Entrepreneurs who are in their
teens. The million dollar homepage that generated $1million was created by
Alex Tew at 21, and facebook CEO Mark Zuckerberg was only 20 when he
created the famous social networking site that just recently had one billion
users in a day.

Jo Moore, a Progressive Community member, started educating herself in

property with Progressive at 17 years old. She wasn’t even old enough at
this stage to get a mortgage! But it didn’t stop her.

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She focused on packaging deals and selling them to other investors to make
shorter-term cashflow, until she became old enough to get a mortgage. She
pulls in £3,000 a deal that she sells, she runs her own events, and she is an
inspiration to young (and not so young) people in the Progressive Community.

She has now got her partner/boyfriend involved in property too; helping him
on his way to more financial independence. With the help of Progressive,
they clearly defined their roles in their business so that they don’t end up
killing each other :-)

NOW is always the best time.

For our first 4 years in property, we used only one strategy. Then we added
multiple streams of income as we gained more experience, reach, and
crossover leverage. As will become clear, there are dozens of opportunities
and multiple income strategies out there when you look for them. It’s all
about knowing which one to use; then sticking with it, focusing on it, and
only expanding it when it is fully operational and leveraged. We even have
a system for that.

The Progressive Hands-free Property

Cashflow Blueprint
The following blueprint is the Progressive system for creating a hands-free
property portfolio that pays you passive income, so you can live a fully free
and mobile life...

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Solution
to problem } Scale Leverage Passion
Profession Merge

Freedom [Mindset]

Automation Let Go Service Vision

Systems Network Wealth

[Mobile] [Team] [Legacy]

• Calendar • MD • Cashflow
• Email(s) • Opps • Capital
• Dropbox • PA/VA • Networth
• Social • Specialists • Physical
• CRM • Financiers • Passive
• Banking
• Ecommerce
• A/Ebooks
• Office Drive
• Password Protect
• Remote AV

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Most people that we meet at Progressive get into property for a lifestyle
choice: more time with their family, more freedom to do as they choose on
their own terms, the ability to travel more, have some finer things in life,
be their own boss, be able to retire earlier, and so on.

We were no different when we started. But property can consume you. It

can take over your life, and you can end up with dozens or even hundreds
of properties, but if you don’t have a clear view and model of your vision
the entire time, you can end up working a lot, and whilst you might have
a lot more money, you may not have those lifestyle choices you first got
into property for.

I (Rob) don’t really like to travel. Mark travels the world, and I mostly
stay in Peterborough! Much to the bemusement of my fiancée, I never
wanted to go on holiday and for the first few years of being a professional
property investor, we never went away, and I was happy with that. I loved
the business we were in and wanted to do it all the time. But that wasn’t
sustainable and wouldn’t serve the vision.

Because I never went away (out of choice, though many business investors
don’t have that choice because they can’t leave) I never had the desire or
need to set up systems so our portfolio and business could be remotely
managed. It was fine because I could keep an eye on it while Mark was
living the (low cost) high life.

Then Dave Ravenscroft, a multi-millionaire himself and owner of a business

with a couple of hundred employees, hired us to consult for him and build
him a strategic plan to build a £100million portfolio. He’s now a non-
resident of the UK, and flew us out to the Cayman Islands, and our families
too (Bobby, my son, was one) for 10 days with 3 days ‘work’ in the middle.
We built his plan, which he is way onto achieving now, but bad news for
me, Gemma had now seen a way that we could travel a lot! All we had
to do was plan work into the trip, and we could go anywhere. And that
actually worked well for me (as I write I am in Miami with some of our
VIPs). But something had to totally change about the way we ran our

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property portfolio and business if this was going to be able to happen

regularly, if at all. Systems.

If we were going to travel for months of the year, Cayman for one month,
all the best global golfing venues for Bobby in every school holiday, holidays
and weddings, VIP trips and the rest of it (my mobile life had already been
planned by my fiancée before we knew how we were going to achieve it!),
we would need the portfolio and business to run without us, end to end,
and that involved operational changes.

This was actually a huge blessing in disguise for me. My lack of desire to
travel had held our portfolio and business back from faster growth. I was
always there, but enjoyed it. We see, however, many start up investors
building another glorified job, once they get to a dozen or so properties,
and they often feel overwhelmed, out of control and lacking in lifestyle.

The ‘Progressive Hands-free Property Cashflow Blueprint’ is the result

of that change of strategy. It is the complete systemised blueprint for a
completely free and mobile lifestyle, whilst still owning, managing and
getting the cashflow from potentially hundreds of properties and many
millions of pounds. If someone tells you this can’t be done, or nothing is
truly passive, then you know where they are ‘stuck’ and that they haven’t
made the shift. Or they tried and couldn’t complete the puzzle, get the
right people or systems, and ended up back ‘in’ the business. We now
travel for 3 months of the year, yet our business and portfolio has so far
grown at an ever-increasing rate.

So let’s analyse the blueprint.

There are essentially 2 sides to the blueprint that break down into 5 parts.
One half of the blueprint is raising finance, no money (or none of your own
money) down, and the other half is the operations of property. They break
down into 5 parts: raising finance (NMD), sourcing, management, systems
and power team.

Here’s what each part means, going left to right:

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Finance:

NMD – no money down (none of your own money)

Equity – net assets/cash in your property

JV – joint venture

PL – private loans

VF – vendor finance

MH/DoT – mortgage host/deed of trust

BA – business angel

LO/IC – lease option/instalment contract

Crowd – crowdfunding

You may use one that works for you, or multiple finance strategies. The
key to scaling your portfolio is to ensure you have de-restricted access to
finance. Some deals will recycle finance, some will need money left in, and
so having a balanced tool-set of strategies enables you to be liquid and
ready when the right deals come along.

Sourcing:
BMV – below market value
NMD – no money down (none of your own money)
EA – estate agent
D2V – direct to vendor

As important as liquidity is deal flow. In the early years our biggest

challenge was getting money for deals, as we’ve grown and made more
profit, the bigger challenge is finding the right/good deals. We seem to
always have more finance than the right deals, no matter how many we
buy. Competition will likely hot up as the market strengthens, and you will
want to be as fussy as you can be over the deals you buy.

The most prolific and consistent stream of deals over the last decade for

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Progressive has been from estate agents. At least 70% of almost 600 deals
have come from agents. The remaining have come from auctions, referrals
and direct to vendor deals (deals without intermediary agents). The deal
flow will be larger through agents, and there will be less of your work
finding them, but the best deals most frequently come when you deal
with, negotiate with and help vendors directly.

Management:
LA – letting agent
VA – virtual assistant

RB – refurb team

Management is the most hands on part of the property business because

it is ongoing for the life of the property. Once you’ve sourced a deal the
work is done until the next deal, but management never stops. This is the
part of the blueprint that most people get sucked into personally, and
can’t see a way of leveraging or outsourcing this. Having a management
process, leveraging a professional manager and having someone ‘manage
the manager’ are the keys to outsourcing the operational, day-to-day
management of your portfolio and business.

Systems:
Apps – Applications
DA – deal analyser
CL – checklists

You need people in your business, but people often have a mind, desire and
values of their own. So you need processes and systems to ‘manage’ people,
so they perform the operations effectively. In the ever-developing tech world,
much of your portfolio and business can be run remotely on apps where
you can analyse a deal, manage a portfolio, globally communicate to your
team, manage cashflow and money movements on banking apps, sharing
documents and more. Checklists instruct people in a step-by-step way of
performing tasks effectively to get desired results and reduce human error.

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Power team:
MB – mortgage broker
SOL – solicitor
ACC – accountant

The purchasing and expense management part of property investing

requires specialists. Good brokers, solicitors and accountants will take you
through the legal process and advise you on how to, most effectively,
purchase and manage property, cashflow and taxes. Good ones may
have higher fees for their services but will save you many thousands in
unnecessary taxes, missed claims or mistakes.

Here is a link to a copy of ‘The Progressive Hands-free Property Cash-flow

Blueprint’ that you can access online, save, screenshot or print out so you
can follow the system to a more leveraged, passive property business,
serving your lifestyle as well as making significant income:

www.progressiveproperty.co.uk/handsfreecashflowblueprint

Summary

Know what wealth means to you and what you want from your
portfolio. Know where you are, where you want to be and see your
journey before you. Set a clear strategy, goals and be specific. Use
obstacles and setbacks as inspiration. Have a bigger picture vision,
even bigger than you. Start now, get perfect later and keep tweaking
your strategy as you go. Follow the ‘Progressive Hands-free Property
Cashflow Blueprint’ for a portfolio and business that serve your
passive income and lifestyle goals.

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Section 3: Strategies & secrets to

profit in property
This is where it all starts to get interesting: the tips, tricks and secrets
that the masses don’t know to help you to build a portfolio with equity
and passive income. The following concepts, rules, laws, secrets, call them
what you want, will be the difference that makes the difference to you.
They will set you apart from your competition and get the deals and the
cash flowing to you.

These following chapters are the combined experience of more than 23

years in property and business. Us in a nutshell: losing money in overseas
and off-plan properties at the start when we were green, starting from
almost £50,000 in consumer debt to making tens of millions of pounds,
many JV partnerships and some that didn’t last, buying or selling (and
holding most of) nearly 600 properties, building a letting agency from
zero to 600 properties in 2 years, getting 3 world records in our training
business, going from £400,000 to £5,500,000 turnover in one of our
training businesses in 11 months, writing 6 books, all of which became
instant property bestsellers, and 3 of which went to Number One Bestseller
out of any book in the UK, built a staff of over 50 people, owning our
offices and training suite that holds 350 people, many TV appearances and
many turned down (Secret Millionaire: how the rich spend their money),
getting rejected and failing many times at many things, training over
300,000 people in the UK on property investment, running 550 events
in the current fiscal year, both getting engaged, Rob crashing a 5-day old
£230,000 Ferrari into the Sun News international build-ing, converting
pubs and clubs into HMOs and flats, loving the journey, always wanting to
learn and serving our industry.

Our hope is that some of these secrets help you make more passive income
so you can achieve your goals and dreams through property too.

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#15. Multiple streams of property income

As you’ll discover when you read the ‘About us’ section at the back of
the book, when we started in property we thought there was one way to
make money. You buy, you refurb, you rent out. A strategy that we leaned
from one of our mentors who was doing it in Australia in the early 2000s,
who taught us some techniques when buying we didn’t know when we
started. Then we refined it for the UK market, pioneering the Progressive
BRR strategy (Buy Refurbish Remortgage).

And it has served us well; we’ve bought virtually all of our almost 600
properties using this one strategy, or used this strategy to re-finance cash
in other strategies. But you are at risk with one single income stream, no
matter how future-proofed or large or passive that income stream is.

Once we had a few dozen single-lets, we bought our first HMO. One we
had half a dozen HMOs, we bought our first commercial building. Once we’d
bought enough properties to feel credible and have a reputation, people
started asking us to source for them and we packaged deals and sold them
to investors. We wrote a book. In fact, we wrote 6 books. We developed a
Property Investors Masterclass to teach those who wanted to invest in
themselves how to be a professional property investor. We branched the
courses out to include Deal Packaging, SuperHMO, No Money Down
Masterclass, Commercial Conversion Masterclass and more. People then
wanted mentoring, support and accountability so we developed a year long
Mentorship Programme. Then we had so many properties in our portfolio
that it became viable to set up our own letting agency. Then we had spare cash
and not enough deals to spend it on so we set up a bridging loan company.
Then people wanted more help so we bought a personal development
company and started teaching mindset and additional income streams such
as running your own online business. Then we launched a Speaker Training
Academy to help people who wanted to share their knowledge.

We had no intention, not even a dream big enough, to build and run all
these businesses that would for us be in excess of £10million a year. They

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just seemed to happen as opportunities in the market came along, there

was enough demand, and we were ready.

Had we just stuck to single-lets, we’d be making a steady income for

sure, but nowhere near the same amount of money, nor making as big a
difference. We’d also be far more exposed to market changes such as rate
rises and tax/regulation changes, if we only had one stream of income.

But…

What we didn’t do is set all those businesses up on the first day of

incorporation! And this is important. Many new investors try to do
everything at once out of pure excitement, perhaps overwhelm and
confusion, not wanting to miss out on the one that pays big, and not
having a clear vision. If you take on too many strategies at the start you risk
getting nowhere with any of them and becoming disillusioned. But if you
just stick to one then you are exposed.

The way to maintain balance is to have one main strategy that works for
you, at your current experience level and works well/best in your local
area, and then have 2 other strategies that can balance risk and reward.
Your main strategy would/should be more long term, perhaps wealth and
capital building, and your secondary strategies would/should be for more
immediate income utilising strategies that might have a smaller window of
opportunity.

If you read Multiple Streams of Property Income (MSOPI) Progressive

have innovated a ‘strategy’ called 70-20-10, which is a time division
strategy for 3 main strategies to balance risk and reward and investment
of time for the maximum leverage and results. So, if you invest 50 hours
a week into property (easy maths example, don’t panic, I haven’t done 50
hours work in a month!), that’s 35 hours in your main strategy (say single-
lets), 10 hours in your second strategy (say HMOs) and 5 hours in your third
strategy (say Deal Packaging). Read MSOPI for all the different possible
variations of 70-20-10 for all the different investor and area types/options.

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Because the market is changing all the time, and new opportunities open
and close (recent big ones being lease options, rent-to-rent, joint ventures),
you need adaptability in your strategy. 70-20-10 gives you this, and it gives
you scalability and future income protection/proofing. Once your main (70)
strategy is working well, you systemise it by creating processes, automation,
scripts, leverage and hiring people, so that it runs itself or is self-managing,
and then you add a new strategy to your 70-20-10. Your old 20 (say HMOs)
moves up to your new main focus 70, your old 10 (say Deal Packaging)
becomes your new 20, and a new income stream (say commercial property)
becomes your new 10. You now have 4 income streams, one passive
and systemised, not requiring any of your time, and 3 ‘in the queue’ to
be systemised. Then you get the new 70 (say HMOs) systemised, and now
you have two passive income streams, and you can bring in a new 10 (5th
income stream, say running a course), and move the old 20 to 70 and the
old 10 to 20. And so you repeat the process, in a strategic and disciplined
manner, until you have 3, 5 or even 10 passive income streams, all pulling in
large amounts of cash without your personal time input, other than perhaps
strategic overview, vision, board meetings etc.

If you want insider tips and strategies on how to live a mobile lifestyle while
your property portfolio is systemised, so you have more time, freedom and
choice to live your life now, then you may find my newest book interesting:

www.lifeleverage.co.uk

You’ll also note that all these are related to property. This gives you
leveraged ‘carry over’ and takes far less time and effort and re-learning in
setting up the new income stream. If you did single-lets (70) ran a coffee
shop (20) and a cosmetics business (10) you’d be learning everything
new and there would be no ‘carry over leverage’. There is huge ‘carry
over leverage’ in setting up a letting agency when you have a portfolio
of properties, or running courses when you have a decade of experience.
This accelerates your growth rate, makes it easier and more systemised
each time you set up a new stream, and de-risks the snakes and ladders
of starting again.

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This is NOT how we did it in the early days. We either stuck to one for the
sake of focus (Mark’s preference), and experienced shocks in the recession
where we felt vulnerable, or took on way too much (Rob’s default habit)
and felt overwhelmed and out of control. We learned this over time, taking
on feedback, tweaking and testing and constantly evaluating our vision.
Sometimes you end up working harder than you planned and property
can become a job again, because you lost focus on the reason and visions
of getting into it in the first place. If you follow this process we believe
through our experience this will give you the shortest route to the most
passive income and a business that will leave a legacy.

If you stay involved in the Progressive Community long enough you’ll have
a whole empire of businesses and income streams around property, and
multiple streams of property income, as we continue our search for more
innovative income streams and our vision of global financial freedom. Our
values at Progressive are Progressive, Innovative and Personal, and you
have our word burned into our mission that we will serve you to help
you to financial freedom through innovative cashflow strategies with a
personal, community touch.

Summary

There are multiple cashflow strategies in property – you just have to

learn them. Focus on one strategy and build ‘add-on’ strategies as
you go that take less time and are more leveraged. Follow the 70-
20-10 time apportion strategy. Balance focus with diversification to
hedge risk and grow multiple streams of income that are systemised
and passive.

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#16. R.E.A.S.O.N
The Progressive R.E.A.S.O.N model is the formula for the type(s) of property
NOT to buy - clever eh, us at Progressive ;-) Property can get you on the
rich list or a repo list, so it’s really important to know what to stay away
from. This model will save you tens, or even hundreds of thousands of
pounds, and has been created from mistakes we made in the past and saw
the proof of the loss, and where many/most of the success stories in the
UK property industry have come from. Importantly, it will mean you won’t
have a bad first experience of the best business we’ve ever seen that could
put you off forever. And we don’t want that. Don’t throw the baby out
with the bathwater.

Whatever you do, when you start out, without exception (unless you are a
bona fide expert in one of these areas, where the exception becomes the
rule), do NOT buy the following types of property:

R. undown

E. xpensive

A. broad

S. cattergun

O. ff-plan

N. ew-build

R. undown
If the property is beyond economical repair or you don’t have the right
contacts to do major building works, then you need to avoid buying it.
There’s a big difference between a ‘refurb’ and a ‘renovation’. You want to
do low-cost, light cosmetic work only, to minimise your cost and risk. You’re
looking for very dirty, poor cosmetically but structurally sound properties.
We’ve spoken to many new property investors who have fallen into this trap
and it’s cost them tens of thousands of pounds. Even more painful, is they
gave up, thinking that you can’t buy to sell or make money doing refurbs.

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One of the really early properties we bought needed rewiring, underpinning

and load-bearing walls supported. But it was c h e a p. So like the 2 naïve
investors we were almost a decade ago, hunting the deals and discounts,
and not knowing the can of worms ahead of us, we bought it. The vendor
must have found it hard to hide his smile, and the costs that we budgeted
for ended up being 3 times as much in cold reality. We were forced into
flipping it, and came out a few grand down with bruised egos, but valuable
‘entrance fee’ lessons learned. You can leverage our mistakes.

I (Rob) have the belief that anyone can do anything they put their mind to,
if they want it badly enough. I (Mark) think you should stick to what you
know, and keep improving at it. Yes, anyone can do big and complex deals,
but it is very risky to do them first, without getting the necessary ‘initiation’
education. Don’t pay your entrance fees other than your education, and let
other novices buy the lemons.

In boxing, a coach will not put someone in their first fight against a world
champion, even if the fighter has huge talent. It is too early, and a big
knockout can ruin a great future career. A good coach will bring a new
fighter through, giving them well-matched fights. Perhaps the first few
would even be ones that the new fighter is the favourite for. Then as the
fighter builds confidence he will step up in class, one step at a time, until
he has enough experience to fight with the best.

Property deals are exactly the same. Don’t go too big too fast. Don’t punch
above your weight, because you risk hitting the canvas hard, and ruining
your career. Start on smaller (safer and often better) cosmetic refurb
projects, and build it up from there.

Mini Summary
Don’t buy anything too rundown: the costs will spiral, you’ll stumble
across expensive repairs you couldn’t spot before, and you’ll lose all
your profit. Stick to cosmetic work only.

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E. xpensive
If a house has (income) costs that are more than the rent it brings in,
then it will cost you money every month, and is not an asset. An asset is
something that brings cash in every month. Some properties aren’t assets
because they cost money every month, despite having equity.

A basic starting rule for single-lets is anything £100,000 or less, is a good

price category (rent dependent). Anything that yields at less than 8% gross
is likely to cost you some money every month, cost of finance and market
dependent. With rates low you may get away with some cashflow despite
buying something too expensive, but as they rise the cashflow could go
upside down. You’ll be shown how to exactly (and quickly) calculate costs
and cashflow in the ‘Yield’ section.

The exception to this is with buy-to-sell strategies, lease options, multi-lets

and commercial, and Central London investing strategies.

Mini Summary

Don’t buy anything too expensive: the rent won’t cover the mortgage
and you’ll be subsidising it every month. General rule, stay under
£100,000.

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A. broad
Risky strategy. Lack of local knowledge. Lack of control. The cost to visit the
property. The cost of the flights and accommodation. Additional legal fees
and translation costs. Managing the property remotely. The list of banana
skins and variables outside your control goes on and on. All reasons (and
unnecessary costs) to avoid, make life easier, and stay local where you can
control most of these factors with relative ease.

Oh, we have some stories to tell here, but let’s not bore you with the
details. In the heady days pre-2008 big companies with bigger brochures
were spending huge amounts of money, some millions per month, on
getting you to emotionally desire overseas properties. A3 glossy brochures
of sunscapes, seascapes, beautiful beaches, big Dulux dogs and a couple
in their 50s, but look in their 30s, running in slow motion into the sunset
in their white linen clothes...

And yes, we fell for it in the early days when we didn’t know what we
didn’t know. We put deposits down for two of them in Florida, please. Not
just one! We’ll have a couple in the Caribbean too, thank you. A perfect
holiday home AND an investment. Boom. Sweet. Ker-ching. All we have
to do now is go on holiday to Marbella, and when we return we’ll be
millionaires, Rodney.

As you can imagine most properties like this have two stories – one before
you buy and one afterwards. Thankfully we got our deposits back and
learned just in the nick of time, but we lost fees to companies who were
selling them. Many of these never rented out, mortgages for overseas
investors were pulled and dreams turned into nightmares.

The mistake that many first-time investors (including ourselves) make is that
they confuse a holiday home or overseas dream with profitable property
investment. If you want a second home abroad to live in at certain time
of the year, then this is fine, but don’t expect it to make any money at
all for a long time. Expect it to cost you year on year and expect to get a
few headaches; maybe even the odd heart attack! Many people get their

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emotions entangled with the concepts of investment and ultimately end

up spending vast amounts of money for very little return. Go and buy 2-3
single lets locally, make £500 net cashflow a month, and use that to stay
somewhere nice when you go abroad, and you have rented accommodation
free and no liability. Plus you can go to different locations each year.

Ignore the hype about the next hot spots: we’ll talk about your
goldmine area in the next chapter. A hot spot is an area where people
speculate that the price will increase in value very quickly. The problem
with hotspots is that they’re often based on rumours, speculations and
announcements by local governments that an area will grow in value by a
new regeneration project, the Olympic games or whatever. This is mostly
guesswork – it is a future prediction, not a past result, and areas over the
long term will balance relative to the rest of the UK, and the ones closest
to you would have been the easiest and cheapest to manage.

You can make overseas property investment work if you’re an expert, if

you live in the country you want to invest in (ie. its not over-seas, its local),
and you know the area like your own town or city. You’ll need to be able
to speak the language, have a local, tested contact base and know the
intricacies of the legal system (and the differences from the UK market).

So keep it simple, save yourself all this time and wasted money. Are we
saying you’ll never make a mistake? Not if you want to get results, but you
can minimise the mistakes significantly.

Mini Summary
Don’t buy abroad: there are too many risks, variables and things
out of your control. Management is virtually impossible, costs will
escalate and you won’t know the local area well enough to know the
right types of properties and areas locally. Keep emotional, second
home buying, and investing totally separate.

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S. cattergun
Having properties dotted around the country is a recipe for disaster, for
much the same reason as abroad. Start local, or have a local area managed
for you, and build up from there. Diversify much later. The key to reducing
risk is increasing knowledge, and it is harder to have specific knowledge
and control of properties, areas, tenants, refurb teams and so on the
further away from them you are.

We knew of one up and coming professional investor on the scene in

2008. A UK big shot who had sourced around 90 properties nationally
through online advertising, dotted all over the country.

It all looked good and everyone was mystified by his fast rise. Within 18
months, when we picked up one of his properties in a repossession listing
locally to us, and paid around 25% less for it than he had, we were able to
dig enough to find out the reality.

Remote management of this portfolio had left half of his entire portfolio
unrented, to the tune of around £25,000 per month! 90 properties within a
5-mile radius wouldn’t have 5 of them in arrears if managed well. Needless
to say he lost them all.

But you don’t know what you don’t know until it is too late.

This is one of the most misunderstood concepts in the property world.

Seriously, there are so many people and companies out there investing all
over the place: villas in Spain, ski flats in Bulgaria, second homes in Cyprus,
and properties dotted all over the UK. And why do they do this?

“I want a diverse portfolio.”

“It is good to spread your risk.”

Well Warren Buffet would argue with that one. He says that focus and
selection are what make wealthy investors. He is a billionaire (and has
many times been the richest man in the world, Forbes Billionaire Rich List)

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and he invests in companies like Gillette (men will always need to shave).
We agree with him here.

We’ve been told that “a deal is a deal” and it is “good to buy all over
to spread your portfolio far and wide”. We monitored and tested our
portfolio. We compared the results (because we foolishly bought some
ourselves), the costs and the pain-in-the-backside factor. The one upside
benefit was that we got to split test them against local existing properties
and so saw for ourselves the real differences in results.

No-one really knows the reality of your own portfolio, or a new strategy
you are using, until you can sit back and review 2 years of full management
accounts. Anyone can say anything, but the accounts tell the reality. And if
people tell you they are making money overseas, its likely they haven’t had
them long enough to know yet, are trying to sell them to you, or got lucky
with timing (which is rare, and even more dangerous).

People chase the deals across the country because they think they don’t
exist on their patch, or that the grass is greener on the other side and the
deals are better elsewhere. They rarely, if ever, are. A big part of what
makes a deal a great deal is its management, it being exactly what you
thought it would be, and it being sustainable.

Something might look good on paper but the longer things take the more
they cost. The less you know, the more they cost. You end up with big
headaches and bigger bills the further afield you go.

Mini Summary
Don’t buy all over the place: you’ll have too many people to manage,
you won’t be able to become an expert on any of the areas, your
costs will spiral and your time will get eaten. Stay local.

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O. ffplan
At the rising peak of the last cycle, the rising market added capital value
to some off-plan properties before building commenced, but that’s luck
at best and gambling at worst. In other parts of the cycle, the value could
go down and you’d be putting in good money after bad. Plus, getting
finance on off-plan/overseas properties is much harder. More money can
be made from smarter investing in properties that are tangible, real and
where values are proven.

Mark bought an off-plan property in Bansko, Bulgaria (influenced by the

pretty artist impression on a luxury brochure) in 2003, which completed in
2007. It cost 70,000 Euros. The net annual loss after the mortgage, service
charges and maintenance worked out an equivalent of: 5000 Euros x 4
years = 20,000 Euros.

It was sold in March 2011 for 25,000 Euros. Net loss: 50,000+ Euros.

And here was the sting in the tail...

The property only rented for 3 weeks in total. And 2 weeks of those were to
Rob, and he didn’t even pay Mark! What looked like a great rental market
with a nice income stream and cashflow turned into an absolute nightmare,
as lots of other apartments were built which flooded the market.

Dishonest solicitors and rental agents and overpriced furniture packs didn’t
help either. Word is, the developer has now evacuated from the building
and rack and ruin is on the horizon as there is no management company!

An important lesson can be learned: don’t invest in overseas off-plan

property unless you know the area, the legals and a reputable bank which
will lend on the property. Otherwise stay away. It’s just not worth the
hassle and risk.

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Mini Summary
Don’t buy off-plan: prices can go down as well as up, further deposits
may be required, and you could even find yourself not being able to
get a mortgage, and losing your money completely. You won’t get
fees back from sourcing companies, and some companies have taken
fees misleading people that they were paying deposits. There are no
comparables for off-plan properties and there’s no historical data, so
you’re speculating, not investing.

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N. ew-Build
Expensive to buy (compared to existing properties). Overpriced because of
taxes, new premiums and developers margins (even with discounts). Very
difficult to prove valuations as there’s nothing to compare them to. Easy
to get emotional about new properties. When the shine comes off, that’s
money you’ve lost, and it can take decades for values to start increasing.
Yes you will make money in the long run because property is forgiving
and goes up consistently, but why take the initial drop until new property
prices level with older ones?

The big problem with a new-build property is it’s just like buying a new
Mercedes straight from the forecourt. As soon as you drive it away you
have lost 10-20% of its value. Sometimes more.

There are sweet spots in the purchase of any object where the residual
values are at their optimum, the point at which the relative value is at the
greatest level. You can buy a brand new Range Rover for £70,000 plus,
and you can buy a 4 or 5-year old one for £15,000 - £25,000. The model
is exactly the same, no facelift, no improved models; still the same model
in the same cycle.

If you had bought that brand new and fancy Range Rover you would have
lost almost £50,000 in 4 to 5 years. For the next 4 to 5 years that car will
lose much less value because the residuals are much better at this point.

Property is exactly the same. When you buy a new property you are paying
a premium. You are paying over the odds so that the developers can take
their profit (fair enough, but why pay that if you don’t have to?). You’ll
also be paying taxes and R&D budgets you won’t be paying on an older
property.

There is one big difference between buying a car and a property, and that
is there are very few cars that go up in value over time, whereas there are
very few properties that go down in value over time.

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Let’s look at this relatively and go back a few years. Yes, right now, we
don’t think that new-build property works for cashflow. It can often take
much longer to grow and can cost you money on a monthly basis. We have
regularly heard of shortfalls of £200 - £500 per month.

When BTL first started to become ‘popular’ around the mid to late 90s,
there were bargains to be had in the new-build arena. You could perhaps
buy a property right at the start of a development, and get it for the
cheapest price, and by the time the whole development was finished,
perhaps in 2nd or 3rd phase, the new prices would drag the value of your
flat upwards.

This did happen. And will again in the growth phase of the property cycle.

And perhaps if you were to time your purchase just right, at the very end
of the development, you could get a flat or two when developers needed
desperately to report to shareholders with sales figures, when they might
let the last couple go cheaper than ‘market value’.

The fundamental flaw with this strategy is that it is totally dependent on

a rising market. The truth seems to be that rising markets can actually
‘smooth over’ poorly purchased investment properties; this has definitely
been our personal experience. However, this will only happen when the
market is rising at15-20% per year, and in reality this is not sustainable over
the long term, year on year. A correction will expose the over payment.

When demand for new-build has fallen significantly and the developer
runs out of cash to pay the bank back, the big banks stop lending and
often these developers go out of business very quickly. This has been a
common story since 2007. And will be each time the market busts.

Most people don’t want to buy these over-supplied and over-priced ‘swanky’
new-builds when the market corrects, because of affordability and because
they can buy older houses down the street for far less money. Those landlords
who were looking to rent out these new flats, either couldn’t, or the rents
came tumbling down because there were too many of them.

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There will be other periods of time where the market rises heavily, and we
should all look forward to that when we have built a good portfolio, but
we must never rely on it to make money.

**Fundamental tip No.2:

You must rely on your ability to buy well whatever the market is doing.

“You make your money when you buy.”

Developers and ‘new-build re-sellers’ now throw all sorts of ‘incentives’

your way to try to lure you in, and hide the reality that has become easier
to spot in a market that isn’t rising.

Free carpets, curtains, upgraded appliances, car parking spaces, choose the
colour of your kitchen tiles, cash-backs, guaranteed rentals, gifted deposits
and stamp duty paid are all hooks to reel you in. None of these have an
impact on the value of the property. None of these all of a sudden (as if by
magic) make an over-priced (for investment) new-build property a bargain.

Very often a ‘25% discount’ in new-build property actually equates to

buying the property around 20-25% over its real value, and if you want
to get a new-build that is well priced, you need at least a 50% discount.

Developers are in it to make money: developers are not stupid. They

are in the business of making money and are not just going to give their
products and profit margins away. And why should they?

Developers charge premium rates for their new developments. Like

anything new you buy. We have personally seen specific examples where
developers are offering 2-bed flats at the same price as older 4-bed houses
opposite that have twice the square footage!

Older properties that have ‘settled’ offer better value because that
developer’s premium has gone. Some S-class Mercedes were £100,000
when new and are now worth £30,000 3 years later. The same happens
to new property, so why not buy it at £30,000 instead of £100,000 where
the residual value is much better?!

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Rate of growth: in addition to this (and in our very own personal experience)
not only will you buy a property that you think is discounted, though in
reality is not, but your new-build property value will likely not go up for
another 3-5 years, as it needs to recover a further 20-25% to get to parity
with an older property.

**Fundamental tip No.3:

Buy on logic, not emotion.

The deal is all about the numbers. Love the numbers if they work. Don’t
love the faux-wooden flooring and the wallpaper, the curtains or the gated
video entrance - love the numbers.

Mini Summary

Don’t buy new-build properties: the price will be premium and you’ll
be paying taxes and profits to someone else. There are very few, if
any comparables for new-builds, so you can’t prove value. Let the
premium come off and buy at the highest point in the value curve, a
few years after the new shine/premium has gone.

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So there you have it. Six seemingly simple staples of property buying which,
if adhered to, can save you years of mistakes and financial loss and pain.
That’s from experience, on the ground, down and dirty, having been there
and made these mistakes ourselves, and feeling the pain. Not because we
are biased, out to prove a point or are emotional about it (have you seen
what some of our properties look like!), but because the bank balance
looks a lot better! It’s all based on what gets real results.

Despite these obvious warnings, we still hear stories of people who got
too emotional, forgot or plain ignored this advice. Look, it doesn’t make
any difference to us, we have no bias or reason to say anything other than
what works and what doesn’t, in our experience. You can try for yourself,
or you can leverage the ‘entrance fee’ we have paid over the years in
mistakes that we’ve ‘paid’ to learn.

Knowing the truth will hugely increase your chances of building a steady
and secure long-term property portfolio that will look after you for the rest
of your life, and for generations to come.

Property profit without (a lot of unnecessary) pain.

We’ve been there, and now you don’t have to.

Summary

Observe the 6 R.E.A.S.O.Ns not to buy the wrong types of property.

New-build, off-plan and overseas property will, more often than not,
cost you more money and give you much more pain than existing
property in your area. Property can get you on the rich list or a repo
list. Stick to the C.A.S.T.L.E.D model in the next chapter and reap the
rewards for the mid to long-term.

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#17. C.A.S.T.L.E.D
So what does work then? What are the right types of properties, areas and
strategies that will make money and save many of the mistakes? Here’s
what to look for when buying, or having properties bought for you.

C. ashflow

A. menities

S. upply

T. enants

L. ocal

E. xisting

D. iscounts

C.ashflow
Not treating your property acquisitions as a business is a recipe for disaster.
Properties used to shortfall pre-2008, and people topped up each month
because they knew (believed) they would get growth/equity that paid it
back (and more).

The landscape is very different now, but yield and cashflow are better and
properties, if bought well, can produce a monthly income, even on a 70%
mortgage, in a sustainable fashion without undue exposure.

“The number of properties you own is vanity, the cashflow you make is
sanity and the cash left in the bank is reality.”
- Mark Homer

As a general rule, you should be looking at properties that are 8% yield

(minimum), depending on the cost of finance (your mortgage, opportunity
cost of cash or deal with your JV partner). This will ensure, with all your
other costs, that the property positively cash-flows from day one, and with
future property and rental growth, that cashflow will keep going up.

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This is detailed in a later chapter for you.

Mini Summary
If a property takes money out of your pocket every month, it’s not an
asset and you shouldn’t buy it in this market. Buy properties for income.

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A.menities
The availability and accessibility to local amenities and facilities such as
local transport links, employment opportunities, local businesses, retail
parks, supermarkets, schools and colleges, new industry and technology,
an influx of employment, bars, restaurants, clubs, culture, museums, art
scene, sports facilities, regeneration plans – all will ensure your investment
has strong tenant demand & the highest capital growth potential.

Remember that all of these are worth thinking about, but analysis paralysis
is a disease of momentum; don’t get too hung up on the details, just be
aware of them. C.ashflow is more important than A.menities, though the
two will be linked.

One of our first choice investment areas has a £1billion regeneration

programme going on; 7,500 new homes, 20,000 new jobs, rail link
improvements. Better to get in before and during than after, because that
is where you get the ‘forced’ appreciation, over and above the average
market growth.

Although important, many novice investors place a disproportionate

amount of importance on this, to the detriment of the other six in the
model. Keep a balance. If you have a choice between good cash-flow and
good amenities, we know which you’d choose. Cash is king, baby.

Mini Summary
What amenities in your local area could add value or forced growth
to your portfolio? Tick as many as you can in this section, but don’t
get too het up on this – cashflow is better.

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S.upply
Ensure properties in your micro-area have the strongest (and fastest
growing) level of demand that outstrips supply for the number of
discounted properties it can supply, and number of available tenants.

Not enough properties and you won’t be able to buy enough for your end
retirement and scalability goals, and too big an area will make it hard to
‘own’ your own ‘patch’.

A high volume of properties, even at good discounts, could mean there

are not enough tenants. You want to have 1,000s of tenants waiting for a
house if possible. One of our chosen investment areas has 15,000 people
waiting for a house, and due to baby boomers living longer, high levels of
immigration and divorce and lack of available land to develop, demand is
way outstripping supply.

1/3, 1/3 rule

The formula we use is the 1/3, 1/3 rule. Use it as a guideline and adjust it
to your area accordingly:

One of our local areas has a population of around 185,000 people, give
or take. 1/3 of that is around 62,000. There are roughly that number of
properties in this area (65,000); 1/3 of the population of the area. Of
those houses, we’d buy or are interested in roughly 1/3 of them; 15,000
to 20,000. The rest would be wrong area, too expensive, wrong tenant
types and so on. From those 15,000 – 20,000 houses we have bought
over 450 (the rest coming from two other areas). You can therefore see
that a population of 185,000 will easily sustain building a large portfolio
for decades.

We currently buy minimum 5, maximum 15, in any given month, averaging

6-7. This monthly volume has grown as we have gotten bigger and better,
and seems to be continually sustainable. Once it gets to 15 a month, it
seems to get harder and we have to put inordinate amounts of time or
marketing spend in to push above those levels consistently.

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We’re also not the only buyers in our local areas, so we’re not buying
all the deals, as much as we would like to feel like we are on our way to
world domination! This figure is what we can/are buying. If we spread our
marketing, developed even more relationships with agents and redirected
a few from the hands of our competition, we could probably double that
number, consistently. The number of people and properties in the area is
rising, and there are still at least 14,400 to 19,400 properties we could or
would like to buy.

Calculate how many people live in the greater area of your locality, how
many houses that breaks down to, and then how many of those fit your
buying criteria. Use the 1/3, 1/3 rule as a guide and our sustainable ratio
of say 6 per month from a volume of 10,000 homes, and you know your
relevant, available buying volume.

If your local area has half the numbers, you’re looking at 3 per month
availability. At one sixth of the numbers, it’s one per month. Do this first,
and you’ll have long-term sustainability and scalability in your area.

Mini Summary

Ensure the supply levels of property in your local area are enough
for your long term investing sustainability. Too many and you’re not
focussed enough, too few and you’ll outgrow your area too quickly
and have to move further afield.

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T.enants
You can buy the best properties in the world with the biggest discounts,
but have them empty long enough and you’ll be giving the keys back,
along with all your money.

Your tenants pay your mortgage, your cashflow and fund your lifestyle,
so the right types of tenants managed the right way make the difference
between income and shortfall.

Some simple things you can do to check high tenant demand in an area:
talk to letting agents, find out where there is demand, gather on-the-
ground data from people in the business; local investors with long term
and large scale portfolios. Ask them where they’d love to get houses to
rent for the tenant demand they have. And ask as many as you can. They
all have specialised areas (high end, professional, student, LHA).

Put an advert in the local paper for a property that you propose to buy.
List the type of property and the rent, and put your mobile as the contact.
Monitor the number of enquires. Clearly lots of calls means that it is likely
to be a great area, none means that there may be low/no tenant demand.

There are more details of tenant specifics in the ‘Letting, tenancy &
management’ section.

A tenant will usually be found more quickly if outsourced to a letting

agent as they have greater marketing abilities and resources than if you
are taking the property on privately. When you find a good letting agent,
you’ll soon realise their huge value for a tiny amount you pay them (out of
the gross rent and not out of your pocket). It is well worth your IGA time
to find a good one, even by kissing a few frogs.

We get asked a lot if you should manage your properties yourself. If you
want to run around at the beck and call of everyone else’s needs such as
changing light bulbs in fridges, switching power back on when they can’t
find the switch, seed the lawn, come and close the loft hatch, put a padlock

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on the gate, let me in every time I lock myself out of the house (all real
examples), for a few pounds a month, then go for it. On a rent of £550,
£55 - £65 to the letting agent to find the tenant, manage the tenant for
the lifetime of the property/tenancy, VET the tenant, inventories, regular
checks, organising maintenance and gas certs, is nothing. It would cost
you WAY more to do it yourself and be a total false economy to save £5
to £65 to cost you £100s or £,1000s of your own time that you could put
into ultra IGAs (Income Generating Activities).

Mini Summary

Before you buy any property, check demand for tenants in your local
area. Ensure you have the right types of tenants for your property,
and don’t manage properties yourself, its poor leverage and IGA.
Find a great Letting Agent, even if you have to kiss a few frogs.

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L.ocal
Buy as locally to you, or within a tight geographical area where your entire
portfolio is as local as possible to itself (even if you don’t live there). There
are goldmine areas all over the country – London, the North, South, East,
West, Scotland, Ireland, even the Midlands and Wales ;-)

You’ll have a better understanding of tenant demand, actual sale price,

who the local surveyors are, best and worst estate and letting agents, refurb
teams, solicitors, competitors to keep close, actual achievable rentals, best
streets with highest uplift potential, and so on.

Not only does buying in a tight area allow you control, but it also ensures
that you understand the prices of the local stock inside out, better than
anyone else, including estate agents and surveyors, who often call us up to
ask us what we think properties are worth that they are valuing!

This in turn means you can sniff out a deal better than anyone else, quicker.
You can manage voids and any issues from the first day you hear about it,
control costs, get multiple quotes and create local competition. Plus because
you will be visible to everyone, you will always be at the top of their mind,
and deals will come to you rather than you having to chase them:

“Visibility is credibility.”

There are property deals everywhere, including somewhere near you;

possibly on your doorstep, probably being swallowed up by your
competitors who are following these rules, and you never get to see those
deals; the best deals, which are making them lots of money.

Just in case you forgot, this is how not to do it:

Guess. Pin the tail on the donkey (map). Choose an area that was reported
to be a ‘hotspot’ 2 years ago. Choose somewhere that you can’t get to
easily. Choose somewhere too expensive or too trendy. Choose somewhere
because it works for someone else.

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Regardless of the North/South divide, England vs. Scotland, the huge growth
that you might have heard about in London and the huge yields in Ferry Hill,
you need your own local patch. We call this your ‘Goldmine Area’.

Look at somewhere within 0 – 15-mile radius of you: don’t be pulled

too far away from where you live. If you are happy to travel further then
fine, and we know successful investors who do travel a little further
because they choose to have their Goldmine Area more remote because it
works for their strategy.

Gill Alton lives in Berkshire, and her Goldmine Area is N********m (she
wouldn’t want us giving away her trade secrets)! Although not 15 miles
away from where she lives, they are all in a 15-mile radius of each other
– thus obeying the rules. She can leverage and become an expert in that
area, because they are all so close. Same strategy.

Since joining the Progressive Community, Gill has built a significant property
portfolio and business. She is doing so well that each time we publish her
results, they go out of date!

Gill had a good corporate job for Xerox, and so for her it was difficult to
quit because she would be leaving very good money on the table, and
with 2 young children that was risky for her. Plus after the crash, business
became very hard for her husband’s mortgage brokerage, with big clients
going bust, they lost lots of fees to debtors.

But less than 20 months later she has bought a portfolio for her family
worth in the millions, she has net cashflow well over £2,000 per month
from her own portfolio, she packages deals for investors through the work
we did together helping her build her property business model, and she
mentors other people.

You now see her speaking at property events and she has a well-known and
trusted brand. She has JVs with many of the Progressive Community members
too; borrowing money, lending money and sourcing properties for her clients.
She has also written a book on creating a property portfolio for your pension.

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So if, like Gill, you live in certain areas that may be too expensive or too
run down and you have to travel further, it just needs to be put in your
strategy. The main thing is to keep your entire portfolio close enough
together so that they are manageable. The more you buy, the more you
will be pleased that you followed this strategy.

A lot of people don’t follow this model for the reasons above, but many
people have the grass is greener mentality, assuming you can’t get the
deals where they live (because they haven’t seen them yet). You don’t
know what you don’t know, so never assume there are no deals in your
area because an estate agent once said that all deals are going for full
market value or someone on a forum said so.

What is your strategy: different strategies have different Goldmine

Areas. Single-lets vs. student HMOs vs. high-end HMOs vs. rent-to-rent vs.
commercial conversion all have different Goldmine Area criteria. Higher
end HMOs and commercial tend to have Goldmine Areas closer to town
and city centres, single-lets tend to be in suburbs (but not villages).

Your area within your goldmine: London is not a Goldmine Area as it

is too big. A big town or city has streets that are priced far too high and
the yields are far too low. Conversely Bronx-type low(est) end properties
where maintenance and management are too time and money intensive.
The best yields and purchase prices relative to rents are found in specific,
micro suburbs and certain streets, which can be 0.25 miles away from
somewhere that doesn’t cashflow.

You’ll be focusing on inner suburbs, specific streets and postcodes,

and these exist in almost every town and city in the UK. In fact, 93/100
people who do the ‘Find your Goldmine Area’ one-to-one training on the
‘Progressive Property Masterclass’ find a local Goldmine Area within an
area, within 15 miles of where they live. Often within 3 or 5 miles. Only
7/100 have to travel further afield.

There are some big advantages of finding Goldmine Areas within areas: you
are seen far more often by more people – you get recognised mindspace

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and so people pass you more deals and referrals. Your presence evokes
action, you are perceived as an expert (even if you’re not yet, as visibility
is credibility), you know the prices and intricate details well (better than
anyone else) and you can become an expert on a specific area quicker and
better than anyone else in the UK, within a few short months.

Mini Summary
Stay local, ideally within a 15-mile radius of where you live. If your
area doesn’t work for your strategy, go further afield, but buy all your
properties within a 15-mile radius of that area.

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E. xisting
Focus on 1 or 2 property types of not new (5 years to 150 years old) in
a local area, say 1960s 2 or 3 bed terraced houses, or Victorian 4 beds
that are HMO-able. You’ll soon know the prices better than the surveyors,
agents, vendors & investors. When something comes up that’s ‘priced to
sell’ you’ll be able to spot it right away, before anyone else, and have ‘first
mover’ advantage.

Price is what you pay, value is what you get: price and value can vary
significantly. You will become an expert at buying on value rather than price.

If you buy a property that is 5 years old (or older) you are getting a habitable
dwelling that is suitable for rent (provided you have done your diligence)
that will cost considerably less than an equivalent new property. You are
buying at the point of optimum value, on its upward curve.

This would be a flawed strategy if you were buying computers or

consumables, but the great thing about housing is that the value can last,
and increase, for 100s of years.

A new computer today at £1,500 would probably be worth about £400 in

3 years time and worth next to nothing in 5-10 years. The optimum time to
buy that computer would probably be after one year when the value had
dropped because it was no longer new technology (and new technology
had come out), but was still useful and not out of date. But you’d only get
6-12 months use out of it before the new V2 or S version is out.

With property you can buy 30, 60, even 100-year old properties and they
still have high relative value. They are still useful and useable unlike 30-year
old computers.

Yield: we have a whole section on this so we’ll save the surprise. You
should be looking for properties with 8% yield and above, finance
dependent. That is gross (Gr) yield.

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Properties in nice areas will be too expensive compared to the rent that
you will be able to achieve, and so the gross yield will be low. Properties
in ‘slums’ might have an attractive gross yield but by the time you have
replaced your windows 3 times, got rid of the graffiti and replaced the
tenants every few months, you won’t be left with much of that. More later.

Be specific with your property type: there are many types of property
that you can buy, which only goes to make things potentially more
confusing. In any one property expo/show, for example, you could buy
land for planning, land for development, developments, overseas holiday
homes, off-plan, self-build, auctions, rent to buy, rent to own, buy-to-
let, buy to sell, new-build flats, shared ownership, repossessions, HMOs,
commercial. We could go on. You get the picture, lots of different types of
property and investing strategies.

5-bed houses and 2-bed flats are very different investment propositions.
Which property type works best for you will vary from area to area. It might
be 1 & 2-bed flats, 2 & 3-bed semis or 4-bed 2 storey Victorian houses near
the town centre.

We’ve still not found any areas where MTV crib houses provide a good
yield. You will discover what works best in your area. Once you know it,
stick to what works best and don’t mess about with anything too expensive
or too far out of what you now know to work. Refine the system and then
repeat it over and over for consistent results.

Generally speaking, the properties at the cheaper end of the market will
give you the best yields and are more likely to cover the mortgage payment
leaving your rental income with a nice margin left. The higher you go the
less likely this is.

With the lower end of the market you are buying properties wanted (or
needed) by a bigger share of the market. How many people out there do
you think want to rent 66 (or 6) bedroom houses? Of course there aren’t
many people who can afford 66 (or 6) bed houses, and those that can are
more likely to buy than rent.

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The lower end offers far more demand. It also offers more long staying
tenants. Newer and bigger properties attract transient families and single
career-minded people. Many of our tenants have never moved from our
smaller existing properties, as they will be in similar circumstances for
most of their life. They are much less likely to buy, as they may not be
able to afford the deposits or have good enough credit to get reasonable
mortgage products. They have a ‘rental mindset’ since that is the way they
have been brought up. These are the kinds of tenants you want in your
properties. They see it as their own property and stay in it forever. Some
even refurb them for you!

It is quite important to explain this ‘rental mentality’. You or I may always

have aspirations to buy one or many houses, as we understand the benefits,
have the knowledge to get a mortgage and a belief that we can either
afford it now, or some time in the not-too-distant future.

However, when dealing with people near the lower end of the market,
things are very different. Knowledge, experience and education are lower
in general, and the belief that one day they may be able actually to buy
a house is very often never there, because their perception is that it will
always be too expensive. It is also quite common for these people to see
buying other ‘things’ (liabilities/depreciating non assets) as more important.

They may have had a mortgage before and felt like it was onerous, or even
got into areas or worse been repossessed. These people still want a home
and still want their home to feel like their home, whether they physically
own it or not, but may never want or be able to get a mortgage.

We find that the tenants who we deal with have the belief that the house
they rent is the house that they own; that it is their home. You’ll only ever
get your properties trashed if you go too near the Bronx/lower end (usually
only a few streets in any town).

Compare this to the higher professional rental mentality which is much

more transient because they will look to buy as soon as possible or move
frequently with their job, and you have an easy decision on preferred tenant.

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Mini Summary

Buy existing properties at the highest point in the value curve, where
history proves value and comparables.

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D. iscounts
**Fundamental tip No.4:

“You make your money when you buy property.”

Not only do discounts make you money on purchase, they reduce any risk
of loss in a downturn. Buying BMV (Below Market Value) is one of the most
important skills to being a professional property investor. It separates the
novices from the professionals.

You can also utilise the BRR (buy, refurb, remortgage) strategy to leverage
one deposit pot for multiple property purchases, which doesn’t work
without good discounts.

You can make every deal a ‘no money left in’ (NMLI) or even a no money
down (NMD) deal, with good discounts. A real discount is one that is
below the market value of a property that can be proven with comparables
(evidenced); that is the same type of property in the same area, sold for the
same price in the same resale market.

Not a price that a financially unsophisticated first time buyer has paid,
which included the developer paying their 5% deposit, with faux-wood
flooring, curtains, free light fittings and a Plasma TV thrown in!

And not a speculative ‘desk-top’ (off-plan) valuation and forward priced

properties.

Even if these valuations have been ‘proven’ by a ‘RICS’ surveyor, be wary.

If there are no comparables for properties of the same type in the same
resale market then it is guess work, not just for you but for a surveyor too
(we learned that the expensive way).

Every pound that you can negotiate off the market value goes straight into
your back pocket in future cash through equity, or cash through sale. If
you pay full whack for something (even property), no matter how great the
deal may seem, there’s no ‘instant profit’.

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Instant profit makes a deal real, reduces downside risk if the market changes
or declines, and means you need to borrow less from a bank or JV partner
to fund the deal, so your repayments are lower and your cashflow is higher.

Discounts are out there, and you choose what you pay between 10% off
sale price (easy) and up to 50% off (or 72% - our best ever discount), but
of course these are much more rare. Be patient. Don’t buy everything. Have
a set of (achievable) rules and stick to them. Yes, you can get big discounts
but that will reduce your volume so you weigh up price vs. volume.

The skill of getting discounts separates would-be or novice investors (some

with plenty of money) from specialist and expert investors. There are many
investors we know who are buying properties for cash and buying them
at full market value. Some of them are great at it! Yes they will make
money in the long run because most of us will in property, but they could
be making up to 3-5 times (unleveraged) what they are making just using
some skill, knowledge and education.

So how do you find these great BMV discount deals?

It’s a numbers game: Specific to achieving discounts, you need to be

putting the offers in to get the deals you want. Putting in one or two offers
that are rejected and then giving up is not going to make you rich. More
offers obviously increases your chances of getting a deal, but importantly
it increases the chances of you getting an ‘off-market’ or ‘not-in-the-
window deal,’ through the estate agent, which is always a lot cheaper
than ‘standard’ deals.

We get one deal in approximately 6 offers through estate agents. It used

to be one in 20 when we started. It could be one in 50, it doesn’t matter,
keep churning the numbers and the deals will come, predictably.

We get two deals per 45,000 leaflets that are posted out (from around
17 phone calls). We used to get double the volume but half the discount
pre-crash, but things have changed. And they will continue to change.
And we will keep testing and adapting. Your results may be better/slower/

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different. Test and measure. As long as it pays a return on time and financial
investment, then you are in profit. Put in the offers, play the numbers
game and you will get the deals. If you don’t shoot, you don’t score.

Be patient: don’t go negotiation crazy. Know your price that you want
to pay and don’t break your rules. If your offer gets rejected then wait, be
patient, and in 3 to 6 months when expectations have levelled, you may
well get some offers back your way. Agents will sense if you have deal
desperation and use their experience to get you to pay more. If you really
want that first or next deal you will overpay for the privilege. More deals
always come, even though at the time when we lose one we think we will
never get another.

Ideally, you don’t want the deals to come off too early. You want them to
take time to ‘burn’. You want the motivation to increase from motivated
to distressed to desperate. You can’t do that in a few hours or a few days
chasing a deal. That has to happen by circumstance and patience.

In fact just recently I (Mark) helped an investor to buy a flat. We actually

went to look at it nearly 4 months before and the vendor was adamant
that he wanted (and was going to get) full asking price. Of course every
vendor’s house is worth full market value, right ;-)

We just waited and the market picked away at him, and now we have
helped her (the investor) get the flat for around £30,000 less than the
original asking price. The vendor is also happy because he needs to move
fast and has had people pull out on previous offers.

We call this strategy (it is a strategy) ‘pipelining’. The longer a deal drags
out, the cheaper you will get it, and therefore it will actually cost you
money to negotiate too fast and hard. Ensure you diarise every deal you
viewed to touch base with the agent or vendor every 8 weeks. Keep a
spreadsheet of every deal too, with initial asking price, market value, what
the price has dropped to, and every 8 weeks check in. If it hasn’t sold
restate your interest (but don’t up your offer). If you get it, you win. If your
offer is still too low, you keep the offer on the table, and you touch base

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again in 8 weeks. If the property sold, you ask what for, and you put it in
your spreadsheet. You soon build the most relevant, local data on real time
asking and sale prices, knowing your area better than anyone else. You
also soon build a large pipeline where you have multiple deals maturing.
Follow your system, touching base every 8 weeks, until you have dozens of
deals to follow up each week or month ‘ageing’ themselves.

