UK Property Expertise with John Howard

#19

UK property expert John Howard’s forty years’ experience makes him the ideal investor to offer an opinion on the state of the UK property market as we head toward the third quarter of 2022.

Rising inflation, properties taking longer to sell, reduced prices, house builders’ share prices falling and an increase in distressed housing stock all point towards a UK property market slowdown at best and a crash at worst. This makes buying at a discount all the more important and John offers advice on how to do it. 

He also argues that expats may be in a better position to ride out a UK property blip. Times have changed in the post-pandemic property landscape and John suggests ways in which expats could do bigger projects with the increased use of online communication platforms. 

Back in 2018, the Expat Property Guy and his wife finally complete their student HMO in Nottingham.

Rate, review, follow and give your ideas for the show at www.expatpropertystory.com  

Chapters:

Expat Property Story (1’37”)

Joke (5’37”)

Postcode Challenge (5’54”)

John Howard’s three golden rules (8’34”)

The importance of buying at a discount (9’58”)

The danger of Joint Ventures (11’09”)

Due diligence (13’03”)

Slowdown (14’32”)

House price affordability 17’47”)

Estate agents (19’51”)

Expats with money to spend (21’29”) 

Pushing the boundaries as an expat investor (24’20’) (

Risk (26’25”)

5 a side property team (28’51”)

Highlights (32’45”)

Transcript

Trailer  00:00

The market is slowing down, prices are being reduced. Builders shares have gone down. The fourth thing is that interest rates are going up, and it's all linked. And on top of that, in the UK, especially, I can't tell you the amount of problems people are having and are going to have further because it's going to go up again, with energy prices it's probably going up 20% At least. If the banks start to reduce the borrowing they will give people then that will cause a problem in the property market because so many people rely on borrowing 70-80% And if they reduce that to 60% And the other thing I'm seeing is distressed stock, if you like, coming onto the market already, which is interesting.

Introduction  00:43

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. 

Expat Property-Guy  00:53

Hello there and welcome to Episode 19. That was THE John Howard, the godfather of UK property investing, not the politician from the other side of the world. It never ceases to amaze me how people can set themselves up as a property trainer after borrowing a few 1000 pounds from their uncle and buying a couple of terraced houses on Teesside. No disrespect to Teesside... it was actually my father's first UK home. Given that we're quite possibly on the brink of a recession, downturn, plateau, crash, correction, call it what you will, shouldn't we all be paying a little closer attention to those that have actually been through a few property cycles? Well, look no further, dear listener, because today you are in for a treat, as John, who has been through several, gives us the benefit of his considerable experience. So stay where you are. Now in the five years since my wife and I started our Expat Property Story, a word I frequently come across is leverage which as far as I can tell, is getting other people to do things that I can't. I've come to the conclusion that I'm pretty good at leverage, probably because there's so many things that I can't do. Just last week, I leveraged the guy to put a lampshade up in our living room, which is always money well spent, as it prevents the kind of nasty atmosphere in my home that usually follows a trip to IKEA. One of the best things about being an expat property investor is that we are automatically prevented from being active hands on developers or managers. So effectively, we are forced into leveraging the skills of others making our property investing as passive as it could possibly be. If you listen back to the first 18 episodes, our real skill was in learning networking and taking action. And that's how we got to where we are in our story so far. As a reminder, it's October 2018. And we've leveraged the skills, knowledge and experience of our carefully chosen UK property partner to buy a house in Nottingham and converted it into a five bed student HMO, which has been rented out to an education company for the remainder of the academic year. The tenancy will take us up to the beginning of the following academic year, and the company that have rented it have paid us in advance, in full. That was the good news. The bad news was that the mortgage process was just as difficult as the one we endured to release equity from our family home to get our story started. The fact that it was a company that restricted the number of lenders available, and the one we ended up with was difficult, to say the least, in terms of conveyancing we had opted for using the same solicitor as the lender as we'd been told that it would be easier. But when I saw that their fees were nearly £400 more expensive than the other solicitors on the lenders panel. I complained to our broker and he got the fees reduced. But hell hath no fury like a solicitor scorned. Well, this one anyway, and the hoops we subsequently had to jump through would take a whole episode to get through: wet signatures, additional certification of documents and their insistence that the mortgage deed had to be not just witnessed by a solicitor qualified to practise in both Hong Kong in the UK, but on that law firms headed paper, which most of the ones I contacted refused to do, except at eye-wateringly huge costs. One firm wanted £2000  just to witness my signature. Anyway, after contacting all 20 Odd firms qualified to practice in both countries, I found that one was willing to do it for a more reasonable fee. And when I turned up to his office, he signed everything off and told me not to worry about the fee! So there you have it, solicitors are great! Anyway, to cut a long story short, the valuation eventually came through at £265,000, which was £10,000 less than we'd hoped for. So we didn't get all our money back, which I'm beginning to think is ,if not a myth, then certainly a rarity and, as an expat leveraging and paying for the skills and expertise of a UK property partner, then almost impossible. So our first UK student HMO had been sourced, bought, refurbished, rented out and refinanced, and we'd set up a limited company for the next property which went swimmingly... or did it. Join me next week to find out. Now, do you like Dragon's Den or The Apprentice? Well, today's guest John Howard appears on the property versions of both, which are, respectively Property Elevator and The Property Graduate. You can find both on YouTube. John has also written numerous books, including John Howard's Inside guides to Property Development: Investment for Newcomers, Advanced Property Developing and Investing and Buying and Selling at Auction, to name a few. You can find links to all of these and lots more both in the show notes and at John's website, www.johnhowardpropertyexpert.co.uk. Now John has a great sense of humour but he challenged ME to tell this week's joke. How do you get TWO Wales in a mini?

