Paul Mahoney: Okay. Everyone’s just quieting down on their own, so that’s good. Well, thank you, everyone, for coming. My name’s Paul Mahoney. I’m the founder and managing director at Nova Financial Group and the author of The Property Pension Plan. So obviously tonight’s … This evening is based around the book launch. But that’s not all that we’ve got in store for you. I will start off with the book. But we’ve also an expert panel, some questions that were sent in by some of you. And [inaudible 00:01:00] some of the key topics in the market at the moment. We’ll take some questions from the crowd as well. And we’ve got a great panel, a very broad range of expertise from four very different businesses that I think cover the sector quite well. As you all know, we’re also supporting a charity, which is Buy One, Give One. It’s a fantastic charity. We’ve been supporting for it 18 months. That is fully funded by membership fees that we pay to them, so any donation from us or through clients that interact with us go directly to the causes that we choose for them to go through.
Paul Mahoney: And I’ll take you through what they are in a moment. But effectively, any business that we do with clients, any revenue that we generate, a certain percentage of that goes to this charity. And it supports some really good campaigns. So I think that’s a good way to start off. Actually, no. First off, I think first off I’d like to thank the venue, so Homegrown. I’m a member here. It’s only opened a couple of months ago. It’s a fantastic club. If you are an entrepreneur looking to grow your business, it’s a great place to be. It’s relatively well priced to be a part of this sort of community. And I’d be more than happy to talk to you about that more on a one to one basis after the talk. I’d also like to support all the, sorry, thank all the panelists that are here today. They’re not being paid for it. They’re doing it out of the goodwill of their hearts to come here and give you, I suppose, help you guys with some of the knowledge that they’ve built themselves through running property based businesses for many years, and as well as Property TV, who’s actually filming here tonight, and will be creating a TV episode from the event.
Paul Mahoney: So first off, the chairman of Buy One, Give One has recorded a video for us from Australia. I’m Australian myself, but that’s about where the ties end so far as that goes. But Paul from Buy One, Give One has recorded a video, so I think we’ll start the event by playing that.
Paul Dunn: Well, hi everyone. And thank you so much for letting me drop in on this very special event. Stephan and I met almost a year ago in June 2018 when I was speaking about what you see behind me here, this quite amazing thing called B One, G One. And like all great things, it started with a surprisingly simple idea. What would the world look like if every time business was done, something great happened in our world? What would happen, for example, if every time you and I shared a cup of coffee, a child in desperate need got access to pure lifesaving water? What would happen if every time someone sold a TV set, someone who could not see got the gift of sight? And most importantly, what would happen if every time someone bought a book, something great happened in our world as well?
Paul Dunn: And of course, that’s precisely what’s going to happen with every copy of Paul Maloney’s great new book. Well done, Paul. Many, many congratulations. And it happens that every time you do business with Nova Financial as well, that’s one of the reasons why Nova instantly joined us in B One, G One when Stephan and I first met. They loved the fact that here in B One, G One, you get access to 500 high impact projects around the world. Plus, when you give in B One, G One, fully 100% of your giving goes directly to the projects you choose. And that leads us to another round of congratulations as well.
Paul Dunn: As you can see right here on the Nova website, the team has already made an amazing 13,840 impacts on our world. And as you can also see on the Nova Financial site, everything we do here at B One, G One is underpinned by the sustainable development goals, 17 key targets that we have to achieve as business owners by 2030, just 11 years away. We’re so thrilled to be partnering with Nova on making that happen. And as you can see behind me, collectively now we’ve passed 182 million giving impacts. And with your continued support of the team at Nova, we’re going to push that way, way higher. And you’ll find out a lot more about that in chapter 10 of Paul’s great Property Pension Plan book. Again, thank you for letting me drop in on you like this. It’s great that we connected. And we’re so thrilled to be making all of this happen with you and the team at Nova Financial. Let’s be sure to create a world that’s full of giving because that is without any doubt a happier world.
Paul Mahoney: So that’s Buy One, Give One, guys. What I really like about it as a charity is it’s very positive. It’s not about seeing starving children on telly and being guilted into giving. It’s about when a business does well, they give a portion of they’re doing well to helping people in need. And I think that applies to not just a decent size business like ours, but as any individual, I think once you start to earn some money, you have a duty to help others that don’t have that money. And it’s not hard to do it. It doesn’t have to hurt your bottom line. And as he quite rightly said, there’s a whole chapter in the book about it and why I think it’s important.
