So you think you have no money to invest with?

One of the biggest problems that I hear from people when they start investing in HMOs is that they don’t have any money. They think that they can’t invest or do rent to rent or do anything. They feel completely stuck. 

The biggest problem that they have is NOT that they don’t have any money but that they don’t know how to find money. In fact many people who say they want to start investing DO have money! They’re nervous and fearful about using it to invest with. It’s their pension, or savings, or back-stop. So they start by thinking that the only way they can invest is by using other people’s money. 

I love using other people’s money. In fact it was only by using other people’s money that I grew my business from two to over twenty HMOs. But I realised that in order to put my money where my mouth is I had to start by using my own money; my own resources; my own confidence.

If you have resources that you’re not willing to use, because you’re fearful and don’t really believe that what you’re doing is going to work, do you think an investor will be willing to work with you?  What money do you already have that you’re not prepared to use yet? If you’re not prepared to use your own resources, that demonstrates a lack of belief in what you’re doing. If you don’t believe that you can make money should you really be using other people’s money with which to invest? 

Until you funnel ALL your resources into getting your property business off the ground you probably won’t ever become investible. This is a huge mindset shift for most people, but it’s so important. You need to be totally committed if you’re going to make investing work. You have to take risks (which yes, you must identify and mitigate) and you must be prepared to give it 110%. If not 200%! Obviously doing the deal analysis, sourcing the right properties and doing the necessary foot work is also part of what you give. But you MUST use some of your own financial resources too.  

If you do believe that you can make money in property and you’re prepared to take the risk first step is to find and use your own money. Where do you find the money then? 

  1. Old savings or bank accounts that are sitting lying dormant 
  2. ISAs and other investment accounts that are giving a lower rate of return than you could make with an HMO
  3. Using your pension. Not all pensions can be used to invest in property but some can, and this is worth investigating
  4. Saving with your hard-earned cash. If you can’t make cutbacks and budget and save each month, you cannot look after money. If you cannot look after your own money you will never be able to look after someone else’s.
  5. Remortgaging your house
  6. Selling stuff you no longer need on ebay to make some cash. Selling other people’s stuff when yours is all sold
  7. Set up a car wash business, dog walk business or cardboard box collection business (yes I do mean used cardboard boxes. Think of all those deliveries that fill up people’s re-cycling bins so there’s no room for anything else). Charge a reasonable amount, do it regularly and leverage your time using other people’s skills. Save the money, use it to invest in property.

What else could you do to find the money yourself? How do you feel reading this? Do you think I am off my rocker?!

Raising Finance for your HMOs

I could write a lot here about the HOWs of raising finance. (In my latest book there is a whole section on this – so grab your copy now – www.epfop.co.uk)! 

But I don’t really think that it is the HOW that is the problem. There are two areas that influence us MUCH more with regard to raising finance:

  1. Internal beliefs
  2. External context

As Henry Ford (apparently) said ‘If you think you can, or you think you can’t, you’re right’.

How is it that some people have investors lining up to work with them, and yet some of us, despite having good deals (even average deals), find it SO hard to raise person-to-person finance?

With mortgage markets getting more regulated every day, and products becoming more refined, there are also many more challenges to getting commercial finance.

So we are facing two problems – getting mortgages from banks and getting money from investors. And as we all know, without liquidity we cannot develop HMOs (even if we are buying with ‘low’ money down).

Here are my tips to creating a pipeline of money for your deals:

  1. There are amazing stories of people who have gone out and raised £150k for their first project from an investor. Yes that does happen. In my mentoring group, one lady did just that with NO experience. Amazing! But TBH this is the exception. Most people start by raising £20-30k from family and friends. Aim to start small. Just raise a small amount (although treat it like a large amount) and take it on a % return basis over 12 – 24 months.
  2. Build your confidence first. Speak to people you know, like and trust and share your hopes and dreams with them. Those that doubt you, stay away from – they aren’t ready to lend you money. Others who do want to help you and encourage you on your journey are the ones to focus on.
  3. Take some form of action EACH DAY. NO EXCUSES. Talk to one person you know. Put a post on Facebook about what you’re doing. Follow up someone from a networking meeting. Keep asking the question ‘ WHO do you know who …’ You’re action will create momentum and belief.
  4. Study money mindset. Work on your internal beliefs. Read about other people’s achievements in raising finance. Allow yourself to believe that YOU CAN DO THIS. When you find yourself disbelieving tell your mind it has got it wrong! If it can be done, you too can do this.
  5. You can only control your internal environment. You cannot alter the wider environment with all its facets. Be controlled about what you let yourself read, think and be affected by. Environment dictates performance. Ensure you spend 70% of your time (or thoughts) in an environment of success. (Not always easy if you are in a job you hate, or with a negative partner. They cannot control your mind though, only you can do that).
  6. Learn to be laser focused and the best in your niche (your area, your brand, your type of HMO).
  7. Study financial markets to understand just HOW VALUABLE your offer is to an investor. Understand the effect of inflation and QE on the value of money (and cash). And how (as Kiyosaki says) ‘savers are losers’. If you understand this, you can explain it. If you can explain it, you can educate people. When people are educated they start to see you have the answer to their problem (and will be much more interested in working with you).
  8. Create a CAPSTONE pitch (I can tell you more about this if you wish). There’s an infographic uploaded to the group you can read that tells you more.
  9. Keep getting better every day. Engage, read, learn, listen, look.
  10. Get your paperwork right. (Tomorrow I’m going to share ‘How to be Mortgage Ready’). If you get organised, then bank finance will be much easier to come by.