John Howard  01:48

It's probably a very simple answer. 

Expat Property-Guy  03:55

It is a simple answer: down the M4 

John Howard  04:28

Very good 

Expat Property-Guy  04:30

Thank you. 

John Howard  04:30

Very good 

Expat Property-Guy  04:31

Thank you 

John Howard  05:02

Very good! I've heard  better, but that wasn't bad. 

Expat Property-Guy  05:55

All right. Well, that's Oh, that'll do for me. 

Narrator  05:56

Postcode Challenge 

Expat Property-Guy  05:58

You have chosen as your postcode for postcode challenge IP1. 

John Howard  06:03

Central Ipswich. Yes. I've done a few deals there recently, The Wine Rack... 150 Flats. So we've done a lot in the last few years there. Yeah.

Expat Property-Guy  06:12

So that's quite ironic The Wine Rack because you don't drink ,do you John?

06:16

No, funnily enough... you've done some research! No I don't. I tried alcohol when I was about 14, didn't like the taste of it. And I've never touched it since.

Expat Property-Guy  06:23

Yeah. All right. My sister had a similar story. She said she was going to have Ribena at her wedding. But no, she didn't. Ha ha.

John Howard  06:29

Ha ha

Expat Property-Guy  06:29

Okay. Anyway, three questions, multiple choice, you have two get to right to win.

John Howard  06:35

.Well, I'm very competitive. So here we go. 

Expat Property-Guy  06:37

Good. Question number one. What are there more of in IP1? Is it retired people or part time employees defined as 30 hours or less per week?

06:48

That's very interesting. I would say the demographics of Ipswich are changing, especially with McCarthy & Stone retirement people buying sites, I would say part time,

Expat Property-Guy  06:57

Correct. Yes. 

John Howard  06:59

Thank God for that!

Expat Property-Guy  07:00

Part time employees 4891 and retired people. 3544.

John Howard  07:06

Yeah, that's changing. More people are coming into towns to retire into you know, so that's interesting. 

Expat Property-Guy  07:11

Question number two, what are theyre more of in IP1, is it terraced houses, or purpose built flats.

John Howard  07:18

Now, ten years ago, it would have been terraced houses all day long. But I mean, there's probably five and a half thousand flats being built around Ipswich waterfront of which we're, we're guilty of.

Expat Property-Guy  07:28

You've probably built most of them.

John Howard  07:29

Ha ha. No we haven't but we've done a few I would say probably there are still more terraces, just, but it's close.

Expat Property-Guy  07:38

You're right, John. Yes. So you win Postcode Challenge, there are 4297 terraced houses, and only 4032 purpose built flats.

John Howard  07:48

What was the third question?