Know when to push (when it is time to agree the deal and get it exchanged),
and when to let the natural energy of the deal ‘age’ or ‘mature’. Outside
factors such as the economy, media scaremongering and the pain of the
vendor will negotiate for you.

This is far smarter, more effective and much more friendly and sustainable
than hard negotiation, which rarely works anyway.

Constant and never-ending improvement: keep improving on your

figures. Keep learning, reading, growing and testing your results so you
know what you can improve on. A small improvement in a chain of events
can compound quickly to big profits.

Use multiple marketing methods: use estate agents, leaflets, social

media, forums & biz directories, Rightmove, the ageing technique, lead
gen websites, Google, facebook PPC, word of mouth marketing, YouTube,
print media, postcards, take-away menus, ‘birddog’ referrals, billboards,
JVs with window cleaners, and many more strategies to find deals. The
more deal marketing methods you master, the more deals you pull in, plus
you’ll be less exposed to change in market conditions or regulations of
any one single strategy. Build them up over time like you do your multiple
streams of property income, perhaps following the 70-20-10 strategy
specifically for marketing for deals.

Stick to what you know: now that you have decided on area and type of
property, stick to it. You will become known for what you want by agents,
vendors and contacts and they will come to you with deals. If you chase
everything and buy outside your strategy, then you won’t get the results
you want.

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“If you do everything you’ll be known for nothing.”

- Rob Moore

You need to let compounding kick in for strategy, marketing, buying,

brand, reputation - everything.

Know your numbers: this is one of the most important factors in buying
a property. Before you even put an offer in you should know exactly what
that property will cost you to buy, including all fees. You should know
what the rental figures are and what it will cost you per month with a
contingency factored in.

What can you get the property revalued at? Do you know what the rental
coverage is so you can get the maximum (optimum) loan to value (LTV)?
What about your completion costs: survey fees, local searches, legal fees,
deposit financing, indemnity insurance, refurbishments costs? Ongoing
management costs? Building insurance, gas safety, mortgage interest, and
service charges/ground rent?

Thankfully, you have a partner (Mark) who loves figures and details. A little
too much in fact with his sweaty typing figures. It’s all been plugged into
his Deal Scrutiniser™ and our gift to you (if you didn’t get it last time), is
the App version that you can use on the go, on viewings. We suggest you
get it now by searching ‘Property App’ on the App store. No cost to you.

Yield: There are always little pockets within towns and cities that offer the
best yield. Some areas will be too expensive and some will be too cheap
(with high maintenance). Read the section on yield, and focus on this when
you are finding your Goldmine Area.

Watch interest rates and costs: as interest rates creep up more people
(especially in the lower end of the market) get into more financial difficulties
as the repayments on their mortgages/loans go up. More repossessions
happen at this point and you can use all of your newly acquired skills as a
relationship expert to lead them out of debt and pick up a bargain. More
detail later on in the book.

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However, investors are not immune to increased costs and rises in rates,
so ensure you have factored in current and future cost of finance to keep
your net yield and cashflow high and sustainable.

Timing: in property buying timing is important. If you can understand the

best time to buy, by keeping your eye on the market and understanding
roughly where we are in the cycle, then you are one step ahead of 95% of
the other property investors.

Certain times of year dictate buying prices. For example, most people are
not prepared to buy over Christmas as it is a huge upheaval. However,
you do, in some cases, get people who really need to sell quickly, and
because there is not much going on, and a lack of competition, you can
benefit. Summertime can be interesting too. If a lot of people are on
holiday (including your competition) then this creates space for you to get
to Banker status much quicker than normal. January is a great time to buy
and help vendors because divorce, financial pain and repossessions are at
the highest point of the year.

Follow all the previous rules: don’t buy new, focus on area and property
type so they have lowest possible void, buy well under market value, ensure
your deal is net cashflow positive, have finance in place, be ready to buy
fast with your broker ready and your DIP (decision in principle) in place.
Never ever pull out of a deal, have the other person’s interest in mind, offer
value and offer solutions to their problems.

Now go out and find some great deals!

Keep on keeping on; make mistakes. So what. We all make them. If you
don’t shoot, you don’t score. It’s all part of your journey, a journey that
no-one can cheat, but everyone can accelerate and leverage, as you are
now. But there comes a time when you just have to do it, even if you’re
not 100% ready. Do your research, protect the downside, get 80% of the
information/confidence you can, and then do it.

Mistakes are essential in growing to become as good as you need to be

to be worthy of the elevated position. Mistakes are feedback on what

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to improve, so in that sense there are no mistakes. It is said that those

who make the most mistakes become the best, but they don’t see their
mistakes in the way ‘ordinary’ people do. It is the meaning we put on our
mistakes and the lessons we get from them that make us who we are and
define our results.

“Anyone who has never made a mistake has never tried anything new.”
- Albert Einstein.

Enjoy the process: hunting for deals should be fun. It is a game and we
love it. You will too, especially when you see the cash coming in and that
you are making a difference to your local economy and community. You
can get out there, help other people sell their house faster than anyone
else and make some money yourself. And have them grateful and thank
you for it.

Mini Summary

Be patient, let negotiations take their natural course, and buy

at discounts. The better the deal, the more protected you are on
downside risk, market changes and finance/interest rate adjustments.
Plus you make more instant cash. Use multiple strategies to source
your discounted deals, but build them up over time, focusing on 70-
20-10. The better the relationships you build, the more they’ll sell to
you at a lower price than offered to your competition. Keep going,
make some mistakes and get the lessons you need from them to get
a better/cheaper deal next time.

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Summary
Use the C.A.S.T.L.E.D model for buying properties. Buy for C.ashflow,
considering local A.menities that add value or forced growth to your
portfolio, with good S.upply of properties for long-term sustainability.
Find good T.enants, in your L.ocal Goldmine Areas buying E.xisting,
value-provable properties at the highest point in the value curve, with
big D.iscounts.

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#18. Your Goldmine Area

Your area within your goldmine: One of the most vital fundamentals in
investing successfully, profitably and prolifically, is finding your own patch.

A goldmine area is an area local to you where there is a supply of discount

deals and or high yields. The definition of discount and supply is individual
to you. Your Goldmine Area needs to supply you with enough deals do
satisfy your insatiable hunger :) If you want 3 deals per month (but to hold
and package) yet you are the only person in the village, you’re not going
to have enough deal flow.

Conversely on the flip side, if your Goldmine Area is the world then you’re
not going to be able to build close relationships and get to know the areas
well enough to own the place. London is not a Goldmine Area as it is too
big. A big town or city has streets that are priced far too high (‘Manhattan’
types) and the yields are far too low. Conversely Bronx-type low(est)-end
properties experience maintenance and management that are too time
and money intensive, so best to avoid.

Specific, micro suburbs and certain streets will have the best yields and
purchase prices relative to rents, and they can be 0.25 miles away from
somewhere (near ‘Manhattan’) that doesn’t cash flow. You’ll be focusing
on inner suburbs, specific streets and postcodes, and these exist in almost
every town and city in the UK. In fact, 93/100 people who do the ‘Find
your Goldmine Area’ one to one training on the ‘Progressive Property
Masterclass’ find a local Goldmine Area within an area, within 15 miles
of where they live. Often within 3 or 5 miles. Only 7/100 have to travel
further afield.

In one of our Goldmine Areas - Mark would kill me for mentioning it, so
we’ll just say - in Peterborough (but you already knew that ;-) there are
around 70,000 houses and 180,000 people living in them.

That’s too vast an area to buy in, and not focused enough yet to be a
goldmine. Even if we only bought 1% that would be 700 houses, so there

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is clearly enough to supply us for a little while yet in the greater area, so all
good so far. We need to narrow down the catchment, because if we want
to become the top expert in an area, it can’t be too big, otherwise it will
take too long and there will be too much competition.

It so happens that the Goldmine Areas, the areas within the areas in our
areas, are around 10,000 houses.

So that’s around 15% of the total housing in the area. From that figure of
10,000, we’ve bought around 550 in this particular area in the last 8 years,
and the deal flow remains constant for the level of discounts we need at
around 5-6 per month.

If we wanted or needed more, we would have to find another Goldmine

Area, as Peterborough doesn’t seem to be able to sustain many more for us
on a consistent basis. This is our experience. You can glean a lot from this.

We have tried to create an algorithm for this, but it does vary area to area,
so use this as a guideline:

Finding your Goldmine Area Guideline

• If the area you are looking at has 20,000 houses, it is likely to have
around 3,000 – 4,000 houses that would be of the right type, area
within area, yield, rental demand and so on.

• Therefore it would likely provide about 2 deals per month that are sweet.
More than enough for most individuals, but if you plan to set up the UK’s
(second) largest property company ;-) you’ll need a bigger catchment.

When we started we did it all wrong through trial and (lots of) error. For
example, in 2006 in Hampton an expensive property was costing £140,000
but in South Bretton you could buy the same size property for £70,000. In
Hampton you’d get £100 per month more rent but the mortgage would
have been twice as much, and the voids would have been higher and the
cashflow negative.

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Where we thought we’d buy – in the nicer areas at higher prices (the
properties were ‘upside down’ as prices were high relative to rent), or very
low (Bronxy) areas or outside of our patch; was almost exactly the opposite
of what really works to build a big, sustainable and cashflowing portfolio.
They consistently had problem tenants, void periods, rent arrears, low
capital appreciation and tenant damage. The great high-yielding property
we had expected never materialised and this ended up being probably one
of the worst properties in our portfolio.

Keep it as local to you as possible: so it is manageable, because there

are some big advantages of finding Goldmine Areas within areas: you are
seen far more often by more people – you get recognised mindspace and
so people pass you more deals and referrals.

So, as long as you don’t live in a rural village, field or very expensive central
city (you go slightly further out or adopt a different strategy to single lets),
then ‘the answer to ‘Which Goldmine Area should I invest in?‘ is almost
always ‘your local area’ in the lower end suburbs.

Remember in simple terms, a Goldmine investing Area =

locality + tenant demand + volume of discounted stock + 8.5% plus yield

It will most likely do well for you consistently over time and keep the cash
coming in. Your (local) presence will evoke action because you will be
perceived as an expert (even if you’re not yet, as visibility is credibility), you
will know the prices and intricate details well (better than anyone else)
and you can become an expert on a specific area quicker and better than
anyone else in the UK, within a few short months.

Here are some great tips for finding those little gem properties with the
highest yield:

**Fundamental tip No.5:

Always look for the ‘worst’ house on the ‘best’ street.

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When you buy a brand new car, let’s say a Mercedes again as an example,
the difference between a standard model and a fully spec’d up supercharged
version can be very significant.

Specifically, a standard Mercedes S-Class may be around £60,000. However

the S-500 would be around £100,000 for the same platform with some
extra toys and a bigger engine.

In 3 to 5 years nearly all that difference in price disappears, and the S-500
might only be a few thousand pounds more expensive.

Property works the same way. If you have two 3-bed houses on the same
road, both the same size but one has video entry, a plasma TV and oak
flooring and is £20,000 more, they’ll still both rent for the same money
give or take 10% because the value of rent achievable is dictated by the
‘platform’ (location, square footage, number of bedrooms).

The cheaper one offers much better value, and a greater yield.

Always look for value by buying the ‘worst’ properties in the areas that
will pull the relative value and rentals up. There are proven comparables
at higher prices on the same street, so it’s more plausible that a surveyor
would value it relative to the others, and you can add that value (refurb,
flip). If you buy at the ceiling value {best house on the street) then you have
no room to improve or add value.

This is also linked to land values. It is the land that very often holds the
greatest amount of value, and it is the land that can influence the overall
price of a property. On any one street similar plots of similar sizes will hold
similar values. This goes some way to explaining why apparently ‘worse’
properties can achieve similar rents in comparison with ‘better’ properties.

Buying property on good land will always be wise. It’s not generally the
primary reason we do it, but it will become ever more important. A lot of
the stock we are buying nearer the city centre and redevelopment areas, is
on land that will continue to rise in value.

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The one thing we can’t get more of in the UK is land, and that keeps
demand very high. There’s a small chance that over the next 100-300 years
your property could fall down (or at least degrade significantly), there’s
almost no chance you’ll lose your land. A fallen down or derelict house is
worth very little, the land will always be premium in the UK (unless more is
made available to build on).

Net yield (gross yield minus costs) can be quite difficult to calculate, and
your knowledge of property type and area and these concepts discussed in
this chapter will be invaluable to you. The point about knowing net yield is
that you can be lured by high (gross) yielding properties, but in reality most
of that return will be spent on costs: maintenance, management and voids.

As a general rule higher (Bronxy) yielding properties over a certain point

can end up having a lower net yield than other seemingly less attractive
properties. If you have to replace the windows every year or spend money
because tenants do not look after your property, then you can end up
with very little at the end of each year, and be fooled by the apparently
attractive gross yield. Void periods can also have a big impact on your
yearly return (cashflow).

Remember that all costs come out of your profit. What you want to be on
the look out for (in your area) are those areas where the gross yield is good
(properties that are not too expensive, not too big and rent out well) and
the maintenance is low (not too grotty, no crime). You will get to know
which areas to avoid at all costs (if the helicopters fly over at night and the
rats are running out of town then stay away) and stick to your strategy at
the lower end of the market.

You can work out gross yield very quickly and it is a very handy pre-
selection tool. Net yield needs a little more research, some experience and
a bit of a sixth sense of your area, and data/numbers over a sustained
amount of time (minimum one year). You will work out how to do this in
a few chapters time.

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Summary

Find an area within an area, local to you, that has the right balance
between gross yield, and net after costs. You will have to test and
research to find the pocket areas. Don’t get lured by emotions or
fancy properties, it’s all about the bottom line. Look for sweetspots
where you buy the ‘worst houses on the best streets’, where you can
buy cheap, add value and rents are relatively high compared to the
purchase price.

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#19. R.A.V.E - 4 ways to profit

There are 4 main ways to add value/create value in property:

R. efurb

A. dding value

V. aluation

E. quity

R. efurb
You want to do low cost, light cosmetic work (‘a lick of paint’) only, to
minimise your cost and risk. You’re looking for very dirty, poor cosmetically
but structurally sound properties. It’s one of the lowest risk ways of
enhancing and adding value to your property. For every £1 you spend, add
£3 of value. This is where you can make thousands of pounds in uplift so
it’s important not to overspend on labour or materials.

Simple and straightforward specification to include: beige coloured carpets

on the landing, bedrooms and stairs. Hard-wearing and durable laminate
in the hallway, living rooms, and tiles on the kitchen and bathroom floor.
Woodwork can be finished in white gloss, the ceilings in matt white, and
magnolia walls. Only replace what you have to, so if the kitchen carcass is
in good order but just ‘tired’ you will just need to replace the doors. Set a
budget at the outset and always get 3 quotes.

Your aim is to smarten or replace the existing kitchen, replace the carpets,
add a new bathroom, paint the walls and generally tart the property up
quickly and cheaply to recover more than the amount spent on the refurb.

This can also include basic exterior work such as new light switches/
electrical sockets, garden and driveway tidied/ landscaped, electrics, new
windows, gas central heating and even plumbing.

The more ‘minging’ the property, the more money you will make on the
capital uplift.

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A. dding value
Once you’re comfortable with the basics of refurbishment you can then look
to move up the chain for bigger returns of adding value to your property.

Things like creating ensuites from empty space, remodelling the property,
getting planning permission for change of use, knocking down walls to
create an open kitchen/lounge diner, dealing with the land registry to
create leasehold titles and remedy other defective lease issues, converting
rooms into a garage or garage into rooms, converting a building with
lower value use to a higher use like commercial to residential, adding a
double bedroom and an ensuite to a loft conversion, splitting freehold to
leasehold and retaining the freehold, basement conversions, adding extra
rooms in extensions, building a conservatory, eliminating shoddy DIY,
moving the kitchen into the large living room to create an open plan living
space and turning the existing kitchen into a bedroom so you’ve turned a
1 bedroom flat into 2.

When you can intensify or increase the density of a property with a high value
refurbishment you can add a great deal of serious value to the end figures.

V. aluation
It is vitally important that you understand the definition(s) of value if you
want to achieve real discounts, release deposits, or put none of your own
money into a deal. What an Estate Agent values a property at will often be
higher than it will sell for.

They want to get you to sell the property with them and will often try to
make you feel good by valuing it high. The value of that property is often
higher than the OPINION of the surveyor (Valuer). By the way, all this plays
into your favour, when understood properly. Armed with this knowledge,
you know that there is a fair ‘range’ of possible values for a property,
where opinion may vary, and this can be up to 20% of the value in many
cases. An Independent Estate agent who wants to buy the deal himself
(naughty, but rife) will value a property very low.

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The vendor is likely to have an unrealistically high perception of the

value. You, the investor, may have a lower expectation of the true value.
A motivated or a distressed seller may have another opinion of value,
incorrect prices listed by estate agents will be different, the average
sale prices shown historically on Land Registry may vary again and even
surveyors opinion of value may vary, depending on their knowledge, stage
in their career, pressure from the market conditions and so on.

1 in 5 properties we buy at full asking price, knowing that we have at

least a 30% margin (or discount after refurb). Very often we only need to
offer 10% below asking price to achieve a 30%+ discount. Yet sometimes
it needs to be 40% or more off the asking price to get the same margin.

The key to achieving a good level of discount, yield and cashflow is

understanding what the real values of the properties you are buying are,
and then negotiating from that point with agents or vendors, or simply
spotting under-priced properties as they hit the market or having the
‘right’ surveyor out on the remortgage. Currently many repossessions
hit the market already BMV (depending on where we are in the property
cycle), and you will be able to spot them before anyone else and ‘hoover
them up’ quickly, because you understand their ‘real value’.

E. quity
The discount you get, and subsequent growth, creates your equity, which
is the net asset value of your property (portfolio) - the cash left after
finance and costs are paid off.

You increase equity by buying with good discounts, adding value

through R. efurbs and A. dding value, general market growth, forced
appreciation through amenities/regeneration, lower debt ratio and debt
erosion through inflation.

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Summary
If you combine more than one of the R.A.V.E models then you have
greater downside risk protection and more net asset value/worth.
You will be able to spot refurb opportunities others miss or are put
off by, add value to properties to create equity and recycle your
funds, intensify many undeveloped properties by changing use and
enjoy equity by forcing appreciation and or capital growth.

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#20. Finance Fundamentals

Your ability to obtain credit, deposits, cash, bridging finance or JV partner
funds is paramount to the exponential growth of your portfolio.

Before we even start on this chapter always remember this: guard your
credit score with your life. Nurture and protect it like a child. Cushion
it. Wrap your arms around it and never let it go. Despite the fact that for
many strategies you’ll learn that mortgages are soooo 2007, they’re still an
important part of your long-term vision.

Never ever miss a credit card or especially a mortgage payment, and always
keep well up to date with what you owe. One missed payment can black
mark your credit and hinder future lending, or put off a JV partner, and the
growth of your portfolio.

Only borrow to invest in income producing assets:

There are many schools of thought (particularly that of the industrial age)
that you should never spend anything until you have it.

This is a sound base on which to build a solid financial platform, and

certainly far better than borrowing to buy petrol-guzzling cars, go on fancy
cruises and build conservatories.

Don’t borrow money to invest in liabilities until you can afford to do so, or
when they can be paid for by assets. And if you can afford them, then why
are you borrowing money for them in the first place? The exception might
be if borrowing is cheaper than buying or there is a cost of capital from
using cash, but as lending and interest rates are relatively low and inflation
is high, this is very unlikely.

Don’t over borrow on assets:

Many home owners and investors pre-crash were ‘geared’ too highly. Over-
gearing (borrowing too much against the value of an asset) has caused
much of the financial mess of the last few years, and the crash serves as a

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good reminder to smart investors that things can change quickly and you
should have a buffer.

Many want to put as little money down as possible into a property deal, but
raising too much debt against it leaves you exposed to market movements
and a lack of control of timing of sale. Pre-crash you could get a 90%
mortgage, a 95% mortgage, a 95% mortgage with a 5% vendor gifted
deposit (100% mortgage).

Yet people forgot in a frenzy of buying with such little money down, that
this was all debt. Debt that needs to be paid off. In this case the only way
it will get paid off is through growth (unless they earn it in their wage!),
and growth between 2007 and 2013 was slow in many areas. But at the
moment we are seeing property prices and the market going through an
upward or growth phase like property cycles do.

Things have changed, and most banks and lenders won’t let you gear at 90%
or more, even if you wanted to. Many won’t let you gear higher than 85%.
They want you to have skin in the game. We’ll admit that in 2006 we probably
did gear up a few properties a bit too much. We still own them, it didn’t kill us,
we didn’t have to sell them, but because of the (relatively) high ‘loan to value’
(LTV), the mortgage is more than it could be, and therefore the cashflow is less
than it should be. Some are saved by low interest rates, but others produce far
less than we are getting now on more recent, better purchases. Other people
were not so lucky and didn’t have other good assets as protection.

Regardless of whose ‘skin’ is in the game (your money, a JV partner’s

funding), a 70% loan (LTV) is high enough. You might want to push to
75% if the banks let you, but even when the market changes and banks
forget the pain of the last few years, taking high LTV mortgages is not
smart investing, even if it is NMD.

(Controlled) leverage:

No-one ever set up a big business or portfolio without leverage. The richer
the investors are, the less of their own money they often use – life’s so

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unfair, right ;-) If you were to try and build a property portfolio with your
own money, buying cash, it would take you 3 lifetimes to match what
many professional investors have done in 3 to 5 years.

Most people could never buy a house unless they leveraged and borrowed
money. There can be great leverage in borrowing money to create
something that could potentially generate a lifetime of income far beyond
the repayments. Just don’t stretch it too far.

Here are some important factors in finance and leverage:

Line up a credit line:

Whether you use it or not, having access to credit can mean a deal that
needs to be bought quickly will not slip through your fingers and into the
hands of the competition. Keeping your credit file clean (and knowing how
to), having access to credit, loans, overdrafts and other vehicles to borrow
means when that opportune moment arrives, you’re ready.

“Don’t get ready, be ready.”

This credit can be with a bank or with a private investor or JV partner, or

credit cards empty but ready.

This is not to say that you spend money you don’t have – just have access
to as much finance as you can. You never know when you might need
funds for a short-term refurb, or a quick cash buy that you can flip. When
you use some of the other strategies in this section, before you know it
you could have access to six or seven figures, waiting and ready for when
the deals come your way.

Don’t just use mortgages:

Mortgages aren’t quite relics yet, but they are not the free-flowing, done
deal that they used to be. Banging your head against a mortgage brick
wall, applying and re-applying for loans you’ll never get, does nothing
other than marginally tarnish your credit score.

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Keep putting in your cash to buy properties, you’ll run out one day, even
if you are a favoured relation of Steve Jobs (what a great man with a great
vision, we can all learn from him).

Creative finance:

Typically means using non-traditional or uncommon means to buy or

finance property. The ultimate goal might be to purchase property using
as little of your own money as possible.

Bridgers, private investors, JV partners, friends and family, peer-to-peer

lending sites; there’s a whole host, and we’re going to show you the lot :-)

The reality is that it is harder to get conventional finance, put down larger
deposits, banks are tightening their criteria (following the Mortgage
Market Review), loopholes are being plugged, and “creativity”, is not
being rewarded by the institutions.

Relying on ‘conventional’ high street ‘sausage-machine’ finance is not

the answer.

But what’s the truth with ‘creative’ or non-standard property financing?

You see, when a new finance vehicle enters the market, it often seems
to be the new solution, though it’s most often less liquid until investors
understand it properly.

There are more obstacles, and so it’s more difficult to obtain. And there are
usually some sweet spots, halfway between creativity and liquidity.

But in reality it usually just means getting more ‘personal’ with finance.
Repackaging and restructuring deals to look good to ‘private’ investors
and creating partnerships with non-standard lenders.

But here’s the thing with ‘non-regular’ finance:

Although newer than personal loans, sites like crowdfunder in property

can provide a good injection of seed money for investors and can often

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give more favourable terms than other lenders.

We raised £150k as a test on Funding Circle and you can get this with no
security though you’ll need squeaky clean business accounts and at least
three good years of trading history.

And most people who need quick creative finance don’t get to or can’t
meet that criteria, which provides more opportunity for the savvy–smart
property investor.

Peer-to-peer property lending is also relevant in this economy. We’ve

loaned and raised finance from websites like Zopa, which can be more
bespoke depending on the criteria of the individual (private) lender. The
Entrepreneurs are now becoming the new bank.

Bridging Property Financing (see below) can be a short-term option though

we often get quite shocked at how much investors are prepared to pay for
bridging just because they want quick finance; sometimes when worked is
over 3% a month. Dangerous unless very short term.

The usual and most effective and realistically achievable strategy is JVs and
personal loans.

The latter relatively unaffected by new FCA (Financial Conduct Authority)

regs, are usually clean, simple, understood by most, security against the
property is safe and obvious, and when compared directly against banks –
the interest rates look great to the investor.

Some may think much of the lending is made of experience and track
record? We thought that too.

But this is only part of the picture. Many personal financers invest in a
‘person’, not a track record directly, otherwise the ‘start up’ world wouldn’t
exist. In many professional lending circles investors like people to have
gone bust once or twice, or to have had failed ventures; apparently making
them lower risk/more lendworthy.

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Many of our professional Venture Capitalist friends have taught us that their
world and criteria is often opposite to what the new-bie/borrower perceives.

It’s also often much easier for an investor to borrow through a non/
unsophisticated investor (friends, family, self-employed, solo-preneur)
on a straight loan agreement, which is certainly less overwhelming and
complicated through the platforms and in the experienced world of money
lending (P2P, VC, bridging, etc).

Non-sophisticated investors are often more trusting and less contractually

minded. Of course the FCA are trying to protect these people, and
the obvious responsibilities stated above are important to make great
partnerships, but from a (new) investors point of view this is by far the
easiest place to start.

More flexible terms:

Private investors will be more forgiving to market changes, and if challenges/

changes arise (which they always do), you can talk to a real person and you
can come up with solutions.

It’s less likely to go wrong, and then when you’ve done one deal like this
it opens the door to more money or many other Joint Venture structures.

Over time, add additional finance raising strategies to your overall strategy,
and think outside the conventional ‘off the shelf’ products.

The power of compounding will really kick in, which will allow you to build
your property portfolio in a shorter period of time with minimal risk and
capital from you.

This will increase your buying power, reduce the time it takes to build your
portfolio and wealth and reduce your risks significantly in many cases.

The secret is that you don’t need to save for years, you just need to know
the right finance strategies and the right people and deviate from the ‘rigid
set of rules’ associated with standard conventional finance.

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And if you need some help about additional finance strategies, you’ll love
the next section.

Buy-to-let mortgage vs. bridging finance vs. private finance vs.

commercial finance vs. Joint Ventures

Let’s take a step back for a moment and break down the different ways of
financing or purchasing property deals that are readily available to you.

(If you don’t know the difference - it’s HUGE!)

1. Bank financing
When it comes to buying property, the majority of borrowers will usually
approach a bank, put down a deposit and borrow the rest of the money
through a 25-30-year loan on owner-occupied properties (residentially
owned) and loans based on investment properties (buy to let).

But to qualify is not easy. Every lender is different and has a different
appetite for certain types of loans.

They have strict criteria in place and limit the number of buy to let properties
you can have before they cut you off for over-exposure. On the flip side,
being a first time owner/landlord is not easy either.

You see, conventional high-street mortgage finance products all fit into a
strict set of guidelines and if your face doesn’t fit or the computer says no,
financing your deals will be impossible through this route.

Financing your flips too (buy-to-sell) even if you do qualify for a commercial
loan can be tough, as lenders often don’t like them. It’s painful we know,
but mortgage lenders don’t like you utilising cheap finance for a short-
term project.

Even if you do somehow qualify for a buy-to-let mortgage here are some
finance fundamentals you need to be aware of:

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A. You will need some “skin in the game”. A typical loan of 75% on
a £100,000 house will mean you will need a £25,000 provable cash-in
deposit (unless the bank of Mum & Dad comes to the rescue).

B. Although you will still need to meet underwriting standards, some

lenders will only ever lend to those who have a personal residence, a
minimum income of £25k, who are not a first-time landlord and have a
track record of experience in the buying to let sector.

Being a first time ‘HMO’ (House of Multiple Occupation) landlord will

prove tougher too.

C. Buy-to-let loans are commercial loans on residential properties so it will

not be on a 30-year plus repayment. These high street banks are far too
smart for that!

They will usually have a term of 25 years with interest rates higher than
owner-occupier mortgages. The repossession process is far easier too, so if
you get into a pickle and have difficulty paying your mortgage the heavy-
handed mob will be around to change the locks in a heartbeat!

Other things you need to know:

• Quit your job and they won’t lend you any money

• No relationship

• They can change the rules instantly

• Mountains of paperwork

• Provide stacks of documents and you have to jump through their

hoops

• Get declined if they don’t like a certain type of tenant profile

Bottom line:

If you are going down the route of high street bank financing remember

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they will only lend if the computer says ‘yes’ and you have a sizeable deposit.

You can still get declined, even if you have a top-notch credit rating and no
track record of any missed payments.

You see, some of us investors love to buy some really nasty stuff! Beyond
the trash and the stench, some of the properties we buy may not have
windows, plumbing and might even be fire burnt.

We buy trash and turn it into cash:

The majority of the banks don’t seem to understand that and fear in the
worst-case scenario they will be left with a short fall should the property
ever be repossessed and you won’t qualify for lending.

With other forms of finance (below) you can buy whatever you want. The
thought of buying a refurb project and turning the ugly stinky duckling
into a beautiful swan is entirely your decision, not someone else’s. You can
be your own approval committee.

An idea:

If you still want to go down this route and want to finance your deals through
mainstream banks but either you don’t have the deposit or can’t qualify for
a loan, you can always find yourself a mortgage host, explained later on.

This is someone who looks great on paper, has a great verifiable income,
great credit rating and a 25% deposit. They will put their name to the
mortgage in return for a piece of the deal.

This can be a great way to finance your proper deals through someone else
taking on the ‘mortgage risk’ but also benefiting from the upside of the
cashflow and equity within the property.

2. Bridging or ‘hard money’ lenders

A bridging loan does exactly what it says – a ‘short-term’ loan (one hour

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to one year) to fund deposits, cash purchases and give you the ‘bridge’ to
owning a property portfolio.

A bridging loan will be worked out on an individual deal. The better the
deal, the better the terms of the loan you will get. The more security you
can offer, the better the terms. Like any finance raising strategy, you need
to be careful not to over-borrow and put yourself at risk, and there are
some thirsty bridgers out there!

Many bridgers fall into the category of ‘Private investors’.

There are some that will eat your lunch and then bill you for it afterwards.
Be careful of these.

However, if you’re looking to buy and hold over the next 15 plus years then
this option is NOT suitable for longer term financing.

But if you’re doing buy to sell or ‘flip’ projects, then bridging finance can
play a legitimate role in acquiring these types of deals.

Now, it’s not all bad, there are many advantages with bridging finance.

Pros:

• Typically easier to qualify - they are not that interested in bad credit or
income requirements.

• Raise finance within a few days.

• Refurbish a property.

• Buy an auction property fast/finish a development project.

• Purchase a property that would not be secured in its existing condition

with a mainstream lender.

Cons:

• It’s not cheap! This a very expensive form of financing, so if you do

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plan to go down this route you need to ensure the profit margin is
enough to handle the cost of finance, otherwise the interest rate can
strip the “meat off the bone” if you know what we mean.

• You will be charged typically 0.8-1.5% per month - possibly more on

more difficult propositions.

• It’s short term. Bridging lenders make the bulk of their money on
“turning their money” charging higher rates, getting the money
back (quickly) and then lend it back out to the next investor.

• The typical length will be around 6-12 months after which the lender
can call their loan in. And when they do, it’s not pretty. You see,
although terms will vary from lender-to-lender, giving the lender the
ability to take the property back after the loan is due or at least start
the repossession process to simply bumping up the already above-
average-high-interest-rate to a “sky-high” penalty rate.

• Although you can still get 100% plus financing including all of the
refurbishment costs, lenders will like you to have an unencumbered
property so their risk is more secure. Otherwise, they will still want to see
some “skin in the game” i.e. that you can bring some cash to the table.

Bottom line:

Not recommended for newbie investors as this very expensive, very short-
term and any sort of 100% financing will be tough to obtain, just like
ordinary bank loans.

If you do go ahead with this type of finance, ensure you have a multiple
exits in place should plan A not work out.

3. Commercial finance
This is where finance is conducted outside of the Council of Mortgage
Lenders guidelines and is usually for businesses.

They don’t usually advertise their rates or criteria as they are usually held in

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the bank’s own portfolio, rather than sold to the open market.

They often look much more closely at you - the borrower. They will ask to
see your assets, liabilities, bank statements, experience, history, P&L and
essential your background.

And if that seems like too much hassle, it’s because they need to build
a profile of the business they are dealing with, in order to make a more
rounded and ‘commercial decision’.

Now here are the positive aspects to commercial finance:

• There is no minimum valuation as you would expect with some

residential mortgages.

• There is no ‘six-month rule’.

• The service is tailored to each individual deal.

• They offer more flexibility with ownership, property type and the
number of properties owned.

• Although this type of finance was easier to obtain pre-2008, it seems

these days they are more restricted, but things a loosening up just a little.

If you can obtain commercial finance, here are some key points to
remember: Commercial finance is all about the relationship, so even if this
sounds less than ideal, chase it down and use it as an exercise to build a
relationship with someone important in the bank.

(A bit like you might go on viewings simply to build relations with agents,
because even if this doesn’t come off, the next deal you’ll be closer.)

• Interest rates are higher, so be sure to update your cashflow analysis.

• They prefer repayment mortgages. You could perhaps get an initial

period of interest only, but then it would revert back to capital
repayment.

• The maximum term they offer is around 15-25 years usually and LTV’s

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are around 60%-80%.

• Rental Coverage is around about 125-190%, depending on the lender.

So even though the rates are higher and the amortisation shorter- they usually
have no early repayment penalties, and can even be used to fund properties at
pre-planning permission stage for larger scale development projects.

Having commercial finance is very beneficial for (contrarian) property

investors who have come stuck with traditional lending. But before you
rush to contact your nearest branch, just be aware of the terms going in.

4. Private finance lenders

OK, here’s where things get a little bit interesting for investors who simply
want to invest but have a little issue with a thing called….money (or the
lack of it!)

You see once you’re able to find TRUE private finance, the advantages over
bridging lenders and high street banks are ENORMOUS.

Advantage #1: Speed

The ability to close property deals in less than three weeks is a huge
advantage over having to wait typically a month for a high street buy-to-
let loan approval.

The importance of speed and certainty cannot be overstated in a competitive

market and quick cash gives you a big edge over other investors.

Imagine you’re the seller and someone comes to buy your property and has
a two-three month period before completing verses another investor who
can close within weeks.

It’s not difficult to tell which offer the seller will accept.

And another thing:

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The real power of this offer is that the seller may accept a lower discounted
price for their property. So not only do you get the deal from another
investor, but you can get it at a Below Market Value (discount) price.

The power of private finance enables you to complete more quickly and
drive better deal terms to YOUR advantage.

Advantage #2: Simple paperwork

Have you ever gone through the mortgage process and had to sign 2
inches of paper work?

Now imagine using private finance and completing and signing only four
of five documents (no that is not a misprint).

You see private money deals are extremely simple and the total paperwork
can be less than 10 pages.

Advantage #3: You control the terms and conditions

One of the biggest advantages of using private finance is you get to control
the terms and conditions of the private loan.

For example you may only want the loan for around 6-8 months if you
plan to refinance the property onto a traditional buy-to-let mortgage (if
you need quick finance/property is not mortgageable or you need 100%
finance) or for around 4-5 months if you know you are going to flip the
property for quick profit.

Or you might offer a longer 5 or 10-year term if you plan on holding the
property for a long-term rental.

As the agreement is essentially a blank piece of paper you can control the
loan conditions, such as not allowing a redemption penalty for paying the
loan back early.

This could mean huge savings down the road, something not available
with the majority of high street lenders.

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Advantage #4: Reduced Fees and Costs

You can negotiate private finance so it’s less costly than high street loans
or bridging finance.

Bridging finance and even mortgage loans can be VERY costly with upfront
fees, interest, exit fees, hidden legal fees and other costs factored in.

Private finance usually have none of these ‘lender fees’ (unless you’re
dealing with a sophisticated investor-lender) so the total costs of private
money can be a lot cheaper than conventional loans.

Advantage #5: Flexibility

Private finance can provide tremendous flexibility for both you the borrower
but also for the private lender too.

For instance, you can pool together smaller amounts of £5000- £10,000
to fund larger purchases for commercial property purchases which can fit
the needs of the lenders too.

5. JV partners
Anyone who can fund your deal, or partner with you by offering other
value propositions such as contacts and complimentary skill-sets, can act
as a ‘leverage partner’ in your property business. Like private investors
or bridging lenders, instead of paying the JV partner back with interest,
usually the structure will be the equity and cashflow will instead be split,
either equally or on an agreed basis.

There are two main types of JV partners: Sophisticated and Non-

Sophisticated. The Sophisticated Investor is a professional, investing and
lending for a living, and the Non-Sophisticated is a non-professional
individual. Horses for courses as you’ll discover in this book.

The Sophisticated Investor:

1. Venture Capitalists (super heavy weight)

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2. Angels (heavy weight)

3. Private investors (super middleweight)

These investors are the pros. They do it for a living. You don’t need to
teach or persuade them to lend you their money, you’d be stuffing eggs
in their mouths. The money flows. 7 figures, 8 figures, if the deal is good,
the money is too.

You don’t need to persuade them to lend or invest, you need to persuade
them on you and the deal. But you’ll pay for it. They’ll demand more
returns and more control than a Non-Sophisticated. But you’ll learn from
them. You’ll get great contacts from them. They’ll leave you to it (while it is
going well). They’ll want to give you more and more (while it is going well).

But if and when it goes wrong, they’ll often apply more pressure than a
Non-Sophisticated investors. You’ll feel like you’ve borrowed from a bank.
They’ll have some nice tight security, and you won’t mess them about.

The Non-Sophisticated Investor:

1. Family

2. Friends

3. Solo-preneurs

4. Biz Opp Seekers

These investors are not professional lenders or partners. They may never
have done it before. They need persuading on investing first, you need to
take a step back. Order another copy of this book and get them it to read
it. Sometimes they’ve been brought up to save, work hard, pay off their
mortgage and retire – the exact opposite of leverage.

But, everybody with money has the same problem right now: they can’t get
a return in the bank, stocks are volatile, government backed investments
aren’t as secure as they used to be and people have lost faith. They’re
motivated. They need to do something with their money, they’re losing

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on it right now and they just need to work with someone they trust. They
need help.

They’ll be a little more worried about where their money goes, they’ll want
more regular communication and they’ll feel the ride of the rollercoaster.
But you’ll get more flexible terms, they’ll likely be more forgiving at times of
market change, and if things go wrong (which they always do), you can talk
to a real person and you can come up with solutions. They’ll probably expect
a little less return (bank beating 5% might be good enough) and you’ll make
a bigger difference to their life when you make a bit of money together.

If you want a detailed synopsis on JV finance, and the exact Blueprint

how to, here’s what you need to do: in the picture section of the book
we’ve printed out the Progressive *Be Your Own Bank* Joint Venture
Blueprint. This is a model built over 7 years and £26m of JVs (some failed
ones that taught us the most). Study it.

If you want to download this Blueprint, along with a detailed document on

how to raise the finance and put the money in the bank, here’s our gift to you:

www.beyourownbank.co.uk

This is a subject on it’s own, that could take up another 500 pages. When
you’ve read the detailed section on JVs in ‘Cash in a Property Crash’ drop
me a line at rob.moore@progressiveproperty.co.uk

and I’ll point you in the right direction of what to do next, how and where
to meet the people, and I’ll put you in touch with the community members
who might want to JV with you :-)

An inspiring example:

Here’s an example from Halstead Ottley, a member of the Progressive VIP

Community:

A sports centre manager, he has always been interested in property and

over a period of two decades, bought 12 properties, the traditional non-

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leveraged way. And of course, they’ve done OK for him, but not quick
enough.

Halstead’s real passion is sports and martial arts. In his spare time he
teaches karate, and gave an acquaintance of his some free one-to-one
training sessions. Imagine a fairly small, light unassuming guy throwing
people twice his weight all over the place (gently, of course) ;-)

And while this is happening, imagine discussions about property investing

(in mid-air perhaps).

Within a few months Halstead had released over £1million from this person
he trains, and none of it was while he had him in an arm bar!

Halstead has now built a £million plus cashflowing property portfolio, and
he has achieved more in the last 18 months with his JV partner, who is
100% financing the deals, than in his previous 2 decades doing it the old
fashioned way!

In over 20 years he bought 12 properties, and in just over a year with Progressive
he bought another 8 to get him to over £3K net cashflow per month.

You can watch his video and get in touch with him to hear this personal
story from the man himself, here:

www.progressiveproperty.co.uk/real-successes

Mortgage Hosts

Even if you can get a mortgage, you might not be able to get many, as the
banks chop and change how many they’ll give you. One month it might be
£10m of property, the next it might be 3 properties only! Depends what
side of the bed they get out of!

Like it or not, you will need (someone) to get mortgages, even if it isn’t you,
to build your portfolio, so the ‘Mortgage Host’ strategy is very important
now. What if you have 3 mortgages already with BM or TMW, and you

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can’t get anymore? What other strategies do you have as a back up?

A Mortgage Host is someone who will take a mortgage on your behalf. It

might be because you have too many properties and the bank won’t lend
you any more for any more. It might be that you can’t get a mortgage, and
it might not be anything within your control. It might be that you don’t want
one in your name. It might be that you need to save them for a rainy day.

A Mortgage Host could be your JV partner, it could be your Mum. It is

anyone who takes a mortgage on you or your partnership’s behalf, whether
active or silent.

Get a good broker

Forget high street banks, forget standard high street ‘sausage-machine’

brokers; get a specialist who is fast, efficient, knows how to make things
fit to get you a mortgage, and has property specific knowledge and
experience.

A property specific broker will know how to ‘position’ you to the lender,
they’ll know the best products for your strategy, they will learn from other
big investors for whom they broker, and they’ll work with you as much as
they will with the lender.

WeUnderstand the fundamentals

have some great brokers in the of finance and
Progressive how you
Community can use
– independent
bor-rowed money to invest in assets. Use leverage but don’t
but aligned with the members. Feel free to contact us to get in touch over-
with
gear. Build a team of finance experts and a large credit line
someone who can help you raise capital to start investing or mortgage to call
uponto
finance when
buildthe deals
your find you, and guard your credit score with your
portfolio.
life. Use the 7 types of investor/JV partner to build a safer, quicker
and more cashflowing portfolio.
Summary

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#21. Creative Finance & JVs

What’s the big thing that stopped us all getting into property for so many
years? What’s the main thing that held us back in the recession? And what
is the thing that most people complain about never having the most?

You guessed it. Money. Or rather the lack of money.

But people don’t have a balanced understanding of what money is and

does. The proven fact is that there is more money around now than there
has ever been. The governments are printing more of it in the long term
(inflation) and the short term (quantitative easing). The amount of money
in the global economy is ever-increasing, even if/when the relative value of
money is decreasing with inflation.

There are more people becoming millionaires and billionaires faster, and
younger, than there ever has been. Fact. A 17 year old ‘kid’ gets $30m for
selling an App to Yahoo. Money moves faster than ever (the speed of light
via fibre optic) and the barriers to entry to make money are reducing all the
time (all you need is a WiFi connection).

Most Entrepreneurs and investors are self-made, starting with little or

no money. Fact. The number of people doing this is going up and up all
the time. No point putting the figures here again, as they will go out of
date very quickly. As the population increases, as more money is printed
and as technology advances, there will be an ever-increasing opportunity
to make and attract more and more money. As the word gets ‘smaller’
with the speed at which we share and access information, the enterprise
opportunities increase.

So, the fact is that your lack of money is not a disadvantage, and if you think
it is, it is because you are looking at different ‘facts’ about what money is
and how you attain it, that have become real to you, but aren’t actually facts
- such as ‘there’s no money around right now’ or ‘I can’t afford it’ or ‘making
money is hard’. The real facts are that there is money around, you can afford
it if you look for it, and making money is getting easier and easier.

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“If you think you can, or you think you can’t, you’re right.”
- Henry Ford

You’ll run out anyway if you buy enough property, even Lord Sugar would.
So learning how to find and pull in money is more important than how
much you have or haven’t got right now. Being your own bank is not
about the balance of your account, but the creditworthiness that the world
perceives you have.

I (Rob) started with minus almost £50k in various forms of consumer

debt. Deena Honey in the Progressive Community started with minus 6
figures and raised £500k within a few short months within the Progressive
Community. Kam Dovedi started with minus £155k in credit card debt and
built a portfolio of over 30 properties. And there are hundreds of other
stories just like it in the Community.

They did it and you can too. Because like anything you become good at,
it’s a learned skill, not a born right.

Creative financing is about creating value. It’s about spotting an opportunity

to make money, offer fair exchange, and providing value or service that
benefits others to attract the money from them to you. Money moves at
the speed of light. It will move at the speed of light from your JV partner to
the solicitor acting on the purchase to the vendor selling the property and
the money from the bank will move at the speed of light through a similar
channel to the vendor and the contracts will be exchanged and completed
and you will own property without seeing the physical money. And the
cashflow will travel at the speed of light into your property account.

There’s roughly, and ever-increasing, $55trillion of worldwide money

cycling around the world economy. Each dollar (or currency equivalent) is
getting used and reused thousands of times! If you’re not finding it, you’re
either not in the right places or you’re not creating the value. Money moves
from those who value it least to those who value it most.

Get yourself in places where there’s a large flow of money.

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Have you noticed that the rich hang around with the rich?

Have you noticed that the rich get richer and the poor get poorer?

If you frequent places where lots of money flows, and you learn the
mechanisms of value exchange frequently used (it will be consistent;
property, business, venture capital, start up, etc), mindset (large scale,
abundance, service, vision) and relationships the wealthy have, you will
become it. More money will move your way. Go to charity balls, functions
and grand openings, high-level business networking, talks, courses
and seminars, expensive gyms, flying clubs, trips to Monaco and Grand
Cayman, business angel events, exotic holiday locations; anywhere where
there is a lot of money moving, and you will receive more of it.

Here are some ‘creative’ methods of raising finance. To define ‘creative’ in this
context is simply to say ‘what the poor/finance limited people don’t know’.

Joint Venture (JV)

A Joint Venture (JV) is a method of creating finance. You have the deal
that has profit locked in, or value that can be added through refurb or
conversion or resale, your value is in finding it and managing it, and the
JV partner will fund the deal. This can be a share in the property with a
sophisticated investor, or a loan agreement with a charge placed on the
property for security. Joint ventures can take other forms such as setting
up limited companies or LLPs and divvying ownership of the companies in
shares. JVs could be skillset related, such as JVing with a builder who does
the work for free and even puts funds into the deal, or a skilled/experience
planning or project management specialist.

Start up capital
Start up capital is capital injected into your business or venture to get it
started. This is a huge, high risk and sometimes speculative industry, where
angels, VCs and dragons invest their cash for a share of the business. In
addition to the cash you can often get the experience of a heavyweight

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investor who has great knowledge and contacts, and you can grow faster
than on your own with little capital. There are many ‘angel investor’ or
‘business angel investor’ events across the UK. Type those keywords into
Google, go along and witness or even be part of your very own Dragon’s
Den. You’ll make some amazing contacts and learn a whole new world of
money you never knew existed.

Options
An option purchase is a method of creative finance. You don’t have the
funds to buy and take out hefty mortgages, so you take an ‘option’ to
purchase (which costs virtually nothing, just legal fees and an option
consideration sum), giving you full control and benefit of the cashflow,
equity and growth (and the responsibility), but without much of the
downside risk. You can take income now and purchase later, should you
choose to. You can choose not to complete on the deal too. Business
specialists have been using options to ‘buy’ businesses ‘no money down’
for decades, where you pay the purchase price later, within a mutually
agreed timeframe. You can turn the business around, make it profitable
and pay the purchase price out of the profit.

You can be creative and bespoke with terms. If the vendor wants a higher
price, you can request longer to pay the higher price. The option agreement
secures the future purchase to you and the timeframe, and the rent or
property growth can fund the future purchase.

Rent to rent
You find large properties to rent from landlords on a single-let tenancy,
and then let out the property by the room, thereby increasing the cashflow.
Because you rented the property and didn’t purchase it, you found a way
to reduce input costs to small-scale refurb and one month holding deposit.
You’ve added value by creating a service and profit centre that wasn’t
already there, and that has attracted the opportunity or the ‘finance’ (or
replaced the need for the finance).

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Make sure you get good training and experienced advice from legal
professionals when undertaking these types of agreements.

Crowdfunding
Many people recognise property as a solid investment that can produce
both income and capital growth, however, it has several draw-backs.
Traditionally, it has only been those who have access to large amounts of
capital that have been able to benefit from the financial gains property
investment can deliver. Further, it is by no means a passive investment and
can take up a lot of your time, particularly as your portfolio grows. And
as an amateur landlord you are also likely to make many mistakes … and
mistakes in property can be very costly, especially if you have tied up all
your available capital in just one or two properties.

Property crowdfunding has democratised property investment. It enables

virtually anyone to get involved, not just those with piles of cash to invest.
It enables you to use small amounts of money to invest in property and
benefit from both rental income and capital growth but without the
hassles usually associated with investing by yourself.

Crowdfunding, and property crowdfunding in particular, has taken off in a

big way over the last few years and is now a multi-billion pound industry.

Like many good ideas, it is inherently simple. Property investing has

conventionally delivered good returns, so why not let people pool their
cash to purchase property and share in the returns from rents or sales.
Property crowdfunding enables finance for a property or development to
be raised from a large number of people usually via a website. Often people
can invest with small amounts – from as little as £50 on some websites,
although most require £500 or £1,000 as a minimum investment. You
simply register as an investor on the website and select those properties
you want to invest in. You will often be investing in shares of a limited
company (an SPV – special purchase vehicle) set up solely to purchase
that property. In that way, your investment is ring-fenced and your money
protected should the crowdfunding platform run into financial problems.

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There are a growing number of property crowdfunding companies. The

longest established platform is The House Crowd, followed by others such
as Property Moose, Crowd Property, Property Partner and Crowdlords. A
quick google check will find many more.

Is It Regulated?

Due to its growing popularity, not just in the UK, but around the globe,
regulators have become concerned about the risks involved in crowdfunding
and the potential mismanagement that might occur. The Financial Conduct
Authority, otherwise known as the FCA, put some controls in place to try
and make investments and the risks clearer to potential investors. It’s worth
noting that firms that are regulated by the FCA will have details of their
authorisation number on their website. If you can’t find these details then
you may well be dealing with a crowdfunding company that isn’t regulated
by the FCA meaning they could operating illegally. So, when investigating
potential companies to work with, this is one of the key issues to check.

Is Property Crowdfunding Right For You?

Whether property crowdfunding is something you should consider, will

depend upon your circumstances, your experience and what you want to
achieve.

If you are a full-time professional property investor with access to bank funding
then you probably won’t need crowdfunding. You know you can invest
yourself successfully and keep more of the profits (after paying off loans).

If, however, you are a developer who is finding it difficult to get bank
finance or you are a part-time/ novice investor who does not have a deposit
available or the ability to get a mortgage, then it may be worth considering,
especially if you are fed up with your savings sitting in a bank account
losing value every day or you’re worried about the poor performance of
your pension or ISAs.

Crowdfunding has opened up property investing to everyone and made

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investing in property as easy, simple and safe as possible, but, as with any
investment, there are pros and cons.

Some may argue that investing with a company who sources, purchases
and manages the property is a way of mitigating your risk as an investor. In
essence, when you invest in a crowdfunding platform you are leveraging the
skills of others in order to generate a financial return. This option is often
attractive to those individuals who don’t have the time or experience to
invest in property themselves, however, they want to invest in the property
sector and see property crowdfunding as a way of achieving that objective.

Crowdfunding is also an option for individuals who have a pot to invest but
perhaps it isn’t a large enough pot to invest in property themselves and,
in essence, that is one of the attractions of any crowdfunding platform. It
allows individuals to invest in businesses, ideas, property etc. by teaming up
with others. Rightly or wrongly some people feel they are less exposed when
investing in crowdfunding platforms as they are investing along with other
people. However, others may argue that just because several people are
investing in something it doesn’t necessarily make it safe or mitigate all the
risks – many of which are exactly the same as investing in a property yourself.

Some people do not like the fact that investing in a crowdfunding platform
means you lose control over the assets you have invested, as you will be
reliant on decisions made by others or on other shareholders voting the
way you would like. You can select the properties you wish to invest in but
have to accept that you will have little or no control over the management
of the property. For many investors that hands-off service is appealing and
for others the lack of control will put them off. A lot depends on the
individual, what they want to achieve and why, and what level of risk they
are comfortable with.

Whichever crowdfunding platform you use you need to trust the people
behind it – there are a lot of rogue operators in every area of the property
industry and property crowdfunding will no doubt attract some unethical
operators too. Do your research and choose a reputable operator.

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Yield v Capital Growth

As with any property investment the same general principles apply - profits
from capital growth are speculative and if you want to minimise your risk,
you should invest in those properties that produce a healthy cashflow. If
the property is putting money in your pocket every year then you will not
be under pressure to sell and can wait for the optimum time to liquidate
and benefit from the capital appreciation.

The biggest risk associated with investing in cashflow positive properties is

damage and/or non-payment of rent. This does need to be factored in as
it will happen at some point and yields will be affected. One major benefit
of crowdfunding is that if you diversify and have money spread over ten
properties, the losses caused by one bad tenant are easier to bear than if
you had all your money in that one property.

Leverage

Probably the biggest drawback to property crowdfunding is that you lose

a large amount of the power of leverage. Although you are using other
people’s money to an extent you will only benefit proportionately. If, on
the other hand, you are comfortable with the risks of leveraging yourself
highly with a bank and pay a low interest rate then, if things turn out well
and you sell at the right time, you will stand to make a lot more money as
you will not have to share the benefit of the capital appreciation. It really
depends upon your appetite for risk.

Which Platform Should You Use?

The 7 essentials of crowdfunding

If you think crowdfunding might be for you, the 7 essential points to

consider when choosing a crowdfunding platform are as follows:

1. Returns

The first essential is the most obvious: What are the returns on offer? The
returns you will receive are based on how well the property performs, so a

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useful guide is to see where the properties are based and how well rental
yields perform in that area. Then ask yourself: “Do the yields being offered
by the platform beat the averages for that area?” If not, and you think
you could do better yourself, then the question arises as to whether it is
worthwhile working with that platform.

Check how far the promised returns are free from other fees, and make
sure you are clear on the actual return on investment after all other costs
have been deducted.