Paul Mahoney: So moving on from that for a moment, I’ll now talk to you a bit more about the book. Obviously, that’s the center of the event tonight. I’ll talk to you a bit more about what sort of brought me to write it, why I think it sort of fills a gap in the market, and why you should buy it. And I’ll talk to you more about that in a second as well. First, I would [inaudible 00:06:45]. And we are a regulated company, so it’s important for me to say that anything that I do talk about tonight, aside from other perhaps on a one on one basis later on down the track, is not specific to you. You shouldn’t really make any changes based upon it. You should seek personal advice before making those changes. And it just so happens that we can do that with you on a one on basis. So come and have a chat afterwards.
Paul Mahoney: We’ll be covering quite a lot tonight. We feel a little bit like this guy, don’t worry. We’ve got time. We can talk with you on a one on one basis, as I say. And we can help you understand the things that we’re covering and how that applies to you personally because that’s quite important. I don’t necessarily think that information is valuable anymore. It’s the implementation of that information. Anyone can Google anything and pretend to understand anything. But it’s how you implement that and how that relates specifically to your situation to better you that is valuable. And that’s really what we help people with.
Paul Mahoney: But I’ll start off by just introducing Nova. I know that some of you, quite a lot of you here know who we are and what we do. But for anyone that doesn’t, I think it’s important that you understand the direction from which we’re approaching this, and therefore, why for example, I’ve written the book. I’ll then take you through the book. So a bit of an intro to it, why I wrote it, a brief chapter by chapter, so explaining effectively what you can get from it, and again, how that might relate to you. I’ll talk you through the eBook promotion that we’re currently running, which has been very successful, even just today. What’s next for the night, so that the continuation of the agenda. And then I’ll answer any questions that people might have at the end. Okay?
Paul Mahoney: So first off, what we do. We’re effectively financial advisors who specialize in property investment. We’ve effectively taken the traditional IFA model and applied it to property investment as the vehicle. And the reason we’ve done that is we spotted a big gap in the market. And to be honest, that wasn’t spotted here. It was spotted in Australia. That’s where I’m from, obviously. And the Australian market is quite similar to here in that you have IFAs or financial advisors at one end of the market, who in the right circumstances are quite good at advising you and helping you toward your goals. But they specialize in equities and pensions, and they don’t have the knowledge or the desire to advise on property, so if you prefer property, they’re not that much use to you.
Paul Mahoney: The other end of the scale, you have estate agents, who at the end of the day are really just trying to sell you something. There’s nothing wrong with that, but you can’t really rely upon the advice from an estate agent because they’ve got their book of 10 properties, and that’s all you’re ever going to end up with. So there’s a big gap in between, people wanting advice, people that prefer property, but it’s very, very difficult to get independent, reliable advice that you can act upon and be confident in. And effectively, that’s the gap that we were aiming to fill, and I think we’re doing a pretty good job of it in the five years that we’ve been operating in the UK.
Paul Mahoney: So in a nutshell, that’s our business, effectively help you better understand the current situation and their goals. What’s point A? What’s point B? And how are you going to get there? The knowledge often used for that is if you jump in your car, and you don’t know where you’re going, but you just start driving, you’re pretty unlikely to end up somewhere desirable. Even if you do know what the destination is, but you don’t know how to get there, you’re fairly unlike to get there. So it’s important to firstly understand where you are now. Where do you want to go? And then put in place a strategy for getting there. Strategy is very important. You need to have a strategy because without it, again, you won’t end up where you want to be. But I think far too many people strategize far too much and do no implementation.
Paul Mahoney: It’s important to have a plan. But then it’s important to take action based upon that. Again, something we help with because property investment’s a big decision. It’s a very daunting decision. It’s big money. And it’s life changing money that you’re investing every single time. So we help our clients have more confidence and more clarity in what they’re doing, why they’re doing it, and what they can hope to achieve from it. So we help with all the research and due diligence that goes into sourcing the right properties, financing them, managing them, and then building a portfolio to actually work toward the end goals. So we have much more of a focus on the benefits rather than the features.