Expat Property-Guy  07:49

A terraced house on the high street number 58, sold for £370,000 in December 2021. But how much did it sell for in September 1999? Was it a) 102,500 b) 122,500. Or c) 132,500?

08:09

Well, there's very little difference between all three. 10% out would be would be acceptable for most people. I would have said, I would have said that's a hell of a good price for a terraced house in Ipswich today, to be fair, so I don't know which one you picked 

John Howard  08:21

Number 58. 

Trailer  08:22

Ha ha... I appreciate it's Number 58... I would say the middle one.

Expat Property-Guy  08:26

No, you're wrong, John. So it's good job you got the first two right is actually £132,500 , 

John Howard  08:32

Was it? 

Expat Property-Guy  08:32

Yeah.  Famously, you have three golden rules which you use to assess a deal and they are: If you can't buy and sell without making a profit without doing anything, don't buy it. If you can't buy refurbish and flip for profit, don't buy it. And if you can't buy, refurbish, refinance and get most of your money back out, then don't buy it. Do you think it's possible to follow these rules if you're an expat? Or are there perhaps three different golden rules for expats to follow?

09:03

That's a really good question. Because obviously, if you're if you're arm's length, if you like... no, no, I think you can do all three. The only thing about being expat of course, is that ideally, you've got someone local, who can just keep an eye on things for you. It might be relative, it might be a professional chartered surveyor or someone who acts for you. So I think you HAVE to make sure you can do all those three things. I think at the end of the day, there's no excuses. You know, I ask those questions every time I buy a deal. Of course, not every deal works out right. And, and ultimately, like I always say, you know, if you show me a property developer, and that hasn't lost any money, and I'll show you, you know, over the years, and I'll show you a liar, but if you're investing to KEEP property, then obviously that's a totally different issue. And I would say that if you're an expat, you're more probably more likely to purchase refurbish and keep than you are to trade. Would that be a fair assumption?

Expat Property-Guy  09:51

I think so. I think there are people who do, who have flipped. But yeah, in general. Yeah, I think I think most people would buy refurbish and hold or just buy and hold. So I've also heard you say that if you're serious about property, then you should be buying at the wholesalers, not at the corner shop. And if you can't find a deal to give you a 20% return, then you should look harder. But how is that possible for us expats?

10:15

It's made harder? Of course it is because you're not here treading the streets as it were. But I honestly truly believe that. Because if you don't, and you know, you're buying a 5% 10% discount, or potentially no discount, you just want to buy something for the long term. You know, you're never gonna go wrong if you keep it because you look at the UK market over the last 20, 25 years on average has gone up 5% a year. So that's the long term. The difficulty comes in the short to medium term.

Narrator  10:38

John gave the example of someone who came to him for help after buying a one bedroom flat in Ipswich.

John Howard  10:44

He bought it for 77,000 two years ago. And he said the great thing is, you know, sold for £153,000 back in 2008. It must be worth £130, 140,000 Now, or if not £150,000. And the truth was he bought it for £77,000. Refurbished, it was valued at £110,000. So after all those years, the market still hadn't come back to where it was in 2008. You need to be buying at trade in the first place, not retail.

Expat Property-Guy  11:11

One strategy to overcome that often suggested for expats is to joint venture with someone in the UK. Now I know it gets on your nerves, when you see people with not much property experience looking for private finance from people they don't know. I'm not friends and family. But what do you think represents enough experience for an expat or anyone else actually to JV with

John Howard  11:31

That's a.... you're good at this! That's a very good question. It really, really concerns me really concerns me at the moment is that there's people that I've met and who come to us to joint venture with us, because I've got this joint venture fund, where we put the money in and they find the deal. And they haven't got enough ability to do these deals on their own. They haven't got enough experience, yet. They'll say, Oh, well, you know, I've got my investors behind me, I don't really need your help, or this, that whatever it might be, which is fine. But those poor investors, presumably they don't know that much about property. And they're investing with people they think know more than them, but probably don't, it's scary. And you only need a slight blip in the market, which I think's coming in the next 12 months. Unfortunately, you were already hearing stories of the bigger companies who have done this, there's a company that have just gone bust in the UK, I think they had 60 million or something in which 29 million was unsecured. In other words, there were debts with some people who've invested with them. 

Expat Property-Guy  12:25

Was that a property company? John? 

