“I know everything about property” said my London taxi driver last week…

 

Ever said that out loud yourself? Heard others say it?

It is fascinating just how many people in the UK believe that they “know everything about property”, including my London cabbie clearly. We are, it seems, obsessed by property. We are, it seems, all property experts.

Why? As much as I would like to blame daytime TV, I am pretty sure I can’t. It appears the majority of the UK population is born with a gene specific to these isles, the “property expertise gene”. A gene or a disorder?

Building a property portfolio is exactly like life: you gain your education one way or the other…that would be the hard way or the smart way. Eleanor Roosevelt once wrote:

 “You cannot live long enough to make all the mistakes yourself, so learn from the mistakes of others” 

I am with Eleanor and would add one more line when it comes to Property Investment: “because learning very quickly from other people’s mistakes ensures you all but eliminate any of your own”.

Why quite so important? This goes back to my question above: “a gene or a disorder?” If you could have been with us as we viewed a property this week you may have come down on the side of it being a disorder. A disorder that creates a kind of delusional blindness. This person clearly did not know everything about property!  You see property mistakes, which this was the very definition of, are generally very expensive. The chances are good that we are going to add a property to our portfolio that should be worth nearly twice as much as it will cost to take control of…as I said, very expensive!

Five ways to spot if someone has the gene or the disorder?

Wholesale vs Retail – you can have a lot of fun with someone that makes the “everything” claim by asking them if they understand what buying at wholesale rather than at retail actually means. The answer will tell you if they are an amateur or they are actually on the path to financial freedom via a property portfolio. Clearly the property mentioned above will be bought wholesale, just as the deals I covered in the blog earlier this week: https://christopherpomfret.com/2016/12/15/an-8-return-inside-12-months-is-that-realistic/

Strategy/Area/Deal – it has to be in that order, getting it out of order would be like making a cup of tea by putting the teabag, milk and then the water into a kettle and turning it on to boil. A professional will have it clearly defined: income, cash, park or a combination of the three. They would know their geographical area and almost never be pulled beyond it. They would know what a deal means to them.

Buy to demand/Let to demand – it might seem obvious but buying a great property that ticks all the boxes, but isn’t going to either sell quickly or let quickly will annihilate a really good plan. How do you buy and let to demand? Think about it, who is going to let the property? An amateur wouldn’t understand the concept of a power team. The professional would have the property virtually sold or let – depending on their strategy – before they bought it simply on the knowledge of their experts on the ground in their chosen geography.

Buy with your calculator not your heart – the figures are always the deciding factor. When a professional builds a portfolio they do so with zero emotion until the purchase has been completed. Ask the one who knows “everything about property” if they have ever bought with their heart, the answer will tell you plenty.

Make your money when you buy – this is  actually the deciding factor and another perfect chance to have fun with the amateurs. If they do not understand exactly what that statement means and how the Six Month Rule is critical to the success of this plan, then they have adopted a strategy that Robert Kiyosaki calls BUY, HOLD, PREY! This part of property knowledge is fundamental. Without it there is no guarantee any property portfolio will become a long-term asset and what amateurs are finding right now is they have built themselves portfolios that have become painful and very expensive Liabilities! Think about it…BUY, HOLD, PREY is a non-strategy!

Is there really a basic strategy to building a property portfolio? 

Yes! Just like most things in life – Black Jack included – there is a basic strategy to this. How do I know this? Just like most things in my life – Black Jack included – where there is money at stake, I went out and invested in the best education. There is no doubt that knowledge really is power in the world of property and if you want to swing some of the power your way by finding out more on the basic strategy – that is property not Black Jack – then you know what to do! As ever, your comments on the blog or your feedback via email are gratefully received: thinker@christopherpomfret.com