#1
Are you looking to invest in UK property from overseas?
Then, tune in to this debut episode as the Expat Property Guy argues against paying for property education at the start of your Expat Property Story.
This debut episode also features Rob Dix, author, podcaster and co-founder of Property Hub.
www.expatpropertystory.com
Rob talks about:
He also tells a joke… (7’55”)
Rate, Review and follow the show at www.expatpropertystory.com
#1
Are you looking to invest in UK property from overseas?
Then, tune in to this debut episode as the Expat Property Guy argues against paying for property education at the start of your Expat Property Story.
This debut episode also features Rob Dix, author, podcaster and co-founder of Property Hub.
www.expatpropertystory.com
Rob talks about:
He also tells a joke… (7’55”)
Rate, Review and follow the show at www.expatpropertystory.com
Expat Property-Guy
You're listening to Expat Property Story, a podcast in which I share my story to smooth the way for you to have your own Expat Property Story. Before we get going, if you like what you hear, it would really help me out if you take a moment to follow the show on whichever podcast provider you choose to use, so that each new episode is delivered straight to your app. Welcome to this the very first episode of Expat Property Story with me, your host, the expat Property-Guy. The format of this podcast is me sharing my story in a kind of loosely chronological order featuring interviews with some of the key players in my story, such as fellow expat investors, podcast hosts, mortgage brokers, etc, etc. If they're too busy, too shy, or just too important to come on my podcast, then I'll try and find alternative guests in the same fields who can offer their insights, tips and tricks for dealing with the different problems faced by us expat property investors. In this first episode, I'll be telling you how I became an expat property investor. That's expat not expert, as I'm not claiming to be an expert, far from it. In fact, hopefully you can learn from some of the mistakes I've made along the way. But don't worry, dear listener, later in this episode, we'll be hearing from one of the most experienced UK property experts, a property celebrity. So listen out for that later. Now, before I start my story, just to give you some background, let me tell you a little bit about myself. I'm originally from London, which is where I met my wife who's from France. That was 2001. And a couple of years later, we bought a flat together. And a couple of years after that, we got married. And then in 2006, my wife was offered the opportunity to come and work here in Hong Kong. So we let out our property through a local letting agent and move to the Far East. For three years between 2006 and 2009, we worked hard and saved even harder. And this was before we had started a family. So we were able to save much more money than we could ever have managed in the UK. We soon started to think about what we should do with our savings. So we went looking for an independent financial adviser. The one we found suggested we invest our pot of gold into stocks and shares, which we did. We invested in a pension plan organised by a well known financial institution, I'm going to call regular strife. That might give you a clue. This was 2009, just after the financial crisis. So the plan did very well initially, because we benefited from the subsequent recovery following the financial crisis. This is easy, we thought and continued to invest. Profit soon stalled. In the meantime, the value of our London flat doubled in 10 years. We went back to our financial advisor, were thinking of investing in property. We said, Too risky, he replied. I'm sure he was thinking of his disappearing Commission, as opposed to our future happiness. But at the time, we were unfortunately too financially naive to question his advice. What we should have been asking ourselves was, why were they offering the advice they were offering, what was in it for them? Soon, the value of our stocks and shares stalled, and our retirement plans were in jeopardy. We decided to ignore our financial advisor. In 2015, we cashed in most of the pension plan, and bought a tiny one bed apartment Off Plan in Hong Kong for roughly 400,000 pounds. Within two years, it was worth nearly 600,000 pounds. Meanwhile, our London home had continued to increase in value. And that's how we caught the property bug. We started to think about how we could get our hands on more property. This was Easter 2017. I had no idea where to begin. So like everyone else, I went to Google and then to YouTube. One of the first clips I came across was a couple of guys from a well known property education company. It was an old clip from the end of 2016. And they were discussing what 2017 held in store for landlords. Many people part with serious amounts of cash to 10 courses by these guys and others. As a natural cynic and spendthrift I was pretty dismissive of the whole property education sector. 99% of the content taught on property education courses is available for free elsewhere, in books, on podcasts, on YouTube, on property forums, or at property meetups. There are a couple of advantages to property courses. One advantage is the contacts that you can make, which can help grow your network. But as expats, that advantage is a little less powerful as you can't exactly meet up with your course mates for coffee. The other advantage of property courses is that some of the people who sign up for them spend So much money on them, that it gives them the motivation they need to make sure it's not a waste of their money, and therefore, they make sure they succeed in their goals. The rest however, just waste their money. Personally, I wouldn't pay for property education courses if you're just getting started. My property education started with podcasts. Podcasts are great. I think I first started listening to them in 2007 when I downloaded a series by comedians Armstrong and Miller, and I soon started listening to podcasts about football, travel, and all sorts really, looking back, if I had to pick one thing that has helped me above anything else, it's got to be podcasts. And there's loads of good ones out there. But none of them looking at property specifically, from an expert's perspective, which is why I've started Expat Property Story. The first property podcast that I found that helped me to get started was the property podcast, which is run by Rob decks, and Rob bent from the property hub. This is a great resource if you're just getting started. So I spent a couple of months going through their back catalogue, listening to old episodes and learning as much as I could, taking notes and filling in the gaps in my knowledge. From there, I discovered the property geek podcast also by Rob decks. Property geek was more guest based and featured interviews with a wide variety of property investors, each with a slightly different tale to tell. I found that the combination of these two podcasts gave me a really good grounding or starting point in my own property education. It should come as no surprise then that my first ever guest comes from the world of property podcasts. And he's a really interesting guy with loads of experience, not just in property, but in life in general. He's been a radio DJ worked in the music business, written books, produced three podcasts run a lettings business, a bridging finance company, and perhaps most impressively of all, he's managed to do quite a lot of that as a digital nomad. Just in case there's anyone listening who doesn't know what a digital nomad is. It's someone who works remotely while travelling around the world, upping sticks and taking themselves to anywhere that takes their fancy, armed only with a laptop, and in his case, and microphone for podcasting. So, as the first key player in my Expat Property Story, I'm delighted that he's agreed to be my first ever guest, the CO creator of the world famous property podcast, which attracts no less than 400,000 downloads per month. Ladies and gentlemen, it's Rob Dix. Rob, welcome to Expat Property Story.
