Questions, Questions Sorting out problems Are you right for investing in property? This is not a chapter that is going to tell you where to get a mortgage, how to pick up a repossession, or how to buy with no money down. Those are the mechanicals. You can learn them anywhere. What you really need to know is: what the heck is the next move? Are house prices going to stick? Are they going to go up? Should I buy now, or wait for better times? Should I get on the ship before it sails off into the glorious sunset of everlasting profits? Should I buy in the UK? Should I buy in Morocco as it's the new kid on the block? Should I pile into an off-plan deal somewhere cute? Should I make my money grow larger somewhere else first? And how the heck do I buy somewhere I can live in that is actually cheap? Can I really get someone else to buy my fabulous home for me? Lots of questions. I cant answer any of these questions because every one requires a personal answer. There are other questions. What's your attitude to risk? Do you mind working your butt off? Can you put up with a hard lifestyle for a few years hoping to make it better later on in life? There is another way to approach all these problems. You need to take a good hard look at two basic questions: 1    Who are you? What makes you tick? What sort of a person are you? Are you good at business? Are you lazy? Are you a dreamer? And so on. 2    What do you actually want from life? What is important? What are you really prepared to sweat for? Sorry about this. All these questions. It's worse than being pulled by the fuzz to answer questions about where you were on the night of the murder. But unless we tackle things this way round we wont get anywhere. To give you a clue as to how to answer these last two sets of questions, let me try and answer them for myself. I am then going to apply those answers to my situation, which for the purposes of this book, is to answer the four questions asked in the introduction. Okay, who am I? I'm a very practical person. I have multiple skills. I trained as an architect and a surveyor. I have been a builder. I can fix the electrics, do the plumbing, lay blocks, and lay drains. I am a workaholic. I am also a bum at heart, and a pesky musician whose only real love in life is to muck about, play games, and play music. Give me a difficult proposition, and if it appeals to me I will have solved the difficulty by tomorrow breakfast time, and probably started work on the project before the week's out. On the other hand I know loads of people who are simply not motivated, even for the things they claim to want, and end up pottering off to the pub, or watching t.v., or simply falling asleep. If you are one of the first types, you can go places. If you are more like the latter person, stop reading this, turn on the t.v. and dont bother with this book. I cant help you. What do I want from life? That's more difficult. This changes as you go thru life. My kids have grown up, and altho they are still a bloody nuisance, by and large they get on with their own lives, and I can get on with mine. My wife died some years back, and my girl friends are suddenly busy doing other things, so I can pretty well do what I like without anyone shouting at me or demanding my attention. If you have attachments, they make life more difficult. Your choices are more limited. In 1991 I made a  big decision. I decided to go for my pension. I discovered something. I went out and did it, and later it was called buy-to-let. It made me relatively rich. You can read all about it in my book After the Property Boom, which I wrote just over a year ago. I bought cheap housing for two reasons: a) the maths stacked up; b) the business proposition was exactly in line with what I wanted for the future. In short, the deals gave me my pension. As I say in that book, things then changed. My own ideas changed, and the market changed, so naturally the plan had to change as well. What was a great deal from 1991 right through the next twelve years suddenly looked damn silly in 2003. Anyone buying into the buy-to-let dream in the UK after 2003 has, in my opinion, been chasing last year's dream. My own advice on the Unique website to anyone who would listen was to stop buying and consolidate. I even suggested in the summer of 2004 that it might well be a good idea to sell off the less profitable deals. The principles here are simple. Dont be greedy. Always leave the last 10% rise in any market to idiots, there are plenty around to take the deal off your hands. Let them sweat for the last crumbs while you safely bank the big profits. Slowly but surely a picture is beginning to emerge from this mess of questions. We have here the makings of a few propositions by which we can judge future situations. But let's not be hasty. Let's get a bit further into this. Let's go back a bit. I pointed out that I had a clear idea of what I wanted to do, of where I wanted to be a certain number of years down the line. I'll spell that out in a minute so you can see how I was thinking. I also pointed out that the maths stacked up. Maths are important. If you dont get the figures right you will make a right cock-up of any venture. This is business. Business requires accounts. And I dont just mean adding up what you spend, and totalling what you get back, and subtracting one from the other. You need to know what to add up. You also need to know a lot about markets and other people's habits. You also need to know one very important thing. You need to know how to value things. I'm prepared to guarantee that if I asked 100 people to value a house not one of them would be able to do it, yet they've probably all bought one in the past. If you cant value a house you should not be in the business of buying houses. You also need to know how to gauge a market. What factors affect a market? If you dont know, then you are in the wrong business. How often have you heard that house prices must go up because the number of people wanting houses is increasing because there are now smaller families, and just look at all those immigrants, they have to live somewhere? What a load of rubbish! None of that has anything to do with demand for buying houses. After all, there were loads of people wanting houses in 1988. Where had they all vanished to just twelve months later? You've probably heard that house prices always go up over the long term. Another load of rubbish. They dont, they go up in line with a very definite formula, and I have 250 years of data to prove it. You need to know what that formula is. You have also probably seen the leaflets showing how house prices have been going up at 8% on average every year since the second world war. When did you last see a leaflet that told you that was a very good reason for not buying a house to make money? Has anyone ever taught you about opportunity cost? Most people dont add that cost into their sums, and as a result, lose more money. Do you know what the real costs of a house are? And how to reduce those costs? Do you know what the ideal buying strategy is? And why you can only use it in certain markets and not others? In short, do you know when to buy? Most people do the exact opposite of what they should do. In the next chapter I will start to give some answers. We need a series of definitions, propositions, and guide lines to follow. Read on. Next >>>

© John Clare and The Property Organisation 2007