0:02

Hi. I'm Rob, and I'm Rob. And this is Oscar

0:04

from Rob.

0:07

Hello, everyone, and welcome to our Robin

0:09

Rob, the show, but where you give us your

0:11

wonderful questions, and we do our

0:13

very best to keep you all wonderful answer or at

0:15

least a useful answer. It's super simple

0:18

to come on the show. We've done hundreds of these

0:20

episodes now, and hopefully,

0:22

you do know how to get on the show. But it

0:24

just been case, you're new to the podcast

0:26

that you haven't quite absorbed the information here's

0:29

another reminder. Yep. So easy.

0:31

Just call 013808 triple

0:33

835 or you can go to property hub

0:35

dot net slash ask. Either

0:37

of those methods will leave you to a voicemail,

0:39

where you can leave it a recording of your burning question,

0:42

just like Gareth did. I run

0:44

Rob. It's Gareth here from your method that will drop the word

0:46

off. I listen to podcasts every week at the gym

0:48

and always find them really informative and inspiring.

0:50

So thank you very much and keep them coming. My

0:53

question is, people

0:54

take a bit if we're in year fifteen or

0:56

so of the eighteen year property cycle

0:58

and that a crash in the market accordance with the

1:00

cycle principles is inevitable. And

1:02

what preparation would you suggest we do know

1:04

to minimize any potential impact that

1:06

this may have to buy to let and deal

1:08

sourcing strategy? Thanks very much,

1:10

and we look forward to your answer. Gaurav,

1:12

I want two more reps out of you before

1:14

we answer this. He's going easy on you as well because you're

1:16

sort of such a wonderful part of the world. Yeah. Normally, that's

1:18

for another ten. Going well, but let's

1:20

assume Garav than the reps, and let's give them

1:22

an answer. Okay. So I think this is really

1:24

interesting question. And something

1:27

that I've started thinking about a bit recently, but

1:29

we haven't actually talked about. So see what you

1:31

think about this. I think Gareth

1:33

sounds like he's coming in with a healthy

1:36

understanding of the property cycle, but

1:38

I think it can be used in less

1:40

healthy way. what I mean by that is because

1:42

we talked about the cycle so much. We

1:44

get endless questions. Where do

1:46

you think we are in the cycle? What's gonna happen

1:48

next? and those are completely understandable

1:50

questions to have. But they get very fixated

1:53

on what's going to happen over the coming months

1:55

or maybe the next year or two. or

1:57

to put it a better way, they get you very fixated

1:59

on what

1:59

might happen over the next year

2:02

or two because the cycle is

2:04

a useful model, but we said every time

2:06

that we talked about this, that the eighteen year part

2:08

is an average. It doesn't always work like

2:10

that. So it's very easy to spend a lot of

2:12

time convincing yourself that a crash is

2:14

just about to happen and therefore not investing.

2:17

So it's not a model that you can use with complete reliability.

2:20

To make matters worse, it would

2:22

be a bit weird if you did have such complete

2:24

faith in the model that you just ignored what was going

2:26

on in the world and followed it blindly,

2:28

which is why people don't do it. And

2:30

so if you look at everything that's been going on

2:32

ever since Brexit in two thousand and

2:34

sixteen was it whenever it was. People

2:37

have been saying, oh, this is mad thing has happened,

2:39

does that mean that the cycle is broken? And

2:41

as a result, the cycle isn't even helpful

2:43

there because it's still giving people fixated

2:45

on what might happen to property prices. So

2:47

this is all a bit of a rant to say that while

2:49

I think, Jared, you can win a very sensible

2:51

take on this. What could I do to prepare if this

2:53

is inevitable? a lot of people, I think, have

2:55

a less healthy take on it and are

2:57

always obsessing about when that crash

2:59

may be and therefore end up

3:01

not investing at all and not investing at all.

3:04

generally speaking, the worst thing you

3:06

can do. So basically, I

3:08

think my answer would be maintain the

3:10

attitude that you've got now Do we gonna

3:12

do without worrying about the exact timing

3:14

too much? But do do some

3:16

basic things to prepare. For example,

3:19

mortgages and financing is a big

3:21

one. We know from past experiences

3:24

that when a crash does happen, it's

3:26

gonna be much harder to get mortgages. So

3:28

if you're an an expansionary frame of mind,

3:30

you might want to go and do as much remerging

3:32

as you can while you can.