Rob Dix
Thank you so much.
Expat Property-Guy
Now, obviously, my humble little podcast cannot compete with the mighty property podcast. I hope not. But to try to make my podcast different. I'm inviting all my guests to tell a joke. So do you have a joke for our listeners, Rob? Oh.
Rob Dix
Okay, so I like to come up with Christmas cracker jokes. This is an original This is a ROB Dix original. How did the astroturf thief get caught?
Expat Property-Guy
I don't know. How did the astroturf thief get caught?
Rob Dix
Someone grassed him up.
Expat Property-Guy
It's a perfect Christmas cracker joke.
Rob Dix
I know.
Expat Property-Guy
Now, I guess since this is the first episode of the podcast, I suppose I should really tell a joke.
Rob Dix
Go on then. I don't know how you're gonna compete but you can have a go.
Expat Property-Guy
Well, I'll give it a go. So it's a similar kind of Christmas cracker joke. So what is the definition of a slug? I don't know. A snail with housing problems. That's not bad. That's not bad. Topical. Yeah, property. So now you've travelled around a fair bit, right? Have you ever been to Hong Kong?
Rob Dix
I have been to Hong Kong only for a couple of weeks. And we stay and we think was in February and it was absolutely freezing. I didn't and yet no one seemed to notice because the aircon was still on full blast everywhere. And by so my abiding memory of Hong Kong. It's just been really cold all the time. But apart from that, it's a really exciting place. I love New York for the energy and everything else and got similar kind of vibes from Hong Kong. Somewhere. I'd like to spend a bit more time.
Expat Property-Guy
Right, cool. So I think some of our listeners will know that you used to be in the music business working in PR and marketing, but perhaps not so many know that you were actually in a band before that. Can you tell us a bit about that?
Rob Dix
I've been in a few bands. Thankfully, it was so long ago it was before the days of YouTube so I'd done pretty sure there is actually there's no evidence out there. But yeah, I played bass in a few different bands. I sort of did. I was just in sort of pretty rubbish bands that I kind of lucked my way into like taking over as a bassist in a pretty decent band, still small but we but we got to play in all the major venues around London and go and do some tours and things like that. So it was a lot of fun. I've successfully avoided having a proper job ever because I also came straight out of uni into the music business, which is definitely not a proper job, then got to my late 20s when being out every night was the appeal. But now that's no longer so appealing. So I thought I better go and do something else and then kind of ended up falling into property. So yeah,
Expat Property-Guy
So I was just wondering if you and your business partner Rob Bence were in a band, what band would that be?
Rob Dix
Oh, well, it's got to be the Beatles. Isn't that I mean, it's a it's a duo, it's got the Liverpudlian thing going on. We're both fans. We ran a letting agency called Yellow lettings. That was kind of a nod to Yellow Submarine and all but also to the colours of Watford which is where I'm from. And yeah, it's got to be but that's probably overrating us a little bit.
Expat Property-Guy
Yeah, you've conveniently forgotten two of the members. I guess that the two you're talking about would be Lennon and McCartney. Unless maybe you guys are Harrison and Ringo? Starr?
Rob Dix
We probably are. Because it's like yeah, well, actually, no, we are we are sort of we're the ones sort of out taking the glory. And then we've got the team behind us who are actually doing all the hard work. So I'm not gonna, I'm not quite sure how that maps onto the Beatles. But we're, we're definitely the front people with egos.
Expat Property-Guy
Well I kind of had you down as a duo. I had you down more as, I don't know if you remember this act from the early 90s, The KLF?
Rob Dix
Ha ha vaguely. Aren’t they the ones who burned a million pounds or something?
Expat Property-Guy
Exactly, yes, the kings of marketing.
Rob Dix
Is that the connection?
Expat Property-Guy
Well I hope you don’t burn a million pounds but, ha ha.
Rob Dix
We have done that!
Expat Property-Guy
Oh, with your Crewe project.
Rob Dix
Yeah, exactly, yeah.
