The Office for National Statistics has released its latest UK house price figures, and you’d be forgiven for thinking that we are feeling pretty good about the news.
After all in the East Midlands, we’ve seen the biggest increases in rental prices in the country in the last 12 months – 2.8%.
But really, this is just another part of the property cycle. Sure, we’d rather have growth than decline, but for the property strategies we use, it’s a long-term game.
Prices will go up quickly, they’ll go up slowly. We’re banking that in the long term they’ll outpace inflation quite handsomely, which they’ve consistently done since records began.
So while we could say, “Look the areas we invest in are the best in the UK,” the real message is that our strategy works no matter where the market is heading.
If you want to know why I’m you shouldn’t gamble on property market predictions, I invite you to watch my video below.
When our landlords find out that rents have risen 2.8% on average in the last, their first question is usually,
“Do you recommend raising rents annually for incumbent tenants?”
The answer is a little nuanced, and it’s always best to talk to our lettings agents for any particular property or tenant.
That said, I believe in asking tenants for an increased rent in a market where other comparable rents are higher than the rent a tenant is paying.
I don’t subscribe to the view that tenants are driven out when rent is raised, creating voids and lowering returns.
From the tenants’ perspective, if they do move out (who likes moving house unless they have to?) then they will have to pay more rent anyway if the comparable rental properties are more expensive. Showing a tenant this black and white information often helps them realize they’re better staying put and paying more rent. This is, of course predicated on the fact that the property they are living in both meets their needs and is well positioned in the rental market.
Who Were Penton Taylor?
Jesse Fossey Taylor was one of two directors at Penton Taylor, a property sourcing company that closed its doors in 2012.
In the Penton Taylor business Jesse sourced the property whilst the majority of the marketing was done by someone else. When Jesse talks about Penton Taylor he will describe a company that did a simple source and renovate job. Penton Taylor bought houses in Nottingham. They cost mostly about £50,000-£60,000 in 2010-12 and for most people they did a great job.
Is Fossey Taylor a resurrection of Penton Taylor?
The Fossey Taylor property group is not a continuation of, or a phoenix of, Penton Taylor. There is a gap in trading and they are separate limited companies. No goodwill or equity transferred from one company to the other. Penton Taylor just closed. At Fossey Taylor there are different people involved, different offices, different systems and procedures. Importantly there is a different philosophy and a high quality mantra that was in the Fossey Taylor DNA from day one.
There were undoubtedly issues with some aspects of the Penton Taylor business. The only qualifications Jesse had at the time were his own property successes and no one pretended otherwise [Jesse owns nearly 200 houses himself]. Importantly, whatever Penton Taylor did was exactly what Jesse was doing for himself and anything that was ‘wrong’ was true of what Jesse was buying himself. Jesse might say he was ‘eating his own dog food’. In fact it was at this time that Jesse formulated his ‘we only show you a house we’d be happy to buy ourselves’ promise which he still stands behind.
Anyone who bought with Penton Taylor got a great deal. Penton Taylor certainly created a few property millionaires. The business was run around a kitchen table and the houses invested in were exactly what Jesse was buying himself. Both directors were doing what they felt to be their best.
If there were any criticisms of Penton Taylor, they effectively became a list of things to fix for Fossey Taylor.
When Penton Taylor closed its doors in 2012, the two directors went their separate ways and it could be described as a divorce. Clients certainly did very well whilst the business was open.
The Fossey Taylor Companies
There are several ‘Fossey Taylor Group’ companies and Jesse owns all of them. [There is Fossey Taylor Ltd, a letting agency Butterfield Taylor Ltd, a few SPV’s and a development company, plus a mortgage business Lace Market Mortgages & Insurance Ltd].
Fossey Taylor is Jesse’s vision and he takes responsibility for everything it does.
If anyone needs clarity Fossey is Jesse’s wife’s maiden name and Butterfield is his mother’s maiden name.
We certainly expect our clients to do their own due diligence on both our business and the properties we work on. We hope you found this post useful, and we are always open to discuss any of your queries. If you would like to come and meet us, please get in touch.