Paul Mahoney: If you go and speak to an estate agent, they’ll say, “You should buy this property because it’s got a balcony facing southwest.” Well, what does that really mean in relation to your financial goals? Is that important or not? We focus more on what is the end goal, and then reverse engineer that to put in place the right strategy and the right assets for getting there. Hopefully that makes sense.
Paul Mahoney: The main reason we like property investment as financial advisors is mostly due to the leverage. We’re in no way in love with property, and we take much more of a, I suppose, a financial planning view to property than a lot of the emotional stuff that you hear people saying about property. Probably one of the most common questions I get when it comes to retiring through property investments: How many properties do I need? And there’s no answer to that because 10 properties worth 50 grand is very different than 10 properties worth $5 million. I’m sure you can appreciate that. So it’s not about the number of properties. It’s really about the amount of equity that you need to have, the investible asset base that you need to have to generate a certain amount of income. So what is that? What is that investible asset base? How does that apply to a property portfolio that’s most relevant to you? And then how is that going to generate you the income that you need to live comfortably and stop working and retire? That’s really the main focus.
Paul Mahoney: And I think too many people get too emotional about property, probably because we’ve all grown up in properties. We know what we like personally when it comes to living in a property. But when it comes to investing, that’s not really what it’s about. It’s about what the target market wants and likes because that’s what drives your outcomes. So be very unemotional and commercially minded. And again, that’s what we help people with because as individuals, we’re emotional, myself included. You see something you like and want it. And quite often, if you then speak to someone and use them as a sounding, someone that knows what they’re talking about, and they’re unemotional about it, use them as a sounding board, you realize actually it’s a terrible idea.
Paul Mahoney: But you were 100% convinced it was great. That’s what we help people with. Regardless if you have a level of experience, we can help you fill the gaps in your resources and as an individual. And I think that’s quite valuable, and that’s where we aim to add value to our clients’ decision making process. Qualifications wise, we’re obviously a registered [inaudible 00:13:13] approved person. I’m a qualified financial advisor and financial planner. I’m a qualified mortgage advisor. I previously ran a large financial service company in Australia called Spring Financial Group, which we publicly listed in 2014. I came for the UK and started Nova.
Paul Mahoney: We have over 100 years of experience between our advisory panel, or our management team, if you like. We’re all landlords ourselves. And I suppose this is how we’re able to add value to our clients’ decision making process. Some relationships is also very important. Some of the guys that are here tonight, the expert panel, and some of the others that have come along is an example of our strong relationships. And with property, that’s very important because it gets us access to the better opportunities that we’re then able to pass onto our clients. It’s like networking on steroids. You can go out as an individual and network all day if you want to. You won’t grow the network that we have in a short period of time. So work with us on that basis and allow us to pass it on to you.
Paul Mahoney: So in a nutshell, that’s what we do. And hopefully that all makes sense. Our biggest point of difference I would say is the fact that we’re independent. We don’t have anything to sell, and that’s very rare in property. It seems silly, but it is. Most people who are going to give you guidance, or want to give you guidance when it comes to property are trying to sell you something, whether that be a property, or a course, or whatever. We’re not looking to sell you anything. Effectively, we’re on your side. We very much establish a mutually beneficial relationship and we help you work toward your goals, and that’s the main focus. So in a nutshell, that’s our business. Hopefully I haven’t ranted too much there.
Paul Mahoney: Okay. So some people listen to what I’ve just said there, and they’ll say, “Well, I can do that myself.” And that answer is absolutely you can. But you will not do it as well. And that has nothing to do with you, individual. I’m not trying to be offensive there by saying you won’t do it as well, but you won’t. And I’m 100% confident you won’t because as individuals, myself included, we are limited by our resources. We only have so much time, knowledge, experience and various other factors. As a business, we have those resources in abundance compared to any individual on this planet. So we can help with that. We can help fill the gaps. We can help take away the guesswork.
Paul Mahoney: Roger Federer, pretty decent tennis player. Would everyone agree? He’s not that great because he’s great, if that makes sense. He hasn’t created that himself. He has a team. He has a big team that surrounds him and makes him brilliant. Without that team, he wouldn’t be so brilliant. Maybe he’d still be okay, but probably not anywhere near as good as he is. So without his coach, his physio, his mental health coach, and all these people, he wouldn’t be anywhere near as good as he is. So effectively, think of us as that’s where we fit in, helping you become the best you can be. Are there any Star Wars fans here? Think of us as the Yoda to your Luke Skywalker. Let us be the guide so that you can be the hero.
