Now property is not complex, but it is multi-layered. So, as an investment tool, it can deem quite daunting to some.
You’ve got to find an area; assess demand; find a property; find the money (or find a creative way to structure the deal and decide on its best use); potentially apply for planning; find a builder; manage a refurb; manage tenants; manage the ever-changing regulation that goes with it all – there’s a whole host of things that have to happen within a property career, and there are really lots of elements to invest in, in property. To be an expert in every single one to the degree and the time required would just be impossible for most people or almost everyone.
So, the answer of course is to surround yourself with a great team: a team of experts who have specialisms where you do not. Your job is really to manage that team; to find them; manage them and keep them on track.
Now the mighty Steve Jobs once said that ‘great things in business are not done by one person, but by a team of people’ and that is so true in property. Even when you’re first starting out, one of the most important members of your team will be your broker, because they are the people that can plan whether what you have planned, is achievable.
So, we all need an exit when we buy a property. Now that might be that we’re refinancing it for rental, or it might be that we’re flipping it on, or that we’re changing the use of it and then going through a refinance. Your broker is the one that tells you whether that’s achievable for your specific position, then it will go on to the solicitor who might get that deal over the line; and then we’re talking to the builder who’s going to help you add value; we’re talking again to the broker and then we’re talking to letting agents.
There are so many different experts that come in and come out of the process, but you are the one constant, and it’s your job to get the right team around you and to manage that team and select it for the right project.
The one thing that’s really important to remember is that it must be a win-win for all of you. So, for example, if you choose a builder to work with because the quote was really low, you need to think about the profitability of it for both parties. If this job is not profitable enough for your builder to continue and finish, you will be left in a mess at the end of it.
So, make sure that when you are selecting your power team you are then going on to engage with them and that the relationship is a real win-win, because if there is no money in it for the builder, they will walk off site and you will be posed with a problem that is much bigger than actually choosing the right builder and the right quote at the first instance.
So do you need to be a builder to manage a builder? Well, the simple answer is of course ‘no’. It might help that you know a little bit about the process of how to refurb a house but then you can lean on your network to educate you. You can devise a process to work with builders that involves contracts and site inspections and site reports to help you through that process, but at no point do you need to know how to plaster a wall, how to put in damp course or any of those things. An appreciation? Yes, that’s going to help, but you don’t need to be a builder to manage your builder.
Now as you progress through development you might engage with other experts like quantity surveyors or with planning professionals or you might have project managers that come in and help you with some of your bigger projects.
You can already see that as we’re talking about building, we’ve thrown in a lot of different team members already. I often say in property investment that you have two jobs: find the money and find a deal, but actually I think there’s probably a third that is equally as important and that is: manage your team.
Managing your team is about recognizing that the builder that does your buy to let refurb is not necessarily the builder that does your HMO conversion, and they are again not necessarily the builder that you might use on your 10-flat development.
The team that you have around you will change now you might have a bank of brokers, you might have a commercial broker, you might have a residential broker, and you might have your ordinary buy to let broker. They will add value depending on the project you have in front of you at that time.
So, whilst we all like to build relationships and keep them, if the situation and deal means that you need someone else on your team, then it’s your job as the property investor to make sure that that happens. You need to get the right specialism for the deal that’s in front of you at that time. Your job is to be the puppet master of all of those specialists that you’ve brought in to make sure that they’re working towards the aim but making sure again that it is a win-win situation for everybody.
What do I mean by that win-win situation? Well for example if you have a HMO and you have a cleaner that goes in on a regular basis to clean your HMO, now they have an extra set of eyes and ears for you to keep an eye on your tenants, and to keep an eye on the property in general.
But, what else could they be? Well, if they’re cleaning for you as a landlord, then they’re probably cleaning for other landlords. So, tell them what you do and tell them that if they ever come across a landlord who is selling, that you could be interested and if you did find a deal that was direct to vendor as a result of a referral from a cleaner or from another trade, then make sure you reward that person. They’re a valuable part of your team and they will be motivated if it’s a win-win for them. So, if you do get a deal, just have a little cash bonus for your cleaner or for the trade that has referred you to that deal. It’s a nice way to do business and it’s a win-win for everyone.
To move up momentum and to take opportunity of all the deals that are out there you’re going to have to engage a great team around you from the network that you hang out with through professional experts like planning; accountants; solicitors; project managers; QS; through to cleaners; agents; builders; and even your tenants.
So, remember you now have three jobs as a property investor: you need to find the deal, you need to find the money, and you need to manage your team.
It’s amazing what you can accomplish if you don’t care who gets the credit.