Building a property portfolio is not complicated. It boils down to finding properties that are quickly lettable to good tenants that pull in a high level of rent [yield] as a percentage of the purchase price of the property.

The biggest risks property are bad tenants, high maintenance, voids and interest rate rises.

Here's how you protect against these risks for confidence, income and security

Get this right and you’ll end up with a solid, recession proof income.

Get this wrong and you could be joining the other overseas, off plan, new build junkies one month away from bankruptcy (or worse)

But here's the good news…Because so many do get it wrong, there's more contrarian opportunity and income for you when you do the opposite of the masses and protect yourself against these:

1. Non paying tenants – They can be the bain of a property manager's life if left unchecked. Tenants need advanced VETing, frequent checking and management, to make sure that the rent is up to date and relevant paperwork has been completed.

You will usually end up teaching the tenant weather they can pay you late or not by how, and the speed at which you react to late payments.

You should be contacting them the next day when in arrears if possible, showing them that you won’t tolerate the situation, and serving section 8 or 21 paperwork at the earliest opportunity, whilst retaining clear, professional dialogue with them.

Its especially important with LHA tenants to understand why rent is late, such as council suspending benefit payments or the tenant hasn’t passed it over, so that you can rectify the situation and perhaps help with communications with the council.

Their payment behaviour is mostly driven by how you teach them to behave. VET upfront, remain professional and at arm’s length, take action quickly and follow the right course, and you'll have fewest issues.

We factor in 14 days vacancy per year into our deal analysis, though the reality is we are at about 9.7 days per year on average. Pretty good.

2. Maintenance – a huge area that letting agents and maintenance men can make their money, sometimes at your expense. You can save huge amounts by staying on top of it, scrutinising bills and not spending money unnecessarily.

We are very particular to ensure that properties are safe and legal, but usually basic with no frills and a neutral look. We always get 3 quotes for jobs over £1000, boilers can cost between £800-£2000 fitted (but make sure you get every last year out of the old boiler before changing) depending on who you use.

I often use the example of a damp contractor who quoted £8500 for a job only to get a second quote in at £3400 and a third who got the job at £360 for a property that I was selling. Differences like this are commonplace. Don’t assume that just because an electrician says a property will be unsafe unless it is rewired (£2500+) that it is, get at least one more round and DON’T tell him what the first one said!

Check everything. Doubt first and question, and get 3 unrelated quotes!

3. Voids – Cancer for property investors. If it means dropping the rent a little to get a tenant in then proceed to lower the rent. 1 month void at £500 will cover almost a year at £50 less a month. It’s much better to get the tenants in and then increase the rent slowly over time.

2-3 months void will eat ALL NET Cashflow, leaving you with nothing.

It's also a good idea to put several letting agents against each other. They all have different types and numbers of tenants. If a letting agent hasn’t let a property in 3 weeks, we usually open it up to others.
Create competition, fear of loss and a healthy respect that you're switched on.

Another good little tip is to ask the letting agent to insert a clause into the AST (tenancy agreement) that makes the tenant give 60 day’s notice before leaving the property. This gives you time to get new tenants in with no voids.

I have analysed our last 5 years tax returns (Rob gets bored reading a post it note, so someone needs to keep an eye on the detail) and as an average across all of our properties, our running costs are about a third of the gross rent (management, maintenance, voids, safety checks, insurance etc).

Yes… it’s more stringent than the lenders 125%, but I like reality. I then work the long term cost of finance out, which is around 6%. An 8.5%-9% gross yield with a third taken off for cost covers the finance, guess what gross yield we look for!
You guessed it, 8.5% or better.

Bonus biggest risk: Interest rate rises – I also know that the biggest single property investment portfolio killer is interest rate shock (quickly increasing interest rates for which rental income is not sufficient to cover). For me this is a risk too great to take, especially as I don’t sleep well anyway

So the way I see it you have 2 options. You can either take an insurance policy out to cover your mortgage payments if base rate goes beyond a pre determined level. Or you can choose fixed rate mortgages.

For me the former has always seemed expensive in comparison the latter. So we will usually elect to pay 1-2% more in terms of mortgage rate for the security of a fixed payment. We would always go long term too….We believe these should all be viewed as long term investments, so 10 year fixes (depending on availability!) should be fine.

Remember, capital appreciation is a fact, not a ‘strategy’. You need to concentrate on achieving monthly profits in order to keep your business liquid. Your aim should be to buy investments “as if prices will never go up again” then you will be forced to only buy properties which give you great cashflow.

Having extra cashflow and a safety buffer will also cover potential rises in interest rates in the future and for any unexpected costs you may incur in case of an emergency.

And if you’re just starting out, spend some time and money investing in advice and mentoring from experts. Whether it’s us or someone else, because the best risk reducer is knowledge.

Leave us a comment, let us know your thoughts!