Paul Mahoney: So an intro to the book, and a bit of a chapter by chapter. So intro to the book, so I suppose first off that the book overall is our approach in detail to property investment. And so far as what I’ve seen, and I read quite a lot, and I think I’ve got a pretty good handle on the industry, I haven’t really seen anyone approach property in the way that we do in the UK. It tends to be more about the properties themselves, or the numbers, but not so much about you as an individual. And I suppose that’s our biggest point of difference as I say, looking at it as a financial tool, financial planning tool, if you like, and planning your life around it to achieve financial goals over the mid to long-term.
Paul Mahoney: Effectively, that’s how the book starts out, is it focuses on … Oh, that’s not right. Well, it doesn’t focus on anything, apparently. Not quite sure what’s happened there, guys. I should know what’s in it, I wrote it. But let me just grab the book. All right. Let me tell you what’s in it. Section one, there’s three sections to the book. It’s understanding you, so starting with you, that’s the most important thing. No one invests in property for fun. Some people might, but in reality it’s generally about achieving a goal. I think too many people focus on the now and don’t think about what the actual end goal. What’s the thing they’re looking for at the end of this journey? And it just surprised me how many people we meet with don’t even really know what their income goal is. What are they actually working toward? A lot of people just go about it in a very ad hoc way, and I think especially the way the market is going, the property market in the UK, with all the changes that have happened lately. It’s not a hobby anymore.
Paul Mahoney: There’s a big difference between what works and what doesn’t. There’s still a lot that works, but you definitely need to be going about it in the right way. So first off to do that, obviously you need to understand you. That’s the first section. Then it’s about understanding property, so understanding you talked about the problem. So what is the problem? Because most of us, if you think about wants versus needs, it’s an established fact that human psychology, you will act upon problems more than you will things that you want, your needs more so than wants. So if you think about: What is the problem? And I think far too many people skim over their problems because they’re all too scary. But there is problems. Most of us, well, perhaps most of you are on track to achieve your financial goals because you’re here, but most people aren’t. They’re nowhere near it, so that’s really the problem.
Paul Mahoney: And therefore, what are your options? So the title of the book being The Property Pension Plan, some people have come to me and assumed that it’s about pensions. It’s not so much. It does touch on pensions. But it’s more about using property investment as an alternative to your pension. So why would you do that? Well, in reality, your traditional pension options are pretty rubbish. It’s a really tax effective way of building a cash savings sort of pot. But what you can then do with it once you’ve done that, if you do actually achieve the investment asset base that you need, is pretty limited. You can put your money into an annuity, you may as well put it under your bed. Annuities are terrible as well. So the investment options within pensions are pretty bad. And then your options so far as what to do with them once you get to retirement are probably even worse, so that’s a problem in my opinion.
Paul Mahoney: So what are your other options? You’ve then got interest bearing investments, so things like term deposits, equities, so shares and stocks, and property. So it takes you through each of those options, the ups and the downs of each. It then goes through how leverage or borrowings applies to each of those options, and effectively explains why we view leverage property investment to be the best option for the broadest range of people. And in a nutshell, the reason we think that way is you’re buying a tangible asset, if it’s in the right location, it’s always going to have an underlying value. And again, if it’s in the right location, offers the right desirability, it’s pretty much always going to have a tenant as well, so it’s pretty much always going to be income generating.
Paul Mahoney: You’re borrowing at very cheap interest rates over the long term with no ability for that lender to recall the mortgage, regardless of what happens to the value of your property. So the risk return basis there is very, very low, meaning that I can take 50 grand and buy a 200,000 pound asset, generate relatively average returns on that asset, and get fantastic returns on my cash. 20% plus is very, very achievable on the cash you’ve invested whilst getting relatively average returns on the asset itself. In my opinion, there’s no other investment option that does that. Some people might’ve heard that 20% and think that’s a bit high, but it’s really not. It’s very achievable. We usually aim for 10% net yield on cash invested, so that might be a 6% or 7% yield on the asset, but cash invested being the 50 grand I’ve applied. We’d be aiming for about five grand net on that per annum. Then 5% on the asset value is 20% on the cash. Put those two figures together, you’re at 30% a year.
