Just to illustrate the extremes we read each day about interest rate and general economic predictions, I saw this prediction this week from an extremely well respected personality n the City, Gerald Lyons, who is the Chief Economist at Standard Chartered Bank
He firmly believes that, as a result of the Bank of England's intentions to keep on printing more money, and the fact that whichever party wins next years election will have to raise taxes and cut public spending, then rates will stay at today's rate until the end of The Governor of the Bank of England, Mervyn Kings tenure ends in 2013.
It does seemto be widely accepted by economists and commentators that rates will stay low for a long time. Time will tell if this is true but....
What does it mean if you are in property already?
Well, if you are in property already and benefiting from tracker rates on your mortgages and/or standard variable buy-to-let rates at low levels - it couldn't really be better news.
Many investors who have never really generated big profits from their portfolio will now start to do so. However, I am pretty sure that many will have a shock if they don't proceed with caution and prudence.
Firstly, when you show a profit, the tax man wants his slice. Those who are not used to paying the taxman a slice because they have never previously made much (or any) of a profit prior to today's low rates will have to prepare for that consequence. Its the downside of the situation.
The other thing to be awre of is that rates WILL rise one day - and they MAY rise above the benchmark of 5.5% - which was the rate in place when the credit crunch hit us - and is therefore the benchmark we should look to for future rises.
What if rates eventually rose to say 8%?
If those people who were say breaking even at 5.5% rates would then be losing money at 8% rates, then the message is clear. Raising rents consistently is one of the tools you can use to negate this - and is something I am very insistent on - but many landlords are either too scared or too 'lax' on this subject.
They should be using their current windfall money (as a result of low rates) as a cushion against an extreme change in rates. Inother words, money set aside for a rainy day!
Basic common sense really.
However if rates do remain low for the next 4 years or so, then no landlord who is today benefiting from low rates should have any excuse for not having a solid business with both very strong cash flow and good cash balances in their rental account.
Finally...if you are that way inclined, and money tends to burn a hole in your pocket...just dont go ut and order your Ferrari.... just yet!
Friday, 28 August 2009
Tuesday, 25 August 2009
keeping a good tenant happy
I thought that you might like to hear a story about a good tenant of mine - she has been my tenant for 3 years now - who had a recent payment difficulty which basically meant she couldn't pay me the months rent.
The lady in question has had a chequered job history and as a result she has very rarely paid me on the due date of the first of each month. However - she has always paid me before the month has ended. She causes me no trouble whatsoever and keeps herself to herself.
A couple of months ago, her cheque for that months rent (which was 2 weeks late as usual) was returned as 'bounced' by the bank. This simply meant that she was in arrears for £570.
How did I handle this?
Firstly, experience has taught me that with good tenants (I don't have any bad tenants by the way - my worst could probably be classed as 'OK') you should value them. I know of many landlords, who, if given an arrears situation, would threaten the tenant with eviction etc....not the smartest way to operate as far as I am concerned. Its best to think your approach through first - to suit that particular person. Antagonising a bad situation is not the wisest move - you need to have a plan in order to minimise potential problems.
I took the view that firstly I should speak to her in a civil and friendly - and hopefully understanding way..
I rang her and she was highly embarrassed and explained that she was temporarily 'in a fix' financially and was really sorry. She explained she could make next months rent - but as for this month she was going to have to downgrade her car and this would put her in a position to then be able to pay me the rent for the month she had drifted into arrears.
However, I made an on the spot decision.
I wasn't desperate for her rent monies, and I knew I would get it as soon as she could find it. I also didn't want her stressing herself out more by making a knee-jerk reaction to sell her car in order to find the rent. I therefore offered that she could spread the £570 over 6 months. Don't get me wrong - i would obviously have prefer ed the rent there and then - but by being party to her having to either downgrade, or even give up her car, even though it wasn't my fault - did not seem the right move.
She was delighted at this - but also a little proud to have to accept what she considered charity. However, we left our arrangement at that.
I was paid the following months rent on time, and yesterday morning I received a surprise cheque through the post for £570 - being the arrears in question, and a note to say she had borrowed the money off a close family member and would repay them over time.
She also mentioned how she was absolutely delighted that I had not turned against her when she was down - and that she would always remember it.
So, I consider that I have come out of this better than before the arrears situation. Fortunately for me, there aren't many landlords who would be so accommodating as I was. All I did was do the common sense thing - be patient and discuss a solution.
I know personally of many landlords who have a 'no messing' policy with arrears - they would have simply commenced proceedings against her without trying to sort out a compromise. this way, in this instance their would have been no winners.
Shouting and threatening the tenant would not have got me my money - so a different more understanding approach was required. I now feel that her estimation of me has increased - which in turn means that a customer of mine is probably more likely to stay renting my house than before.