Expat Property-Guy
There you go, so you ARE the KLF. They were brilliant at marketing, weren’t they? In fact they had a book they wrote, a book called ‘The Manual’ which was how to have a number one record even if you’ve got no talent and stuff so, yeah, the marketing kings, so I thought you’d be, and I like the KLF so.
Rob Dix
We could update that with how to have a number one podcast even if you’ve got no talent.
Expat Property-Guy
Well you already have got a number one podcast haven’t you, 400,000 downloads a month isn’t it I think?
Rob Dix
It includes the whole back catalogue so it’s not that impressive. People will go back to the beginning which I'm just astonished by. I hear from people all the time: I've gone up to 2013 now, I'm really interested to see what happens next.I don’t know how relevant what we’re talking about is now, but fine.
Expat Property-Guy
And before you were in the music business, you studied psychology at Nottingham University, I believe, right? Yeah. Well,
Rob Dix
Who does your research for you? Some of the things that you know! I don't know how this is public knowledge?
Expat Property-Guy
Well, it's all on your LinkedIn page. And that's what I want to get into. Because apparently, your dissertation was about something called the intraparietal lobe. Have I pronounced that correctly?
Rob Dix
You have you have?
Expat Property-Guy
And your profile also says that not a day goes by without you drawing on this knowledge. So how does what role does the intraparietal lobe play in property and business?
Rob Dix
Honestly, I mean, that obviously, it's sarcasm because I cannot I can't even, I can barely remember what it does.
Expat Property-Guy
Well, to be honest, I didn't know that it was tongue in cheek. So I actually took you at face value. And I looked into the intraparietal lobe on Google. And everything that came up was basically, you know, research papers, which are not an easy read, at the best of times. But I did find one that was vaguely readable. And it was all about neuro marketing.
Rob Dix
Oh, wow. That's a new one on me.
Expat Property-Guy
And the word that kept jumping out, probably because it was the only word I understood was risk. Hmm. So I was wondering, what does the word risk mean, to you?
Rob Dix
That's deep! What does what is risk mean to me? I don't have a good answer to that. What does risk mean to you?
Expat Property-Guy
Well, I looked it up in three different dictionaries. And all three of them defined it as the possibility of something bad happening. But none of them defined it as the possibility of something good happening.
Rob Dix
Can you? Yeah, to me, I don't know if there's such a thing as positive risk. I mean, that wouldn't be part of my personal definition, risk is the chance of something bad happening. But then you get into kind of known and unknown risks, which is where things get interesting.
Expat Property-Guy
But isn't it linked to reward though? So if you take a risk, then something good can happen? I guess.
Rob Dix
Yeah. That's yeah, I suppose I suppose it is. Yeah. So by taking a risk, you're exposing yourself to the chance of something negative, but also something more positive. So you're, you're opening up a wider range of outcomes, I guess. But risk is interesting, because I've done things that people have gone. Oh, that's risky. It just doesn't seem it to me. And I think there's maybe an inherent risk in is in just kind of doing nothing, doing nothing feels safe, I suppose because it's predictable. And it's known. But there's obviously a risk there of missing out on all kinds of potentially positive experiences and different paths. And I think I think people get risk wrong a lot of the time and kind of get kind of very fixated or kind of over exaggerate the risk of or how bad things can be. So it's like, you know, you quit a job and you go off to do something else. Well, obviously, there's a risk that something else won't work out. But then in the process of that thing not working out, then you're going to learn things which might come in useful for something else. And well, you can probably go back and get another job. So where is the real risk there?
Expat Property-Guy
True. Yeah. So what would you say is the riskiest thing that you've ever done?
Rob Dix
I've done plenty of things that seem risky, like quitting jobs, changing industries, starting things. Starting things people think of as risky. I don't think of starting things as risky, because nothing's happened yet you've got nothing to lose. If it didn't work out then and I've done far more things that haven't worked out that have, but it's like, well, no risk because the preexisting state is zero. But now, as the business has grown, everything that we do is more risky because we do have something to lose.
Expat Property-Guy
I mean, this podcast is primarily for expats, who you would think would have a higher tolerance for risk since, you know, while we're taking a leap into the unknown, but a lot of the expats I've met in terms of property, they kind of equate low loan to value mortgages (or LTV) to low risk, what are your thoughts on LTV, loan to value and risk?
Rob Dix
I think this is something else where there's a bit of a misunderstanding of risk among investors or fear of negative equity. But people get terrified about that. But as we saw in the last crash, the chances are, as long as you can keep up the repayments, you'll be fine in residential world, you just don't really get this concept of loans being called in because you breached a covenant or something like that. So even if you are in negative equity, which obviously if you're starting at like 70 75%, that's a long way you've got to go to be in that position anyway, then it's unlikely that you're going to get your house taken away, because what's the bank going to do with it, it's just not really a thing. So I think really, it's about being able to service the loan. And if you can do that, and you've got a long enough timeframe, then I see the risk as being minimal, because, okay, you own a property, maybe you buy it at exactly the wrong time. And half of your equity gets wiped out on paper, that's a bad situation to be in. Because I've talked a lot about leverage, leverage is great. It magnifies the upside, it also magnifies the downside. So you can quite quickly get into a position where half your equity or more gets wiped out. But as long as you can keep on holding the property over a long enough period of time, it will recover and then some. So it's this combination of being able to service the debt and having a long enough timeframe that whatever happens on paper doesn't affect you. The other aspect of that is that, yeah, all else being equal, having a lower loan to value exposes you to less risk from your lender. But it also probably means that you're less diversified, because you've had to put more of your cash into a smaller number of assets. So you might say, well, I'd rather actually have a higher loan to value but have a large number of properties, or have half as much invested in property and half in another asset class entirely. So I've got my more diversification that way. So people get funny about mortgages and about debts. I think debt is kind of an emotive thing that people have quite ingrained things about probably coming from things they heard when they're growing up or whatever, that doesn't always stand up to scrutiny.