Do you have any other thoughts? How do you feel about raising finance? Nervous or excited?

If you want a FREE copy of my new book (just pay P+P) go to www.epfop.co.uk

The Rules Of Money to Live By

I have discovered that just like any other energy form, money has its own rules. When you defy them, you don’t have enough if it. When you fulfil them, you have more than enough. Here are my thoughts but I would value yours too!

1. Money likes flow – what does that mean though? It means that you need to think of money flowing through you. It comes in, and it goes out. As you make it, you spend it, invest it and use it. It is not there to be hoarded. It is a gift and an energy which needs to move to increase.

2. It likes to be used and leveraged in a structured and managed way. If you don’t have a handle on your money you will lose it, and won’t be able to make more. Every month you should assess your personal expenditure against your income and make sure you keep at least 10% for saving. This is not a pot for long term saving but for investing. Never spend more than you earn.

3. It needs to be backed by an asset to be properly magnified! That’s why property is such a powerful compounding tool. Always invest against an asset. Whether that is a fixed asset like property, or a paper asset like stocks and shares. Property is better as you can leverage far better.

4. It comes to people who can manage it and show diligence, competence and discipline. Decide today to raise your investment game by managing money better. Save some, invest a lot and spend as little as possible on wasted items and fripperies.

5. Your gearing (amount you borrow against the asset) should be based on four things

1) how much risk you are prepared to take

2) your long term view about your involvement in the asset (ie: when and what is your exit strategy)

3) how far your cashflow will be reduced and whether that is acceptable to you, and

4) the cost of borrowing.

If you can borrow at a much lower level than you can make (at least 10% difference) then it’s often worth taking the borrowing. Example: Your return on an HMO is 15% yield, and your borrowing is 4%. The difference is 11%. Therefore it’s worth borrowing the money.

Your cashflow after gearing should be double the amount of the cost of borrowing. Eg: Your mortgage amount per month is £476. Your cashflow (profit) should be £952.

6. It grows when you add value. Property is a people game, as such it needs you to be a people person! It’s not about bricks and mortar, it’s about solving as many people’s problems as you can. You do that, and you’ll get rich. You are already wealthy. You just now need to manifest it through the zeros (added to the numbers) in your bank account. But remember – keep it flowin’ and you’ll keep it growin’!

What do you think? What have you learnt about money as you’ve been investing in property?

If you have any questions about investing in property, or want to know about Houses of Multiple Occupation please book in a FREE half hour call this week: https://fwfozt-free.10to8.com

After that, I’m on holiday!

Why you have to take a leap of faith at times!

In life there are many times when you cannot determine the outcome of your actions. You cannot see the final results that will be achieved by what you decide today to do, or not do. You might be able to guess at your results by looking at other people’s outcomes who have taken the same action, but even then there are so many variables, it’s impossible to determine with certainty that you will get the same results as them.
Where does that leave you? One path of action would be to find out more information. To analyse your potential strategy in more depth. To minimise the risks of failure.
Another action would be to look at people similar to you and see how they got the results you want. How did they overcome some of the same hurdles you might have to jump? Another action is to wait a bit longer, and see whether things will improve by themselves. You might win the lottery after all, and then all this planning and action taking could be a real waste of time couldn’t it?
Or what you could do is make a commitment. A decision. Today. To change what is the BIGGEST issue in your life. Today. Whether that is lack of money, being overweight, a dysfunctional relationship, not getting enough sleep, not reading enough or smoking and drinking. The only thing you need to do is make a PROPER decision. Not a half-hearted ‘maybe’. Not a procrastinator’s ‘Will do that when …..’ But a true, decisive YES.
Today I commit to …… getting out of debt in a year; losing half a stone; stopping seeing x person; going to bed at 10pm; reading a book a month; quitting smoking and drinking. Today I commit to being the best person I can be. I commit to finding deals and finding money so that I can invest in property and in (2, 3) years time (you decide) leave my job.
There. That’s it. You’ve done it. Now you have to just do it. Nuff said.

