Soundbite: Scaling Your Property Business Part 1

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A week or so ago, I had a couple of conversations with Jesse Fossey Taylor, who owns approaching 200 rental properties. We talked about several things in our first conversation, but the thing that struck me the most as being potentially the most useful to you was the topic of scaling our property business. Jesse has what he calls a lower mid-szie portfolio and knows several people with one or two thousand properties. However, when we don’t have our first property and are looking to get involved in property or to grow a portfolio, he has been through several stage of portfolio development and growth, with the resulting experience that goes with that.

So, today I shall share the first part of our conversation and the pick up some of the summary key points afterwards.

Resources mentioned

Link to the Podcast feedback survey

Zero, Wave, Quickbooks

The Property Voice Live on 7th October – Workshop Event Details

Today’s must do’s

Join me at The Property Voice Live!

If you are planning to scale your property business beyond 5 units, then take note of the key points made bu Jesse, who has grown to 200 BTL properties:

You don’t have to be special and you can find a winning formula, rinse & repeat…just don’t get bored along the way!

Enlist professional help sooner rather than later: lettings manager / agent, bookkeeper, accountant, mortgage broker & potentially a solicitor.

Have a written guide to share with people working on your properties in the form of an operations manual or checklists at least.

Finally, get started and have a problem to fix rather than worry about a problem that does not yet exist (e.g. choosing to invest individually or through a company).

Subscribe to and review the show in iTunes…and while you are at it please help us to spread the word by telling all your friends too!

Send in your property stories, questions or moans to podcast@thepropertyvoice.net and we will try and feature YOU on the show too!

Property Investor Toolkit – here is the book link on amazon.co.uk & amazon.com

Get talking!

Join in the discussion, either here in the comments section below, or by emailing us at podcast@thepropertyvoice.net

Start a conversation on Twitter with us @PropertyVoiceUK or on our Facebook page

Transcription of the show

Hello and welcome to another episode of The Property Voice podcast. My name is Richard Brown and, as always, it’s a pleasure to have you join me on the show again today.

A week or so ago, I had a couple of conversations with Jesse Fossey Taylor, who owns approaching 200 rental properties. We talked about several things in our first conversation, but the thing that struck me the most as being potentially the most useful to you was the topic of scaling our property business. Jesse has what he calls a lower mid-szie portfolio and knows several people with one or two thousand properties. However, when we don’t have our first property and are looking to get involved in property or to grow a portfolio, he has been through several stage of portfolio development and growth, with the resulting experience that goes with that.

So, today I shall share the first part of our conversation and the pick up some of the summary key points afterwards.

OK, so over to Jesse now then in Property Chatter.

Property Chatter

Interview with Jesse Fossey Taylor.

I found Jesse to be a very interesting person to talk to. He has more properties than I do and that’s fine with me as I have different goals and lifestyle choices to Jesse. That also means we can learn a lot from someone that has scaled from a single property around 17 years ago to approaching 200 now. We can learn a lot from Jesse’s experience and insights I think.

Jesse freely acknowledges that things are different now, perhaps slightly more challenging, especially with property financing. However, things will always be different and subject to change and so if not change to finance or S24 mortgage interest restrictions, there will always be something new and different for us to deal with and that’s one of the biggest lessons right there. The only constant is change.

But let’s extract some of the key takeaways from part one of our discussion right now.

Firstly, Jesse doesn’t see himself as special in any way. He admits that he initially got involved in property in something of an unconscious way…the first sandwich shop with it’s crazily complicated method of purchase illustrates that…born out of need than desire.

He has found a model for success and repeated it multiple times over to grow and scale his portfolio. The buy-refurbish-refinance model is very effective and also quite boring; trust me I know this too!

Jesse points out that becoming involved with property is open to pretty much everyone. Now, some people might be saying they need at least £25,000 to get started and in traditional BTL, that’s probably about right. However, there are other ways of getting involved and raising the starting fund as I have spoken of many times. Even so, saving for the first deposit and adopting a BRR strategy, makes the second one easier and the third and the fourth and so on. The reason is that with a value-adding / recycling strategy, you get to extract most of your starting capital. So yes, we need to practice some delayed gratification for a few years, but then it starts to payoff by lowering the bar for the next acquisition.