3:34

So you've got that cash sitting there ready to

3:36

deploy. because the other thing that you mentioned

3:38

was deal sourcing. Deal sourcing

3:40

is gonna get a lot easier if there is a

3:42

crash because suddenly everyone's gonna be freaking

3:45

out and wanting to sell. So again, it's

3:47

up making sure that you're ready for that. Rob, I feel

3:49

like I'm giving you a very kind of

3:51

upbeat and almost sort of vibe

3:53

answer to this, but I'm doing that. Because Gaurav seems

3:55

to be approaching this in the spirit well,

3:57

I want to invest. I wanna keep on investing.

3:59

And so how can I play the market while

4:02

I do that? if you come in saying,

4:04

I'm really scared of a crash. Should I

4:06

be telling now? Then I'll give a very different type

4:08

of answer. But, yeah, what do you think about this?

4:10

I think the framing you've given around this is

4:12

great, Rob. And another way to approach

4:14

this moving forward is, yes, you

4:17

can have ideas of what may or

4:19

may not happen in the market. But if

4:21

you've got a great deal in front of you, are you

4:23

not going to do it because the market

4:25

may crash? If you look at Warren Buffett,

4:27

yes, I know he's not a property investor, but he's still

4:29

an investor. And if he

4:31

sees a good deal, he'll invest. He

4:33

doesn't try in time the markets. So

4:35

if you, as a property investor, see a

4:37

good deal and have an opportunity to get

4:39

one, which is easier said than done.

4:41

But if you are in that position, you

4:43

shouldn't really worry about the markets,

4:46

especially if you're investing for the

4:48

long term. If you are a

4:50

long term investor, which a lot of people who

4:52

listen to this podcast are, then the

4:54

market shouldn't matter too much to

4:56

you. if you have the opportunity to

4:58

invest in a good deal. Now if you're

5:00

an investor who flips, property, for

5:02

example, that's buying and selling and trading,

5:04

If you do that, then yes, you

5:07

need to be more alert and

5:09

more sensitive to what is happening in

5:11

the market. or if you are a long

5:13

term investor, you need to keep an

5:15

eye on it, but it shouldn't dominate

5:17

your thoughts. Work on getting the best

5:19

deals you can now find in areas that

5:21

present the best value and

5:23

continue to invest in those areas. In

5:25

the last cycle, if you were investing in

5:27

London, even way up

5:29

to the peak of the cycle, you were going to

5:31

be doing very well after a

5:33

few short years after the crash happening. So

5:35

yes, property prices crashed in o

5:37

eight. but then in London, they recovered really

5:39

quickly. So London was

5:41

offering value before the crash,

5:44

everywhere crashed together, but then London

5:46

really accelerated rapidly

5:49

after the crash. Within a few short years,

5:51

those losses were gone. And

5:53

actually, a few years later, you are

5:55

making huge profits. Now you could say, well,

5:57

I could have bought when the property

5:59

went down and that was the best time to

6:01

buy a London property, but you don't know when that's

6:03

gonna happen. So buy the fundamentals,

6:05

buy the value, and buy

6:07

the best deals, and over the medium to long

6:10

term, you'll be looked after. Okay, Garrett, we

6:12

went on a bit there, so had more than enough

6:14

of a break between sets get back to it.

6:16

And while you do that, we'll hear from Max.

6:19

Hi Rob and Rob. Max here from

6:21

Milton Keynes. First of all, thanks

6:23

for the great content. My question

6:25

today is regarding emergency funds.

6:27

So my wife and I are in the process of

6:30

remergaging to pull some money out of

6:32

our current home with the

6:34

the hopes to start a BiTELET portfolio.

6:37

Part of my plans is to have

6:39

a three month emergency fund

6:41

to cover all of our if there wasn't expenses.

6:43

When I'm looking at vitallets, I'm

6:46

calculating at a ten percent buffer

6:48

just to cover kind of voids and maintenance,

6:50

which I've seen. My question is

6:52

is this still needed if we've got

6:54

that emergency fund there? Or do you think I

6:56

can increase my cash flow and

6:58

not include the buffer there?