Rob Moore & Mark Homer
Co-Founders of the Progressive Companies
Full Time Property Investors
Double Best Selling Property Authors
Over 350 Properties Bought & Sold

© Progressive Property Education LLP 2011

If the property requires some sort of renovation, do the bare minimum. Do not get drawn in by those magical makeover TV programmes, where the selling price is largely overestimated, and the time and cost of the project are both underestimated. Always over estimate
90% of anticipated selling price is a good figure to work on. Factor in your profit and loss AND account to see if the project is really worth your time. Remember, it's anticipated, it could be more or it could be less!

Also remember that a refurb to rent needs FAR less work and expense than a refurb to sell!

Mistake #7 – Getting emotional about the numbers

The numbers never lie. Do not get emotional over property as this will cost you money. And cause you pain. Don’t chase the deals; let them come back to you. Play the long game – we had a deal that we recently exchanged that we have been negotiating on for 2 years that fell out of bed 3 times! This is not uncommon, and far better than trying to tie a price up too early and getting too emotionally involved and ‘wanting to get the deal done.’ Beginners are especially susceptible to this.

Have a strict set of rules and do not deviate from them. If the numbers do not work for you, don't think they won't for another investor. Consider selling the lead on/packaging the deal up. Maximise your revenue streams!

Mistake #9 – Selling your Property

If you have read our first book, ‘The 44 Most Closely Guarded Property Secrets’ you will know we bang on quite a bit about you make your money when you buy…

and not when you sell.

The reason we believe selling is a mistake is because you are transferring your wealth to someone else. You are slaying the goose that is laying the Golden eggs.

Now, we do believe that IF your property is not performing well, or you have bought a property out of area or you can flip a low yielding property on a quick turnaround, then selling the property to reinvest in another better performing property project or to get out is a viable strategy.

The mistake we often see is investors not investing for the long term. If we go by past property cycles, and property prices increasing in value over time, then continually selling your properties reduces your asset base and long term wealth

Mistake #10 – Buying Overseas, off plan & out of area

This is probably the biggest one and why we have saved it until last. We learned this the hard way in our earlier investing days when Mark bought his flat in Bulgaria which rents out for 2 weeks per year!

Many investors are often hypnotised with the fancy artist impression of some beautiful luxury apartments by the sea: somewhere in an idyllic holiday location 3 years off plan

They are advertised by the big glossy marketing packs as being fully serviced and having a rental guarantee for at least SIX years! Wow amazing…

That’s not all: the icing on the cake is the property is being offered at 50% of its original list price

We would all want a piece of that right…..Ehhh…Actually No and here’s why:

The list price is some inflated figure without any proven comparable values

Nine times out of ten, the purchase has to be made in cash

The clauses in the contract state that after the 5 year period if the buyer does not pay the services charges (which will be an extortionate amount) the property will be seized..

and…

to top it off, the property is worth less than you paid for it

You pay the developer a big chunk of profit. You pay for something new, which devalues immediately it isn’t new (which is as soon as you buy it!)

We would go as far as not investing overseas unless you can speak the language, know the locality, have trusted contacts and know the property buying system: which actually makes it a local purchase!

However we will always speak to a few investors who ignore our advice and buy an overseas property which has turned out to be a property nightmare! Many of the people who come to Progressive Events do so because of these early mistakes

Now although we’ve met many ‘experienced’ or ‘seasoned’ investors at networking events who on paper looked like they were doing well, this has mostly been in a rising market, where mistakes can be disguised, rather than solid property investing strategies – absolutely vital in this market.
Property is a fantastic wealth creation vehicle, and it can give you long term financial independence if you can successfully get to grips and overcome some of the challenges that many investors face.

This short article will highlight some of the main reasons why investors fail and give you some solutions you can implement right away to succeed in your property business:

Mistake # 1 – Not Buying Under Market Value

Ok tell us something that isn’t new…Well sticking to the basics is often sooooo easy to forget that it is sometimes important to refresh our minds with the fundamentals. Warren Buffett has stuck to them for 50 years.

You are in the business of finding motivated, distressed or desperate sellers who want to sell quickly at a discount and where you can help them with their problems. Where price is NOT their most pressing concern.

Buying UMV will you give instant equity and a buffer if property prices were to fall further. It also allows you to remortgage and remove your initial deposit as soon as circumstances allow, thereby significantly reducing the risk of losing money in the short term, as you will have left none of your own money in. 0% risk on finds, infinite ROI

With this concept (which works in any market) you do not need property prices to increase in value as you are making money straight away from the discount and locked in profit

Nice eh?

Mistake #2 – Underestimating the importance of cash flow

Not treating your property acquisitions as a business is a recipe for disaster. We know the old adage that cash flow is king and without a healthy flow of cash your property business will fail

Now, we are not only talking about having good cash flow properties which is essential but also having a buffer of mortgages payments and an extra for expenses, to counter interest rate rises which can put a dent in your monthly profits or if the tenant leaves and you have to fund the void periods.

What if you have an unexpected cost such as having to replace a boiler?

