Hi, Peter Jones, author, property investor, ex-chartered surveyor.
In this short series of videos I’m looking at the lessons which I learned in 2008 which we can extrapolate forward into 2020. So far we’ve been through don’t panic, don’t confuse busyness with productivity and look after yourself which basically means having a routine making sure that you eat the right kind of stuff, making sure you’re doing the right kind of stuff, watching your mental health, all of that kind of good stuff. If you haven’t seen the previous videos then please do have a look.
Lesson number four. We’re going to get into a bit more nitty-gritty about property, and lesson number four which I learned the hard way in 2008 was don’t have just one strategy. Particularly don’t have just one strategy in property, because this is what happened to me.
2007 and the beginning of 2008 was actually very good, between 2006 and the middle of 2008. Because I tend to invest in the northeast of England there’s a bit of a lag really up there between what happens in the northeast and what happens in the rest of the country so I know that the property market was probably or potentially slowing down where you were in maybe 2007 or the beginning of 2008. We didn’t really see the slowdown in the northeast until about the middle of 2008 from my recollection and so things were going quite well.
2008, September, Lehman Brothers collapsed and it all went like that and suddenly it was a horrific thing because not only were the values of all the properties which I bought plummeting which was a bit of a shock in itself, if not a disaster in my mind, but it meant that my kind of activity within property was no longer a valid activity because my strategy which is buy to let, I love doing buy to let, didn’t work.
Because 2008 was caused by a banking crisis, a financial crisis, and the banks stopped lending. If the banks aren’t lending for property, if the banks aren’t lending buy to let mortgages for property if you know no other way of doing it then it means that everything you do has to stop, and that’s basically what happened to me. I had no alternative strategy.
Now looking back I can see with hindsight because of this I made sure that I went out and that I learnt, I met people who perhaps done better than I did during the last recession and I found out how they did it and I’m now much more prepared for what may happen in this recession and what may happen in future recessions because one strategy didn’t work. I didn’t know how to do no money down deals using options, for example, but I do now and I have done some so I know I can do that. I ddn’t know at the time that I could replace bank lending potentially by using private finance using JV partners but now I know that and I’ve used JV finance over the last few years I know how to do it.
This is the key thing if you have only one way of doing something and that way doesn’t work anymore then you’re stuck. So a big lesson from 2008 for 2020, and I realise that if you’ve got to 2020 and you only have one way of doing your property activity this is really just telling you what you already know but hopefully you’re not finding yourself in that position but if you do just remember this lesson because going forward when the next recession comes you don’t want to be caught out in the same way again. So be thinking about what complementary strategies you can undertake with the strategy that you currently perhaps, is your major strategy.
So for me, for example, I’ve already just mentioned no money down strategies they will work, they particularly work in a downturn so that’s good but flipping property trading property I think is something which is complementary and which would also work in a downturn. Why? Because it was obviously going to be a possibility that you can buy property cheap and sell it on. Now if you haven’t got the finance then again you could be a little bit stuck but if you can learn also in the meantime how to raise finance, how to use JV finance, for example, then that could allow you to trade and do deals.
So these are the things which I think you need to think about. Things which are complementary and which fit with the strategy that you want to undertake but the key thing is don’t just rely on one strategy. If you have all your eggs in one basket and then everything grinds to a halt the potential is that your one strategy won’t work and you will need a replacement strategy. Even better is even during the good time is to run more than one strategy so that when the bad times come you’re already up and running and you’ve already got momentum and you don’t have to chase your tail getting yourself started again.
Anyway I hope that helps. Until next time, here’s to successful property investing.
(ex) Chartered Surveyor, author and property investor
PS. By the way, I’ve rewritten and updated my best-selling e-book, 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: