Mark Homer Ask me Anything, Brexit, The Next Recession&Mark's Favourite Doughnut! - a podcast by Mark Homer

This is your chance to ask Mark anything, you’d like about property. Sourced from the progressive property facebook group Mark answers 24 of the most burning questions from how Brexit will affect property investors, to how to pick a good business partner and what’s his favourite doughnut. Hear the advice from one of the countries leading property analysts, on how to get your property business moving and growing.

 Key Takeaways

If you were starting out in property today where would you start? I probably wouldn’t start in a much different place than I did. I would buy terrace houses, single let to get going, and then move into HMO’s and then commercial buildings after that. Finally, I would do commercial buildings which can give you better cash flow. I think there is a lot of power in not selling your property but buying and holding them because over the long-term cash-flow and yields will be greater.

 What’s your prediction for interest rates over the next 2 years? I think they are going to stay relatively static. It depends on Europe, Brexit, and the US. Clearly, the world is slowing down, and the market is not going to be getting any better over the next two years. I think it’s more likely to be a slow down rather than a recession. In the UK there are lots of uncertainties and there are lots of investors who are not investing. I think the likelihood is that Brexit will be extended. We will see a wall of money going back into the system after they have been waiting for the outcome of Brexit. It’s important to focus on the things that you control rather than interest rates and GDP. There will be a lot of commercial buildings available when the downturn comes, at a cheap price.

 How did you know that Rob Moore was going to be a good business partner? What makes a good business partner? I worked with Rob for six months before we went into business together. Rarely business partners work if they are friends. You should focus on adding value to each other, Rob and I were opposites. Rob is great at all the things that I’m not good at. Sales and marketing are not my bags, whereas Rob excels at those. Enter into some lose business arrangements first, and when we started our business we only put a few hundred pounds in. We got to learn what we were good at, and what we need to learn.

 Would you prefer 10* BTL £2500 profit or 1 SA unit £2500 profit? I think if it was a binary choice I would go with the 10* BTL’s because if they were worth over a million in equity together. That’s something that you won’t have in the SA flat. It’s a balance, SA can be quite a defensive strategy, and you should be fine to battle recessions.

 I want to learn the basics of business finance, where should I start? I’m very much for learning on the job. We run multiple streams of income training and the various books that we have at Progressive Property. I would do the first deals as soon as possible. You need to talk about a lot of banks and get a lot of mortgages. Learn from people actually doing the job, and learn on the job.

 What is the best structure for a JV buy and hold? Getting to know someone over a period of time, so you get to know their circumstances. You are going to enter into a financial relationship, and you don’t want that to affect your credit rating. It’s probably better that you are not associated financially.

 What is the mistake that you’ve made that’s been your most valuable lesson? I’ve made loads of mistakes. In the old days, it was buying overseas, buying things that I didn’t understand. Bringing in the right people and paying them well is really important. Over a period of time, paying for good people means you save money, and get a better job done. In the early days, I was trying to reduce costs on everything.

 How would you approach trying to find an investor with the view of starting a JV? You want to be going to networking events, getting yourself out there. Doing smaller jobs with investors, and then you add value to buildings, then move onto the larger JV.

 What would you expect to pay for a shareholders agreement in a JV? For my solicitor will charge around £1,500 for that. It will completely depend on the other party sending over their changes to the document in one go, so it doesn’t drag out. It’s a really good idea to use a solicitor so it’s correct and legal.

 What is the best way to get the most value from a refurb whilst sticking to a budget? Get three quotations for everything, and speak to your letting agent and your builders about what needs spending money on, and what doesn’t. Be really clear about how you want things to be. I wouldn’t pay the builder up front but when it’s complete. Try and build a relationship with a builder who you can use again.

 Do you ever get bored of working or fed up? Yes, I get stressed and fed up. I often just get in the hot-tub and home, and under the water so you can’t hear anything. After a good night’s sleep, I can work through my issues methodically the next day. I do sometimes think how much is enough property, and how long do we want to do this for but sometimes you can’t just stop doing it.

 What was the deal that made you feel rich? I’m not sure I feel rich, and rich is a moving target. I used to think at this level I would feel rich but it’s a moving goalpost. There is always someone else who has more properties or has more income. Because it’s gradual, it’s incremental, and then you don’t notice it as much.

 What's the best banking structures for separate companies? If you are doing big projects then it’s good to start companies per each project. I don’t like having loads of Limited Companies however as there is a lot of administrative burden such as accounting. My goal is to bring everything together eventually. They can, however, shield you from external factors. Every single company I have been involved in that has been dissolved has done so without any creditors, that’s really important to have that history.

 What do you think of the longevity of deals sourcing/packaging as a business model? I don’t think there is a time limit on it. You need to be registered, and get experience with it. You need to get really good at it and find the best deals. I don’t do it as much anymore, because if I find a deal then I want to buy it myself, and get the income from them. It can help you grow your portfolio though, especially in the earlier days of the business.

 Best Moments

‘I wouldn’t have started out in a much different place.’‘I like to buy and then hold property.’

‘Internationally countries are trying to get interest rates up over the next few years.’‘Keep an eye on interest rates, but it’s better to focus on the things you control.’

‘Downturns will inevitably come.’‘I suspect we are in the second half of this cycle.’

‘Rarely do business partners work effectively if they are friends beforehand.’‘Over time you build trust and confidence.’

‘Kissed a lot of frogs to find the right business partner?’‘You need cash flow to look after today.’‘Learn from people actually in the job.’

‘Learn by doing is always best.’‘It’s probably better that you are not associated financially.’

‘I’ve made loads of mistakes.’‘Pay the rate for good people and it will save you money.’

‘Find the right people, and pay them well.’‘You need to network a lot to find your investors.’

‘There is a lot of value in getting a solicitor to help write your shareholder agreement?’‘I just can’t help getting back into it, and buying property.’

‘I’m not sure I feel rich’“I’m always driving for more.’

‘The buck always stops with you.’‘Prepare for the worst.’

‘Lenders are more relaxed when properties in limited companies with your personal lending.’‘The mortgages I have in limited companies don’t show up on my credit rating.’

‘The uncertainty around Brexit isn’t good for business.’ 

ABOUT THE HOSTMark Homer

Mark Homer is an entrepreneur investor.  He has worked with investment since he was 15 years old using the laws of wealth! He is a spreadsheet analyst with an impressive following from major publications including BBC Radio, The Wall Street Journal, The Independent, as well as co-authoring the UK’s best-selling property books.  Mark has always looked for the best investment vehicle, and at the end of 2007 with Rob Moore the co-founder of Progressive Property his joint portfolio produced more profit than any of the other investments he’d tried in the last ten years, combined. 

CONTACT METHODMarkhomer@progressiveproperty.co.uk

https://www.linkedin.com/in/markhomer1https://www.facebook.com/markprogressive

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