If you are starting out, this can be tough, we know that. However, without having cash reserves building a successful property business can prove extremely difficult

However, all is not lost. If you do not have cash reserves set aside, then perhaps you could find a JV partner who has a cash sitting in the bank [getting no interest], who can have an equity share in the property

You can become very wealthy by utilising and reinvesting using other people's money [OPM]. Have a read of our blog post on raising JV & PI finance: http://tinyurl.com/3a44svr and become a fan of our Progressive Property Joint Venture Millionaire facebook page and hit the 'LIKE' button and get access to the resources: http://tiny.cc/1hpce

Remember the 'number of properties you own is vanity, the cash flow you make is sanity and the cash you got in the bank is reality'.

Mistake #3 – Buying for Capital Appreciation [Growth] and not Yield

Many investors base their entire business model on capital appreciation and underestimate funding the shortfall in running their property portfolio. This is a very big mistake and a very high risk strategy to be avoided at all cost. It was the strategy that financially ruined many people 2001 – 2007

All things being equal, we buy our stock on the basis that property prices will never rise, meaning our model is based on instant profitability: income from rent NOT just growth. This mentality helps us make sensible decisions that the figures and the investment will provide a positive income. Capital appreciation is seen as bonus

Sure, we all know property prices virtually double every 10 years, but as portfolios grow shortfalls can become out of control if they are bought on a growth only model

Never ever buy with emotions. Remember, an asset is something that puts money in your pocket and a liability is something that takes money out of your pocket. You should be turning away more deals than you buy, making sure the yield is good, and factoring in ALL of your costs

Something to think about…

Mistake #4 – Not doing enough research

It is imperative that you do enough research and due diligence before you buy so that you reduce and minimise the risk you are about to make

Most novice investors create the supply without the demand. There is absolutely no point (if your strategy is buy to hold, see mistake #5) buying a property that you cannot rent out.

Your local post code district within your goldmine area must be fully researched in terms of the rental market and the amount of current stock within the area. The bridge between supply and demand must be closed

Buying purely because there is a big discount is a mistake, because you will be left paying the mortgage and the operating expenses that come with holding the property. Buying property with apparent discounts without understanding comparables can give you unrealistic perceptions of actual value

Other research you should do along the way:

Is the property mortgageable? Is there any structural damage? Find compatible sold prices, instructing independent valuations, obtain recent sales and letting demand confirmation from agents, check both the Land Registry and current value prices, check LHA rates, have a schedule of any refurbishment costs that will require works, a summary of the locality of the area, transport links, demographics from government and council stats, crime rates, proximity to schools etc

Mistake #5 – Not having an Effective Investment Strategy

Investing in property is a personal strategy based on your personal financial situation, your attitude to risk, the level of funds you have to invest etc

Preparing and understanding your own motivation, goals and aims will help you with your first step and give you a structure about your strategy

For example, if you have a £50,000 worth of capital or less to start off with, then investing in HMO’s will be a pretty tough business because you probably need more upfront cash, but that does not mean you cannot invest in single let properties adopting our model of buying, refurbishing and remortgaging your fees back out

Buying a Property is easy. It’s easy to do, but it’s also easy not to do

However, buying a property that will meet and deliver on your personal strategy and your financial objectives is more of a science and one that you should familiarise yourself with

Other things to think about are how much time you can afford to put into your property business. Many people are unrealistic about the time they can afford: they think they have more or less than they do in reality. If you don’t have much time, perhaps you may need help. If you have lots of time then you probably don’t need the same seed/start up capital.

Watch out for the next 5 mistakes coming soon.

‘Multi-let Without the Sweat’ is a niche little strategy which involves finding a tired landlord or someone struggling to rent their property & offering them a ‘guaranteed rent’ for a fixed term at below market rent & multi-letting the rooms at market value& keeping the difference. Usually this would involve setting up a managing agreement & positioning yourself as a letting agent, keeping the surplus cashflow as your management fee.

This concept is great for a few reasons: You don’t need a mortgage, a deposit, high refurbishment outlay, or planning permission, as you will be taking over established HMO’s & making between £500-900 pcm.

Who wants a piece of that cake?!

Whilst on second stage, Mark & Trevor Cutmore were delivering
No Mortgage, No Deposit, 2012 Cash flow Investing Techniques..

.. This was a fantastic section for those Investors who couldn’t get mortgages, didn’t have money for deposits and were able to make between £200-£400 pcm per deal using lease option & instalment contract strategies.

We were fortunate to have Trevor Cutmore, sharing his experiences once again, tailing off the back end of the Progressive training, showing how he is attainted over £30k per year passive income from his residential and Option portfolio. Trevor was a Progressive student and is now head LO trainer at Progressive because of his fantastic knowledge and amazing results. He is now buying more than we are at Progressive!

Recovering from a short power networking break, Rob went into detail about
finding your local goldmine area.

In simple terms, a Goldmine investing area = locality + tenant demand + volume of discounted stock + 8.5% plus yield

Rob went into detailed specifics on the CASTLED model when researching your micro areas (This is pure gold in the right hands…)

Ok, let's take a look…

C.ashflow – Not treating your property acquisitions as a business is a recipe for disaster.We know the old adage that cash flow is king and without a healthy flow of cash you won't have a business period.

Tip: Look at micro areas with the highest yield & return.

