Interview with Mark Lloyd

Hello and welcome to another Over 50s Money Live interview with the experts. Today we're talking about property investment, not something just for the professionals. So please feel free to add questions in the comments below, and we will try to answer them at the end.

So first, let me welcome Mark. Hi Mark, thank you so much for joining us.

You're welcome. So, I guess first of all, we should ask a little bit about you and what it is that you do and what the Property Master Academy is all about.

Yeah, sure. So, well, I've been in business for over 30 years and property for the last 15 years. Property investing started out not really knowing what I was doing. Bought a couple of properties, hoping to make money. When I bought them, they weren't making money. And then a few years later, I came across a training program with a well-known international brand called Rich Dad Education. I'd heard of Rich Dad through a guy called Robert Kiyosaki, written in some well-known books, Rich Dad Poor Dad being one of them. And I knew this book, had read it, and I thought, like, I'll pop along and see what it's all about. And it kind of opened my eyes to what the opportunities were within property investing. It's something I wanted to do for a while, and my business partner at the time and I decided that actually we'd sell our company and focus fully on property investing. And that's what we've done full-time now for just over 10 years.

A few years into the property investing, there were a few things we didn't like about the way some people were operating. And we were often approached by others to ask how to do things because we'd built up quite a large portfolio. Currently, we own over 60 units throughout the UK. And people were asking for advice and help. And so about six years ago, six and a half years ago, we set up Property Master Academy, which is essentially an education company for new or aspiring property investors, or indeed those that have already got some properties but really need some direction as to how they should expand, how they should get the best returns, where to buy, all those kinds of things.

Excellent. So, what kind of people come to you? Would it be people who want to make it into a business, or people who, like me, might want to build up a property portfolio on the side for future investments?

Yeah, I mean, there are a number of different ones. So we've got, obviously, the younger category, so the kind of 25s to 35s who, what's the polite way of saying this, don't want to work, but they want a better lifestyle than the one they're getting. Realizing that the nine to five is not the be-all and end-all. So they're looking for lifestyle change and see property as a way of doing that. Above 35 to probably about 55, it's a realization of the cost of running a home, family, and perhaps their pension they're building up is not actually going to achieve what they want to achieve. And so they look at investing in property. And that could be on an armchair type basis, where they literally contact a company that does all the investment for them, takes care of the whole thing, and essentially hand over the money to buy that property, which is obviously registered in their name, down to people that want to actually learn how to do it. And whether they do that part-time, which many do and still do, or like myself, where they want to actually convert it into a full-time business that generates a healthy income amongst, you know, as a standalone business. So I think it covers a number of different things. It's there to suit every kind of person, really, whether you want to do it part-time to run alongside your existing business. Because the way we mentor people, they're generally starting part-time. Most of the people we teach have a job or a business currently involved in, and they're seeing property as a way to initially supplement what they're doing. But what they find often is that the property income will overtake what their business or job earnings are, and so the switch over to going full-time and having a bit more freedom is quite appealing.

Yes, I can imagine. So, I suppose really, at the moment, property is very much in people's minds. You know, what's the property market going to do? And how are things going to be affected by COVID and Brexit and all of those sorts of things? So, what would your overall overview of that be?

Yeah, I mean, you know, property prices, I think, is a natural obsession. So that's kind of always in the news. I think, you know, this year has been a difficult year for much of the population, not just the UK, but the world. But property has seemed to have bumped the trend. And I don't know, just explain what I mean there. So during the pandemic, the lockdown part of it that we had here in the UK for whatever it was, six months, I think it was, property was actually, transactions were still happening. In fact, we bought more properties during that time than we have done in the past three years. And there are a number of reasons for that. One, the pandemic, Brexit, the state of the economy, all create uncertainty. And in uncertain times, that's when opportunities arise. And that's essentially what's happened here. And a lot of people we've taught what should be added to their portfolios during this time when, unfortunately, a lot of industries have suffered. So investing is really about looking at what's happening in the economy. We're on a downwards slope at the moment with the biggest drop in GDP ever, I think, last quarter. And that's not going to catch up soon. We've got the full effects of Brexit won't happen until January next year. We've got the stamp duty holiday, which the Chancellor announced, that ends in March next year. And the furlough scheme now ends in March. Now, historically, whenever unemployment has increased, that's what we expect will happen when the furlough scheme fully ends. Property prices have dropped. It's just a direct correlation between an increase in unemployment and a drop in property prices. Are we going to experience the same levels that property prices dropped in 2008, 2009? I don't think so. I don't think we're at that point in the cycle. What we've had is some artificial things happening. The pandemic was artificial. The furlough scheme is artificial. Brexit is going to be a permanent thing, so that's going to see what will happen from January. But I don't think from a property point of view in the UK, we're really going to be affected that much. The fact of the matter is, we are a small island, we have no more space to build, so we have to build on what we have. And we have still far too many people for the number of houses or flats that we have in the country. So from an investment perspective, UK Property PLC, if you want to call it that, is a good investment. And that's not the case in everywhere in the world, but you, the UK has always been one of those hotspots for property. Yes, there are issues with any kind of business because there's still something subject to cyclical economic effects, and property is no different. It works in a slightly different time frame. It usually lags behind other things in the economy. So stock market is always first, you see the effects on the economy second, and the property market is often lagging behind that. At the moment, we're investing, our kind of mantra is basically that if it looks like a good deal, if you're happy with the returns as they are today, then you should invest today. Because we do not know for certain what is going to happen tomorrow, two months' time, three months' time, six months' time. If it's the right decision now, then the thing is, just do it.

