System addict

Man realising what his business has been missing

Do you remember that Five Star song 'System Addict'  from the eighties?! (Showing my age aren't I?) I used to think they were saying 'Systematic'. And it's this phrase that is now beginning to regularly run round my mind when I consider what I need to do to create a business that will work smoothly and cost-effectively.

If you look at any well-run business, there is a system in place. It may be hamburgers, clothes, cars or paint - whatever the product, if the business is to be successful, you must develop a system to ensure the fastest and most effective way of getting the product into the customers hands, and getting the customer's money into your hands!

Although property is not exactly a commodity, nor is it a product, I still consider what I'm doing to be developing a business. There is a transaction between myself and the tenants; there is a contract; there are responsibilities on either side. If I am professional, organised, law-abiding, ethical and also nice (a four-letter word not often used by tenants) then I know that I am presenting the business in the right way. After all, in sales you learn that 'people buy people first'. Right now, I am the face of my business. So I need tenants to 'buy me' first.

After that though, there needs to be a system to underpin all that I'm doing. Otherwise paperwork will get lost, deposits won't be filed on time and in the right place (the DPS) and I won't know when rents are due and tenancies have elapsed. Without these important pieces of information logged and routinised (is that a word?) I could easily miss vital actions such as chasing rent arrears or repaying deposits.

I am NOT someone who a) enjoys creating systems (nor is very good at it either - probably because I don't like it) and b) is very good at sticking to systems (it all seems so repetitive and frankly, dull). But I know that right now, just like cleaning my teeth twice a day, I have to develop workable and effective systems to make this business effective. So, Five Star - I doubt I'll ever be a SYSTEM ADDICT - but perhaps I can be a bit more SYSTEMATIC.

(Another helpful article can be found here: http://www.boxtheorygold.com/blog/bid/18628/Six-Qualities-of-Highly-Effective-Business-Systems)

Comparing estate agents in your area

A natty little piece of information that might save you quite a bit of time if you are trying to compare local estate agents, can be found on www.home.co.uk

If you go to the website you will see at the bottom of the front page a link that takes you to a
'Directory of Estate Agents'.

This link takes you to another page that allows you to search by local area, county and town. You will then be presented with a list of agents in your area. This is a search for agents in Crewe:

You can then click on any estate agent and it will give you an overview of the activity of that agent. In order to drill down even further, scroll down to the bottom of the individual estate agent's page and you will see a link to Estate Agent Portfolio Analysis for *name of estate agent. If you click on this link you will then be taken to a page full of wonderful charts and statistics about that estate agent. Here is one for Bridgfords in Crewe:

Estate Agent Portfolio Analysis for Bridgfords (Crewe) (full page)


This is a screen shot of the page (-by the way, this is only half the information as I had to do a screen shot and couldn't fit it all on the screen)!

 A VERY useful tool!

Five little words

There are certain phrases in life that carry significant meaning even if the words contained within them are very simple. 'That costs an arm and a leg!'.'Well, it's back to square one'. 'Hey it's a piece of cake'! 

All are phrases that I have used about property over the last few years no doubt. Particularly the first two. In fact I don't think I have ever used the last one except by way of referral to a literal piece of cake. Usually at the point when I had said the first two phrases rather too often for my liking. Which of course led to a cake eating incident to cheer myself up. 

However, I now have another deeply meaningful and suggestive phrase to add to my repertoire, and it's one that I am hoping to employ rather more frequently than I have in the past! The phrase was not difficult to learn, and in face it emerged from a FANTASTIC three day Property Mastermind Accelerator course I attended last week in Birmingham with Simon Zutshi.

The course was totally inspirational, motivational and conversational. I learned SO much new stuff about property investing that I'd only barely touched on before and now I'm fired up to start doing some much more lucrative and possibly less stressful (please God) deals in the future. I was introduced to a brilliant group of other like-minded people, who equally want to develop property to enable them to meet their goals. We laughed together, cried together and ate together, and when you've done that for three days with a group  of people you've never met before, it is amazing how deep connections are formed. There were some there who had no property investment experience, and others who had already done quite a lot with property in various ways. But we were all there to learn, and our enthusiasm meant that we maintained the energy and learning for the three solid (and fairly intensive) days. 

A really striking element of the three days was the level of discussion and support that we all gleaned from each other. Just talking with so many different people about their experiences and what they thought about what they'd done was so helpful and allowed me to put some of my doubts and weariness into perspective. Some had regrets - well we learned that there's no point having regrets, they just hold you back. Some had fear (False Expectations Appearing Real), and we learned that they were just that! Some had doubts about their ability to do anything, and again, these were addressed and dealt with. 

We were given some incredible tools to use to employ in our investing strategies and these were covered in as much depth as was needed to allow everyone to understand them fully before we moved on. There were some great examples of deals that people had done and the sheer ability of those in the room was staggering!

We did also eat rather too much cake, and thanks to Gregg from Cadbury's (aka Willy Wonka) far too much chocolate too. In fact when Simon first started writing on the flipchart as he turned his back on the audience, I was half expecting to see the word 'choclit' appear under the heading 'Cravings'. But then I remembered we were on a property course. 

