Part 2 - Doing : What do you do, once you are financially free?
The Job Delusion Book tells the story of how regular guy Kevin H. Boyd, discovered the secrets of the millionaire mindset to escape his day job and become Financially Free.
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Kevin H. Boyd:
Midlife Entrepreneurs Podcast Number one.
Kevin H. Boyd: (00:04)
Hello fellow entrepreneurs and mindset hackers. Uh, this is Kevin Boyd, business coach, entrepreneur, and all around psychology nerd. In this season of the podcast, I want to share with you my 2012 book, the job delusion, where I talk about my own journey of discovering how the wealthy think and then using that knowledge to free myself from the delusion of having a day job and finally becoming financially free. Today’s show is brought to you by audible. Audible is offering you, dear listener, a free audiobook with a 30-day trial membership. Just go to audible, trial.com forward slash midlife and browse through the vast selection of audio programs. Download a free title and start listening. It’s that easy. So go to audible trial.com forward slash midlife to get started listening today.
Speaker 3: (01:08)
Kevin H. Boyd: (01:14)
the job delusion. How to start thinking your way to financial freedom, written and narrated by business coach Kevin h boy.
Speaker 3: (01:25)
Kevin H. Boyd: (01:30)
Part two Doing. How you do anything is how you do everything. T Harv Eker
Chapter five. Rules for buying a rental property. 90% of all millionaires became so through owning real estate. Andrew Carnegie, if you ask any wealthy person where they have their money invested, most will say property is how the rich have built and more importantly held onto their wealth through the generations. So I knew the property had to be one of the pillars of wealth in mind. You financially free blueprint, it’s relatively easy to buy a property. The heartbeat is buying one that makes you money from day one. This is what my property guru JC taught me to bear in mind when buying a rental property. Rule number one, profit starts with what you pay for it. The main factor that will make your investment profitable is how much you pay for it in the first place.
Kevin H. Boyd: (02:34)
No matter how much potential for growth estate agent tells you it has. If the price is too high, it will take your many extra years to move into profit. You wouldn’t open a savings account that lost your money for the first few years. So why do that with a property? If the price is too high to make a profit from renting out, then walk away. Better property will come along. Eventually. Rule number two off-plan is off limits. Don’t buy a property off-plan. He may take one to two years before it’s finished, at which time the property market may have changed dramatically with any newly built property, you’re going to be paying top price for it as a property developer needs to make back all his costs for building it. This consideration disappears after a building is many years old. Rule number three by rundown over high finish. Don’t buy a property that is finished, a high standard.
Kevin H. Boyd: (03:31)
You’re going to be paying for all that Glitz. There’s much better to buy a slightly rundown property and then spend a small amount renovating it. It will cost you or your builder much less to do the work as you can control what work is done. Remember, most renters want a good finish, not an expensive finish, and most rental properties need redecorating every five years due to the wear and tear of tennets living in them. So it’s just not worth putting in a real marble kitchen top better offer than limitation one as in five years time, it probably won’t even be in fashion. Rule number four, a house is better than the flat. Don’t buy a flat in our block because about every 10 years they’re going to have to put scaffolding up to maintain the building and that costs a lot of money. That can make the difference between a profitable long term asset and and a losing one.
Plus. You don’t want to be competing with other landlords in the same block marketing exactly the same kind of flat as yours. That then becomes a race to the bottom to offer the lowest rent and with the house so you can add value to the property by building an extension or a loft conversion, adding extra rooms and increasing your rental income.
Rule number five, befriend your estate agent, they’re the estate agent. Know you’re open to buying difficult properties, ones they can’t shift or ones where they need to sell very quickly. People in a hurry. I’m much more open to negotiating on price than people who are just testing the market to see how much they can get. So built up a good relationship with your local estate agent. Be polite to them and always follow through with promises you make. If a property is not for you, say so clearly to save them, wasting their time chasing you.
Kevin H. Boyd: (05:23)
Rule number six, don’t buy an up and coming area. Buy a property in a good area for rentals. Don’t buy an an up and coming area. It can take decades for an area to arrive by the best property you can afford in an area that is already thriving. That way when the next downturn comes along your property, will weather the storm and come out the other side quicker and worth more than those who bought in the new builds in the up and coming areas.
Rule number seven, be interested in your own. No one is as interested in your wealth as much as you are. In other words, check everything, all documents from your solicitor, from the estate agent, and when you come to rent out the property, double check all the references you receive from the tenants. Yes, the letting agents should have done that, but they get paid for finding new tenants, not whether they still pay the rent six months down the line.
Kevin H. Boyd: (06:22)
It is worth running your own property Lets. Most agents pay very little attention to your property. You are just one of hundreds. They are looking after that leaky radiator that takes a month to fix can do huge damage to your wooden floors and the ceiling beneath it. Rule number eight, learn how to write your own contracts. I chose to learn about how to write contracts after my solicitor wanting to charge me 500 pounds to draw up a very simple contract. So first I discovered law depot co UK and pay just 10 pounds for a simple contract. Then I read up on a few legal websites about the basic rules of a contract and that helped me modify the contract to exactly fit my needs. I have reused that same contract six times to help me borrow over 300,000 pounds. Rule number nine, frozen in time, I did worry about borrowing a large sum of money as one day the mortgage term would expire and the bank would want his money back, but when I would meet people who had bought their home more than 25 years ago, the thing that struck me most was how small the original some borrowed now appeared.
Kevin H. Boyd: (07:35)
It was using the region of just a few thousand pounds. I could pay that off with my credit card. So many people don’t buy property because they’re afraid of being in debt, but the money you borrow for your rental property today will effectively become frozen in time. So that 200,000 pounds you borrow from the mortgage company will appear quite paltry in 25 years from now. And the fact that property’s still being rented out and making a profit will mean that most mortgage companies, we’ll be happy to lend to you again, a rental properties, a business after all, not your own home. So banks will look at the business case first and not your age as they would with a mortgage on your own home. Rule number 10 it’s not a get rich quick scheme. There are a lot of setup costs with buying a rental property. The government want their property tax, the solicitor wants paying for handling the deal.
Kevin H. Boyd: (08:30)
The mortgage company wants a fee to lend to you and the builder wants paying for renovating your property, so you’re going to be spending a lot of money upfront as well as probably paying the full market value for the property. Property is not a get rich quick vehicle. It’s a get very rich, very slowly scheme, which is probably going to take about five to 10 years to start making a decent profit and another to 15 years before you get back your initial investment. So you’re going to have to be patient as with everything the devil is in the detail. So for the next two chapters, I’m going to describe in detail my experience of buying my first rental property and then the even more adventurous plan of building my own rental properties.
Kevin H. Boyd: (09:18)
Today’s show is brought to you by Audible. Audible is offering you, dear listener, a free audiobook with a 30 day free membership. Just go to audible, trial.com forward slash upward spiral coaching and browse the vast selection of audio programs they have. Download a title for free and start listening. It’s that easy. So go to audible.com forward slash upward spiral coaching to get started today. Back when I was a youngster in the 20th century, I worked in the early tech industry, which required me to read, huge thousand page, computer manuals and I found it relatively easy to make sense of them. But today in the 21st century, I just don’t have time to sit down and read and I’ll be honest, I feel my brain just doesn’t enjoy reading pages and pages of texts anymore. But that has been transformed by using Audible because now I can listen to the longest and most complex books as I go from my evening walk around the park or even when I’m cooking as an example of that, and currently listening to Jordan B. Peterson’s 30 hour epic Maps of meaning.
Kevin H. Boyd: (10:25)
There’s no way I would read such a long and complicated book, but with audible I can dip in and out whenever I have a spare few minutes of downtime. I’m learning so much every day just by using audio books, so to download your free audio book today, go to audible trial.com forward slash midlife again, that’s audible, trial.com forward slash midlife and you can get your free audio book today.
Okay, chapter six my first rental property. Price is what you pay value is what you get. Warren Buffett use other people’s money with these rules. In the previous chapter in mind, I put the first rule of the rich and to practice using other people’s money. I remortgaged my own home and extracted 150,000 pounds of my property’s value out as cash. Now, this is a very powerful mechanism transferring partial ownership of an asset to a bank in exchange for money.
Kevin H. Boyd: (11:35)
It’s also a validation of the idea that property is a good investment. When a bank is willing to lend 85% of its value to you. I thought this is an incredible mechanism, being able to get the cash value of my own home but yet still get to keep living in it. A distressed next, I had to find a property that was going to make me money from day one. Luckily my friend JC was well connected with the local estate agents in London and one morning in early August, 2006 he received a phone call from an agent, who, just had a sale drop through that morning and the vendor was desperate to get shot of the house as she now lived on the other side of the world and it was just too much hassle to keep renting it out. Perfect. A seller in a hurry is always a good person to negotiate with.
Kevin H. Boyd: (12:24)
When JC looked around the three bedroom house, it was a bit of a mess inside his students were living in it with mattresses on the floor and sarongs hanging in the window for curtains. But the building was sound. It was the perfect deal. As normal buyers are rejecting it because of the superficial issues. I agreed to the newly reduced asking price and the deal was agreed that same day for 250,000 pounds leveraging in 2006 buy to let mortgages only required a 15% deposit and the bank would lend you the other 85% this was a new concept to me. Leveraging a small amount of money into a larger sum of money. I put down a deposit of 37 and a half thousand pounds and the bank invested the rest 212,500 pounds. This is the power of leveraging other people’s money, so as the property went up in value by roughly 10% a year, I was not just getting a simple 10% increase on my 37 and a half thousand pounds, but on the combined total of mine and the bank’s money, therefore 10% of 250,000 pounds equals 25,000 pounds a year.
Kevin H. Boyd: (13:42)
As Archimedes discovered, a small amount of effort on one side of a lever generates a larger amount of lift. On the other side, and the same is true with money renovating. The next job was to bring the property up to a good enough standard to be attractive to young professional renters. I spent about 20,000 pounds doing modest renovations to the property, a new bathroom suite, tiling the kitchen and just repainting the existing kitchen cupboards, painting the inside of the house and adding new carpets was all done in eight weeks. It’s key not to overdo the decoration for a rental property. Most tenants are happy with a clean and freshly decorated property. People are very price sensitive when they ran, so paying extra for high end finishes, not on the agenda for most renters. Property for free. As I bought the property below, market value due to the seller being in a hurry to sell and I had now renovated the building to a good standard.
Kevin H. Boyd: (14:42)
The mortgage company surveyor now gave it a value of 350,000 pounds. So in three months I had made 100,000 pounds in total. I got back 83,000 pounds from the mortgage company which pay back all the money I had invested into the property plus an extra 10,000 pounds of cash just for me a rent and are very easily and was making me a profit of 200 pounds a month. Effectively I had bought the property for nothing, not a single penny of my money was now in that asset and it had paid me a bonus of 10,000 pounds and was generating 200 pounds a month rental profit. I definitely wanted to do another one of these as quickly as possible. If you need help changing the way you think and behave around your own wealth mindset, then get in touch with spiral.uk.com and book a free consultation with me to see how we can work together to free you from your own job delusion once again that upward spiral.uk.com and I look forward to hearing from you.
Thank you for listening. This has been Kevin Boyd of Midlife Entrepreneurs. Please subscribe to my podcast and follow me on Youtube and get in touch if you want to discuss how I can help you transform your life.