Okay, that sounds like very good advice. So, to an individual watching this, what makes property a good investment for an individual who's considering going forward with property investment?

Yeah, well, I think, you know, a lot of people, a lot of your listeners will undoubtedly be homeowners, and they would have seen the value of their property increase through really doing very little. They've lived there, so they've benefited from the fact that they've been in an area which has some demand for properties, and that's essentially the whole of the UK. And property prices on the main have increased. So it's a secure investment, relatively speaking. You've got a physical asset. And if I could kind of take it, compare it to something like shares on the stock market, shares on the stock market are not a physical asset, they're just literally paper. With property, you have a physical asset. Now, what makes property such a good investment is the fact you can borrow against it. Because individually, if you bought a property for cash, the returns you'd get on it varies obviously around the country from anything from 3% up to above 10%. Now, all of those will beat anything in the bank by quite a margin. Once you start to borrow against that property, we call it obviously leveraging, then those returns increase exponentially. So most of the properties that I buy or I get involved in, I will receive on average a 25 to 30% per annum return, often higher than that. But that's that's my yardstick, that's the minimum I work to. Some people work to less than that. So, you know, the fact it's a physical investment, the fact that you can leverage against it are the two main factors that make property such a good investment, particularly in the UK.

Excellent. So, what would you say are the advantages of property investment for the over 50s?

Well, in the 50s, I think once you've got to 50, and I was there 10 years ago, and for me, it was, I was looking to supplement a pension that really I didn't have. I've been self-employed most of my life and I run businesses. And essentially, my pension was my company. The company was involved in. But when we sold the company, we thought, well, okay, what do we do with the money? And this has already identified, you know, we decided property was going to be that route because of the security aspect, because of the fact that we could get a, not quite a passive income, but almost a passive income from property, which is quite good. Because essentially, once you buy a property, you attract tenants into that property, then they'll stay there quite some time. If they're happy, they'll stay there for quite some time. And so you do get that income element coming through, which is almost passive. And the returns are, you know, not going to set the world alight compared to the stock market, where the stock market can go up 10, 20% in one day and then fall down 10, 20% the following day. Property doesn't work like that, and it's quite a steady return. So for the over 50s, it's probably more about looking at supplementing income, supplementing pension and retirement. There's a sad fact looking at pensions that pensions can't invest in property, they're not allowed to, which I've never understood at all. When all you're allowed to invest your pension in is a gamble on the stock market, if you think that way. And the average return on a pension fund is an appalling 3% per annum. Now, again, having said that, your return on your bank deposit is going to be less than 1%, so 3% is not that bad, probably speaking. But on average, on my portfolio, in terms of the rental yield alone, I receive around about 8%. On overall return, that's per annum. My overall return per annum based on, it's a bit of a complicated equation, so I'm going to, at the moment, but essentially the return on the money I've got in that property is nearer to 25, 30%. So the returns are attractive. There's no security. It's, I think there's a little sometimes a little bit of reticence because people are worried about having somebody else living in a property that they own.

Yeah, that's usually the biggest reticence because you see all these stories in some of the tabloid newspapers about, you know, bad tenants, bad landlords. And it's the feeling is they're everywhere. And I can assure you, they're not. Of over 60 units that I own, we've probably had one bad tenant, one out of 60. So in percentage terms, I don't know what that is, but it's pretty low. And yes, you can mitigate those risks by having the right people, the right team around you. And that's, you know, for example, it could just be a good letting agent.

We have a particular criteria. I was going to ask you on that. Would you recommend people managing the letting of the property themselves, or would you recommend them going to an agent to do it for them?

Well, it depends whether you want a bit of a job, really. So if you want a bit of a job and you're happy to do it looking after your own properties, that's fine, as long as they're obviously within a reasonable distance of where you live. But all of ours are managed. We have a particular criteria for selecting the agent that we use. So it narrows down. I mean, again, there are good agents and bad agents, but we narrow down as much as we can. So the criteria that we use to get the good agents. So in one area of the country, we employ our own lettings manager. They're actually paid on a PAYE by us. But in other areas, we've got letting agents that we've had virtually since day one, and they do a fantastic job, and we're very happy to recommend them to other people as well.

So those are all the positives about it. But what if someone's considering this? What are the pitfalls that you think that they should be aware of?