The lady in question has had a chequered job history and as a result she has very rarely paid me on the due date of the first of each month. However - she has always paid me before the month has ended. She causes me no trouble whatsoever and keeps herself to herself.
A couple of months ago, her cheque for that months rent (which was 2 weeks late as usual) was returned as 'bounced' by the bank. This simply meant that she was in arrears for £570.
How did I handle this?
Firstly, experience has taught me that with good tenants (I don't have any bad tenants by the way - my worst could probably be classed as 'OK') you should value them. I know of many landlords, who, if given an arrears situation, would threaten the tenant with eviction etc....not the smartest way to operate as far as I am concerned. Its best to think your approach through first - to suit that particular person. Antagonising a bad situation is not the wisest move - you need to have a plan in order to minimise potential problems.
I took the view that firstly I should speak to her in a civil and friendly - and hopefully understanding way..
I rang her and she was highly embarrassed and explained that she was temporarily 'in a fix' financially and was really sorry. She explained she could make next months rent - but as for this month she was going to have to downgrade her car and this would put her in a position to then be able to pay me the rent for the month she had drifted into arrears.
However, I made an on the spot decision.
I wasn't desperate for her rent monies, and I knew I would get it as soon as she could find it. I also didn't want her stressing herself out more by making a knee-jerk reaction to sell her car in order to find the rent. I therefore offered that she could spread the £570 over 6 months. Don't get me wrong - i would obviously have prefer ed the rent there and then - but by being party to her having to either downgrade, or even give up her car, even though it wasn't my fault - did not seem the right move.
She was delighted at this - but also a little proud to have to accept what she considered charity. However, we left our arrangement at that.
I was paid the following months rent on time, and yesterday morning I received a surprise cheque through the post for £570 - being the arrears in question, and a note to say she had borrowed the money off a close family member and would repay them over time.
She also mentioned how she was absolutely delighted that I had not turned against her when she was down - and that she would always remember it.
So, I consider that I have come out of this better than before the arrears situation. Fortunately for me, there aren't many landlords who would be so accommodating as I was. All I did was do the common sense thing - be patient and discuss a solution.
I know personally of many landlords who have a 'no messing' policy with arrears - they would have simply commenced proceedings against her without trying to sort out a compromise. this way, in this instance their would have been no winners.
Shouting and threatening the tenant would not have got me my money - so a different more understanding approach was required. I now feel that her estimation of me has increased - which in turn means that a customer of mine is probably more likely to stay renting my house than before.
These situations to crop up from time to time - usually in relation, quantity wise, to how many rental properties you hold as a landlord. It is important that a potential new entrant - who is pondering entering into this business is not only aware of the potential 'hassles' that crop up - but just as importantly - how they can be negated quite easily with some common sense and understanding.
Monday, 24 August 2009
The same old dilemma
Today I had a call from someone who has decided to purchase my manual. The reason I write about them here is that they have the same dilemma that many people whom I have helped over the years have experienced.
What is this dilemma?
Well, its quite simple really. whilst they realise that by applying themselves long-term to property they can make themselves wealthy (as long as they do the important things correctly that is), they cant work out the way to leap frog from what they are doing now - onto property full time.
My answer to this is very simple. I explain to them that unless they have masses of ready cash to support them already, or have a substantial private income, then they will have to engineer their move over a period of time. Yes, this means probably overloading themselves a little for a while (for me it was 18 months until I could sell my business that was holding me back)
When I do explain that there is no secret answer, then, unless they want to be totally reckless and endanger everything they have by walking away form a steady, albeit frustrating day job, then they must start now...and be patient.
If they don't like the sound of that, then I ask them what the alternative is. the alternative is usually to carry on doing what they are doing anyway - which is something they hate - we've already established that by this stage!
So, why not at least carry on doing it - but with something concrete and real running next to it? something that will offer them eventual financial security some time down the line - and also the knowledge that they don't have all of their eggs in one basket by having to turn up to work every day to keep the boss happy and the bills paid.
When I say 'the boss', the boss could be, and quite often is - themselves. I get many, and today's new student was no exception, people who work for themselves - who simply hate their lot.
'Working for yourself', by definition, means you are a worker.....and a boss too...how's that...2 jobs for just one wage!
Not many employees would do that! I tried it once but soon worked out that it was a bad deal for me.
Hopefully, this may ring true with you as you read this?
Property is certainly not going to be a sure-fire easy ride to fortune. I can vouch for lots of problems and hassles along the way - but I figured that you get problems and hassle even in the most menial underpaid job anyway!
So why not start as early as possible on your get-rich-moderately quickly plan?
If you follow a proven course diligently..and have patience....you will be able to start to take control of your own future probably sooner than you think.