Run your portfolio as a business. Need I say any more about this topic? Not really, if you have heard me speak long enough, you will know that is one of my major recommendations. However, specifically, Jesse advises us to not try and do everything ourselves and to get in professional support in three key ways:

Lettings management – he eventually brought in a lettings manager internally, personally I use external letting agents. The common theme is to outsource to a professional.

Bookkeeper – track your ins and outs and monitor your portfolio health through some KPIs or Key Performance Indicators every month. Granted, with a single property that’s possibly slightly too much…but as we get beyond say 5 or 6 properties and head towards 20, then this becomes an essential requirement. Personally, with my own financial background, I am happy to track the portfolio…for now. However, it is quite tedious to undertake detailed banl reconciliations every month and prepare the monthly reports, so there comes a time when a bookkeeper will help no end.

A accountant – following on from a bookkeeper is an accountant and I noted that Jesse mentioned one with experience in property. The interaction with the accountant will be lower than with a bookkeeper but is more strategic in nature. Besides the legal and tax compliance, a good accountant should be able to advice on the right structure that suits your needs.

Mortgage Broker – an essential part of anyone’s team as a good broker can help to avoid that ‘oh no’ moment when you discover that you don’t meet a lender’s criteria, you fall foul of the new portfolio landlord rules or you just realise that it really is a specialist area that you need specialist help with.

Solicitor – Jesse didn’t mention a solicitor and to some extent I understand why. Legal conveyancing with basic property purchases is not that difficult to be perfectly honest with you. It is only when more complex structures get involved that we would value and appreciate a quality legal firm with the right credentials, team and experience. I now have one, but my first half a dozen purchases or so were nothing special really and I think I worked with around half a dozen different conveyancing firms back then. Now, I have a single legal firm that I go to each time and it does make things simpler. They already know me, we have a good understanding of my needs and the working relationship works very smoothly.

Operation Manual – Jesse mentioned this, albeit briefly. As we scale, we need to bring in additional help and if these people are internal, then we need to set some guidelines of how they work. An operations manual at the basic level is just a checklist (my preference actually). However, it can also develop into a formal written set of policies and procedures. Remember that it must be fit for purpose though. No point in having something that would get us ISO9000 accreditation when all we have is a single BTL that we self-manage or pass to an agent!

The last area we discussed in part one was in structing our property portfolio. I’m really pleased that Jesse said what he did about get yourself a problem before worrying about it, as that’s how I see things too. In truth, for the first 5 or 6 properties it doesn’t matter too much whether we go in individual names or through a company. There will be certain times when one option seems to favour another, but as Jesse points out, only if we actually go and do something.

So, yes by all means set up a limited company if you plan to grow a large portfolio, this does seem sensible as Jesse mentioned. I would agree that as a higher-rate taxpayer it should be considered too. However, if you are not sure that you want to scale and you are a basic rate taxpayer, the costs of incorporation can outweigh the tax savings until you reach the 4-8 properties we talked about.

The real key here is to get a good tax accountant and I see so many people looking for free advice on the property forums instead of paying a good accountant a few quid for decent professional advice. Let’s face it, if we plan on spending £100k to half a million pounds on our first half dozen rental properties, why not fork out around £1,000 for a bit of professional advice from a decent accountant? It still amazes me why people won’t do this and is a clear example of poor man’s thinking as I like to call it.

The final watch phrase that Jesse used was ‘you don’t want to be an early adopter’. I like that and that’s a fitting way to draw a line under part one of our discussion I think. Property investing does not need to be complicated, although there are several moving parts. The key is to keep things simple and boring…that seems to be one of the key ingredients to scaling your property business from this discussion at least.

If you want to talk about anything from today’s show the email me podcast@thepropertyvoice.net. Equally, he left his contact details on part two but just in case you wanted to get in touch with Jesse now, you can find him and his company at http://www.fosseytaylor.com/. Join us next time for part two of our discussion as that’s where all the goodies and giveaways are mentioned as we dig deeper into the mindset of a large portfolio landlord, whether or not Jesse sees himself in that way!

As usual, the show notes will be over at the website www.thepropertyvoice.net

But for now, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao ciao.

The post Soundbite: Scaling Your Property Business Part 1 appeared first on The Property Voice.

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