7:00

Thanks for your thoughts. Hi, Max. Thanks

7:02

for your question and well done because not

7:04

everybody will be doing what you're doing and

7:06

they probably should, having an emergency

7:08

fund is a really good idea, particularly

7:11

if you are relying on one source

7:13

of income. And what I mean by that is if

7:15

your income only comes from your job

7:17

and then that job disappears, then you have no

7:19

income. If you have a large portfolio

7:21

of properties and they all produce an income

7:23

then maybe your emergency fund doesn't need to be

7:25

as big because you're derisked by

7:27

all those funds coming in. Right. That's

7:29

emergency funds. The amount you need,

7:32

three months is fine. Some people like to go

7:34

to six months. It's up to you. Whatever

7:36

makes you feel comfortable, but it's great that

7:38

you have that in place. And as a basic personal

7:40

finance rule, I think it's great practice. And if

7:42

you're listening to this and you haven't done this

7:44

yet, it's something worth seriously

7:46

considering.

7:47

now Now moving

7:48

on to your BioSelettes and how much you

7:50

should put aside for voids and maintenance.

7:53

It's interesting that you pick ten percent and

7:55

you do see some of these rules where it's like, I'll put

7:57

this amount ten percent. For

7:59

me, it's going to vary for

8:01

every single person. and it's

8:03

also going to depend on how big your portfolio

8:06

is. So I believe that

8:08

two to five thousand pounds is probably

8:10

enough for most properties. And the reason that the

8:12

range will depend on the property, so if you

8:14

have a brand new apartment, then

8:17

you would be at the lower end of the range.

8:19

two thousand pounds will probably be enough, and I'll explain

8:21

why I picked that number in a minute. If you have

8:23

an old Victorian terrace,

8:26

then maybe the five grand

8:28

is probably where you need to be because you're

8:30

more likely to have repairs

8:32

needed and things go wrong

8:34

just because of the property profile.

8:36

Now a mistake some people make is then they

8:38

do that for every property

8:40

and I feel that's not needed because

8:42

as I started with, once you have multiple

8:44

streams of income, your risk diminishes.

8:46

So if you have a large portfolio

8:48

and you're getting income from all of them,

8:51

every month you're making profit. So

8:53

if you put enough money aside for one

8:55

property and then you go really on alternate and

8:57

two went wrong at once. Then

8:59

you've got the income from the other properties, which could

9:01

probably quickly top up your

9:03

emergency fund for your buy to

9:05

let. So

9:06

you may

9:07

want to increase that amount slightly

9:09

if you grow your portfolio out but

9:11

not buy a lot. So two to five

9:13

thousand pounds is kind of the range I would

9:15

put aside for any property. And

9:17

then you may increase it slightly as you build

9:19

your portfolio out, but not at the

9:21

same ratios. So at some point, you would stop adding to

9:23

that part because you would have enough. Now,

9:25

there are some exceptions and some variables.

9:27

For example, if you

9:30

invested in country estates

9:32

of twenty bedroom mansions, then you

9:34

might want to port a bit more aside than the range

9:36

I've given. But the range I've given is for a

9:38

sensible by flat range of the time properties

9:40

most people would invest in. Yeah. I completely agree

9:42

to what you said, Rob. Having an emergency fund is

9:44

obviously a good thing. And

9:46

I think sometimes people do gotta

9:48

overdo it, which again is coming from a good

9:50

place because it's being diligent and it's far better

9:52

to be that way than the other way. But the kind

9:54

of rules of thumb that you see are useful

9:56

up to a point, but in reality, everyone's

9:58

situation is so different. People's portfolios

10:00

are so different and people's

10:02

personal situations are so different.

10:04

Right? some people lucky enough

10:06

to have family members that they could go to to

10:08

borrow a couple of grand in a pitch if they

10:10

needed to. And that means that they could then be a

10:12

bit more aggressive with their own cash if they

10:14

wanted to compared to someone who didn't have

10:16

that option. And there's loads of other factors as well.

10:18

I don't know that's less reassuring then.

10:20

Oh, you should definitely have this number. But that's the

10:22

reality of it. Hopefully max that will set your mind

10:24

at rest because if you're even thinking about

10:26

this, then chances are you're gonna be

10:28

fine. That is us done for our scrubber

10:30

and Rob for this week. Thank you for joining us.

10:32

We'll be back with a property podcast on

10:34

Thursday. We'll see you in. Bye bye. Bye

10:38

bye.