2. Security and Risk

The target demographic for most property crowdfunding companies tends

to be people who are unhappy with conventional savings accounts and
disgruntled landlords. And this target group tends to be risk averse. Ask:
How will my investment be protected? If it goes wrong, how much equity
is there to enable me to recover my money?

Buy-to-let with no mortgage = lower risk/decent return.

Development finance with little security = high risk/high return

It’s all very well a platform offering a high return, for example, on a
development finance deal, but what happens if the developer goes bust
(as happens fairly frequently)? What security is there in place to recover
your capital?

Unless there is sufficient equity in the property you may be at risk of

losing some or all of your money. Standard buy-to-lets are generally more
secure as the property already exists and there are fewer things that can
go badly wrong. But in a longer term buy-to-let investment you should
make sure they are protected either by ownership of the property via their
shareholding in an SPV or a charge registered at the land registry.

What happens if your dividend is not paid? This could be a risk if there
are 3rd party landlords/ developers involved where they simply do not

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pay the dividends that are due. If that happens, how are you protected?
For example, is there a default mechanism in the SPV’s articles allowing
shareholders to force a sale if the returns due are not paid.

3. Background of the Principals

The third essential is finding out: Who are the people running the platform?
After all, it will be their judgment about the right investment properties to
buy. Look for people who have a proven track record in property investment.
Look for people who are experienced investors themselves with a portfolio
of their own properties. Otherwise it could be a run by people looking to
jump on property crowdfunding as a lucrative bandwagon.

As anyone who has bought their own buy-to-let knows: managing

property, even through agents, is troublesome and things go wrong. You
need to be confident that the people protecting your investment have the
knowledge and ability to make the right decisions.

4. Is the investment being offered by a company associated with the

platform itself or an unrelated third party?

The fourth essential contains key information that should prove easy to
access. Ask yourself: do the platforms provide their own properties and third
party offerings, or just their own properties? If it is an investment being
offered by an SPV associated with the platform itself then it tells you that the
platform is fully responsible for the investments and delivering the returns.

Be wary of platforms which may focus on raising funds for anyone who
wants to list their investment on the site (and earn money from doing
so). Platforms with integrity, which care about long-term reputation, will
conduct serious due diligence on the investment and the people behind it
before allowing them to promote on their platform. So if the investment
is being offered by an unconnected third party (e.g. a private landlord or
property developer), then you should ask what due diligence has been
conducted on that third party, consider what their track record is and
look at what additional safeguards are in place. If you are investing small

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amounts it is unlikely to be worth suing them if it goes wrong, so make

sure they have a good credit rating and a solid reputation.

5. Track record of success and transparency

The fifth essential may seem fairly obvious but isn’t always apparent. Check
the track record.

There are companies now who have been trading in property crowdfunding
for more than a year so should have a track record to shout about – if they
don’t, you have to wonder why.

Check how long the crowdfunding company has been trading. Can they
show a history of successful investments and a track record of paying out
dividends on time? With regard to transparency, do they make you aware
of all downsides as well as the benefits to the investment?

6. Exit

The sixth essential is how easy is it for you get your investment back when
you want to.

One drawback of property crowdfunding is that as an investor you will

have little control over when the property is sold. It is probably not the
right investment for you if you think you might need your money back
at short notice. With most platforms you will be making an investment in
shares which improves liquidity to some degree but it still may take a while
to sell those shares and there is no guarantee you will be able to do so.

Check the small print to see if the companies will assist you in finding a
buyer for your shares. It’s unlikely there will be any guarantees to do so
but you can find out how likely it is.

7. Customer service

The final essential in finding the right property crowdfunding platform

for you is that hardy perennial: customer service. There is nothing more

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frustrating than working with a company who do not look after you once
they have taken your money.

There is no way to know this definitively but see how quickly they respond
to enquiries and deal with complaints. Are they helpful and informative
in dealing with you or come across as pushy sales people? Are there
testimonials and case studies on their website? Search online for their brand
name to see if people have taken to forums to complain about their service.

And, finally, what about the other side of the coin…

Raising Money For Your Own Projects via Crowdfunding/ Secured

Peer 2 Peer Lending

Crowdfunding can also be a way to raise money for your own projects
without going to banks. The good crowdfunding platforms will want to
see that you have a proven track record and will undertake appropriate
due diligence on your opportunity before allowing it to be promoted.

Each crowdfunding site operates in a slightly different way and accepts

different sorts of deals. Lend Invest or Crowdproperty for example will
make secured loans against property, CrowdLords offer landlords and
developers the ability to raise money on a shared equity basis. And The
House Crowd offers both shared equity deals and secured loans.

Secured loans offered on crowdfunding platforms tend to be short term

and you are likely to be paying a significantly higher rate than a typical buy-
to-let mortgage, but less than standard bridging loan rates.

There is no guarantee that you will be able to raise the money and it will
obviously depend on how attractive the deal is for investors. If you are
prepared to share the profits though it can reduce the risks, as you will not
be obligated to make mortgage payments every month.

It works particularly well for short-term develop-and-sell projects, as it

means you simply share the profits out when the property is sold. Longer
term B2L Joint Ventures will involve a considerable amount of administration

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to keep investors updated and pay out dividends on a regular basis.

Here is a guest section from Frazer Fearnhead, founder of The House

Crowd property crowdfunding platform:

Finance evolves in line with evolution itself. Who’d have thought that we’d
be paying by contactless and Apple Pay just a few years ago. Someone has
a finance problem, and then those with vision look to solve it. Peer-to-peer
lending and crowdfunding is quite a new finance innovation. There will be
many more. Strategies to move money your way will evolve too, so keep
learning, growing and innovating, always searching for a faster, easier
way to attract finance. Keep your creditworthiness high (credit, brand,
reputation, financial footprint, etc.) and surround yourself with finance
innovation, as this is the new age ‘bank account’.

Development finance
Raising development finance through online Platforms

As above, crowdfunding is a platform of peer-to-peer lending, where you

can raise small amounts of money from a large number of people.

Typically this is done online, although it can be done through networking

groups through syndicate pool funding. From our experience we have raised
over £1.5m in the last 12 months alone to fund 2 specific development
projects from a couple of different sources.

Our primary focus in this section is to demonstrate how to raise money for
development projects. There are many different crowd funding companies
out there, all offering different rates and terms but for the purpose of this
book, we are going to focus on what we know, and how to raise money
from online portals.

How to do it

You might have had a personal experience in raising finance through

crowdfunding, and we are sure you found a fantastic way of finding money.

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For those who haven’t used this method, there are a number of benefits
to crowd funding. For one, the interest rate is fixed, so you know exactly
what you are going to be paying back including the interest accrued. This
helps in planning your deal from the start.

Generally, as long as you are organised and you can get your paperwork
together, crowdfunding is a relatively quick, and simple process. A good
broker can really help you in getting what you need to submit as a deal
to the crowdfunder.

I don’t know if you can relate to this, but, if you’ve ever tried raising private
finance before, it is necessary you reach out to investors, speak to them, pitch
or propose your idea about your specific project you have in the pipeline.

Well, with crowdfunding, the investors will find YOU! How does that
sound? As long as your deal stacks up and you’ve processed all the necessary
paperwork. Your deal will be posted on the platform for investors to look
at and invest in. You might be thinking investors won’t pick your deal, as
there may be better offers out there?

The most important part of getting a deal funded is finding a good

broker who can guide you through the process. Their job is to make sure
that you get everything you need in place to submit a deal. So let’s talk
about how to submit a deal.

How to submit a deal

When we’re talking about a deal, we’re talking about a development.
Once you have a development that you are expecting to get funded, you
will need to do a bit of due diligence before-hand.

This is very important in appraising a deal. Making sure it stacks up from

the beginning is key to your success. There are two possible exits when it
comes to developments. One, which is probably the more traditional way,
is to build and sell. What we do, is build and keep or build-to-let.

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How do you like the sound of building your portfolio literally? Once you’ve
built the properties, you can, in most cases, commercially mortgage the
properties onto longer term finance. This doesn’t work on all sites, so every
development is different.

Once you have done your due diligence, you can then submit your deal to
Funding Circle. You will need to send an application in, along with your
account details and previous track record in development.

Before your deal can be uploaded onto the platform, an independent

evaluation and survey of the site will need to be done.

As long as the deal stacks up, this is usually enough to have your deal posted
onto the platform to start getting funded. What happens now is, various
investors invest small amounts of money (in most cases) into your deal. This
could vary from £25 to £1,000s. You can actually see your deal getting
funded. On the Funding Circle website and the mobile app, you can actually
follow your deal and watch it go up... 17% - 48% - 79% - 100%!!!

Typically, once your deal is on the platform it has 14 days to get filled. (In
our experience, about 10 days was the maximum amount of time) but this
will vary from deal to deal depending on the size of the loan.

Funding circle will lend a maximum of about 70% of the total costs. This
includes the purchase and the build costs.

However, they may give you up to 100% of development finance if you

own the land outright. This is their security measure in the deal. Once your
loan has been filled, the necessary paperwork and legal work, normally
take a few days/weeks before you receive the first tranche.

When you receive your first tranche, the interest payable on the loan is
deducted from the loan before you receive it. You don’t have to pay the
interest at the end as was deducted from the start. There is a benefit to
this. If you pay back the loan before the agreed term, there are no early
redemption penalties to pay and what’s more, you only pay interest on the

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term you’ve borrowed. For example, we paid back our loan after 11-12
months. Our term was originally for 18 months, so we saved ourselves
around £13,000 of interest.

Here we’ll share one of our developments where we used Funding Circle
as a route for our development finance.

We had heads of terms back from Funding Circle very quickly as we had
sent them a viability study showing them that there is a demand for the
houses we were building in the area. As the development finance was
new to Funding Circle and us it took a couple of months. However they
agreed to give us 100% of the development finance, as we owned the
land outright. (They will do that with any deal where the land or building
is owned outright) We got £462,000 in total. We received this over 3
tranches. When we first looked at this deal we had 2 exits, sell or keep.
Both worked quite well, but we eventually decided to keep the properties
and build our portfolio.

You might still be thinking this isn’t for you. That’s fine. But we feel anyone
can become a developer. Even if you have no previous history of developing
there is a way you can become a developer. What about if we told you
how you could become a developer with no experience? What if, you
Joint Ventured with a builder? That way not only would you have the past
experience to submit to Funding Circle. But your builder will have interest
in the job and will be more likely to stick to budgets and timescales.

You might be thinking, it all sounds good, but you don’t have any money?
Well, hopefully this section has made you think that getting development
finance is easier than you thought? Have you ever heard of the phrase ‘cash
rich, time poor’? People have money to spend but not enough time to do
anything. There is money out there; it’s just about finding the right deal.

So you don’t need experience per se and you don’t need money, but what
if you have no time? This is where you can leverage your time with your
builder. It’s not your job to be on site, it’s theirs. Yes, you will need to spend
some time on site now and again to check plans, discuss options etc. but

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you don’t need to spend all day everyday there.

To sum up, whatever kind of developments you are seeking whether

this be new-builds, residential or commercial, part-build or conversion,
development finance will likely be the route you will need to take. Funds
will be released in stages and repayments can be deferred until such time
you exit the project. Each project will be based on its own merits because
the transaction will never be the same as another.

This guest section was from Andi Cooke and Lloyd Girardi, hosts of
Progressive Property Network, Northampton.

Summary

You don’t need huge deposit pots to start in property, you need a
creative mind to add value where it didn’t exist before. Create value,
offer a service and look for innovations in raising finance. There is an
abundance of money that moves from those who value it most to
those who value it least. Go to places where there is lots of money,
learn the strategies that wealthy people know, and money will flow
to you. Enterprise creates finance.

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#22. Yield & return(s) on investment

Yield is the investor’s (universal) way of gauging a return on a prop-erty
investment on a yearly basis, calculated as a percentage of its value (where
value is purchase price plus refurb).

A £6,000 yearly rental income return on a £100,000 house is a 6% yield.

Note this does not include capital growth/equity, as this isn’t income. It’s
the percentage cash you get out of your investment.

Yield actually has many variations. To a professional property inves-tor,

the two main and most universal calculations are gross yield (Gr) and
net yield (net).

Gross yield is the gross return (before costs) on the value of your property
through rent on a yearly basis, expressed as a percentage. As per the
example above: £6,000 return in rent (£500 per month) on a £100,000
property is a 6% gross yield: the return before costs are taken out.

A nice easy way to calculate this is to multiply rent (500) by 12 and divide
that by value (100,000) and you will arrive at a one hundredth decimal
figure: In this case 0.06 (or 6%). Then multiply this figure by 100, though
looking at it you can see what it is without having to do the final x100
calculation, simply take the first 2 noughts off.

The obvious difference between gross yield and net yield, is that the net
figure has all the costs taken out, and so is the cash you are left with.
This is the return most relevant to you, and the reality of your purchase in
terms of income you are left with. If this is the case then why is gross yield
even relevant? Surely the only relevant figure is net: the real cash that goes
in your bank?

Gross yield is the barometer, the gauge, the most universal and con-sistent
way of measuring the viability and potential cashflow/return of a purchase.
You have to have a common, accepted way of benchmarking; a way of
comparing asset for asset, like for like. You cannot compare net yield on

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properties on a like for like basis, be-cause the costs are variable between
any individual investor.

Variable costs that contribute to net yield are cost of finance, letting
and management, voids, bad debt, insurances and regulations and
maintenance, and these vary totally from investor to investor, area to area,
depending on many factors such as level of experience, cost of local trades
and so on.

But a house is purchased for a fixed cost, and the rent is a fixed cost, and
so properties can be measured against each other and compared.

In the instance of the £100,000 property with a £6,000 yearly in-come, to

increase the (Gr) yield, you either buy lower, or get a higher income (rent).
Buying at £60,000 would give a 10% yield, or getting £600 per month
(£7,200 per year), would give a 7.2% yield (gross). If you reduce or have
no refurb cost this can increase the yield a little.

If you have a refurb on a property, we see that as a cost associated with

the purchase price, and so you should add that on to the yield calculation.
If the refurb was £5,000, then you use £105,000 as your calculation for
gross yield.

Why? Because it is a factor of the buy price: you got it cheap because it
needed a refurb, and you needed to do the refurb to add the value. The
refurb is part of the value.

The updated calculation is rent x12 divided by purchase price plus yield x 100.

Net yield is the return on the value of your property through rent on a
yearly basis as a percentage, minus any additional on-going costs relating
to the income (not the capital). Those income costs are cost of finance
(mortgage, bridging loan, JV funds, cash), letting and management, voids,
bad debt, insurances and regulations and maintenance.

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The calculation for this is rent x 12 – costs divided by purchase price minus
refurb x 100.

The gross yield calculation enables you to quickly work out, on a beermat
or on a viewing, if a property is a buy or walk away deal. And you need
to be able to work that out quickly. Then you lose fewer deals as well as
impressing estate agents with your speed of decision, and how professional
and knowledgeable you are.

But how do you know what a buy, or walk away, gross and net yield figure is?

You calculate ‘Cashflow Benchmark Neutral’

In order to know what is a good gross and net yield (which varies area
to area and strategy to strategy), the important figure is ‘Cash flow
Benchmark Neutral’. This is the figure where the net yield is zero (neither
positive nor negative). Anything in the negative is a walk away deal, and
anything in the positive (or a minimum positive criteria set by you) is a deal
to buy (based on yield and not other factors).

How to do it:

There are 2.5 ways to calculate a ‘Cashflow Benchmark Neutral’:

1. Work out all your own costs on the individual deal.

2. Work out an average cost across your previous deal.

2.5. ‘Benchmark’ our average cost across almost 600 purchases.

Actual costs of running a portfolio will vary investor to investor, and actual
properties in your portfolio will vary property to property. If you want to be
specific, detailed and exact (as much as you can), calculate all the projected
costs of running your property, project them forward through the year and
deduct them from your gross yield.

How would you know exactly what those costs would be? You never will
to the pounds and pence, no matter how long you’ve been doing it, but

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experience will get your guestimate much clos-er/more accurate. The best
gauge is experience of like for like prop-erties, so following step 2, using
your data from previous properties, will help you to project forward. Get
all the costs for each area (listed in this section) and average them out over
the years and properties.

What if you don’t have much experience or historical data? Then use step
2.5, and benchmark us. I (Mark) have been tracking our properties bought,
sold, still owned and in our JV portfolio, and have averaged out all costs
based on this history. Although you might accuse me of being a bit anal
here (at least Rob will), this is now very accurate – but only as an average.

Our figures show that ‘Cashflow Benchmark Neutral’ on smaller single-lets

moves between around 5% (low cost of finance) and 9% (high cost of
finance). Here’s how it breaks down:

1. Cost of finance

This is the biggest cost, and can be anywhere from 2-3% a year (old-er
rates linked to Bank of England base rate), up to 6% for a longer term
fixed rate mortgage. Call it 5% now/for the long (particularly that of the
Industrial age) term average.

2. Management

Based on 10% of rent, this works out to be around £700 a year, or 0.7%.
There’ll be other charges, so we call it 1% to be on the safe side. If you
self manage you might think you’ll save this cost – it will actually cost you
a lot more in non IGTs.

3. Maintenance

This usually adds up to around £200-£300 per property per year for a flat,
and £300-£400 per property per year for a house. We have got this down
considerably over the years and have good economies of scale. It could be
more (or less) when you start out). Call this 0.4% to be clear.

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4. Insurances & regulations

You’ll need buildings insurance, gas and boiler safety tests and so on.
0.4% a year should cover it.

5. Voids and bad debt

It takes us 8 days per property to rent it out, and we lose around the same
in bad debt per property. Again we have dramatically re-duced this over
the years, so your figures may be different. Good tenants first time, and
it will be less. Get your bad one right up front, and it will be more. 0.5%
should be enough.

6. Contingency

These figures will vary per property. Save 0.5% (£500 a year on a £100,000
house) just in case. If you don’t have it, you’ll need it. Known as Sod’s law ;-)

The total of all of these is 7.5. The best case will be around 6.7%, and others
could cost you 8% plus. This will be dramatically reduced or increased
based on the variances in the cost of finance. So on this averaged basis
gross yield under 7% means your costs will swallow any profits you may
have. Anything over 7% and your rental income will exceed costs and
you’ll make money. Just to reiterate, this will change as finance changes
so always adjust the main cost of finance figure accordingly when working
out your own ‘Cashflow Benchmark Neutral’ figure.

A 10.4% gross yield on a £100,000 house, will leave a ‘Benchmark’ net

yield of 3.4% a year, based on CBN being 7%. That is £3,400 a year, or
£283 clear per month. This is definitely achievable for you depending on
your Goldmine Area. We see yields of 6% or less in Central London and up
to 13% plus in extreme Northern areas.

Costs on a higher yield are often higher, so be careful not just to get lured
by very high gross yields, without evaluating what the risk is or what might
be too good to be true.

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Return on cash invested/employed

Yield tells you the return against the value of your investment. It’s also
likely that you’ll want to know the return on your invested cash (or the
invested cash), so you can compare against other assets and convince JV
partners and money lenders to lend to you for greater returns.

Return on cash employed (ROCE)

This is calculated on your income return on your investment as a percentage of

the cash you put in the investment. This has a gross and net calculation too.

Using the same example of a £100,000 property, let’s say you in-vested
£30,000 into that property. It gives you £600 per month gross rent,
which translates to £7,200 per year, or 7.2% of £100,000. Because the
investment only cost you £30,000 of your or your JV partner’s money, your
gross ROCE is £7,200 per year from £30,000, which is 24%.

This figure, presented to a private investor or JV partner, blows the return

from a bank or other investment vehicle out of the water. Even split 50-50
with your JV partner, it’s an excellent, market out-performing return. This
doesn’t even include any growth.

But it’s not the full ‘in the pocket’ story.

Net ROCE is calculated as the net income (after costs), as a per-centage of

the value of the cash invested (£30,000). A net return of 2% of £100,000
(£2,000 after all costs), equates to an almost 7% return. Still better than
the banks and many investment vehicles, and very secure.

How to create infinite ROCE/ROI

You’re probably one step ahead of us, and have already worked out how
to create an infinite ROI/ROCE on your investment. Using the Progressive
BRR strategy, if you Buy at a discount, add value through a Refurb, then
Remortgage to get your (or JV partner’s) cash back out, then your ROI &
ROCE is infinite.

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Use these formulas to assess any deal (quickly), and to convince JV partners
and private investors to lend their money to you or partner with you, as
opposed to other, less secure and lower return investments. The numbers
make you money, and guesswork and emotions lose you money.

Summary

Gross Yield is your quick benchmark to assess a deal compared to

other deals. Net Yield is your actual cash return on the value of your
investment. When you leverage, you can get double digit Return
On Cash Employed, and when you use the Buy Refurb Remortgage
strategy this means you can get up to an infinite ROCE for your (or
your JV partner’s) cash.

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#23. Leasehold vs. freehold (houses vs. flats)

You’ll often find one camp who believe that houses are best because they
don’t like paying ground rent or service charge on flats. Perhaps they also
don’t like the lack of control/dealing with the freeholder on what they
perceive as costly maintenance issues or the proximity of other tenants/noise
in the building. Some old school investors assume (incorrectly) that you have
to give flats back at the end of the lease, so are therefore a wasting asset. In
reality you can always force the freeholder to extend the lease.

Then you will have another camp who assume that flats make better
investments because they often have higher yields (lower purchase price)
and less maintenance to deal with, as the freeholder organises external
works for them.

As you may know, I (Mark) have had some experience investing in both
types of properties and although not meant to be exhaustive, the list below
reflects some observations of each type of investment property.

Advantages of Flats:

1. Typically lower entry purchase price than comparable houses.

2. You can find good quality flats for two thirds of the cost you would
pay for a house.

3. Traditionally higher cash on cash returns and yields.

4. Lifestyle trends may mean renting flats become more popular thereby
reducing voids as young people/people without children often like them.

5. Cost of maintaining the building is shared & the freeholder (or the
managing agent) will typically organise the work.

6. Short leases, absent freeholder; can all make the investment an

attractive proposition if you work on wrestling the freehold from the
owner by getting others in the block to join with you, enfranchise and
buy the freehold.

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7. Buying flats with management companies that have gone bust can
be cheap as they are often unmortgagble, fix the problem and the
value increases.

8. The cheaper nature of buying flats means it’s easier to buy a large
number to build up your portfolio.

9. You can spread your risk wider, which enables you to reduce the
impact of one of your properties being untenanted.

10. Secure bigger discounts by buying in bulk.

11. 1Strong demand in metro areas can cause prices to soar.

12. Easy to convert a flat to add an extra bedroom if flat currently has a
separate kitchen by moving kitchen into living room.

Disadvantages of buying a flat:

1. Some have high ground rent and service charges.

2. Harder to qualify for financing on a certain type of flats and LTVs
meaning lenders see flats as higher risk.
3. Smaller living spaces.
4. Less opportunity/freedom to add value without consent of the
freeholder (no ability to extend, covert a loft, add a conservatory).
5. Lower unique factor when the flat is situated in a large block.
6. Higher turnover of tenants.
7. Hidden high maintenance costs you didn’t perceive or anticipate that
could affect your investment returns as freeholders can use this as a
profit centre.
8. Harder to obtain finance on leases less than 80 years.
9. Value of the flat will drop quite a lot once the lease goes below 70
years, so a payment will need to be made to the freeholder to ex-tend,
say £10k-£15k on a £100k flat to take lease from 70 to 125 years.
10. Ground rents can increase a lot over time.
11. Share of the freehold can give the best or worst of both worlds

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depending how well others work together to maintain the property.

12. High-rise flats attract slower capital growth, council high-rise blocks
are often nearly unmortgageable.
13. Concentration risk of lots of flats in a block can create a short-term
oversupply, meaning voids or lower rental and capital values.
14. May not be able to convert the property into a HMO to reduce voids
and increase cashflow.

Advantages of a singe family house:

1. Finance for single-family units is more readily available.

2. More privacy and feeling of space for tenants and buyers.
3. They will attract longer-term tenants such as families with kids who
won’t uproot after 6-12 months and are more likely to maintain the
property themselves.
4. More potential for capital growth.
5. They have a larger land size value giving you flexibility to develop,
convert or extend to add value to flip or refinance.
6. A house will always appeal to a larger cross-section of buyers such as
first time buyers, investors and young families.
7. No high service charges or issues with ‘common areas’ not being maintained.
8. Ability to buy the property at market value, convert into multiple flats,
create leases and either sell/remortgage or a mixture of both.

Disadvantages of buying a singe family house:

1. Typically higher investment and start up costs.

2. A garden you may need to maintain.

3. Higher stamp duty & interest costs.

4. More wear and tear if families have children.

5. A house is more likely to be vandalised/boiler and pipes stolen if empty.

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6. Potential for more frequent maintenance and repair bills as there’s

more square footage to maintain.

7. Because of the lower yield the cashflow may be lower.

As you can see there are clear advantages and disadvantages with both
options. So which is right? There is no ‘right answer’.

Investors who are stuck on this question should instead be ask-ing: ‘What
property will deliver on my objectives and return the highest return on my
investment?’

What is clear is that regardless of your decision, you’ll most likely find
that both houses and flats will be a wise decision if purchased with a high
enough yield and at the right price. You’ll likely end up with a balanced
portfolio of say 70% house an 30% flats, or if in a very dense area it may
be the other way around. You will also be governed by what you find at
the best price/yield at the time and what deals the lenders are offering.

Summary:
Both have their advantages and disadvantages. Flats are usually
cheaper than houses so barrier to entry is lower, yield is higher and so
easier to finance than homes. Homes are easier and quicker to sell as
you have a much higher pool of buyers and don’t get lum-bered with
issues with management companies, less barriers to add value, service
charges, short leases which can make them unmortgagable, absent
freeholders, flats on one freehold - although, these can present an
opportunity for those investors brave enough to go against the grain.

So what type of investment property is right for you? There is no ‘right

answer’. Investors who are stuck on this question should in-stead be
asking: “What property will deliver on my objectives and return the
highest return on my investment?” Regardless of your decision, you’ll
most likely find that both houses and flats will be a wise decision if
purchased with a high enough yield and at the right price.

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#24. Never sell (buy-to-let)

If you buy well, at a good discount, with a good yield and a positive net
cashflow, why would you ever sell a deal? For quicker, bigger lumps of
cash, perhaps? Let’s discuss.

Pre-crash, and in the first 3 versions of this book, the title of this section
was simply ‘Never sell’ and the next section ‘Buy to sell’ didn’t exist.

Times have changed, new strategies develop, but fundamentals remain

the same.

If you buy well, and make your money when you buy, then you wouldn’t
want to sell properties, unless you want someone else to continue to
make the money after you sell it to them. This of course applies for asset
building purposes: for building a portfolio that will passively fund your
future pension plan, lifestyle and freedom. For passive income generation
and creating a legacy or dynasty.

It should be obvious that if you buy and sell, you never actually grow a
portfolio. Sure, you may make some (quick) cash, you may make a ‘living’
(you may also not), but you are exchanging your time for money, like a job,
and you only earn once on the asset.

You’ll never achieve true wealthy turning properties around on this scale.
It is generally too time intensive, there are too many variables that can go
against you: high disposal costs, low ROIs, risks and exposure to market
changes and one off ‘salary’ or consultant type income payments as
opposed to being passively and residually paid for life.

You can also end up inadvertently building up a capital gain by holding

properties if you access cash or renew your rates by remortgaging. If you
then opt to sell you could have a tax liability, so you need to be clear from
the outset if you have a buy-and-hold-forever, or a buy-and-sell-at-some-
stage strategy.

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If you want or need to create income quickly, in the first year, and you
need tens of thousands of pounds to replace your income or meet your
needs as you transition from a job to an investor, flipping (the right way),
can achieve these goals. Single-let properties net cash flowing at 1.5% to
3% will not meet these short-term needs. You could add single-let to your
70 or the 70-20-10, and buy-to-sell (flip) to the 20, buying a few properties
a year that you will hold forever for long-term income and capital growth,
and short-term ‘lumps’ of cash by flipping a deal or two.

It’s relatively easy, once you know how, to create a replicable system around
buying single-let properties at a 20-25% average discount (15% to 72% is
our range over the last almost 600 properties since the beginning of 2007),
and a net yield of 2%, or around £150-£200 net cashflow per month.

You might only need 20 of those to replace your earned income. You
might only need 30-40 of them to be totally financially inde-pendent. And
when you’ve owned that portfolio for a decade, you can at the very least
double those figures with capital and rental growth. So, every one you sell
just takes you a step back in that pension/retirement plan.

Building assets that you can get at discount to leverage your money will
generate for you mid-long term wealth. It is this mindset, rather than instant
gratification, that will guide you to financial success in your portfolio.

Here’s a recap of the benefits of holding properties forever:

1. You earn on it for life.

2. The income is (virtually, strategically) passive.

3. You can access larger lumps of cash through remortgage and never
pay capital gains tax (as long as you never sell).

4. You can retire on the income with a set strategy.

5. The process is systemisable, repeatable and predictable.

6. The model is robust through market changes.

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7. You compound your income and growth as you build a portfolio.

The longer you own it, the more powerful it becomes.

Of course there are exceptions, as there are to every ‘rule’. If you’ve

bought a ‘kipper’ (structurally defective, damp issues, lease problems, huge
shortfalls, above a kebab shop, in a war zone) then by all means get rid of
it. Learn your lesson (like we did), take your medicine and move on - fast.

You wouldn’t believe how many people we talk to wish they had not sold
their house 10 years ago: people who tell us that their old house is now
worth double what it was in that time, even after the crash. Here are some
figures to demonstrate:

You own one house that is worth £200,000 (an example: insert your own
figures here). That will go up £10,000 per year tax free (compounding -
going up year on year) at 5% growth (realistic).

You build an asset base following the rules: 10 houses worth £200,000
each = £2million. Your portfolio will go up £100,000 per year tax free
(on average and compounding year on year) at 5% growth. If each one
of those properties produces just a 1% net yield, that is a £20,000 (and
growing) yearly income. You should even be able to double that. Better
than exchanging time for money, right?

Then flip the odd low-yielder, or out of area, property here and there and
you have a semi-passive, high-income, robust property investing strategy.

To buy more houses/scale this model, you can remortgage proper-ties as

they go up in value, and recycle this cash into further proper-ty purchases.
You compound your results, as one property creates another, creates
another. You also don’t have to use hard earned, tax paid savings, so you
reduce your risk of capital and the time it takes to build your portfolio. This
is known at the BRR cash recy-cling technique, one of the best ways to
speed up and leverage the growth of your portfolio.

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It is important that you don’t go and spend borrowed (remortgaged)

money on liabilities (depreciating assets), otherwise you’ve doubled the
reverse compounding; you’re paying interest on something that is going
down in value. This is not smart.

It is also important that you watch your tax liability. You will owe Capital
Gains Tax as your property goes up in value, but only when you sell. If
you ever sell them, there will never be any CGT on them, and they go
into your estate when you die and any tax ‘converts’ to IHT. You will want
to make sure you are protected if you are ever forced to sell. You do
this by managing your properties well and ensuring they cashflow (then
you’ll never need to sell them), and by monitoring your loan to value (LTV).
If your LTV is high, then you have more exposure to market changes,
lender covenants and so on. If you keep your loan to value too low, you
are unleveraged, and not utilising your funds/assets for the best return.
Maintain a bal-anced LTV across your portfolio. When you buy you might
be in at 75%, perhaps let the LTV’s drop to 60% give or take a few per
cent, remortgaging only when you drop below these figures.

If you have an asset (your house) with equity in it, then make sure you keep
it. If you need cash to re-invest and buy more ‘appreciating assets’ then
instead of selling it and paying all the disposal costs, consider remortgaging
your property to access equity (tax free) to leverage more investments. Just
don’t over leverage.

Summary
Never sell a good-yielding, income-producing property. Create long-
term wealth by buying and holding forever, letting the rental income
and capital grow, which you can access by remortgaging, tax free.

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#25. Buy to sell (Flip)

If you are looking for bigger ‘lumps’ of cash, larger scale projects or you
want the maximum return on time invested (when exchanging time for
money) then flipping can fit your strategy/vision. Its viability depends on
market conditions (easier to flip in growing market), but professionals can
flip property through the entire cycle.

You see, flipping property is a popular strategy for builders and

tradespeople, and it is something that all types of people not in the trade
can also cash in on. Buying and selling residential property is known as
trading and those who use this strategy are referred to as ‘traders’ rather
than ‘investors’, which is a phrase coined for people who hold onto their
purchases and rent them out.

If you purchase a property with the intention of selling it then HMRC will
require you to register as either a sole trader, partnership, LLP or Limited
Company. How you establish yourself as a property trader for tax purposes
will depend on your other sources of taxable income and the people you
are setting up in business with. You should speak to an accountant to
decide which structure is best for you.

Traders will buy residential property with the intention of adding value
and offering the property back to the market at a higher price than they
bought it in order to make a profit.

Buying property (stock) to trade (sell on) can generate job-replacing income
in one deal when done correctly. It is an entry level strategy which, if you like
being hands-on, can teach you many transferable skills – where to source
materials for the best prices, project management, money management,
communication, creating a power team and patience (!).

It’s also a highly leverageable strategy and successful flippers will have
multiple projects on the go at once, with the right people doing the right
tasks at the right time. The main thing to focus on with flipping is ensuring
that the uplift in selling price justifies the work that you are doing.

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Every £1 spent on upgrading the property should add £3 of RICS value.

A common mistake made by newbies is thinking that a lick of paint will

add thousands of pounds of value to an already decent property. The
golden rule is – if a homebuyer could see themselves moving into it as it is
and decorating it to their taste over time, then it’s not something that an
experienced trader would consider buying.

Buying property to refurbish and sell on is a great way to generate chunky

money, which can then be spent on other things such as liabilities (cars,
holidays, your own home) or invested in other assets in order to build
wealth and/or a legacy.

There are many ways to source properties, which can be flipped, the main
ones being through estate agents or direct to vendor. Knowing what to
look for in a flip is vital and successful traders will know instantly whether
or not a deal is suitable for flipping.

What should you be looking for?

If you are new to flipping then you should think about starting in a lower
price bracket in order to earn your stripes. Smaller houses, maybe ones
suited to the budget of a first time buyer or young couple are ideal.

This is because on your first flip you are learning the trade. You are
building your knowledge and putting together the power team you need
to complete the project. By starting with smaller, lower-priced properties,
you will require less lending and therefore minimise the cost of borrowing.
Depending on your flipping Goldmine Area, these properties will typically
cost less than £250k to purchase (ideally £100k).

You will need to find properties that require some kind of ‘updating’ or
‘modernisation’. If you are searching through one of the online search
engines you will see these words and other similar ones in their listings.

Flipping can range from a ‘tart and turn’ which would be simple work
such as decorating, garden tidy and deep cleaning existing kitchens and

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bathrooms, to a complete renovation with more extensive works such as

adding extensions or undertaking garage or loft conversions.

The fundamental rule of flipping is to add value. This can either be

achieved through buying at discount and rectifying any cosmetic issues, or
buying at a market value and spotting the potential to add value through
reconfiguration, title splitting or converting a loft, garage, or basement.

Flip properties are sourced and bought with the next owner in mind. When
undertaking your due diligence about the viability of a flip, think about the
following:

Potential Purchasers

Who would want to buy the property from you? Is it more suited to a
single person, a couple, a family, an older person etc? This is particularly
relevant when thinking about indoor/outdoor space i.e. Will they want a
grassy garden or easy to maintain hard landscaping? Is having a garage for
the car more important than a converted extra living space or bedroom?

Understanding the demographic of your buyers will help you to determine

the type of upgrading to undertake and what works will add the most
value and get the property sold quickly.

Position of the Property

What amenities are there in the local area? Are the transport links good?
What about school catchment areas? Is there regeneration or investment
planned or underway?

Or does the area have a reputation for being ‘the badlands’? Would you
park your car there overnight and expect it to still have its wheels the next
morning? Remember, just because it’s cheap and you can buy it; it doesn’t
necessarily mean that you should.

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Profit Potential

Think about the minimum profit you would want to make and work
backwards from there. It’s smart to overestimate the cost of work and build
in some contingency whilst underestimating the price you’ll get when the
property is ready for resale.

Knowing the end sale price of the property is key to determining whether
or not the deal stacks up. A great tool to use when starting out is Sold
Prices tab on Rightmove.co.uk. This tool will tell you how much other
properties in the vicinity sold for and then it’s up to you to check that
you’re comparing like-with-like.

So why would you want to flip properties?

Interest rates

Do you think interest rates will go up? Do you think they will fall? The
truth is nobody really knows for sure; we only know that they will change
at some time. The great thing about buying properties to sell is that you
don’t have to worry about interest rate changes, because you are selling
the property on rather than holding it for rental returns.

Also, with interest rates so low that gives you great deals on lending to
fund your flips. If you have cash in the bank making you 1% interest or
maybe if you’re really lucky 2%, buying property to sell instead with this
cash can give you returns of 20% and more. Think about that for a minute.

Maybe you know someone with cash who you could pay a % return on.
With that money you could buy a property to flip and upon completion
of the sale; return their money with interest and you keep the profit. This
makes flipping accessible to everyone.

Tenants

We all love tenants that pay the rent on time. However, there are some
that don’t pay and these can be really difficult to evict, leaving you out of
pocket. With flipping property you don’t have any tenants to think about.

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Maintenance

When you hold properties for rental you have to look after them. As the
owner and landlord it’s in your best interest to keep them in a good state
of repair. It’s also your responsibility and all the cost of repairs come out
of your pocket.

With flipping, you buy the property, refurbish it and then sell it on. Completion
day is your pay day and once sold there are no ongoing maintenance
responsibilities, enabling you to move straight on to the next project.

The Market

Properties are bought and sold all of the time. When the market is buoyant,
properties sell quickly and you may need to go straight to vendors to source
your flips – however you will be able to refurb these and sell them on fast.

In a slower market there will be lots of deals to be had, and while the
media may have you think that nobody has any money, everyone needs
somewhere to live and experience has shown us that there are still plenty
of buyers for well-executed flips.

Below is a guest section from Karen Whatley and Tasha Darrington on

successfully renovating property to sell for lump sum profits:

You may want to flip properties if/because:

Out of area deals

If you find an out of area deal that would be a great deal if it was in your
area, flipping is the best option, provided the numbers are right. It will cost
you time and money owning out of area properties. There are other ways
of ‘packaging’ - flipping being one of them.

Low yield, high equity

You will come across deals that you can get good discounts on, but are
low yielding. If you held them, they’d be negative cashflowing, but a good

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discount is hard to turn away, right? You don’t want to leave all that
money on the table. Consider flipping it, probably to a first time buyer
(FTB) or owner-occupier (OO).

Larger refurb projects

If you want to buy a property and turn it around quickly to sell, it’s likely
that you need to spend some money on it. You often get the biggest
discounts when properties are dirty-ugly - as they put others off. The
margin is in the ‘added value’, through your refurb. The bigger the refurb
job, the worse it is to other buyers, the cheaper you’ll get it, and the more
you can add value. The larger the project the more it could put others off,
thus reducing your competition.

We don’t like being doom-mongers, but it’s our duty to serve you the best
we can and give you the most relevant, honest guidance. So here it is:
Don’t start too big too soon with too many risks, variables and cans
of worms you’ve not seen yet, because you’ve not been doing it
long enough to spot them.

And when you find your first decent looking refurb-flip, double the costs
you anticipate and double the length of time you think it’ll take, because
in nearly all cases, especially when you are a novice, you don’t know what
you don’t know and there will be things you miss. Most people with a
successful business and portfolio will know that things virtually always take
longer than you initially plan and especially what you are told by others
(trades people, solicitors, etc.). There are many moving parts to a property
purchase, so accept/expect this and factor it in.

So, let’s go through the necessary things to be aware of and then you can
just crack on and do it :-)

Ensure your ‘refurb’ is not a renovation

Structural work, listed buildings, legislative matters, planning and legal

issues and so on should be avoided, unless you have good experience

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where it becomes an advantage. Even when you’ve been in the business

decades, things will still pop up and surprise you when work gets this deep.

Overestimate the time and costs of flipping

We’ve had a flip take 18 months before. We’ve had another one take
12 months; then we ended up renting it out (it never even sold). We had
properties cost twice as much as we budgeted. We’ve had estate agents
lead us down a garden path about how much we could sell some of our
flips for: fake viewings, BS excuses about the market, knee drop strategies,
gazundering, the list goes on. As I (Rob) write this section, do you feel
that I am making it sound like it’s not worth doing? You shouldn’t be
because you’d be leaving tens of thousands of pounds on the table. But,
when you know this, the reality, you actually make more money than you
predicted, and more than your competition who don’t know this. We call
this ‘positive paranoia’.

I (Mark) factor my figures in my ‘Flip Analysis’ tool, on 3 price variables:

‘Worst case’, ‘likely case’ and ‘best case.’ If I can make it work by £7,500 or
more on worst case, I’ll do it, if it is a regular buy-to-let. It must be at least
£20,000 on best case to hit the green light, and I always turn an estate
agent’s ‘worst case’ valuation into my ‘best case’ price variable, because
they’re biased, and their job is to talk up the market and sell houses. I
accept that, but therefore take their valuations with a pinch of salt.

This is the sane, realistic way to make money from flips. It is not as important
to be this careful with buy to let valuations, because the equity stays in the
property. For flips, the values have to be real and achievable. Most estate
agents will say what you want to hear, to have you list properties with
them. It’s their job. We’ve employed a few over the years and learned to
take at least 10% off their valuations in most cases.

You can get the ‘Flip Analysis’ App version on the Progressive Property App
– search ‘Property App’ on the App store.

One in 3 makes no money: if you were to flip 3 single lets at the £125,000

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- £150,000 mark, out of your first 3, one would make £25,000, one
£15,000 and one would barely break even, if at all. Sure, you’d probably
want to hear that every flip will make £25,000, but it just doesn’t work out
that way from our experience. If it did, everyone would be doing it, right?

It’s actually not a disaster to do a flip and break even. You learn a lot. You
learn more than on the ones you make money from, and you end up making
more money on the next one. You don’t make the same misjudgements;
you know that the deals have to be a little better and you pick more wisely.
So work your profits out on flips in batches of 3. If you do 3 a year, you
should make a minimum of £40,000 net after all costs, more in London.
And once you’ve done 3 and paid your ‘entrance fee,’ then you have a more
systemised model and your profits should be higher and more consistent.

Like Geoff Whittaker who we mentioned earlier who made £58,000, net
after all costs, on his first 3 flips, with little previous experience.

Know your costs: there are way more costs associated with a flip than
there are with a buy to let. In addition to the standard costs of purchase,
you have added refurb costs for a higher quality refurb-to-sell, all the
associated agents and selling costs as you’ll be the vendor, mortgage or
cost of finance to cover the durations from purchase to sale (factor one
year), legals and valuation fees, council tax while it’s empty and possible
stamp duty.

You should factor 10% of the price of the property for all these costs,
a figure most amateurs never realise. And if it ends up being ‘best case’
variable, then you win, but you’ll cover yourself on the downside risk.

3+1 Combination strategy: a smart strategy for the modern professional

is a 3+1 strategy. Buy 4 properties, hold 3 buy to lets/multi-lets, and sell/flip
one. You combine long-term asset building with short term, bigger chunks
of cash. You know how to do it the right way now, too.

And for final downside risk protection, make sure you’re always able to
hold and rent the one flip if the market changes and you can’t make a

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profit from it, and the worse that happens is a good lesson to help you
make more money next time. Know your back up exit options before you
buy. On some major commercial projects we have 3 or 4 exit strategies
lined up before we buy, just in case.

Summary

Use the 3+1 strategy: buy and hold 3 properties and flip one.
Overestimate the costs and time it takes to refurb a property, and use
the 3 variables to cover the downside risk in the worst case scenario.
Expect one out of 3 deals to break even only at best, and target
minimum £40,000 for every 3 flips (on low cost single lets), more in
London. Use as a strategy to make chunks of cash while you build
your portfolio for the long term.

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#26. Cashflow Strategies

Now, more than ever, cash is king.

And it is easier now to get going faster, and generate income quicker, with
property as your main vehicle. If you focus on it. Remember money moves
from those who value it least to those who value it most.

Dose of reality

You can actually earn very good money, have clean credit with a score
of 999, and still be refused a mortgage if your face doesn’t fit. You can
now have too many properties, as well as not enough evidence of finance,
and even with a rental property you need to prove income, unless things
dramatically change.

If you are self-employed then your task of getting a mortgage is harder

still (though by no means impossible). In 2007 and the 5 years preceding
it, banks were throwing out NINJA mortgage ten-a-penny (No Income, No
Job, No asset) - no problem. Not anymore.

So having the knowledge to create the cashflow without relying on banks

and mortgages is essential information in the current climate.

But the flipside of these difficulties is that this has provided great
opportunity for ‘Contrarian Investors’. Every upside has a downside and
every downside an upside. The main, huge upside of lack of liquidity from
mainstream lenders (banks) is that previous non-commercial or everyday
Joe Public lenders have space in the marketplace.

The main cashflow strategies you’ll want to consider adding to your

arsenal are:

BRR (Buy, Refurb, Remortgage)

This is a low to medium risk, time-tested strategy, which is the staple diet
of a professional property investor. You should understand this before you
start other more intricate cashflow strategies in this section.

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BRR allows you to force the appreciation of the property through

refurbishment, and ‘cycle’ one deposit ‘pot’, getting all of your own money
(or JV partner’s money) out upon remortgage, making it a NMLI deal (No
Money Left In). Then you go again. Or you could simply leave the money in
so that the sophisticated investor/JV partner protects their cash from lower
return vehicles and earns a perpetual return on it. After all, if they loaned
the money to you in the first place for a return on it, why would they want
it back in a year or less?

Professional, sophisticated investors have been doing this for years, and
have built £multi-million portfolios on one single deposit (that they probably
borrowed from a JV partner or took out of their own house as equity),
therefore building a no money down (NMD) cash-flowing portfolio. Even if
they left a few thousand in each deal (no disaster), they’d get huge returns
on investment, and the cash left in is protected from lower return vehicles
and inflation.

Here’s how it works.

1. You must get a discount that equates the Loan to Value (LTV), to
be able to recycle your deposit back out upon a remortgage. You will be
buying the property with your initial mortgage at a LTV (say 75%) of the
purchase price. There is an example in a moment.

So, your first mortgage is 75% of the purchase price, say £70,000. Your
remortgage will then be for 75% of the real value, say £105,000. You will
therefore be left with a mortgage of 75% of £105,000, the old mortgage
of 75% of £70,000 will be paid off, and you will be left with an amount
that ‘pays you back’ your initial deposit.

2. If you want ALL your money back (refurb costs, fees), you need an
extra discount to match these costs; usually about 3-4% depending on
the value of the property.

3. Your 2nd (remortgage) must have no ERCs (early redemption charges).

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Most lenders (though not all, and the market is always evolving) will not
allow you to mortgage with them, until you have owned the property for 6
months. And many of these lenders will charge you an ERC to pay off that
mortgage (to remortgage to another lender). This can be as much as 6%
of the value of the loan.

You need to select a mortgage that has no ERCs. Very important or you’ll
be paying £5,000 - £10,000 extra on your ‘remortgage’.

4. Get a different surveyor to do the higher valuation. If the same

surveyor is sent to value your property for the remortgage, 6 months or so
after she values it previously for 30% less, do you think she’s going to give
you the extra 30% on the valuation?

No.

It is vital that you instruct a different surveyor (through a different mortgage

company) to value your property on the remortgage. You’re not being
shifty here, you’re simply getting another independent valuation, from a
surveyor who is valuing the property on its merits and value, and not being
influenced by knowing what you bought it for.

Surveyors are being pressured now to value quite low, and are also instructed
to value on the basis of value or purchase price, whichever is lower, for their
indemnity and protection. If they know the purchase price, they will value it
at that level, even if you have genuinely bought it at a discount (which you
have), and genuinely added value through refurb (which you have).

Using the BRR strategy you can buy one property every 9 months or so
(6 months plus remortgage and valuation time) with one deposit. If you
want to buy more, and build your cashflowing portfolio faster, simply raise
more deposits. The first deal or two you do you may end up leaving a
little cash in. This is no disaster and just you learning how to achieve your
results through actually doing it. SO tweak and refine your strategy as you
gain more experience, meet more surveyors, get to know all the different
lenders criteria, etc.

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In 10 years with just 2 deposits you could have a portfolio of 26 properties

worth a conservative £5million valuation and likely minimum equity in the
millions. We used this exact strategy and built a portfolio of almost 600
units in this same time, so if anyone tells you that you can’t, it just means
they don’t know how.

BRR example:

Purchase Price: £70,000

(1st) purchase mortgage @ 75%: £52,500

Deposit: £17,500 (equity in home, loan, stocks, savings)

Cost of refurb & fees £5,000 (approx..)

Total money in: £22,500

Revaluation (value) after 6 months of mortgage: £105,000

New re-mortgage @ 75% of £105,000: £78,750

(No deposit needed, as this is a re-mortgage)

Money left after old mortgage is paid off by new mortgage (£78,750 -
£52,500) = £26,250

Money back out to ‘start again’ on the next property: £26,250 (£3750
more than cash put in)

You have effectively bought the property, refurbished it and remortgaged

it, pulling out the original deposit leaving no money in (NMLI), even getting
a little cash back. You then repeat the process over and over. Remember,
you also have locked in equity of £25,000.

This is infinitive return on your investment (ROI), or 100s to 1,000s of % if

you leave in a small amount.

This property will now give you passive income from the cashflow from
day one (approx. £150 per property per month NET), and all there is left

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to determine is how many of these ‘money boxes’ do you need to replace

your current income through equity or cash-flow?

Even if you could only get a valuation of £95,000, you’d have a cash
flowing property with £25,000 equity, with only £6,250!

Further Advance (FA)

A further advance is very similar to BRR, except you don’t need to
remortgage to another lender. In the case of an FA, you simply apply to the
same lender (as long as they offer this service) to ‘advance’ you the uplift
in value. This is like a remortgage, based on the fact that the property is
worth more, but with the same lender.

The benefit of this is that you don’t incur double fees (as you are only using
one mortgage company, and it is quicker). You do have to ensure that you
have shown an increase in value, for the same surveyor to be happy to lend
you more money to get your deposit back out. You may not get all your
cash out. Speak to a good broker.

HMOs/multi-lets
The demand for rooms is growing fast. People can’t afford to buy like they
used to, access to lending for ordinary people is hard, and rents and prices
are very high compared to salaries.

The population is exploding through larger families and immigration, and

towns and cities are becoming more and more densely populated, without
the available land to build on.

It has gotten harder and harder for developers to make margins, so they
build smaller and smaller houses and flats to reduce costs.

People are more transient in their careers now and do not hold down jobs
or relationships for as long as they used to, so they need more flexible
living accommodation to match the changing lifestyles.

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The reaction to this is obvious and necessary. You’ll notice many more
houses are being converted into room lets, especially in and around the
town centres. You’ll notice more and more people renting out a room
in their house. You’ll notice more and more pubs and clubs and nursing
homes and old offices being converted into multi-lets.

There are 5 main Progressive HMO/multi-let strategies, and 5 main

finance strategies to acquire them, many that don’t need a deposit, if you
combine them with an innovative finance strategy such as rent to rent or
option purchases. Progressive are currently the only people training you
on all of them.

Which strategy or strategies work for you will depend on your available
cash, your local Goldmine Area, and your local planning regulations. It is
important that you research to find these before you scale up your chosen
HMO strategy or strategies, and something that many investors are getting
wrong now.

The 5 Progressive HMO *strategies*:

High-end ‘Boutique’

The most profitable room-by-room model is the ‘Boutique’. It is also the

model that requires the largest initial outlay of cash. This model provides
Boutique, mini-hotel-room accommodation for high-end professionals
near the town centre or more affluent parts of a town or city. This model
commands the highest room rent, attracts the best tenants, and needs to
be furnished accordingly. It also attracts more liquid finance partners.

Post grad/professional

One step down in ‘quality’ to the ‘boutique’ model, but with a slightly
larger market, with less input costs to you or your JV partner.

Blue collar

A larger market than professional/post grad, and not as necessary to be

right in the town centre, where prices are often higher, as these can be

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located close to the main industry of the town/city, for example near the
hospital or a large manufacturing plant.

Less input cost. Tenants are less fussy about the quality of the
accommodation and perhaps an extra room can be squeezed in per house.
The lower down the 5-step model you go, the more management the
tenants need.

Student

Especially effective in University cities, and usually within one mile of

campus. Voids are higher because of holidays, and maintenance and
management are also higher, but tenant expectations lower and a greater
tolerance of higher numbers. Accordingly, rent is higher. Obviously useless
in a non-university town, but can be a great market for breakthrough
university towns/cities.

LHA/DSS

The ‘lowest’ end of the market, needing the lowest amount of capital
outlay, but commanding the lowest rent per room, and requiring the
highest management in time and costs. Space can be maximised to great
effect, and the market is wider than ‘Boutique’ and ‘Post grad/professional’
but tenant turnover can be high and management intensive.

The 9 Progressive HMO *finance models*:

Here are the different finance models for buying the cashflowing HMOs:

BRR

As explained in this chapter, you buy with a deposit, refurbish, then rent
out. You own the bricks and mortar. And in some cases, you can achieve
a higher income valuation if you’ve significantly increased value. You can
recycle much, and in some cases all the cash back out.

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Rent to rent

Also known as sub-letting or corporate letting (watch that some fraternity

have negative associations with these terms). You rent an ‘HMO-able’
property from a landlord on a single-let basis, and then ‘HMO’ it yourself,
renting out multiple rooms. You create all the cashflow of an HMO, yet
you don’t buy it. No deposit needed. No big upfront costs, just small refurb
costs. Big upside is it’s virtually NMD. Trade off is you don’t own it, so don’t
want to spend much refurbing it. You can mix and match this finance
strategy with one of the 5 Progressive HMO strategies above.

(Lease) Options

Rather than buying the HMO and needing the big deposit, you take an
option to purchase it. You take control of it through an option that excludes
all other potential buyers, giving you the right but not the obligation to buy
it, but you don’t ‘pay’ for it until you ‘complete’, which could be many
years down the line. Virtually NMD HMO ‘control’ (not ownership) except
for legal costs, and a great way to generate significant cashflow with
limited finds.

Trade off is that you’ll need to learn and master this strategy, get the
legals right and ‘educate’ vendors, landlords and agents. It’s a bit more
technical, but that’s the same for most finance innovations anyway, which
puts your competition off. Lease Options and other option variations such
as purchase and sandwich are detailed in ‘Cash in a Property Crash’.

Delayed completions (EDC’s)/Instalment contracts

A variation on an option where you exchange on a property, thereby

negating the risk of lost refurb costs. Once you exchange, you basically
own it, but you can then ‘delay’ completion, or own in ‘instalments’ over
a period of time, often many years.

LOs & ICs are as relevant to single-lets as they are to HMOs, and are a
creative and evolutionary finance strategy that negates the need for
mortgages or large chunks of cash.

