A key truth about property investing, which many new investors and would-be investors forget, is that to be a successful property investor you must be persistent. There is no substitute to keeping going. Successful property investors are the ones who never gave up or, to mis-quote a famous motivational observation, successful property investors are the failed property investors who kept on going one more time.
In my experience, and the experience of many if not most, property investors is that worthwhile though property is, things rarely go the way you think or hope they will.
Actually this is true of all businesses and life in general. The self-development gurus will tell you that “A successful person is one who tried just one more time”. Also that success is 90% attitude and only 10% aptitude.
But what does this mean in practice in a property context? In my experience, from the day you start until the day you choose to finish, you’ll suffer setbacks, rejection and disappointment. But before you give up now, the highs in between will give you immense satisfaction, and hopefully excellent returns. It’s really a case of three steps forward, two steps back.
One of the first things a property investor will need to sort out is finance. This is where the rejection potentially starts. You might have read all the books, including mine I hope, and spent hours reading the excellent posts on the Property Secrets website. You might have done your research, set your goals and put together a perfect business plan, but these things in themselves might not be enough to impress your first choice lender.
One of the first and most surprising sources of discouragement you might encounter can be from friends, and more harmfully, family. Then there are work colleagues, acquaintances and other lounge bar experts. Many will be able to prove beyond doubt that now is not the right time to start investing, or that a crash is around the corner, or that property has always been a poor performer compared to the stock market, all things I’d dispute.
Then there’s the bank manager. With the popularity of buy to let you aren’t likely to find it difficult to borrow for a residential investment property. However, anything other than this may open you up to rejection. When I first started, I had a resounding no from the main high street banks I wanted funding from for a refurbishment property that I wanted to do up.
One of the most infuriating forms of rejection you almost likely experience is from estate agents. Often I have registered to receive details of suitable properties but have received none, even after follow-up phone calls to remind them. This is something I don’t understand, still, perhaps they already had ‘pet’ developers and investors who got first pickings. Of course, almost as bad is the estate agent who is all over you, offering you everything they take on whether it meets your criteria are not. But that’s another story. Then there’s vendors. Is everyone going to accept your first offer? Of course not. Are most going to accept offers? No. In fact, unless most of your offers are rejected you’re probably offering too much. You are likely to hear “No” a lot. This doesn’t mean you can’t negotiate, it’s better to start low and get a no, and then increase your offer gradually until it is accepted, than to go in too high and get a yes, and then wonder how much cheaper you could have bought it.
Finally, there’s a miscellaneous category to cover all the odd occasions you might be rejected or discouraged. As a condition of my limited company’s mortgage facility I have to personally guarantee all the mortgages and confirm, each time I draw down any funds, that I have taken independent advice from a solicitor. However, both local solicitors in my home town refused to do it, on the basis they were unable to give this advice under the conditions of their professional indemnity insurance.
So why am I telling you this? If there’s nothing but obstacles and disappointment ahead, is it even worth starting in property?
The answer, of course, is yes. The returns you can make from property should make the whole process more than worthwhile. But to be forewarned is to be fore-armed. As I said at the beginning, the successful investor will be the one who presses on despite the obstacles and disappointments. Entrepreneurs are often described as problem solvers and this is equally true of property entrepreneurs. Every business has its difficulties including property, and this is only to be expected.
Here’s to successful property investing
Peter Jones B.Sc FRICS
By the way, I’ve rewritten and updated my best selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to ThePropertyTeacher.co.uk