TMBA 358: Is All Property an Investment Opportunity?

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As many of you know, Dan and Ian have recently been exploring the subject of investing in properties – and the many reasons for, and motivations behind, buying real estate. It’s now been a few months since Ian purchased his place in Austin, Texas and he is still trying to wrap his head around what it means to be ‘a homeowner’.

This week, he decided to reach out to Rob Dix and Rob Bence, who have both been investing in properties in the UK for almost a decade. They also run a business finding and managing properties for others, as well as hosting a podcast about property investments called The Property Podcast.

On this episode, “the Robs” share with Ian why people might want to invest in property, some of the archetypes of those who do and their general feelings on the future of housing market.

Transcript

Listen to this week’s show and learn:

  • Why there is a general assumption in the US and UK that property is a good investment. (3:54)
  • Some archetypes of people who are looking to invest in the housing market. (10:42)
  • What the Robs think about Ian’s recent purchase. (18:01)
  • The differences between investing in businesses and investing in property. (33:03)
  • Some tips on how to purchase property under market value. (36:23)

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Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.

Cheers,

Dan & Ian

Published on 10.13.16
  • http://www.adventurous-soul.com/ Shayna

    Great episode! I’d been hoping you’d get Rob and Rob on the show. Loved the nuanced breakdown of the different archetypes; this makes so much more sense than some of the one-size-fits-all property investment training out there.

  • http://stankavich.com Mike Stankavich

    Very much enjoyed this discussion. Unfortunately I was one of those who got in at the top back in 2007 and took my lumps. So I’m definitely more cautious now, but I do see property as part of my portfolio going forward. I do like the idea of using property as a place to store wealth with a different risk profile than the stock market and entrepreneurial businesses.

    I’d like to share an interesting startup that I spotted a while back for those who want to pursue the strategy of investing in other areas that support returns above the national averages. Have a look at http://roofstock.com. They break down the relevant numbers and offer facilitated purchases of rental properties that are already rented. I haven’t invested, but I may have a look at that for my self directed 401k once I get some money built up in there again :)

  • http://www.tropicalmba.com/ Dan Andrews

    cheers Mike thanks for the link

  • http://www.tropicalmba.com/ Dan Andrews

    Thanks Shayna! Those guys are sharp

  • http://www.funnelengine.com Richard Patey

    Hey guys another great ep. Wanted to ask, when Ian said you were getting 20% return in your biz was that the net income compared with value of biz or return on marketing spend?

  • http://www.translationequipmenthq.com/ ww

    Awesome episode. One piece of anecdata on residence vs investment property:

    We just bought a rowhouse in Washington DC that has a basement apartment. We live upstairs and just listed the bottom unit on Airbnb. In the right location something like this blends the best aspects of residence and investments:

    1) In month one (renting it out at 10-15% below comp listings) we are set to earn ~80% of our mortgage, and that’s after paying a property manager who specializes in AirBnb to do the turnovers and management. Barring some blowup with Airbnb, this 1 bdrm unit will continue paying most of our mortgage payment (including taxes and insurance). Our cashflow looks much better than when we were renting. No plans to invest in real estate beyond this.

    2) In the US, primary residences get much better mortgage rates than investment properties. We also get a bunch of tax deductions related to mortgage interest and normal home expenses that can be allocated as business expenses to the rental.

    PS: I second Ian’s shoutout to Redfin. I think this is the direction real estate is heading and would strongly considering buying shares if they go public. Their data and business model are much better than Zillow

  • http://www.tropicalmba.com/ Dan Andrews

    cheers ww I’ve heard of this type of thing, IIRC it’s how Paula Pant got started as well: http://www.tropicalmba.com/property/

  • http://www.tropicalmba.com/ Dan Andrews

    i think what he meant was net return on inventory investment/risk (net income after marketing spend)

  • http://www.tooltester.net/ Robert (Tooltester Network)

    Great episode! I know that a home to live in is rarely considered an investment but we should not forget two things: not only do you save the rent you’d normally pay but in addition there’s no tax on these savings (unlike when you rent it out). I think Ian did the right thing by purchasing the ranchette with the assumption of selling it again sometime down the road.

  • http://www.reikit.com Kuba (REI/kit)

    I love the archetypes you guys put forward, they’re spot on. They should become a more regular shtick on the show. There are so many different ones in the real estate business, that you could spend a month on it and not run dry. One of those archetypes, for whom we’re just starting to build out a central knowledge-base for, is people running fix and flips remotely https://www.remotefixandflip.com It’s for people who are either priced out of their local market, or for those whose market is huge (Los Angeles for me), or even for people who are location independent, but still enjoy the hands on aspect of doing flips instead of sitting back and drinking coconuts. Keep up the great work guys!

  • http://www.tropicalmba.com/ Dan Andrews

    cheers Robert good point, that’s certainly a bet that you’ll want to stay in that location which for Ian probably makes sense, I had to look at myself in the mirror and admit that I wouldn’t reap that benefit as I’ve got ants in my location pants (even if that means just moving around BCN to different neighborhoods/apartments/homes) :)

  • http://www.tropicalmba.com/ Dan Andrews

    cheers thanks Kuba!

  • http://www.homebuyerconveyancing.com Duncan Pattinson

    In the Uk over the past few years everyone if they could afford it bought in London and focused on capital growth. How times have changed we manage a conveyancing comparison service and we see first hand Investors selling in the south and buying in the north. http://www.homebuyerconveyancing.com
    So in a nutshell an opportunity today could be a problem tomorrow. always look at the exit strategy on any investment

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