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JVs

Any property buying strategy becomes NMD (no money down to you)
when a JV partner fronts all the costs. A big advantage of working with
a JV partner is that you can still own properties by using more traditional
purchasing methods with your partner’s money, and you have a partner
who gives other benefits such as knowledge, experience and contacts that
you wouldn’t have working alone.

Cashflow

With a single-let property, you’re doing well if you can clear £200pcm net
income. In some low-yielding areas around London, it’s virtually impossible
to achieve cashflow on single-lets without a 50% deposit. Not a great use
of leverage or cash.

With HMOs, you should be looking at minimum £400pcm net, and with
the higher end models, you can be looking at £800 plus per property per
month, with some well over £1,000 (even with a re-payment mortgage).

The more rooms you have (5 or more; 8 optimum) the more your cashflow
increases, and many old commercial units, old hospital and council buildings,
clubs, nursing homes, retail and pubs are prime for HMO conversion.

You may need 20 single-let properties to get to your income target,

whereas 4 larger HMOs can achieve the same goal. We recommend that
total beginners cut your teeth on a few single-lets before stepping up, but
if you’re ready and you have a few already, perhaps it’s time to step up and
accelerate your cashflow?

Deal Packaging

When buying any type of property, it’s likely that you view between 5 and
50 before you get a deal accepted, depending on your experience, criteria
and area.

So this begs the question: what are you doing with the 4 to 49 properties

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that you’re NOT buying? Are you making any money from them, or is
someone else buying them?

What if you could make just £3,000 on each one? Or even just £1,000? In
your professional property career you’re going to view 100s or 1,000s of
properties (or someone for you will): you do the maths!

Strange though it may sound, there’s a great advantage to having no

money, or not being able to buy yourself. You are forced to find the
strategies that maximise cash flow and minimise cash input.

The fact that Jo Moore, Progressive VIP member, was 17 when she joined
the Progressive VIP community should have meant she could do anything
until she was 18, if you talked to ordinary people or banks.

At 17 you can’t buy property. Game over, right? Well no, not for Jo.
Without cash or the ability to get a mortgage, you have to be creative.
Jo started sourcing and packaging for others first, until she turned 18, so
that she could learn property as a business, and make cash while doing it.

She did this by ‘packaging’ deals and selling them to other investors for
immediate, upfront cash profit. More than £3,000 per month. Not bad for
a 17 year old, right?

Many more of the Progressive Community members double or triple their

property income from selling deals they don’t want, or would have previously
rejected. Some make well over £10,000 per month deal packaging.

Kris & Jayne Carpenter, a brother/sister partnership in the Progressive

Community, now have over 25 properties and a Letting Agency with over
120 lets, and still did their best month ever recently of £25,000 in deal
packaging fees in one recent month!

Deal packaging gives you faster access to liquid cash that could free you
from your job in 30-90 days; certainly much quicker than buying 20-
30 single lets. And if you are really grasping the idea that property is a

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business, you can see how powerful, leverageable and cash generating
this strategy is. You could also use this extra cashflow to fund deposits to
speed up the buying process and covert cash into capital.

You might think it’s too early for you, or you don’t have enough experience,
or any other excuse you could make, but where else can one deal sold
replace your monthly gross wage? As long as the deal is good (though
it doesn’t have to be as good as one you’d buy for yourself), then a fair
exchange of value and fees is acceptable.

And the power of compounding really kicks in when you combine deal
packaging with HMOs/single-lets with a well-financed JV partner.

The fees you can get from deal packaging vary from £50 a lead, to £20,000
plus per property, depending on the strategy, time input, and customer
type. uQL, QL, RMD’s, FF, PPD, AS, LO/SO & PB are detailed in ‘Cash in a
Property Crash’.

Lending your money to other property investors

If you have cash to invest, and want a better return than the bank, and
want to be more passive in your investing, you can consider lending your
money to other property investors.

Most bridging/private lenders get between 1% and 3% a month on their

money, depending on the term of the loan. With loans of six months or
more 1.5% is easily achievable and with relatively low risk. Though as
previously stated we’d only borrow at 1% a month or less.

You can secure your loan on the property in question, and your investment
is likely to be almost as safe as if it was in the bank, except you’d be
making 5 to 10 times the return.

Many investors who become successful in property and make big lumps
of cash, often use lending money to other property investors as another
stream of their property multiple income strategy.

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It’s also a great way to ‘buy in’ great contacts and learn how to invest
from people who are already doing it very well. You can use some cash to
partner with an experienced investor, shadow them, and learn exactly how
they do it, whilst learning how they make money on your money.

You can call upon any contacts in the Progressive Community if you require
help with the strategy, the legals, the contracts, the agreements, keeping
the risk low and setting clear expectations from the start.

Gill Alton has been both money lender and recipient of funds in the
Progressive Community. She loaned out a deposit to another Progressive
Community member at 8% per year, and borrowed from her parents at 5%
per year. As have Francis and Jane Dolley, who’s £9,500 net cashflow per
month has been leveraged by the funds they have borrowed and loaned
within the community.

We often ‘bridge’ money to friends and business associates, and sometimes

even act as money lenders to ourselves.

Sharing your knowledge and selling the information

Information is one of the most important and valuable commodities in the

new age and economy that we’re in. With the leverage that the internet
has, it makes it easier for people to make money and create enterprise
in a shorter time and with lower cost. People want instant, on demand
knowledge. Property investing, making money, business opportunities and
entrepreneurship are some of the most popular topics people desire right
now, especially with the money problems many people have, the recent
property crashes and credit crunches, and people’s ever present desire for
freedom and control.

In years gone by the facilitation of this information was only for the very top
experts in their respective fields. But today where ‘people buy people,’ and
look for trust more than ever, people with less experience are positioning
themselves as experts and being rewarded handsomely (financially) for it.
As long as you know more than someone else on a subject, and you are

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doing it, you can help them, and people will buy your knowledge if it is
valuable and solves their problems.

The world is micro-niche-ing and super-specialising as time progresses.

Just look at how many models of car, phone, watch and so on there are.
Information is the same way, and there is a niche for you if you find it and
get great knowledge on it.

One of the unique things about the Progressive Community is that we

teach and actively encourage you to become an expert as quick as you
can, and help and train others. This is both to pass on your knowledge
which we feel is the responsibility of those with knowledge, to help others,
and also to help you create more streams of property related income. We
believe the world needs more trainers and leaders right now, and why
shouldn’t it be you?

Sure, you’re not going to go out and teach someone how to build a multi-
million pound property portfolio if you’ve never bought anything before,
and still rent off your Mum at the age of 76, but with each step up the
ladder you go, there will always be someone a level below you who needs
the information that you have, information they’ll gladly pay for.

The packaging of information has no limits. At whatever level you’re at,

you can ‘repurpose’ this information and sell it to others and help them
make money. Even after your first property purchase, you can teach people
how to let their first property. When you’ve bought 5 properties you can
teach people the fundamentals of building a solid portfolio. When you’ve
bought 50 properties you can teach advanced investors the intricacies of
building a multi-million pound portfolio.

When you have a multi-million pound business you can teach other people
how to build add on, cross leverage businesses around property.

Even more exciting than this are multiple ways in which you can package
this information for people with different learning styles, therefore ‘selling’
the information many times over.

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This is the exact journey Progressive have embarked upon, and the thing
that helped us make far more money than we ever dreamed we could
when we were keen but green. Buying houses alone would still have
been great, but it may have taken us a few years to become financially
opulent. With the help of training courses, mentorships, CD programs,
DVD programs, online memberships, retreats, accountability programs
and many other ways of repackaging the information, we’ve been able to
create many more, multiple streams of income, and make a difference to
many more people. It also means you can go global with audio and online
programmes, further leveraging your time and scale.

Genuinely as good as the money is, the enjoyment and satisfaction and
meaning you get from helping other people achieve the same results as
you. Your sense of pride, humility and importance in life grows not so
much with more money but with more contribution.

Mark has always said that training other people in property is what I (Rob)
was born to do, because making money talking about myself all day is
two of my favourite things combined :-) It’s certainly more enjoyable
and rewarding than dealing with tenant’s minor issues, reading all legal
contracts and other necessary details in property investing, that really
should be leveraged to other people (unless you’re a geek like Mark and
you love that sort of thing).

Many of our competitors have said that we’re crazy to share this information,
reveal our ‘ulterior motives’ and train others to do what we do, thus
creating more competition in the market place. However, we believe in
abundance and the more people we help who help more people can only
be positive for the Progressive brand. The community grows faster this way
and more people that want to learn from Progressive will be attracted to
us. Not everyone wants to learn from Progressive, and you have unique
skills and personality meaning that people may prefer to learn from you.

Some people place us on high pedestals and feel that we will always be
way ahead of where they could possibly ever be. This is not the case and

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we believe we’re ordinary guys who are no different to anybody else.

Other people mock anyone who teaches/trains, saying that those that can,
do, and those that can’t, teach. You can be and do both, or partner with
someone who does most of one (doing or teaching) while your partner
does the opposite. Don’t let what anyone thinks of you define who you
are and what strategies you choose; let your vision and legacy decide that.

We are very proud at Progressive of the 1,000s of successful people we’ve

trained/who’ve become life long (so far) members of the Progressive
Community. There are at last count over 24 published authors from
Progressive Community members, and dozens of our ‘ex-students’ who
are now mentors and course providers themselves. As long as you have
integrity and practice what you preach, you will have a scalable business
and significant income.

We all have the same opportunities, yet the only difference is not everyone
takes them. So, people who feel overwhelmed and awestruck by our
results would prefer to learn from someone else who’s not been doing it
quite as long and is nearer their level.

And even better than this, is the fact that Progressive will teach you how to
do exactly this for a fraction of the cost of becoming a long-term 10,000-
hour expert. We all get to serve and give back to our industry and keep the
flow of money and success within our field.

Plus, the best way to cement any lessons in your own mind is to teach
them. Please don’t underestimate the unique talents and skills you have to
offer the world and how other people crave them. Don’t do them a huge
disservice by keeping it all to yourself.

For more advanced property cashflow strategies and multiple streams of

property income, read ‘Multiple Streams of Property Income’.

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Summary

There are multiple streams of cashflow available through property

investing, not just buy-to-let. Over time add additional cashflow
strategies to your overall strategy, and think outside buying and
renting. Sell to and help other investors, share and sell your knowledge
and information, and sweat each asset to it’s maximum by renting
out multiple rooms.

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#27. Letting, tenancy & management

Tenant selection can be a minefield. Voids can be a killer. Eviction can be a
nightmare. Perhaps that’s why amateurs and part-timers don’t like renting
out properties?

Perhaps one of the most common fears in property investment is the

prospect of having properties vacant and not being able to rent them out,
thus being stuck with mortgage payments on properties.

This is a sensible concern, as void periods consume the profits.

We’ve been studying what types of property rent out the fastest, the
longest and with the least amount of hassle for many years now.

You have probably realised now what type of property we like and why.
One of the biggest reasons for loving (and making money from) the ‘lower’
end existing (not new) property market, as opposed to new build, overseas
and off-plan, and high-end tenant, is ‘rentability’.

For single-lets, target the mid to low end of the market

There is an optimum price point for rentals, and it will vary from area
to area. Our optimum price point for rentals is £65,000 - £120,000;
specifically studio, 1 & 2-bed flats and 2 & 3-bed houses in 6 very focused
‘area within area’ Goldmine Areas. These areas are ‘not best not worst’
areas which are affordable to the masses.

When you find these areas local to you, with everything you’ve learned
in this book, you’ll notice that void periods and time to find tenants will
significantly reduce, duration of tenants staying will in-crease and the ‘pain
in the backside’ factor will ease. We’re currently renting out many of our
properties within a day after completion, and even have a waiting list on
many and our tenants tend to stay for long periods of time.

And the types of tenants and areas that work weren’t necessarily the ones
we initially would have chosen or assumed.

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Never mix tenant types

There are different tenant types in single-lets and HMOs, and you should
never mix them. Don’t put a high-end professional in an LHA house, and
don’t put an LHA tenant up market. Especially don’t mix tenant types
in multi-let HMOs, in the same house. It’s like when one infected virus-
vampire gets locked in a room full of innocent people, soon enough they’re
all eating each other and trashing the place.

Match refurb standard with tenant type

If it’s a nicer area, the standard of the refurb will need to suit. If you’re
going for high-end tenants in your ‘Boutique HMOs’ then they need to
look like ‘Boutiques’. If you are in the lower, single-let LHA areas, clean and
tidy is more than enough, you’ll be wasting money on fancy fittings and
it’ll make no difference to the rent.

Letting yourself vs. Letting Agent

When it comes to letting out your properties, there are advantages to letting
yourself - you save some money. For HMOs, that can be a reasonable sum, and
you may not be able to find good enough let-ting agents to manage HMOs.

The big mistake many landlords make is appointing the usual high street
single-let letting agents to manage their HMOs, a big mistake in our
opinion. They will often mix tenant types, they won’t arrange communal
areas to be cleaned because as a single-let agent, they’ve never had to
do it. They often won’t do the inspections in the right way and won’t
create a good community within the household even if they say they can
successfully manage the HMO for you. It’s there-fore really important you
find a HMO specific letting agent which focuses on multi-lets.

But for single-lets, it can be counterproductive. It can cause you hassle,

pain, multiple hernias and coronaries: all to save 10-15% per property.
In the long run it will end up costing you way more - in money and time.

You may like the control of letting and managing yourself (if you have 37

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hours in a day to manage it), and you may feel that letting agents get a bit
heavy on maintenance costs. These can be con-trolled.

It is definitely NOT an IGA task to manage yourself. You didn’t get into this
business to manage tenants, and you don’t know anywhere near as much
about is as a (good) professional letting agent.

Not everyone will agree with this, and that is fine. Some people have been
landlords a long time, and know what they are doing, and have learned to
systemise the tasks. It is very difficult without a lot of experience and can
tarnish your enjoyment of the investment pro-cess. It also goes against all
the concepts of leverage that we have been discussing so far in the book.
And many landlords who I know who manage their own properties are not
time or cash rich.

For those who want, and are still not convinced or are having doubts, read
the following mini-section on using a letting agent vs DIY. You will be glad
you did!

Letting agents offer two main levels of service: a ‘let only’ service or a ‘full
management service’.

Let only

This level of service requires the agent to carry out the following basic steps:

1. Produce lettings particulars of the landlord’s property for

marketing purposes – This will involve the agent providing a rental
assessment which gives the landlord an idea of the rental value which
can be achieved in the ‘area within the area’ of your chosen investment
property.

2. Marketing the property – The agent will advertise the let-tings

particulars on the company’s website, with accredited letting sites
such as Rightmove. They will also include your property in the weekly
local newspaper.

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3. Viewings – The agent will take the prospective tenants on viewings

to your property.

4. Referencing – The agent will carry out the referencing pro-cess of the
prospective tenants, and provide the landlord with their assessment so
the landlord can then make an informed decision.

5. Tenancy agreement – The agent will determine the type of

agreement, which will usually be an up-to-date Assured Shorthold
Tenancy Agreement (AST).

6. Deposits – The agent will take the first rental and deposit payment
and pay it over to the account that is nominated by the landlord.

7. Check in & handover – The agent will carry out the neces-sary ‘check
in’ and ‘handover’ of the landlord’s property to the ten-ant.

8. Inventory – Although the agent may charge a little extra, they can
prepare an inventory for the landlord.

Full Management

The other option is on a full management basis, this is for landlords who do
not like dealing with tenant issues and don’t want contact with the tenant.
If this rings true for you, it will be a good idea to employ letting agents who
are worth their weight in gold (if they’re good – explained later).

Filtering

A good letting agent will filter out some of the poorer quality letting applicants.
This is a good process as it means the more financially risky tenants, some on
benefits, or ones with a bad history, are less likely to come through to the
agent. It is important to note, some agents are specialists in benefit tenants
(LHA), and many are NOT. It’s your responsibility to find out which.

Cost comparison & opportunity cost

Traditionally letting agents charge in two ways: a fee relating to a multiple

of the weekly rent, two weeks + VAT is typical or a per-centage of the

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rent due of the tenancy contact, typically between 8% and 12% + VAT.
This figure is reasonable and only equates to be-tween £30 and £100 per
property per month, depending on the value.

One hour of your time is worth more than that.

A number of letting agents are also charging on a fixed fee for their service,
and can be attractive to a landlord who has a higher value let, as it can
equate to less than 10%.

Most letting agents would prefer landlords to use the full manage-ment
service, as the agent will make a lot more money and get a regular income
for doing very little, once all is set up.

That’s good, because you also want to do very little.

Cost of DIY

To explore the cost element of managing the let yourself, it is im-portant

to compare both assessments like for like, with opportunity cost of time
factored in: Cost comparison between a letting agent vs. DIY landlord:

*Please note the above figures are based on rent at £675 pcm and standard
let only fee of 10% on a 6 month rent.

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As can be demonstrated landlords can only make a marginal saving on

DIY lets in real cash terms. If the rent were higher, the letting agent’s fees
would increase, but nowhere on here is time factored in for not knowing
how to find a tenant/the right tenant in the first place, all the form filling,
for visiting the tenant, gas safety checks, cleaning, repairs, renewals, your
time and travel costs, phone calls, cost of one bad tenant not properly
vetted, eviction time and cost of mistakes.

Tax

Letting agent’s fees are all off-settable against the profits of your property
business. That £480 per month can offset £480 net cashflow you bring in.
You can show an actual profit but a tax loss, paying little to no tax on your
property income.

Sanity

Then there’s your happiness and calm :-)

Opportunity cost

And then there’s the 3-5 hours per month (or more) per tenant time that
you can put back into your property business buying deals and generating
more cashflow.

Finding a good Letting Agent

They are worth their weight in gold. It might take a while and you may
have to get through a few, kissing a few frogs. However, the good ones are
worth every penny of the 8% - 12% they will charge you. But remember
they must be good, because you’ll be watching over them watching over
your properties. It is a good idea to note the following:

• Always make sure that your agents are working in your best interests.
Check them out.

• Ask to see details of how they advertise and how (and where) they
present the properties that they rent out for you.

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• What papers do they advertise in and how big is the space?

• How does their website look (do they have one?) and how often is it
updated? Compare them with other agents in the area too.

• Always make sure they are a member of the National Approved Letting
Scheme, or one of these professional bodies: The Association of
Residential Letting Agents (ARLA) ; The Royal Institution of Chartered
Surveyors (RICS) and The National Association of Estate Agents
(NAEA). Being a member of the Property Ombudsman will also give
you reassurance that you are dealing with a reputable letting agent.

• Other things to note are: does the agent have professional indemnity
insurance, a separate client money protection account, what tenancy
deposit schemes they have in place, if there are any special management
clauses in the contract such as giving six months notice to cancel
the agreement (3 months should be a reasonable period), whether
there are any charges for when the property is vacant, they arrange
annual gas safety checks, and keep copies of all correspondence and
necessary records.

Test

Your job has only just started once you have decided on an agent, because
for your next 3 properties you’ll want to use 3 different letting agents and
test them against each other. We can almost guarantee that by the end of
the year, there will be one agent who really shines and you will know which
one is the one to use for your future tenants and management needs.

The reality is you’ll only know the reality when you have had them with an
agent for 6 months to a year.

Hunt out other investors locally

Which letting agents do the top dog investors use? Chances are they’ve
gone through the testing process.

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Competition

We like our agents to know, in a subtle way, that they are competing with other
agents. It keeps them fresh and doing their job. They stay proactive because
they want the business and they don’t want to lose out to a competitor.

When they get complacent their work standards will drop. This is something
that we have experienced firsthand. They might be a ball of energy to get
you, but how do they keep you? If they think they have a monopoly on
your business and you get too friendly, things can very quickly go south.

Random spot checks

Get your letting agent to list their charges, including finding tenants.
Check how many times they do an inspection and ask tenants if they have
seen the agents when they last came round. Make sure you keep your eye
on them, as some have been known to make large amounts of money out
of landlords and tenants by not doing the services they list, or hiking up
the charges. You need to make sure you use an agent who uses the most
up-to-date tools such as an iPad where they can record the state of the
property and match it to the inventory taken out at the outset.

Slow or delayed repairs

Ask the letting agent to notify you immediately of any major repairs such
as the structure of the building, sinks, baths, toilets and other sanitary
fittings including pipes and drains, heating and hot water, gas appliances,
pipes, ventilation and any electrical wiring issues. You’ll annoy the tenant
if these are not rectified and they might deem this as an excuse for them
not to pay the rent and or leave. Ensure repairs are swiftly resolved which
will often mean the problem not escalating and costing more money in
the future.

Rent expectations

Often most agents will give you a figure of what they think they can achieve
for rent, and then a few weeks voids later and you’re accepting £50 less.

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We very often take rental figures with a pinch of salt until we have seen
figures and tested them ourselves. In some instances we have had to take
£50-£100 off what they say they can get, especially when we were new to
them, as they were selling themselves to us.

It is up to you to set the expectations. If you set the expectation of what

you want to achieve, then challenge them to get it (with a view that you
will not accept lower), then you may achieve more rent. It can be done,
but you must be realistic and aware of how they play their game. You
are trying to set the expectations for any future dealings, and keep them
aware that they’re competing for your business.

Increasing rents

Your cashflow relies on steady incremental increases in the rent. Good

letting agents also know this, and want to keep your business, and will do
this gradually to keep the tenant happy (better than finding out that the
rent has doubled because it has not gone up for 10 years!). Poor agents
may be afraid to ask or not be organised enough to notice it is needed.

Vet your letting agents vetting your tenants

Always make sure your letting agent does a proper credit check on your
potential tenant. Any financial grief further down the road will be hugely
reduced. Even if you are ‘desperate’ for a tenant, don’t cut corners here.
A bad tenant can really upset your investments, so selecting a good one
is vital. Some landlords might insist the letting agent visits the current
property of the incoming tenant when they apply so you can ascertain how
likely- good or bad they are to treat your property and take any referencing
from their current landlord with a pinch of salt, especially if they want to
get rid of a troublesome tenant.

Always dress the property

Presentation is key - and it doesn’t need to cost you a fortune. Just like
show-home developers dress their properties for sale, dressing your rental

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unit can make all the difference when it comes to attracting the right type
of tenant and the highest rental income. Showing how the property can be
maximised to it’s full effect by ensuring the beds are made, tables are laid,
sofas are dressed with pictures on the wall - this small investment can reap
big returns and you can re-use the furniture kit for the next property you
purchase. This is even more prevalent when buying properties to multi-let
as if the tenants can picture themselves living in the property, the property
will let quicker and retain better tenants.

Always take a deposit

Never let a tenant into your property without a months rent. The more you
can get the less likely your tenant is to trash your place and get into arrears.

Always have a contract

This seems so obvious, but isn’t always to some investors. An AST

agreement should be a pre-requisite for a letting agent, but you should
make sure. It is advisable to get your solicitor to look over one the first time
you use an agent.

Make sure you get your monthly statements

You need to keep a close eye on what is going on. We have had months
where our rent has not been paid in. The only way to keep a check is to
receive (and read) your monthly statements. It will ensure that your agent
knows you are keeping an eye on them and you won’t miss anything.
Re-member that one missed rental payment to you could cause a missed
mortgage payment. That could cause a black mark against your credit and
hinder further borrowing.

And remember this: your credit score is your holy grail. It is your little
golden cup. Guard it with your life.

Systems

Do they have a procedure for everything they do? Are they making sure the

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gas safety checks are done every year? There is a lot of paperwork around
finding and housing tenants. Do they take guarantors for Local Housing
Tenants especially as they have no income for the rent and potentially
have bad credit. Ensuring the agent has systems in place to get a working
or home-owning guarantor will be the best way to protect yourself from
non-paying and damaging tenants.

The more disorganised a letting agent is, the less they will get done, and
the more problems you will ultimately have. Look for those who systemise
and log their procedures, use dedicated landlord software, have tidy
organised offices and are attentive to detail.

Two new sets of rules for lettings – smoke/CO detec-tors and

changes to S21 Notice procedures

With new property regulation coming into force its impera-tive that you
as the manager (DIY) or the letting agent is on top of new changes which
come into effect.

So what’s new? Smoke alarms will now need to be fitted on every floor
of every rented property whether the property has a new or existing AST.

Any landlord who fails to check smoke alarms on the day the tenancy
begins could face a fine of up to £5000, so be aware!

Another requirement is to fit carbon monoxide alarms in living spaces

where solid fuel appliances are present.

The new Section 21 changes have been reviewed in the fol-lowing areas:

• When S21 notices can be served.

• How long they will be valid for.

• What now needs to be served with them.

• Potentially a new prescribed S21 notice.

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Furthermore, a new retaliatory eviction measure has been introduced

which bans landlords from using the S21 laws for 6 months where a local
authority has served an Improvement Notice to the landlord.

Ensure you and or your letting agent is up to speed on the new requirements
and obligations.

Changeover

Letting is not just about getting a tenant in your property. Make sure you
know in advance that everything is done properly when a tenant may leave.

Don’t let the agent release the tenant’s deposit until you have inspected
the property yourself, at least every few properties, randomly, so they
know you are watching them.

So often have we seen properties not left in the right state afterwards – go
round yourself and stand firm on the costs to clean and return the property
to the standard that it was when they moved in. You are managing the
behaviour of the tenant and the agent. Video inventories are great for this,
and now should be standard practice.

Be proactive and friendly

This goes for you and the letting agent. The more proactive you both are,
the more you will get done in the shortest possible timeframe. The more
your agent looks after your tenant, is likeable, quick and efficient, the
more likely they are to both stay and pay your rent on time, every time and
treat your place like their own. Despite many myths about tenants, they’re
human just like us, and respond well to being treated well!

Remember your role in all of this. There is a chain that goes from you to
your agent to your tenant. If you bully or com-plain too often (or even if
you are too lenient) then life will be more difficult for you than it should be.

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An opportunity

Letting agents can also be a good source of deals. Make sure you let them
know what you want and how you work and open some potential doors
for referrals. Try to incentivise them to do this. If it is their own business
they could invoice you for a finder’s fee. This incentivises them and makes
them come to you rather than anyone else.

Always pay them on exchange immediately. It will only make them more
likely to do it again for you. It is amazing what money does to people’s
passion and productivity!

Summary

Letting yourself saves a little money but costs a lot more, and takes
up your time that could be put to better use. Vet, monitor and test
letting agents, find the good ones and keep them competitive to free
your time to buy more and more.

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#28. Protect the downside

There are risks to property investing, just like any investment. The upsides
are so big that the downsides can be bankrupt-inducing if you get it badly
wrong. Property can get you on the rich list or a repo list.

The R.E.A.S.O.N model will immunise you from most of the mis-takes, but
there are other factors you need to know to add a dose of protection and
commercial reality to your big goals and dreams of financial independence.

Keep your costs down

Everything that you spend on your property portfolio eventually comes
out of your profit (or your pocket). You must know exactly where (and
where not) to spend money. Keep a hawks-eye on your spreadsheets and
numbers like Mark Homer on steroids. Or get someone to do it for you (like
Rob has). Every pound saved goes straight on the bottom line, but every
pound earned has costs of sales, operational expenses and taxes to come
off, so a pound saved is more valuable than a pound earned. And as Mark
likes to say ‘every pound is a prisoner’.

Holiday homes will cost you £1,000s. Emotional refurbs to make a house
you’d live in could drain month or years of profit. Overpaying for properties
is a waste of cash. Bad mortgage deals can cost you for 25 years. Paying
a JV partner too much could eat all of your cashflow and leave you in a
legal battle.

If you want to profit, then you need to keep the costs as low as you can,
and then keep trying to get them lower. Now of course there is a limit,
doing things too cheaply so that it ends up being far more expensive in
the long run gives diminishing laws of returns. We are not talking about
cutting corners or pulling fast ones.

You will learn the right balance as you go, and it will be specific to your
area and the people you use. As a guide, be on the tighter, Mark Homer
end of the scale ;-)

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Always get at least 3 quotes for any job

In trades where the trades people hold the knowledge and skills, it is quite
easy for them to pull the wool over your eyes. Boiler quotes are the best
example of that. Most of the time you will get told you need a whole new
boiler system that will cost you £3,000 when perhaps it is just the ignition/
pilot that needs fixing. Boiler costs can vary by 100% or more. Refurb costs
can too. Scrutinise and itemise every cost, take out everything that is not
necessary, and then drive the price down again. People need your business
right now, and you’re probably having to do the same for your clients in
your business or job.

Be cautious and question all costs. The compounded effect of saving

10% on all your costs is likely to be thousands a year, and hundreds of
thousands, or more, in your life.

You set the expectation

Most people make the mistake of asking for a quote and accepting a
price. This is a big mistake. You should be letting any supplier/retailer or
tradesman know what you are willing to pay for a job or service and let
them meet your price. If they can’t, fine. Find someone who can. There will
be people out there who want your business.

Only make basic/light refurbs

When refurbishing a property, you’re not looking to make an MTV crib
footballer’s wives home. You’re looking to make the property clean,
rentable and neutral so that any person can quickly move in and make their
own mark on it. You may like purple carpet, other people may not. You
may like floral curtains, mint green wallpaper and brown bathroom suites
(if you’re still living in the 1970s), other people may not. The exception to
the rule is if you are developing flats to sell or boutique-style HMOs.

Spend your time and (tight) budget on kitchens and bathrooms and keep
them basic, neutral and cost effective. We use Howdens or go through LNPG.

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This is what most people will notice, and make the biggest difference on the
value uplift. Carpets should be neutral but dark enough to hide stains; walls
should be eggshell white or magnolia to look clean and open. Perhaps spend
on light fittings/lampshades or mirrors to make small rooms look bigger, but
remember every penny you spend is money out of your profit.

Match your refurb to the type of property you are renting out – lower end
means lower end. No need to spend on white goods, they’ll bring their
own and only cost you when they break the ones you put in anyway.

At Progressive we look to keep a full redec (redecoration) under £2,500

and a full refurb (redec plus kitchen and bathroom) under £5,000. These
prices haven’t gone up much since 2006.

The more you get tradesmen fighting for your work and the more you set
the expectation, the more you will be able to get them down to a price
that you want to pay.

B.O.Q (Bill Of Quantities)

Always produce a Bill Of Quantities (a list of what you expect to be done).
Go through it with the tradesmen and get them to check and sign it to
agree. Do not pay them all of the money until the job is complete and
you have snagged the B.O.Q (check it has been done and make sure you
oversee any corrections).

You know what happens if you don’t, don’t you? Jobs not finished. Jobs
not done properly. Once they’ve been paid you can almost guarantee
that unless the work has been done, the motivation to maintain the
quality will diminish.

Interest rates
Interest rates are a big expense for you. Whether it is linked to your
mortgage payments, cash held in the bank, or the returns you pay your JV
partners and money lenders.

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Bank of England base rate

Since the 1st edition of this book, when rates were 5.5% in 2007 and
people were worried about rate rises, the property market, in fact the
world, has changed, and rates have been held at 0.5% (at the time of
writing). It is predicted that rates will stay this low, but creep up. In reality
no-one knows.

Whether this is true or not, until the market completely recovers rates are
going to have to stay low to protect over geared borrowers and prevent
more repossessions. Of course there are many other factors – this is the
most relevant to investors. Our crystal ball says rates stay low :-) Doom
mongers may say something different. If you are reading this and rates are
relatively high, then look to have your investments in cash-related vehicles
and look for the innovations and opportunities that it brings

Low rates mean low interest for savers. Savers and wealthy people need to
get their money out of the banks, Money is getting eaten by inflation and
it needs to be leveraged, and the more money someone has, the worse it
is. Low rates mean lower cost of finance, which means higher net yield and
cashflow. ‘Benchmark Cashflow Neutral’ in 2006 was at the very least 2%
higher than it is now. On a £100,000 house, it was costing you at least an
extra £2,000 a year in finance costs, maybe more.

Protect against 80s style rate hikes. Despite low rates now, they will
eventually have to go up, we all know that. People who experienced the
rate hikes in the 80s felt how real and painful it was, and don’t want to
go through it again. Despite it being very unlikely to happen again, the
same results in a different way could occur, and it is smart to protect your
downside risk. There are 3 ways you can do this:

1. Get a fixed rate mortgage.

2. Get a variable rate mortgage.

3. Save the predicted rate rise as a contingency.

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4. Balance your ‘portfolio’ of mortgages.

5. Go for the bet deals at the time.

Let’s look at these:

1. Get a fixed rate mortgage

Depending on the market, you can get 5 and 10-year fixed rate mortgages,
which cannot go above a set level in the term of the fixed part of the loan.
This is a guaranteed way of protecting against rate rises, for the term of
the loan, and very secure. You know from day one what you’ll be paying.
You can work out your figures to cash flow with your fixed rate. Downside
protected, and you can sleep easy. But...

You will overpay slightly for a fixed rate vs. a variable (tracker) rate mortgage.
You’re paying (a little) extra for the security, and the banks want to hedge
against future rate rises by charging you more. It’s an insurance policy. But
if rates don’t rise, you could have paid a decent amount more over the
term, which could have gone in your pocket (which you can never predict).

2. Variable/tracker mortgages

Seems strange to say that this is a way to insure against rate rises. Well
it isn’t, but over the long term variable rates are, and have proven to be,
cheaper than fixed rate mortgages. This is because there is no premium,
but of course there is no risk protection if rates go high, quickly. If you have
mortgages on relatively short terms (2-3 years) it may cost you less to have
a variable rate.

3. Save the predicted rate rise contingency

Mark calls this self-insurance. As a tracker rate mortgage (variable with

the base rate) will cost less in the short term, you might prefer a tracker to
keep the net cashflow as high as possible. But there’s a risk – base rates go
high, and so do your payments. I (Mark), like to vary the mortgages across
the portfolio to mitigate risk, and so don’t want too many fixed rates.

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To protect against possible (though unlikely) quick rate rises, I’ll get a
tracker mortgage, and however much it costs less than the equivalent fixed
rate, I save the money in a high interest account (as high as I can get at the
time). I’ve been doing this for years and have built a big buffer that I can
earn interest on, or lend out to my property company, and it helps me sleep
at night. I’m quite risk averse, and I do worry about doomsday scenarios,
and want to make sure I’m covered. If you’re anything like me, mixing this
strategy with some fixed rate mortgages will suit your personality.

4. Balance your portfolio of mortgages

If you balance the number of fixed and variable rate mortgages, you
balance overpaying vs. the risk of rate rises. Whatever scenario hap-pens,
you are at least half protected of you have half upside. You might also be
governed by the types of deals you can get at the time.

5. Go for the best deal at the time

If I had the choice between a 3% variable or a 6% fixed, unless I thought

rates were going to go crazy, I’d take the variable. At certain times lenders
will do special introductory rates, or if your credit is really good, you have a
low loan to value (LTV) or you have a strong relationship with a bank, you
might get a good variable rate deal. SO you also make decisions at the time
as well as a more long term, strategic view.

If you balance variable, fixed, self-insured and best deals at the time, you’ll likely
have the best balanced portfolio of mortgages to balance risk and reward.

Protect with discounts

Yes, it’s one of the driving factors that make you money, but it’s also one of
the biggest downside risk protections you can give yourself. In a downturn
the discounts will likely be better, so you have addi-tional protection from
further drops in the market. The bigger the discount, the lower the loan
on the property, and the higher the cashflow, as loans/values will be as low
as possible compared to rents. The bigger the discount, the more liquid

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you are because you can exit quickly without taking a hit. You can sell at a
lower price fast and still make a profit or at least cover all your costs. Most
people only see the one side of getting discounts, we (Mark) think this is
the biggest benefit.

Cost of finance
With mortgages still not as free and easy as they were pre-2007, more
creative ways of raising finance will help you to property success. Some
novice investors assume that the terms will be better because they’re not
borrowing from a bank, which it can be, but it can also be the reverse if
you don’t know what you’re doing.

Don’t overpay on borrowed money from JV partners. Just because a private

investor or bridging lender wants 1.5% per month, and you need money for
the deal, does not mean that money is right for you. 1.5% a month, even
using the BRR strategy, is 17.5% a year! That’s 3 times the cost of an expensive
mortgage. You’d need a 45% discount to get all that money back out with
the deposit to pay off your JV partner! Bad idea, unless it is very short term.

Gill Alton, a well-respected Progressive VIP member, borrowed from her

family at 5% a year. Nick Hague, a fellow Progressive community VIP
member JVs on family funds without a repayment (he offered equity
share), others have borrowed at 6% - 8% a year. Fran & Jane Dolley
borrowed from fellow Progressive VIP members at similar rates. There are
many people out there who are looking for better returns than the bank,
and that’s not hard right now.

Your relationship skills

You are managing these processes and relationships. Things can go wrong,
in fact you should expect them to. If you have a clear vision, do the right
thing, are clear and fair, you will get respect from your power team, people
will give you space and forgiveness if things get tough, and you will stay
successful in property for the long term.

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Summary
Reduce your downside risk and keep your costs down. Get 3 quotes
for any job relating to your portfolio and don’t be tempted to spend
where you don’t need to. Think of property as a business with a tight
profit margin and don’t make decisions emotionally. Protect against
interest rate rises, don’t overpay when borrowing money and keep
good, fair relationships with everyone in your powerteam.

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#29. Finding the deals (marketing)

Your success in property in terms of cashflow, compounded growth
and protection from risk is defined by the strength and volume of your
property deals.

Marketing is how you get to communicate with the world; how the world
knows what you do and how you can help them. The consequence of
attracting people, who you help and serve, is property deals. It is the result
of your marketing. Visibility is credibility; you could be the best at purchasing
and managing the deals, but if no-one knows you, you don’t exist.

Self-marketing
The very 1st step in ‘marketing’ to find your deals, is to tell everyone
that you meet about what you do. Tell everyone that you are a property
investor, and that you buy properties and help people out of debt or
sensitive personal difficulties. Even if you are still in your job, and property
is something you are working towards but aren’t a tycoon just yet.

If you don’t tell people about what you do (and importantly how you can
help them) then no-one will ever know, will they? It sounds so obvious,
but you can be the most skilled buyer in the world that no-one knows, and
you’ll be the poorest most skilled buyer in the world. The sad fact is that
there are many skilled, knowledgeable people out there who don’t really
understand how to market them-selves, their products, their brand or their
services. You don’t have to shout in people’s faces, simply weave into a
2-way conversation what you do and how you help other people.

When I (Rob) used to paint, in my harder days as an artist, I totally knew

nothing about marketing, so little that’s it’s almost embarrassing. I couldn’t
sell because I was scared of rejection. No-one knew about my work other
than through recommendation, and the little talent that I had was totally
wasted and slowly driving me insane because I couldn’t get any of my work
seen, let alone sold. Sometimes I didn’t even want to tell people what I did,
in case they were negative about it, which would hurt me.

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In building your portfolio and finding the deals that you want, you need to
think of marketing as a 4-part process:

1. How you market yourself.

2. How you appeal to the needs of others/help them.

3. How you’re remembered (mindspace).

4. The vehicles you use for marketing.

Let’s look at each one.

1. How you market yourself

How you conduct yourself, your image, your brand (because everything
that says anything about you is your brand) is of vital importance. It is
remembered, positively, negatively, or forgotten, in the minds of your
target market.

How do you want to be known and perceived? What are your per-sonal
values? What are the most important things to you in your life? From your
personal values should come 3 to 5 ‘brand’ values – what you are all about,
and how the world sees you. These must be clear, and must be inherent in
everything you do and the way you communicate.

You should really take the time to think about this, as it drives every-thing
you communicate. To help you, here’s a reminder of the Progressive values:

Progressive | Innovative | Personal

These aren’t right or wrong, they are us. That’s why you don’t get dull and
boring from Progressive. That’s why you get the newest, most up-to-date
strategies. That’s why you can talk to us personally. That’s why we are still
going and still growing.

If our brand values were:

Professional | Consistent | Efficient

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You’d get an entirely different message from us, more like a German car
manufacturer or something. Not better, not worse, just different.

Perhaps you are organised, friendly, efficient, consistent and trustworthy? If

you are, sellers, agents and contacts will be happy to do business with you.
They may even go above what’s expected of them and surprise you because
of how you have treated them. They know what they are going to get with
you. They trust you. You don’t need to try to be whacky or funny or crazy,
you are who you are, and you can become the best at it, and the most
known for it. You can’t be and do everything, you can only be and do who
you are, with a dose of marketing to make sure people know who you are.

Just look at how Apple employees live the brand. How Richard Branson
manages to instill brand values within his organisation. He gets passionate
people working for him, and not necessarily paying the highest wages. He
conducts himself in such a way (passionate, committed, fun-loving) and
people are attracted to that.

He instills ‘sex appeal’ in his brand and does anything however out-landish
which will generate media coverage for Virgin. Now we are not talking
about dangling yourself in the buff over Times Square or bungee-jumping
100-feet below a helicopter to be landed among 100 beautiful female
lifeguards on Bondi Beach (although this would be nice :-)), but getting
out there and using yourself to get other people to believe in your brand.

Take your time to brainstorm your values, which shouldn’t be hard because
they are who you are with a dose or who you want to be-come and known
for, then live by them and push them through all your communication.

There’s a section in the back of the book for you to brainstorm your values.
Come up with 25, then chop them down to 10-15, then ask as many
people as you know to pick 4 that say the most about who you are – it’ll
soon become clear.

Turn to the appendices at the back of the book.

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2. How to appeal to the needs of other people

We are not really talking about the traditional definition of market-ing
here; something like:

‘The total of activities involved in the transfer of goods from the producer
or seller to the consumer or buyer, including advertising, shipping, storing,
and selling.’

Thanks to dictionary.com, though it doesn’t really help us to make profit in

property. Every great marketer we’ve studied will say that marketing is about
how you deliver a message that triggers a desired decision in someone’s
mind. It’s about cutting through the noise and mass of information people
are exposed to, getting positive mind-space and turning that into your
desired action.

That could be a buying decision (action) for someone to buy your packaged
deals or give you JV finance, or a selling decision (action) such as a vendor
selling you their property or an estate agent giving you first choice of a
great property deal. What is important is that you understand the ways
in which you communicate, and how they can trigger (or turn off) the
action and outcomes of the customer or recipient of your service. If you
can occupy space in the mind of someone you want to make a decision,
you have nailed marketing. If when someone local thinks of selling a
property they think of you, like you might think Nike for trainers or Apple
for computers, then you beat your competition and attract deals to you.

OK, so here are the fundamental things in marketing that you must
remember, and then we’ll move on to the best marketing strategies to
help you find the best deals:

Trust

People will only buy from or sell to people they trust. Remember that in
some instances you are buying property from people under very sensitive
circumstances, so they absolutely must be able to trust you.

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Trust and permission-based marketing works. Pushy, spammy marketing

does not. And the same principles always apply in person, in print or on
screen.

Anything that you can do to increases trust comes off the asking price and
you get more properties, faster and cheaper, with less buyer’s remorse.

Putting a woman’s name instead of a man’s name on a leaflet to receive a

call increases conversion, because of a perceived increase in trust.

Real pictures of you and a friendly, up-to-date website with full contact
information increases conversion because of a perceived in-crease in trust.

Handwritten leaflets increase conversion because of a perceived increase

in trust.

Testimonials and how others have benefitted increases conversion because

of a perceived increase in trust.

Go to all lengths to gain the trust of your vendor. In an increasingly

untrusting world, you stand head and shoulders above your competition,
without having to be all sales-y and pushy. Even if you don’t end up buying
the deal or winning the decision, do the right thing by people, help them as
much as you can, because everyone will likely tell 3-5 people about you, and
that’s a lot of free positive marketing if they have something good to say.

Understanding your target market

The vendors and agents you work with all have wants, needs, pains and
importance drivers that are most important to them, in their life. As we all do.

If you’re running newspaper ads, what publications would your tar-get

demographic audience read, what is the common age group, what are the
pains they want alleviating and problems they want solving? The more of
this information you have, the more targeted and specific your marketing
is to your target customer, and the more on point your message to them.

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Put yourself in their shoes, in their skin; see the world through their eyes.
Work out what motivates them and leverage it. What makes them take
action? Get feedback from those you’ve helped previously and use this
data to communicate with other people like them.

WIFM? What’s In it For Me?

This is all that people are interested in: period. They don’t care about you;
they just care about how you can help them or how your product or service
can benefit them, ease their pain and make their life better.

The more you understand the people you are communicating to, their
behaviours, decisions, interests, places they go, films they like, the more
you can communicate to their model of the world, tap into their desires,
give them those things, and you profit as a natural consequence of
providing relevant service.

We all like to be around, buy from and sell to people we like and share
common interests with.

“No-one likes being sold to, but everyone likes to buy.”

Communication

Whether it is how you speak to an estate agent or how you write your website/
leaflets, how you communicate is how you ‘sell’ or buy. Understanding
your market is not enough. You need to know how to communicate with
them effectively so that you trigger that desired decision.

The art of the spoken and written word is simple. Be clear and concise.
Use plain and simple English that everyone can understand (no-one likes
a smart-ass self-styled Guru do they?). Talk in terms of other people’s
interests and get them saying Yes. Think WIFM and benefits. Use the word
‘You’ at least 3 times as much as you use the word ‘I’. Listen at least twice
as much as you talk. Then ask nicely for the decision.

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Testing and measuring

This is quite possibly the most important aspect to marketing, and one
that most people overlook completely. The best ‘marketers’ in the property
world; the ones who get consistent deals of 25%+ evi-denced discount, do
so because they continually improve and tweak their marketing, constantly
moving towards the best practice and most effective method.

In order to be able to continually improve, you need to measure each

marketing medium that you use, knowing all the numbers and KPIs (Key
performance Indicators)(offers, leaflets delivered, calls, offers, purchases),
and always trying to beat your best marketing results.

Most people guess or go on what they would like. Which means they lose
money.

It takes the guessing out of everything, and creates predictable, sci-entific,

scalable results. It reduces cost and risk.

Use different phone numbers on leaflets. Use Google Analytics on your

website. Split-test ads on Google Adwords to keep improving them. Split
test ads in print media. You should always A/B test (split test) one thing at
a time (headline, text font, pictures etc) and con-tinually try to beat your
best performing ad. As you build up split test results, your conversions
keep increasing.

“Investing is all about testing. Test. Test. Test.

Protect, replicate then aggressively scale up.”
- Mark Homer

The ‘cost’ of marketing

Everything in life comes at a cost, even ‘free’ marketing such as es-tate

agent sourcing, and it is important that you know what your cost is.

And that cost is not just financial. Factor time costs in too, because it could
be cheaper to spend money rather than spend your time.

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How much time out of your life does your marketing take (example:
delivering leaflets yourself)? Is that time replacing other tasks that make
you money, enjoyment or ultra high IGV?

Property can be a very time intensive career if you don’t monitor the time, and
that needs to be measured (against financial cost) so that you can get the right
balance for you (or get someone else to do it for you) so that you can take
the benefits without the time cost. Stay clear on your vision and why you are
getting into property when you make these micro-marketing decisions.

Your website marketing may cost 10 times as much as your leaflet

marketing. You won’t know until you test. If it takes you 35 offers to get a
deal with your local estate agent, but that takes up 55 hours of your time
at £20 per hour value, could you source more deals in-vesting £20 x 55 in
other direct to vendor (D2V) marketing strate-gies?

Testing will give you the answers. You can ask for results/advice from those
who have gotten the results to give you a leveraged head start, but your
results will end up being unique to you.

3. How you’re remembered (mindspace)

Unless you and your marketing are memorable, you don’t exist, not matter
how technically good you are. The best is the most visible:

“Visibility is credibility.”

What makes you unique? What makes you stand out from the rest? What
brings you to the top of the estate agent’s mind when they get a call from a
lister with a really cheap deal, such that the first person they think to call is
you (regardless of experience)? What makes other people talk about you?
What are you most known for that people want to talk about?

Your memorability, share-ability and mindspace are your most powerful,

leveraged marketing strategies. This is what causes recommendations
and referrals. This presells the decision you are looking to get before you

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engage. Like someone who recommends a great film to you, it just makes
the decision easy and low risk. We are all looking for certainty when making
decisions, especially finance related decisions, so the more certainty the
easier and faster the transaction occurs with less remorse.

4. The vehicles you use for marketing

Marketing vehicles part 1

At Progressive we use many forms (vehicles) of marketing. Better to have

multiple marketing channels than one, because the effectiveness of each is
always changing, and you risk your leads/business drying up if you are too
reliant on one or a select few.

These vehicles of marketing can be for sourcing properties or cus-

tomers, and include direct mail, e-mail marketing, joint ventures, affiliate
marketing, leafleting, business directories, forums, CPA/CPL, social
media, estate agents, SEO, Google adwords & Facebook PPC, viral and
article marketing, Youtube paid and free, banner advertising, commission
incentives, auctions, ‘birddogs’, word of mouth re-ferrals, and so on.

Here are the first and most important few to get you started sourcing the
best deals locally to you.

Estate agents

Estate agents could be vital to your negotiation and dealmaking success.

The great thing about sourcing through estate agents is you don’t have to
pay for entry into the agency, you don’t have to pay the ‘consultant’ for
his time, and you don’t even have to pay the vendor to buy their property,
or the agency: a virtually free way to make serious money in property. In
what other business can you achieve such leverage?

Estate agencies are the places where virtually all properties are sold, so why
go against the tide. And it’s an end to end, mostly ‘done for you’ service.
And you pay on results, not upfront. And it’s a highly competitive market
so you can negotiate fees.

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It doesn’t matter what you think of estate agents (and any, often false,
preconceptions you may have) you need to make them your allies and
friends. We’ve bought over 450 deals through estate agents alone, and
in the early days when we didn’t know how to source deals any other
way so it was our Golden Goose. Still is to this day, though we use mostly
commercial agents now.

You must deal with each agent differently depending on their character,
age, sex, role in the agency. The end goal will be to have a relationship
with the agent that is more similar to friendship as opposed to a business
relationship. Contrary to what many people believe, most are hard working
with a lot of industry specific knowledge, which you can leverage. They
want to sell properties, make money and be a success, you want to buy
properties, make money and be a success, so your interests are perfectly
aligned. And if you like to help people then the set up is perfect because
you help the estate agent pay their mortagage and the vendor sell their
house, you help the solicitors and brokers earn fees, refurb teams and
tenants too.

Despite working on behalf of the vendor, estate agents can be very helpful
to you. Their job is to sell properties and meet targets, and for that they
need buyers as well as sellers. They need to match buyers with sellers and
price the properties that work for both par-ties to get deals sold. Their ideal
buyer would be fast, efficient, friendly and trustworthy, and someone who
is going to buy over and over. Does that sound like someone you know?!
This will naturally reduce the buying price.

Despite the increase in direct marketing methods, perhaps 90% or more

of the houses sold in the UK are sold through estate agents. There is a
lower marketing cost through agents (virtually free) and there is better
leverage in getting an agent (or many agents) doing the groundwork for
you. Buying through estate agents effectively is a very leveraged operation,
getting calls for the best deals first without doing the work.

Estate agents need good buyers like us, like you, as much as we need them.

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Not only do they have sales targets, they also have heavy competition from
other agents to be proactive so that they don’t lose their listings to other
agencies. This would be a disaster to an estate agent, not so much because
of the loss of a couple of grand commission, but more for reasons of
competition and reputation.

Just viewing properties and making offers will build rapport and gain the
trust of agents, getting you closer to your first deal, or your pipeline of
many future ones. This will be your ‘alone time’ with the agent out of the
office where you can ‘test’ some information gath-ering about the vendors
motivation, who else gets the best deals, if they understand ‘no money
down’, if they are proactive, hungry, motivated, what drives them and so on.

Viewings not only enable you to build out of office (honest, reveal-ing)
rapport with an estate agent, it goes without saying that without viewings
you can’t offer, and without offers you can’t buy. You also help estate
agents hit viewings targets, which many of them are measured by, with
their bosses and vendors. They will also tell you things on viewings they
can’t/wouldn’t say in the office in front of their boss or other agents that
work in the office that they are highly competitive with. This knowledge
is also vital because this is where you get inside intelligence about vendor
motivation, history of the deal, how many other buyers are interested,
how sticky the deal is, whether the agent wants to shift it quickly. Your
low offers may at first start as favours to agents for perceived activity, but
some will turn into deals.

It’s a numbers game. And your numbers will get better the more you view
and make offers (make sure you track all the data). And all those things
you might be worried about (low offers offending, too many offers might
get you more deals than you can finance, you might be seen as a time
waster, etc) will disappear with the real ex-perience and rapport.

**Fundamental tip No.5

Revelation alert: The more properties you offer on, the more you will get.
Keep the numbers up and this will help you get better/more deals. Then
you can reduce your viewings when you know what to look for.

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The more you offer on at the price you want to pay, the more you will get
at the price you want to pay.

If you want 10% BMV (Below Market Value) deals, you probably won’t have
to view that many to get one; maybe 3 viewings to one deal. If you want
25% BMV deals (which are out there) then you’ll have to view more and
offer lower; maybe 20 to 30 viewings to one deal. But those deals are out
there. If you buy 100 deals, at least 10 of them will be 30% - 70% BMV.

We have built up a network of estate agents in our local area, many of

whom have become genuine friends. It is essential to strike up a good
rapport with your agents and become someone who they will call ahead of
the rest of the pack. Trust and friendship - ‘people buy people’. You’ll align
with some more than others. You won’t win them all, but you can keep
developing relationships with existing and new estate agents.

It is also very important to build rapport with everyone in the estate agency,
not just the boss or immediate agent/decision maker. Not treating the admin
people well and building rapport with everyone is a big mistake because a)
they could have a good relationship with everyone in the office b) they could
be the boss’s daughter, spouse or lover(!) c) they are likely to be involved in
the purchase transac-tion at some stage/level and d) they want respect and
importance just like everyone else and could be your best route in.

A great way to become close to agents is to go out socially with them and to
go above what they would expect of you. Perhaps take them out for lunch
occasionally. Think about what it is that they want. Maybe they have specific
interests that you can relate to? Find out what it is that gives the agents their
importance and significance. It might be success, power, respect, beating
other agents targets, recognition, tanning vouchers, track days, dental work
(all real ex-amples) or simply someone who is nice to them.

Ensure you have done all your number crunching before you view, or
on the Deal Analyser App while you are viewing, so that once you have
viewed a property get back to them immediately with your thoughts and
an offer if necessary. If you can make an offer or at least discuss price

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there and then, the agent will see you as a serious buyer. If not, at the very
least commit to calling the agent back in the morning (‘I just need to run
over the figures overnight, I will get back to you at 10am tomorrow’). Tell
them you will call them to-morrow and make sure you call them before
they call you at the time you stated. Offer if the deal is right for you, and
don’t waste time. And if the deal isn’t right, either offer very low so that it
is likely to get rejected (or if you got the deal the numbers would work), or
give them genuine, honest feedback as to why. That way you teach them
gradually what you would buy.

This will let them understand in a more specific way what you are looking
for and will keep you in their mind for when the next deal comes along if
the offer does not get accepted.

We will detail specific offering and negotiation techniques in the next chapter

Mindspace

You need to ‘occupy a space’ in the estate agent’s mind, especially if you
are just starting out. You’ll only have a split second when the agent gets
the call from the lister of the estate agency, that a brand new deal at a
great price has just been signed up, to pop into their mind. As soon as
they get that call and way before the deal gets back to the office or in
the window, the estate agent thinks (not even consciously) ‘Who do I call
now?’ If it is you, you get the best deals first, fast and with least effort, if
it’s someone else your competition wins and you don’t even know what
great deals are out there.