Paul Mahoney: Now that is very, very achievable with average leveraged properties. If we were outperforming the market, we can do even better. We don’t necessarily have to, and that’s the point. It’s not about maximizing returns. It’s about investing in the types of locations and properties where we have absolute confidence in achieving them. And I’ve skipped ahead a bit there. But effectively, that’s why property. That’s why we like property. We’re not emotional about it. But what I’ve just talked about there is not available with any other investment option. And that’s why we like it.
Paul Mahoney: Obviously, therefore, if we’ve established … Well, actually understanding your current financial position so there’s quite a cool acronym I think called the RETIRE acronym that I’ve kind of created there. And it talks you through the stages of life. I think this is another thing that a lot of people overlook, is where they currently are, and therefore, what’s most suitable for them specifically at that stage of life. The RETIRE acronym is, the first step being ready to get started. So this is when you’re first getting going. You’re a beginner, you’re first time investor, you don’t know what you’re going to do, but you need to find out. So start doing your research. Start familiarizing yourself and what might work for you based upon your current situation, your goals, and the timeframes that apply to that. And that’s the next step being education. Testing the waters is obviously starting to make your first investment.
Paul Mahoney: And I’m a strong believer that when making a first investment, you should be quite conservative because once bitten, twice shy very much applies to investing. Investing is very much about confidence. If you lose your money first off, you’re not going to want to do it again. And you need to do it again. You need to be a bit brave when it comes to investing, but you also need to be smart. So you need to want to do it and continue to do it over a long period of time because that’s what’s going to help you achieve those goals. So testing the waters first off, being conservative about that, investing further, so building your portfolio, perhaps becoming a little bit more creative as your experience and your knowledge builds.
Paul Mahoney: Once you’ve then created the asset base, and generally throughout that timeframe, it’s about capital growth. You want to build your asset base. A lot of people go wrong by investing just for cashflow right from the start. The problem with investing for cashflow right from the start is the only way you build cashflow through cashflow is investing more cash. So for example, if I’ve got 50 grand and I’m a first time investor, and I want 50 grand a year in 20 years time, and I invest just for cashflow today, and I get a 10% net return, which is pretty good, that’s going to give me five grand a year. If that asset doesn’t grow in value, the only way I turn my five into 50 is investing nine more lots of 50 grand.
Paul Mahoney: Now I’m sure most of you will agree that’s pretty difficult for anyone, regardless of how much you’re earning. Investing 10 lots of 50 grand is going to take a long time. However, if I take that same 50 grand and invest in a 200,000 [inaudible 00:24:36], so like the example I’ve just given, and that asset grows in value over a 10 to 15 year period, all of a sudden, my 50’s worth 250. If I do that four times through remortgaging and perhaps putting in a bit more cash myself as well, all of a sudden, my 50’s worth a million. 5% yield on a million is 50 grand. So if I was to say to you, “I can help you turn 50 grand into a million over a period of sort of 15 to 20 years,” you might think that’s a bit silly. But actually, it’s very achievable using leverage property investment.
Paul Mahoney: That again sort of explains our approach to property. But once you’ve built the asset base, quite often people have invested for growth, and it’s not giving them the income they need. So we’re based in Central London. We meet with a lot of people with pretty big portfolios based in London that are generating terrible yields. So they’ve got the asset base they need, but it’s not giving them what they need being the income or the yield. So quite often, there’s a transitionary period about rebalancing the portfolio at that point. You’re taking what you’ve got and turning into what you need, so that’s the transitionary period. And then easy retirement, if you’ve done things right, then it should be fairly simple. You generate an income you need. You can live off the fruits of your labor. So that’s the RETIRE acronym.
Paul Mahoney: Understanding property, we go through setting goals, property research and due diligence and sourcing. Some of the key things that we look for there, I’ll just tell you on a high level what they are, just as sort of headings. Some of the key things, some of the key sort of fundamentals that we look for when it comes to sourcing the right locations and right properties is first off, supply. So how much supply is coming into the market? And is it justified by demand? Being the second point, demand. So supply versus demand, any investment, not just property, is driven by that. If there’s more demand than there is supply, prices increase. If there’s more supply than there is demand, prices decrease. So that’s very, very simple, and its a good way of starting out when looking at a location, and not just overall, but also particular types of properties and where the demand in those locations are skewed because that has a big impact as well.