John Howard  12:27

Yeah, property company. Yeah. And they were offering apparently 18% interest to these people? Well, I've got a bond on the European stock market to raise money to do deals. And I'm sorry to say we give 5.5%. So there's a lot of difference between 5.5% and 18%. But there's a reason for isn't that if it sounds too good to be true. Please, please be careful out there. You know, really research the people you're looking to invest with, see what they're doing, see what they've done, you can talk to them, but there's so much money out there flying around, and people are so concerned about not having it invested in a deal. You can do 10 deals and make no money in a year. Or you can do one good deal and make a lot of money. 

Expat Property-Guy  13:05

Lots of people say like you just did there, John, do your due diligence on the people 

John Howard  13:09

Totally

Expat Property-Guy  13:10

How would you do that, then?

John Howard  13:11

Well, certainly I'd do a credit check, you could ask them for a statement of assets, you can then check that that statement of assets is true, because people might exaggerate their statement of assets, you could get the statement of assets qualified by an accountant before they send it to you that would be a good way of checking that it is bonafide, you can go online these days, you can get a list of the developments that have been involved in check there have been involved in them and there not someone else's developments. You know, all these tricks happen. All these tricks take place. So just be super careful. And I've got someone who I've been helping and unfortunately, they invest a lot of money in with someone a lot of money, and we're trying to unravel it for them now. And unfortunately, it looks like they will lose a substantial amount of money and what the guy was doing, he was getting money off everyone not telling the bank it wasn't from him, almost like a Ponzi scheme. He is doing the developments, but I mean, they're not going to be profitable. And where's the rest of the money gone? Basically. So please, please be careful out there. It's so much a bit going on and so many terrible stories you hear and of course it's all unregulated lending and borrowing and this is the problem somehow the government needs to get to grips with it all I think 

Expat Property-Guy  14:17

And expats are particularly susceptible to that. 

John Howard  14:20

Well, I think the problem is they're looking for something that doesn't exist if you're offered 18% interest you know, how can I can afford to give someone 18% interest? 

Expat Property-Guy  14:28

Yeah

John Howard  14:28

And I'm reasonably good at what I do. Don't get it right every time no one does. But if it sounds too good to be true, it probably is.

Expat Property-Guy  14:35

So something you just said there a minute ago: in the next 12 months you think something's gonna happen and you have said that whatever happens in the auctions will happen in the rest of the market six to nine months later. So... and you know, the auctions very well, having owned an auction company, but what is happening in the auctions right now, as we record this in April 2022. 

John Howard  14:54

Well, interestingly, not as much as I thought. So, at the moment, the auction results So pretty good everywhere still, about two months ago, the auctioneers started ringing me and being nice to me and saying, Hi, John, how you doing? Do you any funds to spend? That's a red flag is it?  Exactly. They're fickle a lot at the best of times, and I hadn't heard from most of them for yield to and we buy an auction on a regular basis. It's not as if they're dealing with someone they don't know. So they obviously were concerned early on in the year that things were going to slow down. And I think to a point they have slowed down, but it hasn't really been shown in their results. So far. It's still early days, property's like a big boat. It takes a long time to stop and turn in the other direction unless there's a catastrophic disaster. The results you hear from Rightmove and people like that, especially for expats who aren't living it every day if you like. The results are fantastic, Rightmove and Nationwide came up the other day with some great results. These results are three months old, really. So when someone buys a property, the completion takes three months, their results are three months old. So we're at the sharp end of it all. We're at the coalface. So we see what's happening straightaway. And I've got six offices in Norfolk, Fine & Country's a nice brand, we own six offices there. And interestingly, even at that level, which is less affected by mortgages and interest, because a lot of people are cash buyers, two things are happening. One is that property is taking longer to sell. So if you look on Rightmove, on the stats, you can see how long they've been on the market. And the second thing, which is a real telltale sign is prices are being reduced earlier and not sold in others have been reduced. The third thing it tells you the market slowing down is house builders shares have gone down. The fourth thing is that interest rates are going up. And it's all linked. And on top of that, in the UK, especially I can't tell you the amount of problems people are having and going to have further because it's going to go up again, with energy prices and the cost of living. They say the cost of living 6 or 7%. Well, if you go shopping on a weekly basis, and buy petrol and everything else is probably going up 20% at least. The only question that I've got about the market not slowing down and stopping and so on and going flat, at least flat if not worse than flat, the only thing you can say is that in the past property has tended to keep up with inflation. And under a Labour government, no pop the company have done has done too badly under Labour government because there's always more inflation under Labour. Now we've got a Conservative government who are acting like a Labour government. But interestingly, where we keep up with inflation, of course, we've got ahead of inflation over the last two or three years. But will we keep up with inflation this year or not? My thinking is if the banks start to reduce the borrowing they will give people then that will cause a problem in the property market. Because so many people rely on borrowing 70 80%. And if they reduce that to 60%. And the other thing I'm seeing we're buying, hopefully buying a couple of deals in Scotland of part finished stock, distressed stock, if you like coming onto the market already, which is interesting.