Be memorable by complimenting the agents attire or accessorising. Talk

about the market. Joke about other investors. Have fun. Smile. Be quirky.
Talk about football or their interests - anything to differ-entiate yourself
and be remembered. Make an impression.

Estate agents get people all the time who are ‘investors’ and who walk
in asking for the ‘deals’ and they get pretty sick of it. Do not be another
number; these are called ‘binners’.

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Always be honest with them. If you don’t want a property tell them
immediately and why, but be very short with the dislikes and let them
know what you do want. Educate them progressively with feedback after
each viewing and non-offer. If you do want to offer (techniques in next
chapter), try to gauge where the vendor is (what is their expectation and
motivation?) on price. The agent is likely to know this, so if you get on the
right side of them they are likely to tell you.

Although they ‘can’t tell you’ exactly what offers they have had for a
property, they will be able to give you a ‘good idea’. This can be really
helpful for you on giving you the inside track, saving valuable time and
chasing the right deals at the best prices.

You may not get the property the first time of offering, as the ven-dor’s
expectations may be too high (in terms of price or timescale to complete).
It may work later for the vendor though, and you may get the property
for a reduced amount, when the market has reduced their expectation.
Remember the technique of pipelining every deal you view, so you either
get it now or you check back in around 8 weeks time.

Never but never pull out of deals - this is so important. You will shatter
any trust you have with the agent and make it very unlikely that they will
give you any deals again. Your reputation, credibility, and professionalism
(what others say about you) is your brand, and you’re only as good as your
last deal. If you offer, make sure you have every intention of completing. If
you are making offers based on a numbers game and you still need to find
the finance, that’s OK - use this as the motivation to go and find the finance,
no matter what. A good deal will usually always find finance anyway. Use
the accountability of not pulling out of deals and your resourcefulness in
finding the finance when you need it the most.

The whole idea of them coming to you with property is that you are a fast
purchaser who is not in a chain. You guarantee to buy, and buy quickly
and without hassle or risk, and they will be guaranteed to earn their
commission quickly.

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They can then ‘sell’ this to the owner of the property who actually needs
a purchaser like you. It gives you advantage over other buyers who might
even offer higher, but be less likely to complete. The agent has to balance
the higher offers but lower likelihood of com-plete versus the lower offers
you might put in, but a guaranteed sale. It is often in the vendor’s best
interests to get a sale at a lower price than not get one at a higher price.

They may be in financial difficulty and facing repossession of their home,

which you will stop if you purchase their home (quickly). They may be
going through a divorce or the property may be part of an estate of a
deceased person and the executors may be trying to sell it quickly to pay
the inheritance tax.

The point is that all of these situations, covered by the D.I.S.R.U.P.T

formula, require a fast guaranteed sale and in return these vendors (or
sellers) are willing to accept a reduced under market value (BMV) price for
the property. In these circumstances price is not the most critical factor. The
agent is looking for a purchaser like you to take the property - someone
who can offer a sure, fast sale.

And then do it over and over on the next deals.

**Fundamental tip No.6

To get great BMV Property, you need to find vendors whose primary
motivation for selling is not price.

So even if you realise that you have paid more than you wanted to, or that
the refurbishment work may cost more than you thought, go through with
the sale. Your word is your bond. You will make good money in the long
run, and your first/next deal isn’t likely to be the best anyway. Let’s hope
it isn’t. Commit and go through with your promise and trust will be given.
This will earn you future deals. It will cost you a lot less in the long run.
Agents (like everyone) talk, this is what they do for a living, and you want
them to be talking about you in the right way: positive mindspace.

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You may also find that you are competing with the owner/manager of an
estate agency (the Godfather) for deals, as they are in a perfect position
to take advantage of them. They see deals everyday because that is what
they do.

It is a good idea to try and get on the right side of the owner or manager,
if they are taking deals themselves. I (Mark) can think of one particular
owner of an estate agency in our town who has bid on the same proper-
ties as me. This has happened for sale both through his agency and
through others. This has not always created a great situation and I wish I
had managed to form a relationship with him beforehand.

Buying and selling houses, whilst popular on TV, costs a lot more than
people think. On average it costs about 10% of the sale price to buy, pay
the mortgage and sell a property in 6 months. On top of this you a have
the refurb or renovation costs, your time and tax. Re-read the section on
‘flipping’ deals in this book if you want to use this strategy.

In the next chapter we will cover the specific offering and negotia-tion
strategies you can use with estate agents to get more deals from them.

Leafleting

Leafleting has provided us with 4 of the top 6 best ever deals we have
attracted in discount terms, the best of which was 72% dis-count from
sale price with a corner plot piece of land that we sold off too, and kept
the house. We have sourced dozens of deals through leafleting and they
are almost always very good deals. On average they will be even better/
cheaper than deals through estate agents. For someone to respond to a
leaflet through their door would suggest they are very motivated, you get
to deal and negotiate with them direct, and many of them don’t like estate
agents and so don’t want to deal with them or have had bad experiences
with them.

If you get leafleting right, it can pay you handsomely.

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When you advertise ‘direct to vendor’ (D2V), you deal directly with the
vendor, not with an estate agent. You also often find them at the 3rd stage
of motivation: desperation. Last resort attempt to sell their property is to
pick up a leaflet off the front door mat of their house to sell their property,
so they don’t have much time and have to accept a lower price for speed
and certainty of purchase.

The important concepts about leafleting are:

Targeting: only drop leaflets in your Goldmine Area within areas. There’s
tens of thousands of houses you don’t want, so why waste your time and
money delivering leaflets to the houses you’d never buy anyway?

Reduce volume, increase frequency: far better to deliver one leaflet a

month for 6 months to the same property, than one to 6 different houses.
It takes time to build trust and visibility, so reduce the volume, target the
area, and deliver every month for 6 months at least. You’ll get noticed more,
trusted and therefore more deals. Plus they might not be motivated when
they first see your leaflet, but the motivation may grow over the months.

Make the leaflets personal: the more personal the leaflet, the more
leads and deals you’ll get. Personal handwriting, women’s names, home/
mobile phone numbers, and pictures all give a more personal feel to the
leaflet, and higher response rates.

Split test: Always test one thing for every leaflet drop. Test the paper, the
colour, the headline, the font, the name, the phone num-ber, the wording.
On EVERY drop, just test one of these variables each time, keep a note, and
after 10 or 20 tests, a 1% improvement on each variable compounds to a
lot more leads and deals.

The easiest way to test a leaflet drop is to have a different person’s name
on the leaflets being tested. When the leads calls, notice who they ask for,
and you know which of the 2 leaflets it is.

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Strategy: personal or leveraged? Decide from the outset if you are

going to be personally involved in the leafleting/buying process. If you
want to view and visit the vendor and help them personally, you’ll probably
get the best conversion. If you like helping people, this will align with your
values too.

If you’re busy or want to grow a business, setting up a virtual assis-tant

(VA) to take all the calls, manage the messages, pass the leads through,
even visiting the vendor and doing the deals, will be important to you. This
takes some training, and isn’t always as highly converting, but leverages
your time.

Monitor delivery: people often think their leaflets are failing, when in
fact they’re not even getting through the door. It is NOT a given that
the first person or delivery vehicle will get all your leaflets through every
letterbox.

Test local paperboys vs. local delivery companies. You can find both at
your local business clubs/BNIs. Test these vs. Royal Mail door to door.
Each delivery ‘vehicle’ will vary in your local area, and testing these is as
important as testing the leaflets themselves.

You should expect 5-20 calls per 15,000 leaflets, and one deal every
25,000 leaflets. Of course this varies area-to-area, and market-to-market,
and how good your leaflets are.

Newspaper ads: we turn newspaper ads off and on as we need to scale

up or back our buying volume, depending on how many deals we want
to buy. Our regular buying volumes are 5-15 deals per month. If we want
more volume, we’ll put some newspaper ads in, negotiate an 80% discount
from rate card price, and will usually get a deal within the first 2 months,
putting in 4 ads per month.

When we switched on our newspaper ad campaigns recently we got 2

better than 30% BMV deals within the first 4 ads (the first month). Well
worth the small investment, which again will vary from city to city. You
should be paying less than £500 for a ¼ page ad.

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There are many different types of newspaper ads you can run, in different
publications and different placements of those publications.

We suggest you read your local papers daily and look for the ads, their
placement, how they engage you, and ‘model’ and test them. Don’t re-
invent the wheel. We use the 2 local rags, the free Friday ads.

All of the rules for leaflets apply for newspaper ads, with the following
additions:

Test ad placement: it’s often best to put your ad in a different place to all
the property ads, as there is less competition for the eyes. But you’ll need
to test sections, pages, sizes and so on.

Negotiate hard: but fair. You should find out the print deadline and tie
up your deals at the latest possible time. There is always ad space, and
publications really need advertising business now, so you should be getting
50% to 80% off the rate card price.

Test publications: free publications often work best for LHA type housing,
and higher end paid publications for ‘Boutique’ HMOs. Match publication
to strategy, but always test first.

You should expect 7-15 calls per ad, and one deal every 4 ad place-ments.
Of course this varies area-to-area and market-to-market.

Social Media: the power of social media needs no introduction, but how
to monetise it and use the time effectively does. No-one wants to get
sucked in hours on end in mindless conversations tak-ing you away from
your real income generating activities (IGAs), and if you’re not careful
that’s exactly what social media does.

So let’s be careful. And smart.

The great thing about social media, especially sites like Twitter, facebook,
LinkedIn and YouTube, is the access to many millions of people from your home
computer. You literally have access to half the population at your fingertips,

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without having to leave the house. This includes sellers of properties, estate
agents, customers for your packaged deals, as well as JV partners.

And even better is that it’s totally free.

Using the search facility on facebook and LinkedIn, you can search for any
group that you want to be a part of. It’s just like having Google within
social media sites and you can quickly find all groups and communities for
your specific target audience(s).

For example, if you type in ‘property’ in facebook, a drop-down bar will

appear with all of the property and property related groups. Simply add
yourselves into all these groups (assuming you have a facebook account)
by clicking on them, and over a period of a few weeks have a look in each
one to see how active these groups are. Where there are active discussions
between people, and genuine value and sharing, become active in the
group. Where there are just spammers and people selling trainers and
sunglasses and people wanting to love you long time, remove yourself
from these groups.

In the property groups alone you’ll probably connect with up to 50,000

unique people in 20 to 25 active groups within the facebook and LinkedIn
communities.

Oh and did we say this is all completely free?

You can do the same thing for ‘joint ventures’, local town or city groups
to find vendors, ‘business’ and ‘Entrepreneur’ groups, ‘sell your house’
groups. Just keep thinking of relevant keywords and phrases and search.
You can even target specific motivations such as ‘divorce’ groups and
people moving abroad.

Through all these social media channels you’ll be able to find all your local
networking groups for property and business, and meet local investors
JV partners and vendors. Progressive Property have property network
meetings all across the UK called PPN (Progressive Property Network).

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Search on Google or facebook and find your local one.

And the great thing about facebook and LinkedIn, is that if you use it
properly you will get instant connection and trust much faster than having
to meet face-to-face, or not being able to find the target group so quickly.

You also get quicker access into other people’s very valuable net-works
that they have taken years to build and nurture

Did we say it’s free?

Add us on facebook and you have immediate access to a very well

connected Progressive Community:

www.facebook.com/groups/progressivepropertycommunity

JVs: There are some really smart, leveraged ways to JV with people in the
property business to get cheaper deals before anyone else. Here are the
ones we’ve done, though you can get as creative as you like and work with
anyone who you think could get access to the types of properties in your
local area that you want to own.

Window cleaners: we have to confess that we didn’t design this strategy,

we borrowed it from a Progressive Community member, Andy Watkiss.
Andy bought the best part of 40 deals in a very short space of time, half
through leaflets, and half JV’ing with a window cleaner, all whilst still
working as a full time lorry driver.

He approached a window cleaner who was cleaning the windows on his

local patch (not to demand Mafia money), and asked him if he’d consider
putting some signage on his van advertising to buy houses.

Here’s the deal they cut: in exchange for double sided signage on the
window cleaners van, Andy paid his tax and insurance on his van for one
year – around £200.

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That’s £200 for a constant advert that drives all day every day around his
local area, stopping outside each house for 40 minutes a time and waits for
him to complete his job, until he’s onto the next, like postman Pat.

This single strategy produced 20 discount ‘BMV’ deals. Clever right?

If you want to watch the interview, you can see it on the Progressive
YouTube channel, simply visit the page below and search ‘Andy Watkiss.’

www.youtube.com/progressiveproperty

Take-aways: another smart, creative, competition-baffling JV is with local

take-aways. Visit the local take-aways on your patch (don’t demand Mafia
money), order a big order from them, the biggest they’ve had, and while
you’re waiting ask conversationally who owns the place while looking at
their leaflets. When you find out who the owner is, ask them if they’d like
help paying for and/or delivering their leaflets, and you’re in.

Once you get agreement on this, share the cost of the delivery with them,
in exchange for an ad on the back of the leaflet, about 1/3 of the size of
the back page. No bother to them, perfect ad space for you.

This might not yet sound as smart as it really is, but ask yourself this: if you
get a leaflet through your door, do you chuck it away? Yes, we thought
so. But...

If you get a take-away menu through your door, what do you do with it?
That’s right, you put it in your drawer or better stick it on your fridge for
when you get dumped or have a lonely night in, right?

It just sits and waits patiently until the vendor is ready to sell, and generates
far more ‘calls per menu’ than a leaflet ever will.

And when you have 2-3 window cleaner or local tradesmen with ads
on their vans for you, and 2-3 local take-aways with your ads on, your
advertising owns the local patch and the deals flow.

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Postcards: have a drive around your local area, and make a note (Mark: on
a spreadsheet) of all the shops, take-aways, news agencies, post offices,
pubs, doctors surgeries, pound shops, supermarkets; all retail.

Then buy a batch of 5x8 postcards, and hand write a simple advert about
buying houses in the local area, paying all fees, helping people out of debt
and making a fast, easy, discreet offer and purchase. Colour photocopy
around 30 of them and keep them in the glove box of your car.

Then each time you go on a viewing (to leverage your time), drop in to a
few of these places and ask if you can stick your postcard up. A few may
say no, most will say yes, some will charge a nominal fee.

With each viewing you ‘own’ more of the advertising in your local patch,
and you have more chances of getting in front of the right eyeballs to get
more deals.

A nifty trick Alan Graham did, as a headmaster at his school (you’ll re-
member him: he’s one pair of the ‘Buy-to-let Doctors’) was to issue out
more detentions so that whilst supervising his (now full) detentions he
could get all the kids handwriting his postcards for him as ‘punishment’.
Thought you’d like that one, but we’re not recommending it! You could
handwrite them in nice bright colours and then colour photocopy them so
you only have to write up one.

Forums (paid & free): forums are a fantastic source of low cost or free
leads for almost anything you can think of in your property business. In
fact, you can decide exactly what type of lead you want, and then find a
forum that will have those kinds of leads.

Let us give you an example. Here’s a reminder of the a 7 motiva-tions for

someone selling BMV:

D. ivorce

I. n debt

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S. caling back

R. elocation

U. psizing

P. robate

T. enant issues

If you want to specifically help people who are getting divorced (and
make a handsome profit in the process buying their property), simp-ly
type ‘divorce forum (insert your local area), or related keyword phrases’
into Google. If your local area is Plymouth, type in ‘divorce/ forum/advice
Plymouth’ and you will have access to forums filled with your potential
customers/vendors. Some forums/groups will be local, some national, and
some linked to ‘real life’ events and groups, not just online.

IMPORTANT:
You must make sure that you have the vendors’ best interests at heart.
Fishing on divorce forums and breaking up relationships just to buy BMV
property ain’t gonna send you to heaven ;-)

The great thing about the property industry is that you have the power to
really change people’s lives. When a film company on be-half of Channel
4 came to us to film our ‘property business’ (that’s what they told us) the
camera crew were blown away that vendors actually thanked us, were
hugely grateful, many of them breaking down in tears, because of how
much we had helped them and eased their financial pain - and every time
we are buying houses at 30% plus BMV. We think they were expecting us
to be taking advantage of people: they were genuinely surprised (and the
show never got aired).

The same thing happened when we filmed ‘Super Landlords’. The film
crew had a perception of what capitalist property investors are like, and
they were proved wrong many times over when they saw how we turn
around disused properties into Boutique living spaces and how we’ve had

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many of our tenants have been tenants for life. You really can make one
hell of a profit and still go to heaven!

So if you want to find people with financial based motivations, simply

type in ‘debt forum (insert your local area here).’ Keep doing it for all
the motivations, add value to people who have problems through time,
knowledge, understanding and offering solutions to problems, and you
will find an abundance of free ‘motivated seller’ leads.

Because you are finding people with the specific motivation, you are much
closer to the sale of the deal that if you just find ‘property people’.

You can also find people in different industries. You can network online
at business networks, business angel networks, other wealth creation
industries, and of course you can do the same offline – go to charity balls,
rotary clubs, business angel events, parties, social events, launches and so
on and you will meet the people who want the returns you are getting,
want the knowledge you have, but don’t have the time, belief or desire.

Probate: When a house owner dies the property usually needs to be sold.

Unless the estate is being administered by a professional entity such as a

solicitor, bank or trust company, the person who obtains au-thority to deal
with the estate will often be a family member or friend. They may have
been very close to the person who has died and so it’s important to be
sensitive to their situation and feelings.

Where settlement of the estate is being handled or assisted by a

professional, negotiations may be more formal and drawn out but your
objective should always be the same - to acquire the property you want for
the right reasons, for the right price and within the right timescale, while
helping others to move on in the process.

Access to bank accounts and investments and other assets is re-quired in

order to pay debts and taxes. Then the estate can be dis-tributed to the
beneficiaries but none of this can happen without a Grant of Probate or
(where there is no Will) Letters of Administration.

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All funeral and other expenses, liabilities and taxes need to be set-tled so
that the value of the estate can be distributed in accordance with the Will
or, if there is no Will, the rules of intestacy.

If the house does need to be sold then the person who has that re-
sponsibility may well be a motivated seller. To them, the house is likely
to be more of a burden than an asset because, for example, it may be
some distance away from their own home, yet it needs to be kept secure
and marketable while there is a continuing need for bills and maintenance
costs to be met.

For these and many other potential reasons the opportunity to buy a
Probate property for a purchase price below market value can arise. The
property may not be up to modern day standards because its fixtures and
fittings are dated, or it may have a poor layout, or lack of facilities. Perhaps
it has been adapted to meet the needs of someone with disabilities or
limited mobility resulting in the need, say, for a bathroom to be reinstated
or a stair-lift removed.

It’s possible that the seller, on behalf of the beneficiaries, would rather
accept a reduced sale price in order to settle the estate quickly so that they
can move on with their own lives. There could be numerous beneficiaries,
none of them expecting to benefit from the estate to any large extent and
simply wanting to receive their share without delay.

For property investors who want to buy, control or deal-package houses it

can be a worthwhile strategy to seek out Probate properties because the
search will be more targeted than other methods.

Whatever your investment strategy might be, the chances are that a Probate
property will give you a great opportunity that many other investors aren’t
leveraging. Probates are particularly good for ‘flips’ (buy - refurbish –
resell) or to buy, add value and then resell. This is because Probate houses
are quite often larger, non-estate houses on larger plots. They can also be
of more substantial construction and generally quite well maintained.

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While on the subject of plot size, look out for land development opportunities
because obtaining planning consent is a relatively sim-ple process and parts
of gardens sold on as building plots with the benefit of outline planning
permission can produce a quick, cost efficient, investment returns.

Probates, like repossessions, can also be good for single-lets and multi-lets
because of the opportunities they present for you to buy :: refurbish/add
value :: re-mortgage :: rent. However, Probates are likely to have the
advantage over repossessions that, because financ-es probably won’t have
been so tight, they will have been generally better cared for over the years
and the last occupant won’t have trashed the place before they left!

Given the right circumstances, including a sole beneficiary of the estate,

even rent to rent or lease options can be achieved and, for those who want
to start or expand a deal packaging business, Pro-bates can provide an
unending source of leads.

Anyone who is thinking about focusing on Probates should keep the

following points in mind:

1. You may be dealing people when they are at the lowest point in
their life having recently lost a much-loved relative or friend. You
have to be sensitive, ethical and completely profes-sional. This is not about
taking advantage of other’s misfortune. If it isn’t possible for you to provide
a solution to a problem, whether or not you stand to gain any advantage
in the process, it’s best to be able to move on with a clear conscience. The
motivation is caused from the situation and that will create the pain that
you can alleviate. When you secure a deal through Probate it’s very often
rewarding as you know you have helped a family. Many of us have suffered
loss of some sort in our lives so you can draw upon your own experience
when dealing with sellers to build connection and show that you care.

2. Bear in mind that a quick, straightforward solution may be just

what the seller needs to enable them to move on.

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3. Probates come in all shapes and sizes from the tiniest house through
to the biggest country mansion estate, or a shop or guest-house or hotel or
farm or land for development – in fact any asset that requires a signature
for it to be bought or sold.

Probate properties are there to be found almost anywhere. If you are new
to buying Probates the best place to start looking is the traditional method
of using estate agents and property websites. Most Probates that are
already on the market are easy to identify. These are some of the tell-tale
signs to look for in agent’s photographs:

• Dated patterned carpets

• ‘Wing back’ chairs

• Brown furniture

• Big (not flat-screen) TVs

• Unmodernised kitchens and bathrooms

• Freestanding enamel cookers

• Stair lifts

• Evidence of obsessive hoarding

• Polystyrene ceiling tiles

• Telephone seats in the Hallway!

And in the description detail look out for ‘no onward chain’ and/or
‘shower room’.

When you see these indicators you can approach the agent and seller in
the knowledge that it is probably a Probate and that BMV could be a
possibility. Because the house isn’t of habitable standard for the majority
of buyers, that could be a problem that you can solve for them.

For more experienced property investors there are ways and means to
identify Probates and prospective Probates before they come on to the

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open market. These rely upon good local knowledge and/or good working
relationships with local agents and solicitors.

In the same way that it is possible to spot many Probates from in-ternal
photographs, it is equally possible to find them when you move around
your Goldmine Area. These are some of the signs you will be looking for:

• Evidence of neglect because the property is empty or be-cause the

owner is physically or financially unable to main-tain OR immaculate
because professionals are being paid to maintain

• Overgrown gardens

• Rotting windfall fruit

• Bins not put out

• Cars/caravans that never move. Flat tyres. Mildew on win-dows

• Peeling paint

• Broken/detached gutters and downpipes

• Curtains always open/closed

• Lights always off

• Cars visiting infrequently

• Carers/meals on wheels visiting daily

When you find properties like this the easiest thing to do is to ap-proach
your local agents and or Probate solicitors, having already established
relationships with them, asking if they know of the house and encouraging
them to contact you first if they should receive any instructions to sell it.

For the very advanced there are online tools and resources that you can use
to research local and more distant Probates. Whatever you do, DON’T use
death notices, obituaries, newspaper articles, funeral notices or funerals as
your opportunity to make an approach. Cold calling is likely to cause upset
and rejection and the seller probably won’t be ready to deal with you anyway.

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Be respectful, sensitive and professional and always be nice even though

you may not always be able to help. More than any sourcing strategy, the
price you get will be closely linked to connection and trust. This is not a
harder transactional sale like other online sourc-ing strategies.

The Executor’s role is pivotal – they have the authority – they make the
decisions. The better you understand the Probate and pur-chase/sale
process, the better placed you will be to help and deal with everyone else
involved. Your best approach will always be WIFM - “What is in it for
them”? – A solution based strategy.

• Some may need to sell quickly

• Some may be under pressure from the beneficiaries

• BMV frequently happens but it’s not the only strategy

Probate properties come to market in a continuous stream and that will

never change because all property owners are just custodians looking after
houses for their successors. Probate sourcing is far less ‘feast and famine’,
compared to say repossessions that rises and falls with the market. This is a
long-term strategy that sustains all parts of the cycle. What are those only
two guarantees in life: death and taxes. Become an expert in the market
and you will always have the edge over your competitors because you will
know things that they don’t know and see opportunities that they don’t
see. You will also build a trusted reputation as the go to person, reducing
the risk of dealing with someone who isn’t trustworthy or specifically
knowledgeable in Probate.

Many thanks to friend Derek Whatley for his contribution to the above section.

Bandit Board: It’s a classic sales adage that you can’t sell deals without
leads (motivated sellers’ contact details), so I can’t stress the importance
of paying the utmost attention to the art of generating them for yourself.

The only reason for advertising, in my opinion, is to get the lead. It’s not
about telling the world who we are or preaching about the wonderful

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products and services that we offer, it’s purely to get that lead. It’s an ROI
calculation and not a vanity exercise.

I’ve heard plenty of people say in the past that flyers and bandit board don’t
work. Well, for anyone who ever says that, I like to tell them the story of a
young playwright who you might be familiar with – William Shakespeare.

He wrote a particular play about two lovers called Romeo and Juliet for
which he sold the performance rights to the Curtain Theatre in London. The
theatre’s owner, James Burbage, fancied himself as a bit of an Entrepreneur,
and used two methods of marketing to get bums on seats for his new
production. He scattered leaflets throughout the whole of Shoreditch and
everywhere south of the Thames, then went North of the river where he put
bandit boards on posts anywhere that he could. These two systems, and
we’ll only look at one in this chapter, have been around since 1592.

So that’s over 400 years ago; it certainly wasn’t us to who made it up!

Of course, things do change a little bit because time changes, but we’ve
been using the same principle for an awfully long time. If they’re done
correctly, they can be a great addition to your marketing armoury, and I
think we’ve developed the right way to do it.

There are two types of bandit board - the pedestrian board and the road
board. Pedestrian boards, as you’d probably guess, are on lampposts and are
there to attract the attention of the pedestrians walking by. They’re usually
A4 or A2 signs pointing towards the pavement, staggered along the road
every now and then rather than clustered together in several rows.

The road boards are pointing towards the vehicles and most of the time,
they won’t be on pavements or lampposts because they’re up on verges
and banks. They point towards the road, but they’ve got to have a bigger
typeface on them because the vehicles are travelling so much faster. We
don’t put boards up in residential areas or other 30mph zones if we can help
it. We try and target the 40mph zones to keep us out of residential, usually
finding ourselves in more indus-trial routes coming in and out of town.

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If you look at the lettering and positioning of a board, try and imag-ine
that it’s a speed limit sign and you’re just about to enter a 40mph from a
30mph. You’ll be faced with a big sign at the start which, by law, will be
followed by three small repeater signs. The typeface of the speed limit on
these signs is a call to action, and exactly how we need to approach our
own bandit boards. The highways agencies have been studying this for fifty
or sixty years, so we’re just going to copy that and follow their research.

Have you ever driven past a sign and then only figured out it was advertising
a food van right at the moment that you fly past the van in question? It
can be any roadside service from flowers in a layby, to the snack van, to a
pop-up farmer’s market, but business lose out on big chunks of business
through ineffective sign placement. 200 metres can make all the different
between a potential customer hurtling past your board, or pulling in to
part with some money.

What I (Mark I’Anson) am looking for in terms of my own bandit boards

are lampposts. I tend to patch over quite small areas, usually around
4,000 houses, and in that area I’m looking to cover between three and
six lampposts. There’s a very easy rule of thumb that I’ve worked out for
when I’m assessing the catchment area of a potential location. I simply get
myself an Ordnance Survey map, which is scaled at 1:25,000, knowing that
two 50p coins will cover around 4,000 houses in a terraced-housing area.
It’s important to under-stand that I don’t stick to just counting the 4,000
properties; I stick to the natural boundaries. For example, I might have quite
a major road on one side, a river on the other and a school or district on the
other side, which gives me natural boundaries around a patch.

In your 40mph zones, you’ll usually find them about 200 yards apart, and
ideally they’ll be no interfering ‘sign noise’ around them. It’s imperative to
drive around your own patch to find out which are the good and the bad
ones because if you have your board set amongst a swap of other visual
media, you’ll never be seen. Avoid wasting your own time and money by
taking a little drive around your patch, and pick up a nice row of clean
lampposts.

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A perfect example of how not to do things was a chap who decided to

advertise on junction 14 of the M1. It’s got huge roundabouts on it, there
are no lay-bys and on either side is a dual-carriageway, so I imagine he
thought he was on to a winner.

On another occasion, I remember a guy using a Correx-style board, which

he’s used the right way because they have flutes on them. It’s basically a
bunch of straws that are glued together in a line, which are flanked by
plastic on both sides to give them extra reinforcement.

On the surface, it looked like he’d done a great job and got it up on the
post the right way around, but it had only been attached by one cable tie
so had bent around in the wind and it couldn’t be read - another complete
waste of time and expense that could have easily been avoided. If you’re
going to use cable ties, go all out and secure them properly with a pair of
pliers and you’ll get the bolts locked in place.

Coming back to our six adopted lampposts, we’re going to need a few
groups of these dotted around our patch. I put up between 18 and 24
boards in total, and here’s how I do it:

Before I set out, I’ll pack the duffle bag with a few key items. I’ll take
some super strength glue out to secure the wood onto the back of our
boards to keep them nice and strong. As I’ve already mentioned, a pair
of pliers are key to get the cable ties tight, as well as a stool, which has
got adjustable feet on the ground. Lampposts are often mounted on
grass verges and little hills, so the feet help you to get a grip and keep
you level. They are extendable to about seven feet in the air, so it’s pretty
essential to get your boards nice and high. Finally, I have a standard knife
for cutting holes for the cable ties to go through, and some heavy duty,
10mm thick cable ties. These aren’t ones that you’re likely to find in the
supermarket; they’re thick, in-dustrial cables ties. The reason for that is
because in some areas, councils have cut them down, but they only get
through with scis-sors, and scissors won’t get through these. The only
problem with these is if you’re putting boards up in freezing weather;

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they become incredibly brittle, so it has to be done in slightly warmer

temperatures.

The next thing we need to decide is how high we’re going to set the
boards. Again, our good friends at the highway agency have done our
research for us, and have decided that signs go at about seven feet in the
air. The reason for this is that they can be seen above stationary vehicles,
and is also the reason our extendable stood is taken with us. Even in a line
of traffic, the sign will be seen by everyone.

There are a couple of things to watch out for amongst all of this. There’s
a lady I know who told me that she’s been using bandit boards for ages,
but the council keep taking them down and fining her. As a rule of thumb,
if you put them up in residential areas, no matter where you put them,
neighbours will complain. If a neighbour complains, the council has to be
seen to do something about it and they’ll all come down. Also the councils
can be really slick in cities, so I’d avoid cities in their entirety. Manchester
alone has 28 guys responsible for taking these things down, so they’re
pretty clued up on the situation.

Generally speaking, boards should last anything up to six months, although

you always get the odd group of three that will get taken down within a
week. It’s important to continue to patrol you boarded areas and I go back
to them every week. I usually end up finding myself replacing two or three
every fortnight due to damage or re-oval. Since they’re mainly in industrial
areas, it’s not normally malicious vandalism, although it does crop up. Of
course you can leverage out this operation entirely, but you need to know
it yourself first.

I’ve heard stories where councils try and trick people, giving them a call,
asking your name, where you are, your location etc. and then two days
later they slap you with an £80 fine. Keep your eyes peeled for cameras
around the area, and certainly don’t drive your car to the lamppost you’re
going to put you board on because they will take down your registration
plate and have further reasons to fine you.

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So this is how we go about setting up our signs:

We use three signs and I’ll go through exactly what goes on each one.
We’re following the AIDA model, which is A.ttention, I.nterest, D.esire and
A.ction, although interest and desire can be intermingled onto the same
board which is why we’re left with three. The first board is our attention
grabber and simply says, ‘Read The Sign’:

The second one is our interest and desire, and that will say a couple of
details about what we do. It could just as easily say “Clear Your Debts’,
‘Make a Fresh Start’, or ‘All Considered’. The third board is our action
board, complete with a text-to number on it. It carries on the AIDA model
by reinforcing it with ‘We Buy Houses’ a second time:

There are two very good reasons why we use a text number. The first is
that it’s short and easy to remember after the motorist has driven past
the sign and digested the quick-fire information – don’t forget that we’re
placing these in 40mph zones. Secondly, the texting number makes us
one step removed from a trace. All you need is a text-to mobile number so
you’re not going to get the council chas-ing you.

The law is from the Clean Neighbourhoods Act 2005 and you can check
your local area before you do this to see how they deal with bandit boards
and flyer posting. It’s worth finding out how they’re likely to approach it so
you know in advance the likely consequences. As I said, I wouldn’t do this
in city centres and would stick to the outskirts of towns, well away from
30mph areas. This way you’ll stay safe and won’t get fined.

On a side note, the residents themselves usually don’t take too kind-ly
to these sorts of signs popping up in densely populated areas. I’ve been
in a position before where I’ve had boards ripped down, sprayed on and
generally vandalised, and I can assure you it’s not a pleasant job replacing
them all after you’ve already gone through the pain of getting them up in
the first place. They don’t cost much, maybe £10 for one of the big boards
and the same again for printing, but it’s the effort and drain on your own
time that really needs to be avoided – plus the kids get pretty sick of having
to write the same graffiti out over and over again...

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So we now have our signs up in a 40mph zone: ‘Read The Sign’, ‘Debt
Worries’ and ‘We Buy Houses’ with our text number for ac-tion. They’re
spread one lamppost apart, which equates to about 200 yards.

You must take the time to drive around your area and find out where the
traffic is, even if it means joining the rush hour queues to get the best insight.

You can buy the correx board from vendors on ebay, and likely get the
cable ties too. Use yellow board with black text as it is tested to work the
best, and follow the system, get calls and buy houses.

Many thanks to friend and partner Mark I’Anson for his contribution to
this section. Mark is regarded as one of the top UK special-ist/experts on
Bandit board advertising to get motivated seller leads. His books are highly
recommended.

Auctions: This is a very specific strategy which seems to come and go in

terms of its effectiveness. In a rising market we find that auctions become
less and less effective for us. Since Property Ladder and Homes Under
the Hammer and all of these fashionable TV shows (eye candy for the
general public), it seems that every Tom, Dick and Harry (every accidental
or speculative investor) was running along to the auctions to try their hand
at the property game.

Because of the nature and the specificity of auctions it rules a lot of people
out of the market. A lot of people don’t have the money ready and can’t do
the deals quickly enough. This creates an opportunity for you. It has become
easier to find deals at auction because most people who go to auctions are
cash buyers. There aren’t many cash buyers at all in the market now. We are
finding that investors are getting some very good deals from auctions now,
so this strategy is something you should seriously think about if you have a
little bit of cash and if you understand the process involved.

You see getting great property deals should be the fundamental core for
achieving your property related goals with your investment strategy. The
tricky part is finding good deals, especially in a hot sellers market.

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Buying a repossession from an auction is one way to get a great deal, and
naturally and depending what market we’re in, the level of competition
can vary.

Typically you will tend to find properties below what they are really worth,
higher yielding units, rundown and distressed properties, development
potential properties, properties which are derelict - and if no-one else
notices its potential, you could find yourself a bargain. You can also buy
residential and local government properties and commercial property
through auction. You can also buy some weird and wonderful properties
with strange construction types, irregular contracts, leases and planning
permissions. You need to watch out for these. Auction houses can be full
of unconventional, unmortgageable properties that you don’t want to be
left with: kippers.

Auctions are popular with buyers who want to avoid the traditional house-
buying chain, or the uncertainty that arises with an open mar-ket sale.
Once the sale is agreed, there’s much less chance of being gazumped or
something falling down at the eleventh hour.

But you need to be warned there are downsides to buying at auctions…

Even though the room will be transparent and you will see all the other
bids as and when they are made, there is a danger you could get involved
in a bidding war and end up overpaying. Another danger is if you lose the
bid through another higher bidder you will have lost the money carrying
out surveys on the property. You might even find the house you were
going to bid on has been sold pre-auction.

Some things to be aware of at auctions:

Auctions aren’t necessarily fully loaded with property bargains like you may
be led to believe. A lot of properties are at auction for a reason; they can’t
sell because they’re not good investments. You have to see through all the
smoke and have a clear strategy. If you ever go into a property auction with
your emotions then you’re going to end up losing money.

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Homes Under the Hammer and all these property shows glorify auctions.
People just love the thought of going to auctions and standing there
looking like a professional and bidding on properties. They get attracted by
low guide prices, and before they know it they’re paying market value for a
property that they really need to get 40-50% below to make the numbers
work. Most of these people don’t do their research; they’re speculative
investors and you don’t even want to entertain getting into bidding wars
with them. Let the Wookie win!

Costs

You will incur costs along the way and here are some you need to keep
in mind:

• 10% on the day once contracts exchange.

• Administration fee to the auction house, ranging between £250-£350.

• Solicitor and conveyance.

• Stamp duty.

• Survey and valuation fees.

• Insuring the property upon exchange of contracts.

The best way to find an auction

Is to decide on an investment area and then contact the auction houses

that have properties coming up for that area. You can request a catalogue
and once you subscribe to their mailing list, you will be drip-fed upcoming
properties in the surrounding locality. Essential Information is the best
online portal for sourcing properties online, it will find properties in your
area from auctions all over the country, its truly priceless.

Between publication of upcoming properties there will usually be four

weeks when the auction will take place, so ensure you’re in a position to
act fast if you see you a potential property which will make a great deal.

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Before the auction:

Research:

• Shortlist potential properties which cater towards your property

strategy and contact the auction house to arrange a viewing.

• Don’t be put off by the ugly duckings. You will often find proper-ties
that are in a very poor state, which is why you might be able to get
some absolute gems.

• Take a builder, or a professional opinion of someone who knows how

to cost so you have a better idea of how much (any) works will cost
so you know how much the house is worth and what your maximum
bid is likely to be.

• Do your research and get options of local estate agents on how much
the house would realistically fetch on the open market once done up.

Survey:

Make sure you get a survey to ensure the house is structurally sound and
worth what you’re paying. It might cost around £600 plus, but could save
you thousands. Because the last thing you want to do is buy a property
that is nothing more than a garden shed!

Read the legal pack:

The auction house will make the legal pack available for properties that
you are interested in buying which you and your solicitor will need to go
through to make an informed decision about your lot.

The pack will contain copies of the title deeds, leases, special condi-tions
of sale, office copy entries, searches, replies and pre-contract enquiries.

DO NOT BID WITHOUT HAVING HAD A SOLICITOR GO THROUGH THE

LEGAL PACK!

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The guide price:

Even though on the surface it may look like you’ve spotted a bargain, you
will be wise to know that guide price is deliberately set low to generate
interest in the lot. This is not what the property will (likely) sell for, but it’s
a good indication of what the vendor is hoping to achieve.

The reserve price:

This is the lowest price the vendor will accept. This will be confiden-tial and
not disclosed to any interested parties and only the vendor and auctioneer
will know it. If the property fails to meets its reserve price, it will become
an unsold lot where you can strike up a price post auction with the seller.

Be financially prepared:

If you’ve got enough time ensure you have your ‘decision in princi-ple’
and a firm mortgage offer before the auction so there’s no waiting around
after you’ve exchanged on the property as you will only have four weeks
to complete. If you think the timing will be tight to arrange finances you
might go down the bridging or joint venture route.

Once you’ve successfully placed the winning bid and the hammer has
fallen you’ll have to pay 10% on the day and the remaining 90% usually
around one month later. If you don’t you will likely end up losing your 10%
deposit. If this happens and the property is subsequently sold for less than
your bid, you may have to pay the difference between your agreed price
and the final selling price.

Bid Prior:

Some great deals are done before the auction day, put the bid in through
the seller’s solicitor as the auction house might not be very helpful in putting
the bid forward as they may want to see the prop-erty in the auction room.

The day of the auction:

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Make sure you play it cool and don’t get emotionally invested in the deal.
Know your maximum bid and stick to it. If you get outbid there’ll be plenty
more deals. You never know why someone else is paying way above the
odds in the heat of the moment, so keep calm and strike up a conversation
with the buyer afterwards. This will help you understand whether you
missed a trick or was the buyer paying any money to secure the deal for
other reasons.

Get there early:

This will enable you to see whether the auctioneer is taking phantom bids
to ‘up’ the sale price.

Identification:

Take two forms of identification such as a utility bill, a driver’s license, a

passport and proof of funds for the 10% deposit.

Approach the seller:

As above, if the property fails to meet its reserve you will be able to strike
up a deal with the seller post auction, so make sure you stick around at
the end.

Bid on unsold properties:

Some of the best deals are done after the auction on properties that didn’t
sell in the auction, this is often where the really cheap properties are!

Summary:

Nothing will beat the adrenalin of purchasing a bargain property at auction.

The thrill of buying an ugly duckling with the potential of turning it into
a beautiful swan will be addictive. Providing you’ve done your research
correctly there’s no reason why you shouldn’t succeed in getting yourself
a bargain in the process.

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Summary

Marketing is not just about vehicles to find the deals, but understanding
what people want: their hopes, dreams, desires, fears and pains, and
offering them solutions and hope. You must be memorable to even
exist in the property world, and then use multiple marketing vehicles
to communicate to your vendors, customers and JV partners. Use
estate agents, postcards, leaflets, newspaper ads, forums, window
cleaner and takeaway JVs, auctions, probate, bandit boards and
social media, and watch your deal volume multiply.

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#30. Dealmaking & negotiation

Dealmaking and negotiation are where you make most of your money in
property investing, and the biggest ‘chunks’ of cash too. You make your
money when you buy, and how well/cheaply you buy is down to your
dealmaking and negotiation skills.

Firstly, let us talk about what dealmaking and negotiation is not:

Gazumping, ripping people off, lying, pulling out of deals at the 11th
hour, reducing your price at the 11th hour (gazundering), one up-manship,
conning, cheating, bullying or a big ego tripping and power.

You probably don’t believe these either, but imagine if you held just one of
these beliefs around dealmaking – you’d never want to do it, because you
wouldn’t want to do or be any of these things.

These are surefire ways of ruining your investment career (and losing all of
your friends). We’ve seen it happen, we’ve even worked for people just like
this in the past. It’s not pretty and it doesn’t work. You might get a short-
term power victory, but you’ll create so much long-term collateral damage
that you won’t be in the game long enough to take all the money.

If the vendor feels pressure or thinks you’ve railroaded them, you’ll get a
phone call a day later from the vendor or message from the agent giving
you excuses as to why they won’t sell to you, even if your price was the
highest. Buyer’s remorse almost always happens, and sometimes, right at
the death when you’ve paid all your valua-tion fees. In reverse though, this
is why you will get deals when others don’t, because they will be pushing
and pressurising, and you will know better.

What is great dealmaking and negotiation?

Helping people. Solving their problems. Listening. Finding out what is most
important to them and then giving it to them. Being flexible with multiple
solutions. Genuinely caring about them and doing the right thing in their

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best interests, even if it doesn’t benefit you (directly). Creating win-win-

win deals for vendor, agent and yourself.

The good news is anyone can do these, they are easy and they build the
best relationships with the least resistance. They are far more long-term
and much easier to complete. You develop a good brand, which in turn
attracts more deals your way in the future.

Yes, you are influencing people, make no mistake about it. Don’t you
think we are all influencing each other all the time? If you think about it,
you’re either (ethically) influencing someone to do what you want them to
do, or you’re being influenced by them to do what they want you to do.
Influence or be influenced. Negotiate and make deals happen, or watch
other investors get rich.

“You’re either influencing people to help you to your

vision, or you’re helping others to their vision.”
- Rob Moore

So clearly, there is a smart, elegant and ethical way to influence agents

and vendors for more dealmaking. Here’s our definition (thanks to many
mentors far smarter than us for helping us develop this over the years).
Influence is:

“Leading people to do what you want them to do, having them

believe it was their decision, and thanking you for it.”
- Rob Moore

Imagine that. People helping you to your vision, doing what you want
them to do, buying into it, enjoying it, loving it, and thanking you for doing
what you want them to do. Just like so many of our tenants who may not
have their own home were it not for the win-win deal they did with us.

And if a vendor doesn’t thank you for buying their property, helping them
out of pain and debt (despite the low price), then something has gone
wrong. You solved their pain (money wasn’t the biggest one), you helped

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them, you did things they couldn’t do, sometimes you even save them.
They’ll thank you, and you won’t know why. That’s when you know you’ve
got it spot on.

Negotiation
Negotiation is agreeing on the terms of the sale. The ‘selling’ and
dealmaking is done, now it’s time to get agreement. It is all about coming
to an end result that is beneficial to both parties; the vendor and the buyer
(and not just yourself). If the price is too low, no matter how many tricks
you use, you’ll get remorse. If it’s too high it will never sell. There has to be
something in it for each party, but the primary driver isn’t necessarily price.

Professional investors know this better than anyone, and are smart with
their time. At least 90% of standard property sales on the open market
don’t have a high enough ‘motivation’ behind them - the vendors don’t
want or need to sell it badly enough, and so the kind of price you want is
unlikely to materialise.

Novice investors chase these, because it’s all they can find, and try to
‘negotiate’ (they even tell the agent and vendor they want to ‘negotiate’ -
schoolboy error) with sellers who don’t want to sell.

Professionals let everyone else argue over the over priced deal, and know
how to find, or get tipped off on, the best deals, where the vendor wants
and needs to sell, where price is not their highest motivation. If the pain
of debt or divorce, or an imminent relocation or a tenant from hell is
big enough, it will be more important to get rid of this than achieving
a maximum price. These deals, around 7% - 10% of total sales (but still
a huge number), are the deals you want to focus all your time on. Huge
leverage. Contrarian thinking.

The 4 stages of motivation

Let’s recap on the 4 stages of motivation:

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Stage 1. Unmotivated seller

Stage 2. Motivated seller

Stage 3. Distressed seller

Stage 4. Desperate seller

The best negotiators hunt out the deals with these motivations, where the
pain already exists, and highlight perceived benefits to the other party, and
quick solutions to the pains and problems. So a big part of ‘negotiation’ is
the set up of the deal and finding the right levels of motivated seller. The
nearer to stage 4 they are, the easier the ‘negotiation’ part is. Then they
do everything they can to help the vendor, making the transaction as easy
and quick as possible, letting them feel like they have benefitted from the
transaction. They have to win, for you to win.

Let them ‘win’

If you are negotiating a discount, always let the negotiation end on a price
that the other party offered, so that they feel like they have controlled the deal
and won. Sounds a little silly but if you play your tactics right you will still end
on the price you desire. You will also hugely reduce the risk of buyer’s remorse
or the buyer pulling out of a deal, which can be expensive and annoying.

“Let them win, you take the money.”

Seeing the negotiation from the vendor’s point of view

Get right in the mind of the vendor, wearing their skin, in anticipation of
what they might think, how they might feel, how they may react and the
result they will want to achieve. They are a unique person, not like you,
and they won’t have the same logic or emotions as you.

Let’s be honest, they don’t really want to sell their house for 70% of what
it’s worth. But what they might want is a fast sale, a discreet sale, a hassle-
free sale, to someone they want to sell to, someone they quite like (no-one
is ever very likely to sell something to someone they don’t like).

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Never buy/sell on price

Finding those 20-35% BMV deals is all about finding those buyers whose
prime motivation for selling is not driven by price. (You’ll spot those that
are; very often a little stubborn, won’t budge on price, often in no hurry,
sometimes have an unrealistic perception of the market). This is totally
pivotal, and the more you view, the more agents you use and the more
vendors you speak to, the more intuitive you’ll become.

You are looking for the people whose prime motivation for selling might
be speed or security or discretion. Remember that selling a house can be
one of the biggest and most stressful events in a vendor’s life, and with big
pain comes the need for a fast solution.

**Fundamental tip No.8

“If you can take people’s pain away, you’ll go a long way.”
- Rob Moore

Think co-operation not competition

Think of buying a property as a short-term partnership with long-term
benefits to building a great relationship.

Always remember the following when entering negotiations:

Know the maximum you are prepared to pay and do not go over it:

Don’t get the ebay or auction bidding frenzy; walk away if the price is
more than you set as maximum before you entered negotiations/bidding.
There will always be other deals and the chances are at about 30% that
you might be re-contacted later, when the price might be even cheaper.
Be patient as many deals will come back to you that you didn’t expect,
sometimes one or 2 years later, when it could be a much cheaper price.

The numbers game:

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If you are putting enough offers in on properties then you will get some.
Many vendors wait for months and their expectations change. People’s
expectation of what they can sell their property for is nearly always too
high, so let the market ‘chisel’ them down (Mark likes that phrase). Monitor
every deal in your pipeline, and keep in touch every 8 weeks.

Understand the emotions involved in negotiation:

Don’t get angry or chase deals. Don’t get too excited or desperate. Easy
to say, but keep calm. When you are after your first deal and it’s exciting
and you are keen (desperate) to get the first one under your belt, it can
cost you money.

Be diligent. Be flexible. Offer other benefits such as higher price with longer
terms, options etc. Be strong and fair and don’t give anything too much
away too soon. Let them feel good about the negotiation; it is not a fight
or a testosterone kick. Do you know what motivates them? If so, use it.

Knowing what value and price the property is worth:

Know what the equivalent properties are worth on the same street and of
the same type (comparables). This is known as ‘information power’ and is
vital in your negotiations. If it is clear to people that you know your stuff
then a) you’ll command respect and b) no-one will pull the wool over your
eyes. You’ll also educate agents what you will pay for the next deal and so
your time won’t be wasted.

If you don’t know your stuff you will end up paying too much. Estate agents
can be good at setting your expectations too high (or too low in some cases),
so you need to know what the real value is. They can be good at creating
emotions and scarcity and a buying frenzy. What might seem like a good
deal in isolation might be expensive when compared to the market.

Understand the definition(s) of value:

If you want to achieve real discounts, release deposits, or put none of your own
money into a deal, then an acute awareness of value is vital. What an estate

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agent values a property at will likely be different from your interpretation,

which will be different the perception held by the vendor, which again could
be different in the opinion of one surveyor to the next, which might again be
different to that of a first time buyer (FTB) or owner occupier (OO).

All these variables can play into your favour, when understood properly.
Armed with this knowledge, you know that there is a fair ‘spread’ of value,
where opinion may vary, and this can be up to 20% of the value in many
cases. An independently owned estate agent who wants to buy the deal
himself (naughty, but rife) will value a property very low. A ‘lister’ who
works for the estate agency, who wants to win the property onto their
books, may value it very high to lead the vendor to believe they can get a
top price for the prop-erty. The vendor is likely to have an unrealistically
high perception of the value. You, as the investor, may have a lower
expectation of the true value, such as the average of comparable sale prices
shown historically on land registry. These will definitely vary compared to a
surveyor’s opinion of value. All of the above can be influenced by you, but
must first be understood. Information is power, my friend.

Don’t show your hand:

A big mistake many ‘dealmakers’ make is that they always state from the
outset that they want something cheap or at discount. Do they think that
is what the seller wants; to give his property away for less than he sees it is
worth? Do you think the estate agents are sitting just waiting for them to
come in and ask for a huge discount so that they can get lower fees? Don’t
let on that you will ‘negotiate’.

Be opportunistic:

Know that you have things, products, services and knowledge that other
people need and offer these in return. Know what other options you have
at the ready such as rent to rent option, instalment contracts, vendor
finance and so on. Have contacts and power team at the ready to make
this happen fast. Be flexible, professional and personable, and always find
ways to help the other party.

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“100% of the shots you don’t take don’t go in.” Wayne Gretzky put it very
well. Opportunity is the same.

The perception of price and percentage:

When working on negotiation, in our experience in viewing 1000s of

properties, you have more chance in getting a higher percentage discount
on a lower priced property. Here’s why:

When using our spreadsheets, the deals are mostly about percent-ages,
with only a few absolute numbers. A 25% (on the current 75% LTV)
discount can give you a no deposit deal, at 30% can mean you can get
your deposit as well as cash back to cover your fees.

Vendors (sellers) almost always see price in absolute terms rather than
percentage terms.

For example, we recently bought a flat for one of our investors for £50,000,
which was on the market for £75,000 and worth £70,000 through proven
comparables. This is a massive discount, but in absolute terms is only
£20,000 off market value. It is generally as hard for us to get £20,000
off a house that is on the market for £120,000, despite the fact that the
percentage discount is much less; only 17% as opposed to 29%!

**Fundamental tip No.9

Percentage vs. absolute terms. You get bigger percentage discounts on

cheaper units.

Elegant negotiation techniques:

Here are some specific and elegant negotiation techniques for you to use
direct to vendor and when buying through estate agents. These techniques
will make and save you significant amounts of money that will compound
over time. They will avoid being binned by making too many low offers,
not enough offers, coming across like a time waster or not believable.

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When dealing with estate agents, especially when new, you are try-ing to
be taken seriously, regardless of how many deals you have done before.
Every master was once a disaster, so it doesn’t matter if you’ve done deals
with agents before or not; you’re only as good as your last deal anyway.
A big shot investor can put off an estate agent just as much, sometimes
more, as a new investor. Here are some techniques, originally taught to
us (Mark and I) from actual estate agents (and not the lazy ones, but the
ones passing all the deals to the big local investors). We only got this intel
because a. we became well-known local investors, b. we hired many of
these agents and so c. they told us all the stupid things we did (mostly me,
not Mark) in the early days when we were new :-)

Specifically vague:

You’re most at risk of getting binned in the first few exchanges with an
agent. They get a LOT of time wasters (especially in a growing market, when
Home under the Hammer is on) and so have to make decisions quite quickly.
If you are too ‘vague’ (“I want to buy houses”) or too ‘specific’ (“I ONLY
want 3 bed houses in PE1 postcode on Park Street that need big refurbs
and are 25% BMV” & “I want the off-market deals” & “I want the deals
that never get in the window”) then they will probably dismiss you, quickly.
Every agent wants to think that you will buy houses from them, and they
want to feel it will be easy. So you play along. No agent wants to feel it will
be hard work working with you (ie. you will only buy the best deals), so you
lead them to believe you will buy potentially many types of houses without
sounding like a newbie. Then you educate them over the period of a few
viewings (time bridging). So the technique goes something like: “I’m looking
for 2, 3 or 4 beds, houses or flats, in the Peterborough area, and also houses
that need doing up. Also any properties you think might be worth viewing.”
It sounds specific without being ‘investor specific’ and sounding too fussy/
difficult for the agent to deliver. It also gives them a chance to palm some
properties they want to onto you. No-one said you’re going to buy them,
but like looking through the photo album of a doting parents kids, you get
to play along, during which time you can build connection and trust. NEVER
use our own industry terms like BMV, NMD etc.

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Time Bridging:

This is where you get out on viewings, build connection and trust, and drip
feed feedback, educating the agent the types of deals you want. If you drop
it on them all at once, they’ve heard it all before and had their time wasted
and will bin you with the rest, quickly and in an unforgiving manner. You
wouldn’t talk about marriage and kids and what kind of kitchen you will
have in your dream home, on the first date (I hope). So the plan is to follow
their lead a bit, show willing to view, look serious without being too vague
or too specific, and build the trust over a number of viewings, like you
would a number of dates. View a good number of houses (not too many
to be a time waster, not too few) and keep ‘educating’ and drip feeding
feedback on the sorts of properties you are after and not. ALWAYS give
your reasons for offering, not offering, what you liked and what doesn’t
work for you, as this will all be taken in, some of it not consciously, by the
agents. The more viewings you do (without being a time waster), the more
you ‘bridge’ time, sharing multiple experiences with the agent in a shorter
time frame, thus increasing connection and trust, a feeling that you have
gone through more experiences together, getting to know their needs,
values, and important ‘intel’ about the market, other investors, specific
properties and so on.