Remember – the 'number of properties you own is vanity, the cash flow you make is sanity and the cash you have in the bank is reality'

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, will ensure your investment has strong tenant demand & the highest capital growth potential.

S.upply – Ensure properties in your micro-area have the strongest (and fastest growing) level oftenant demand relative to the supply of properties of that type

T.enants – A simple thing you can do to check high tenant demand in an area is to put an advert in the local paper for a property which you propose to buy

(could just be a general ad in the classifieds)

List the type of property and the rent and put your mobile as the contact. Gauge how many calls You get and monitor the number of enquires. Clearly lots of calls means that it is likely to be a reat area, none means that there may be low tenant demand!

Your risk is vastly reduced as you know whether it will rent BEFORE you make the decision to purchase. Also check LHA waiting lists in your area.

L.ocal – Not only does buying in a tight local area allow you to understand exactly what the tenantdemand is, but it also ensures you understand the price of the local stock inside out and (this isthe big one) you can manage them properly jumping on voids, high maintenance or bad debt.. all things, which left unchecked, can really hurt you.

E.xisting – You will focus better on 1 or 2 property types in an area, say EXISTING 2 or 3bed terraced houses, as you will likely end up knowing the prices better than the surveyors, agents, vendors & investors. This means when something is priced cheap, you'll be able to spot it right away whilst others don't.

D.iscounts- By getting a good level of discounted properties whilst ensuring a number of greater comparable units are selling at open market values, you've got instant equity and a buffer if property prices were to fall further. It also allows you to Remortgage and remove your initial deposit as soon as circumstances allow, thereby significantly reducing the risk of losing money in the short term, as you will have left none of your own money in. 0% risk on funds, infinite ROI.

We've never previously revealed the CASTLED model (except for our LIVE presentation at the PPSC) so we hope it helps you get the highest ROI in your goldmine area

Simon Zutshi was delivering some golden nuggets on second stage on making great returns flipping deals that didn’t fit your investment strategy or had little or no equity. This was insightful to say the least.

Next we had Mark detailing another investment strategy that we are utilising very much in the current climate that we’ve never shared before – Title Splitting or otherwise known as Buy One Get One Free (BOGOF).

This is very specific sexy strategy which involves buying a property & developing it into self contained flats, creating separate titles & separate leases. There's often a large gap between the value of a house and what it might fetch converted to flats.

The flats , combined are worth more than the value of the houses on its own. We recently purchased a property for £185,000 (15% UMV)& developed them into 4 self contained flats, total value after refurb £415,000 & generating £880 NET cashflow pcm.

This talk was definitely an eye-opener for some: taking such a simple strategy & exploiting it to its core in terms of cash flow & uplifted value

Next we had the UK’s leading authority on LHA, Mike Frisby sharing his cashflow nuggets especially his 2 + 2 strategy which we never heard of – this was a fantastic section & Mark was certainly implementing these tricks the next day for our properties let to LHA tenants..

We had the crazy Austrian& Brand Expert, Daniel Wagner revealing his
“Expert Success Formula”..

Imagine what it would feel like Right now to be BOLD and turn your dreams into reality… Work when you want, where you want, and how you want. No more alarm clocks ringing at some ungodly hour every morning, each weekday, no more struggling to work, squeezing through bumper traffic, underpaid, unfulfilling work for 40-60hours a week [or more] for the rest of your life…

Daniel was absolutely mind-blowing. Now was the time to turn your life around, cash in and develop your niche area of property investing & brand so you can teach and build your portfolio & generate income, and leverage yourself as a brand expert.

What was even more powerful was that he was actually doing it LIVE, teaching you how to influence and get people to buy your products, while doing it!

Inspirational to say the least

Lastly, Rob held the audience with his spellbound skills in the advanced bare knuckle negotiation section.

A truly gritty and practical segment from Rob, with a no BS, underground presentation you wouldn't want everyone knowing, especially estate agents and vendors – his 'sudden change of behaviour' technique was extremely powerful.

To end a fantastic start to a great day, we donated over £28,000 to Cancer Research (topped up by Rob & Mark to £30k)- Thank you for those who joined us last making the 2012 Progressive Property SuperConference the most amazing yet.

We are all looking forward to next year already ; -)

The majesty, the pageantry, the speakers, the sights, the sounds: anyone who attended the Property Super Conference 2012 experienced all of these, and more..

The weekend was quite simply amazing…Well done to the team & EVERYONE who helped put this beast into play– we Rocked’ Wembley Stadium to make this the biggest Property Specific event to date.

Over 300 Facebook posts, tweets, & 192 thank you emails (Yes we read & counted them all), with gratitude we thank you all
From the moment the PPSC 12 kicked off, everything screamed “big deal” – including Bob Geldof's keynote interview…

This was not just an ordinary property event…

This year we wanted to make it the LARGEST property JV & Networking Event (& we did) – it had everything you needed for 2012 all in one place on one weekend, including most of the UK's most prolific investors & speakers..
In all of the events we’ve ever run, the atmosphere, buzz, energy and networking was like nothing we've ever experienced before – all 900+ of us

900 people were engrossed, inspired, over whelmed & educated by the entire weekend. The energy was electric, everyone was buzzing and you could really feel the potential of the audience.