Yeah, what the pitfalls? Don't watch Homes Under the Hammer. It gives a false impression that property is easy. There are, it's not easy by any stretch of the imagination. Obviously, you are risking money. Any investment carries risk. Okay, that's that's a given. What you try to do with property is limit those risks. And yeah, have I made mistakes? Yes, I have. Have I lost money? Yes, I have. Certainly in the early days when I didn't really know what I was doing. That's why I went down the training route to try to actually understand from more experienced investors what I was doing wrong. And once you hear it, you think, that's pretty obvious, but it wasn't obvious at the time. So, the downsides, could you lose all your money? Very rare. The thing about property is, if you hold on to it long enough, it recovers. You know, if you think of the last big crash we had in 2008, 2009, when property prices plummeted throughout the country, went to where we are now. Property prices are above that level and beyond, quite by some stretch in some areas as well. So with time, property recovers. And that's common with a lot of things, stock market to a degree as well, companies. But companies go up and down. Property market, unless something drastic happens in an area. And I'll give you one very good example. So at in sort of the early 80s, when Margaret Thatcher was Prime Minister, and some of the coal mining areas were closing down. Now, that obviously has a dramatic effect on that area and would depress house prices for quite some time. It did do for quite some time. But those areas now are regenerated to quite a degree, and they're actually been very good investment areas, very good places to live as well, you know. So it's, I think whilst I'm obviously very pro property, it's not something I do. It's just making sure that you don't rush into things. There's, if you see a property deal that you think, interesting, but you're not sure, there's going to be another one around the corner. There's going to be another one tomorrow. There'll be another one next week. There's plenty of property there. So you don't rush into it. But as long as the figures stack up to what returns that you're happy with, then the question you have to ask yourself is, why wouldn't you do it?

Yeah, yeah. So I suppose the overall message there is to use your head, not your heart, as well. You're not buying a home, home. You're buying a house or a property to use as an investment. You're not buying, it's emotional. It's, you know, you're not going to live there. It's not, does the house look pretty? Is it a pretty area? It's not any of those things. It's, does it stack up? There are some things about the area you need to know, of course, but it's not an emotional purchase. It's based on facts and figures.

Yeah, yeah. So, I suppose we might have covered this, but what are there any top tips for investing at the moment? Are there any kind of little nuggets of wisdom that you can give us if someone's looking right now?

One, take your time. As I said, due diligence is really the key. If you're not sure what you're looking at or how to work things out, then speak to someone that does. Talk, talk to an experienced investor who will help you. The due diligence though goes a number of different ways. So it's not just looking at the property. It's really, it's the area. If you're going to employ a letting agent, it's due diligence on the agent. You want some recommendations. If you're going to use builders, tradespeople, because there's work needed to the property, then clearly some due diligence on those, so checking out their previous work. But they're kind of the main ones. It's, it's really about taking your time. There's no rush. You might want to make an extra one, two, three, four, five thousand pounds a month by the end of the year. But let's just be realistic and say, like, how much time you've got to put in? And just take it slowly. You will find, if you do follow a methodical process, then you will get there. And it may take a year, two years, three years, always depends on a number of different factors, but you will get there.

Okay, well, it sounds like fantastic advice for everyone. I don't think we've got, let me check and see. I don't think we have got any questions at the moment. So, I think I'll invite people to comment and leave their questions afterwards, because this will be available on our Facebook page, so add it to LinkedIn. So if anyone does have any questions, they can just leave a comment and you'll come back to them. And of course, we do have your website address here, which if you would like to get in touch with Mark and get some advice from him, or sign up to get some long-lasting tips and advice. Would you call it mentorship, I suppose you would call it?

Yeah, we run a mentorship program where where we will, you know, it doesn't matter in terms of whether you're employed, you've got a job or business at the moment. We'll work with part-time people, we'll work with full-time people. And our goal on the mentorship is to help you get to whatever, whatever goal it is you're trying to get from property, whether it's an additional part-time income or changing to a full-time income or a retirement plan, even.

Responding. Brilliant. Well, thank you so much for joining us, Mark. I really appreciate all of your. And I hope that we'll have some questions for you later. And good luck to everyone if they decide to invest in property. And say them well.

And oh, hang on. I think we may just have a quick question. Yes, we do. So Richard has asked, if you were looking to begin investing, what is a minimum amount you'd say is reasonable to start with?

Very good question. So there are a lot of misconceptions about property, and one of those biggest misconceptions is you need a lot of money. You don't. Now, there are, without getting it too complicated, there are two ways of two main ways of making money at property. One is ownership, the second is what we call controlling. Now, by controlling, I mean there's a contract in place which allows you to take ownership of the property or have all the traits of ownership without physically paying for it. Okay? So in answer to the question, you could start with probably as little as £10,000. You'll see upwards from there. Yeah. So we have a lot of younger people want to get involved in property. They can see, you know, it's a route to getting them out of their job at a young age, being financially free. And I know that with the right attitude, and that's obviously really important, that someone with £10,000 to start with, we can get them started. It's not going to get the full rate, but it will get them started. They will get to control some properties. They will earn some income out of those properties, even though they don't own them. And I suppose for the over 50s, and particularly for our viewers and followers, that's maybe something that they can help their own children with, grandchildren, and set them on the road to owning property through investments. Definitely.

Okay, great. Thank you, Richard, for your question. Much appreciated. Right, we'll leave you be now, Mark.

All right. Thank you for your time again. Always. Thank you.