NOTE: This is a long post, so you can either read or watch the video, below.
John Wilson here and I wanted to come to you with a short message (well maybe not so short actually), addressing current events as they relate to the property investing world.
This is entitled: “How to Thrive as a Property Investor Through the Lockdown and Beyond...” and it’s intended for my property investor friends, and for my subscribers and clients, over at Property Investment Blueprint.
We’re still locked down here in Texas, as I’m sure you are in the UK or wherever you are. For us it’s no major change, as I normally work from home, and we normally have two screaming under-twos in the house anyway, so no change there! They’re over at grandma and grandpa’s today, hence the blissful silence around me!
Anyway, I went live on Facebook the other night about my more general thoughts on what I called “The outbreak, business, property, God and the coming Greater Depression...”.
You’ll find a link to that in the description or under this video, depending on where you’re watching this. And I do suggest you watch it, because it contains views and information that you’re not likely to find anywhere else (including in this video!).
Anyway in that video, among other things, I predict a coming Greater Depression, that will be worse than any in living memory.
More on that in a moment, but the bottom line is that there will be massive opportunity for investors on the other side of this lockdown, and as we go into the depression.
In this video, I’ll talk about ways that investors can survive and thrive through the lockdown. I’ll talk about ways to cope, and even increase your earnings if you are in serviced accommodation. And keep watching right to the end, as I have something special for you, to help you turn this lockdown into a time of learning and action, to prepare for the opportunities ahead.
But first back to “now”.
In terms of property investing, there are certainly ways for this to carry on in the current climate, although I am seeing things start to grind to a halt, especially where sale/purchase transactions are concerned.
I heard the other day that Registers of Scotland (the people who handle property titles) have shut down, so that basically makes buying or selling an impossibility. That is likely to happen in England too, if it hasn’t already.
But that doesn’t mean that you should stop everything, and eat Wotsits in front of Netflix for a month!
In terms of doing things remotely. Look, I’ve been doing business in the UK remotely from the USA for over three years now and you find ways to work. You adapt, you get creative!
If you can’t sign a document in person, use Hellosign or one of the many other online apps to do it instead.
If you don’t want to do a viewing in person on an empty property, use a lockbox.
If you want to see a property but can’t get to it, get the owner to send you a video tour.
Do everything you can do to lock down deals right now, with the proviso that they’ll go ahead when everything opens up again.
You can still talk on the phone can’t you?
You can still get the owner to show you round using Facetime, or Whatsapp video, or Facebook video or whatever, right?
This lockdown presents a massive opportunity, because while your competition is cowering in fear, or in front of Netflix, you can be locking down deals with no competition!
If you can’t get out to put up advertising, go online!
Advertise on Gumtree, use other local ads sites that you can find on Google, or use Facebook.
Respond to ads on Gumtree, look for signs of tired landlords and contact them.
Speaking of Gumtree, I had a call from an investor who responded to one of my ads for a Rent to Buy property I’m advertising on there.
The lockdown didn’t stop him! He’s still doing deals! So why not you?
He wanted to offer me an option agreement, and asked me to send him a video of the property, as he was based in Kent.
I almost wanted to let him have it, as I was so impressed at his creativity and drive. And we may still do a deal on something else that I have.
There are also going to be huge opportunities on the other side of this for investors -- whether new or experienced -- who refuse to curl up and retreat in fear. And now is the time to get prepared and educated for that.
People still do, and will need solutions, and if sales and purchases grind to a halt for a while, there is going to be an explosion of activity on the other side.
This glut of property coming onto the market could lead prices to drop for a bit. And you should use it as an opportunity to negotiate harder, and get better deals.
I think that with what we’re starting to see already, with people losing their jobs, is that we can’t rely on the system anymore, and when the crash comes, believe me, you won’t be able to rely on the government either.
So, if you’ve been sitting on the fence thinking I need to start my own business or I need to get into property investing, then NOW is the time to do it. If you’re not in the Property Investment Blueprint world already, then you can get started now by signing up to my free course at freepropertytraining.co.uk.
Remember this: historically, some of the biggest and most successful companies were started during times of hardship: General Electric, IBM, FedEx, Microsoft and many more were all started during recessions.
Uber, AirBnB, Pinterest, Whatsapp and others were born out of the last recession.