Expat Property-Guy
Yeah, that's a great answer. Would you agree that interest only mortgages are less risky than capital repayment mortgages?
Rob Dix 18:09
I think logically, yes, I see why people aren't comfortable with that. If somebody has properly engaged with the issue and thought it through and decided that they get it, but they still want to have a repayment mortgage, just because it makes them feel more comfortable than fine. I wouldn't try to dissuade them from doing that. But yeah, I do think by having an interest only you've got more control over your cash flow. So yeah, it is less risky. Of course it is.
Expat Property-Guy
And would you also agree that an 85% loan to value mortgage is less risky than a 75%? One? Because all the money that you save, you can keep aside for a rainy day if you need to, you know, service that debt? Yeah,
Rob Dix
I see the logic, I think there's a lot about as you build a portfolio, I think your kind of your overall, holistic financial position is important because you can , like, get a lot of questions about you know, like, how much how much should I be putting aside? Like, you know, what's the what's the kind of like a decent kind of reserve for repairs or whatever. And once you get sort of up beyond one or two properties, it doesn't matter so much because you're not in reality running. It's not like you got a ring fenced bank account per property, and you can't do anything else. Right? So you might have one property where you get very lucky one way you get unlucky, but I think, I think I think the same thing, like if you refinance to take some money out, but you just kind of leave that lying around in the bank, then yeah, that of course does give you more resilience, so it's safer. So you do have to kind of consider it a bit more broadly. But at the moment, it's so cheap to borrow money, you're practically getting paid to borrow money, that it's just kind of seems almost silly not to that's something else that I think people have this kind of mental barrier about because, you know, like debt is bad debt is risky, but it's like, well, when money is free, that's not so bad.
Expat Property-Guy
Sure, sure. So the other word that jumped out from that article on neuro marketing was trust. And you know, as expats deciding who we can trust from the other side of the world can be a bit of an issue. And I mean, you guys have sort of started some big projects. So how do you decide when you can trust someone? And what advice would you give to expats on the other side of the world, in choosing, you know, people to work with in the UK,
Rob Dix
These are all very good questions. I do think trust needs to be earned. I approach things from the from a kind of like a default position of good trust level, some people are extremely trusting some are very, very suspicious and earn their trust, I kind of started start from general position of everyone's basically fine doing their best and not gonna screw you over. But the only way to really test that assumption is repeated actions over time. So if somebody has consistently done a good job for the last five years, they're probably going to keep on doing good job in the future. And so I think where that becomes relevant for expats, is to try to start small, and obviously difficult because properties are big purchases, right? So if you're buying through an agent, and the agent sells you a dad, it's obviously a lot of money. But as much as possible, try to start with small stakes and see if that person does consistently do what they say they're going to do. Maybe that's as simple as you know, ask questions and see if that person's follow up follows up and thing and things like that, right? Start with low stakes. And that's what is what I did with Rob Bence, my business partner, like we didn't start, we didn't like start, oh, well, let's today, like, employ 50 people and start doing all this mad stuff. We started by doing a podcast. And as we each turned up, every week, you're like well, here's someone who does what he says is going to do, right? So I think that that's part of it. The other part of it for expats is educating yourself, because by knowing your stuff, then you're in a position to kind of know, if you're being bullshitted or not . And you can ask some pointed questions and see what answers you get, you're not going to be able to be hands on and do the same kind of verification of the property that you're buying, and exactly the way it's being managed as you would do if you live down the road. So in place of that, you need to do that on the people that you're working with. So that that kind of that scrutiny that you the research that you would normally put on the property, you kind of have to put it on the person. So even though I'm not an expert, I don't live near... well I do live near a couple of my properties, but that's just a fluke. But I own properties that I've never seen, I've never visited. And I've done that because I'm comfortable with the person who recommended that deal to me. And so and if if somebody if I just got, if I'd been sent, an email out of the blue from someone I've never met with that exact same opportunity, I wouldn't have done it. So. So it is hard to do it remotely. But it's getting easier. There are lots of tools available now. But I think that's sort of your job as as a remote investor, whether it's overseas or elsewhere in the country is like it's your job to to work with the right people and do your research on those people.
Expat Property-Guy
I think that's the key answer. You know, you do a bit of research on people that you're planning to work with you have a conversation with them, and then verify some of the things they tell you.