The first thing that people I have coached tend to report back to me is based around confidence. Once they are 'up and running', speaking to potential sellers and maybe even having found their first deal or two - they get that elusive commodity called confidence.
What is clear to see is that, even though they haven't made their fortune yet - far from it, they have the confidence to see that the system works over time. If you speak to someone who has 100 investment properties - they will tell you that there was a time that they had only one!
They (my students) are now in a position to visualise themselves doing well some way down the line. All this is a massive step forward for someone who has been sitting on their hands up to now and telling themselves why they shouldn't get involved!
Until next time.....
What is this dilemma?
Well, its quite simple really. whilst they realise that by applying themselves long-term to property they can make themselves wealthy (as long as they do the important things correctly that is), they cant work out the way to leap frog from what they are doing now - onto property full time.
My answer to this is very simple. I explain to them that unless they have masses of ready cash to support them already, or have a substantial private income, then they will have to engineer their move over a period of time. Yes, this means probably overloading themselves a little for a while (for me it was 18 months until I could sell my business that was holding me back)
When I do explain that there is no secret answer, then, unless they want to be totally reckless and endanger everything they have by walking away form a steady, albeit frustrating day job, then they must start now...and be patient.
If they don't like the sound of that, then I ask them what the alternative is. the alternative is usually to carry on doing what they are doing anyway - which is something they hate - we've already established that by this stage!
So, why not at least carry on doing it - but with something concrete and real running next to it? something that will offer them eventual financial security some time down the line - and also the knowledge that they don't have all of their eggs in one basket by having to turn up to work every day to keep the boss happy and the bills paid.
When I say 'the boss', the boss could be, and quite often is - themselves. I get many, and today's new student was no exception, people who work for themselves - who simply hate their lot.
'Working for yourself', by definition, means you are a worker.....and a boss too...how's that...2 jobs for just one wage!
Not many employees would do that! I tried it once but soon worked out that it was a bad deal for me.
Hopefully, this may ring true with you as you read this?
Property is certainly not going to be a sure-fire easy ride to fortune. I can vouch for lots of problems and hassles along the way - but I figured that you get problems and hassle even in the most menial underpaid job anyway!
So why not start as early as possible on your get-rich-moderately quickly plan?
If you follow a proven course diligently..and have patience....you will be able to start to take control of your own future probably sooner than you think.
The first thing that people I have coached tend to report back to me is based around confidence. Once they are 'up and running', speaking to potential sellers and maybe even having found their first deal or two - they get that elusive commodity called confidence.
What is clear to see is that, even though they haven't made their fortune yet - far from it, they have the confidence to see that the system works over time. If you speak to someone who has 100 investment properties - they will tell you that there was a time that they had only one!
They (my students) are now in a position to visualise themselves doing well some way down the line. All this is a massive step forward for someone who has been sitting on their hands up to now and telling themselves why they shouldn't get involved!
Until next time.....
Friday, 21 August 2009
Welcome to my very first blog post.....
Thanks for taking the time to read my very first blog post on my new web site http://www.propertyinvestmentcoach.co.uk/.
It is my intention to post on here regularly on issues which I feel may interest my readers. I will, as makes sense to me, be mainly bringing news and my views on the property market, and more importantly how best to exploit current situations, trends and legislation in order to increase your wealth. I will also share my experiences with you of deals completed and situations presented when handling and managing my tenants and properties.
I am also committed to ensuring that I offer to the reader all aspects of this business, and not just the glamourous side (is there a glamourous side? I ask). What I mean by that is that i will not, as some people in this industry do, gloss over the more mundane and essential aspects of buying, holding and disposing of investment properties that you have bought at big discounts to market value.
Some of you reading this may well have properties that you haven't bought below market value (BMV). In that case - congratulations on taking the move into this lucrative industry - but on the other hand I strongly suggest that from now on you certainly consider buying properties at much much less than they are really worth - this is how I can help you.
It is my intention to post on here regularly on issues which I feel may interest my readers. I will, as makes sense to me, be mainly bringing news and my views on the property market, and more importantly how best to exploit current situations, trends and legislation in order to increase your wealth. I will also share my experiences with you of deals completed and situations presented when handling and managing my tenants and properties.
I am also committed to ensuring that I offer to the reader all aspects of this business, and not just the glamourous side (is there a glamourous side? I ask). What I mean by that is that i will not, as some people in this industry do, gloss over the more mundane and essential aspects of buying, holding and disposing of investment properties that you have bought at big discounts to market value.
Some of you reading this may well have properties that you haven't bought below market value (BMV). In that case - congratulations on taking the move into this lucrative industry - but on the other hand I strongly suggest that from now on you certainly consider buying properties at much much less than they are really worth - this is how I can help you.
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