Trailer  15:22

The other thing, of course, is that when average house price affordability is seven times the average salary, then a housing crash is around the corner. But currently, it's eight times

18:00

Yeah, it's interesting and the Bank of England are changing their criteria aren't they? Of how they allow the banks to build societies and lending institutions to lend. Because what they're saying now is that and this is the argument is because people are out there affording to pay, say £1500 rent in a property. And then when it comes to buy, the mortgage mustn't be more than say £900 pounds? Well, they say, well hang on a minute, I can afford £1500 pounds, why are you restricting me to £900? In simple terms, so the Bank of England are changing the rules to allow these lending institutions to lend more, more time. So I agree with you. In the old days, when it got to six or seven times income people were borrowing a crush was always around the corner. Now interest rates are incredibly low. I mean, my first mortgage in UK was about 10 11% on my house, until the last 10 or 12 years, the average mortgage you had on your home was about 10%. And now it's what 2%  / 1.5%. I mean, it's incredibly low. I just think we've had it too good for too long.

Expat Property-Guy  18:58

Do you think that that decision by the Bank of England is kind of like kicking the tyre down the road, and they're just creating a perfect storm, and it's gonna be a bigger recession? And  Well, you do have to wonder that, you know, they don't allow 100% mortgages or there's one or two companies, I think I've started maybe one company doing 100% mortgage. But when all that starts, disaster normally follows 420,000 first time buyers came into the market last year, which is a huge number. And I don't think there'll be anything like that this year, there was lots of incentives and all the rest of it. I just think that people's affordability, you know, interest rates ARE very low. But if your new mortgage is going to cost you, you know, turn 250 pounds more than it would have done last year that's 250 pounds less you've got to spend on coffee, cinema restaurants, and the whole economy starts to slow down and grind to a halt. Certainly I think there'll be more opportunities especially for the expat fraternity, you know, because I think they won't have to chase a hard to find the margins. I know that you have been working with estate agents for over 40 years, and I heard you say you know what they like on another podcast What DO they like?

John Howard  20:01

They all like fast cars, they all tell you when you employ an estate agent, that the car's not important. Car's not important to me, John, I want to come and work for you. So that's great, that's wonderful. You've got a three year old, whatever it might be. That's a bit of a problem. I had a brand new car, my last job, you know, so they're all the same. So estate agents, when they wake up in the mornings, they pull the curtains back, and it's always a sunny day, always a sunny day, even if it's raining, they're selling your property, you want them to be optimistic about selling, but you've got to take their advice with a pinch of salt, because if you're selling a property for them, and you might have gone to three different agents, and they know you've got three agents, most of them are going to overvalue it in order to get it on the market and stop another agent getting it. And then over the next four weeks, six weeks, they'll what's called work it down to a level where they can sell it. Okay, this last year has been exceptional, but that's what normally happens. They all do that to me, they do it to everyone. Now what I do to stop them doing that, then I say to them, okay, that's great. Thank you for your estimated valuation or whatever. Can you tell me? What would the price be to sell it within a six week period? Because that way, you're giving them another bite of the cherry to be honest with you? And you're given them excuse? To be honest? In other words, oh, well, it's six weeks, of course, John, it needs to be a bit less. And that's the figure I take the bit that when they say it needs to be a bit less. That's whatever that figure is. I never take the headline figure.

