The 7 Deadly Sins of Property Investment ....

[Vanessa]

1. Arrogance/not sharing information: Thinking you know it all. The day that happens is the day you will fail! When getting involved in property, you should acknowledge that you are committing to life-long learning. As Nick and I like to say, you can never learn less and you can never know it all! Be generous with sharing your knowledge with others. A measure of a person is what he will do for someone who can do absolutely nothing for him! It's costs nothing to light someone else's candle from your flame of knowledge.

2. Treating tenants like a rent payment instead of a person: Tenants are our "clients". By paying their rent on time, and treating our properties with respect, they are allowing us to have a business and create wealth over the long term. As a landlord, you are a "service provider", and to be successful you must provide a high standard of service and accommodation. Tenants increasingly have a choice and they know it, so treat them with respect. You will only be a successful LL if your properties are fully occupied with happy tenants. Sounds obvious, but too many amateur LL just focus on rent payments, not the fact that they have to provide a service to the person paying the rent.

3. Not keeping up to date with government legislation. As a LL, you are bound to comply with certain legislation to ensure the health and safety of your tenants. These include Gas Sure certificates, EPC's, HMO licencing (where appropriate), operational smoke alarms, correct insurances, etc. By not keeping up to date with these, you are not only putting your tenant at risk, you are putting your business at risk.

4. Ostrich syndrome. Not changing with the times. Business is changing at a faster pace than ever before in history. We are in the era now of the linked economy. This has huge implications on your property business. To bury your head in the sand, and not recognise these changes, and try and change with them, may lead to the demise of your property business. Networking events and forums like this are great places to keep your knowledge up to speed and help you move with the times.

5. Not having systems in place to manage your business. LL's should have systems in place to keep track of each individual property in terms of mortgage product, cash flow, keeping tax records, etc. Failure to do this, will lead to problems down the line.

6. Absolving all responsibility to a third party. Whether it be to pay for a portfolio building service, hand over your properties to a letting agent, or pay for property deals, you MUST take responsibility overall for your decisions. Third parties generally do not care about your business or your money as much as you do. If you cannot be bothered to take responsibility, then don't expect others to. There is no such thing as an "armchair investor". It's your business, so take care of it, or face the consequences. "Get rich quick" mentality is one of the deadiest sins in property!

7. Not taking consistent and massive action. The only way to be successful in any business, is to take consistent and massive action. Many people pay to go on seminars and courses, and then never put the knowledge into practice. Other people start out with the intentions to build a portfolio or property business, and then give up at the first hurdle. The only way to success is by setting big, fat, hairy goals, keeping them in sight, and taking steps towards them every day.

What other deadly sins can the tribe think of?

[Mary Waring]

Really agree, Vanessa. The most important one I think is no. 2- treating your tenants with respect. So if a tenant calls with a problem about something not working you have to sort it straight away.
By keeping your tenant happy they stay longer, you have less voids and less admin costs. Everyone benefits.
Any LL who only considers the rent coming in & not providing a service will actually have high tenant turnover.

Mary Wating

[Richard Greenland]

Assuming that just being involved in property is a way to riches, because people on TV make it look easy. Assuming that hopes and dreams alone will do, without having to bother much about research, stacking deals, building relationships and trust, or an exit strategy.

Mistaking a large portfolio for a successful business. Why do people ask each other how many properties they have? It’s just d**k measuring. A large loss-making portfolio is a liability!

Rich

[Vanessa]

I think I need to add another deadly sin: GIving people bad advice. Attended a presentation recently where the advice was so bad, I found it shocking.

[Richard Greenland]

Large, highly-leveraged portfolios, I take it you mean, Roberta.

Could you tell us more Vanessa?

Rich

[John Corey]

#4 can happen when people get locked into one way of thinking. Maybe it is the owner occupant viewpoints that do not work when dealing with rental properties. Other times a person was running a successful rental business but the rules and regulations have moved on (multi-lets before the HMO regulations kicked in in 2006(?)).

You also have to leave your personal biases aside and think out of the box. I have seen people get all worked up about something being illegal or similar when the issue was their closed thinking. People make stuff up about what the law says when they is nothing there. Or they convince themselves that something is legal just because they want to believe it is true so they can chase the profits.

Keep an open mind, adjust to the changing conditions and DYOR so you know the truth rather than follow assumptions.

Assume - Make an ASS of U and ME.

John Corey
www.ChelseaPrivateEquity.com/blog
Follow me on Twitter -> www.twitter.com/john_corey

[Vanessa]

The brilliant Seth Godin has come up with another deadly sin in his most recent blog, this one being "Boring":

You're boring

Sorry, someone had to say it.

Your products are predictable. Your insights are recycled. You don't bring surprise with you when you enter a room.

That's why people are ignoring you.

Which used to be fine, because you could just buy attention for your brand or your company or your sales efforts. But that half-price sale on attention is now over.

The only path left is to lean out of the edge and become interesting, noteworthy and yes, remarkable.

[Rich Vincent]

Big, Fat, Hairy and Boring...charmed I'm sure and thank you for the compliments Vanessa. ;-)

Great discussion and here's my additions to this -

Due Diligence - without doubt this term is overstated and under used. Some believe they have done their DD when they've looked over figures and info written up by some else. That some one else usually being a beneficiary should the investor purchase the property. This really goes back to point 6 and Absolving Responsibility. Carrying out your own DD (research) is paramount. It's your money and should you purchase, it'll be your property, so you need to know Everything you possibly can about the property, not just how it 'stacks up'. Percentages mean nothing if the foundations are about to give way!