Ok, we were bit disappointed by the AV& audio hitches at the start, lucky Rob had a couple of back-up jokes :- ) but on the whole it was just amazing to be in the room with like-minded serious property investors.

The event started off with Mark unleashing the truth behind the current 2012 UK property economics, mortgage and money markets, how the market has drastically changed, LIBOR, property activity index, austerity measures and so on. This was a real treat, I’m sure you relate to this, especially to those mini Mark AN-AL-ISTS..

(Rob took a little nap at this point as he hears it 14 hours a day!)

Concurrently on second stage, Juswant & Sylvia Rai – the dynamic duo , were showing Savvy investors & Networkers how to network for property profit, ask appropriate questions, engage people & hunt out underground Millionaires in the process – this was a real treat & refreshing to say the least

Recovering from a short power networking break…

Rob unleashed the reality about raising Joint Venture and Private Finance without Investing any of Your Own Money
We’re guessing you heard a lot of hype about JV’s so far…Maybe you haven’t – but either way, this ancient strategy has been generating as much buzz as it has “head-scratching”

We’ve had quite a few success stories from our Joint Venture portal insisting that JV’s were the shortcut to their success
Some call it the most powerful strategy ever…as it offers limitless investing potential, yet many think JV’s are complicated, difficult, scary – or worse yet, “pie in the sky”

Rob unleashed 12 places to find more millionaires per square foot than anywhere else on the planet bar a Philip Green birthday bash, the 7 structures of JV’s that allow you to overcome all JV partner objections and nervousness about investing in YOU, to accelerate your property business…

JV’s are the Most Effective Tactic for fast pacing your property investing in this marketplace, if getting mortgages and standard finance is slow, tough, impractical and expensive

The next section was Rob interviewing some of our MasterClass protégés…

They have been getting awesome results by implementing skills and tricks learned from our 3 day Intensive Masterclass where they met and formed a JV partnership, and a £Million+ portfolio and 18 months on…

Many spent the weekend networking and catching up with old & new friends. These events are always a great place to meet like minded investors and form new business and property relations..

For many, this was their third Property Super Conference and many JV partners were lined up, so things were definitely moving forward from the weekend!

Simon Zutshi kicked of his speech with everybody in the room on a complete high… He brought up the topic people say stuff but don’t take necessary action, you need to move quickly, and a couple of people in the audience stood up to move to the back of the room to invest in his program …. WAIT FOR IT! Simon shouted and it got a appreciation from the audience…

Johnnie Cass delivered an action packed speech, unless we have a purpose, it doesn’t matter what you learn at this weekend because it will mean absolutely nothing to you — that resonated with the whole audience, his focus on the reason why we do things was truly inspirational to everybody…

Meanwhile on the second stage…

Peter Hassett covered the underground lead generation strategies for property investors and what you must do in order to stay
ahead and be profitable

Alex Way brought ALL the current and most up to date estate agent secrets, what to do and how to do it in the quickest time possible

And that’s not all…

We had the great pleasure of hanging out and kicking back with Sir Bob Geldof backstage, where he and Mark were talking about the current world crisis & how this was caused due to the exploitation of the poorer class,
especially where mortgage agents and banks went out into the poor suburbs of the US and started giving mortgages to people who had no job, no income, bad credit and had no way of being able to pay these debts off in the hope rising prices would secure the debt.

This was Mark’s language. It was like watching the Williams sisters play tennis – super fast acronyms and high tech finance speak flying across me like an aggressive baseline rally!

In Mark, he definitely met an equal in finance & economics knowledge and instant risk assessment (…..we even managed to see the funny side when he put Mark’s girlfriend Gemma on his knee and squeezed her rather close!)

Sir Bob Geldof really knew a lot about the world and how development economics helped bring the 3rd world up to better things, as was reflected in his keynote..

He challenged us to: Address the world with the confidence that is strictly the province of this country. Don’t turn inward. Don’t be scared of the future. All change comes from unreasonable people. Look at it cold-eyed and try to create a new world, with your values. Wow!

Honestly friends, we really could go on and on about how speaking to Bob Geldof has left us inspired, encouraged, and motivated, but we will simply say this- we cannot let up on the urgency on the movement to see an end to extreme poverty in our lifetime. Let’s be more creative, innovative, and aggressive in our service, because now is the time!
He went on to share some absolute gold on stage any entrepreneur would have been touched on so many levels…

But when he said to me…

"Where did you get them F****** Boots!" & some things backstage which we could never repeat..
And totally ripped me for my dress sense (2 years running now)… Apart from the audience laughing…

I knew deep down this guy was normal on the inside, yet extra ordinary with the lives of so
many people he has touched and changed over the years..

