0:02

Hi.

0:02

I'm Rob, and I'm Rob. And this

0:04

is Ask Robert Rob.

0:07

Welcome to Ask Robert Rob. Good to have you here.

0:09

as we're just about to answer two more

0:12

questions from wonderful listeners just

0:14

like you. If you got a question

0:16

about property, the economy, or

0:18

business, or anything, tangentially

0:20

related to what we talk about on this show, then don't keep

0:22

it to yourself. Send it away. This is how

0:24

you do it.

0:25

Yes, indeed. You can give us a call

0:27

and leave us a voice mail by ringing

0:29

or dialing 013808

0:31

triple 035 or you

0:33

can go to propertyhub dot

0:35

net forward slash ask and levers

0:38

recording. That way, super simple.

0:40

Obviously, it is because we've done hundreds of these

0:42

episodes. and it appears at least

0:45

two people have cracked the format this week, and

0:47

we start with Maddy.

0:49

Hey, Robin Rob. Maddy here.

0:51

And listen to your podcast last

0:53

few months been through all of

0:55

the prior episodes. And I've got

0:57

a question about what

1:00

is the suite spot in

1:02

terms of rental income percentage

1:04

if you're trying to make the leap from, you

1:07

know, salary jobs into the rental

1:09

income supporting you. So

1:12

I'm a liaison to my investment journey.

1:14

I've got four properties now

1:16

and they span graph stuff

1:18

contained flat, small to to

1:20

downs, and we're just about to complete

1:22

on a larger sort of family property

1:25

a foreign or portfolio. And we're getting

1:27

quite close to the profit

1:30

sort of meeting our needs

1:32

to live but I'm very conscious

1:34

that that doesn't give any buffer for maintenance

1:37

problems in the properties. And I was wondering

1:39

from your perspective would that be ten

1:41

percent twenty percent, twenty

1:43

five percent of rental income.

1:46

How much would you hold back in

1:48

that fund? to ensure that

1:50

you can live and pay all your bills,

1:53

but also ensure that there's

1:55

no excuse of the properties. Okay. Thank

1:57

you.

1:57

Maddie, thank you for the question and bought a

1:59

great

1:59

situation here Well done. If

2:01

we had a similar question last

2:04

week in terms of emergent funds, which was

2:06

coming at it from different perspective, but

2:08

the core question was very similar. So

2:10

definitely go back and listen to that one because Rob

2:12

gave some great thoughts there. as part of that

2:14

answer last week, Rob talked about the portfolio

2:17

you've got and sort of what kind of typical

2:19

expenses you could expect to have on that and also

2:21

size the portfolio because obviously If

2:23

you've got twenty properties, it's highly unlikely

2:25

that everything something will go wrong in all of them

2:27

at once, whereas if you got two, it's more

2:29

likely. So those are all factors that you

2:31

want to think about, but it is a very portfolio

2:34

specific answer. What I would say though

2:36

is your situation is a little bit different.

2:38

because we're talking about a scenario here

2:40

where parental income is your only

2:42

source of income or will be your only source of

2:44

income, which means that there's a possibility that

2:47

you have a big expense that you weren't expecting.

2:49

Therefore, you can't pull the money out of your

2:51

portfolio that you wanted to and therefore,

2:53

you can't pay your own bills. And that's not

2:55

a situation you want to be in. So I would

2:57

say that whatever the range is and it always is a range

2:59

because you don't know exactly what your costs are gonna

3:01

be, it's worth going for the upper end

3:03

of that range to be safe. because you

3:05

are putting yourself in a vulnerable position.

3:08

And that's actually the other point that I'd make

3:10

it. You are voluntarily putting

3:12

yourself in a vulnerable position if you

3:14

are cutting off all your salaried income

3:16

and you'll have just rental income. Is

3:18

that something you really wanna do?

3:20

Maybe it is. If it's your dream

3:22

to go off and travel the world, then

3:25

great. And it's amazing a property can

3:27

do that for you. I'm sure you can find a way of making

3:29

that work. but many people don't

3:31

like either their specific job

3:33

or they don't like the lack of flexibility of traditional

3:35

employment. And therefore, replacing that

3:38

with rental income is super attractive.

3:40

But if you're not going to be going often traveling the

3:42

world or looking after a

3:44

relative who needs full time care or

3:46

something like that, then does it have to be

3:48

as black and white as that? Is there a way that

3:50

you can go part time? Is there a way

3:52

that you can establish another source

3:54

of income that's either more flexible or

3:57

that's actually so fun that you enjoy

3:59

it, that it's something

3:59

that you want to spend your time doing.

4:02

Because unless you're doing one of those things I mentioned

4:04

earlier. If all you're doing is living a few threads, then

4:06

you got nothing to do all day, but there are plenty of things

4:08

you can fill your time with. that do just

4:10

so happen or can just happen to bring

4:12

in money in some form or other.

4:14

So it's impossible for me to say what's a

4:16

good idea for you, what's not because I don't know

4:18

you beyond this message. But I think what I would be

4:20

doing in this situation is seeing if I

4:22

could make a bit more of a phased

4:24

transition. maybe rather than

4:26

going to completely rely on my rental

4:28

income, go part time, or save

4:30

up a really healthy emergency fund. And

4:32

so I've got a year's runway

4:34

and use that time to try and get little part time

4:37

business off the ground. So I've got some more money coming

4:39

in. That's how I think about this question, Mehdi.