Expat Property-Guy  21:21

Right? So that's a clever way of finding out what the real figure is. So yeah, so you need to take what they say with maybe not even a pinch of salt, a bucket of salt, 

John Howard  21:29

A bucket of salt, most of the time 

Expat Property-Guy  21:30

A bucket of salt. 

Narrator  21:31

I asked John what he thought expats with money to spend should do in the current climate? 

John Howard  21:36

It depends what they want to do. Do they want to be a hands on developer stock investor as much as they can? Or do they want to put it and I'm not Jesse, my bond, particularly, which is obviously a regulated list of bonds. So it's official, if you're like, unregulated, or do they want to invest the money with a developer who's then going to give them a good rate of return, which is a much softer way, of course of doing it. But like we said earlier, if you're doing that make for the bond is regulated. And the interest rate isn't crazy. Because at the end of the day, if it's crazy, we've already said what sounds too good to be true, it probably is. So if you have a relationship with the developer, and you can put the money in and they can do the work and you split the profit 50:50, that's absolutely fantastic. If you feel you want to do it yourself, it's possible at arm's length if you like, but you have to have good advisors and people around you, I do a bit of consultancy if the scheme is big enough. And certainly I would be happy to talk to them on that basis. If they've got enough money to invest, as other people will, I'm sure as well that I don't think you want to be in a hurry at the moment. Because I think we want to know where all this is going. We've got Ukraine, dreadful things happening out there. We've got huge inflation, interest rates going up, you know, it's not rocket science to say, Well, I think things are going to slow down and get tougher. And I think the third or fourth quarter of the year, we'll see these things start to bite, the interest rates, bite, inflation bite, and so on. There's no rush, if the deal is fantastic. If a deal's really good, you've got to do it. I understand that. If you're only finding average deals, then I would keep what's called your powder dry while. I would just monitor the auction market and see where that's going. If you're looking to invest in long term, I suppose he doesn't matter too much. But you just might be paying 10 / 15% more than you need to. at the end of the year, maybe you can pick up more of a bargain.

Expat Property-Guy  23:18

How do you draw that line between taking action and being brave enough to walk away from a deal if it's not a good deal?

John Howard  23:25

Yeah, no, I understand that. And actually, in the early 90s recession, the market dropped, but it dropped slowly. And it kept dropping, and you felt it had stopped dropping? Yeah, never catch a falling knife. As they say it felt like it stopped dropping and plateaued. So then you get in and buy and then it will drop again over two or three years. And that was a very difficult scenario. In that scenario, if it's dropped a bit, and you buy and it drops a bit more, and you're looking to long term, it's not the end of the world. But if you're looking to trade out of it, which I do a lot, then you need to move very quickly. Although you bought at a discount. If you don't sell it quick enough, the next drop has taken account of your profit. It's a dangerous game to play, but knowing when to get in and out that's just experience. In 2008 / 2009. You know, I called the top of the market. To me, it wasn't hard to call. I mean, all due respect, when you see people who don't think should be making money on a property making money on a property then... and making more than you, then it's probably time to step back

Expat Property-Guy  24:21

Right... I think you'd like a challenge. I would say if you were an expat and you wanted to do something that people say no, you won't be able to do that. John, that's crazy. What would you do that is within the bounds of not being crazy, but doing something that people say, you won't be able to do that.

John Howard  24:39

Everything's harder from a distance. However, I live 600 miles away from Scotland, something like that. 500 miles. It's a plane journey away. Really. Yeah. And I'm doing hopefully that deal in Scotland where I need to spend a million pounds and so I'll probably go up there four times. That's it... four times. And that's to finish the development and what I speak about really to start with in my advanced property and developing seminar to start with, I talk for an hour and a half about consultants, because consultants at that level are where you have to be, you need to employ the consultants, they need to be good, and you need to be able to trust them. And if you can do all those things, and that's the benefit of buying a bigger development than perhaps you would normally do, if you're hands on, you can actually afford to buy then develop a bigger development if you're further away from home, because actually, you don't need to be hands on too much. So because you've got your consult around, you are doing the whole job for you. So actually, what I would say to all those expats out there who have got money, and they're thinking of buying the terrace house for 150 grand or, but they've got a lot more money than that, my argument would to them would be, do a bigger scheme, yes, have a consultant on it, have somebody you can trust on it. But actually, your consultants will protect you and look after you complete, which is on a smaller job, they won't because you can't afford to employ them, they won't want to be employed on the small job. But they will want to be employed on a big job. And they've got insurance, and they're professional, and they've got integrity, and they will make sure you'll development is successful. But of course, you are still the captain of the ship. But with Zoom these days and everything else you can have regular meetings, and it's not like it was. It's changed for the expats. And and I would I would I would definitely advise people to look at... be a bit more ambitious, perhaps than they were thinking of being because they're a long way away. And actually, the bigger the scheme, the easier it is to manage from a distance.