Rob Dix
I think so. And through people doing things like we do with the podcast, that's great, because it kind of gives people it gives you a chance to see what you think of us and what we have to say. But I think people that go on to work with us that hopefully not expecting that we're going to get everything 100% spot on because we don't... no one does. But at least they know, they know that our hearts in the right place. And they know that that we've given them the tools to assess what we're saying. So whenever we offer anything, we always say, here's all the information, but don't take our word for it. Go do your own research. And so we kind of, hopefully help give people the knowledge to do that.
Expat Property-Guy
And just to plug your podcasts by my reckoning, you've done over 900 episodes.
Rob Dix
Oh, wow.
Expat Property-Guy
Yeah. And so really, that's a great back catalogue for anyone listening to get yourself educated on property. So we've, we've talked about risk. We've talked about trust. I think the other concept I wanted to talk about is, you know, as expats we probably earn higher salaries than we would in the UK. We probably pay lower taxes in a lot of those places, like in Hong Kong and the Middle East, for example. But we work longer hours, a lot of us. So we don't always have so much time. But you guys provide solutions for that by sourcing properties for your clients. And you've also recently set up a platform or an app called Portfolio, right? That's right, where people can buy property on their mobile phones?
Rob Dix
Annoyingly, I have to be really careful what I say about this because it's heavily regulated. And I'm not allowed to say much. But I can say if you if you want to know what it is, you can go to portfolio.co.uk but I can't say any of the nuts and bolts about what it is and how it worked. But I can say is like, yes, the intention of creating something like this was that we see that there are a lot of people who are in the position of wanting to get into property, but just not having the time. I think property is hard to dabble in, right? There's a lot that can go wrong, the amounts of money are large, it's not like you can just like buy a share in a company and see how it goes, you have to kind of dive in. So yeah, there's a lot of people in that position. And that's a problem that we wanted to try and solve. Annoyingly, we are restricted to marketing it in the UK. So it's not something that's suitable for expats at the moment. But it's something that we intend to try to address in future because clearly, expats, like you've said, do kind of fit this demo this demographic of well, we don't have much time and obviously can't be particularly hands on.
Expat Property-Guy
What percentage of your property hub clients would you say are expats.
Rob Dix
It's somewhere between 10 and 20%? We haven't measured for a while. But it was in that kind of range with big concentrations in Hong Kong, Singapore, Middle East. And sort of some, some others kind of scattered around the place. But those are the big ones.
Expat Property-Guy
Would you agree that property hub deals lean more towards capital growth and cash flow?
Rob Dix
Yeah.
Expat Property-Guy
And is there a reason for that?
Rob Dix
The whole company, the podcast, the everything is based around us as individuals. And our strategy, it's entirely selfish. But we believe that the real value of property is in the long term. And this is a bit of a it's a bit of a journey that I've been on, because when I got into property, I wanted the cash flow. I wanted money coming in each month. But then over time, I've kind of actually seen how my portfolio performs. And I've got properties at all different price points in different locations of differing degrees of swankiness, and I've sort of seen I've, I've kind of got far more into the nuts and bolts of it sort of seeing how property work, how it has, has worked historically, and how it's playing out for other people. And the majority of the gains is always in the capital growth, or it has been historically. So if you end up chasing that extra percentage point of yield, then you could end up doing yourself out of a huge amount of total return in the long term. Because ok, you end up getting an extra 50 quid a month or something. But then you miss out on 10s of 1000 pounds worth of capital growth. So if you're investing in the long term, I think you have to have a bit of a tilt in in that direction, doesn't mean ignore income, definitely don't ignore income. And it's all about a balance, we definitely tilt in the direction of capital growth, which really means tilting in the direction of quality and location.
Expat Property-Guy
Well, that's interesting, because, well, I've actually heard that Well, I guess it depends on the location, but over a 10, 20 year period, the gains are pretty much split 50:50 between capital growth and cash flow...
Rob Dix
it's going to depend on location. But I think if you I think if you get it, right, obviously, there's always gonna be a distribution of returns, and you kind of calculate everything on based on UK averages, but you can't buy the UK average property. It's not it's not possible. But I think if you, if you chase capital growth, and you get it right, then you can end up doing far better from that side of things than you can do on the rent. That doesn't mean that the rents not important because it is for many reasons, but also, that's kind of like your base case, you can you can estimate the rent pretty accurately. But you can only speculate as to what capital growth is going to be. So that's got to be oh, well, whatever happens that I've got this money coming in, that's great. I could use that to save it up for the next one or for whatever. And so you know, that's got to happen. So that that is not to be underestimated.
Expat Property-Guy
So capital growth is the main focus for Property Hub deals. would you also agree that you build your ethos quite heavily around the 18 year property cycle?
Rob Dix
Yes
Expat Property-Guy
I've had conversations with expats here who have never heard of the 18 year property cycle. Could you give a very brief summary of what the 18 year property cycle is?