Taking leap of faith

Photographing your HMO rooms!

When your HMO is completely ready and fully dressed, set aside some time (or pay a professional) to take a full series of photographs, detailing all aspects of the HMO. Effective property photography involves a little planning, time and applying the right techniques to get the best results. Photos should sell your listing and help to create a story. They need to show the property in the best light and appeal enough to get tenants to visit in person. Here are some common mistakes to avoid, plus ways to fix them to ensure your listing stands out from the competition. Here are ten tips to ensure that your photos show your property off as aesthetically as possible.

  1. Use a DSLR camera. The biggest error many agents and landlords make is using poor quality images. Especially with low-cost listings, many agents think it is acceptable to use grainy images, which often results in room voids. Property advertising requires high quality images. Smartphones and basic point and shoot cameras just don’t provide this. To get the images required for effective marketing, you need to use a DSLR camera. Research shows that listings shot with a DSLR camera gain more interest faster than those that were not. Learning how to take your own photos isn’t hard, it requires the correct equipment, some practice and knowing basic techniques to get started.
  2. Attach your camera to a tripod. Hand held cameras are great for taking spur of the moment pictures, but a tripod will give you the stability to take clearer, sharper photographs.
  3. Switch on all the house lights. Even during the day, having all the lights on in the property will instantly make it look warmer and more appealing. Switch on all bedside lights, draw back and straighten curtains and blinds, and turn on any ensuite lighting. Lighting makes a huge difference to the appeal of an image. If there isn’t enough light then the photo will appear dark and grainy, too much light and the image will be over-exposed, reducing the amount of detail visible.
  4. Avoid reflections. There is nothing more unprofessional then flicking through images of a listing and seeing a reflection of someone in a bathroom. All good photographers have the skills to avoid getting their reflection in a shot and this also includes the reflection of a flash and the camera. Try using different angles in a room that has reflective surfaces, like kitchens and bathrooms, to reduce the chances of getting caught in the photo. Sometimes it isn’t possible to completely avoid a reflection, especially in small, tight spaces. All you need to do is take your photo as normal, then use an image editing service to remove the unwanted reflection. Sometimes it’s impossible to avoid catching your reflection in an image. Another suggestion is to set up the shot using the self-timer on your camera, then step out of the room.
  5.  Use lighting equipment. Dark corners don’t do an HMO any favours online, and simple lighting equipment will help you illuminate them. A flash will help, as will a reflector and even a light stand.
  6. Use a bubble spirit level. To prevent your pictures looking wonky, use a bubble spirit level to ensure your camera is perfectly angled for each room.
  7. Take exterior shots in the morning. Getting up a dawn isn’t everyone’s idea of fun, but it’s the ideal time of day to get the best photographs of the outside of a property: dawn light is better and there are fewer people around.  Watch how the light hits the property. At different times of the day, and at different times of year, the light will change how the house looks.
  8. Process the images. Processing helps to soften, sharpen and generally tidy up any imperfections. Using online tools you can sharpen, blur, soften and lighten shots, adding to the quality. Be selective in the images you use, and only include those that show the good features of the property. All the images used should tell a story and add value to the property – you want to show off as many features as possible in the most appealing way
  9. Take a photography course. If you plan to take your own photos and know your skills are not up to scratch, there are photography courses run at adult education centres all over the country, and are the best place to start learning about taking better pictures.
  10. Use the services of a professional photographer. Good quality photos can make the difference between your rooms renting quickly or not. With a one-time investment in professional photographs, you can re-use them each time you come to let the property. Even if your agent offers to take photos, I would still recommend you take a series of your own. Then you can decide which ones are of a higher quality for advertising purposes.

For more fabulous tips please come along to one of our brand new ‘Get To Know HMO’ events – see the website for more details:

www.hmosuccess.co.uk

How to FUND your HMO Project!

You’ve heard the phrase ‘ Money Talks’ no doubt. But if all yours has ever said to you is ‘Goodbye I’m off’ then you’ll know that making money from property is not as easy as it looks!

Funding your project is often the hardest part of the system unless you know what you’re doing! If you’ve FOUND a great property but have no money to buy it or develop it. you are well and truly STUCK.