And by the feedback we got…

You guys were BLOWN away by his keynote too…

The one thing that stood out which has been a common theme among all of our keynotes is that Sir Bob Geldof noted that the UK is an economy which is very much focused on home ownership & pride, & it will be this desire among entrepreneurs and savvy investors that will help us get out of a recession…

Next we had the Personal Development Expert and one of the leading authorities in the UK on the psychology of success & personal development, Andy Harrington

Imagine what it would feel like Right now to be BOLD and turn your dreams into reality…

Work when you want, where you want, and how you want. No more alarm clocks ringing at some ungodly hour every morning, each weekday, no more struggling to work, squeezing through bumper traffic, underpaid, unfulfilling work for 40-60hours a week [or more] for the rest of your life…

Andy was absolutely mind-blowing. Now was the time to turn your life around, cash in and develop your niche area of property investing to become an expert so you can teach and build your portfolio & generate income, and leverage yourself as a brand and hypnotic sales expert.

What was even more powerful was that he was actually doing it LIVE, teaching you how to influence and get people to buy your products, while doing it!

To end a FANTASTIC day, Mark grilled our Top Property Expert Panel consisting of the Finance Trio [Scott Rawlings, Simon Gee and Rory O’ Mara] & tax expert Iain Wallis, this was certainly what Mark had been waiting for- his la dolce vita moment!

So…

Strategy 1: Buy Refurb Flip….This is a low risk, time proven strategy that allows you to force the appreciation of the property through refurbishment and realise the profit by flipping the property [buying and selling – the most basic for of property transaction] on for a profit. You’ll need to find a property that’s run down and needs work, with available ‘uplift spread’ on the street, and the bigger the discount, the more the profit.

You might not want to sell a high yielding, cashflowing property, so find a deal that you can buy UMV [Under Market Value] that you may have passed on before. We bought a property for £92,500 with comps [similar 3-bedders] on the market in excess of £145,000, Even if you don’t achieve that figure, which doesn’t usually happen, there’s still room for profit. After all buying costs, selling costs and refurb fees, we walked away with a nice net profit after selling the property for £135,000.00. Timescale – 4 months: Net Profit – £24,0005.93 Geoff Whittaker, one of our Property VIP Millionaires Club Members, is up at almost £60,000 cash from his first 3 deals, in less than 9 months, so could make it…! Watch his video here: http://tiny.cc/100k

Strategy 2: Assisted Sale [AS]. This strategy is smart. You buy or take control of a property [exchange on it with an ‘assignable’ contract or take an ‘option’ to buy it], then pass it on to the investor/your customer and take your profit from the equity, not fees. Let’s say you source at 30% UMV: you can pass this on to another investor or, more easily, a FTB [First Time Buyer] at 10% UMV. They will jump all over that because they do not expect professional discounts like you will be able to get, and you can make a larger profit: 20% of £100K. Timescale -1-2months: Net Profit – £16,0000.

Total at this stage…£40,005.93

Strategy 3: Options to Purchase. Using an option to purchase instead of buying allows you flexibility, much lower costs than a buy and sell, and avoids you having to wait 6 months to remortgage.

The seller is pretty distressed and owes £70k on his mortgage and in the current run down condition his property is probably worth about £130,000. The seller is 10 days away from being repossessed and wants’ a quick sale of £75k. Similar properties in good condition could sell for £150k.

We will get the seller to sign an option which includes a lockout agreement giving us the right to purchase the property for £70k, and locking other buyers out for a pre-determined timeframe. We will probably spend around £9,000 adding value to bring the property up to scratch to other proven comparables and accept an offer of £143,000for a quick sale.

In the meantime, we will liaise with the lender and pay a holding sum to our solicitors to show the lenders we are serious and we have the funds to pay off their £4,000 arrears, which holds off repossession. Because this is a great deal, we will give a further £10,000 back to the seller as an equity share and everyone will be happy with the outcome, and of course it is a great feeling helping someone in a less fortunate position.

Remember it’s not all about making ‘a wad of cash’ but being ethical and stabilising what is a bad situation for the seller. Timescale – 1-2 months: Net profit – £41,000.

Strategy 4: Positioning yourself as a Letting Agent – This strategy is a variation of similar option style strategies where you are not purchasing a property now but making real profit in terms of cashflow by controlling a portfolio. Maybe a landlord is fed up of managing their 15 property portfolio, has out of date tenancy agreements, lets the odd rent slip through the net, doesn’t like dealing with repairs or tenant issues and just wants out from the day-to-day hassle.

The landlord may be earning about £120,000 per annum from his portfolio, but with your management you could increase the rents to about £130,000, as well as other fees for your service for bringing the tenancies to boost your income.

You agree to take a fixed management fee of about 13%for his entire portfolio. Of course depending on your negotiation skills, you could also have an option to purchase the entire portfolio at a discount in the future. This is a very real strategy that has worked for many in the past and the best thing about it is you don’t need much, if any, up-front cash. Timescale – 2-3months: Net Profit: £15,600 per annum/£1300 per month.

Running total…£96,000

In the between the time of purchase and flipping in strategy 1, use one or more of our 32 lead generating strategies to monetise leads or deals that you don’t even want to keep yourself:

Strategy 5: Using a combination of the following you can make a substantial return: B2S/FLIP [or Buy to Sell] £10-50k profit ; Qualified Leads [QL] – £75-£250 Profit; Unqualified Leads [UqL]- £20-£50 profit ; Ready made deals [RMD’s] – £3k Profit; Pre-packaged Deal [PPD] – Profit £4-£7k; Portfolio Building [PB] – Profit – 20k per property; Lease Options/Straight Option [L]O/SO – Profit – £3k-£10k Profit.