Rob Dix
I'll have a go the the very quick version, his property is cyclical, and it's because everything is cyclical because it's all based on human emotions, greed and fear, ultimately, and as a result, you I always get these sort of periods of speculation when everyone gets very excited, and prices go up and business activity expands that everything else. And all of that gets captured in land prices. Henry George was kind of like the first to kind of do work on this 150 years ago or something. But then someone called Fred Harrison popularised it more recently. But all of this ends up getting captured in land prices. And so you'll get a build up as everyone gets confident, and that confidence turns to overconfidence, which turns to speculation, and everything goes mad, and prices build up to a peak. And then something happens, everyone loses confidence and prices come back down again, and then start building up. And the way in which this happens, it's kind of just a wave over time, which you tend to have 14 years of expansion, followed by about four years of decline before things sort of bottom out and start picking up again. And the important thing is that the start of every cycle, every cycle starts from a higher base. So even though you get this huge run up, and then you get a crash, it doesn't crash down as far as it was at the beginning of the previous cycle. So if you zoom out, then over the long term, prices go up. But along the way, you get these peaks and troughs. So we talk about the 18 year property cycle, I don't like the 18 year bit, because I think that can be misleading. The 18 years is an average. But knowing the average is not particularly helpful, because it's not something you can set your calendar by.
Expat Property-Guy
So the next crash could be around 2026 2027.
Rob Dix
If you're going purely by the by the 18 years, and you're looking at about 2026 for the next for the next crash. But that may, that may turn out not to be the case, you might think it could be it could be out in either direction. By multiple years, which matters, right? There's not It's not particularly helpful if you if you are out by years. But where it's useful is that at the beginning of 2020, when COVID became a thing, and everything started falling off a cliff, and I was oh my god, this at the end of everything. The very few people who were looking at the property cycle said, No, that's not the case. They this mid cycle debt Exactly. And you kind of had a had a framework for understanding why that wasn't the case. So by knowing the framework, and by looking at the signs in the world around you, because like I said, it is all driven by psychology. So you can, you can look at things like world's tallest building being announced, that's always a good marker for where for when things start getting carried away, eventually, complete construction after the crash. And you can just look at how look at how people are acting and talking about things and look at look to the media and all that sort of thing. And by doing that, and by combining that with a framework you can kind of get an idea for where we are. What did
Expat Property-Guy
Do you think then, when you know COVID really hit... did you think, oh, actually it might not be happening this time round? Or were you firm in your beliefs that this was the mid cycle dip?
Rob Dix
I think, I think everyone had a wobble of about a month when it when it first sort of kicked in because no one had a clue what was going on. But I think I'd say within a month or two, we kind of went on record as saying I can't I can't bought the prediction was I think we said prices will sort of end up being flat this year or something like that. At the same time as all your other commentators were saying it's gonna be like 10 15% declines. And we kind of watered it down a bit from what we actually thought because we thought it would sound too crazy. But as it turned out, it turned out to be pretty close. And we're actually we actually undercooked it. But that's purely because of this knowledge of the cycle.
Expat Property-Guy
Have you put all your eggs in this basket? I mean, how would it affect you if it turns out not to be true this time?
Rob Dix
I think all you can do is kind of maybe sort of exercise more caution in the lead up. But you don't really know the timing well enough. There are people who missed out on buying after the last crash because they were just like, Oh, no property prices, we've still got further to go or whatever. But then yeah, they sort of end up waiting a decade. But I think the real money is to be made on the other side. Because after the crash, being able to kind of know when things have kind of bottomed out or close enough and buying then then you can set yourself up to do extremely well, which is the best time to buy but the point where no one is buying.
Expat Property-Guy
So you will be kind of cautious in the lead up to that time.
Rob Dix
Yeah, I think it's difficult to get the timing well enough, but I think as the longer the cycle goes on for so we know that we're sort of we're in the second half of it. So you could be getting sort of getting progressively more and more cautious and kind of second guessing yourself because that's when things start to get a little bit more dangerous but then, when you do come down the other side, that's where the cycle can really help you out. This is gonna be the first cycle when I've really known all this stuff, So I'm like excited. All right, bring it on, this is ...
Expat Property-Guy
Piling in.
Rob Dix
Exactly. Because that's when you that's when you really set yourself up for life
Expat Property-Guy
Wise words. Now, I'd like to ask you, if you were an expat now, in 2022, and you were looking to get started, and you were, say, your age now in your 30s, and you had 100,000 pounds? I know you have to think about your goals, and it would all depend on your goals. But what would you do with 100,000 pounds? Now?
Rob Dix
You're right, that doesn't completely depend on goals. So all I could all I could do is answer for me. So I am investing for the long term. And at this stage, in my life, I don't want any hassle or aggravation. So I would try and stretch it to buy two quality properties in good locations, that'll rent easily hand them over to someone and forget I own them. That's what I would do. Check back in a few years, see if you can refinance them. And that's about it. But I think a lot of it depends on, is that the last 100,000 that you're likely to have? How long have you been saving that up for? And that's important. Because if that is your... all you've managed to save in your life up to that point, or it's an inheritance or something like that, then I think you need to be thinking more about how you can maximise that how you can add value, how you can buy at a discount how you can refurb or do something. So you can then pull some of that out and go again. But expats, like you said, tend to be in a position where they're earning well and paying less tax. And so if it's the case of well, actually, I can afford to buy a property every year or every two years, then that kind of takes the pressure off, I think from having to like really maximise every purchase.
