July's #FeatureFri article is a special Q & A with fellow landlord and property coach Hazel De Kloe of Why Property Works. Hazel has been guest blogging for Martin & Co for more than three and a half years and over that time she has provided our landlords and readers with invaluable insights into the property industry.
Today, we chat with Hazel about her personal goals, her words of wisdom for aspiring landlords, how alongside her husband Dennis, Hazel has built up a successful property business and her inside knowledge on how to spot a great investment.
How did you get started in property investment?
We bought our first investment property in 2001 in our late twenties, having owned our first home since the ages of 20 and 21. Our original intention for going into buy-to-let was to build up a pension pot by buying a few properties when we were still young, and just holding onto them for the long-term. My parents had done well from property in the past, so we learned from them to ensure we made a good start.
Soon enough, the first investment property generated a positive cash flow and it was at that point that that we thought about taking buy-to-let more seriously.
From there, we educated ourselves, forged forward, and over the years have built up a sustainable portfolio of BTL and HMO properties.
When did you decide to turn coaching into a business?
I always had a passion for teaching and when I was invited to become a coach and mentor for a large property training organisation in 2007, I jumped at the chance. I had a teaching background as well as the technical know-how on the property front, so it was a perfect match!
I started Why Property Works in 2011 and since then, I have worked with over 200 people to help them start or continue to build their portfolios.
What constitutes a successful investment for you?
This one's easy to answer. A successful investment in property terms, for me, has three simple elements:
Â· A good True Rate of Return (TRR) of at least 10pc;Â· Financial flexibility with the property (refurbishment, refinancing etc.)
What advice can you give to aspiring landlords starting out in the current economic climate?
Now, more than ever, due to many recent changes in our nation's circumstances and legislation, you need to know what you are doing in the property business. Education is a big part of this, as is an honest outlook on the challenges and benefits of going into property.
My initial advice would be to learn how to undertake proper research and due diligence, understand how you can/should build your business (however large or small) and get a good grip on the financials.
Do you recommend landlords to use letting agents?
Working with a letting agent can be invaluable. They are often a great resource of knowledge and expertise in their area and can steer you towards the best types of properties to buy for your purposes. Local knowledge is not only useful in terms of building your portfolio, but also in finding the right people to rent from you.
Have you come across any stumbling blocks in your career as a landlord?
Learning the hard way is problematic but so important.
The main pitfalls we have encountered in the past have been listening to others' advice (when we were young and naive) without doing our own due diligence, and dealing with the infamous 'nightmare tenants', who can really test your resolve as a landlord!
In terms of how to handle what went wrong, we had to re-evaluate what we were doing on occasions and make necessary adjustments to our portfolio and processes. Putting all these systems in place over time have really helped us create a strong business.
How do you work out whether a property is worth the investment?
Ideally, we work towards achieving the highest TRR (True Rate of Return) that we possibly can.
The TRR is different to the 'Yield' of a property in that it is the actual cash flow made from a property (per annum) divided by the amount of money left in (rather than Gross Annual Rent divided by the Property Value).
These two sets of figures can be VERY different! Sometimes, we are able to refinance and pull all of our original investment back out of a property, thereby leaving us with an infinite TRR.We typically achieve a minimum of 25%+ TRR and increase the value of a property by at least 20% of its end value through a programme of refurbishment and reconfiguration.
"Treating people fairly and with respect can gain you a good reputation as a landlord"
What has been the highlight of your landlord career so far?
I was honoured to be a Finalist in the National Landlord Association Property Women Awards a couple of years ago, but equally honoured to be invited by a long-standing set of tenants recently to have dinner with them. It just goes to show that treating people fairly and with respect can gain you a good reputation as a landlord.
It goes without saying that I also thoroughly enjoy being able to pass on my experiences and learning to others on the property journey through my mentoring and coaching business too.
Finally, as stated in our most recent market intelligence reports, house price growth has outperformed other investments in the past 30 years, why do you think the UK property market is so special on a global scale?
There is no surprise in hearing that property has outperformed many other investments in recent history, this has been a trend for a very long time. I think it is a combination of factors which go to prop up the values here in the UK, not least the fact that us Brits love to own our own homes!
That being said, there has definitely been more of a trend towards 'Generation Rent' over the last decade and with retirement prospects not looking too good for many, it is no surprise that property, as an alternative investment vehicle, is being sought by people to supplement their income now or in later life.
With so many aspects to take into consideration as a landlord, and in the context of building your property business, I have compiled a complimentary Special 24-Page Educational Report entitled 'What To Know Before You Buy Your Next Investment Property', which isFREE for you to download here.
You can also contact me via mywebsite.
If you would like to discuss the needs of your portfolio, would like some further questions answered or are looking to instruct some property management services, contact your local Martin & Co branch today.
To download your FREE copy of our latest market intelligence report click here.