Expat Property-Guy  26:28

What does the word risk mean to you?

John Howard  26:30

I use the word de risk more than risk. Every development I look at, I'll look into derisk it before I buy it. And when I say derisk it, I'm looking to know what it's going to cost me to put right what are the challenges? What are the problems, de risking each problem if I can, and then look at the very worst scenario, what if I can't sell them? Can I rent them? What can I rent them for? So by the time I've bought it, I'm pretty relaxed. Risk is relative. So for me, I don't want to be taking big risks, and I don't want to lose what I've got 

Expat Property-Guy  26:58

At your stage of life. Right? 

John Howard  26:59

Exactly. I've always been relatively cautious, surprisingly. But when I was 2021 2223. And the same with some of these first time developers, they don't understand risk. They don't think they're taking risks. But in my opinion, quite often they are because they haven't got the knowledge to know any different. And that's where your consultants and everyone comes in. I did a seminar two years ago in Manchester, this guy, very nice man. He said to me, Oh, I couldn't do what you do, the risks you take, John. And I said, What do you do? I build one off houses. Oh, right. Okay, so what sort of level? Well, between sort of three and a half and 5 million each? 

Expat Property-Guy  27:37

Wow. 

John Howard  27:38

He's in Manchester, deals with the footballers. And he doesn't see that as a risk at all. He thinks what I do is a risk. That would worry me to death doing one off houses risk is all relative to the person. 

Expat Property-Guy  27:47

So what's the riskiest thing you have done, then John?  Well, it all depends if you've got a personal guarantee on it or not, doesn't it? You take The Wine Rack out. So The Wine Rack in Ipswich. 26 million pounds to develop it. Risky from the point of view, 150 flats. Risky from the point of view, as my wife said, you don't want to get this one wrong, darling, I can see it from Marks and Spencers. So you've got personal risk and personal humiliation if it goes wrong. And then you've got financial risk. From a financial risk point of view, we borrowed the money off Homes England, which is the government bank, basically. So although we're in for a lot of money, I wasn't int for any personal guarantees, and it's worked out fine. So some people would look that as a personal risk. If it all went wrong. It would be embarrassing for me, in my position probably, as well as I'm relatively well known in Ipswich because it's my local town but for financial risk, there wasn't much risk really, to that. I never do a development where I couldn't write a check out for the personal guarantee if there was a problem. That's probably a good policy. I mean, God forbid I've ever had to pay out a personal guarantee. But you know, you never say never and you mustn't ever be complacent.  One more question, John. So you're around my age. 

John Howard  28:55

Sadly, I'm older than you, 

Expat Property-Guy  28:57

But you look younger. I know you're a football fan like me. 

John Howard  29:00

Yes. You'll remember playing football in the playground jumpers for goalposts, etcetera, etcetera. And everyone took turns to pick teams. 

Expat Property-Guy  29:07

Yes. Right. So it's like five a side. And you're picking a five a side team, but not to play football. For property? Who's in your five side team?

29:16

Well, that's very, very easy for me to do. And I'll tell you why. Because I was with most of them yesterday: Property Summit, where there's six of us now in property Summit. So we're gonna have a sub if that's all right, yeah. Five professional people in property giving sound professional advice to people, especially expats actually who want to keep up with and keep up with the knowledge and what's happening in the UK property market in a professional manner. Not some hyped up, we're not trying to sell anything. It's purely genuine advice. So my team would be Paul Mahoney. Young, so he's got the legs, so he's got the legs in the team, Nicholas Wallwork, who has been in property 15 years, both those guys on Property Elevator with me as well. Both of them are super bright. My advice to anyone is always to surround yourself with people brighter and better than you if you can, and then I would have Ranjan, I've got to have Ranjan in there, 

30:05

okay, 

John Howard  30:06

You know 30 years of buying in St. Albans and all around London. Again, a very bright individual.