Expat Property-Guy
So that was the easy question. Right? I'll give you a more difficult one now. So the format of this podcast, as I told you off air, is the slow reveal of my wife and I's Expat Property Story. So I've already told listeners before the interview, that it's Easter 2017, we have our original home in London, our flat, which in 2017, it's worth £425,000, we still owe 50,000 on the mortgage. We've just ditched our financial advisor who's been telling us not to invest in property. So we've got about 150,000 that we're going to take out of the pension plan. So what do we do? And our goal, by the way, is to be not working for others in 10 years’ time, so 2027.
Rob Dix
Okay
Expat Property-Guy
So what I thought would be fun was you tell the 2017 version of us what we should do. And then later on, listeners will be able to compare your suggestion for what we should have done to what we actually did. So what advice would you give the 2017? Us?
Rob Dix
Okay, well, this is easy, because we've got perfect hindsight, because we actually know what's happened for the last few years. So what you perhaps should have done with perfect knowledge would have been, you sort of, you take that equity out of the flat, you actually, you actually probably should have sold the flat, because based on the perfect knowledge of what London was going to do in the in the coming years, but... But you could take the take the equity out of the flat, go and buy some properties in Manchester or Liverpool, both of which have been flying for those years, probably Manchester, because that had the growth earlier. And then you'd be in a position to buy properties that are very easy to manage from abroad. That would be bringing in some rental income, but tied into what I said earlier, are going to give you good capital growth that's going to allow you to then refinance, and then go out and buy more, because you're talking about 10 years’ time. So what you want to have done, I think is by in 10 years’ time, he wants to build up a portfolio that through rental income is paying your bills, it's replaced your income. But you don't have to have done that on day one. You're optimising for that in 10 years, you're not optimising for it now. So rather than going for the most rent that you could achieve now, which doesn't really do a lot for you, while you're still working, you tilt yourself more to capital growth so you can build up that portfolio and then sort of see where you are in 10 years’ time and possibly change the portfolio around at that point, depending on what the market is doing to tilt yourself back towards income again.
Expat Property-Guy
Right. Well, there you go. So I suggest everybody to subscribe, and stay tuned to find out whether Rob's advice is actually what we followed.
Rob Dix
Hmm.
Expat Property-Guy
Now there's one other thing I would like to ask you and this is something that I grapple with myself. And it's, do you have any sense of guilt about investing in property? You know, knowing that it's making it harder for people to get on the housing ladder?
Rob Dix
It's a really tricky issue. Because I don't. Should I? is the question, and I don't, because I think there is a big place for renting. And my kind of unpopular opinion in the property industry, is that I think renting should be a far, far better experience. That doesn't necessarily mean more regulation. It means better regulation. But it doesn't mean no regulation or less regulation. I think renting is important. And I think renting in the UK is a terrible, terrible, terrible experience. And I very much hope that it won't be for much longer, like, I feel like because of technology and things like that people's standards and expectations have improved increase in lots of lots of areas in life where it's like you'd previously but be fine, like bringing up the minicab company. And they'll say he's five minutes away, and it'll be half an hour, and you can't, but you're kind of okay with that, because that's just how things are. But in property, people still settle for a dreadful experience, because it's just the norm. And I don't think renting should be a second class experience, because I think renting is a perfectly valid option. Some people rent because they have to, but some people rent because they want to I rent my own home because it suits me, but it's still crap. So I think that if you can provide quality rental accommodation, then I don't think that's anything to feel bad about. And I don't feel bad about my tenants sort of sending me their bank transfer every month because they're getting something valuable for it. Does it make it harder for people to buy? It's very hard to tease out all the different strands. Yes, in some ways. Of course, more buyers in the market does do that. But also everything kind of lands at the door of like greedy landlords, but actually it's government policy and monetary policy and all the rest of it makes far more of a difference in house prices than anything we could do. So no, is the as the short version of that?
Expat Property-Guy
Well, you've made me feel better about it. Anyway,
Rob Dix
Good.
Expat Property-Guy
Now then, a good interviewer should challenge his guest.
Rob Dix
Right.
Expat Property-Guy
So are you prepared to play Monopoly Challenge, Rob?
Rob Dix
Of course, what is it?
Expat Property-Guy
Well, the object is to name as many squares on the Monopoly board as you can in no more than 30 seconds. If you repeat any squares, then that square will not count towards your final total. So Rob, are you ready to play Monopoly challenge?
Rob Dix
Yes, I am. Um, this is gonna be very bad. I'm not I don't play Monopoly because I'm a bad I'm a really bad loser. Alright. So it's not good for no good for family relationships, but have a go.
Expat Property-Guy
So, you've never played Monopoly?
Rob Dix
I have, but not for a long time. It never ends well.
Expat Property-Guy
Okay. So using your long term memory then, your 30 seconds starts now.
Rob Dix
Okay. Old Kent Road. I'm just going to do random places in London. I can think of ...Park Lane. Marleybone, Fleet Street, Bond Street. Piccadilly Circus, Leicester Square What else is there... I'm just terrified of repeating places now. Angel Islington Pentonville Road.
