I recently had an enlightening conversation with Peter Jones, who is a successful chartered surveyor, author, and property teacher. The most properties Peter has completed in a single year is an impressive 35, and during his career he has bought 3 portfolios, two of which he flipped, and always reinvests. His 70 properties make him about £10,000 per good month, and he is currently moving into even higher value deals.
Self-confessed “risk taker” Peter has been in property his entire working life, having studied it at university and then moved into valuations. In 1995, Peter was in a well-paid job and had a wife and three children. He expected to be in that same job for his life but despite the money felt trapped by his career choice, and its corporate environment made him miserable. Then, out of the blue, he was laid off, and from this twist of circumstance Peter decided to unleash his entrepreneurial side and get into buy-to-let property.
Peter began this journey by borrowing some money from a family member to buy a small terraced house – a joint venture partnership that took place more than a decade before Progressive Property began teaching JV values!
Let’s see some of the advice that Peter has picked up along the way.
Be guided by buy-to-let property investment training
That first purchase of a terraced house led to a refurbishment project that took Peter 9 months when it should have taken 4. This extra 5 months was partly due to him insisting that he performed much of the refurb work himself, rather than leveraging and hiring an expert. He made a moderate profit, but realised that there must be a better way to achieve more in less time.
Peter says that if there had been more guidance, mentors and property educators around when he started, he probably wouldn’t have purchased a property in the worst part of town, or taken 4 years to learn how to make buy-to-let property work well for him!
There is always the risk of unexpected problems
Early on in his property investment career, Peter entered a deal that he should never have gotten involved in – however, he did not have the experience to know any better. It was an HMO property with a lot of history, but the man who owned it “wasn’t the easiest person to deal with” and negotiations dragged on for two years. You may wonder why Peter didn’t simply drop out, but by the time he realised that the deal was heading for trouble the legal fees were already beg stacking up. He had been made redundant just a few years before, so at this point Peter didn’t have money to simply throw around.
Peter saw the deal through to the end and in the end found himself £20,000 down. This demonstrated that the first time you ever do a new type of deal there is always the risk of unforeseen problems. This is unavoidable, but it is no reason to lose faith in the buy-to-let property market.
Above everything else - PERSIST
Peter uses the Buy, Refurbish and Refinance model, which allows him to add value to a buy-to-let property before taking the money back out before reinvesting in another project. This is certainly an effective model, but there will always be times when a property investor loses faith and struggles to keep going. These are the times when Peter urges you to keep on going with persistence, focus and a plan.
Peter said: “These times demonstrated to me the power and importance of having a good business mindset. When I encountered struggles there were numerous times when I could have given up, but I had something inside me that knew I could make things work, so I persisted, and here I am”.
Property is about a lifetime of persistence. If you follow the right systems, after 5 years you’re likely to be doing well. In 10 years, you’ll be killing it.
Property investment is non-linear
Property is rarely easy to predict, which is another reason investors have crises of faith and sometimes wonder whether they should drop out of the game. However, if you have a target of 12 property purchases in a single year, you probably won’t secure 1 per month in a neat, symmetrical, consistent way. You might find that you don’t make any purchases in the first 4 months, or even the first 6. You might have a rush early on in the year, and then buy no more until the very end. You might make all 12 purchases in October and November.
This is simply a fact of the property market, and it is only after several years of having stuck to the process that you can easily recognise the progress you have made. Remember: historically, the most common reason that people have landed on the rich list isn’t because of tech unicorns such as Uber and Facebook – it’s due to succeeding in the property market.
Things progress more rapidly if you lay stable foundations
In 2000, Peter had 8 properties and felt that he was building momentum – but then he hit a bump.
The bank told him that they wouldn’t be lending him any more money, but that if he was still in property after another year they would begin lending to him again. Peter felt that he wasn’t very lendable at the time, so he went to a few banks and valued his properties in order to get some cash back on them. It took him about 10 months to get any cash together, and ended up with some mortgages that weren’t on the best terms.
After a year, his original bank became available to him again, so because they had the best terms Peter refinanced everything with the first bank again.
If you are in the buy-to-let property market for long enough, you are going to encounter problems and have a year (or more!) when you feel like you are not progressing. However, because of Peter’s firm foundations in the buy-to-let property market, three years after that little bump he was buying and selling portfolios!
Only sell if you are going to use the profits more efficiently
No two properties will ever work the same, and, despite the fact that you should generally aim to hold on to your properties, there will always be times when you will prefer to sell them rather than persist with a property that is causing more hassle than it is worth. For example, at one point Peter had a single property that made up just 1.4% of the portfolio, but felt like it was taking up 99% of his time!
Just bear in mind that the rise in property values is often only clear after a cycle or two. I’m now getting to the point, 11 years in, that I’m seeing that some of my properties have doubled in value! If I’d sold some of these a few years back, I’d be facepalming right about now.
If you would like to dig deeper into property investment systems, you can find the book Multiple Streams of Property Income here
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