And I’m not necessarily a fan of this guy, but legendary investor Warren Buffet famously once said of investing something along the lines of: "Be fearful when others are greedy and be greedy when others are fearful". Do you think people might be a bit fearful right now? I think that a similar principle applies to business in general. But I’d probably reword it slightly and replace “greedy” with “courageous”.
So, what’s coming next?
Well, whilst I am optimistic about business and investment opportunities during this time, for those who are willing to adapt and not be fearful...
I’m not as optimistic about the economy at large.
Some out there seem to think that when this blows over, we’ll be back to business as usual.
But I have been expecting an economic collapse for years now, and honestly we were on borrowed time already: the policies of infinite quantitative easing, pumping billions into the economy every day essentially had the system on artificial life support. It was always only going to take one event to bring the whole house of cards tumbling down.
I don’t think anyone ever expected it would be this kind of event that would be the catalyst, but here it is, and the strain that the loss of jobs and government stimulus is going to have, I believe will bring it down.
But remember: through the Great Depression in America in the early 1930’s, the companies that survived it were the ones that kept their cool, and kept marketing.
Here’s a quote from Mr Potter in the ever-popular Christmas movie “It’s A Wonderful Life”:
“Now take during the Depression, for instance. You and I were the only ones that kept our heads. You saved the Building and Loan, I saved all the rest.”
Now, make no mistake about it, property investing works in “good” markets and in “bad” markets.
Anyone who retreats when the market is so-called “bad”, is basically a fair-weather investor and a dabbler.
When this happens, guess what? There’s less competition left for the hard-core, savvy investor.
In case you hadn’t noticed, the property market works in cycles. We’re coming to the end of a cycle now.
And by the way, there are other cycles too: there’s a war cycle, a social unrest cycle and others. We’re in a social unrest cycle and the war cycle right now as it happens, which you may not be surprised to hear!
Anyway, if you rely on these cycle to run your property business, then I have news for you: you don’t have a property business.
That’s how I was working for the first few years of my property career.
I bought my first few properties in 2003/4, and I thought I was onto something great: the market kept on rising, my lenders kept letting me remortgage, pull out funds and buy more.
All of sudden that stopped, and I didn’t know what to do.
That is, until I discovered BMV investing around 2007, and I realised that real investors make their money when they buy. Instead of relying on the market rising, now I was relying on my own ability to find and negotiate property 20-30% below market value.
If you’re doing that, then it doesn’t matter what the market is doing.
You’re insulated to the tune of 20-30% against any market fluctuations. In other words, he market needs to drop a whole 20-30% before you’ve even started to break even.
And that brings me to fluctuations.
When the property market fluctuates, it usually does so very slowly. After the credit crunch of 2008, it took till about 2012/13 for the property market to reach its bottom.
And that’s because of the way that property is valued. It’s done by “comparables”. That just means prices that similar homes nearby to the one he’s valuing actually sold for. A surveyor needs to see a sufficient amount of comparables to support his valuation. He can’t just use one, as that may be an anomaly. He needs a few, and it takes time for a few to appear.
That happens pretty slowly, and in contrast to the stock market, which can drop 10% or more overnight, as we’ve seen recently.
So, if you have strict investment criteria, make sure to buy low and add value, then you’ll always win.
So, bottom line, property is not as volatile as the stock market.
This means that if you want to buy and flip, then you’re probably going to be okay, especially if you’re buying 20 or 30% BMV (below market value).
If you do that, using the methods that we teach then you’re always going to be insulated from market fluctuations.
So, again, if you buy 30% BMV to begin with, then the market has to drop a whole 30% before you’re even at break-even point. And as I say, the property market tends to move slowly, so you’d likely have time to get out before things even got to that point.
But by the same token, if you happen to own property that you have significant equity in, then I’d consider selling it as soon as you can, because I believe we’re pretty much at the top of the market, and this may be the last time you’ll be able to access it for a good while.
Also, be mindful of the fact that after the last crash, some lenders withdrew funding...
I had a former business partner who lost 400 properties overnight because his lender recalled his funding. I believe that this funding wasn’t traditional buy to let funding, more of a commercial arrangement. But all the same, I’d be looking to spread my lending across multiple lenders to reduce your exposure to that risk.
To demonstrate that principle, I had just two properties with that lender out of my whole portfolio, and I was able (just) to sell those properties, and scrape together enough additional funds to pay the lender back.
So I literally survived on that occasion, due to being diversified over a total of about 5 or 6 lenders.