You will definitely get used to eating dust if you are a property developer

I was amazed at the amount of information we received; the huge file of handouts and further information, the additional guest presentations and also the incredibly valuable contacts. But I think in the end it will be the simple yet hugely powerful five word phrase that we learnt, that might just turn out to be the most important aspect of the course. It was a phrase that Simon Zutshi himself embodies in his work and passion to teach others about property, and one which you can probably never use too often:

'How can I help you?' 

Because ultimately, property is not just about bricks and mortar, it's about people. 

And we're off!

My bag is nearly packed, my suitcase is just about closed. No, I haven't decided that Andy's geekery is too much for me to take. I'm actually off for a bit of investing indulgence as I leave tomorrow morning for a three day intensive course about property investment.  I must admit to feeling a mixture of excitement, nervousness, and wonderment - who will be there? What will we discuss? Will I feel totally out of my depth and wish I had concentrated more on maths at school? Particularly when the training moves on to an analysis of interest rate percentage points, calculations of Return on Investment (ROI - I know that one!), or mortgage amortisation comparisons?

Hm. Calculator where are you when I need you?  

I'm optimistic though that this three-day residential Property Investors Network 'Property Mastermind Accelerator' programme down in Birmingham will help me learn something more about property. It all looks amazing - although I expect it to be very tiring too. There are so many ins and outs to investing in property and it seems that you need to be able to use a number of different strategies to be successful. I think I have learnt some new things in the last couple of years but need to stretch myself again. I am anticipating something good meeting other property investors and finding out about their stories and backgrounds. 

In the meantime while I'm gone, would you like a sneaky peak at how the house is coming along? I was amazed today to show two people round who dropped in on spec, tiptoeing over the rubbish piled in the front yard, wiping their feet from the dust and debris, to let me know they would like to rent a room!

Here you go ...

Attic room (blinds not in situ yet)

Stairs to attic

Landing

Ensuite

Other view of ensuite

Upstairs front bedroom

Upstairs middle bedroom

Upstairs middle bedroom with view of ensuite door!

Shower room

Downstairs front room 

Kitchen

Downstairs middle room

Downstairs middle room (the red room)!

Hallway into property

There are lots of little jobs still to do - pictures and mirrors need putting up, the built in wardrobes need shelves adding to them, there is a lock on the bathroom door that needs fitting, the blinds need putting up in the attic, kitchen and shower room etc etc.

But we are certainly making progress. Can't wait to show you when it's all totally finished!

Hitting 'the wall'

Long distance runners sometimes talk about the time in a race when their legs suddenly just seem to stop working. The muscles clench and tense as their legs turn in equal amounts to wood and jelly. Nothing makes them go anymore. The spring has finally unwound and there is no more energy or capacity to do any more. The brain has disconnected from the body and it is as if there is absolutely NOTHING left to give. This is not a brick wall that is 'theoretically' difficult, it is one that is literally and physically difficult.

But amazingly about an hour later, those same marathon runners pass the finish line. Running, walking or stumbling (as I would be), that white line is passed. Someone thrusts an energy drink into a weak and limping hand and hugs a space blanket round those tense and tired shoulders. Then slowly the euphoria of the achievement dawns on the runner. They made it! They did it! And in what time!

Perhaps in every long race in life we hit that wall. And I did last week. I was totally at my wits' end. A property we had viewed in January, which we subsequently made an offer on, and worked on really hard to buy (there were many issues that we had to overcome to get this far) fell through on Wednesday. Not only had we put in a lot of hard work, there was also the solicitors' time (which we paid for), the structural reports, the mortgage company's time - which all amounted to nothing.

After weeks of oscillation, the mortgage company pulled the plug on the offer and decided that they needed to instate a full retainer in order to ensure that basic upgrades were completed. However, their requirements were so totally unrealistic that after much consideration I decided we had to withdraw. We had explained from the start that this house needed a LOT of work. It was a project! It was a development that needed re-wiring, some plumbing, redecoration, a new bathroom and kitchen. Lots of re-plastering, quite a bit of building work, and yes something that your usual house buyer would not even pick up the bargepole of let alone use the bargepole to touch it. I had not left any detail undisclosed. I was constantly told that the mortgage would not be a problem. That is until three days before completion! A phonecall in the middle of my unremarkable and plaster-dusted morning announced the decision. Final. Decided. Certain. That was it - no mortgage, no property purchase. Four months of completely wasted effort, time and expense.

 After talking to the estate agent, she told me this wasn't the only time recently that a similar situation had occurred to another developer, where initially the bank were all hearts and flowers 'yes sir, how much sir, three bags full sir'. And as the time neared for completion and the hand-over of the said mortgage monies became a reality, the tone changed to 'how much sir? really sir? for THAT property sir?'. It seems that still the power lies well and truly in the hands of the financiers.