Property investing can be fantastically difficult at times. In his first few dozen properties, Jesse was on the steep part of the learning curve and he’s been committed to learning and improving even though we’re now past 600 properties.
Fossey Taylor are a team of property professionals, each in charge of our own cog in the machine. That machine only runs smoothly when everyone is supported in their role.
Do Fossey Taylor Have Property Problems?
We have lots of ‘problems’ in our business. On average two or three things go ‘wrong’ in any given day. This is property and if anyone tell you that everything goes smoothly all the time they are just plain wrong.
While we offer a hands-free portfolio building service, we would never pretend that problems don’t occur. A big part of our education piece for new clients is telling them what we are responsible for and what we can’t be responsible for. We only make one promise and that is to do our best and advise on what we would do in that same situation, these are houses our clients own in their own names and they have the ultimate responsibility and or course all of the upside too.
We are always realistic, open and honest. A lot of our ‘sales’ process [we don’t call it sales], could very easily put a client off property all together. We don’t say this will all be a breeze and you will make millions overnight. We know that we are building long term relationships with our clients that will last the life of the investment, hopefully 10, 20, 30+ years.
Here is a list of all the good stuff Fossey Taylor does, we think most property people would approve of most of it
- All clients must meet us before we work with them.
- All clients sign not only a terms of business [the lawyers want that], but also a scope of service document that spells out in plain English exactly where our and our clients’ respective responsibilities begin and end.
- All property is bought at value and renovated to create value.
- All renovations have schedule of works, gas and electrical certificates as applicable and all work is warrantied.
- All jobs have a works manager who visits site regularly, often multiple times a week.
- We make a video at key stages of all renovations send it to clients as an update and a record.
- We have a lettings business that is second to none. Our rent collection, void and bad debt levels are exceptional compared to our competitors for two reasons: we know what we are doing and we care.
Our goal for our clients is an amazing one:
We want to get our clients into the top 5% of earners in the UK through property, and to have them there with little effort and no need for ongoing work.
To be clear, that aim equates to £80,000 [top 5%] per annum as a passive income.
Some people take a swipe at that goal saying it is unrealistic. Jesse likes to point out that is a realistic goal for anyone. He achieved it, and he started out as a courier driver. We spend all day every day delivering on that aim for dozens of happy clients.
Our aim for ourselves is to work with nice, happy people. We only want happy people around us so far as is possible. Property is difficult enough without over-promising and under-delivering to clients.
We encourage you to come to meet us to find out some of the challenges of investing in property and what we do to overcome them.
We’re often amazed by the misconceptions we hear about property fundamentals.
If you want to make the most of property – whether you invest for a pension, for financial freedom or for a legacy to leave your family, you need to understand the fundamentals. Watch the video above to get Jesse Fossey Taylor’s explanation of which brings the most wealth – capital or income.
If you want to download the spreadsheet mentioned in the video, it’s available here: Capital vs Income for Property Investments
We’ve populated it with typical numbers we see in our Buy to Let area, and you can modify it with values suited for your area.
It’s an accepted internet observation that most people skim read the text on web pages, and if you were to stop at the first conclusion and the headline of this recent article by Countrywide, you’d completely miss the point.
“Rental Growth Stalls
Rents in Great Britain were £5 a month (0.6%) lower than in February 2016, the first annual fall for more than six years.”
Of course, there’s more to the article than this fact – Countrywide measure supply and demand of single family homes, and their diagnosis was based on the whole of the country. They are country-wide after all. If you take a deeper dive into the statistics, you’ll see that rents have dropped in London and supply is up there.
However, and this is a big but: Fossey Taylor invest predominantly in the East Midlands and we see a different picture here (the worst investment property Jesse bought last year is yielding 25.0% as a single let after refinance)
The rental increase year on year from February 2016 to February 2017 in the Midlands is +2.8% – bucking the national trend.
If you look at supply and demand in the East Midlands, you see that rental supply is up 5% since last year, but demand is up 9%. Demand for single let properties is outstripping supply here, which contributes to our extremely low voids.