Paul Mahoney: Secondly, the target market. So who are you going to rent it to? What’s the demographics? And what do they actually want? Understanding that person both in the rental market and in the resale market, understanding your exit as well. The location, so obviously quite important. You know the old cliché of location, location, location. Obviously, you want to invest in a good location. But it’s not just about the location, as I just said. It’s about, again, understanding that location and investing in the right type of property where the demand is skewed. Infrastructure makes a big impact, things like roads and rail being big infrastructure. Smaller things like bars, restaurants, cafes, they make a big impact as well, especially so with the younger generation. They’re obviously becoming a much bigger part of the market.
Paul Mahoney: So understanding what your target market wants and making sure there’s either an abundance of that already, or that is being created and things are moving in the right direction, so essentially positive growth and change. Price is very important as well. But I think there’s too much emphasis put on price. We obviously want as much value as we can get, but you need to balance that out with desirability. It’s not about buying cheap really, because if you buy a cheap property, it’s usually cheap for a reason. We need to make sure there’s going to be strong demand for it. Getting fair value, so it kind of ties into the last point a little bit. But I think that the most overused and probably the word I hate the most in the property market in the UK is below market value. It’s complete rubbish.
Paul Mahoney: The definition of value is what someone’s willing to pay you for that property. Now of course, you can get distressed assets and things, and maybe get lucky. But generally, you’re just being sold something that is what the value you’re paying for it. It might even be worth less, if you’re being sold it by someone that’s a bit unscrupulous. So be very cautious of that word because it’s mostly a sales tool. Value is important, but there’s so many other things that are just as important.
Paul Mahoney: Economic changes and legislation, so you need to make sure that you’re accounting for the current market. For example, I’m sure some of the things that we’ll get onto in the panel are things like section 24, the [inaudible 00:28:38] changes, the changes with regards to finance, portfolio landlords. There’s been a lot of changes lately. You can’t really account for them before they’re announced. But you do need to strategize around them once they come about, not whinge about them and get upset about them because that doesn’t achieve anything. We need to be, as I say unemotional and commercially minded about it, and change our strategies to what works in the current market.
Paul Mahoney: Understanding the vendor. Well, if we’re dealing with an estate agent, well, can we actually trust this person? Is what they’re telling us right? That’s in the secondary market. If we’re buying new or off plan, who’s the developer? Are we confident in dealing with this person? Some of the key due diligence things that we look for there, and then also the target property. What works in that market? What makes sense so far as whether it’s apartments, houses, townhouses, whatever that might be? HMOs is a bit of a buzzword and I think again, something that is probably a bit overused and has become very flooded in the areas where that does work. And there’s obviously areas where that doesn’t work. So understanding all those things I think is very important if you’re a property investor or if you want to be a property investor.
Paul Mahoney: We’re going to move on to section three, which as I mentioned before, probably the most important section being understanding implementation, so actually taking action, making positive change to your situation. So chapter six is on finance. Part of our business as a mortgage broker, I think a lot of people see that the name of our company and assume we’re mortgage brokers. But that is a small part of what we do. We are mortgage brokers, but that’s more of a support service to our property advisory business. So understanding finance, though, if you’re going to use finance, you need to understand the terms, how that applies to you. Are you an individual? Are you a couple? Are you a group of people? Are you buying through a limited company? How all of things work and how you can use it to your advantage.
Paul Mahoney: The right tax structuring and accounting obviously become a much bigger point lately with regards to section 24. Can you do something to change that with regards to your current portfolio? What should you be doing moving forward? What are the different structures that are available to you? The advantages and the disadvantages of each is all covered. Managing your portfolio. So should you self manage? Should you use an agent to find your tenant, then manage? Should you use them to find your tenant and manage it for you? And again, the ups and the downs of each. I’m a strong believer that, well, I suppose because our approach is very much around passive property investment, I don’t want to be out fixing toilets every weekend. So I am a big believer in full lettings and management and passing on the work that I think is less valuable work. My time is probably more valuable than taking calls from the tenant every five minutes. So I’m a big believer in that. You’ll obviously see that in that chapter.