What you have read is just the beginning on what is possible to earn £100,000 per year from the above strategies, 32 of which we are using right now in the new investing landscape.

Give Progressive a call if you want a bit more info on the above, we are happy to answer any questions you may have.

Invest for Freedom, Choice & Profit

Rob Moore & Mark Homer
Co-Founders of the Progressive Companies
Full Time Property Investors
Double Best Selling Property Authors
Over 350 Properties Bought & Sold

© Progressive Property Education LLP 2011

Rob in Iceland, 25 or so VIP's and a perfectly timed explosion! Leave your comments below on how he managed that!

http://www.progressiveproperty.co.uk/2012/02/03/the-warren-buffett-rules-part-1/

Rule No5. Long term hold

‘Our favourite holding period is forever’.

How long should you hold on to a property? Buffett stated that if you do not feel comfortable owning an asset for 10 years [average duration that property prices will double] you shouldn’t own it for 10 minutes.

Never selling a property is regarded as one of the best strategies. This actually shocks, surprises, mystifies and confuses many people. It should be obvious that if you buy and sell, you never actually grow a portfolio, you just tread water. Of course, we are talking about a mid-long term strategy here. One that works. One that will last your whole life. One that will cost you the minimum amount of money for the maximum return.

Buying and selling may be a good investment proposition for maximum returns in the following few specific circumstances. We believe that you can ‘flip’ a property if you are buying outside your patch, to generate some cash flow for your business or getting out ONLY when you think trouble is on its way. Although in this latter point, we would aim to buy every property we could [being a contrarian, seeing opportunity where others see a problem] Andreas Panayiotou saw this as an opportunity in early 2007 and cashed on his £1bn property portfolio before prices crashed. Two years later, he began buying again because he could earn more from rental income than he could from bank deposits.

Selling your property will mean your valuable asset now belongs to someone else, someone else earns on your valuable asset for the rest of their life, you no longer earn on that valuable asset, get the picture?

If your strategy involves using other people’s time [OPT] and other people’s money [OPM] for leverage and for long term financial gain and independence, then the strategy of never selling is a must.

Rule No.6 Don’t rush

You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.'

Understand the market and only buy a property when it is cheap enough in comparison to the rest. Boredom can cause rash emotional and rash buying decisions forcing an investor to buy badly or pay too much.

When I read Buffetts autobiography, I was quite surprised that he often buys properties for tens or hundreds of $ millions without ever visiting the unit.

Although the jury is somewhat split on whether you need to view a property before buying, if you genuinely have all the numbers, information, and facts, a visit may often be a luxury rather than a necessity.

In any case, if you do visit, do not get emotional as this can cost you money. Cashflow, equity and growth is what really matters to us. This will make you money.

This is why we use our Deal Scrutiniser™ to dehumanise the buying process and take all emotion out of investing. If the numbers pass through our software [that has taken 3 years to develop] we will buy, if not, then we will either take it on as an option or do something creative to monetise our reject deals, but we will not hold it as a long term investment.

Rule No 7. Strong profitability

'Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years'

Warren Buffett prefers to invest in properties with a proven, strong yield, looking at the profitably on a monthly basis as well as the return on capital employed [ROCE]. Profit is income, as well as capital growth, so the investment must provide income from the start.

Rule No 8. Strong management

'It's better to hang out with people better than you, … Pick out associates whose behaviour is better than yours and you'll drift in that direction.'

Buffett has a very strong management team around him, and you will need to build relationships with people to get people to like you, to influence them in a positive way and ultimately to get what you want from your property portfolio investment career.

Napolean Hill calls this the ‘mastermind alliance’. The team of people around you who you can leverage that will enable you to achieve infinitely more than you would be able to achieve on your own. Build a team of specialists around you who have specific skill sets in a variety of areas that you can leverage and manage to make significantly more profit in significantly less time.

Every seller will need a buyer, every landlord needs a tenant, every buyer will need a mortgage broker [unless they are cash rich], you’ll need to have a conveyancer to do land searches, and definitely the help and expertise of surveyors and solicitors.

Everyone is intrinsically linked to another human being in one form of another. Man needs women. Tarzan needs Jane

Build a team of people around you who can help you do things you can’t do, you don’t want to do, you are not an expert in, take you too long, frustrate you, don’t put enough value on your time or do not take you closer to your goals. Outsource as much as you can and lead your team with vision, purpose and intent.

Invest for Freedom, Choice & Profit

Rob Moore & Mark Homer
Co-Founders of the Progressive Companies
Full Time Property Investors
Double Best Selling Property Authors
Over 350 Properties Bought & Sold

© Progressive Property Education LLP 2011

The billionaire has amassed his fortune by identifying companies and properties that he believed were worth more than their current value and investing and holding these investments for the long term. It is fair to say, his decisions have certainly paid off.