You can read the whole Countrywide article here, and for reference, here’s their table highlighting that the East Midlands is in fact on the up and up for rentals.
If you would like to learn more about how to challenge the conventional wisdom that 7-8% yields from single let property investments are acceptable, then come along and meet us. We might also tell you the secrets of getting even higher yields from HMO investments.
Everyone loves a sale – the opportunity to buy at a discount. If you’ve ever attended any property training or read any investing books, you’ll understand that buying property at a discount is the fastest way to grow your portfolio and keep your investing momentum. But how do you know that you’re getting a property below market value?
Does BMV Mean Anything?
Below Market Value (BMV) is such an abused phrase in the property investing world, that it has very little meaning. The absolute worst use of this phrase is when it is used to describe the difference the asking price and the purchase price. This is the same approach that your high street retailer like Next uses – just because they didn’t sell a pair of jeans at £80 last month, it doesn’t mean that they are now a bargain as they are only £60. It’s not a real discount. It’s not really below market value – it’s just worth less than the overblown asking price. In fact, the market value is the price that a group of people are prepared to pay for the amount of stock.
If you don’t have time to understand the value and pricing of jeans in the open market, you might justify the purchase by the terrible information you’ve been given by the vendor. It’s a pair of jeans, and your time is valuable. It’s okay.
Hopefully, you don’t buy investment properties in the same way you buy jeans. There’s some due diligence required.
How To Ensure Real Discounts
There’s a simple way to make sure your due diligence is accurate.
You buy properties in an area you know, in an area that you’ve bought property in before.
You know the real value of investment properties, you know the cost of works to bring them up to standard and you know the value when they’re completed.
You buy in a homogenous area – one in which houses can easily be compared. If you have a cookie cutter process to transform an ugly duckling into a swan, you know how much to pay for your duckling.
Here are a few ways you know that you’re purchase isn’t below market value:
- The vendor accepts your offer straight away. Sometimes at Fossey Taylor we buy a property six months after we view it, after two other sales have fallen through. We might not be the best priced offer (well we certainly hope not to be) but we guarantee we’ll purchase – we’re a safe bet.
- The purchase price is compared to the price of the instruction. The ticket price is immaterial – it’s just a marketing figure. It’s the price the house isn’t selling at.
- There are no strong comparable sales for property as it is ‘unique’ or there isn’t a market for the type of property you’re buying. Clearly this is different if you’re buying a large development. At Fossey Taylor we buy hundreds of single let properties and houses to be converted into HMOs. We buy homes that are like the property next door and down the street. It reduces risk of not knowing the value immensely.
How to ensure you don’t pay too much of a property:
- Have a formula, stick to it. It’s as simple as that. If a vendor comes back and asks for £500 more than the number at which the deal works, we walk away. We have a formula for a reason – we know in advance what return a property will give – we have yield and discount targets – and we know this when we make an offer.
- Make enough offers on enough properties. Viewing properties and offering on them is a full-time job (in fact several full-time jobs for our team of Fossey Taylor buyers) It’s a numbers numbers numbers game – you have to make offer after offer and be persistent to get them accepted and ensure your discount.
Whether you buy discounted properties yourself or you buy from a deal sourcer, you need to make sure your discount is real. If you’d like to see exactly how we do it, come along to one of our Discovery Days and we lay out the exact process that works for us, and show exactly which areas to invest in.
Fossey Taylor take on all aspects of sourcing, renovation, finance and property management which means that you can enjoy a truly passive income. We spend our time building your property portfolio so you can spend your time on the finer things in life.
We don’t sell training, but we are happy to share the exact methods we use ourselves and for our clients.
We hold regular free training webinars and promise to never try and sell any property training. If you would like to know when and what the next webinar will be then register your details here.
Here are some examples of our old webinars.
The latest happenings in the property investment sector
Learn how to make at least £20,000 on each property investment you make.
We look at some real people who are building fantastic investment property portfolios
We look at real life case studies and investment property opportunities that people have taken advantage of.