Round number Round number Random number (Rn-Rn-Rn): This is

where your offers are more tactical when dealing with agents for the first
few deals. Everyone knows there’s a bit of ‘negotiation’ on many offers,
and the best technique to most likely get low(er) prices accepted is the Rn-
Rn-Rn technique.

Notes: It doesn’t guarantee 25% BMV every deal, but will get lower
offers accepted than not using it. Also, NEVER say, or let on, that you are
‘negotiating’. It’s a rookie mistake, and just lets the agent know you are
going to drop your pants, or should I say, price. They need to feel that you
can’t/won’t ‘negotiate’ even if/when you do up your offer.

So your first bid is a whole number (Rn - Round no.), the second bid is
again a whole number (increased) (Rn - Round no.) and your final bid

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should be a very random figure (increased slightly) (Rn - Random no.). So

your 1st offer may be £6k and a bit under your final offer, your 2nd offer
that you increase might be £4k more, and your final offer £1,770 more.
This works because you have upped your offer twice to show willing, and
your final offer is random enough so that it looks a. believable and b. that
it is the absolute maximum you can pay. If you give a genuine reason like
‘the maximum the mortgage company will lend me’ then the agent and
vendor a. know that is the maximum you can pay, so b. have to seriously
consider the offer and c. feel that they have pushed you up to the max.
This will make them consider lower offers because unconsciously people
will not a. want to stop until they feel they have got the max price and b.
feel they have got you up as far as you can, so an illusion of ‘the very best
they can get’ is created. The agent will think this too (and again shows why
you should never let on that you are ‘negotiating’.

Additional notes: don’t overdo the random number. So £97,644.73 is too

much. £95,770 is fine. Don’t start too low below your final offer or they
won’t accept, but give yourself enough room to move up enough to not
seem token.

This is not an offer, offer (TINAOO):

This is an elegant offering strategy to ’test the water’ and to ensure you
don’t get ‘low offer rejection’ from agents and/or offend them enough to
bin you. It is an offer if it is an offer, but it’s also not an offer if it’s an offer.

The drawback with low offers is the risk of not being taken seriously, or
upsetting an agent before connection and trust is built. But at the same
time you don’t want to just make higher offers to overcome that. So here’s
a smart technique to get over this. There are 2 scenarios to use TINAOO:

Scenario 1. The agent phones you/asks you for the offer/feedback

If the agent is proactive (and this is one of the ways to see/test how
proactive they are, after all you want to be working with the best ones)
they will follow up and call you (the next day) and see if you will make an

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offer. If you don’t offer, they will soon get tired of working with you, if you
offer too low, you could offend them. So when (if) they ask if you’re going
to offer, you use one of the follow-ing scripts (exactly):

“I’m not going to make an offer {PAUSE} but if I were, it might be

{SPECIFICALLY VAGUE OFFER}.”

“I don’t want to make a low offer {REASON} {PAUSE}, but if I was it would
be {SPECIFICALLY VAGUE OFFER}.”

They will respond in one of 3 most common ways (or variations of):

1. That’s too low.

2. OK, well it’s low, but I can put it to the vendor.

3. If you could come up a bit…

Here’s how you respond:

1. That’s too low - “Yeah, that’s exactly what I thought, and I didn’t want to
offend or waste time with a low offer, it’s just that {RESTATE REASON}.”

2. OK, well that’s low, but I can put it to the vendor - “Ok, well I wasn’t
going to make the offer but I’m ready to buy and can act fast at the
right price. If you want proof of funds and DIP let me know.”

3. If you could come up a bit - “Hmmm, maybe I can a little if you think
the vendor really will sell at this price (translate: if the agent will make
the deal happen).”

So, no matter what happens, you avoid as best as possible ‘low offer
rejection’. You aren’t making offers, you are testing, and you go with the
reaction of the agent. But those non offers become offers if well received.
ALWAYS give your reason, because that is a way to keep educating the
agent and to let them know what kind of properties you would buy, and a
valid reason for not offering higher; giving you more credibility.

{SPECIFICALLY VAGUE OFFER}:

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This is another technique within this technique to soften the blow of the
TINAOO. Here’s the full script:

“I’m not going to make an offer {PAUSE} but if I were, it might be {hmmm,
80s, 90 maybe?}”

You are hinting of a region for your offer, without offering it, further
softening the low blow, and keeping the door open.

{PAUSE}:

You pause to see if/how they respond. Will they ask you why you’re not
going to make an offer (you want to give them the chance to say it first)?
Will they encourage you to put an offer forward anyway (therefore getting
permission and reducing even further the chance of ‘low offer rejection’)?’

Scenario 2. You call/directly offer/feedback to the agent

The offer techniques are similar/same as above, but if you call the agent
you add a couple of techniques. You call them by around 2:00pm the next
day, and say:

“I’m calling to give feedback on the viewing yesterday {INSERT PROPERTY

DETAILS}. It’s weird, I thought you would call me for an offer or feedback.”

You’re showing them that you know how the game works. You’re showing
them that you’re serious. You’re also testing them; getting them to think
about calling you up when they have other/better viewings/deals.

Let them respond, which will probably lead into you making a TINAOO.
Then follow up with:

“I’m sure you get time wasters all the time. I’m serious about building my
portfolio and buying some properties from you.”

Reasons for ‘not’ putting in offers:

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“I mostly buy 3 (x) beds - but I’d buy anything at the right price.”

“I’m looking for something I can do up more - I’ll buy any of the big re-
furbs you get.”

“I’m looking for something more in the {X} price range.”

The reasons give credibility, education and soften the ‘blow’ of the low offer.

Playing the ‘Long Game’:

Most new investors try to rush deals through because they want to get
started or get some properties under their belt. The problem with this is it
will cost you in higher prices because an agent or vendor will sense this and
keep the price higher. If they get any sense you could come down, they will
hold out, and the quicker you drop after every ‘round’ the more they know
you will come back again.

More than any technique you can use, the long sweat of time is the
best negotiator for you. Time makes debt deeper, problems worse and
motivations turn into desperations. And you don’t have to use any
gimmicky or pushy-sales techniques.

Here are some ways you can use the long game to lower prices:

1. Don’t rush getting back to agents/vendors for feed-back/new

offers. Obviously this is a balance because if you take too long they will
deal with someone else, but if you are too quick they will hedge their bets.
Drag it out for as long as you think you can whilst staying credible.

2. Keep offers on the table and just wait. If you get an offer rejected,
thank them, say you can’t move any lower and leave offers on the table.
The more you leave, the more they work in the background on your behalf
as and when motivations increase.

3. Use your systemised pipelining technique. As discussed earlier in

the book, add every viewing into your online diary and set a recurring

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reminder (that never ends) every 8 weeks. Touch base with agents/vendors
every 8 weeks to see if anything has changed.

We often buy properties 6 months to 2 years after viewing them. If they

have ‘fallen out of bed’ once or twice then the price will be much lower,
and these are always far cheaper than deals we chased or closed quickly.

Glooming:

A technique where you (or the market forces) make reference of the pain
points to the vendor, which aids a decision to sell.

No vendor will ever sell a property at a significant discount without a

motivation. They need to be motivated, distressed or desperate in order to sell
a property to you at the price you, as a professional investor, would like to pay.

You get naturally lower prices when the media is doom and gloom, the
market is depressed, and general sentiment is low. Just like you did in the
last recession/crash. People act mostly on fear and greed, so the more fear,
the lower prices are.

When you are discussing a sale with a vendor or agent, you can point out
these pains conversationally. Let us be clear, you are not using unethical
techniques and lies to trick people; you are using events and circumstances
that have natural pain associated to them, and pointing them out in the
best interests of the vendor.

For example, if a vendor is highly motivated and you know reposses-sion

is a definite possibility if they don’t take action, you could point out all the
steps and processes in a repossession. Simply, you can say:

“I don’t know if you know what happens in a repossession, but did you
know that the lender can come after you for the mortgage and interest for
15 years after the property has been repossessed?”

You’re not saying if you don’t sell to me now you will get herpes. Let’s be
honest, most of us didn’t really get off our arses and do something about

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property until things were bad (not enough time with family, lack of real
pension and getting older, not enough pas-sive income, freedom, etc.),
so it took a little pain to get us going. Perhaps even a single painful event
changed your life forever. For me (Rob) that was December 15th 2005, and
I share how this day shaped my entire new life at events I speak at. Literally
that day turned £50k consumer debt into tens of millions. Weirdly because
it was the worst day of my life, it was the best day of my life.

Other natural elements that highlight pain are markets going down,
newspaper headlines, economy issues (nationally or globally), lack of
mortgage and other finance, lack of other buyers, not being able to
complete quickly, others finding out about personal troubles, and so on.

Metaphors & stories:

“Facts tell, stories sell.”

The more you tell someone what to do, the more you risk them wanting to
do the opposite. If you’re a parent, you’ll totally understand this. So instead
of making instructions and commands, weave in suggestions through a
story or analogy. A story or analogy allows us to ‘get in character’ and ‘see
the picture with us in it.’ A command does not. A story or metaphor allows
us to relate and to feel the emotion of the message. A command does not.
A story takes us back to childhood and to our most vivid imagination. A
command takes us back to our worst teacher!

If you have bought a property before or helped a vendor, use the similar
situation to relate to the current vendor’s situation. If you haven’t personally,
use one of ours, being elegant about the origin of it (do not lie). Here are
some examples:

Scenario 1. Direct to vendor opportunity, 1st hand:

“It’s funny you say that Mrs. Jones, because Mr. Smith who lives at no.
53 was in a very similar position to you. We just helped save him from
repossession, but it was very close. He had stopped opening his mail and

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buried his head in the sand a bit about his debts, and they had racked
up. The banks and mortgage companies were hounding him and he was
probably 10 days away from being summoned to court. He was really
worried about his friends and neighbours finding out. Other areas of his
life had gotten worse and he was having relationship troubles. He’d had a
couple of other salesy companies trying to buy his house for half what it
was worth so he’d become skeptical. But if he didn’t do anything quick he
was going to get repossessed and the banks would be able to chase him
for the loan plus any built up interest for 15 years after the repossession.”

Scenario 1. You don’t have a specific story to share; 2nd hand:

“I work with a big property investor who was talking to someone in a

situation similar to yours. In fact, a seller locally…{INSERT THE ABOVE
STORY/A STORY LIKE IT}.”

Stories are obviously the best if they are a. true and b. you’re your own
experience. But they don’t have to be. It’s called a ‘story’ not a ‘fact’, so
you have some elegant artistic license to share second hand stories if a.
they are in the best interests of the vendor/all parties, they have come from
a truthful situation/are based on reality. Just like you hear a joke and then
you share the joke, so you can with stories, as long as you use them with
good intentions.

You can weave into the story many elegant techniques to help your agent,
vendor, JV partner make a clear, faster decision that is right for then and
right for you. Here are some examples from the above story (which we’ve
experienced for real many times over):

“It’s funny you say that Mrs. Jones, because Mr. Smith who lives at no.
53 was in a very similar position to you {CONNECTION. CAN RELATE. EX-
PERIENCE}. We just helped save him from repossession, but it was very close
{EXPERIENCE. SIMILAR SITUATION. MUST ACT}. He had stopped opening
his mail and buried his head in the sand a bit about his debts, and they
had racked up {GLOOMING. CAN RELATE}. The banks and mortgage
companies were hounding him and he was probably 10 days away from

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being summoned to court {GLOOMING. MUST ACT}. He was really worried

about his friends and neighbours finding out {TRIGGER}. Other areas of
his life had got worse and he was having relationship troubles. He’d had
a couple of other sales companies trying to buy his house for half what it
was worth so he’d become skeptical {CONNECTION. ELEGANT DPOSITION
OF OTHER OPTIONS}. But if he didn’t do anything quick he was going to get
repossessed {MUST ACT} and the banks can chase you for the loan and built
up interest for 15 years after the repos-session {GLOOMING. MUST ACT}”

Note that every part of the above story and the real life scenarios used to
relate to the vendor are real, true and happen daily. Only you can decide
what is right to use and not use at the time. If it is in the best interests of
you, the vendor and the agent, then it is right to use. If it is not, or you
have doubt or guilt, then do not use. But if you don’t warn your kids that if
they don’t look left, right and left again when crossing the road, then you
have not served them best.

In the early days, Mark was better at doing this than Rob. Mark very much
works on facts, so he could see how this was logical. Point out the fair
warnings because they are facts. But Rob felt guilt and some of the vendor’s
pain when talking about ‘crossing the road’. The first time we did a direct
to vendor deal together, the deal was very well priced. It was such a good
deal that after the initial elation in the moment, almost immediately Rob
felt very guilty and started to doubt that we’d done the right thing.

Because Mark had seen this scenario many times, he sat Rob down and typed
‘what happens in a repossession’ into a search engine. He went through all
the things that happen to the vendor. He told me how many properties
he’d bought post repossession, where he’d met with the vendor before the
repossession, and the vendor had the chance to sell to Mark. Then when he
bought the post repossession property, even cheaper than the offer he’d
made to the vendor, it became clear that not only is it the right thing to
do whatever it takes to encourage the vendor to sell to you, but Mark felt
much better about a. buying it pre-repossession and b. getting the discount
because it was a far better option for the vendor than repossession. Rob

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needed to see this end to end to feel good about it, and hopefully this helps
you too. If you feel uncomfortable, or that your offer is too low, then maybe
your offer is too low. You can be the judge of that. Though really you should
let the vendor be the judge of that though, because they will sell to you at a
price that works for them in their current situation, and if it is too low they
either will refuse your offer or pull out later.

Progressive & Regressive visioning: Emotions dictate actions. An agent

or vendor is much more likely to sell to you if you can get them in the right
emotional state. A JV partner is much more likely to lend you money or
partner with you if you can get them in the right emotional state. You can
control this to a certain degree with connection, trust and having good
energy/positivity/a can do attitude, but if they can’t see in their mind the
outcome you want them to take, and connect with it emotionally, you
might not get your desired outcome.

Progressive visioning: This technique takes the agent, vendor, JV partner,

whoever you are looking to lead, and gets them seeing the future outcome,
feeling the emotion, now in the present:

“Mrs. Jones, imagine how you will feel now when you have sold your
house, the deal is done within a couple of weeks, and the debt is gone.
The bills are gone. The mortgage company is leaving you in peace to get
on with your life. The stresses of the last 2 years are gone. How would that
feel? That is exactly what I can give to you and help you achieve. I want
to help you.”

Regressive visioning: This technique takes the agent, vendor, JV partner,

whoever you are looking to lead, back to a time when they felt an
empowering emotion and gets them to see it and feel the emotion, now
in the present:

“Mr. JV partner, do you remember the last time you made a great return on
an investment. Perhaps you felt it was a bit risky at first but you went with
it, and you made a great return, hands-off. How that felt when you got

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all the money back from the investment is how you’ll feel when we work
together. Property is paying great returns and you should get your share.”

Summary

Be great at dealmaking and negotiation and you will attract wealth

in your ever-growing portfolio, and help vendors and agents. Always
be in tune with the other person’s wants and needs and aim to
present ‘win-win’ negotiations. Help the other party get what they
want ethically, and have them thank you for it. Knowledge and
information are power, so get a true understanding of value and
market variations. Know the 4 types of motivations and ONLY deal
with sellers who have one of the 3 motivations. Don’t buy from
people who are fixated on price and keep track of every offer, even a
rejected deal, as it will stay in the pipeline and there’s a 30% chance
it will come back to you, only much cheaper. Use specific offering
and negotiation strategies to reduce offer rejection and increase the
volume of deals and discounts you get.

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#31. Joint Ventures

A Joint Venture (JV) is simply a business venture or transaction between
two or more people. In property investing, the joint venture is usually
based around an individual who has time or experience looking for cash to
fund deals and scale, working with someone who has little time but access
to funds looking to leverage time and experience.

JVs also occur when the following exist:

Complementary or opposing skill sets: one partner is an expert

marketer or negotiator or tradesperson, in ‘exchange’ for the partner’s
cash, mortgage-ability or management skills.

Cash & time: one partner is cash-rich, but time-poor; the other is time-
rich, but cash-poor.

Time & experience: one partner has lots of experience, but little time; the
other has lots of time, but little experience.

Experience & cash: one partner has lots of experience but no cash; the
other has lots of cash but no experience.

Why use a JV partner?

Using a Joint venture (JV) partner is one of the most efficient ways to build
up your property business in a shorter period of time with minimal risk and
capital from you. This will increase your buying power, reduce the time it
takes to build your portfolio and wealth and significantly reduce your risks
in many cases. It’s also great to leverage skills you are weak at or don’t
like but get the full benefit of them. It helps you work in a team and not
alone, and helps you stay accountable and resourceful. It can also make
every deal NMD.

Here are other great benefits:

Business experience: a lot of private investors will have business experience

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that they can bring to the table. This could be very beneficial especially
when analysing new deals, legals, negotiations, contracts, profit and loss,
managing teams, etc.

Rewards: 50% of a deal financed by a JV partner is better than 100% of

nothing.

Contacts: your network is your ‘net-worth’. Your JV partner will have a

contact base of extremely useful people that can be called upon, which
otherwise would have taken you years to find and build a trusting
relationship with on your own. This can be as valuable as their cash.

Multiple deals: You will be able to develop your portfolio quicker, take
on more deals and increase your credibility with agents, attracting better
quality deals as the volume increases. You will be able to get the best deals
when they are there and not just whatever deals are around at the time
you happen to have a deposit.

Why would JV partners invest in you/partner with you?

In the current market, with cash savers getting negative growth in the bank
(low rates minus inflation), many asset vehicles risky and unstable (stock
market hardly any higher than it was 10 years ago and volatile) and people
busier than ever and little time to research investments themselves, many
private investors are flocking to property and people like you in property
for a better return on their money.

People trust banks, corporations and pensions way less than ever before, and
business is once again becoming more about people and trust, like it used to be.

Cash holders/investors are the new motivated sellers, because the money
they have been used to receiving has disappeared and the lifestyle they
had built on that passive income can no longer be maintained. This gives
you great power and far easier access to private investor (JV) funds than
in previous markets. In short they need you and you therefore need less
experience and credibility than in previous economic climates.

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And if you still can’t convince them, buy them a copy of this book.

How will the JV partner make their money?

Split of the profits: When the property is sold or remortgaged, they will
have a percentage stake in the property, and on going profit. You can own
the property together, or use a DoT (Deed of Trust) and they could hold or
host the mortgage, for security if necessary (see earlier comments about
lender Ts & Cs) or you could hold the mortgage and they have a restriction,
charge or DoT with you.

Monthly interest charge: The private investor lends you the money directly
(i.e. pays it to you or into the property, as opposed to buying the property).
You will pay the agreed interest per month until the full loan is paid back.
As soon as the property is sold or refinanced you will be able to pay off the
loan. The likely interest rate you will pay is 1% - 3% per month for short
term finance and 0.75% - 1.5% for longer term (more than 6 months).

A mixture of the two above: See above

A share of your business: A JV partner can act as an angel/dragon investor

and invest in you/your business. They have a partnership or share of the
company not the properties directly. If you take on larger project JVs this
can be a way to separate JVs from each other and to de-risk other parts
of our business or portfolio from other JV partners or if something goes
wrong with an individual deal.

Security - whose name to use?

Option 1. The property is under the name of the private investor. This
is the most likely way an investor would want security to use his/her
money. Hence if the worst would happen, the investor could dispose of
the property on the market. The partner could have an agreement in place
when the investor sells the property the partner could be paid his share of
the profit. This reduces the risk to a JV partner working with you, and also
allows you to own assets if you can’t get a mortgage or have bad credit.

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Option 2. You own the property under your name (your own per-sonal
property or the property bought for the JV) and the private investor takes
a charge or restriction over it. The property is now security for the debt for
the monies borrowed. If the property is sold or refinanced the investor will
be notified and/or paid before you run off with the money! If they put up
all the cash they may expect 1st charge, if they put up the deposit then
2nd charge or restriction.

Option 3. A DoT legal agreement. There will be no charges in this example

placed on any property: you promise to repay the money back to the private
investor when the property has been sold or refinanced. The investor will
instruct his solicitor to take an under-taking agreement with your solicitor
to ensure he will get paid first upon the sale or refinance of the property.
Watch for lender Ts & Cs and get legal advice as most solicitors will be
happy to place re-strictions etc. after completion, where you do not have
to declare interest in the property to the bank.

Option 4. You own it together as tenants in common. You both have legal
ownership, which could be 50-50 or a different percentage split.

Option 5. A handshake – not recommended (especially for those lending

the money, even with family & friends, but surprisingly frequently done).

Where to find the money?

The only thing left for us to tell you is where to find these cash rich, open-
minded JV partners…

Local property events, business networking events, business angel events,

charity balls, flying clubs, rotary clubs, functions and openings, online
forums, property portals, private member clubs, personal concierge and
Mark Homer’s birthday party to name just a few.

The Progressive Community is also a great place to meet JV partners,

both online and off-line and on facebook. There are thousands of active

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investors looking for partners just like you, many with cash. You can find
them here:

www.facebook.com/groups/progressivepropertycommunity

If you get the chance to meet us personally at a local or national Progressive

property event, you will meet and network with many of these partners
yourself in a safe, comfortable and like-minded environment, such as a
Multiple Streams of Property Income event or a Progressive Property Network:

www.progressiveproperty.co.uk/events

Your network:

The more like-minded people you know will have a direct impact on your
net-worth. It is said that you are the sum of the 5 people you spend the
most time with; you become the 6th. Observe the people you spend the
most time with, it will have a strong bearing on your results. Change your
peer group if necessary, and look to be the least experience/least wealth
person in your network/circles and you will get dragged up to their level
much faster than with people at your level who are likely to hold you back.

We all know when starting out in property that it can be lonely or

challenging without support or guidance. The upside of your readymade
network is the virtually leveraged building of your property portfolio and
business, because everything you need and would take an age to find
yourself is on tap.

The great thing about property investing is that more than many other
industries; the experts are willing to share their knowledge openly and
freely with you. You would not experience this in most professions or
corporations, but because property is a local business, people are happy
to share their ideas and strategies with you because you will not be in
competition with them.

Imagine in the corporate world going up to your boss, sitting him down,
buying him a drink and asking him to share with you exactly how to do his

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job. No chance. You’d get fired for your audacity. But most professional
investors love to share; it’s a great industry to be in that helps each other
that is mostly non-competitive where you can learn so much for a fraction
of the cost of a conventional degree.

Networking and working in partnerships never ends. You can continually

grow and network into ever increasing circles of wealth and influence.
One person you meet could open the door for you and introduce you into
a seriously wealthy and powerful network. And that’s how it works, one
door after another after another opens through introductions, and before
you know it you have access to dozens of multi-millionaires.

The Progressive Community does exactly that, with more than £110million
joint venture network already in place, and all the brokers, solicitors,
mentors, tradespeople and extended network you need to be ready to
invest and build your portfolio as soon as you put this book down.

I (Rob) started in property at the end of 2005, as a struggling artist, almost

£50,000 in consumer debt. The interest on my loans and debt was more
than I was earning in a month, so it was getting worse. The very first
property networking event I went to in December 2005, a week after a
day that changed my life forever, in a room with no more than 15 people, I
met my first JV partner, at my first attempt. I had no idea what a JV partner
was, I had no deposits and I had no idea how I was going to be able to buy
property. I just knew that I wanted to change my life and I wanted to get
into property. I’d watched for many years and never done anything, always
citing the reason that I couldn’t afford it. It was only 9 or 10 weeks after
that day that I bought my first property with my JV partner (using both
his skills and money). We bought 20 in the first year together, none of
my money, 30 in the second year, none of my money. We had almost 100
properties in joint ownerships 3 years in and today we own or part own
almost 600. That JV partner was Mark Homer.

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Summary
Joint ventures enable you to leverage all aspects of your property
business to make more money in less time. Joint ventures can
make every deal a No Money Down deal, provide infinite returns
on investment and cashflow from no capital outlay. Your network is
your net worth; continually build it and open doors to higher circles
of wealth and influence.

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#32. Exit strategies & tax (how to pay less or none)

“Start with the end in mind.”
- Stephen Covey

“Smart investors know how they’ll get out before they get in.”
- Rob Moore

Knowing how you’ll ‘cash out’ is important because it dictates your tax
strategy and also protects against downside risk. If you have children your
exit will be impacted, and variables such as your current income level and
company structures will also impact your strategy.

We’ll be introducing you to a property tax expert from within the

Progressive Community to give you the up-to-date details and strategies
far better than we could, in a moment.

The most tax efficient way to ‘exit’ is to delay exit until death. When you
sell, you will incur a capital gain, details later in this section. This can be a
considerable amount. But more problematic is that you’ve disposed of the
asset, you no longer own it, and someone else earns on it.

Most people don’t realise they can continue to take income and cash
chunks without selling, and not pay tax on the ‘capital’. Instead of selling
to gain access to your cash equity, you can simply refinance (remortgage)
and access it that way. You won’t pay tax on it because it’s a loan, and you
haven’t officially disposed of the asset.

In this instance you have raised more finance (debt) against your property,
you have legally avoided paying tax on that extra cash, and you still own
the property, which is likely to continue to rise in value over time and pay
you again and again.

The Progressive finance model is as follows:

Buy at the highest and safest LTV ratio, to enable you to get all your cash
back out without being overexposed. This recommended LTV is around 70%

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to 75%. Much higher and you’re exposed to a fall in values and high debt
costs that can’t be sufficiently covered by the rental income. Lower and you’re
leaving cash in, unleveraged, that could be working for you in other assets.

Over time your rents will increase, and you’ll have a greater margin that
will allow you to increase your debt against it without sacrificing too much
income. Your LTV will decrease in that same timeframe, giving you more
equity that you can leverage against other assets. This LTV decrease comes
about as property values rise through market growth and inflation, which
effectively pays your mortgage off for you.

We like to keep our LTV/debt ratio at around 50% - 60% perpetually. We

‘buy in’ at around 75% LTV, and as time goes on and values increase,
when the LTVs drop under 50%-60%, we remortgage back up to between
50% and 60%. This is obviously also driven by what terms/rates we can
get from banks at different LTV levels but as an average 50%-60% is the
target overall portfolio gearing.

That extra cash is paid out in lumps over time, compounds and becomes
more frequent the more properties you have. And the more you do it, the
more properties you can buy.

At this LTV/debt ratio you are protected against dramatic falls in prices, and
you’ll still have enough margin that the debt will be covered by the rental
income at around 200%+ (A nice place to be is where rent is around 200%
of the mortgage payment).

This gives you enough income to live off and reinvest, but not too much
that you’re paying lots of income tax on it. This also gives you a constant
stream of cash free tax (M2) to re-invest, without unnecessary risk, and will
dramatically reduce IHT when your time comes. We don’t generally like
spending this further borrowing/remortgage money on personal expenses
and use it almost exclusively for reinvestment.

Whilst I’m not an accountant, have no formal qualifications in this area and
therefore can’t offer tax advice I can talk about our experiences and how

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this has affected us as property developer investors. Lots of our Progressive

delegates have found these Property Investment Tax Tips useful. Most of
the tax rates and rules quoted below apply as at November 2015 and are
likely to change in the future, it is important to keep abreast of tax changes
as I can guarantee that they will look different in 5 years.

Please also welcome Iain Wallis. Iain first joined the Progressive Community
in 2010 and having gone through all the training is now a mentor on the
VIP programme. Having learnt and applied his knowledge Iain has now
bought over 25 properties for himself and other investors generating
£1,000s of per month net cashflow. A Chartered Accountant, see more at
www.iainwallis.com , he also owns a niche property tax business, so who
better to detail some important tax saving strategies?

In the world of property taxation the big five are: Income Tax (IT) Capital
Gains Tax (CGT) Inheritance Tax (IT) Corporation Tax (CT) and Stamp Duty
Land Tax (SDLT).

Do not be afraid of tax (and I would say this wouldn’t I?) but learn to love
tax and know how knowing the rules can save you thou-sands of pounds.
Start by knowing the rules and then appoint a property tax specialist. You
wouldn’t go to a dentist to get your heart looked at so don’t go to a
general accountant who won’t know what you can and can’t claim for.

As always don’t let the tax tail wag the dog. There is no point in doing
something if it saves you tax but actually costs you money! That’s plain
dumb but believe me people do it.

So, let’s look at each of these taxes and see what we can do to avoid tax.

First of all remember that there is nothing, I repeat nothing, wrong in arranging
your tax affairs to legally pay the least amount of tax. If you believe there is
a moral argument to pay more tax than you are legally required to (and not
many do) to help those in need perhaps you should find a good carefully
chosen charity to give excess cash to, at least this way you will have more
surety that the money is not being wasted, as it often is, by Governments.

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Stamp duty
When you buy a property you will have to pay stamp duty. If you notice
throughout this book, we mention that we are buying property under
£125,000 (Residential) or £150,000 (commercial) as at November 2015*;
well that is because we are saving a 1% stamp.

Stamp duty on residential properties in the UK is currently (September

2015) set out as follows:

• Up to £125,000: 0%

• The next £125,000 (The portion from £125,001 - £250,000): 2%

• The next £675000 (The portion from £250,001 - £925,000): 5%

• The next £575,000 (The portion from £925,001 to £1,500,000): 10%

• The remaining amount (The portion above £1,500,001): 12%

You will notice that stamp duty has changed so that vacuums don’t exist
as they did previously.

Now that the system has been changed in a way similar to income tax
so that the next tax band is only chargeable only on the portion of the
purchase price over each threshold rather than the whole purchase price
makes the tax much more graduated and removes the stepped nature of it.

*The above still applies to residential or ‘owner occupier’ properties.

George Osbourne dropped a bombshell in the recent Autumn statement

when he announced a new 3% surcharge on stamp duty when landlords
buy a new property.

Effectively what this meant was, buyers paid no stamp duty on the first
£125,000, then 2% on £125,000 to £250,000 and 5% above £250,000
to £500,000, rates continued to step up above this.

The recent changes will now mean for landlords buying a buy-to-let

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property or second home, stamp duty will now be 3% on homes between

£40,000 and £125,000, 5% to £250,000 and 8% to £500,000.

For those buying up bigger units at around £275,000 home, the old rate
of stamp duty meant a £3,750 stamp duty bill.

This is worked out by:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £25,000 = £1,250

Total SDLT = £3,750

But adding the 3% surcharge will see the price of the tax rocket for landlords:

3% on the first £125,000 = £3,750

5% on the next £125,000 = £6,250

8% on the final £25,000 = £2,000

Total SDLT = £12,000

I had a discussion with someone about boats resetting their sails when the
wind changes. When legal or economic changes take place (as they did
with the credit crunch a few years ago and lots of other times over the
hundreds of years that property investment has been a favored investment
tool) we have to change the angle of our sail to continue to prosper.

We will go through this cycle many times in our lives and we just need to
accept it as being normal. There are and will always be solutions for those
who are willing to learn and adapt.

Lots of investors will not adapt and you should see this as your advantage
as competition will inevitably decrease, and as with any business this will
mean that your margins will increase.

Progressive saw this through the credit crunch when 80% of our

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competition gave up. We persevered and now have much higher margins
and sales volumes than before 2008. Playing the long game in business
and investing is the single best way I know to achieving extraordinary
results. Warren Buffett is a great example of this. Some government policy
changes, which are responding to public sentiment about a wider issue
of a lack of housing (which these policies won’t materially change) don’t
change the economics.

There are not enough properties for the people that live in this country.
Many of the people in this country can’t afford to buy as they can’t or won’t
save for a deposit and pay a mortgage (or want to be more transient/rent
for other reasons) so they need to live in rental properties.

As quick as negative sentiment can move against us it can move onto

something else just as quickly, people are fickle like that.

We won’t be the focus of other people’s issues forever, rather than taking
personal responsibility some will want to have a new group to point the
finger at as landlord bashing becomes boring. How long this will take I
don’t think anyone knows. I will believe that George’s building boom is
actually going to happen/make a difference when we see results (as so
many of them before him have promised similar and achieved very little in
this area) so I predict the shortage will continue and therefore rents will rise
even more strongly. You might want to use this extra cash from rents to
pay your accountant to run your new Limited company to get around the
amount landlords can claim as relief - as this will be set at the basic rate of
tax - currently 20%.

Capital Gains tax

The most significant tax for any property investor.

Be very aware of the distinction between investing and trading in property.

If you buy to hold, you’re an investor and any sale will attract capital gains
tax. If you buy to flip then you are a trader, and any profit will attract
income tax or corporation tax if you buy through a limited company.

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When property investors come to sell or transfer an investment property

the sale may lead to a CGT liability.

Any tax liability will naturally reduce the overall proceeds and thus the
gain. Why may? Well there are numerous reliefs and exemptions available
and also planning opportunities too complex to explore in this chapter but
used correctly they can lead to significant tax free gains. And you’d all like
some of that wouldn’t you?

Who pays CGT?

Capital gains tax is payable in the UK by:

1. Individuals who are UK resident or UK ordinarily resident.

2. UK resident trusts.

3. Non-resident persons trading in the UK through a branch or agency.

So what is a Capital gain?

A capital gain arises on the disposal or part disposal of an asset or part of

an asset.

A disposal is deemed to take place as soon as there is an unconditional

contract for the sale of an asset. This is not the same as the completion
date so beware if you are disposing of an asset around the end of the tax
year 5 April!

An exchange on April 4 2016 with completion 10 days later would put

the sale into the 2016-17 tax year with the tax due 31 January 2018 and
so bring forward the tax liability by 12 months. A simple delay to put
exchange on 6 April just two days later would push the tax bill back to 31
January 2019.

At the moment (at time of writing) you work out the CGT after the end
of the tax year, as part of your tax return as above. In practise this means
you have 10 months to do the maths. These timescales are to be tightened

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from the announcement of the Autumn budget, so that the CGT will be
due 30 days after the property is sold though this will not apply until 2019.

A capital gain is the difference between the net sale proceeds on sale of
the asset (sale proceeds less disposal costs) and the cost (cost of asset plus
acquisition costs).

Be aware that in certain circumstances on disposal there is deemed to be

tax payable on transfer or disposal. Transfers between husband and wife
or registered civil partners will be totally exempt from Capital Gains Tax.

Net Sale Proceeds

This will usually be the actual sum paid to the vendor from which may
be deducted the costs of disposal. These costs need to be spent wholly
exclusively for the purpose of the sale and typically would include agent’s
fees, advertising and legal fees.

Here’s an example:

I sell a house for £400,000

Proceeds £400,000

Agents fees £9,600

Sunday Times advert £2,400

Legal fees £1,000

Total Costs £13,000

Net Proceeds £387,000

______________

Rates & Allowances

Each tax year nearly everyone who is liable to Capital Gains Tax gets an
annual tax-free allowance - known as the ‘Annual Exempt Amount’. You

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only pay Capital Gains Tax if your overall gains for the tax year (after
deducting any losses and applying any reliefs) are above this amount.

The annual tax-free allowance (known as the Annual Exempt Amount)

allows you to make a certain amount of gains each year before you have
to pay tax. This allowance is offset against total gains from all sources for
that tax year, so if you sold another house and made a profit in the same
tax year using some or all of your allowance you couldn’t use the portion
already used on the previous sale.

Nearly everyone who is liable to Capital Gains Tax gets this tax-free
allowance, which is:

In 2015-16 the Annual Exempt amount was £11,100 (the amount usually
rises each tax year).

Then once these allowances are utilised and costs offset the follow-ing
Capital Gains Tax rates apply:

• 18% for basic rate tax payers and 28% tax rates for higher rate payers.

So, work out your total taxable income before working out which Capital
Gains Tax rate to use.

1. First work out your taxable income by deducting any tax-free

allowances and reliefs that you are entitled to.

2. Next see how much of your basic rate band is already being used
against your taxable income. The basic rate band for 2014-15 is
£31,785.

3. Next allocate any remaining basic rate band against your other gains,
these are charged at 18%.

4. Any remaining gains above the basic rate band are charged at 28%.

Simple!

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Did all of that confuse the hell out of you? If not, then you should be working
for the Inland Revenue! However, if that sends you into a bit of a spin then,
don’t worry. The whole point of this is that you can avoid all of the messing
around, calculating and analysing by holding your properties by never selling
them and using a clever accountant to work them out for you.

You should know this by now! And at least you can’t say that we didn’t
tell you.

Now we don’t know about you, but we want to do as much as we can to

reduce our tax bill. The simplest way in property terms is, and we’ll say it
again: to never sell your investment property.

Other things to consider with capital gains tax:

Separated couples will still be considered as connected persons and

divorced couples only become unconnected for tax purposes once the
decree absolute has been granted.

Tax is always paid on the 31st January following the year of assessment.
So if a gain is made during the tax year 2017-18 then the tax will be due
31/01/2019.

If you hold your properties and access your gains through remort-gage,
then you are effectively accessing your gain by borrowing it against
the value of your property. You do not have to pay tax against a loan
(mortgage). The great thing about this system is that most people can
remortgage every three years or so anyway and actually never pay off their
mortgage. They can apply this strategy without changing anything they
do. All we need to do is buy more property and compound the gains and
keep accessing them this way.

This enables you to access your money incrementally rather than having to
wait 25 years for it. This also saves you shed loads of tax! In addition, this
reduces your inheritance tax bill because you have less profit in your asset
when it comes time to pass it on. (provided you have gifted/spent the cash
you have released to your children etc at least 7 years before you die).

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Inheritance tax
This can be just as nasty. The more assets you own when it comes to passing
them on, the more tax the recipients will have to pay. So if you have been
following the strategy of borrowing and taking equity from your portfolio
as you earn it, you can greatly reduce your IHT bill using the strategy above.

If your portfolio has grown to £5million and some throughout their life
may spend some of the equity, buy more assets and enjoy your life, and/
or gift cash to children then your children or other recipients will have a
much reduced tax bill.

Inheritance Tax as it stands at September 2015:

The first £325,000 is allowed to be transferred free of Inheritance Tax so

a married couple ignoring all other allowances for this example can pass
£650,000 worth of assets to their children completely tax free.

Some figures for you:

Traditional thinking: own one property outright. Bought for £50,000

in 1985, worth £800,000 in 2025 (generic example based on historical
growth). Mortgage fully paid off.

Initial taxable profit: £750,000 on death. For this example I’ve assumed one
partner dies, then passes to surviving spouse with full nil tare band utilised.

£750,000 less tax free amount of £650,000 will leave £100,000 taxed at
40%. So £40,000 of your wealth goes straight to HMRC and your estate
will probably need to sell the house to pay the tax.

Inheritance Tax as from April 2017

A family home allowance that will eventually be worth £175,000 will

be introduced gradually from 2017 to 2021 which is in addition to the
£325,000 allowance. This will allow people to pass their family home
equity to their children on death up to £175,000 per person or £350,000
for couples who die whilst owning their own home.

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This would therefore give a total allowance of £500,000 per person or

£1million for a couple to leave to their children before paying inheritance tax.

Progressive thinking: own 11 properties using equity from your first

home. Total portfolio value in 2025: £4million (conservative estimate of
only 5% growth):

Taxable equity of 15%: £600,000.

Using traditional thinking, you have paid off your own property by
2025. Your asset has grown to £800,000 in 40 years and you have not
remortgaged it. You have not been able to use, invest, spend or enjoy
any of that money and your next of kin are lumbered with a big tax bill;
£40,000 in the example above.

Using Progressive thinking, you have used equity in your own home to buy
more property. Perhaps you bought the next 10 from that one remortgage
or you kept remortgaging over the next 20 years and re-investing. You have
taken your money as your property has grown in value and you have enjoyed
or reinvested at least £1.25million in that time. Your asset base only has
equity in it of £600,000 (less than with traditional thinking) and below the
2015 nil rate exemption of £650,000 and the tax bill you are leaving is NIL
(yes NOTHING) on a considerably larger asset base.

In all the years of investing, studying, testing, trailblazing and meeting the
richest investors, we have not yet found a better strategy than this.

So die in debt and pass cash to your children 7 years before death tax free
with the right strategies in place.

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Income tax
This is the tax most likely to impact on the profit that you make from your
property investment. Yes, there are many expenses that can be claimed
against your income but at the end of the day the intention is to make a
profit; so yes, you are likely to pay income tax if you hold the properties in
your own name.

Companies and Forthcoming mortgage interest relief tax changes

The million $ question I always get asked is should I use a Limited Company?

It used to depend, it’s now much simpler, we would buy in a Ltd company
so that you can offset all mortgage interest as this will not be possible for
properties owned by individuals, LLPs and partnerships from April 2017.

Roughly speaking, from April 2017 a new system will be gradually

introduced over a 4 year period so that eventually in rough terms only half
of the mortgage interest payable can be offset against rent for higher rate
taxpayers. Lower rate taxpayers will see no change unless their property
income pushes them into the higher rate income tax band.

This change however applies to properties owned personally, in partnerships

and LLPs, not Ltd companies. Therefore to avoid this tax on turnover
many buy-to-let investors will start to purchase future properties through
Ltd companies. I expect to see more and more lenders start loaning to
Ltd companies, as they will want to maintain their business. This does
however create a problem for those investors who need to transfer existing
properties which are held personally into a Ltd company, as Capital Gains
Tax and stamp duty may be due.

There may also be issues with lenders in transferring the properties as your
mortgage rate may increase etc.

We have found some solutions to these issues below, discuss them with
your accountant as you will be eligible for some and perhaps not others:

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• Use Incorporation Relief when transferring properties from your

personal name to a Ltd company to defer paying capital gains tax until
the property is eventually sold.

• Use a relief provided in Paragraph 18 of the Finance Act to negate

the need to pay stamp duty on the transfer (subject to certain criteria
being met).

• Ask your solicitor to draw up a series of deed of trust documents

for the properties you wish to transfer, this will allow you to move
the beneficial ownership to a company meaning the property will
be taxed inside the company, but the legal owner, land registry and
mortgage lender are unchanged, still hold the same owners details
(you rather than the company) meaning you don’t necessarily need
to remortgage/take a worse mortgage deal (subject to your lender’s
Ts&Cs not prohibiting this).

• When you buy your property investment through a Ltd company, this
is seen to have a separate legal status to individuals. So when you
search on Land Registry, the company’s name will appear as the owner
rather that the individual’s. This can be useful if you want to keep your
details private and might be useful in protecting your personal credit
status against utility providers who register late payments for bills you
haven’t received and other civil claims.

• Owning a property in a Ltd company or LLP will mean you have to

publish publicly available financial accounts on your portfolio, which
whilst not detailed when small will become quite clear as the size
of your company/portfolio grows and the reporting requirements
increase, something to consider.

• You only need one shareholder to purchase through a Ltd company so

you can hold the only share and still be the sole owner. And if you’re
a shareholder you are of course entitled to the share of the profit and
this will be paid out in dividends.

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• You don’t need to own a vast portfolio to benefit from a cor-porate

structure, one property is enough.

• When you hold the property investment through the Ltd company you
pay corporation tax which is likely to be around 18% (by 2020) of the
profit generated (but not drawn out) of the business. Should you leave
all of the profits within the company this is the only tax you will be
liable to pay on profits.

• For those who don’t want to draw any (or much) of the funds personally
to create a personal income this can be very useful and offers a definite
advantage over owning property personally. If you are like me and like
to reinvest profits to create bigger profits the compounding effect of
only paying 18% tax over time is huge. With some paying 40% tax on
their rental income profits you could potentially generate a yearly tax
saving of 22% which would snowball into big numbers if consistently
reinvested over many years. When owned personally, any property
income would be taxed in its entirety every tax year giving no ability
to defer.

• When you come to sell a property rather than paying 18% (basic
rate tax payer) or 28% (higher rate taxpayer) capital gains tax for
properties held in your own name the ltd company would pay 18%
corporation tax and you would then be subject to the same tax on
dividends outlined above for higher rate taxpayers.

This coupled with the fact that you get no personal Capital Gains Tax
allowance (The first £11,100 each so £22,200 if you own it with your
wife/husband/someone else of gains where you pay no CGT) often means
Capital Gains Tax is lower for properties owned in your own name rather
than the tax regime afforded to Ltd companies. So if you are likely to sell
a property every few years you are better to own it personally to reduce
your CGT bill. Should this become too frequent however (say more than 1
a year) HMRC will claim you are property trading and charge you income
tax anyway; an important consideration when deciding whether to have a
Property Investment Company or hold properties as an individual.

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I would certainly avoid anything ‘off-shore’. Nor would I be buying property

in other people’s names for the purposes of saving tax. It might save you
a little tax in the long run, but it will require expertise, can end up costing
and taking up a lot of your time, and may give you a long-term headache. I
have seen off-shore structures and other schemes work for so many people
for a while, but once the Inland Revenue start an enquiry (often random)
sometimes many years later these schemes usually fail and you will owe a
huge amount of tax.

A relevant point to note here is that any losses are aggregated with profits
from all properties and carried forward. If you register a loss on your
income tax for the year, you can carry that forward and it can be offset
against the future years that you may make profit.

Even though your property does not yet make a profit you will need to
tell HMRC and file a self-assessment return. You will need to make up
accounts to 4th April each year and file your return by 31st January each
year for personal tax. So income earned up to 5th April 2016 will go on
the 2015/16 Self-assessment Return. At present this return can be filed by
paper by 31st October 2016 or online by 31st January 2017. Any tax due
will be payable by 31st January 2017.

So what can you claim against your rental profits?

In a nutshell most expenditure incurred from a simple stamp sending back
the paperwork to the lawyers through to expenditure on refurbishing
your property.

This is a book about property not tax so space dictates that we concentrate
on a few of the key areas:

Repairs and renewals

Never has so much been written or discussed about the treatment of repairs.
The simple reason is that repair expenditure will be deducted as an expense
whereas capital items you will only get tax relief when you sell a property so
over time with inflation the real value of that money diminishes.

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The HMRC gives clear guidance on the fundamentals:

• When first brought into rental market (usually purchase) expenditure

to make it fit for purpose is CAPITAL expenditure.

• So if you buy a property then redecorate and repaint to make it

habitable (fit for purpose) then you have capital expenditure.

• Restoring a property to its previous condition (or modern equivalent)

is REVENUE expenditure.

• So if you’ve let out a property and then redecorate and then replace
carpets then that is revenue expenditure.

• Same expenditure but completely different tax treatment, so the key

is to get the property tenanted, even for a short period, before any
significant work is undertaken.

• Enhancement expenditure will be CAPITAL expenditure, so if you add

a conservatory then that will be capital expenditure.

Mileage

You would be amazed how many miles you travel as a property investor
so it’s essential that you make a claim for all those miles travelled. Some of
you may invest in areas well away from where you live as the yields in your
area don’t stack up.

So if you find yourself hurtling down the M4 to Wales or heading up the

M1 to the frozen north (it’s not really, it’s just wonderful :-)) to undertake
viewings then be sure to keep a record of the mileage undertaken.

Just think how many times you will clock up mileage: attending view-ings,
a trip to the auction house, a visit to your IFA, a visit to your solicitor, your
friendly accountant, networking events, training events. Keep a diary for a
month and you would be amazed at the miles undertaken.

A simple multiplication times 12 would give you a typical property mileage

on which to make a claim. If you have an anorak or maybe work for HMRC

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then you would dutifully record every trip 365 days of the year. Yes the
second method will be 100% correct, the former there or thereabouts and
a quicker more commercial approach.

Those wonderful miles can then be claimed at 45p for the first 10,000 and
25p thereafter though these rates do change.

Legal fees

Your first encounter will be when you buy the property. Legal costs in
acquiring the property cannot be claimed against your rental income and
will be treated as a capital expense. You will get tax relief when you sell the
property. All is not lost, however.

Within the conveyancing process part of the legal work will relate to the
raising of the finance and them helpfully telling you that you are borrowing
@ x% and that your home will be repossessed etc. (stuff that as a wise
property investor you already knew). So ask your solicitor how much of the
bill related to raising finance and then claim that part. If needs be, arrange
for a separate bill and claim that deduction.

Somebody came to me and asked about this. He was appalled to learn that
his accountant had not done this and he had over fifty properties. Fifty
properties at say £150 per property amounts to £7,500 expenditure left
and @ 50% that £3,750 more tax paid that necessary. Ouch!

Where tenants fall behind and you have to bring in the strong arm of the
law then those costs will always be allowable.

Summary
It’s important that you consult an accountant for property investment
tax advice before you make the final decision as your individual
circumstances such as your portfolio, other income, age etc. will
affect your decision.

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#33. Why most fail, don’t start, get it wrong, & how
you won’t be one of them
“If you do what you’ve always done, you’ll get what you’ve always got.”

‘If you do what others do, you’ll get what others get.”

‘If you do the same thing over and over and expect different results, that’s
the definition of insanity.”

“Anyone can succeed in property, it’s just that not everyone does.”

Unfortunately the statistics are not good. Most people are not wealthy,
financially independent or in a position of choice in their life, whether in
property, business or anything else.

Out of every 100 people by the age of 65:

• 25 will be dead.

• 20 will have incomes of less than £5,000 (no kidding!).

• 51 will have incomes of less than £17,000.

• 4 will have incomes over £17,000.

• Only 1 will be a millionaire.

Anyone can succeed in property, it’s just that not everyone does

Most people who try property don’t do anywhere near as well as they
could; or perhaps should. Most people will make money in the very long
term, accidentally, as the market and rents continue to rise, but only if
they stay in the game long enough. Most people’s lives are out of control,
with no clear vision on where they want their life to go, who they want to
become to get there, the things in life that are most important to them,
and the goals and milestones and daily tasks that break the journey down
into manageable chunks.

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Every human being has every trait of every human being. Every human
being therefore can do what every human being can do. If anyone can do
it, you can do it too. Sure, some physical or genetic restrictions might make
some things difficult, but this book isn’t about trying to make basketball
professionals out of midgets. This is about having emotional, mental and
intellectual capacity to learn something that anyone really can learn. Many
people before you have learned, where age, race, background, geography,
previous painful experiences and so on do not define you and do not have
to dictate the future. AS with anything that is learnable, there is the best
system and process to get the best results in the shortest timeframe.

“Do what the best have done and you get what the best have gotten.”

You have your own unique genius. It is most likely hidden right now, but
there is a unique place for you in the world, and the world of property, to
be the very best at something and to add value and serve the most people.
All you have to do is believe that about you and then discover what it is,
and live out your mission and destiny.

Vision & values

You’ve already covered this in an earlier chapter, so we assume you’ve
worked on your vision of where you want your life to go and who you
want to become on the journey. The more clear you are about this, and
your values (the most important things to you in your life), the easier it is
to instantly know the right thing to do (decision, task, intuition, person
to hire, etc.). Clarity on your vision and values gives you self-awareness,
poise and confidence. It stops you getting distracted, comparing yourself
to others, chasing the glitz and the get rich quick (the route that looks too
short is the longest).

So many ‘investors’ we have met are changing tack every 5 minutes; chasing
MLM (multi-level marketing) schemes, doing internet marketing, a bit of
stock market trading, forex in the morning, some gold, silver, bronze, tin,
carbon and soil investing, every property strategy at once, without working
at the previous one long enough to make it work. This is nearly always

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the case down to lack of clear vision, self-minimisation by comparing to

others, lack of confidence and a fear of missing out. The irony is that all
of these emotions that take you off the path to your vision make it longer
and harder to get there.

The biggest investors like Warren Buffet have built their wealth steadily over
time through ‘value’ investing and sound principles. Many have portfolios
generations old and continue to use strategies that have worked for them for
decades. And you can too. There’s nothing wrong with developing and refining
your strategy for single-lets (70) and another property type like HMOs (20) and
just keeping at it long enough to get well-known, get compounding working
for you, and have a system that minimises risk and maximises predictability;
and just keeping on and on and on for as long as you can.

70-20-10 application
Chase too many rabbits, get none. Spin too many plats, smash them all.
But do just one thing and you risk exposure to market, regulations and
emotional changes. Get yourself educated as much as you can in the next
8-12 weeks reading every property book you can, contributing in the
Progressive Community, ask many questions, do the relevant courses and
mentorships that work for you, then decide on your 70-20-10 strategy/
time division, and stick to it for at least one year. Ignore all noise (which
there will be in the form of scaremongering, regulation change, other
people doing well in other strategies, impatience and lack of self-belief,
haters and envy, media dooming, etc.) and keep at your 70-20-10 for at
least 12 months. It is likely that it will evolve, so look at it each year to see
if it needs tweaking, or if you can systemise and personally exit one of the
strategies to take on one more. Print out this section and pin it up in front
of your face in your work area because you will need it!

Observe the masses, do the opposite

Most people are unsuccessful, so common sense isn’t in fact common
sense, and most people are not worth listening to. Second only to observing

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successful people and modelling them in terms of a sure way to success is

to watch what unsuccessful people do and do the opposite. Those who are
successful are very often quirky, individual, extreme, sometimes excluded,
sometimes ridiculed, very often creative, perhaps stubborn and focused,
definitely courageous, inspired, clear, experienced, open-minded and
don’t often do what people expect them to do. The rest stay with the herd
because it is comfortable.

People can also be like crabs. Crab fishermen leave the lid off the boxes
that they put crabs in because they know that when a crab tries to get out
of the box, all the other crabs grab hold with their big claws and pull back
into the box the crab that dares to venture.

Be successful, be courageous and observe what successful people do and

do that; don’t let the crabs drag you back in your box.

Mentors, mastermind and modeling

It is very important to be strong and to stick to your strategies and
convictions. Only listen to those who have been there, done it and are
doing it, and politely ignore everyone else. This is of course easier said than
done because there are naysayers/haters/envious peo-ple out there who
seem to be born just to stop you from success. The reality is that they just
have a very different set of values; they value what you don’t and don’t
value what you do. So don’t take it personally; stay focused on your vision
and align yourself with those who support, inspire and lead you to your
destiny. The reverse of peer pressure is positive peer pressure, and that
is what mentors and masterminds give you in abundance. Leverage the
power of your network and the successes of others, model the traits of the
greats and you will own their best traits too.

Growth, support & challenge

There is no growth without challenge. Property will give you an equal
balance of support and challenge, so don’t look for it to be easier, look for

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you to be better. And each time you go up a level your challenges change
form and grow in scale, they do not go away. Growth is defined as you
getting better at dealing with them.

This shouldn’t put you off or make it sound hard. It’s easy to do and easy
not to do. It’s just as easy to be rich as it is poor, in fact we’d say it’s easier
being rich. Remember it takes time to make money in property, but not
a lifetime. The person you become making a success of property is just as
rewarding as the money you make, and if you want to make property easier
and quicker, accept challenge equally with support, accept everything that
happens along the journey and enjoy solving bigger problems.

The two guaranteed ways to succeed in property.

An article by Rob: I’ve heard many people say that some people just can’t
succeed in property; they don’t have enough knowledge, enough money,
aren’t credit worthy, or simply don’t ‘have what it takes’.

