608: Focus on Property Rather Than The Media Scares
Distractions: There have been so many distractions for property investors in the last few years in the external environment, it’s been difficult for many to concentrate on the job in hand – namely making high returns from property investment.
Let’s list just a few:
• Brexit – all the media angst
• Government – the back stabbing in all parties with a focus on ministerial bickering in the Tory party plus Labour party divisions from the far left to centre left
• Trump – and his Presidency through Twitter, firings and threats
• North Korea – threat of a nuclear war
• Syria-ISIS-USA-Russia – the power struggle in the Levant region
• Iran – a constant thorn in the side of the USA with constant tensions
• Terrorism – frequent attacks in Europe – including London-Manchester
• China – South China Sea and Chinese ambitions to usurp USA as the most powerful economy in the world
History and Wars: To put this into context, in history there have been constant wars in different parts of the world, and arguably the amount of people getting killed in wars today is less than it’s ever been as a percentage of the overall global population. With regard to terrorism in the UK, you are 100 times more likely to get killed in a car crash than being killed in a terrorist incident.
7 Billion People – You Don’t Control Them: Another consideration is that – there are 7 billion people in this world. Its rather arrogant to think we can all individually control this huge populous or influence to any meaningful extent being mere property investment mortals. Remember, it’s not our job to govern, be political or save the plant. We can do our bit, but ultimately don’t feel too guilty about an atrocity happening on the other side of the world five steps removed from any influence you might have. Turning things around – if you feel very strongly about all these above issues in the world – then maybe you should stand as an MP or lead an NGO for a living and forget property investment. You could combine the two though your property investment is likely to lack focus which would naturally damage sustainable investment returns.
Time is Money – Emotion and Energy: Hence – the purpose of describing all of the above is for you to get more comfortable about discarding these things as much as possible from your thoughts – since the time and emotional energy thinking-considering all of these things on a day to day, hour by hour basis will damage your chances of achieving a successful property investment business. The more emotional energy you give to the world’s problems – the less you will have for your property investment portfolio and managing your business. Take care of your business, not everyone else’s!
Local Make Money: Ultimately property investment is done at a local level. It brings local benefits to yourself and your family. It brings local benefits to tenants – providing a high quality valuable service. Its very much to do with improving the local environment where you are investing or close to where you live – or even the property that you live within.
Local Businesses: Most millionaires make their money from local investments, local businesses and focus on providing an excellent service whilst adding value to their business or portfolio. You need to focus on this, not what is happening on the other side of the world. If you become intellectually drawn in to the global debates – you will be taking your eye off the ball with your property investments.
News flow and Media Hype: With the exponential increase in media news flow and every larger data streams, one can spend all day monitoring what is going on in the world – but ultimately you will take you eye off the ball – which is investing successfully at a local level. Media want to “stop you dead in your tracks” so you read their articles and also buy the products being sold with their adverts – they make money out of eye catching articles. One could argue you are the sucker for spending hours a day being pulled into this.
Property Investment Has Not Changed: For centuries, property investment has not really changed much and it’s not likely to change that much in the next 30 years either. It involved purchase of land or property, adding value to this asset, this is either through renovation, building or extensions, renting it out for an income stream and/or selling it. Then repeating, simple. You don’t need to be a rocket scientist. Governments can print as much fake digital currency as they want – but if you buy and house today, it will be worth one house in ten year’s time. It does not deflate in bricks and mortar terms – it may inflate or deflate in currency terms only. It is a hard physical asset that you can touch, feel, use, live in or rent out. It has utility. It is useful. Everyone well always need to live in a home. Homes hardly change with technology. We challenge anyone to dream up a way that in the next 40 years – people won’t need or want to live in a home-house. It’s one of the few things that technology cannot disintegrate – technology cannot eradicate the need for a house – unlike PCs, oil, coal, many businesses, business travel etc. We don’t see people wanting to live in ever smaller properties in the future – its human nature to want space and a large home with a garden – or at least a reasonably spacious flat with the latest mod cons.
