is created to achieve these. You should also understand that I am not talking about buying and selling for a quick return.
The 3+1 Plan is about creating a portfolio that will enable you to have enough money, ten or more years down the line, to answer those original three questions which we asked ourselves at the beginning of the introduction. Then it will be time to fulfil all your dreams.
About the author
BRETT ALEGRE-WOOD
I thought that I should add a brief note on myself, so that you had some idea about me before you begin to read The 3+1 Plan, and hopefully, before we meet to discuss your own 3+1 Personal Property Plan.
I grew up in Australia, spending most of my early life in Melbourne, until my father - who was in the army - got posted to Brisbane. It was there that I spent most of my school years, until I graduated from high school and also chose a career in the military. I spent a year in the army full-time, and then enrolled in university to study international business while still in the army part-time.
It was only after leaving the army that I moved into the lucrative field of management consultancy. At a young age, I had a chance to work for many of Australia’s largest companies as a consultant and I very quickly learned that a high-profile job had very little to do with financial security!
My interest in property first developed in 1994, when I trained as an estate agent with a local entrepreneur. As an estate agent I realised that although there was an abundance of people interested in purchasing property, deals would often fall through due to lack of finance.
It didn’t take long before I met Peter James - one of my mentors - who was also an expert in mortgages and insurance. Peter runs one of Australia’s largest non-bank lenders. He inspired me to become a mortgage broker, and soon after, I had a successful mortgage business and was training mortgage brokers across Australia. This eventually led to being accepted into the State Committee for the Mortgage Finance Association of Australia (similar to the UK’s Council of Mortgage Lenders).
During this time, I began running seminars on ‘How to Build Wealth through Property’. I noted that the majority of people attending my seminars were there for a similar reason: they had also come to the realisation that they couldn’t rely on their pensions or their employer’s plans to set them up comfortably for retirement.
On top of this, on their moderate incomes, all the scrimping and saving to put every spare penny back into the mortgage meant that what should have been the prime years of their lives were being spent slogging away at setting themselves up for a not-so-bright future.
These people believed that there must be something more out there, a better way to do it. And they were right.
During my time in Australia, I learned how to buy property and renovate it, act as a landlord and listen to endless problems that would arise from tenants. It basically just felt like I had a second stressful job and I knew that I had to organise it in a quite different way.
Since then, in the UK, Spain and three other countries around the world, I have not used a single paintbrush, hammered a nail or knocked down a single wall. I haven’t dealt with sourcing tenants, or even worse, evicting them. I have bought only off plan and newly built property, each time with considerable discount and structured it in such a way as to require only minimal capital outlay.
Yes, I still have to pay my mortgages, ensure rents are received and pay the various charges, but, for the most part, my portfolio is in Set and Forget mode, explained fully in Chapter 2. I am free to live out my dreams and enjoy my life to the fullest, doing the things that I am passionate about.
I moved to London in 2002, initially to fulfil the typical Aussie tradition of backpacking around Europe for one or two years, while using London as a base - but I soon realised that there was a huge opportunity in property in the UK, an opportunity that still exists today.
In 2003, I published a letter to my investors explaining the current state of the property market in the UK and some of the tricks and sales tactics being used on people. This letter generated a huge amount of interest, and led me to the creation of my free Insiders Tips & Tricks weekly newsletter.
In 2004, interest had grown so much that I created my website, www.YourPropertyClub.com. Over 80,000 people now receive the newsletter and the contents of this book are the consolidated learning from all of those newsletters, combined with the practical experience of mentors, clients and my own experience.
In 2008, I married Arlene and we then bought a new home in Islington, London. In 2009, we had so many clients wanting to create their own property portfolios that I decided to begin expanding the business throughout Australia, Asia and a further five offices in the UK. I learned long ago that the time to develop your business was when others were panicking.
I also learned that a great time to build a property portfolio was when many people in the market were desperate to sell. By buying at depressed prices, you are sitting pretty when the good times return.
Welcome to the good times.
Important Note
HOW DOES THE 2008/2009 CREDIT CRUNCH AND RECESSION AFFECT THIS BOOK
I would be lying if I said I forecasted the full extent of the credit crunch and recession. In fact, I have yet to find a single economic commentator who predicted what actually happened. Whether anyone did or didn’t predict the eventual outcome, it actually doesn’t matter. As investors, we must roll with the punches as they come.
The main changes to the mortgage market for property investors during this time were:
•Loan to values dropped from 85% down to 65%, which meant you needed extra deposit to purchase a property.
•The interest rates on buy to let shot up from around 5% to as high as 6.5%-7.5% meaning that your monthly cash flow was affected, and they then dropped again to around 5.5%.
•Most banks offered fixed rates at this higher level which meant investors were locked into cash flow shortages for two or three years.
•Rent coverage which was as low as 100% coverage raced up to 125%. This wasn’t such a big deal because the loan to values had dropped sufficiently to off set this change.
•Finally, the Council for Mortgages Lenders (CML) made a number of changes, meaning that all incentives had to be declared to the lender. This limited cash backs, non-financial incentives and bridged deposit structures.
The most important thing about the lessons in this book is that some of the information may have changed by the time you read it. Interest rates may have changed, the market may have changed, loan to values may have changed, mortgage products may have changed, average prices may have gone up (or gone down). Regardless, the laws, principles, strategies and structures in the book will still apply: these won’t change.
For over fifteen years and in the three different countries that I have built property portfolios, the same lessons apply, despite the criteria having changed between countries and with the different market cycles in each country.
My advice is not to get too bogged down in the current property market. It will change. Focus on the lessons and learn to apply them in any market.
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