These have nothing to do with someone’s success or lack of. Having

trained, observed & served over 300,000 property investors of all levels and
‘abilities’ (& learning all the time), I’d be an idiot not to spot the common
traits of successes and non-starters, & they boil down to just two things;
revealed later in this article.

But first, the following are myths that do not impact success rate: how much
money you start with (or don’t), your level of experience, your geographic
location, who screwed you in the past, how many courses you’ve done or
not done, if your family and friends are supportive or resistant, and so on.

All these micro-factors give small, temporary advantages or disadvantages

in the transient moment, but won’t stop success, or guarantee it, in the
long term. I’ve witnessed all or none or some of the above advantages or
disadvantages leading to very fast success, never getting off the ground,
or anywhere in between, with all manner of excuses & stories to back up
the level of results.

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But those who succeeded, those who are now inspiring others in the
community, many in a relative short period of time compared to their
previous life vocation, found a way of making it of highest importance
to them.

We all do what is most important to us. Our lives reflect our highest values;
our results, network, how we fill our space and time, information we retain
or forget, places & people we are drawn to, our perceived genius or lack
of, what inspires us and the challenges we overcome.

When you get (more) into property, you either do it because it is of highest
importance to you; you’re inspired by it & could do it daily with vigour
and without need for external motivation, or you do it because you think
it can serve your highest values. In reality, a smaller number of people are
most life-inspired by property and business, compared to something else
in their life. The worst thing you can do, if you have something else more
important to you than property & business, is to ‘pretend’ that you have
the highest inspiration for property & business, if your highest values exist
in other things. This creates tension & self-doubt.

100,000s of people who want better results in property and busi-ess have
been attracted to Progressive because to us property, business & teaching
it is our very highest value; as a company and reflected by Mark & Rob; it’s
co-founders. That is why we exist. Our life long purpose is to do exactly
this, and to help others to succeed doing it too. If you have these values
too, you will already be succeeding, you will know in your heart that you
are on the way, and your results will either be showing already or being
rooted for the future, and you are convinced of that. If you don’t, the
worst thing you can do is to compare your lack of results to others. This
creates resentment, self-doubt, & your continuing questioning of yourself:
“Can I do this?” ‘Is this really for me?” “Why aren’t I getting quicker/
better results?”

Those who aren’t succeeding or are self-doubting just haven’t made the
direct link of how property and business serve their highest values & vision

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(yet). Even if you get ‘intellectually’ that money, free time, retirement etc.
from property will be good for your life. The tension, lack of motivation
and energy, excuses, wondering why others seem to be doing better, all
stem from having something more important to you (which you may not be
conscious of) & you are focusing more on this than property. For example
being a parent, having a hobby, paying your bills or your relationship with
your partner. Whether you are aware or not, what you consistently do
represents what is most important to you, or you’d be doing something else.

The best thing you can do; in fact the only thing you can do, that will
enable success in property and business if it isn’t your highest value, is to
link how success in property & business will lead to success in your highest
values. How will making passive income or building a pension replacing
portfolio serve your highest value of {being an amazing parent} {living out
your hobby/passion & serving others doing it} {insert your highest value}?
Ask this over and over & come up with 50 reasons how property & business
serve your highest values and enable you to live them out everyday, and
you’ll likely have the epiphany you’ve been waiting for and the clear path
to results in property and business, which in turn serve your highest values
and vision so you can do/be/have more of what is most important to you.

You’ll drop all unrealistic fantasies of get rich quick tomorrow for long
-term wealth, a balance of support and challenge, of ease and pain; all
necessary to help you grow to become better, to be more able accept a
higher level of results & of balanced responsibility.

So can anyone do this? The answer is yes, if you have property and business
as your highest values, or find a way to link living and achieving your highest
values to property and business. We are all made with high ability and genius
within us, but only to those things we see as most important to us.

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Summary

As most people don’t succeed yet global access to information is

easier than ever, the only variable left is your mindset. The skillset
without the mindset will leave you upset, as Rob’s speaking mentor
Craig Valentine says. SO go back over this section 3-5 times so you
memorise this section and know the difference that makes the
difference. To know and not to do is not to know.

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#34. Leverage
Leverage is an art form in a scientific guise.

Put simply, it is achieving more, with less. More money with less money.
More time with less (of your personal) time. More results with less (of your
personal) effort. Also known as the law of least effort and/or the 80/20
Principle.

To many this concept is just not believable. They’ve been brain-washed to

believe that ‘working harder’ means you’ll earn more money. You have
to ‘graft’ and ‘sacrifice’ in order to ‘earn a living’. Living is your right, you
don’t have to ‘earn’ it, you should be living it.

Everyone experiences leverage. You either leverage, or you are leveraged.

You are predator or prey. You are employer or employee, slave or master,
leader or follower. Each serves the other, but one leverages and the other
is reverse-leveraged.

You see you’re either utilising leverage in your favour, moving to-wards
your inspired vision, earning on OPM (bank, JV partner), getting results on
your time invested and OPT (other people’s time), or this is happening
to you, in reverse, and you’re working for someone else’s vision, being
leveraged by them, getting paid an hourly wage for time you’ve given up
(and will never get any residual benefit from).

If you work for someone else and you’re not happy, or you work for money
and that money stops when the work stops, and no-one works for you,
then you are being controlled by other’s leverage. They are earning from
you, you’re the bottom of the food chain, and earning the least while
probably working the hardest. You probably have the least control and
freedom, and you’re possibly the unhappiest.

Now this is not to say that working for someone else is wrong. We all need
each other, and we are all interdependent. The banks need the borrowers
and the borrowers need the lenders. The landlord and tenant need and

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serve each other. The cleaner needs the boss and the boss needs the
cleaner. And if you’re happy at the hand-to-mouth end of leverage, then
you are happy, and who are we to judge?

You’re probably just reading this book for fun and you’ll go back to living
a happy working life.

But perhaps that is not you, and perhaps you want more, but you don’t
want to kill yourself doing it, or make huge sacrifices over the things you
love and the people you love. Perhaps you have a greater vision. Perhaps
you want to leave your mark and legacy on this planet when you’re gone,
inspiring and financially fuelling many generations to come.

If you can master and control leverage then you will be wealthy beyond
all of your expectations, plans, goals (and quite possibly dreams). You will
earn on your portfolio almost infinitely more than you would using your
own money. You will earn on other people’s time, resources, knowledge
and contacts.

This is what millionaires and billionaires know and do. It’s the biggest
worldwide myth that you have to work hard for money; you need to make
your money work hard for you. Just look at the billionaire lifestyle and tell
us if they are working ‘harder’ than the slaves and the cleaners and the
servants. Here’s the good news; what they know regarding leverage is
learnable. You can learn the same strategies and systems they know, and
have learned, and are using to make money and make a difference.

Leverage is becoming more and more important in our society. First

there was the wheel, the donkey, the camel, the horse and the elephant.
We’re not great on history, so we can’t tell you which one came first. Did
prehistoric man use the mammoth to get from his ice house to the local
ice bar? You get the picture; we used animals to make a journey quicker
and easier.

Then there was the wheel 3,000 odd years B.C. Then the bicycle, then
the train, then the car, then the plane, then the shuttle. Fibre optics send

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information at the speed of light so we can leverage the internet and the
world’s information, organised by Google!

Who knows what will come next, but whatever it is will make journeys
even faster and easier, thanks to compounding and Moore’s law (not Rob).
You can outsource any task for pounds and pence on sites like elance,
peopleperhour, fiverr, onlinejobs.ph. You can em-ploy a VA (virtual assistant)
who you can pay by the hour or even by the minute, to do tasks for you to
free your time to focus more on Income Generating Activities (IGAs). 5 hours
a week leveraging non IGAs that might cost you £40, and those 5 hours
can be spent viewing and offering on properties that might bring you in
£30,000, and £1,000s per year passive income for the rest of your life.

This is the main difference between an ‘investor’ or ‘property entrepreneur’

and a ‘landlord’. Whilst investors do have landlord duties (regulation,
management, maintenance), landlords are hands-on, unleveraged
‘workers.’ They are simply self-employed people whose job it is to buy,
manage and maintain properties, and they aren’t that much better off
than a well paid job. They often get involved in refurbs, painting and
decorating, collecting rent and other operational tasks. Of course these
tasks are important, necessary and were they not done, the properties
would not cashflow, but an investor or property entrepreneur keeps to the
high-level strategy and vision, and leverages, outsources, employs, begs
and borrows (at the start) all these regulations, management tasks and
maintenance to others, freeing their time for higher level, higher IGAs.

Leverage really is easier and more accessible to the everyday person than it
used to be, mostly thanks to the leverage of the Internet. The main things
holding people back are lack of knowledge, lack of belief, overwhelm,
information overload and fear.

It can be a hard shift for many ingrained with values passed on from
hardworking parents from a different era/age to get a job, work hard,
get your head down, make sacrifices and don’t take risks. Then many
self-employed people (who think they are business owners, but are really

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slaves/employees to themselves, their employees and their customers) take

real power, ownership and over control of things that they have built. They
have identity and importance from being the boss and getting stuck in,
they can get precious about handing tasks over to other people because
no one can do their job as well as them, they think they can’t afford to pay
people to do things, or that they can ‘save money’ by doing it themselves.

Of course we’re not saying that’s you ;-) But perhaps you can relate to this?

When I (Rob) first got into property, I thought viewing properties, going
through the purchasing process, dealing with mortgage brokers, refurbing,
renting out and managing tenants was going to be my daily vocation
(grind). After a dozen purchases and well on the way to financial security
in my first year, I had this shit-any (reverse epiphany) where I asked myself
“Is this really what I want to do with my life?” The reality was I wanted
the baby, but NOT the labour pains. I personally do not enjoy the nuts and
bolts of property, whereas Mark does much more.

Without a vision and leverage, property can be a job like any other, with
crappy stuff to deal with and people who don’t value you, if you let it. I
decided early that I didn’t want to have my property business like this,
and looked at ways I could get other people to view, offer, buy, rent,
refurbish, manage and maintain my properties, whilst still making most
of the income. And it’s not that I was trying to pass the buck, because
as I found out partnering with Mark, there are people who value these
tasks, even love them, and earn their own living doing them. So if I could
leverage this all out, that would mean I could grow, earn more, do more
of what I love, AND create commerce, jobs and economy. A real win win.
More later on how you can achieve this too.

But if it couldn’t get any better, right now, we’re in this perfect storm
because in the current financial climate, in this little wormhole that we’re
in, property is free and it’s probably going to be free for at another three
years. If you miss these next three years, you’re going to certainly wish
you hadn’t, I think.

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Property has gone up 10% a year since 1088, so let’s take an exam-ple of a
£100,000 house, an easy example. 10% growth is £10,000, so you make
£10,000 doing nothing, that’s growth that you’ll get guaranteed over
every year over the long term. You’ll get about £3,000 in net cashflow. So
about £250 per calendar month, let’s say. So your overall profit in growth
and rental income is £13,000 on the £100,000 house.

Now, it’s more next year because that house is now worth £110,000, so
it’s actually about £14,200 but let’s just keep it at £13,000 to make it easy.
£100,000 house £13,000 profit per year. In the last five years the growth
has been a bit more than 10% a year and we’re not even in the boom
stage as yet, we’re just getting out of the recovery stage. Just to show you
that it’s probably going to go quite crazy and you’ll want to get the timing
right of this, and I believe we’re in that perfect storm.

So, at the moment get a good debt or call it a mortgage if you like against
a rental income property - not against your own home but a rental income
property - good debt costs you about 3% maybe a bit less but let’s say 3.

So it costs you £3,000 a year on a £100,000 house assuming that the whole
house is debt but you’re getting £13,000 in income, so you’re getting plus
£10,000 a year and you’re having your mortgage paid down by inflation.
Because, right now, inflation is more than the cost of interest on a mortgage.
So if inflation is 3% - and in reality it’s a lot more, travel and insurance has
gone up 50% in just a year or two - but let’s just call inflation 3% and let’s
believe the government and call inflation or the increased cost of living 3%.
Every year the value of money goes down by 3%, which means your mortgage
every year goes down in value by 3%. So if £1 is worth 97p next year your
£100,000 mortgage is worth £97,000 next year because of inflation. So this
is the clever part, this is the part that those that really understand property
really get - and this is the magic in it - if your mortgage is getting paid down
by 3% every year at least by inflation and it’s only costing you 3% in the loan.
So your net is costing you nothing, that’s even without any growth or without
any income, your costs are £2,000 a year, your income is £13,000 a year. So
you’re left with at least £11,000 profit every year.

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Why you need to leverage

Leverage is the non-get-rich-quick, get-rich-quick(er) strategy for property

investors. Property investor’s success and scale is down to how much or
how little they leverage, and this section will help you start with your
outcome and vision clear in your mind, and give you the shortest possible
route to one or all four levels of financial freedom.

You see, when we first started in property, we did everything ourselves.

We probably didn’t do too badly, because we kept costs really tight, we
protected the downside and we reduced risks, after all just as we’d set
up shop, the biggest recession/property crash in history happened. But
looking back, we could have achieved more, faster and smarter, without
increasing risk too much, if we got out of our own way and leveraged out
most of the boring and difficult jobs to others (far better than us), at a
much lower rate of pay than for us doing it ourselves. This would then free
us to do more IGAs and compound our income, results and legacy.

This is shown in how fast the Progressive Community members and VIPs
get results - the proactive ones do so well so quickly if they pick up on
leverage early, and fast. Many of them are now full-time property investors.
Many of them build £(multi)million portfolios in 6,12 or 18 months. Many
of them hit net cashflow figures of £3,000, £5,000, £10,000 or £20,000 in
1 to 3 years. Many quit their old jobs. Many of them are even now training
others and respected experts in the industry, giving back and making an
additional income stream (this is taught in Rob’s book ‘Multiple Streams of
Property Income’).

If you’d have been with us in December 2006, you’d have seen us sourcing
our properties, arranging and doing the viewings, finding the tenants
(to save the money on fees – poor leverage), checking the properties,
even doing the maintenance, painting and decorating and on-going
management. We were also doing all our websites ourselves, our own
admin, management accounts, post, going to networking events, you
name it, we did it, ourselves, the hard way. Sweat beats regret – we said.

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After a year or so the time we were spending doing everything was actually
holding our business back, costing it money, and repelling huge amounts of
money we didn’t know we were losing, because we couldn’t see it. After all,
what you earn isn’t as much about what you are doing, but what you are not
doing. We were in so deep we had no view outside. No-one was steering the
ship but it was going at full steam heading nowhere in particular.

The business couldn’t grow because we only had so many hours in the day,
no matter how many hours we worked or how hard or even efficiently we
worked, we kept hitting ceilings. As we got so busy our time was taken
away from IGAs, and we started making mistakes through fatigue and lack
of focus. We kept getting in our own way.

And besides, the whole point of working for ourselves was so we could
free up some time to do the things we really loved, right? But we were
too busy working to be able to do these things, and the dream of property
financial independence was starting to slip, despite buying around 20
properties in our first year in partnership together.

We thought it was how every business was. Work hard or go home. We

didn’t realise that it was our behaviour. We didn’t understand leverage
because we were going it alone. We didn’t know what we didn’t know.

With hindsight, we needed to create our business so it would work

independently of ourselves, if it were to grow, and be congruent with
our lifestyle and vision. We wanted passive income, a scalable portfolio
and to help others achieve the same. We couldn’t do that on overdrive.
We needed to continually increase our IGV (Income Generating Value)
by ensuring we were totally strict with what we did, outsourcing all low
income level tasks, and only doing what had the absolute highest IGV to
us. Anything that brings in less than our personal IGV (you’ll work out
yours in a minute), must be out-sourced, or you go backwards and become
poorer, but working harder for that right.

Fast forward to now, and property for us, and for Progressive, is a
leveraged business. In fact Progressive has become 8 separate businesses

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to include lettings, personal development, speaker and ecommerce

training, money lending, commercial buying and more. Our portfolio has
grown from 20 properties in year one to almost 600 in year 8. Katherine,
the Progressive group MD, manages the business, and the team of over
50 staff at Progressive House. We have 15,000 square feet of office and
training academy space, up from 200 square feet when we started. Wayne,
Progressive Lets manager & co-owner, manages over 600 tenants who
rent our properties. Personal assistants and team members in every depart-
ment take on the roles in the business we tried (and failed) to juggle in the
early days ourselves.

Refurbs are managed by Caroline, buying by Mark (another Mark) using

the version 5 Deal Scrutiniser™ software that Mark created version one of
back in 2005. We have 5 people in the accounts department managing
the money (all women of course - we make it but the smart ladies manage
it for us) there are 7 people in our events department, 8 in the marketing
department, and these will continue to grow as the vision plays out and
grows. Some of my (Rob) email accounts are managed by Sharon (my
Mum), though you can still get me personally on:

rob.moore@progressiveproperty.co.uk

The list goes on, but we certainly don’t say this to blow our own trumpets.
When we started we did everything, and it cost us a lot of money. I’d say
we’d be twice the size if we started again, read this section, and stuck to
the rules and models we’re about to share with you.

But before we do, this is just as important in your private life too. If you
iron your clothes, that’s time taken away from making money. If you cut
the grass or clean the house, that’s time away from IGAs. If you drive to an
event rather than have a driver or get the train, that’s dead time you can’t
leverage or earn from.

I (Rob), once read a book that said that millionaires cut their own lawn.
I feel that this is a bit out of date now. If a millionaire can do a property
deal in a few hours, time spent on non-IGAs actually blocks out and repels

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the IGAs. You save £30 mowing the lawn but leave £30k on the table by
not doing a deal. Perhaps the millionaire cut his/her own grass to create a
strategic vision in peace away from the humdrum of the world. Now that’s
leverage. I now have a full time chef (Mum again; she cooks and I pay her
credit card off each month. She’s a trained chef, we get to see each other
every day, Gemma my fiancée has less work to do, I get laid once a year
and everyone wins ;-) OK, I’m dreaming.

And if you saw either of us iron a shirt, you’d see us lose 7 months off
our lifespan, 17 minutes wasted and burn marks in perfectly acceptable
stripy Duchamp shirts. Yet pop down to Peter’s cleaners and you get 3
shirts pressed for £5. That’s cleaned and ironed! That’s 51 minutes saved,
7 months of your life back and £5 *invested.* In 51 minutes we could
probably make 5 or 6 figures doing some kind of property or business deal
from that £5 invested (as long the time was reinvested wisely).

Plus we add to the financial and resource flow of the economy in our area
and support local businesses too, giving many 100s of people jobs, houses
and contracts, which we believe will in turn come back to us through the
laws of economy.

But you might think it’s OK for us, we’re in the position to do that, and you
don’t have the resources for that. Yes, and that’s exactly why we’re spending
a good amount of time telling you this, because the longer you leave leverage
out of your life, the longer people leverage you. The longer you stay poor.

So here’s how you do it, technically speaking. The only way to know for sure
if you are leveraging correctly, and that the tasks you are doing are of the
highest financial value to you, and the tasks you’re outsourcing are beneath
your financial value, is to know what you’re worth, per hour of your time.

Calculating your IGA: the first stage is to calculate your Income Generating
Value (IGV). When you know exactly what an hour of your time is worth,
you can calculate accurately what tasks you should do yourself, and what
tasks you should leverage out, pay for, or inspire others to do for you.

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Taking a step back though, the following exercise is important. This is a

book of action, not just a book of hypotheses, so are you prepared to take
some action?

“When all is said and done, more is said than done”

- someone who did something

Good, then let’s begin:

For the next 2 weeks create a simple work log of how you are spending
your work time (career and property and any other ‘work’). Have a word
doc open or a sheet of paper or notes folder on your smart phone. Every
hour that you work in a day, note briefly what you did. Be honest with
yourself, including all wasted time or distracted tasks, and at the end of
the day put the letters IGA next to the parts that were income generating.

At the end of the 2 weeks, work out what percentage of your time is spent
on IGAs. If you’re anything like us, you’ll probably be shocked at how just
a few hours bring in most of the money and results, and a huge amount of
time is virtually wasted, with little or no financial benefit. This is your 80/20
time calculated, and a clear visual of what you should be spending at least
80% of your time on. You will use this in a minute.

Now, to calculate your IGV, add up the total amount of hours you spend
working every week. That includes your job/career, any part time work,
and any time you’re putting into property or asset building – the entire
amount of time attributed to earning money. You might have something
like 55 hours.

Now calculate, or roughly guess, how much money you earn in that
timeframe. If you find it easier, calculate the same figures: hours worked
and income generated, in a month, it doesn’t matter as long as there is
consistency. You may have £850 in a week. Make sure that all income that
is not a loan is added, any asset or passive in-come should be included.

Now divide the amount of income by the amount of hours, and you have
your IGV – your time value per hour. Every hour you work brings in, on

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average, £x. In this example: 55 hours / £850 = £15.46 per hour. Every task
that will/could bring in more than £15.46, it’s OK to do yourself; you could
do yourself without diminishing your IGV. Every task that brings in less
than £15.46 per hour, or you could pay £15.45 or less to outsource, must
be outsourced if you want to increase your IGV. This compounds, because
when you free time from lower value tasks to higher value tasks, you bring
in more money and it compounds the IGV.

Now you have to be strict with yourself, and have faith in this algorithm.
OK, it’s not that fancy, but still you should be disciplined: any task that
comes your way that you feel will or could earn you more than your IGV,
then do it yourself, because it will pay you to do it. If you keep doing that,
your IGV will go up and up and up.

But even more importantly, every task that comes your way that will or
could bring in less than your IGV, you must leverage or outsource it. Either
blag a favour, do a reciprocal deal, or pay for the task to be done on one of
the outsourcing websites we mentioned earlier, or a local virtual assistant.
Or your Mum or your kids. If you don’t, you’ll get poorer and you’ll actually
repel more money than you pull in. Stick to this system and it will change
your life forever.

“What you earn has nothing to do with what you’re doing, and everything
to do with what you’re not doing.” – Rob Moore

And to monitor your time, to check that you are using it well, do your
worklog for an additional couple of weeks to make this time restructuring
a habit. It’s a habit of successful people; you can make it a habit too. Then
do it once a year and see how your IGV goes up from £10 to £100 to
£1,000 to £10,000 or more. And boy does that feel good!

The greatest business people in the world understand this concept, because
they have had to learn it through experience. If you ever want to grow, or
upscale to the next level, whether in business or investing, you need the
help of people; their money, time, resources, systems and contacts.

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Many of the greatest investors never actually use any/much of their own
money, but invest millions. Many of the biggest business owners don’t
work day-to-day, yet employ thousands of people. They know the value of
their time and you often hear them saying ‘it’s just not worth my time’ or
‘I wouldn’t get out of bed for that’.

In investing terms, relating this concept to property, leverage is ‘utilising

other people’s time, money and skills to gain greater advantage, result or
wealth than you ever could on your own’.

Think of buying a property now. Do you think you would be able to source
it, survey it, do the conveyancing, find a solicitor, organise the mortgage,
do the gas safety check, vet the tenant, do the inventories and so on, all on
your own? Of course not, you rely on skilled technicians to do those tasks.

The more people you can ‘utilise’, especially experts in the areas that
perhaps you aren’t as strong or as specialised, so all bases are covered and
none exposed, the better the results you will get. You’ll find your property
business will grow into an automated *system* and run much more on
autopilot without you. Sure, it will need checking every now and again,
and even that can be done by a high-level MD or CEO.

In property investment we can look at leverage from 4 angles:

1. Leveraging other people and their time and ideas

2. Leveraging money (OPM, bank, JV, private investors)

3. Leveraging systems and software

4. Leveraging other people’s contacts and resources

And it is very important to understand that leverage is not ‘using’ other

people; that will end up more expensive in the long term, guaranteed. It’s
not about bribes or emotional leverage. It’s about having a vision, helping
people through your leadership, giving them hope and belief, adding value
to their lives, providing them with incomes and security, and making them
feel valued and important.

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The first person we recruited at Progressive was Mark’s Mum, Catherine.

She helped us because she loved her son; it was a cost effective way for us
to leverage ;-) We leveraged her time and her love for Mark. She still works
at Progressive (though she gets paid now before you say anything!).

The second person we recruited at Progressive was Rob’s Mum. She still works
with us too, 8 years on and counting, and she loves it. And we get to see our
Mum’s everyday, which is one of the greatest gifts property and the passive
income can bring. We hired estate agents to buy for us and paid low basic
salaries and very high commissions, we offered properties for design work and
IT services and a host of other ‘contra’ deals - we did what we had to do to
get leverage, even when we didn’t have much spare cash to pay people. The
hardest part, like 80% of the fuel to get a rocket off the ground, was getting
our first couple of people, the first small steps. After that you think nothing of
growing and scaling and leveraging all the 4 points.

But looking back we were far slower than we should have been, and you
don’t have to be, because you can leverage our experience and mistakes
for faster results.

We managed to get people working for Progressive’s vision because they

felt part of it. That was more important than the money, and still is today
for many of the team.

Every person you meet has the ability to help you to your financial goals.
You can help them to theirs. You can help each other. These rules apply
not just in your handling of agents and vendors, but also in all areas of life.

Here’s another model for leverage. It’s changing one or two small words in
your thought process, but a huge difference in your results and outcomes.
Most people, when they have a task to do, ask themselves:

“How can I do that?”

Fair question, right? Better than “I can’t do that”. But still, the prob-lem
with this is that they are asking themselves to do the task, and if they are

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asking themselves that, the likelihood is that they don’t have the answer.
It’s likely to take some work. It’s unleveraged and relies on their time.

If you ask a different question, you get a different result. Here’s how to ask
the same question, a question that you probably have 100 opportunities
a day to ask:

“Who can I get to do that?”

Train yourself to do this. Give yourself diary reminders or stick it on post-it

notes on your desk. If you make this a habit, you’ll make success a habit
too. You will always be deflecting tasks that people try to drop on you.
You’ll teach the world not to give you low-level tasks and time will be freed
for those 4 leverage points and ultra IGTs.

Gentle word of warning: not everything can be leveraged ;-)

Make your money and your wealth work for you. If most of it is stuffed
under your mattress then it may be going down in value by 5% or more
per year. The average inflation figure since 1948 has been 5.8%. You
could be investing that cash for an infinite return using other people’s
money. And you can sleep easily!

A simple buy-to-let mortgage in today’s market will require a 25% deposit

(subject to weekly change it seems). Yes there are other mortgage products
that allow 80%, and there are bridging loans and such that use leverage,
and we’ll talk about these in forthcoming chapters.

The bank will lend the other 75% (in the current climate, this may go up
or down in the near future) of the purchase price needed so that you can
buy a property. Banks are willing to lend such a great amount on property
(as opposed to shares, bonds and other vehicles) because it’s secure and
stable. The banks know they have a good chance of getting their money
back if things go wrong as their loan to you is secured by a charge on an
historically stable asset.

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You will use the money received from your tenant renting out your property
to pay the bank (mortgage) back. Here you have effectively used leverage
twice. Then you will have net cashflow remaining that the tenant is paying
you too. More leverage.

You will earn your return on the full value of the property having only paid
out 25% of the full price. That is leverage. And that is only the start.

Where else and in what other vehicle can you leverage the bank to lend you
most of the principle of the property, leverage a private lender to borrow
the deposit, leverage technicians to manage the purchasing process (some
paid by adding onto the loan and not out of your own pocket), leverage
tenants to pay those loans for you, leverage inflation to pay down your
debt, leverage the tenants again to pay you some cashflow, and then
leverage a letting agent to manage them for you (which you only have to
pay out of profit and not your pocket), AND then leverage the market by
getting yearly in-creases in rents AND capital values?

Now THAT is leverage!

Later in this book we’ll show you how to leverage the 25%, so you are
100% infinitely leveraged!

Do you remember just a few moments ago we we’re talking about the law
of compounding? This is where leverage really comes into its own.

We discussed the Rule of 72 working on the amount of capital that you

invest, and we used the simple example of a £100,000 property bought
for £75,000.

We kept is simple, stating that a deal like this would probably cost you
about £3,000 to £5,000 in cash.

And we gave you the figures below based on your ROCE (return on capital
employed - spent):

5% growth: 72/5 = 14.4 years to turn £5,000 into £10,000

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8% growth: 72/8 = 9 years to turn £5,000 into £10,000

11.74% growth: 72.11.74 = 6 years 48 days to turn £5,000 into £10,000

Using the leverage you can obtain through property, we can dramatically
improve these figures:

Taking the example of your £100,000 Property, in 10 years at the 3 given

growth figures, the results are as follows:

5% growth: £100,000 becomes £162,889

8% growth: £100,000 becomes £215,892

11.74% growth: £100,000 becomes £303,450

So instead of taking between 6 to 14 years to double your cash and get a

200% return, you could be getting an ROCE (return on capital employed
- return on the cash you spent) of over 4000%. If you want to see exactly
how this is worked out, please turn to the back of the book on page 523.

We still know many investors who buy property for cash. They are not
effectively utilising leverage and could buy 4 to 7 times as much property
for the same money. Just imagine earning 4 to 7 times as much money
with just a few simple tweaks in what you’re doing. How would that feel?
We also know investors who want to pay down their mortgages as quickly
as possible; again this is lacking leverage.

Are you sitting on an asset right now that you can leverage? That asset
could be cash, investments, your own home, or even your own time or
experience. Or simply your desire, drive and vision.

Think of your own property now. If you don’t own one, perhaps you have
friends or family who do. Over half of the people we regularly speak to at
Progressive events and in the Progressive Community, have enough equity
in their home to buy more property (and earn much more using leverage).
And if not theirs, their friend’s or family’s. So think of theirs if not yours.

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Get a specific property in mind, and think back to how long you or they have
owned it; perhaps 5 years, 10 years or more. Think back to what you bought
it for; perhaps less than £100,000? Perhaps less than £50,000. Think now
to what it is worth. If you don’t know, look for what similar properties are
selling for on www.nethouseprices.com or www.rightmove.co.uk.

You could also get an estate agent to value it for you (if you are even just
thinking of selling your home, they will do it for free).

There is a great chance that the value of your home has gone up in value
£50,000, £100,000 or more in a very short space of time.

In fact, some of our investors’ and community members’ homes doubled in

the 5 years before the crash. Some are still going up in London. Many have
doubled every 10 years, in line with national averages.

You probably have enough equity, or other assets sitting idle, or those of
potential JV partners, to buy more property, get the tenants to pay your
mortgages and your monthly cashflow, and generate additional equity
on perhaps 2-5 properties or more, rather than just your own home.
Leverage baby!

Whatever equity you have made on your house now, multiply that by 2 or
10 and imagine what that means to you. And you made that equity with
no strategy or idea or intention, it just went up anyway! Where else can
you make that sort of accidental profit. Think of £500,000 to £1million
now. Imagine 5-10% of that per year for the rest of your life. Would that
help you for your retirement or the lifestyle you desire? Would that give
you freedom, choice and independence?

There are 2 models for advanced leverage - Leverage 1st, manage 2nd, Do
Last, and Time invested vs. Time spent. They are detailed in the next chapter.

You’ll barely be doing a task ever again!

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Summary

Always think of how you can use leverage. The difference between
a successful person and a poor working person is how they use their
time. Leverage time, money, resources, systems and contacts. Think
“Who can I get to do it?” “How can I earn maximum return on
minimum time and use other people’s money for infinite ROI?”

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Section 4: What are you going

to do now?
A quick breath: that’s nearly all the information you need. Now it’s time
to turn your knowledge into action and the action into cash (only if that
is OK with you of course)…

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#35. Time: Your most precious commodity

Money - we can get back. Invest it - you’ll lose some, get modest returns on
some, and win big on some. Trust, love, property, fitness - we can get back.

Time - you can’t. Once you’ve used it, invested it or wasted it, it’s gone.
And if you’re not careful, your whole life can catch right up with you and
you may have little to show for the time you burned out and possibly
wasted. You may regret how you used your time as your life draws out.

You know it’s the one thing that is most valuable to you. So with that in
mind we’re going to share with you some Progressive time ‘models’ - ways
to monitor and invest your time, for the maximum return. We call this ROTI
– Return on Time invested. As well as looking for maximum ROI you should
be looking for maximum ROTI.

But beware – if (when) you use these proven systems for time and life
management, all other parts of your life, especially your free time, will
dramatically improve.

Fair warning - there’s a price to pay. That price is discipline. Though if

you have a clear vision and are living out your values then you need no
motivation or discipline to do those things of highest value to you.

“It’s easy to do, but it’s just as easy not to do.”

– Jeff Olsen

You choose which price you will pay - the short-term delayed gratification
or the long-term regret.

And just before we share Progressive time freedom models, this is one of the
very latest additions in the 4th edition of the book. We’ve been developing
these models for many years, whilst running a 7 and then 8-figure property
business, buying almost 600 properties, setting up another 7 businesses,
having babies, getting pilot’s licences, travelling around the world, racing
cars, trying to be good partners to each other and our ‘bosses’, raising 6

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figures for charity, spending meaningful family time and doing our best to
really contribute to the property and entrepreneurial world.

And trying to stay humble :-)

These are certainly not said to blow trumpets, but to share that without
these time models we’re about to share, that we learned the hard way
(burnout, lost money, failed JVs, disillusion, stress), it would have been
impossible to do and achieve all these things. We have many people far
smarter and richer than us to thank for guiding us through and helping us
refine these systems we are about to share with you...

And having delivered these models to many of the Progressive Community,

this generates much of the meaningful, life-changing feedback we get –
and it’s often not what property investors thought they needed.

L1. M2. DL
Leverage 1st. Manage 2nd. Do LAST!

When you’re busy, perhaps the first thing you think is ‘what do I need to
do? Or ‘I’ve got so much to do, where do I start? Or ‘When can I get this
done?’ or ‘How can I do this?’

Well try this: next time you start your task or to do list, instead of starting
with a task, start with what you can leverage or outsource. Who can you
get to do the first task you were going to do? And the second. And the
third. Out of 7 tasks for the day, if you’ve leveraged 4 of them, and you do
3 of them, you’ll achieve more than double the results in less than half of
the (your personal) time.

But unfortunately, once you’ve leveraged out tasks you would ordi-narily
have done yourself, they don’t just magically arrive on your desk the next
day in shiny wrapping paper. Any task ‘leveraged’ needs managing through
to completion (time invested). The wealthiest people have managers to
manage the managers to manage the managing.

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Check through your leveraged tasks and manage them accordingly, and
only once you have gone through these 2 steps should you consider ‘doing’
a task (time spent). A few small hours moved from doing to leveraging,
from time spent to time invested, has huge compounded benefits. And if
you’re too busy to invest time, that’s probably the very reason you need to
do it. And if no-one can do that task or job as well as you, that’s probably
the very reason you need to do it too.

Much of your ‘personal’ work is holding you back from success, and most
people are working too hard to be rich. Any ironing, cleaning, gardening,
driving, cooking, housework, car maintenance, shopping and so on brings
in zero revenue but takes lots of time. Unless you are lucky enough to
have a husband or wife that does all that (and loves to do all that for you
;-)) then you could be spending 10 or even 20 hours a week on Ts tasks,
trying to save a few quid but costing yourself thousands. A millionaire may
have an averaged work time value of £5,000 or more per hour. So 10 to
20 hours doing these low level tasks would cost £50,000 to £100,000
of opportunity cost cash. And it would probably only cost £10 to £20 an
hour to outsource each of these tasks. People think that millionaires have
these luxuries of service because they are millionaires, but the reality is they
became millionaires by valuing their time highly, only doing the highest
IGTs and outsourcing/leveraging the rest.

Ti vs. Ts
Time invested vs. Time spent.

Working for an hourly rate, doing a task, or exchanging your time for
money, is time spent (Ts). You can never get it back. Unsuccessful people
‘spend’ most, if not all of their time. Low value hourly rates and salaries
are Ts. Even good salaries are Ts. Much of the work you’re doing, imposed
upon you by others but not high on your values or leading you towards
your vision, is Ts.

Leveraging, leading, inspiring, influencing, managing, outsourcing,

networking, training and building systems, educating yourself, time with

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mentors and in masterminds, are all examples of time ‘invested’ (Ti).

Time invested continues to earn or leverage long after that task was
completed. Buying a property is Ti (and money invested), building your
team and training them is Ti. New knowledge that gets you better results
is Ti that you can leverage for the rest of your life. Ti has a passive,
residual and recurring benefit long long after the time is spent. Ironically,
in property and business, many of the highest value Ti tasks don’t pay
immediately but pay for a long long time, maybe forever. Many Ts tasks
will pay immediately but at a very low level and once.

Become aware of where you are spending all of your time in one of the 2
areas above, spend less time, and invest more of it. Passive income comes
from time invested. Dividends come from time invested. Salaries come
from time spent. There’s nothing wrong with exchanging time for money,
as long as there is a vision to invest it. When you package deals, you can
earn a lot of money per deal or per hour. That can get you on the road to
being wealthy, and investing time. It serves its purpose. But you’ll never be
time wealthy unless you invest time for residual returns.

So be very selective in how you use your time. Measure it, monitor it and be
strict and disciplined with where you invest it. Lead, manage and leverage.
It’s not about how much you do, but how much the world is doing for you
and for your vision. Then you have more time to do the things you love. To
do things that build you a future. To do things that make you money. To
do things that build your property portfolio. To do things that help others
and contribute to the great world we live in.

Don’t waste your time with anything else. Don’t waste your time doing
things you don’t want to do and don’t have to do. You have ultimate
choice. That’s the great thing about the free information world we live in.
It’s so easy to get someone else to do all the things you hate, or you’re
terrible at. And they probably love it! Freaks ;-)

(For the avoidance of doubt – doing things that you don’t particular-ly like,
but you know, being honest with yourself, are IGT, Ti & Leverage, shows true

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discipline that will lead you to great success and riches. There’s a world of
difference between doing these important ‘tasks’ and everything else that you
don’t like that is useless to your life – or you do like but is useless to your life).

Throughout the years that we’ve been building our portfolio and businesses,
we’ve always striven to become more efficient. That was harder for me
(Rob) than it was for me (Mark) because I’m a ‘fire, ready, aim’ and ‘get
perfect later’ kind of person. Mark taught me systems. We now consistently
look at how we can get better and do things quicker without duplication
of time, resource or personnel, because it has a long-term passive, residual
and recurring benefit.

We’ve built systems and checklists to control property viewings,

automatically evaluate deals, monitor and control refurbs, manuals to
manage the people managing the systems, people to manage the people
managing the systems, and systems to manage the people that manage
the people that manage the systems. James Caan really helped us with
this, he’s smart when it comes to systems - thank you James.

One of our best systems is Mark’s ‘Deal Scrutiniser™’ - and as a thank you
for getting this far, and because those who keep going get rewarded, you
can download the iPhone App version here, unlocked and free on the App
store when you type in ‘Property App’.

You can choose that you are only going to do what you love, what
you want, and what makes you money, and the rest can be delegated,
leveraged and you can lead all that serve your vision. That’s often the best
anyway because any of those things that you don’t love you’re probably
terrible at anyway (if you’re like us). One of the most liberating things in
the world is to do more of what you love and are great at, that serves your
vision, and to outsource or leverage all the things you hate. That is real
freedom. And the person that does it for you probably loves it, is certainly
better than you at it, and you get to serve more people.

And when you’ve ‘bought back’ and leveraged all this time, you can either
fill it doing more of what serves your vision, as we did in the first few years,

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to get compounded results quicker, or simply spend more time doing the
things you love the most, with the people you love the most, when you
want, where you want, whenever you want.

Summary

Use your time wisely, efficiently and systematically, because it flies by.
Don’t waste a minute. Make your decisions quickly; use L1. M2. DL.
& Ti vs.Ts time freedom models and be disciplined to follow through.
Either you’re using your time to serve someone else’s vision, or the
world is serving your vision. You should be looking for a long term,
passive, residual and recurring benefit from most of the time you invest.

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#36. To know and not to do...

Is not to know.

And when all is said and done, more is said than done.

So now you have a good level of knowledge to get out there and start
investing in property.

But of course you know that this is not the end of the road. The rest is up
to you and the action you take from here on.

I hope that we will talk in the future and you will be telling us your stories
of action and success, and hopefully some of those will be down to what
you have read here in this book. Maybe we get to work together at some
capacity within the Progressive Community, it would be a real privilege.

“It’s easy to do, but also easy not to do.”

We hope you choose the easy part :-)

Get perfect later. Fail forward fast. Decide forward.

Education. Decision. Action

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#37. Your Next Steps...

Is this the end, or is this just the beginning?

So you’ve proven that you can go the distance, and you clearly want
something more. You must be ready, and for that we want to thank you.

Thanks to you, and hundreds of thousands of others just like you, we get
to live a far greater purpose. We don’t have to buy our friends (any more)
;-) The Progressive Community has something so special about it that just
can’t be put into words, and it’s all about the great people in it.

People from all walks of life - men, women, 17 years old, 85 years old,
billionaires and zero-aires, people in terrible debt a year or two ago who’ve
turned their life around, highly educated people and others like Rob ;-)
From 39 countries across the world and counting. Everyone with totally
different backgrounds, cultures, experiences and beliefs, but with couple
of key distinctions and common goals - to do better, be better, have a little
more and give more. And when Mark was a glorified butcher and Rob a
struggling artist, we never got to be in a community like that.

Where else do you get so much shared information, resources, contacts

and experience? Imagine asking your boss for all his secrets - he’d tell you
go and do a little dance for it or give you the ‘bird’.

So, if you’d like a little help where to go to continue your journey, here are
some possible next steps for you:

Have you read any other Progressive Property books? Did you know we
have others? Yes, more of the same!

‘Cash in a Property Crash’ - does what it says on the tin, but especially
relevant years before the crash so that you can buy properties as cheap as
in a crash, and prepare for one as early as you can. One of our mentors told
us 2 years ago, which is possibly 7-9 years from the next crash, to save and
build a war chest cash fund now to be ready for the next crash to a. protect

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the downside and b. be able to buy all the best, cheapest deals when they
drop. You can search on Amazon for ‘Cash in a Property Crash’.

‘Multiple Streams of Property Income’ - if you want to know all the more
advanced cash flow strategies to make the most amounts of cash, progress
quickest from beginner to winner, select the best 70-20-10 for you, have
your journey as a property investor mapped out in front of you, and you
want the latest innovations and opportunities in property, search on
Amazon for ‘Multiple Streams of Property Income’.

You can also get the audio version of this book, and ‘Multiple Streams of
Property Income’ on iTunes or Audible.

To meet us and the Progressive Community personally, you can join us at

a Progressive Property Networking event (PPN) near you:

www.progressivepropertynetwork.co.uk

Or for more information on our more detailed, specific events, training

programmes and higher education for accelerated property success, go here:

www.progressiveproperty.co.uk/events

6 actions you can do, right now

Here are the top 6 action steps you can do right now to get you ahead and
give you immediate momentum. Do these in the next 5 days and you will
have made the first, and for most the hardest, part of the journey; the start.

1. Book viewings.
2. See/speak to a broker.
3. Go to/book a property event.
4. Book lunch with someone you know who has cash.
5. Go to a business event.
6. Decide/book your next self-education (book, course, etc.).

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Here’s some info on each:

1. Book viewings

Go in and see 3-5 different local estate agents, and book some viewings.
Right now it doesn’t matter how many or if they are the perfect deals. You
should aim to do at least 3 viewings per estate agent, use the specifically
vague technique, and don’t worry if you don’t have deposits yet. The idea
is to get known, build rapport with the agents and see what properties are
on the market and their prices. You can always post any questions you may
have from the viewings on the Progressive Community.

2. See/speak to a broker

You’ll want a D.I.P (Decision in Principle) or A.I.P (Agreement in Principle)

in place when you make an offer, and you may want to get advice on the
right types of mortgages and if you can refinance any existing properties.
Agents like to know you are ready to buy, and this is part of getting ready
to buy for yourself. Don’t get ready, be ready.

3. Go to/book a property event

Go to progressivepropertynetwork.co.uk and book your nearest PPN.

Start networking in property circles as soon as you can because it keeps
inspiration and momentum and it gives you the contacts and resources you
need to be a professional property investor.

4. Book lunch with someone you know who has cash

Someone you know, or someone who knows someone you know, has cash,
and could be your perfect JV partner. Think who this might be, whether you
know them well or haven’t spoken in a while, and book to meet with them.
Don’t tell them you want their money, just meet, have lunch or a coffee, and
when you get a chance tell them what you now do (in the present tense).

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5. Go to a business event

Often at non property, more business type events, you are one of the only
property people in the room, so you become the go to person for property
by default. You’ll meet some successful people in other circles and could
meet JV partners and other valuable contacts.

6. Decide/book your next self-education (book, course, etc.)

Take immediate and consistent action and decide what you next want/
need to learn. The education and growth never stop, you are your best
asset, and you pay yourself the most interest, so invest in yourself wisely.
Traditional education will make you a living; self-education will make
you a fortune. Go to progressiveproperty.co.uk/events for the different
programmes that can help you make more passive income in property.

Summary

You’ve got this far – CONGRATULATIONS because you are one of the
few. “To know and not to do is not to know – just go.” What is your
next step? Follow the 6 steps and take immediate and consistent action.
Post any questions you have on the Progressive Community. We’d love
to be a continued part of your successful journey, and above all else
we’d like to thank you for putting your faith in us. So thank you.

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#38. Are You sitting on an asset?

If we were to tell you the single most common reason, or (translated) excuse
for not getting into property, or buying enough once you’re educated, or
scaling up once you’ve bought a few, or moving up to your next level, we’d
bet a few of our houses that you could guess it.

It’s the thing that stopped us for many years before 2005. Maybe it’s the
thing that has taken you this long to get to this point...

You guessed it – money.

“I don’t have the money to invest in property.”

“I can’t afford the deposit.”

“I’m worried about voids, mortgage payments and debt.”

I (Rob) started with more around £50,000 of consumer debt. You didn’t
pop out of your Mum with a briefcase full of money, and nor did anyone
else. Very few start life with enough money to live off forever, and the very
few that do mostly squander it, right?

You know this to be true, so the big question is ‘What’s been stopping you?’

Well every penny you’ve ever *attracted* into your life to buy or invest
in anything, or donate, gift or waste, has literally, in your material world,
come out of ‘thin air’. If you total it all, you’ve probably *attracted* millions
in your life, right?

So you’ve proved that you can do it, you probably just want to be able to
do it quicker this time round. By now you should know that you can do it,
let’s just work on doing it a little quicker, together, shall we?

Some facts about money:

At the time of writing, depending on the source, there seems to be between

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$40 trillion and $55 trillion of worldwide currency circulating around the
world. Each $ equivalent gets used/recycled thousands of times. Although
that’s not an infinite amount, to the human brain its virtually infinite. It’s
certainly more than enough for us all to be multi-millionaires; or at least
for you to have your share without being greedy. So let’s get rid of “I
don’t have any money” and “I can’t afford it” “There’s not a lot of money
around at the moment” “No one’s spending/got any money” as excuses.

Those ridiculous statements aren’t just damaging to your wealth, they are
magnificently untrue!

Next.

“I don’t have the money.”

You never did. You never do. You borrow it from the ‘world’. You weren’t
born with a bank account, you don’t get given a limited share, it’s not scarce
(Inflation & QE - more and more is being printed), and you ‘attract’ or ‘repel’
it according not to what is fair, but what you believe, do and give. Money
moves from those who value it least to those who value it most.

Your bank account is not held with Barclays or HSBC, your bank account is
held in the ‘world’. It’s all there, waiting for any deposit or withdrawal, at
any time, with no daily limits or restrictions, with unlimited overdrafts and
infinite repayment terms. There’s an almost infinite amount therefore its all
there, ready to draw down.

All the money you need for anything is moving constantly around the contacts
you know. How many people do you know who are good at ‘attracting’
money? How many wealthy people do you have in your extended bank
account? How far does it reach? Your network is your net worth.

In the “Joint Venture – Be Your Own Bank™” audio programme, there’s a

whole disc dedicated to your money beliefs. That’s one-eighth of the entire
programme. Most property people don’t get into property thinking they
need to learn about ‘beliefs and values’. They want strategies, tools, tactics
and information.

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“The skillset without the mindset will leave you upset.”

– Craig Valentine

Well what’s the difference between giving a Michelin star chef a knife, and
a murderer? Do you think their beliefs may impact how they use the ‘tool’.
Your beliefs totally dictate what you do with the tools and opportunities
that are passed your way by the world every minute of every day (notice
your beliefs about that statement too).

So how about we share a detailed list of places where you can attract
money. If we give you a dozen or more proven places to raise finance,
then your excuses for not having any of it dissolve to non-existent, right?
So here we go:

• Crowd funding sites

• Peer to peer lending sites

• Market invoice sites (Invoice factoring)

• Asset based lending sites

• CDFIs (Community Development Financial Institutions)

• EFGs (Entreprise Finance Guarantee)

• Venture Giant

• Business Angel events

• Property portals & membership sites

• Personal concierge

• Flying clubs

• Charity balls

• Friends & family

• Early inheritance

• Pension redemption

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• Dating websites (we have a great story about that)

• Social media groups

• Business networking events

• Property networking events

• Progressive property events

• Pay per click (facebook, Google)

• Private members clubs

• List rental/CPA/CPL

• Affiliates and Joint Ventures

• Sale or IPO of business

• Sale of unwanted possessions

• Home equity

How would you like to be financially independent, living your life of choice,
with no loss of your time, all from the equity you have in your house, right
now? Every property purchase you ever do could come from this first step,
and every deal could end up as none of your own money (left) in. And you
don’t even have to sell your house or pay anything out of your own pocket
or earnings.

So many people who have become financially independent have accessed

their money through remortgage of their existing home. Many others
have borrowed money from their family or friends. A little bit of leverage
goes a long way. Many of them have gone on to become multi-millionaire
property investors. You could do the same now, too.

Many people didn’t even realise the asset they were literally sitting on. Do
you remember earlier in the book we asked you to think about your home:
what you bought it for and what it is now worth? Or if you have a family
member who has a house and you can ask them the same question.

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The major benefit of this strategy is that your income and savings are not
impacted in any way. If you have a property with sufficient equity in it,
or you know someone who has, or you can access funds from any of the
vehicles/places/sites above, you can get started right away.

Just remember, a lack of money is not a valid excuse for not starting or
succeeding in property.

If anyone can start in property without any/much money, you can too.

And if you have cash or deposits to get ahead, then make sure you don’t
spend/invest it too fast and pay more than you should. Keep a 15%
contingency fund. Invest at least 10% of it on your education (which will
help you protect and grow the rest) and invest it wisely.

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#39. About Mark & Rob (the full history)

This seems like the right place to tell you a little more about us. If you’re
already in the Progressive Community, you’ve heard this all before (from
Rob!). If not, it’s a pleasure to be on a similar journey with you.

This book is not about us, it is about what you can do with your financial
future and how you can have security and wealth through property. And
all those other things you want too. However, you could, no should, be
asking this important question:

“Who are these guys and why should I trust them?”

“What makes Progressive different/unique?”

“Are Rob & Mark the real deal?”

OK. We absolutely regard ourselves as 2 ‘normal’ guys. In fact Mark is very

boring! We’re not ‘gurus’ or self-proclaimed cult leaders or evangelists.
We might get labelled as ‘gurus’ (both in the positive and non-positive
sense), but we value learning and growth very highly so will never rest on
our current results or think we have ‘made it’.

Property investing is quite an unregulated industry. That brings equal

measures of positive and negative, like everything. The barriers to entry in
property investing were very low for us (and are for you too), so once we
decided to invest in property (Mark in the early 2000s, Rob in 2005/6) we
got off to a fast start. No degrees or diplomas, just straight on the front
line, doing it.

Rob scraped a degree in Architecture that he’s done nothing with, and
Mark’s degree in Economics, though a useful stepping stone, never
prepared him for the real world of business and investing. I guess we went
down the ‘traditional’ education path initially, because that is what you’re
supposed to do if you can. We certainly won’t be teaching our children
the ‘traditional’ way, as although part of the path that lead us to where

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we are, it has not had anywhere near the impact a self-entrepreneurial

education has had, which totally changed our lives and made us tens of
millions. And we plan to be going for at least another 6 decades.

Funny how we both sunk around £50,000 a piece into ‘traditional’ education
(university), much of that from our parents - yielding virtually no return. Yet
from minus £50k (Rob), self-education, real-life investing and business has
returned a £25m+ JV mini-empire (that’s how Rob likes to see it). Funny how
most of the debt was created trying to get traditional education.

And funny how most people do the same with blind faith, yet baulk when
it comes to investing in themselves on a course or CD programme. Or don’t
even read non-fiction books. Those who don’t read have no advantage
over those who can’t read. Not that we’re against traditional education,
but it only serves to get you a traditional career. This is fine, great, if that’s
your vision. We guess you wouldn’t be reading this book if it was.

Funny how they’ll pay £60 per month for Sky and £300 per month for a car
lease, but spit at investing in the very thing that will make them rich – their
own education. Mark was very much like that when he started; he hated
spending money on anything.

So, we both started from relatively humble beginnings. Mark is obsessed

with figures, details, economics, business and investing, and has been
since a teenager. He’ll explain in a moment.

Rob is a disruptive, impatient, never-satisfied Entrepreneur who gets perfect

later, decides forward and strives to continually improve. But makes lots of
mistakes. Usually publicly. Between the age of 18 and 27 there were lots of
those failures (in strange ways) that he will reveal in a moment too.

It was an unlikely partnership. We met at a dingy property network-ing

meeting – you know the ones where you were told there would be 50
people there and there are 9, everyone is a bit coy, it’s all a bit tin-pot, the
speaker is dull and stands in front of the screen so that his presentation
reads like a script. Boring. No, it wasn’t Mark ;-)

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I (Rob) must have thought to leave half a dozen times. The last time was
as I walked past the bar towards the exit, but something made me stay for
one drink (water of course).

So after ‘strategically’ networking with everyone, sharing cards and talking

shop (which I had to pretend at the time and use phrases that I didn’t yet
fully understand, as I didn’t know anything about ‘shop’) the last person
I met at the bar was a bit rigid. His shirt was even tucked in and his jeans
had creases in them, pulled up near his armpits.

After 15 minutes of trying to drop words that made me sound like I knew
what I was talking about, I swapped cards with Mark and our partnership
started 2 months later, buying our first of 20 properties together over
the next 12 months. We thought we had everything in common, because
we both talked property and we had both been recently ‘evicted’ by our
respective girlfriends. Grounds to start a lifelong partnership, right? But
now you can see why we believe in property and business networking and
events so much. Were it not for those who knows where we’d be?

But that is where the similarities ended. And lucky too. The best JVs and
partnerships are built on polarised skillsets, and we were lucky enough to
be virtually opposite.

But with a shared vision.

Fast forward to now and the Progressive Group has become an 8 figure
£multi-million business, the UK’s largest yet most personal property training
company (yet most people call it a community) with spin off businesses in
personal development, letting, bridg-ing/finance, networking, ecommerce,
public speaking and more.

Who’d have ever thought we’d build a business ‘mini-empire.’ Being

honest, we never looked beyond buying a few dozen single-let ‘grot-boxes’
in Peterborough over and over. It just didn’t seem possible or realistic that
we could scale like we did. And that’s all thanks to property investing,
the systems that we’ve now developed and refined, the training and self-
education and the network. It is not because we are gurus. We are not.