Paul Mahoney: Chapter nine is business owners investing in property. It talks about why property investment is a very good hedge for business owners. So if you are a business owner, if you think about it this way for example, if you’ve had a good year, and you’ve got 100 grand sitting there doing nothing in your bank account, and it’s not really working capital, it’s just sitting there doing that. And this is pretty common from what I’ve seen. A lot of business owners have probably at least that sitting there. They don’t really know what to do with it. They’re earning maybe 1% if they’re lucky in the bank account. They can take that 50 grand, that 100 grand for example, split it into two lots of 50, buy two 200,000 pound properties and achieve those 30% returns I referred to before.
Paul Mahoney: Now quite often, that 30% returns could be a better return than their actual business. So in filtering proactive profits into passive investments over a period of time I think is a fantastic idea. It’s something that we do ourselves. Buying passive assets on the side in a limited company structure, so you don’t have to take the cash out of your business and therefore pay tax on it. You keep it within the tax effective limited company structure and start to build a portfolio alongside your business to the point where it replaces the need for your business, to the point where you can sell your business and retire based upon that portfolio. And I talk about how that’s done and why it’s quite a tax efficient and beneficial option.
Paul Mahoney: And then giving back, so chapter 10 as I mentioned is all about, as I say, you should by that stage understand our approach and how to implement it so far as property investment. Hopefully you’ll still want to work with us and help you implement it. But you have much more of understanding of why those things are important, and hopefully therefore start to benefit from it. And then I’d like to think that if you’re benefiting from it, if you’re doing really well, then you can take a very small portion of that and help people that are in more need than we are. So that’s chapter 10.
Paul Mahoney: And then effectively, a bit of a wrap, at the end of each chapter, there’s some questions for you. What have you learnt? Do you understand these things? We’ve also created a property investor’s scorecard, the link for which is at the end of each chapter as well, which goes through five different sections with regards to your situation, your property investments, your finance, your yields, your property management. And it gives you a score on each, and then a report on how you can improve on each. And that’s free. It’s nova.financial/scorecard. So hopefully you find that useful as well.
Paul Mahoney: We then go through some appendixes. So building a portfolio, there’s quite a cool little graph at the end of the book, which shows you how passive property investment can have a snowball effect. So it really goes through, starting with one property, most of you probably can’t see this, but you start with one property. Every two to four years, you remortgage and buy another one. So you go from one, to two, two to four, four to eight. And that might be a very simple way of looking at it. But actually, it’s very achievable. Based upon the last 20 years’ growth, it’s been 5.5% per annum. So if you’re doing 5.5% per annum, and you’ve bought well initially, you should be able to remortgage every three or four years, release equity, and buy another property. So it talks about how, for example, somebody who is 30 years of age starts investing with one property, by the time they are 55, they’ve got 73. Sorry. 32. Excuse me. They’ve got 32.
Paul Mahoney: They go from one to 32 in 25 years, which the numbers speak for themselves, but they’re average numbers. These aren’t setting the world on fire. This is just remortgaging, reinvesting, based upon UK average returns. And it is actually very achievable and quite compelling I think, so far as if you’re being active, if you’re being brave in what you’re doing, you can actually do that. And then it goes through some key resources. Some of the things that we use as a business and I use personally, both on a day to day basis, as well as some various books to read and things like that, that obviously aren’t as good as this one, but are okay.
Paul Mahoney: And then little about me as well, in case you hadn’t heard enough tonight. As I said, the guys are here from Property TV, which is great. And they’ll be filming the event tonight. I host a TV show with them called Proper Wealth, which effectively is an informal conversation between me and various industry experts about their area of expertise, the current market, what’s changing, and certain tips for various people. So that’s all on our website. It’s also on the Property TV website, and it’s on Sky on channel 189 between 8:00 and 10:00 every night. Well, not every night, but the show’s on every night.
Paul Mahoney: So we’ve got very good feedback from the TV show. If anyone likes video, which I think is the way sort of marketing is going these days, there’s lots of video on the website for you to sink your teeth into. There’s 17 episodes of Proper Wealth, and there’s about 250 of Property Question Time, which is another expert panel that I feature. And I think I’ve done about 60 or 70 episodes of that now. So that’s all on our website as well.