And at that point I just felt totally deflated. I began to question my plans, my hopes, my dreams. What's the point of all this property development? Why do it? It's painful, tiring, stressful, nerve-wracking, expensive, worrying, and demanding. I began to ask myself whether I had the skills, the ability, the knowledge to do this stuff well. Maybe I am not cut out to be a property developer and I need to lower my expectations. Perhaps I have too much to learn. And even when you have bought a property that seems to offer potential (as we have in Crewe) what you previously believed to be a gold mine, is actually a money pit. No progress apart from a total drain on finances seems to be occurring. It is so slow and unseen. It is dirty, dusty and raw. Every which way you turn there is mess, chaos and cost.

Yup, I hit the wall you might say.

But I still carry on.

I haven't quite crossed my own white line yet - the finishing one I mean. But when that day appears I can tell you that I am well and truly going to enjoy the hug of congratulations (even if only from my hubbie) and the warmth of the euphoria of completing such a housing marathon this year. And the energy drink? Well I have to admit that I suspect it will be SLIGHTLY stronger than a Lucozade Sport.

Bank of Mum and Dad

I was fascinated and a little perturbed to read an article in today's Daily Telegraph about the number of 18 - 30 year olds who rely heavily on their parents for financial help and also for simple decision-making [Recession has turned ‘Blair’s children’ into a ‘Peter Pan generation’(Daily Telegraph, 6th May 2013)]. Although it can't be surprising that Generation X need financial support to get on the housing ladder, or help to put down a deposit on a rental property, not having the ability to take responsibility for other areas of their life is actually quite worrying.

In their book The Millionaire Next Door: The Surprising Secrets of America's Wealthy (1996) Thomas J. Stanley and William D. Danko expose the truth about the way that self-made millionaires run their lives. Far from having lavish lifestyles and buying expensive cars, or indulging in goods of ostentation (always wanted to put that word in my blog), these PAWs (prodigious accumulators of wealth) save regularly, invest consistently and never spend more than they earn. This allows them to make the most of the spare cash they do have in building something for the future (something more than bricks and mortar perhaps)! Amongst the many traits of the individuals studied was the willingness to suffer hardship, discomfort and poverty in order to remain fully independent adults and NOT rely on the bank of mum and dad for handouts - EVER. This built a determination in these self-made millionaires to be economically independent, come what may, and to be enterprising and frugal. Over time, their approach paid off and they ended up being very rich indeed.

The authors discuss the growing tendency of parents in America to fund their adult children almost continually even after they have left home, calling it  'Economic Outpatient Care', by giving gifts of money and offering financial support. The authors' research clearly demonstrates how this affects those on the receiving end of EOC. The authors discuss the impact of this ongoing 'drip, drip, drip' effect of monetary gifts, and expose the problems that it is storing up for America's future economy.

Before I tell you the results, which of these statements do you think most closely describes the most common effect of EOC on the adult children who receive these monetary gifts?

1. As a result of the financial assistance, the offspring become completely financially independent, thus taking responsibility for their lives and demonstrating much greater enterprise so they are not reliant upon anyone for further help.

2. As a result of the financial assistance, the offspring become slowly more and more accustomed to 'hand-outs' (willingly or begrudgingly given by parents) and less likely to ever take full responsibility for managing their finances - indeed eventually seeing it as a necessity.

3. As a result of financial assistance, the offspring themselves become generous with others, and utilise the financial support from their parents to enable them to become philanthropic and charitable for the good of the wider community.

So - which one do you think MOST closely describes the MOST common effect of economic outpatient care? 

The answer is number 2. In fact over time, offspring who receive EOC seem to be unable to function without it. They become dependent on the extra financial help from their parents, and never take responsibility for their own finances! [It would be great if the answer was number 3, however this is the least likely outcome as these offspring actually become more profligate over time and completely unable to stick to a budget. Therefore giving to someone else is usually out of the question].

The article in The Telegraph would seem to bear this out - that parents are unable to raise their children to be independent (perhaps they secretly don't want them to be) and to take responsibility for their lives (a much more worrying trend).  Clearly this situation has massive implications for families across the country. And of course, in part it all depends what kind of society and families we want to have. I however, want to raise children who are proud of their own achievements, determined to be responsible and independent. I don't want them to be reliant on us as parents to prop them up when they experience hard times, and in so doing I am hopeful that they will be more successful than us! You have probably heard the wise saying 'necessity is the mother of invention' and surely your own life bears testimony to great results borne out of testing times.

We need to trust that we have raised our children to be resourceful, intelligent and able - what we must NOT do is remove from them the other key ingredient that will fuel their success - motivation!

HMO update

Things are getting increasingly close to lift off in our large HMO!

Here are the latest pictures of all the work that's been done - I can't wait til it's all finished now!

The new kitchen tiling and lighting

Downstairs back bedroom (just love those curtains!)

The new corridor downstairs (fire safe and acoustically sound -haha) 

Completed plastering in downstairs front bedroom (nice matress eh?)

Upstairs middle bedroom

New towel rail in main shower room

En-suite to upstairs middle bedroom

Floor in ensuite and towel rail

Upstairs front bedroom, plastered and ready for decoration and carpets

Shower in upstairs front ensuite

Toilet and towel rail in upstairs front ensuite. 

Carpets are ordered, curtains on their way, furniture needs to be arranged! Painting taking place as I write... not long to go before the 'To Rent' adverts are out!