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Almost 600 properties bought and sold in a few short years, including larger
scale HMOs, offices, training suites, flat and title splitting and conversions/
developments, and we’re literally pinching ourselves. And we’re less than
10 years into a 70-year journey.

7 best-selling property books, including 3 that went straight to number

one in all books in the UK on amazon.co.uk. We were blown away enough
that even one of our books made No.1 in the property section. When most
people say ‘best seller’ they mean in a tiny category for one day, and we’d
have been happy with that. We couldn’t believe that ‘Multiple Streams of
Property Income’ ‘Property Investing Secrets’ ‘Beginners to Winners’ ‘Make
Cash in a Property Market Crash’ ‘Wealth DNA’ and ‘Low Cost High Life’
would all go to No.1 in all books on launch. And more recently Robs new
book Life Leverage went to No.1 after only a few days!

So, imagine what our old friends thought when we bought our first Ferrari
(for those that care, and since we get asked all the time by fellow boy
racers; an F430 Spider, bought with cash because apparently anyone can
rent one, and it spends most of it’s life in the garage being repaired)?

Those guru-bashers loved to hate us. Especially when we sold it 4 years

later for the same price so it didn’t depreciate, and especially when Rob
crashed his £235,000 Ferrari 458 spider 5 days after buying it into the
News International (The Sun newspaper) headquarters.

Correct, they all thought we had set up a local drugs ring. Of course they
had no idea all of these material things we’re being funded totally out
of passive income from property, because that’s one of the greatest gifts
property brings, the residual income to be, do and have the things you love.

Someone did actually comment on YouTube that we never owned our Ferraris.
In fact, we had stolen it and got the bus to work every day ;-) You might find
that comment on our YouTube Channel to this day (with 100s of Progressive
case studies of success & cashflow), as it was too funny to delete.

Imagine what our old friends thought when we had a fleet of sports
cars (12), and when we gained our pilot’s licences and started flying to

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places in Helicopters, and when we bought offices and training suites and
commercial buildings for cash. All funded by income from our property
portfolio and business that started as a ‘Net £3k per month’ 3-year goal.

And all learned from the *systems* of property investing that you’ve
learned here, and that Progressive have the great privilege to pass down.
Remember money moves from those who value it least to those who value
it most, and property taught us this. And whatever it is you’d love to use
the passive income for; travel, great education for your kids, things to treat
yourself; this is all up to you, it doesn’t matter what anyone thinks and it
all comes from property. And the best thing is that on the first day of next
month all that money ap-pears again on direct debit in your bank account.

Imagine what Mark’s friends thought when he finally threw away his 12-year
old M&S suit and started wearing good clothes, and when he sold his £47
Nova that he’d been driving for over 150,000 miles and changing the oil
himself, and drove 911s, Ariel Atoms and Ferraris. All his friends from school
scratched their heads because he never told any of them what he was doing
because he didn’t want them to hold him back or judge. He’d just turn up to
reunions in supercars and watch their faces. He’d say nothing.

That was the final straw, we were officially evil, money grabbing, had-to-
be-screwing-people b*stards, and of course they were all waiting like a
pack of wolves for us to fail to tell the world “We told you so.” They will
be waiting like dusty skeletons.

And for those non-materialistic types, forget the possessions and money and
negative reactions from friends. Just think about the freedom, autonomy
and choice. Never again having to answer to anyone but yourself, knowing
that everything you wake up to is your choice, not an obligation. Going on
more holidays and doing more of the things you love, funded entirely by
property, and despite the things you may not be strong at.

Imagine cleaning your friendships and moving away from the ‘crabs’ to
amazing, inspiring, big thinking, fight-your-corner people. And not just

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Lord Sugar, James Caan, Frank Bruno, Bob Geldof, Karren Brady, Neville
Wright (Kiddicare), Andreas Panayiotou, Louis Smith and a whole list of
inspirational and wealthy people, but a whole Progressive Community,
literally thousands of people, all of like mind, supportive and genuine.

That’s the part we never dreamed we’d have. We thought it would be

years of struggle. We were wrong. The people you get to meet and the
person you become is even better than the money.

And do you know the best part? Better than the TV shows and media
coverage and money and ‘stuff?’ The best parts are that we succeeded
totally despite ourselves. We made so many mistakes. Property is very
forgiving because of the continued rise in rents, values, and the leverage
you can obtain.

If we’d have made so many mistakes in any other business we’d have got
wiped out 17 times over. But we succeeded not because of our superior
greatness, we succeeded because of the vehicle and *system* of property
investing. The leverageable, forgiving and limitless investment vehicle of
property. This system is what Progressive lives to serve you to learn and
achieve too.

All we did was take what people far smarter than us had learned, add
our own special sauce over the years as we ‘failed-forward’ and refined
a system that we’ve taught you in this book and our other books and
programmes too.

The other ‘best part’ is the people we get to touch. In no other business
that we’ve ever been in can we make such a difference and contribution.
It’s impossible. We’ve broken 2 speaking world rec-ords that have raised
£130,000. We’ve raised over £300,000 for Sue Ryder care and cancer
charities. Thanks to property and the community spirit it brings. What an
amazing gift! It’s not all capitalism, or at least you can use capitalism to
great service to the world.

For those who think property is all about money (like we probably did
when we started – nowt wrong with that), imagine how great it feels

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to build the UK’s largest property community with over 100,000 people
online and live all on the same mission.

Imagine having thousands of people who’ve gone out, followed the

simple system, kept going, and bought cash flowing properties, built
property businesses, housed tenants, saved people from repossession, and
contributed to the community so positively.

We’ve seen a lady six figures in debt and painfully shy raise £500k of
JV finance within six months. We’ve seen a young man be an innocent
victim of a £20m VAT fraud in his name, with family death threats, create
a cashflowing portfolio of many thousands in just a few short months.
We’ve seen people of 17 years old build a property business before they
can even get a mortgage, people who can’t see or have cerebral palsy buy
cashflowing properties, all with zero previous experience.

You can find all the proof on our Progressive Property YouTube channel.
And honestly, that means so much more than the money. Don’t get us
wrong, the money is up there with oxygen, but the freedom and the
feeling and the community - yeah baby that’s what it’s all about.

Over the years, going through our 20s and into our 30s, it’s been a continual
path of education and growth.

“If you’re green you grow, if you’re ripe you rot.”

The £50k that got us degrees came to virtually nothing of financial note,
but the continual, entrepreneurial, self-education has paid huge dividends.

Our budget for personal education in each year is £140,000 for courses,
trainings, CD programmes, flying all around the world doing the best
business, marketing, sales, leadership…whatever training we can get our
hands on that we can apply in our property business.

There are many peripheral industry experts that have had £10,000s from
us, and we’re so grateful what that training has done and the great
mentors who’ve helped us along the way and guided us.

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When you do a degree, let’s say to be a Doctor, you don’t get to pick and
choose the modules and when you apply them. You don’t get a knife to go
‘cutting’ after your first semester. You don’t move up the ladder for decades,
and you’ll be six figures down before you’re earning. You have to take the
long slow path that everyone else does. You have to follow the system.

When you’re an entrepreneur, you’re on your own. There are no agendaised

modules or lectures. There’s no ‘path’. So it’s not for the faint hearted.

But…

You can pick and choose what you learn and when. You can start now and
succeed (or fail) fast. You can go straight for the jugular and learn the most
income generating, business building strategies, now for fast cashflow and
financial freedom.

And you can access that information fast and at low cost. When we got
into property we paid £4,997 for a property pack (an Arch Lever file with
one property strategy in it, and it made us many millions). Now that money
will get you a whole year with Progressive. That is one-twentieth the cost
of a degree, and you can start earning now. Not in 7 years time.

The best of the best in the field of property and other related businesses
are teaching too. Just like us. And they love it. They’ll talk to you for free
at networking events, they’ll share all their secrets in a book, or CD or DVD
set, or a course. They can tell you the truth from the ground, on the front
line, warts and all. And it’s in their best interests to do so.

Imagine going to your boss in a bog-standard job and saying to her “Can
we have lunch as I’d like you to teach me how to do your job please. I fancy
having your job and you’re going to teach me?”

She’d ask you politely to smoke it in your pipe.

The property industry works in just the opposite way to the *system*.
The *system* produces sausage-machine clones to fill the public sector.
Entrepreneurs fund the public sector.

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And you don’t have to train with Progressive. We’ve learned so much from
so many great entrepreneurs and business people. Go dine with as many
millionaires and billionaires as you can find. Be a networking pimp!

“It’s not what you know, it’s how many millionaires you know.”

Just the talk of property, business, investing, money, finding deals, the
entrepreneurial spirit, turns us both on big time!

And if you can’t get yourself juiced up knowing you have full and limitless
control, then you should get a job at Greggs.

We started Progressive Property on £300 each. Mark had the cash, Rob had
to put it on a credit card. We are proud of what Progressive has become,
and it’s just at the start.

And we want you, my friend, to grab on, hold tight and fulfill your goals,
plans and dreams with the help of the Progressive Community.

Mark about Mark

I had dreams of becoming an investment banker because it seemed like they
earned the most money, had the most glamorous lifestyle and the most fun.

I soon realised that the competition was intense and I would not even be
considered with my grades (although I enjoyed university very much). I hit
a wall because I had been working to this point for many years of my life.
I made money in the interim in true entrepreneurial fashion selling various
products; importing and exporting and such, and raised enough capital to
be able to start investing.

Following university I went on to work for a multinational company on a

graduate scheme. I thought I would be an integral part of a big company
with great prospects. As it turns out I was a glorified butcher earning
average money with little future. I didn’t like the corporate ‘way’ and the
hierarchy. Looking up at someone’s arse on a ladder I was at the bottom of,

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having to wait in line for mediocre ‘success’ and ‘status’ was not my idea
of happiness and freedom.

I looked at the guys 20 years ahead of me and I didn’t like what I saw. They
were wrinkled, tired, financially stretched and they never looked happy. I
thought to myself; all that work (weekends as well), and this is where I will
be heading in 20 years?

Who wants to be like that? Not me. I wasn’t that happy. My zest, enjoyment
and passion had been sapped.

I joined a property investment company thinking that I could change my

life by becoming a business owner. I was made a director for impressive
property sales, however the reality was that I was a glorified employee.
My boss certainly didn’t look happy or live the kind of life that I aspired to,
even though he ‘read all of the books’ and ‘did not deal with negativity’. I
didn’t want to model myself on him.

I was genuinely down at this point; nothing seemed to be going right. I

wasn’t sleeping for months on end because of the worry of work, and it
began to affect my personal and working life.

Yeah, on the outside I had the job title, yeah, I was investing, and yes I was
making money. But I wasn’t happy.

And that is what is most important for me. For all of us, I think.

Then I met Rob. He joined the company I was at and we hit it off
immediately. He was (and still is) a qualified life coach.

We struck up a gentleman’s deal that he would coach me in areas like

relationships, health/body, work, mindset and I would teach him how to
invest in property/and make money.

This is where my whole life changed. We are very different people in terms
of skills and technical focus, but we have a shared vision. We got on so
well and our skills seemed to dovetail. Whatever Rob was weak at I could
help him with and vice versa.

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Over a period of months I learned how to develop every area of my life to

become the best that I could be. I started to run faster and longer than I
had ever before (I now go almost everyday and it’s something that makes a
real difference to my state of mind and performance). I ran a half marathon
after 4 months of running, another 2 marathons for our charities, and have
lost a lot of weight to become fit and healthy. I did not focus enough on
this when I was just doing property alone.

I became so much better at building relationships with people and I started

to feel great and love every day of my life. Now I sleep like a baby and have
massive energy all day long (as long as I have been for my run). I can still be
a bit grumpy from time to time, but no-one’s perfect, right?

And you know the best bit?

My property investment ability rocketed! We bought around 20 properties

in 2006 with a relatively small amount of money (most were NMD) and
refined a property buying system so much that we now have bought and/
or sold almost 600 properties for ourselves and in JVs with other investors/
partners/clients.

As we’ve gained more experience in property I spend a lot of my time now

on commercial investing, developments and high-end ‘Boutique’ multi-
lets. I’m totally hands-off from buying single-lets, as the Deal Analyser
(Rob calls it a Deal Scrutiniser) I developed buying all the properties now
runs as an automated system. It buys us 7-15 single-let properties a month.
We’ve bought pubs, bars/clubs, old police stations, offices, 12,000 square
feet of training suite and office space for our companies; all a consequence
of starting from very small, low cost local single-lets (most of which we still
own and produce passive income).

Pretty much every deal we’ve done since 2006 has been without money, or
has recycled money back that we made from a previous deal (that required
no money). Although I started with money from previous small ventures I’d
been doing since the age of 15, I’ve been careful not to use it. I’ve always
believed that knowledge reduces risk and learning how to invest like the
best negates the need for any money in any deal.

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If anyone ever tells you, you can’t, or that you can’t because you have no
money, or you tell yourself that, they simply don’t know how. (You can)
learn how, and everything will come to you, starting without money.

I am now happier than I have ever been in my life. Don’t get me wrong,
I’m not a happy-clappy-faux-positive personal development junkie. I’m
still quite risk averse, still very careful and have my moments of analysis-
paralysis, but I know that I am in control of my feelings, my decisions, my
actions and my future, which has been a huge development in my life, and
something I never truly under-stood before.

I enjoy spending time with Gemma (my Gemma, not Rob’s Gemma),
dining with inspirational business and property people, travelling to great
destinations around the world, running, flying and anything to do with
property and business. I’m crap at sport and my hobbies and ‘work’ are the
same things, which is lucky for me, I guess.

Rob about Mark

Mark is a dealmaker. He is highly analytical, quite risk-averse, semi paranoid
and very detailed. He has a sixth sense for property in-vestment deals in
my opinion, built up through 1,000s of hours of experience and passion,
researches thoroughly, protects the down-side, and is definitely one of the
most (if not the most) knowledgeable investors in the UK. And perhaps the
most paranoid!

He’s also semi-autistic, and is the property equivalent of the rain man.
He sees everything in numbers and figures, and constantly thinks and
evaluates everything in his life like a property deal. If you go on holiday
with him he’ll talk about all the hotels and properties; he literally sees
everything in property and economics. He bought some quite amazing
deals in 2004/2005 when he was relatively new to the market and it was
clear to me that I had to learn what he knew. He had developed a skill and
was only going to get better. I wanted in on those kinds of deals.

He has helped me immensely with my property knowledge and more

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technical aspects of money, property and business, and just being around
him helps me grow immeasurably every single day.

His attention to detail is scary. To be honest sometimes he bores the pants

off me with the amount of detail he goes into, and how many times he
tells me the same thing like I’ve never heard it; but it’s all good. I am one
of these kinds of people who likes the baby but not the labour pains. I like
to leverage and maximise my own time by positioning myself with people
who are better than me in specialised areas. I’ve done many silly things,
but JV-ing with Mark was the smartest one so far, by far.

Rob about Rob

Ever since I was 17 my life seemed to go steadily downhill.

I was a half-talented sportsman and got mostly As at my GCSEs (through

hard work, the fear of failure, and a £200 bet with my Dad, rather than
talent). I was accepted to one of the best universities in the country and
felt I had a good future ahead of me (or so I thought)…

Then in 1996 I had 2 serious injuries within the space of 6 months. I

crashed my motorbike (and not by half). It was my pride and joy at the
time because I no longer looked the pillock that I did on the provisional-
licence moped I had previously. It took me one year of begging my parents
to let me get me one. I spent 6 months in rehabilitation from multiple bone
breaks. (If you are considering getting a motorbike: DON’T! My son Bobby
certainly won’t be getting one!).

That ruined any prospect of me becoming a professional golfer or cricketer,

which I had genuine aspirations for. I held much resentment and never
really recovered from that. Six months later my appendix burst (a close run
in with the big man upstairs) whilst in a nightclub. The whole second year
of my A-Levels was written off.

I spent the next 7 years always living in the shadow of myself and what
I could have become - bitter, resentful and a feeling that everything had
been taken away from me. I lost my ability to dream and believe in myself.

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I managed to scrape into a university and pulled off a good degree in

Architecture (fear of failure again, as I didn’t even want to be an Architect).
As soon as I graduated I had no idea what I wanted to do, other than not
Architecture. The only reason I didn’t quit the course after 2 months was
my pride (ego) as I did not want anyone to think that I gave up on things.

I came back home to help my family in their pub, as my Dad was very ill.
What was essentially a 3-month plan ended up being nearly 3 years. Ever
feel like your life ends up somewhere many years down the line that was
not your plan?

I tell the full story at our events and the feedback is that it is the single
biggest thing that gets people into property. If we get to meet personally
I’ll share it with you too.

All the while I knew that working in Mum and Dad’s pub was not what I
ultimately wanted to do. But it is hard to break away when you think you
are letting your family down. And you don’t know anything else you can
do. I’m sure you may have felt the same. I finally broke away in 2003 and
set out to make a living in my real true passion: art.

I have loved art since before I could talk and that is something that I did
actually have some kind of talent for. I believed that ‘talent’ was enough to
bring me the success, wealth and happiness that I desired.

As it turns out ‘talent’ was not enough. I struggled for 2 years working 16
hours a day and failing to pay my debts of almost £50,000 that I amassed
at (and since) university.

I felt pretty low at this point. It was impacting other areas of my life, such
as my relationships with friends and family and my ability to socialise and
enjoy life. I had completely lost my drive and enthusiasm. I was constantly
looking back at what I should have been and that, 7 years on, I had still
achieved nothing in my life that I wanted.

I realised that I had no savings, no future, and that if something happened

to me I would be in big trouble. I was literally less than a month, every

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month, away from having nothing. I was not looking forward to working
16 hours a day for the rest of my life and I was turning one of my true
passions into something I resented.

My Dad worked for 15 years in the RAF serving his country to receive a
pension of £19 per week. £19 per week. What an absolute joke. I did not
want the same fate, and I wanted to be able to help him, having sponged
off him for the best part of 27 years.

I knew that I was missing something and in 2005 I met Mark, my business
partner, great friend, investment partner, and co-author of this book, of course.

Those 2 months were the best, most exciting turning points in my life. If
this is the beginning for you, despite all the things you want; the things you
don’t have yet, revel in this time of excitement and change and mystery
and the opportunity for something new and better.

Since then, since finding what I consider to be my purpose and what I am

meant to do, everything has accelerated so fast and I have learned so much
that sometimes I wonder what on earth I was doing for 27 years.

And not a day of it since then has been ‘work’. I’m even grateful for the
bad days, as they are as good as bad days can be.

Mark and I really have had the most amazing journey and I feel very
fortunate to have forged such a relationship with such a great guy, and
someone with such vast knowledge. And now to the 100,000s in the
Progressive Community who we get to share this great journey with.

I was out of debt by April and in the same year I partnered with Mark
(my interest payments alone were over £2,000 per month - more than I
was earning), we reached a £1million property portfolio and job replacing
income by the end of that year, and Progressive started to grow into a
£multi-million, 8 figure a year business.

Since then we’ve used the life coaching training to rescue a personal
development company which is now a £multi-million company. We

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invested 6 figures into delivering courses for many people, and have grown
that business to help people with their mindset, beliefs, speaking skills,
online ecommerce enterprises and business success.

Once we hit the 300-property mark we set up a letting agency with an

expert in the field, who managed a letting agency in our city but was
not a shareholder. Progressive Lets has become one of the largest letting
agencies in the area now with over 600 lets, and is another income vehicle
we didn’t plan or dream of when we started buying our little single-
let ‘grot-boxes’. We are also in the process of setting up a Progressive
Foundation and launching a business training company.

I really don’t consider this to be ‘impressive’. Being in our mid 30s, we still
have so much to learn and experience. I plan to be alive until I’m at least
95, and my exit strategy out of business and property is death. I have 6
decades of learning, growth and fun yet, so am by no means a ‘guru’ or
the finished article.

This business actually isn’t difficult. It’s not easy, but it is just as easy to
do it as it is not to do it. It’s just as easy to manage a portfolio as it is a
dead-end job or a boss you hate and it’s just as easy to be rich as it is to
be poor. Follow the system, tap into your passion and enjoyment, keep
focused on your vision, and go and get all the things you deserve. Property
saved my life in spite of all my mistakes, and you’ve likely got a much
better grounding and life experience than I had when I started, so you’ll
get success even quicker.

If only I had started sooner, but then I guess we all say that, don’t we? And
I now know that now is always the best time. It’s never too late to start but
it’s always too late to wait.

It’s funny because so many people think they have missed the boat with
property. I thought that myself for about 4 years. I was looking at 3-bed
houses for £70,000 in 2003. And I did nothing (but watch them go up and up
and up and tell people stories about why I didn’t-couldn’t-wouldn’t-shouldn’t
buy them). These are worth over £150,000 now, even after the crash. I am just
so glad that I know what I know now. Now is always the best time.

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Things just keep moving for Mark and I now and we have newer, bigger
goals. At the time of writing this we are both writing new books, which
will take us to a grand total of 9, and we’re not stopping there. We are
building our portfolio, both for ourselves and our investors, daily. We’ve
had offers to do TV shows, invited to appear on the ‘Secret Millionaire’,
‘How the rich live,’ and ‘Super-landlords’. We have endless joint ventures
and business partner alliances, and met some really great people. It is
amazing what a bit of momentum can do. It is the security that I feel from
having a property portfolio that will look after me for the rest of my life
that enables me to really go for it in other areas too.

Mark about Rob

It’s Rob’s drive and focus that inspire me the most. When I first met him he
knew only the basics about property, but within his first 9 months his portfolio
was up over £1million (and he was nearly £50,000 in debt at the time).

I have not met many people who have the ability to do this and the fact
that he has done it in a very short space of time gives me the evidence I
need to know that you can do the same.

Rob encouraged me to start out on our own and we haven’t looked back
since. I think it is his ability to just go for it and make things work regardless
of what people say that keeps us going when many people have been saying
(through the last 7 years) that the property market is dead. If we believed
them we would still be employed and not have the freedom or the results.

He learns very quickly and has seriously added to his skills since I have
known him. Sometimes he thinks so much to the future that he forgets
about detail, and I have had to help him with his driving licence and
insuring all his cars, a couple of parking tickets, the odd speeding fine and
his accounting. I feel like his 3rd PA sometimes but someone has to do it.

If it wasn’t for him we’d probably just be buying properties. That would
of course be fine, but we wouldn’t have the businesses that support it
and we’d have about 6 income streams less. I’m sure when you meet Rob

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he’ll share just how many opportunities and income strategies there are to
‘bolt-on’ to ‘buy-to-let’ that will turn a few grand to many millions, with
proper application and planning.

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Bonus Section: 5 fast starts to

successful psychology

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#40. Take action: Start Now

Decision.

“It’s in your moments of decision that your destiny is shaped.”

-Tony Robbins

**Fundamental tip No.9

Start Now. Get perfect later. To know and not to do is not to know, just go.

Procrastination and indecision are diseases of progress and momentum.

Both indecision and over-analysis essentially lead to the same thing: a long
and windy road to nowhere:

“I want to wait to see what the market is doing.”

“I don’t have enough money yet.” (So I might as well give up!)

“I don’t have enough time.” (Less than everyone else?)

“I do want to invest in property but don’t know where to start.”

“What if I make the wrong decision?”

“My mate Jonny down the local pub told me the property market is going
to crash, so I think I’ll wait.”

“It’s too risky.”

We are all going to make mistakes. Mistakes are necessary. Mistakes are
part of the journey to success that can’t be avoided. Knowing that this is a
fact of (successful) living, why not go out and make a few? Accept this as
part of our journey; you can even start enjoying a few of them by seeing
the funny side, or knowing that you’ve ticked another off the list and got
one mistake closer to success, or you’ve got over one more hurdle that
most people fall short of.

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A great friend of ours likes to make as many mistakes as he can up front

because he believes that the more mistakes he makes quickly, the closer
to his goal he is getting, in less time. We really admire that attitude. Only
through mistakes do you get to grow.

Fear, pride and ego are some of the biggest barriers to success. Enjoy
listening, enjoy learning and growing, and know that we can all learn
something from everyone. Do not fear the consequences of your decisions,
and accept and enjoy mistakes. Be decisive. You’ll learn as you go with the
right mix of studying and doing and reviewing.

“Learn. Do. Review. Repeat.”

- Mark Homer

We call this the ‘entrance fee’. You have to make mistakes, and you have
to ‘pay’ for your education, one way or another (education, mistakes,
experience). Wealthy people do not wait to make decisions; they make
decisions and then refine their strategy and improve upon it.

Indecision leads to procrastination, which leads to frustration, which leads

to more procrastination; and so the cycle continues. Ready, fire aim. Go.
Just frickin’ do it baby.

**Fundamental tip No.10

“Don’t wait to own property, own property and wait.”

- Mark Homer

Perhaps you have thought about investing in property for many years now,
but have not ‘got around to it’. The time wasn’t quite right. That wouldn’t
be the first time we have heard that. If we had just a pound for every time
we heard that then we wouldn’t need to buy any more property! That
would be our main passive income stream ;-)

As Napoleon Hill puts it: “Do not wait; the time will never be ‘just right’.
Start where you stand, and work with whatever tools you may have at your
command, and better tools will be found as you go along.”

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You will never be 100% ready to start in property, and you’ll never be
100% perfect, no matter how much you learn or know, or however many
you’ve bought.

If you’re still ‘getting all your ducks in a row’ you’re probably just scared.
We all start at the same point remember. We all have to earn the right in
the same way, make the same sacrifices, look silly from time to time (Rob
is good at that) and get back up.

It’s just like having a baby. You can go to the doctors and see the scans, you
can go to breathing classes, you can eat all the right foods, do incantations
and play dolphin music. You can get a pram and paint the spare room
pink, but nothing will quite prepare you for the drop, and everyone says
they were never really ‘ready’.

But when it happens you get resourceful and any good parent will make it
work. You’ll learn and grow through doing and it will add so much more
to your life. It’s fun, it’s exciting and it’s real.

Decision is a mindset: be a decision maker. Take action now.

“The more action you take the more money you will make.”

Most people can’t be bothered to make money, be wealthy and at-tract

success. They’d rather stay in their comfort zone of underachievement. It’s
much easier! Even if we try to pull some ‘reverse psychology’ on you and
point out that you will not be one of those, 95% of you will be one of
those! We just hope it’s not YOU.

Don’t just read this to humour us or because you have heard about us, or
maybe even because you like us; or because you don’t. Read it for you.
Make a decision right now that you are going to take action on what you
are reading in this book.

Consistent action is the only way we are going to achieve wealth and
success. As Richard Branson states: “Screw it, let’s do it.”

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No-one ever had a bag of money fall on their head whilst asleep, watching
TV, meditating or playing a games console.

It’s all very well being great at visualisation and manifestation, but without
doing anything about it, nothing will ever get done.

“The more you sweat in training, the less you bleed in battle.”
- proverb

It really doesn’t matter how fast or slow you take action, what di-rection
you go in, or which strategy you use at first, as long as you continue to
take action and you are open to opportunities that will come your way,
because you are taking action.

Summary

Be decisive, do a little more each day and always be moving forward.

Think ‘What action I am taking on a daily basis to get closer to my
goal?’ Use consistent action with never-ending improvement and
you will be as wealthy as you believe you can be. You have made
that first important step towards being financially independent and
taking action by buying this book. Procrastination is a disease - don’t
let this be you. Don’t fear mistakes, enjoy them, knowing you’re
one step closer. Now is always the best (and only) time. Learn. Do.
Review. Repeat.

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#41. Anyone can do it

And yes that includes YOU :-)

You are your biggest chance of success and your biggest chance of failure.
If you don’t believe that you can have the wealth and property investment
success that you want, then you won’t. Sorry to be blunt.

Henry Ford best coined the phrase “Whether you think you can or can’t,
you’re right.”

It doesn’t matter if you don’t have all the answers right now: none of
us have all the answers. Get perfect later. This book will give you a big
leap forward, but the rest of your success will be down to your consistent
learning and consistent action.

Remember that we used the analogy that buying a property is like having
your first child. OK, to all the mothers out there, we are by no means
saying that we could even begin to understand the pain you went through
;-) But at the end of the day when it happens for the first time we’re all in
the same boat; we all start from the same place and we all have it in us to
be good parents; even though we might not know it yet!

And it’s amazing how resourceful we become when we’re actually doing it;
when we’re in at the deep end, getting the lessons the fastest, in real time.

You know that anyone can do it. Think about it. You know that most
entrepreneurs, multi-millionaire business people and property investors
started from the start. Very often that somewhere is much further back
than where you are right now. I (Rob) was almost £50,000 in consumer
debt when I started and James Caan built his business from a broom
cupboard. Most millionaires are self-made and more millionaires are made
in a recession than at any other time.

Just look at anything you have achieved in the past: anything at all.

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Everyone has unique talents and genius and we know that you are great,
even the best in the world, at something, many things in fact. Whatever it
is that you are thinking now that you are good at, where you have achieved
levels of success, you can replicate across into property and business.

Napoleon Hill calls it ‘transmutation’. Think of all that wayward sex-ual

energy a lot of us have (speak for ourselves?!) and the huge amount of
energy people expend (waste) on negative things that serve them no
purpose. Imagine if you could rein that in and hone that energy in attaining
wealth and success. We’d all be multi-squillionaires! You’ve mastered what
you’ve seen as most important to you and you’ve had amazing results in
that which you value the most; so either make property and business of
highest importance to you, or link it to helping you be/do/have what is
most important to you, and success and wealth is the natural consequence.

There is enough money out there for us all to be millionaires many many
times over. Go and get your share. There are enough properties out there
for everyone who reads this book to have a nice profitable portfolio, go
and buy some before your competition swallows up all the best ones.

Money does not choose where it goes and does not discriminate. There
isn’t one single ‘type’ of person that becomes wealthy. Regardless of age,
race, upbringing, creed, nurture and health, we can all become wealthy
right now. And there are many people across the world who do not have
the same 1st world opportunity that you or we do.

Take personal responsibility now: do you know anybody who is always

blaming other people for things that go wrong? Perhaps even your boss or
partner? Maybe you know people who always blame the weather or bad
luck for their misfortunes. People who say “it only ever happens to me” or
“that’s just my luck” or “that was such bad timing”. People who are never
wrong and nothing is ever their fault.

I remember (Rob), being a competitive golfer in my youth. I consistently

blamed my clubs, bad bounces, bad luck, and especially the wind for my
poor scores. The irony is that the same wind blows on us all, doesn’t it?

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If only I knew then what I know now. If, but, when, maybe, shoulda,
woulda, coulda: whatever!

The most wealthy and successful people, investors and business owners
understand responsibility. The performance of their assets is not due
to market movements, but their own diligence, faith, persistence and
following of the ‘rules’ as discussed in this book.

And adapting and being resourceful.

Don’t blame the market or the estate agent or the vendor or the surveyor.
The more you take responsibility for everything that happens in your life,
everything that you have control over, every decision you make, the more
you will be in control of the things that happen in your life.

When Donald Trump was asked by reporters why he was in $900 million
debt, he could have made excuses such as the real estate bubble burst, or
blamed the economy, but instead he took complete responsibility for his
results. He said:

“I took my eye off the ball. I stopped doing business the way I used to. So
I got my eye back on the ball.”

His personal responsibility propelled him to get back on the ball and to
enjoy massive success. Similarly billionaire investor Warren Buffet talks
openly about the mistakes he has made, and how he has taken complete
responsibility for his failures.

Money is not the answer, you are.

If you think that money is the answer to all of your life’s problems, then
your problems are only just starting.

Money is not the answer.

Many of our business mentors state that with more money bigger problems
come. Of course a problem is a perception, and the wealthiest see these so
called ‘problems’ as bigger challenges or opportunities.

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“Money is one of the most important subjects of your entire life.

Some of life’s greatest enjoyments and most of life’s greatest
disappointments stem from your decisions about money. Whether
you experience great peace of mind or constant anxiety will depend
on getting your finances under control.”
- Robert Allen.

Money is easy to attract because you have the unique abilities to attract it.
You already have vast wealth, it just exists at the moment in non-monetary
form, waiting to be converted or cashed in. Money is not prejudiced and
you can have whatever belief, religion or political standpoint you choose,
and still be wealthy.

Money and happiness are completely unrelated. Some of the happiest

people are the poorest and some of the most horrible, revolting, nasty
people are wealthy beyond imagination. It probably won’t last, but there
we go. Don’t look to money for the answers. You can choose to be whoever
you want, regardless of how much wealth you have now and how much
more you will make in the future.

Your portfolio is your vehicle to do the things you want in your life, but it
does not depend on it. Wealth is merely a consequence of whatever it is
that you do very well. Wealth is merely a result of the more value you give
to more people.

Those who continually spend more than they earn (even when they earn
a great deal) are chasing their tails in a self-fulfilling vicious circle: always
chasing more money to be happier only to spend more than they earn and
feel empty.

You have everything now and you’re ready right now to be as wealthy as
you want to be. You can choose. You can have wealth and happiness and
free time and a social life and a great family life and time with your kids
and partner who you love dearly and who feels appreciated and holidays 3
times a year and regular sex and breakfast in bed (or both at once)…

You really can have it all, and it is only belief that will ever tell you otherwise.

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Summary

Anyone can do it; especially you. Believe that you can and you
will and know that you have the answers you need. Take personal
responsibility for your life, your decisions and your finances and have
what you want for your life. You have your own unique genius, just
not yet in converted cash form. Work out how to serve people more
and serve more people, and you will make more money.

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#42. Be realistic (& unrealistic)

Set your vision big. Bigger than you. Then set goals and expectations
realistically. Go fast or take your time, but keep going.

All pain, frustration and get rich quick emotions come from unrealis-tic
fantasies about how easy it should be or how well or how fast it should
be to you.

This was something that I found so hard in the beginning (Rob). I was so
focussed and excited and determined and energetic and impatient that I
wanted everything yesterday and made these huge goals and felt amazing
(setting them, not getting them). It’s not that the goals and dreams were
unrealistic, but the timeframe and scale of them were.

Big vision: (stretchy) realistic goals.

Goals, dreams and vision are all essential parts of seeing your future before
it happens and making plans to get there. Some of the greatest business
people are those who can vividly picture their life in its future exactly how
it looks, no matter how apparently far-fetched or in the future, or the lack
of proof to back it up. And then they live that vision in the now.

And with this ability, it is just as essential to understand what you consistently
need to do on a daily basis, and how you’re going to realistically achieve
your goals. Being overly dreamy or unrealistic about the market, goals,
projections or reality is dangerous because natural order and balance will
give you feedback (negative emotions) to redress the balance, but most
people don’t know how to handle these emotions so they self-sabotage
through frustration, quick short-term emotional changes of mind and
grass is greener syndrome. This is one of the biggest things will damage
your long-term wealth and security.

This is where our partnership has become more and more important over
the years. Mark is very much a day-to-day, doing what is real, now, kind
of person; very operational and very realistic. Dislikes fluff. This is great

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for keeping your feet on the ground, staying focussed and getting the job
done. But he’s not a strategist, finds it difficult to imagine anything until
he’s seen the proof, and often over-analyses and gets bogged down in
detail or indecision.

Rob is hopeless with analysis – if the thing isn’t top of Google, it doesn’t
exist, and he needs one of his PAs to search it for him. He gets distracted
quite quickly and doesn’t always do enough research. But he makes quick
big decisions well, can think years in advance, and sees the bigger picture
to keep the direction of today on the vision of tomorrow.

These opposite traits have been one of the major things that have helped
us get to where we are. Rob would have been off all over the place with 73
different businesses buying everything everywhere (and making some big
mistakes), but Mark would still be an employed account manager stuck in
the middle of a rigid corporate structure quietly rotting away but not doing
anything about it (because of the risk).

And it was this realisation (not at the start of Progressive, by any means),
that helped us get the best of both opposing skillsets. And you can do
that too, by understanding your strengths and being honest about your
weaknesses, and partnering accordingly with people in your powerteam.
You get to leverage natural balance because you have people in your team
that will give you feedback if you are either too much in the detail or you
have unrealistic fantasies of overnight billions with zero challenges.

But, be warned. You know that overly ‘realistic’ people are usually cynical,
cannot stand change, will often sneer at you in the beginning, stay stuck in
a past mindset that existed 5 years ago, are probably scared, likely envious
and need attention. Realistic does not mean pessimistic.

Do you think it is ‘realistic’ to earn £30,000 a month? Is it realistic to own

600 properties or to win a gold medal? Or to fly or step on the moon or
sacrifice your life for someone you love? Imagine what the world would
have been like if some of our greatest inventors would have been ‘realistic’
(about their vision).

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What you want from your life isn’t ‘realistic’ because realistic is safe,
boring and for everyone else. But wanting it all yesterday just isn’t going
to happen, and daily, realistic things need to happen consistently to get to
your unrealistic vision.

Be realistic about your daily tasks and timeframe to success. Study what
other successful people have achieved. Sam Walton of Wall Mart was an
expert at watching his competition and taking on the things that worked
well. If someone who has been in the industry takes 5 years to build 50
properties is it realistic to try to buy 100 in your first year? You need equal
balance of support and challenge to grow.

“Most people over-estimate what they can achieve in a year

but under-estimate what they can achieve in a lifetime.”

Summary
Be realistic about what you can do in a day, but have a big vision that
is bigger than you. You can change the world in your lifetime, just
not every day. Set your expectations at the right level from the start,
get rid of unrealistic fantasies and take consistent action. Leverage
others in your network to have complementary skillsets. Never stretch
yourself too far and always have contingencies in place for worst-
case scenarios.

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#43. Expect the unexpected

Planning and preparation are absolutely essential in property wealth and
success.

“Fail to plan, plan to fail.”

“Plan the work then work the plan.”

There are very few people who had lasting wealth or a 20+ property
portfolio by total accident. Although it may appear that way on the surface,
the fact is that wealthy people who are self-made are great planners.

They may appear ‘lucky’. In our experience, that is what envious or unsuccessful
people say of those that have done well. If we take the time to look closely
and to ask the right questions, we soon learn that there are principles that
successful and wealthy people follow that anyone else can follow.

Wealthy and successful people do things ‘subconsciously’ that others

are not even conscious of yet. They have done this through habit or
repetition, experience or knowledge. Anyone can do this, anyone can
get the experience or knowledge required to make these ‘secrets’ (what
most people don’t know that successful people do) become automatic and
‘subconscious’.

Always do your diligence, but diligence can only get you so far. Get 80%
‘clear’ in your research then decide and act. There are always unexpected
factors that you’ll never be able to account for, no matter how many times
you re-analyse it.

Ensure you have a set contingency for each strategy you implement. Any
deal should have a worst case scenario built in, so that no matter what
happens nothing comes as too much of a surprise that it knocks you on
your knees. Be prepared for many situations that could arise and not just
the one that you expect (or desire).

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If you don’t prepare for the unexpected, you know it will happen, and it
will catch you by surprise. We call this ‘positive paranoia’.

What’s your financial contingency for the unexpected?

What’s your plan C?

Know how much you want to invest and don’t push it too far. Have a
separate account for unexpected costs (that absolutely will come up;
especially if you have not opened this account).

Know how much you can afford to risk.

Know the difference between investing and gambling and understand risk
assessment.

Always check the small print on any contract or agreement. Check the
interest rates, charges and fees of everything (especially when borrowing)
and don’t be afraid to negotiate and shop around as you can always find
a better deal. Do not believe the first figure that you are told, and do not
settle for a deal you are not happy with.

And, if like Rob, that sounds like torture to you, find your own ‘Mark’ in
your powerteam, and leverage out these necessary steps.

Good people to listen to are the wealthy, the very successful, inves-tors
with a portfolio of 20 or more properties, the ones who have the skills and
knowledge that you require, and the ones who are already doing what you
want to do.

Don’t listen to anyone else.

People you shouldn’t listen to can very often be the closest to you, and this
can be hard for some people. Friends and family may have (or think they
have) the best intentions, but they can very often hold you back without
even knowing that they are doing it. Are they experts in property? Are they
rich and happy? You should expect people to live by their own highest

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values and not yours, expect them to have their own self-interests at heart,
expect them to let you down from time to time. And forgive them.

Accept and expect change. Constantly.

If living things are not growing, they’re dying. In this world, there is actually
no such thing as standing still. It is forwards or backwards. Stagnation/lack
of movement means you are actually falling behind.

“If you’re green you grow and if you’re ripe you rot.”
- Ray Kroc

Growth, evolution of the self and the acceptance that things don’t stay the
same are so important in your mindset and achievement of wealth and success.

And the sad and unfortunate thing for many is that those who do not stay up-
to-date with the fast moving world get left behind. They stagnate. They die.

Many people have lived a life a certain way for such a long time and
are so resistant to change, that they just fall behind helplessly. It is so
counterproductive and such a waste of energy trying to fight the trends
of change.

One thing that inspires us is youth. Youth, or the mindset of youth.

If Avon had continued selling books door to door, if Colgate had continued
to sell soap and candles, if Nintendo had continued selling playing cards
and if Nokia continued as a paper mill, these companies would likely have
failed. Because they adapted to change and could flex to what the world
and their market wanted at the time, they were able not just to survive, but
to thrive. The property market is the same; it’s always evolving so expect
curve balls and u-turns and shock and surprises and go with them.

Buy-to-let didn’t even exist until the mid 90s, and then property investment
changed. It changed again in 2006/7 when 100% mortgages stopped. It is
changing all the time and now more and more houses are getting rented
out room by room.

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There are so many opportunities of earning income from different property

related fields. Property is no longer just about buying and holding as it was
just over a decade ago. You now have deal packaging, options/instalment
contracts, rent to rent, serviced accommodation, commercial conversion,
building your brand, training, authoring books, property clubs, networking
events and online communities.

All of which are covered in our 4th book, ‘Multiple Streams of Property
Income’ available on Amazon or on audio on iTunes and Audible.

Your needs and values will change over time too. A lot will depend on
your age, education, family and social needs, health and your emotional
mood. The people you know and deal with will change. Society will change.
The rates from the bank and the value of money will change. The way
you spend ‘money’ and what you want it for will change. The mortgage
products will change and the economy will change. Accept and embrace
it. Revise your strategy as you feel the need and know that you are on your
path, and that growth and change are part of your journey.

“In property, the only certainty is change.”

- Mark Homer

Summary

Plan, prepare and be ready for the unexpected. Know that the market
and your strategy will evolve and change over time. Don’t resist it;
accept it and embrace it. Be flexible, versatile and decisive.

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#44. Never give up

As Winston Churchill famously said (and repeated):

“Never ever ever give up!”

When it gets hard, keep going.

Endearing persistence (not cat-like annoyance) is absolutely essential in

your quest for personal success.

It took Thomas Edison ten thousand experiments to finally see the light
in his invention of the light bulb. He did not give up, and knew that with
every ‘failure’ he was one step closer to his goal. Failure is only an option
when we give up, until then we are still moving forward.

“Nothing in the world can take the place of persistence. Talent will not;
nothing is more common than unsuccessful men with talent. Genius
will not; unrewarded genius is almost a proverb. Education will not; the
world is full of educated derelicts. Persistence and determination are
omnipotent. The slogan ‘press on’ has solved and always will
solve the problems of the human race.”
- Calvin Coolidge

There were many times when we could have given up; times when the
deals we bought weren’t the best; times when we had surveyors down-
value perfectly good property, when people wanted us to fail (that only
gets bigger the bigger you get, so wear their resistance like a badge of
honour), when cash was tight, when times were hard, when markets
changed, when regulations changed, when new parties got into power,
when when when...

“The main thing is to keep the main thing the main thing.”
- Zig Ziglar

Our story of persistence is, to be honest, not as glorious as some, but it’s
ours and there have been plenty of times when we felt like throwing in the

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towel. But that feeling was only ever very temporary, usually only lasted
a few hours or days, so the worst thing we could have done is to make
long-term decisions in these fleeting moments of ‘ugh’ that we all feel
from time to time.

If you want to read a story of persistence, read up on Gerald Ratner

and Christopher Reeve. Inspirational. Will make you want to keep going
towards your vision no matter what.

The simple secret formula here is to just keep on keeping on. You only fail
when you stop; so just don’t stop.

“Sweat beats regret.”

What will motivate you when times get tough (as they will)? Is it the fear
of going bust or the fear of failure? Having to go to work for somebody
else, or beg for your old job back? How about what your friends and family
will say and think about you when you succeed? To prove the doubters
wrong? To give back to your family? To prove to yourself that you can?

The sad thing about persistence (or lack of) is that so many people actually
get quite close to their desired goal. They can almost touch it. They get
most of the hard lessons they need to toughen them up for the future,
they go through most of the initial dip, they are just around the corner
from a big breakthrough towards success, and then give they up. Doh!

Everything you do gets to a tipping point, where all the hard work you put
in, (like getting the knowledge to go out and get great discounts or building
a solid and reliable contact base to lend you JV cash for your next deal) will
pay dividends. Once those foundations are set, then the money starts to roll
your way; and it keeps on rolling, but not before you’ve earned the right.

Take Neil Asher, for example. Neil has one of the most successful global
Life Coaching companies in the world, New Insights. I wouldn’t be right
to tell you in our words what he achieved, so this short passage is from an
email he sent us as soon as he had read this book:

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“As a direct result of one of the many secrets in the book, I purchased a
property in Brighton & have made £27,000 in 3 months, all whilst having
a baby daughter!

“Rob & Mark actually do what they teach rather than the so called ‘gurus’
who talk the talk but still work in Sainsbury’s at the weekend. If you have
any interest whatsoever in setting yourself financially free you have to read
this book now!”

Don’t be one of those people who nearly got there, had great stories of
how they nearly made it, or could have been, if, but, when, and maybe.
Own yourself, not your stories or excuses.

Summary

Never giving up and having faith in yourself will send you on your
desired path and get you where you want to be. Stay elegantly
persistent. The education you get along the way, and keeping on
keeping on will get you to your destination, as long as you don’t stop.
Don’t ever ever give up. Ever.

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#45. We believe in you

What you have been given here are the tools to have the mindset of the
wealthy and successful. Yes, this applies to property, but it is not exclusive
to just bricks and mortar, it should carry through the whole of your life.
Here’s a reminder:

“The skillset without the mindset will leave you upset.”

- Craig Valentine

I (Rob) have to admit that it took me 25 years to get this. It took me that
long to understand that I was responsible for my own life and my results,
and that there are things that can be learned that will make you rich,
happy and successful. I thought it was genetic, down to where someone
lived and who had the most luck. I thought that it was everybody else who
was lucky and that only drug dealers drive Ferraris!

From what I know now, I can see that what I thought before is total
nonsense. But I didn’t know what I didn’t know. The trouble is:

“Ignorance isn’t bliss, it’s ignorance.”

- Rob’s Dad

We can be all anything we want to be. You can be all that you want to
be. I know because I have done it for myself and I have coached 1000s of
people and helped them do the same, all without silver spoons. When it
comes down to it, we’re all made of the same stuff. I don’t take the credit;
they do, because they did it. I just believe in them like I believe in you.

Think ‘How can I do it?’ rather than ‘I can’t do it,’ believe that anything can
be achieved, seek to learn new things daily and take consistent decisive
action every day, and you’re there.

And we’re here, every step of the way, for You.

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#46. Your Turn: Your figures & projections

Your rules:
Enjoy filling in the questions below, they are tested and just writing them
down will increase your chances 10 fold of achieving them.

Remember: Be as specific as You can:

Your vision, big picture & purpose:

(Wealth to change the world? A higher standard of living for you and the
ones you love? Shelter or charity? Freedom? Financial independence? A
collection of supercars?)

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

Where are You Now? Your Equity statement:

(State exactly where you are. Subtract your total debt from the equity in
your assets and your savings. It’s great to go back to this year after year to
see your progress):

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Equity in assets:

_______________________________________________________________
_______________________________________________________________

Cash & savings:

_______________________________________________________________
_______________________________________________________________

Fixed expenses (pcm or pa):

_______________________________________________________________
____________________________________________________________

Estimated variable expenses (pcm or pa):

_______________________________________________________________
___________________________________________________________

Value of possessions:

_______________________________________________________________
____________________________________________________________

All debt ex. mortgages (loans, credit cards, hp etc):

_______________________________________________________________
____________________________________________________________

Total personal equity (equity in assets + cash – debt):

_______________________________________________________________
____________________________________________________________

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What specifically do You want to enable you to achieve Your goals?

(How many properties do you want in your portfolio. How much cash do
you want per year? Is it passive? Do you want to work or retire, and by
what date? Property full-time, part-time or leveraged? This is your means
of getting your goals):

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

Your goals:

(Best selling author? Property expert status? A self-built mansion? A

collection of supercars? 10 properties? 100 properties? Body building
world champion? Pro golfer? Lady of leisure married to James Bond? Go
for it; everything that you want):

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

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Your unique talents, skills, expertise and qualities: Page

(Don’t be shy, we all have them. Anything at all, you might be surprised):

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

and a few more lines, because there is always more!

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

Your values:

(What are the core values you’d like the world to recognise about you and
your property business?):

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

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 Appendices

Appendix 1: The law of

compounding Page 69
On Page 69 we were discussing the figures using the Rule of 72 and the
laws of compounding and leverage. Here are the calculations behind the
figures shown.

The Rule of 72:

5% growth: 72/5 = 14.4 years to turn £5,000 into £10,000

8% growth: 72/8 = 9 years to turn £5,000 into £10,000

11.74% growth: 72/11.74 = 6 years 48 days to turn £5,000 into £10,000

Property growth on the example £100,000 Property in 10 years:

5% growth: £100,000 becomes £162,889

8% growth: £100,000 becomes £215,892

11.74% growth: £100,000 becomes £303,450

Example capital employed (spent) to purchase a Property worth £100,000

for £85,000: £5,000

(This example takes into account all fees of buying a property such as
valuations, conveyancing, solicitors fees and legal work, land registry and
transfer fees, office copy and disbursements, broker fees and so on. Using
our suggested investment model, you would get your £15,000 deposit
back, therefore it is not employed or spent capital).

Therefore, using the example of 11.74% growth every year for 10 years,
your growth would be:

Total Property value: £303,450

minus existing mortgage: £85,000 = £218,450

£218,450/5000 = 4369% return on your capital spent (ROCE)

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 Appendices

Appendix 2: Interest only vs.

repayment
Option 1: You invest the £20,000 and with it, using your increasing
knowledge, you can plausibly buy one property per year with the same
capital. For ease of figures; these properties are worth £100,000 based on
today’s figures.

Compounded equity at end of yr 5 (based on 5% growth): £168,461

Property 1: Value after year 5: £127,628

Property 2: Value after year 5: £127,628

Property 3: Value after year 5: £127,628

Property 4: Value after year 5: £127,628

Property 5: Value after year 5: £127,628

Total value: £638,140

Less 5 mortgages of £469,679

£638,140 - £469,679 = £168,461

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 Appendices

Appendix 3: Want to learn more?

Further reading and audio from Rob Moore & Mark Homer:

‘Cash in a Market Crash’ – Rob Moore & Mark Homer

If you’d like to cash in on the crash past and future, like almost all
millionaires and billionaires do, create more cashflow, buy assets at rock
bottom prices, learn more advanced buying and negotiation strategies and
have much less competition, then this book is for you.

Find on Amazon, iTunes, Audible or Kindle.

‘Progressive in Property: Beginners to Winners’ – Robin Shaw &

Progressive Community members
‘Progressive in Property: Beginners to Winners’ reveals multiple property
income strategies through the stories of beginner investors who joined the
Progressive Property Community and succeeded big. Many transformed
their lives and income (up to £10,000 net cashflow per month) within 9-24
months, and you can too, because they show you how.

Find on Amazon or Kindle.

‘Multiple Streams of Property Income’ – Rob Moore

Multiple Streams of Property Income takes you through UK property multi-
millionaire Rob Moore’s 6 Stage Investor System, taking you on a proven
journey from new investor to £multi-million property business owner,
revealing and detailing multiple income strategies through property
investing for long-term and more short term, immediate cashflow.

Find on Amazon, iTunes, Audible or Kindle.

‘Low Cost High Life’ – Mark Homer

If you want the most scrutinised detail on how to save costs on everything
you spend and invest in, fully researched, analysed and tested, so that
you can achieve maximum wealth living a multi-millionaire lifestyle on the
minimum budget, this book is for you.

Find on Amazon, iTunes or Audible.

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Appendices

‘Life Leverage’ – Rob Moore

Life Leverage means taking control of your life, easily balancing your
work and free time, making the most money with the minimum time
input & wastage, and living a happier and more successful life. Using this
remarkable Life Leverage model, you’ll quickly banish & outsource all
your confusion, frustration and stress & live your ideal, globally mobile life,
doing more of what you love on your own terms.

‘This book shows you how to get more done, faster and easier than you
ever thought possible. A great book that will change your life’. Brian
Tracy, bestselling author of Eat That Frog.

Find on Amazon, iTunes or Audible.

For Progressive audio and training programmes go to the following pages:

www.progressiveproperty.co.uk/e-shop

www.progressiveproperty.co.uk/progressive-training-programmes/

Or email Rob at:

rob.moore@progressiveproperty.co.uk

And if you haven’t already, don’t forget to join the Progressive Online
Community (usually £9.97 a month but free for Progressive book readers):

www.facebook.com/groups/progressivepropertycommunity

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 Appendices

Remember that you can be, do and have anything you want. If anyone else
can do it, and Rob and Mark can do it, You can do it too. Never let the
others and the voices tell you otherwise. We believe in you.

Oh, and as a special gift for reading right to the end here’s that other
special gift we mentioned at the start of the book; a downloadable book
on how to buy property with none of your own money:

https://goo.gl/ORXi7W

Thanks for reading right to the end.

Your property adventure starts now. So, go on, do something to kick start
it now.

Rob Moore & Mark Homer

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“Don’t wait to buy property, buy property and wait.”
How would you like to own a cash-flowing property empire, with little-to-none
of your own money in?

How would you like to have a sustainable, low risk pension replacement that
you control, that could be worth millions and secure your financial future?

And would you like the secret strategies the new super-rich are using in the
current financial climate, that you can too, if you knew how?

“The 44 Most Closely Guarded Property Secrets” will show you how.
Rob Moore & Mark Homer will teach you exactly HOW they bought and sold
over 350 properties and became property Multi-millionaires by the age of 30.

This is not a book of theory. In fact you’ll be shocked at just how much detail
of a £Multi-Million property empire is shared in a single book, fully updated.

“If you don’t risk anything, you risk everything” - Rob Moore
You’ll learn the exact ‘how-to’ and candid ‘how-not-to’ techniques in a frank
and sometimes controversial, yet easy-to-follow manner.

Read this book and you’ll discover how to:

• Profit in a ‘boom’ and a ‘crash’ ISBN: 978-0-9559712-7-3
• Replace any pension whatever your age
• Earn with little-to-none of your own money
• Actually implement the secrets full or part time
• Ethically save £10,000’s in tax with little known
government incentives

“While I was stupidly messing around with the F.A, these young property
guys were making a killing, it was a waste of my time and talent”
- Lord Alan Sugar

www.progressiveproperty.co.uk UK £15.97 EUR €25.00 US $32.00