Expat Property-Guy
Not bad. Some obvious ones you missed out. Go.
Rob Dix
Ohh! Fair enough,
Expat Property-Guy
Go to jail. Free parking.
Rob Dix
Ahh Okay.
Expat Property-Guy
But don't worry. I'm sure there'll be people who do better and some people who do worse,
Rob Dix
But I'm winning at the moment right?
Expat Property-Guy
Well, you are! You are the early leader. That's true. So Rob score in Monopoly challenge was nine which as he says puts him in the lead. So can we finish with a game I play with my daughter: This or That? Are you up for that?
Rob Dix
Ooh, yeah.
Expat Property-Guy
All you have to do is to choose from one of the two options. Okay?
Rob Dix
Okay. Let's do it.
Expat Property-Guy
Beach or Mountain?
Rob Dix
Mountain
Expat Property-Guy
Wow, that was a long time
Rob Dix
I'm taking this seriously.
Expat Property-Guy
Yes, I can see! Marble or wood?
Rob Dix
Wood.
Expat Property-Guy
Interestingly, when they do developments in Hong Kong, they sometimes do alternate floors, marble and wood.
Rob Dix
Really?
Expat Property-Guy
Yeah. So you have the choice of floor when you buy.
Rob Dix
Wow!
Expat Property-Guy
Clever, eh?
Rob Dix
That IS clever. Very interesting I learned something today.
Expat Property-Guy
Good! Thailand or Spain?
Rob Dix
Oh, Thailand.
Expat Property-Guy
You've lived in both right?
Rob Dix
I love both. That's tough.
Expat Property-Guy
Okay, early morning or late night?
Rob Dix
Early morning.
Expat Property-Guy
Go forward in time or back?
Rob Dix
Oh, forward always forward,
Expat Property-Guy
Staying in one place for 12 years or moving every day?
Rob Dix
Oh, but both are awful but I'd have to move every day.
Expat Property-Guy
Okay, fair enough hotel or Airbnb?
Rob Dix
Airbnb
Expat Property-Guy
Books or podcasts,
Rob Dix
Podcasts,
Expat Property-Guy
Property Geek or Property Hub? Getting a bit more tricky now.
Rob Dix
Property Hub! Come on!
Expat Property-Guy
Homes Under the Hammer, or Location, Location, Location?
Rob Dix
Bizarrely, I haven't actually watched that many of either, but I do do like a good bit Homes Under the Hammer,
Expat Property-Guy
Escape to the Continent, or Selling Sunset.
Rob Dix
Yeah, I haven't seen either. really disappointing. Yeah, put Million Dollar Listing in there and I'll be okay.
Expat Property-Guy
Selling Sunset's more trashy TV
Rob Dix
Really? I'd probably like that one then.
Expat Property-Guy
Okay, Robert Kiyosaki or Warren Buffett?
Rob Dix
Warren Buffett. Well he hasn't been on the podcast yet.
Expat Property-Guy
You interviewed Robert Kiyosaki, didn't you?
Rob Dix
We did!
Expat Property-Guy
The Three Robs.
Rob Dix
Too many Robs in property,
Expat Property-Guy
Property or crypto ?
Rob Dix
Property but i do like crypto
Expat Property-Guy
Liverpool, or Manchester?
Rob Dix
Rob might listen to this...Liverpool
Expat Property-Guy
Houses or flats?
Rob Dix
I can't give an answer to this one because we've spoken repeatedly about how it doesn't matter. So it'd be hypocritical to answer.
Expat Property-Guy
Fair enough. Okay. HMOs or single lets?
Rob Dix
Single Lets
Expat Property-Guy
Why, out of interest?
Rob Dix
Easier,
Expat Property-Guy
Easier. Okay. Limited Company or personally held
Rob Dix
Depends. But there's not a cop out answer. But I think the fact that you do, you can't have a firm answer to this. But a lot of people are not must be limited company. know very much depends.
Expat Property-Guy
Okay, hold or flip hold. And finally 80% or 60% LTV
Rob Dix
Depends on the rate. But if the if the rates are the same or similar at why not?
Expat Property-Guy
Rob, you've been an amazing first guest on Expat Property Story. It's been a real pleasure talking to you. And I really appreciate your time. Thank you so much.
Rob Dix
You're very welcome. I'll have to keep listening to follow the story. Yeah,
Expat Property-Guy
That would be great. Thanks again, Rob.
Rob Dix
Pleasure.
Expat Property-Guy
I hope you've enjoyed listening to this show as much as I've enjoyed making it. Now if you're an expat property investor, or you're thinking about becoming one, or you just enjoy the show, it would be great if you could lend your support by subscribing wherever you get your podcasts. And if you know someone who might find the information useful, send them a message and spread the word. If you really want to help build a community of expat property investors, please rate the show on your podcast app or leave an honest review on Apple podcasts. Why not write to me at expatpropertyguy@gmail.com and tell me what kinds of things you'd like to have covered in the podcast. If you want to tweet me it's @ExpatPropGuy or follow me on Instagram at Expat_Property_Guy. You can find links to all of this and more in the show notes. You've been listening to Expat Property Story