But if you want to play it really safe, then there are plenty investing strategies that you can employ that don’t involve having to own property at all:
OK, on to serviced accommodation.
As many of you know I operate a couple of these: one in Glasgow, and one on the Isle Of Islay.
At the start of this “outbreak”, it seemed that these were both holding steady, indeed the few bookings I’d had canceled on me, were getting re-booked by other travelers immediately.
But now, all of my bookings on Islay have been canceled, not least due to the lower immune system tolerance to infection that islanders have in general.
I’ve still been hosting pretty constantly in Glasgow till now, but that seems to be tailing off, with cancelations coming through almost daily.
If you’re not in serviced accommodation now, then I don’t recommend starting now, as there’s a learning curve at the best of times. But if you’re in it already, then here are some tips on how to cope.
In these times, yes, leisure travel is pretty much done, but what about essential healthcare workers who need to be moved about the country?
Start off by making your listings stand apart from the rest by:
I actually heard of a serviced accommodation investor in London who is making MORE right now that he did before the outbreak!
Here’s what he’s doing:
Look, this is not only “not a bad time” to get started, this is the BEST time to get started.
When the smoke clears on this outbreak, sadly there is going to be a LOT of people who have lost their jobs and need to sell or downsize.
The market will NEED investors like you to provide ethical win-win solutions to help those people.
What’s more, many investors will be sitting on the sidelines still paralysed with fear, so the amount of competition you’ll face will be way less.
I want to finish up with this: in my Property Investment Hacking book, I lay out my 10 point “Guerrilla Property Manifesto” and point number four of that manifesto is very applicable right now, and I believe, will become more and more so in the near future.
Way back in 2007, there was a really cool mortgage product (Mortgage Express, you might remember it??) on the market that allowed investors to buy property “no money down”...
It worked like this:
1 - negotiate at least a 25% discount on a property
2 - buy using a Mortgage Express mortgage
3 - remortgage immediately at the full market value and pull your deposit back out (and sometimes a bit more, sometimes a lot more)
Speaking as someone who used this mortgage a lot, it was great. Everyone was making hay while the sun shone and living the high life...
But then the market started to turn and they pulled the product...
Suddenly, everyone was crying into their champagne and bemoaning their loss. I daresay that spelled the end of many a fair-weather investor’s career (remember I mentioned those fair-weather investors earlier on?)...
But amidst all this weeping and gnashing of teeth, two colleagues of mine were figuring out a way to allow people to continue buying no money down...
They succeeded and the result was that they were able to keep making hay for themselves and not only that, charge all of the rest of us for the use of their witty new invention...
I learned a valuable lesson through that experience, which eventually became point #4 of that Guerrilla Property Manifesto:
“The Guerrilla Property Investor thinks outside the box. When rules and regulations [and I’m going to add to that: market conditions] change, he doesn’t cower and whine about it with other lesser “investors”, he sees the situation as an opportunity and quickly figures out a way to capitalise on it.”
So, the question is this: are you going to whine about the current state of the market / social conditions / [insert other excuse here], or are you going to step up and make things happen for yourself?
Now, as I said earlier, if you’ve been on the fence about getting started in property, then NOW is the time to get off.
Not only because of the uncertainty surrounding job security and continuing income for yourself and others.
But also because this is one of the best times to get started that there could be, due to decreased competition from other investors, and all the people out there who will be looking for ethical solutions as a result of this outbreak.
Not to mention, the unprecedented downtime that you have right now, represents the perfect time to get educated and position yourself to win on the other side of this.
Indeed, I've had at least a couple emails in the past week or so asking if we have a discount available for an annual subscription of our Guerrilla Property Investing membership, since they're all cooped up in the house and have plenty of time to get stuck into training...
I hope you’ve got a lot of value from this video, but if you’d like a helping hand to get into property investing, here’s how I can help.
I've put together a limited offer for those folks that emailed me (and for you, if you're in the same boat). Here’s what you’ll get:
That's a total of £793 real world value, for only £234.
It’s available for just a few days only, and you can get it at propertyinvestmentblueprint.com/prepare
Use the code “PREPARE” at checkout to get your discount, but it should already be applied for you.
Finally, as I said in my other post...
Be safe out there, love each other, and don’t be fearful.
Check on your neighbours, be a leader.
And I’m here for you if you need me for anything at all, whether that’s questions on anything I’ve talked about today.
Thank you and God bless.