4:41

But obviously, everyone's gonna have a different

4:43

perspective. what you do is up to you, but

4:45

hopefully you found something in there

4:47

useful or thought provoking in some kind of

4:49

way. Great answer Rob. Maddy,

4:51

I'm sure you'll do very well if you follow Mr.

4:53

D's advice there. Right. Next up,

4:55

we have a question in from

4:57

Gaza. Hello,

4:59

Robin, Rob. My name's

5:01

Gazy, and I'd like to thank you firstly

5:03

for your content. It really does help us.

5:06

And my question for you today is with

5:08

the increase in living costs and

5:10

obviously with the uncertainty of the

5:12

market, does it make sense to do

5:14

a property flip? Obviously, where

5:16

this would be my first property flip, I

5:19

think, or the bit hesitant that I should

5:21

do the flip or not. And if it

5:23

does make sense to do it, how do I mitigate

5:25

that risk through the exit strategies?

5:28

Because

5:28

with the high interest rates, people

5:30

might not want to buy the properties, what I'm

5:32

assuming. So Thank you. This

5:34

is a brilliant question, Garci. Last

5:36

week on Ask Robin Rob, we talked about

5:38

how if you're investing for the long term,

5:41

you shouldn't be as sensitive to

5:43

being fearful of what the market may or may not

5:45

do because ultimately you'll be rewarded

5:47

over the long term if you're buying a

5:49

good deal. But if you're flipping

5:51

a property, which is just buying

5:53

it, doing it up and selling it, then you

5:55

are going to be more

5:57

sensitive to what's happening to the market in

5:59

the

5:59

short term. but it

6:00

doesn't mean you can't implement this strategy.

6:03

You just have to implement it well. And

6:05

what do I mean by that? Well,

6:07

lots of people in the last

6:09

market cycle as the market

6:11

boomed. We're doing flips. And

6:13

you may remember a show on the

6:15

TV was on felt like nearly every

6:17

night called property ladder, and Sarah Binnie

6:20

would go around, watch people do refurbs,

6:22

often they'd rest it all halfway through,

6:24

ignore her advice, and then they get to the end and

6:26

find out how much they've made. and nearly

6:28

in every scenario people made

6:30

money. But what was really interesting

6:33

is that Sarabbini looked at the

6:35

market and said to what fell out in

6:37

the majority of those investors, if

6:39

you'd actually done nothing with the property you would have

6:41

made as much. So basically, the money you'd

6:43

invested hadn't really added any value. and

6:45

that's because the market looked after them because it looked

6:47

at going up and up and up. That

6:49

is not flipping. That

6:51

is just look. and using

6:53

the market to help you increase your

6:55

wealth. It's actually wasting your time because you

6:57

could have not done all the refurb and made as much by

6:59

just holding the property. So

7:01

when you do a flip, you

7:03

should look the numbers and make an

7:05

assumption that the market is not going to move

7:07

at all. and it's not gonna

7:09

help you out. And you have to

7:11

be super disciplined even if the market

7:13

is moving in the background in your favor.

7:16

and bring that job in for the

7:18

cost that you've laid out so you

7:20

can sell it for the price that you think it's

7:22

worth after that work. and your

7:24

research will help you know if it will be worth

7:26

that amount or not. It

7:28

should be a healthy profit margin as

7:30

well. So if the market is flat, you'll

7:32

make that profit. And if it goes in your

7:34

favor, then you'll make more. But if

7:36

it goes against you, hopefully,

7:39

that margin is enough. to

7:41

mitigate against the losses. So you

7:43

might not make money, but hopefully you

7:45

won't lose money. Now, if

7:47

the worst case scenario does take place

7:49

and the market happens to fall apart,

7:51

and you can't sell it for even

7:54

no profit whatsoever. You may

7:56

be willing to take a small loss. but

7:58

perhaps you should also consider, will

8:01

this property convert to a bicelet

8:03

and be profitable as a bicelet

8:05

if I needed to? And I think

8:07

that's your safety net. Is look at the

8:09

property and go, okay. In a worst case

8:11

scenario, could I convert this into

8:13

a standard by to let? let it

8:16

rent out for a number of years until the market

8:18

recovers and then sell it.

8:20

That's your final safety

8:22

net. but discipline with

8:24

your numbers at the beginning and making

8:26

sure you are buying a really good

8:28

deal in the first place and

8:30

you've got your numbers bob on. will

8:32

mean that a lot of the risk is taken away of

8:34

any market corrections in the short term. Great

8:36

answer there. And that brings us to the end of another

8:38

ask Rob and Rob to more questions

8:40

dispatch. but I'm sure you've got

8:42

questions of your own. So do send them in 013808

8:45

triple 835 or property hub dot

8:47

net slash ask. Are you aware of doing

8:49

that? Won't be long until our next podcast Thursday,

8:51

in fact, and it's gonna be a good one. So do make

8:53

sure you join us then. See you soon. Bye

8:55

bye. Bye bye.