Paul Mahoney: This is questions sent in from viewers, so similar to the panel we’ll be doing tonight, we do this every couple of weeks with Property TV. We have lots of educational resources on our website as well, which are all free, and a good refresher or starting point. And in some of the emails we sent out, we talked about a promotion. So aside from the eBook, so far as actually doing business with us, and us helping you improve your situation, we always run a complimentary meeting in our Central London office. It’s a bit of a meet and greet. It’s an opportunity for us to get to know you, you to get to know us, learn more about us, we learn more about you, and see if there’s a fit there. Is there an alignment of thinking? Is there the potential for us to help? That’s where we can help. How to put in place the right strategy for you, help you implement it, help you improve your finance structures, your strategy, and effectively just work toward your end goals in a better way.
Paul Mahoney: We have all of your details already, and the guys will be giving you a call over the next few days to see whether you’re interested in that promotion. And if you are, then you’ll qualify for the waiving of the fee. So just keep that in mind when you have a chat with the guys. This is our management team. This is effectively where that advice comes from. I’ve probably spoken enough about myself. Ian is the head of our advisory panel. Ian was the CEO of Vail Williams, up until when he joined us, which is one of the largest surveying companies in the UK, so obviously knows property. But probably more importantly, he makes sure that we’re dotting our Is and crossing our Ts. He reviews every recommendation that comes from within our business to make sure that we’re doing the right thing by people, which of course, we’re always aiming to do. But checks and balances are important.
Paul Mahoney: Charles has been with us for 20 odd years, and is [inaudible 00:38:25] approved person, as am I. Gary was an IFA in the UK for many years. He then moved to Hong Kong and has been involved in about half a billion worth of property transaction. Stephan actually worked with me in the company I mentioned before in Australia, and came over and joined me at Nova two years ago to run our front office team, and is now director and shareholder. And Sam was actually my first employee in London five years ago, so Sam’s worked with the business, grown with the business, and is also now a director and shareholder of the business. So we like to grow our people from within. So effectively, we have lots of experience there. That’s how we’re able to, as I say, add value to our clients’ decision making process.
Paul Mahoney: Right. Forget about feedback. But questions, does anyone have any questions? Just raise your hand. Yep.
Speaker 3: Have you used a SSAS a method [inaudible 00:39:20] wealth?
Paul Mahoney: Good question. You obviously haven’t read the book. I’m only joking. Yes. Yes, we have. And it is in the book. Yeah. So in the ownership structuring section of the book, we talk about the use of SSASes. And if you’re a business owner, they are fantastic. They are almost a no brainer if you have owned a business in the past, or you’re a current business owner, they’re great. So yes, if that’s you, you should understand them and determine whether they’re right for you. But as I say, they can be very, very good because they’re so much more flexible than your traditional pension options to the point where you can actually take money out and use it to invest directly in property.
Speaker 3: And lend to other people.
Paul Mahoney: And lend to other people, exactly. So yes, it can be a good idea. Shouldn’t say it’s a good idea, but it can be. Seek advice. Any other questions, guys?
Speaker 4: Yes, sir. I didn’t hear that. What’s SSAS?
Paul Mahoney: It’s a small self administered scheme. So effectively, it’s called a small self administered scheme. That’s what SSAS stands for. But effectively, if you can prove that you’re a savvy business owner in the eyes of HMIC, which effectively just means you’ve run your own business in the past, and you’re a businessman, or businesswoman, businessperson, more PC, you can take your current pension with whoever that might be, Fidelity, take it from them and put it into your own structure that you effectively manage yourself. There doesn’t need to be someone overlooking it. But it’s very, very flexible so far as what you can do with that money. So again, if you’re a business owner, it’s worth looking into. And there’s a bit on it in the book. Yes.
Speaker 5: Are SSASes still restricted to commercial investments?
Paul Mahoney: Within the structure, they are. But you can take money out of the structure as a loan to yourself, or somebody else, or to your company, and then they’re not. With that money you can do as you … Well, not as you will, but any investment you can use that money for. So yes, leverage property investment, for example, you can use that cash for.
Paul Mahoney: Good, guys. Well, look, as I say, you’re probably sick of hearing me, so we’ll have a bit of a break, get a drink, have more of a chat. And then we’ll come back for the panel in about 15 minutes’ time. Thank you.