financial advisors. That’s because they don’t make large fees out of your money, when you invest in a few properties.
1.Building up a property portfolio is simple, not always easy, but always fun.
2.Property prices have doubled every ten years for fifty years. The British like to own property and property prices never collapse like the stock market. Even in 2009, after the fall of the last two years, those who bought at the end of the last decade are still seeing their property worth twice as much as the price they paid for it.
3.Your property portfolio is run by you, the budget is controlled by you and not handed over to some stranger to play with, who then keeps the largest part.
4.Your profits from your property portfolio are not savagely reduced by management costs, which can be 40% of the money you pay in each month into a stock market pension plan. You know exactly from your own budgets the extent of your ‘management’ costs.
5.The running costs of your investment properties are dramatically reduced by the income from your tenants, so that your monthly outgoings are normally far less than paying premiums into some stock market pension fund.
6.When you finally sell any of your properties, all the profit comes to you and stays with you; it’s not kept from you and dribbled out to you with a few pounds each year.
But there is one point above all other points and it is unique to this form of investment. Property is all about leveraging. I don’t mean to cover detail points in this Introduction, but I must remind you of the unique joy of being able to buy something with only a down payment.
When you come to create your own 3+1 Plan, all you have to put up is the amount which a lender will not give you. It could be 10, 20, 30 or 40% depending on the market conditions, but a lender will always put up over half.
This is an extraordinary advantage. If you buy £10,000 of shares, you pay £10,000. If you put £10,000 into a savings account, you put in the whole amount. If you put £10,000 into a new company, again you put in the whole amount. If you put £10,000 into a pension plan, the government will add to it, but then grab it back at the end and tax you on your annuity.
What this power of leverage means is that you can buy, say, a £200,000 property for anything from £20,000 upwards, depending on the mortgage market at the time. The lender granting you a mortgage will pay the rest.
And, you know, there is another extraordinary benefit to you. When you decide to sell one day, the Lender doesn’t want a share of your profit. You take all the profit; he just wants his loan back.
Successful investment is all about leveraging, and only property investment has that beautiful bonus.
Take an easy example. You buy a £200,000 property with a 70% mortgage. You therefore put up £60,000. Ten years down the road it doubles in value to £400,000. You have all the equity, so you can receive all £400,000 from a sale. You just pay off the loan of £140,000, and you net £260,000.
Renters have paid your interest costs to the lender and you have over four times your investment. 400% return: where else could you get that amount of profit?
Are you convinced? I hope so, but some of you may still have some concerns, because changing your future financial plans into property and away from pension plans or the stock market is a serious decision.
Before you read the rest of this book, before you begin to create The 3+1 Plan for yourself, I want to try to answer any concerns. I don’t want you to start the book with doubts, I want you to be clear, here and now, why I am suggesting that you will find your answer in my plan.
Let’s take the points one by one.
1.I don’t like being in debt. Absolutely right, but this isn’t bad debt, this is good debt. This is not a consumer debt that takes money from you; this is a debt that is paid by somebody else, in your case a tenant. This is a debt that is covered by income, not a debt that takes money from your bank balance.
2.I wouldn’t know what to buy. You can learn that in a later chapter in The 3+1 Plan and how I can help.
3.If I buy at the wrong time, my property might crash. Of course it can, but it doesn’t matter. You are making a long-term investment and the market will catch up at some point. You are not putting your money in for a quick profit; you are in for the long term.
4.I don’t know the people to look after my investment. No, but I do. Lawyers, accountants, property managers, mortgage brokers, property managers and bankers are part of my service. Even if you don’t use a service like mine, the high street is filled with people who can manage your investments for you.
5.I don’t know if I have enough money to buy another property. You may well have it, but don’t realise it. Remember that you only have to put up a small part of the total price. Remember, also, that you are planning to have your annual mortgage and running costs paid for by your rental income.
Once you start reading The 3+1 Plan, you will see how easily it can be done and how well it can be organised, so that you do not have anymore worries.
The rise of the buy to let market in the UK has made a property portfolio much easier to control and, although it has only been going here for a decade, it has already produced thousands of millionaires.
This confirms the remark made to me by the famous Robert Ki-yosaki, of ‘Rich Dad, Poor Dad’ fame, that the rich may make their money from shares or businesses, but, whatever its source, they hold their wealth in property.
Is it really easy to build up a property portfolio? The truth is ‘No’ at the beginning, but ‘Yes’ once you understand this market. This is why I have written The 3+1 Plan.
Everything in this book is about making it easy for you to start growing your property portfolio, without the day-to-day hassles of being a full-time landlord. The 3+1 Plan is a very clear concept and I support that with what I call My Set and Forget Philosophy. This gives you the attitude and strategies to ensure that you can live your life to the full along the way, secure in the knowledge that your future (and present) is in safe hands.
This book will show you everything you need to know, so you too, can achieve The 3+1 Plan, while being a Set and Forget Property Investor. Then, all you will need to do is decide how you would most like to enjoy your time.
You will be guided through my processes, procedures, structures and strategies for developing and managing a property portfolio. I will do this by coaching you with all my knowledge and experience. I’ve never lost money on a property deal, but I’ve had some hair-raising experiences - that’s where I often learned the most!
I am going to tell you a load of different stories, but I am also going to give you the basics of building a portfolio; real strategies, time-proven, not just the same old stuff on how to find the right property.
While the property is definitely important, the experienced investor doesn’t ignore the strategy and structure that they use to purchase and hold the property.
One thing I ask from you. Be clear from the beginning as to your