Stable Investment Class: This is one of the key reasons why property investment is such a stable type of investment class.
Millionaires from Property: The other positive attribute is that property is the asset class in the last 50 years that has allowed the bulk of UK citizens to become wealthy. Most millionaires made their money from property – not stocks and shares or other investments – many almost by mistake or without thinking about it too much as property prices have risen as the governments have continued to print currencies. People have being riding the inflation that government always create – they create inflation to create a feeling of growth.
Rich Propertied – Poor Unpropertied: It’s true to say the key reason why the rich get richer and the poor get poorer is because if you are motivated and buy a property – you avoid paying rent then the property value rises as shortages continue – you save money every month even if you have a mortgage. But if you prefer to rent a property – and may be spend money on holidays and cars instead – without the responsibility or taking the risk of owning a property – then you give money to landlords and property prices continue to rise and then you get “left behind” as the government inflates the currency and property prices rise further. Renting is also risky as you can be given notice at almost any time and this can disruption your life – especially if you have children. It would be interesting to name just one very wealthy person that only rents and does not own a property – if anyone knows that person, please email us! In summary – and rather regrettably for society as a whole - there are the monied property owners and the poor (or less well of) who don’t own a property.
Threat of Spending All Your Spare Time On Social and News Media: One of the key threats for the young people today is spending all their time on social media debating the finer points of society, politics, the environment and global wrong-doing – whilst everyone else is making serious money from property investing at a local level. Yes, these property investors are proud they are contributing to investment in their local area – keeping nice houses – improving the neighbourhoods. They are less likely to be spending all their time campaigning for the good treatment of Amazonian indigenous tribes 10,000 miles away for example.
Choices for Everyone: In a way, what we are highlighting is the choices people make – some chose no responsibility renting, lots of nice holidays, no saving, hand-to-mouth, spending lots of time on social media and debating the world’s problems – with the threat of becoming a “victim” of all the worlds ills. Then there are other people – who are motivated to invest, take financial risk, save, generate income and become wealthy by working at a local level and not spending all their time on holidays and social media debating the problems in the world. It’s your choice. One route leads to poverty or being less well off, the other leads to riches – wealth and ultimately financial freedom – with endless holidays if you so desire at a far later date after saving-investing.
North Korea Crisis: Finally, we are certainly not belittling the problems in the world at this time. Indeed the threat of a nuclear war - likely stemming from North Korea - has a higher probably than it has since the Cuba crisis in the mid-1960s. We have Trump. Kim Jong, Putin and the Chinese all flexing their muscles – some testosterone driven egotistic machismo that regrettable has quite a high chance of leading to war – let’s hope it doesn’t but frankly, we don’t think there is that much we can do about it at this time. We’d give it a 50% chance something monstrously bad will happen in the next 1-2 years - even if this is triggered by mistake. However, all the demonstrations and campaigning will probably not help.
Property Investment Tenets: So back to property investment – and regardless of whether property prices are rising or falling, as long as you are buying at below market value, renovating and improving – adding value efficiently, then renting out with a positive cashflow, you will prosper in the longer term. Just a reminder to always look for areas that are undergoing “positive long-term change”:
• New rail, tube, tram, bus, road, airport links
• Regeneration plans or actions
• Improving schools and universities
• Increasing private sector jobs and businesses moving in
• Improving communications links
• Lowering crime levels
• Central to attractions like theatre, cafes, restaurants, tourist attractions, shops
• Expanding population
• High or improving education standards
• Higher wage earners moving to the area
• Private sector dominating rather than public sector (the latter is likely to see further jobs losses)
Hot Areas: This is why we like London, Bristol, Bath, Oxford, Cambridge, Maidenhead, Stenfield, Slough, Reading, Southampton and Brighton – further north we see value in places like Derby and Manchester-Salford – with ripple effects out from London and Manchester city centres. Possibly Leeds – because it is a compact city with good university and a large commercial centre.
We hope you have found this Newsletter insightful. If you have any queries, please do not hesitate to contact us on