Expat Property-Guy  30:11

Can I just pause before you choose the final two?  Yeah, of course.  It's a mixed gender team.

John Howard  30:16

Yeah, I understand that. I understand that. Don't worry about that. I'm gonna bring in Helen Chorley

Expat Property-Guy  30:21

Right. 

John Howard  30:22

Love Helen. She is even brighter than all of them

Expat Property-Guy  30:24

Oxford educated, I believe

John Howard  30:26

Yeah. First from Oxford. She's on both the shows that I do. So I'm a little bit biased, probably. But Helen is cautious, very sharp with the numbers and you need that anchor. So if you're considered to be the dealer, if you like in a partnership, you need someone who's going to be the anchor and the anchor will do the finance and make sure that you don't overstretch yourselves, and make sure you don't look stupid. You may not sometimes make as much money as you think you should if you're the dealer because they're holding your back. But on the whole, it's always worked for me that I've always had an anchor someone financially solid who can crunch the numbers for me. I'm top line, but there's someone else behind me crunching numbers, don't worry. 

Expat Property-Guy  31:02

So she's the holding midfielder. Right?

John Howard  31:04

Holding midfielder. I would definitely have Helen, I think I will choose Richard Busch as the financial controller stroke funder. 

Expat Property-Guy  31:14

So he's in goal. 

John Howard  31:15

Well, yeah, you could say he's in gold. Yeah. So Richard runs Crowd Lords crowd funding platform, do a lot of mezzanine finance and stuff like that very, very measured, very quiet, very professional, unlike the rest of us, really, we're all a bit loud compared to him very, very calm in a crisis. And now I think my sub would be Tony Gimple. Tony's a bit off the wall for me sometimes, but super, super good on tax matters, and organising your future and your children's future and everything else financially. So I would have him a sub. 

Expat Property-Guy  31:45

Alternatively, you could manage the team. 

John Howard  31:47

Do you know what? Someone said to me the other day: Oh, you're so busy. John, how do you do a thing you do? And I thought about it. And actually, I really don't do that math. I just have to make the difficult decisions, which hopefully go right. I'm not a details person. I'm a delegator, I jump in on anything that's not going right and sorted out. But I have very, very good people around me all the time, who look after me and look after my interests. And I look after them, obviously, as well.

Expat Property-Guy  32:13

I guess you only get to delegate really, once you've got your hands dirty in the first place. And you've done all those things before and you work very hard. And that puts you in a position where you can delegate.

John Howard  32:22

Yeah, and I'm capable of still doing and that's the key. That's the key, I think is that people will see me doing it. And I think that's important too.

Expat Property-Guy  32:30

Well, what an amazing conversation that was to have the opportunity to listen to all your wisdom, experience... expats all over the world, very lucky to have had the benefit of your time today, John. So thank you very much, really appreciate it.

John Howard  32:42

It's an absolute pleasure. And thank you for inviting me.

Expat Property-Guy  32:48

So much to learn from today's episode. But the three most interesting points to pick out for me were firstly, John's idea to surround yourself with people who are brighter than you work with the best. It may cost a little more upfront, but it will save you or make you more money in the long run. The second thing worth pointing out is that John never does a project in which he couldn't afford to lose the money he's personally guaranteeing. And finally, John suggests that if you've got a large amount of money at your disposal, doing a bigger project might be more worthwhile than a smaller project, even as an expat as the size of the project would mean that you would have a big enough margin to employ a consultant to manage the project. Plenty of food for thought then, for this week's exotic listener location, we're going back to Africa, because we have a new country, which takes us to 86 The country is Nigeria and our listener is in Lagos, which I thought was the capital city and apparently it was but in 1991 that honour was given to Abuja. So if you're our listener from Lagos, let us know at www.expatpropertystory.com And perhaps you can help me out by rating reviewing and subscribing. Next week we're off to the Teeside seaside to talk to a man who has helped a fair few expats dip their toes into the holiday let market. Join me for that. And if you think someone might benefit from John Howard's four decades of property expertise, share the show to spread the word. You've been listening to Expat Property Story