What do you do for a living?

January 06

So, what do YOU do for a living?

Before you read on - just think about what you say when you are asked that question. Perhaps you describe yourself as a property investor, perhaps as a landlord, perhaps as a computer programmer who happens to own some investment property, or a petrol station manager, accountant, doctor, or full-time parent.

The most revealing answers are always the ones that come straight back. If you answered the question straight off, without pausing for thought, then you have just discovered what your mind focusses on.

For many years, I saw myself as an IT Manager... if I was in the company of some property people, then I might think to describe myself as an IT Manager who also had some Buy To Lets, otherwise I saw myself, and acted like an IT Manager, not as a property investor.

Once, however, I started describing myself as a Property Investor, I noticed some changes within a relatively short time - people started approaching me with deals, or asking for advice. Within a year, a whole world had opened itself up to me and I was making the contacts I needed to take my property investment to another level...

... and over the same period, people stopped coming to me (outside of my then job) to ask for IT advice.

Why was this? Did I know any LESS about technology - absolutely not - I got into IT because I loved it as a child, still enjoy the challenges of technology, and even now keep up to date with innovation in my specialised area of the industry.

What had changed however, is how I saw myself, and thus how I described myself, and thus how others saw me.

So, how about, for the next month, you describe yourself as a Property Investor, rather than as an accountant, or lawyer, or electrician, or whatever you do. You may be surprised by the number of interesting opporunities that start coming your way.

However, when you talk to me, you will sometimes hear me describe myself as a Landlord rather than a Property Investor. The two terms have, again, two different focusses. With Landlord, the focus is on the profession - keeping up to date with changes in legislation, looking after customers (tenants), and keeping everything running.

With Property Investor, on the other hand, the focus is more on the money, the income stream (rent) the risk profile (see my previous articles) and the costs.

The danger of imagining that you are a Landlord, and never a Property Investor, is that you will end up doing things because they are what landlords do, without considering whether you will get a decent investment return on them.

The danger of imagining that you are a Property Investor, and never a landlord, is that you can lose customers (tenants) by failing to serve their needs effectively, and potentially run into big problems by failing to keep track of changing legal requirements. For example, if you hold deposit funds at the moment, are you going for a custodial scheme or an insurance-backed scheme for holding those funds in future? If your letting agent holds the deposits, then which are they going for? Are they a custodian in their own right, or using a third party scheme? If they are using an insurance-backed scheme, then what are the costs, and will they be passed on to you or borne out of your existing letting agents charges?

My solution, of course, is to remember that your investment is a business, and like any business, it needs an Operations Manager AND a Finance Manager - it may be that both of those roles are played by the same person, but both angles need to be looked at, and remembered.

The worst mistakes are made by those who treat Property Investment as a hobby, and fail to keep a proper focus on either side - remember the difference between a business and a hobby is that hobbies cost you money, and businesses are there to make money.

This is just the feature article from the January 06 newsletter. Subscribe for market comment, forthcoming events, and more.

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