Let’s take a look at some of the rules Buffett lives by and apply them to property:

‘Rule No.1: Never Lose Money. Rule No.2: Never forget Rule No.1.’


‘Risk comes from not knowing what you're doing.'

Buffett is referring to the mindset of a sensible investor who doesn’t ‘bull doze his way into a china shop’. In property investment terms this simply means doing your due diligence. Don’t gamble with your future and think it’s OK to lose. Minimise the risk by being informed and doing your homework.

The following contingencies should be considered and planned for:

• Market conditions
• Interest rates and economic growth
• Demographic and your area to invest
• Location
• Property size
• Property type
• Property condition and potential refurbishment
• Lifetime value of tenant
• Property valuation
• Comparable sold/selling prices
• Running cost of your property with contingences
• Remortgage strategy
• Growth strategy
• Tenant management
• Completion

Buffett only invests in assets he thoroughly researches and understands, and it is imperative to adopt this principle so you reduce any potential loss.

The property market will go up and down, but you should remain focused on your goal of buying a solid long term property asset from day one. You make your money when you BUY [& not just when you sell].

Rule No3. Being a contrarian investor [80/20 or the 99/1 principle]

‘The Golden rule is the man with Gold, rules!”

If you have read our second book “Make Cash in a Property Market Crash” you will know we drill the concept of making money by going against the crowd. Walt Disney coined the phrase [and quoted many times by James Cann] “Observe the masses and do the opposite”, while Buffett explained “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”.

The investors who make huge amounts of money in a downturn do so because they buy when everybody else is selling. The mass sell because they believe the market is declining. The person who makes the money is the person who can buy all these properties at a cheap price and wait for the prices to go up. Liquidity [access to cash] in a downturn always wins.

This is not necessarily because the market is wrong, but because the crowd’s wisdom is most likely reflected in market prices.

Rule No.4 Value Investing

‘It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price’.

Buffett is a value investor who likes to buy something for less than it’s actually worth, at rock-bottom prices. He examines what similar companies and properties are selling for and what cash will be generated to determine the “intrinsic value”.

Professional property investors know the key to buying a good buy-to-let property investment is to buy at the lowest possible price, under the prevailing market value [UPMV].

This strategy allows a good safety margin if market conditions drop and maximum profit at the time of eventual remortgage or sale. In our view, buying at 25%-60% discount [for your own portfolio] will be a good investment for your long term wealth. Cash flow is the life blood of any investment decision, so make sure you get paid on a monthly basis, after your debt and other associated costs are been serviced.

Buy properties at wholesale, not at retail prices. If the property needs work, then never pay for more than 70% of the after repair value. Avoid the ‘fat pitch’ and buy at really depressed cheap prices.

Invest for Freedom, Choice & Profit

Rob Moore & Mark Homer
Co-Founders of the Progressive Companies
Full Time Property Investors
Double Best Selling Property Authors
Over 350 Properties Bought & Sold

© Progressive Property Education LLP 2011

You see, many of our experiences stem from trying to use our local housing allowance [LHA] model, which we use on single let properties in a HMO environment.

Unlike family’s claiming housing benefit, the single person room model just doesn’t seem to work with tenants claiming benefits.

Let me show you the difference on 2 properties we own that are opposite each other on the same street, of exactly the same size and type, but managed by 2 different letting agents. One letting to LHA tenants claiming benefit and the other to working professionals.

Property 1:

Property 2:

The difference between the two properties is stunning!

One agent clearly does a better job than the other [even managing to provide such amazing things as monthly rental statements!], but most of this is down to the fact that single benefits claimants attracted to HMO accommodation appear to have a higher propensity for being in and out of prison, involved with drugs [we took 130 needles out of one we cleared after sacking a terrible agent!] and theft.

These factors mean that other tenants in the building move out a lot more often, creating huge voids and non payment of rent for the tenants who end up in prison.
Of course, the agents involved in both of these models told us up front how much each investment strategy would work, so the question arises, how do you decide which route/letting agent to go with when making the decision on which strategy to follow?

Testing IS the ONLY way…

An early mistake we made investing in property was to rely on what we had been told by people and market participants about expected returns…

We would often find a model that we believed worked, and quickly purchase a large number of units, outlaying capital on
refurbs without first securing the income stream.

These days we frequently try new things, but if we want to try a new model we will often do the following things:

1. Test the market and tenants for the property type as above
2. or buy a few properties at any one time

AND then test the return from the LHA tenant and one with a private tenant with different managing agents.

We will then assess the results after around 6 months and start to move in the direction which seems to be working.

Due diligence is all good, but it can only take you so far: you then need to just jump in at the shallow end, and make sure you watch like a hawk, keeping track of the financials on a monthly basis, with a view to scaling later.

“If you go as far as you can see, you will then see enough to go even farther” — John Wooden

Invest for Freedom, Choice & Profit

Rob Moore & Mark Homer
Co-Founders of the Progressive Companies
Full Time Property Investors
Double Best Selling Property Authors
Over 350 Properties Bought & Sold

© Progressive Property Education LLP 2011