Strategy - this links with Vanessa's 'big fat hairy goals'. The goals being the outcome of the strategy you put in place. A strategy needs to include such things as where you're starting from, what you're starting with, financing your purchases, type of tenants you're aiming at, which in turn will determine the property your needing to purchase. Also an exit strategy/contingency plan needs to be in place should things take a different direction to the one you planned. These are just a few considerations when putting together you're strategy/business plan.

Purpose - this is a must have but how many people have even thought about this? Not many! You must have a purpose as to why you are investing in property, without purpose what is it all for? My purpose is 'choice', I have so many things that I want to do and achieve in my life, and building a successful property portfolio and business will allow me to do these things. I won't have the usual barriers such as lack of time and money and will have instead, the choice of what, when and where. So I suppose you could consider purpose as a goal but I look at it as the 'Ultimate Goal' that all other goals lead to and it gives meaning to your life at any point in time.

Anyway I'll stop right there, as things are beginning to sound a little deep on a relaxing Saturday afternoon and Julie keeps staring at me because I'm on here, when I've promised to leave it alone at a weekend. Ooops, I shall have to define my purpose for the weekend a little more! :-)

All the best,

Rich

[Vanessa]

Great additions Rich, thank you.

Well, you are certainly changing with the times and NOT being boring with Lincs Property Tribe! Well done!

L-PIN has had a re-vamp, or a refurbishment as we know it in the property world. The website has been updated, they've changed the name and even the format of the meetings will be different. It's fresher, modern, down to earth and dare I say has a 'Tribal' feel about it now!

Any tribe members in the Lincs area, please connect with Rich and support his property networking event. Nick and I have spoken/attended and it comes highly recommended. No sales pitches either!

Rich - please don't forget to add your event to the "Events" section so the tribe know when you are next gathering.

[John Corey]

Vanessa said:

I think I need to add another deadly sin: GIving people bad advice. Attended a presentation recently where the advice was so bad, I found it shocking.

Are you referring to the event we both attended recently?

If you want to start a fresh discussing I would be interested in hearing what you found shocking.

John Corey
www.ChelseaPrivateEquity.com/blog
Follow me on Twitter -> www.twitter.com/john_corey

[Vanessa]

Did you not find it shocking when the person concerned said words to the effect of ....: "Estate agents are numpties. They were probably working at Burger King before they became an estate agent. They hamper the process and have no purpose, so cut them out"?

Two things spring to mind:

1. That is a sweeping generalisation. Many estate agents are very experienced, have a lot of local knowledge, and can be a resource. They should be treated with respect like any other person. Their purpose in a property transaction is very significant - they are there to protect the interests of the vendor. The person concerned was talking about how to manipulate the vendor to agree to "creative financing". That is why the estate agent is vitally important, but for these schemes to work, estate agents need to be kept out of what is really going on and how the deal is being structured. That is more why this particular person wanted them out of the equation and to justify why, he belittled them rather than tell the truth.

2. If you can treat someone with so little respect, what does it say about you and what YOU are like to do business with? This person went on about creating trust, but everything he said pointed to the fact that he was not trustworthy at all! There were many discrepancies and inconsistencies in what he was talking about.

I also found that he made it all sound so simple --- go and have a cup of tea with the vendor. He failed to mention how many cups of teas you would have to have before getting a deal. What is the conversion rate? Do you have to have 20 cups of tea to get one deal? How much of your time would that take up, including travelling to and fro? Mostly a waste of time it seems to me.

If you just bought the property at the net price and put in a 25% deposit, none of this would be necessary. It's all about "fudging the system", taking the short cut, and that amounts to BAD advice whichever way you flip it on its head.

He also said that when vendors start asking you questions, that means they don't trust you, and you should not answer their questions, but refer them to "his team" to deal with. How can you expect someone to trust you if they are not allowed to get answers to their questions? I would have thought an indepth conversation with someone is one of the only ways to build trust.

There were other things that were wrong, but that's enough for me to know that no one should be listening to such nonsense. I hope Mary contributes to this, as she was there too, and I know she feels the same as me about what went on.

[Bruce Coker]

That doesn't sound so much like creating trust as convincing somebody to trust you which is a quite different thing. I find it axiomatic not to trust anybody who says "trust me" - they invariably turn out not to be worth it. IN no particular order, a few observations on trust:

1. Trustworthy people rarely need to shout about it; they demonstrate it by their actions

2.Trust, like respect, should never be asked for or demanded but earned through acting with integrity

3. The abuse of trust has a net negative consequence for both the trustee and the trusted party

4. The only thing you can ultimately trust anyone to do entirely is to put their own interests above yours (which is absolutely fair enough, just worth remembering)

5. Be wary before giving people a second chance. If you're going to do that you need a pretty strong reason to believe that the outcome will be different to last time.

[Vanessa]

You have hit the nail on the head. This person's whole presentation was as much about "convincing" people to trust him as it was about convincing vendors to trust you, not actually earning that trust through actions.

I, for one, did not fall for it, but I was definitely in the minority, bearing in mind the number of people who went up to sign up afterwards .... lambs to the slaughter springs to mind. I'll lay odds that none of them will ever get a property, but they will spend a lot of money trying to ....