Here are some of my top tips for ensuring that you DON’T GET STUCK without money when you are investing in HMOs…

1) Your money mindset is the most important part of the process.
If you believe, trust and TAKE ACTION, you can raise as much money as you want to. I know this may seem a little airy fairy, but trust me, I have worked with many people who say that the difference between being wealthy and being broke is what is between your ears! Not what you can do, your background or your education. It is purely how you THINK and ACT that makes the difference.

2) Create a clear budget for what you need.
Purchase Price – £140,000
Refurb costs – £50,000
Legals – £700
Stamp Duty – £4,500
TOTAL = £195,250
It looks like a lot of money doesn’t it? But how about if you break it down and challenge yourself to raise each part, bit by bit? (In reality most of this will come from your investor but it’s a great challenge to get lots of little pieces and put them together).

3) Do the maths on the project
How many rooms will you create: 6
How much will the monthly rent be on average per room: £600
Total Annual Rent: £43,200
With those figures you can work out the Return on Investment for your investor, your yield and the possible re-valuation at the end. It’s not an exact science as there will be voids, maintenance and so on. The key thing is to understand the maths behind it, so that you can give your investor some rough ideas as to their return.

4) Create a compelling reason why your investor should work with you
This might be because of your personality, your work experience, or your relationship with them. It is very rarely just about property investing experience or money.


5) Network and learn continually.
You are always pitching, whether you realise it or not. Your social media, your emails, your meetings and your networking say a TON about who you are. Make it great and make it memorable. People will fall at your feet to lend you money!

Multilet Income Multiplier Event
If you are dribbling to know more(!) I am leading my VERY last Multilet Income Multiplier event next weekend – 17th and 18th November at Crewe Hall in Cheshire. It is a fabulous hotel, and I’m even gonna take you out for dinner on Saturday night!
The event will cover everything you need to know to set up, scale and systemise your HMO business and is the very last one I will be running. As this is my last event, I am offering a very special rate for the last few seats I have available.
Just £499 plus vat for your ticket to this amazing weekend experience.
If you would like to know more, please click here https://goo.gl/6kERgs for full course details and information about what will be covered on the two day event.

Connected Tenants

Like water, tenants expect broadband to be on tap and in full flow 24 hours a day! Sign up for the highest quality broadband service in your area. Even if it’s slightly more expensive, having unlimited superfast broadband will not only attract tenants but will help keep them too. Order it early as it can take a few weeks for the delivery of the router, and the line to be activated. Choose a suitable location for a shelf where the router can be placed and kept safe from tampering. Unless there is already a power socket nearby, have one fitted. Once fitted, use a Speedchecker App to test that the download and upload speeds are in accordance with the speeds advertised.

Future Proof

If you can demonstrate an ability to find, finish, fill and future-proof your HMO investment, you will discover that you become a fascination for financiers! Investors across the world are looking for secure, high yielding investments, and HMOs are no exception. I have completed many deals where money has been left in the deal – but it’s not been my money! Giving an investor anything from 7% return upwards is very attractive when banks can only return 1-3% at best. Your track record and ability to systemise and professionalise your business will be the key to creating an investible opportunity. Investors will be fascinated by you, fish for more information from you, and follow you. You therefore need to facilitate a way you can enable a favourable result for you both

Audiobooks Offer

I started listening to Audiobooks about 3 years ago and at the time I was a little dubious about whether I would benefit from listening as much as reading a book. Being a visual person, I can get completely engrossed in a page of text, in a way that I thought wouldn’t be possible with an audio version. How wrong I was! I now find that whenever I’m in the car, cooking in the kitchen, or doing odd jobs around the house, I LOVE listening to audio books. There’s something very satisfying about completing a real, whole, complete BOOK (which believe me is a real achievement with four children) in the course of a month, over and above any ones I’ve also read.  

As well as being a fan of audio books, I am also a fan of Audible – the Kindle app that allows you to buy a monthly subscription and then take your pick of thousands of titles. You simply download and enjoy! There are so many topics to choose from – from investing, to property to HMOs (yes mine is also on there surprise, surprise) to cookery to yoga.

If you haven’t yet experienced the delights of Audible, I have a VERY special offer – if you join Audible this month, and buy my book ‘101 Essential Tips for Running a Professional HMO’ and download this as your FIRST Audible purchase (only about £4), I will also send you the paperback version ABSOLUTELY free! Just screenshot your purchase (or send me proof in any way possible) and your name and address, and I will pop a copy in the post to you! That way, if you decide not to keep Audible you can still keep my book. Happy listening! https://goo.gl/jpGwxM