Why invest in Nottingham Jesse and Ant discuss the reasons why Nottingham is one of the best hot spots for buy to let investing.
Jesse discusses the benefits of having a hands free property investment portfolio, and how it can give you greater ROI than doing it yourself.
Jesse and Ant from Your Property Network discuss how to build a property portfolio using just one deposit. This is a tactic many of Fossey Taylors customers use.
Would you like to come and see for yourself how we manage our customers investment properties? Book yourself onto one of our informative discovery property workshops.
I would like to share with you an meeting with a gentleman who I met recently who ‘liberates’ pensions for disillusioned clients who want to access their pension early, as it’s now their right, and re-invest it in something more profitable. He told me his sales pitch and I found it very interesting so I thought I would share it with you here.
First he asks a potential client questions about key things in their life that have some kind of financial measurement. So for example, how much do you earn? How much tax do you pay? How much is your house worth? How much was your last holiday? And so on. He then he asks a few more random questions like, how much is your Gym membership? What does the dog cost to insure? Have you worked out the overall running cost per mile of that lease car you have sat on the drive? Most people know most of the answers, sometimes even the minutia in quite a lot of detail.
Then he hits them with the Biggie;
How much is sat in your pension pot and how much will it give you per month when you retire?
And Bhamm’, he has everyone’s attention. Then start to listen as they start to think because, as this man is finding out, most people do now know.
With a little gentle probing, he can usually show even those who think they know, that they probably don’t really. Also, and perhaps more concerning, is that people generally don’t know much about how their pension fund is run or charged for, or how its performance specifically translates into Pounds, Shillings and Pence at the end of the term.
This man tells me that most know more about the trivial details of their finances than they do about the one financial product that could be the biggest investment they have ever made. It is an extraordinarily expensive financial product with one specific purpose of the upmost importance, to looking after you in old age.
A lot of people are delegating the responsibility to an unknown quantity, for uncertain results is that clever?
If you are looking for a reliable alternative to pumping countless thousands into an unknown. Something that has a proven track record and where everything about the investment is visible to you, owned wholly by you and ultimately controlled just by you [even if you have advisors, agents and so on, they are YOUR team chosen by YOU]. Then you should be looking at investing in property.
Click to join us on one of our free and informative property investment workshops.
If you want help building a property portfolio due to lack of time, skill or experience on your part, then you want help from the right people. People who are trustworthy, reliable and have access to the cost savings that come from being in the property market day in day out and from buying over 400+ properties over the last few years. You want to deal with people with a successful track record and dozens and dozens of happy clients.
In short, you should contact Fossey Taylor, the Investors Estate Agent.
Thanks for your time
Jesse Fossey Taylor
Armchair property investors
An important factor to consider is that if you want to purchase the right investment property, which on paper seems like common sense and relatively easy to do. If it was that easy we would all be property investors. This property needs to be right regardless of its location in relation to where you are based, as an arm chair investor this increases your geographical options. You can take advantage of some of the best yields across the UK, for example Nottingham, with the help of the right property investment company.
It seems like common sense again but the secret to a successful armchair investment is to work with the right partners, researching all potential property investment companies. It should go without saying however we are going to say it no the less, it is important to buy from a company with a proven track record; use a letting agent that specialises in the rental sector you are looking to be in eg student, residential, DSS, commercial or retail. Each of these is a specialist field and if not undertaken by an experienced agent, can lead to the failure of a potentially good investment.
Should you be looking for the investment property to provide a passive additional income or as a pension, it is best to use an agent. Whatever you do, make sure you carry out thorough research, before making any decisions on how you will manage your investment.
If you have an agent looking after your property, all you have to do is check your bank account to make sure your investment yield has paid. You won’t have to worry about obtaining the correct licenses and keeping them up to date; paying utilities; organising repairs; resolving tenant complaints; chasing rent arrears; and providing the annual gas, electricity and PAT certificates.
You can see why so many of our clients use our arm chair service, it leaves them to get on with their lives knowing we are working hard to give the best ROI with no hassle.