Simon Zutshi and Samuel Leeds talk Property Investing

Samuel Leeds sat down with Simon Zutshi, one of the UK's most successful property investors for a in depth deep dive conversation on property investing in the UK.

Simon has over two decades of personal experience investing in residential property in the UK and actually mentored Samuel when he was just 17 years old!

Simon started investing in property in 1995 whilst at university. His very first deal was a NO MONEY down deal. He bought the house as a first time buyer and he was able to get a 95% mortgage and borrowed the 5% deposit. He went on to rent some of the rooms to his university friends and the money they paid him covered the mortgage and bills, so he effectively was living there for free! This enabled him to save the salary from his job at Cadbury World and money earned through his part time nightclub promoting business. In 1998 he bought a second house and moved into it and that is when he says he became a ‘proper student landlord’ and that is what kicked it all off for him.

Simon explains, “I had that distinction at that point that if you buy a property, in the right area, at the right price and you rent it out, when you take out all the costs; the mortgage, insurance, management, maintenance and there is money left over it’s like owning you very own cash machine! If you have enough of those cash machines, it kind of replaces your own income.” As a result of this, Simon was able to leave his full time job at Cadbury World in 2001 and by 2003 he had completely replaced his former income on a passive basis.

What made Simon buy his first property?

He became inspired when he and his friends, aged 19, went to sign the tenancy agreements for the property they were going to live in one year after moving out of university halls of residence. The landlord lived on a posh street in Edgbaston, Birmingham and his home was grand and impressive. Simon cheekily asked him, what he did for a living and he revealed that he was a ‘full time landlord.’ “I don’t think I knew what that actually meant at the time,” says Simon, “but later in that academic year he came round to the house to sort out maintenance and I sat down and had a cup of tea with him. [The landlord] said he had 100 properties in Selly Oak – now that is probably worth £35 maybe £40 million pounds now and I kind of realised that what we were paying him was more than the cost of having the house.” At that point, a seed was planted in Simon’s head. Having been quite entrepreneurial and money minded Simon could see how much of a good idea this was.

When Simon graduated from university he was unemployed and had to go on the dole, for 6 weeks until he got a telesales job. He was shell-shocked, as he never expected he would be in that position after coming from a middle class family, with a 2:1 honours degree in Manufacturing Engineering and Business Studies. He talks about this being around the time they started the National Lottery and he states “The reason I am telling you this is because it is really important about goal setting and visualisation.” He asked himself, ‘what would I do if I won £1 million pounds?’ and his thoughts turned to property. “At the time, I thought, I would buy 20 houses and the rental income would be enough to live off for the rest of my life. So it’s a vision I had from my early 20s from a place of not having any money at all and being in debt. So AS SOON as I got a job and started earning money, I bought a house and rented the room out to my friends.”

It was in 2003 when Simon set up the Property Investors Network (PIN). He explains, “The reason I did that was because I started investing in myself and personal development and I learnt about the importance of environment and getting the right people around you. I went online and there was no networking for investors. I thought it has got to be smarter learning from other people so I set up the group really with the intention of helping my self to learn from other people, connecting and learning about other resources.” At this point Simon was only 32 years old. People began asking him “Why don’t you have to work?” and so he began teaching this. He had the realisation at this point that he loved to teach. He would share something really simple with someone, they would go away and TAKE ACTION and come back with good feedback and success. Simon said he became addicted to helping people and the buzz he would get when they said ‘Thank you Simon.’

“It was very simple, very basic stuff nothing like the sophisticated stuff we do now and people would come from all over the country. So I started a PIN in London, Bristol and few other locations and I was running all those meetings.”

Samuel asked Simon “When you started PIN and you had these few locations going on and you’d just started teaching. Did you have any idea that come 15/20 years you’d still be doing it on MASSIVE level?” Simon’s response was “No, I had no idea at all. I didn’t have the vision to have 50 meetings when I started. As we grew it, I thought, this would be good to have a national network. But that wasn’t a vision at first.”

PIN runs nationally in 50 different locations, with Simon’s success students running the different events, which not only introduce people to property but also provide a positive supportive environment. Samuel and Simon met at a PIN meeting towards the end of 2007, when Samuel was 17 years old and starting out in property. Samuel heard Simon speaking at this event and he says, “It was that evening I thought, I could do this.” Ten years on to present day and Simon said to Samuel “You are a great speaker and I am really pleased that not only are you successful in property, but you have gone on and you are helping and inspiring and that is one of the great things about you. People will understand what an amazing feeling we get when we know we are inspiring other people because in a world that is so cynical and sceptical, people don’t get it and are conditioned. There is another way and we can shine a light on it.” Simon went on to point out that

It’s NOT EASY

You’ve got to put TIME and EFFORT

Being able to inspire people to take action is something that Simon finds very rewarding and that is why he set up PIN and has passionate speakers like, Samuel, sharing, teaching and inspiring others.

Samuel reflected back to his thoughts when he left the PIN meeting after meeting Simon, he shared that he was thinking about how he didn’t have any money, he couldn’t get a mortgage because of his age and basically thought it wouldn’t work out for him. He’d just quit his job but was thinking maybe property would not work out for him. Samuel and Simon had a link which was magic. Prior to property, Simon worked as a magician during his school years and that was the route Samuel was forced down too, as his dad was a magician. They both reflected back to a 45-minute phone conversation that they had where Simon advised and encouraged Samuel to go ahead with property investment. Samuel was left feeling like ‘I can do this!’, Samuel said “The big thing for me on that conversation was I was thinking, I’m 17 I don’t have any money or anything but if Simon thinks I can do it and he’s successful and he’s done it, well then I think I can! It was just that BELIEF.”

Simon talked about how having belief is one the most important things and that SELF DOUBT is what stops a lot of people actually achieving their dreams. Simon believes

ANYONE can become successful in property

You’ve got to WANT to do it and

BE PREPARED to put the effort in

TAKE ACTION

What does Simon do now?

Simon is really successful with a large property portfolio, financially free, running a training company and 50 property networking meetings and he still teaching. The reason he says he does it is because he loves teaching. He talked about cynical people who ask him; why he still teaches people how to invest in property if he is so good at it and successful in property. His response to that is “When you make a lot of money, it’s not about the money. When you make a lot of money, you have choice and freedom to do what you want to do. If I had to choose, property or teaching people, I would always choose teaching people. Property is great and I still invest in property but I love teaching because I love seeing people change. What is the ripple effect that I can have on life? I can impact far more people [this way] than just buying property. I think, we need to fulfil our purpose…and I think I am as close to my purpose as I can be at the moment.”

So then the next question some might wonder is why do trainers charge and not give away the information and training for free? Simply, if something is given away for free, it is not valued.

Property Predictions for 2019

Samuel asked Simon what his thoughts were on upcoming changes such as Section 24 and Brexit and whether Simon thinks NOW is a good time or a bad time to invest in property?

YES, it’s a good time to invest, if you know what you are doing.

Simon’s thoughts on Brexit

Simon made a prediction on the property market in 2019 and he believes we will see a dip in property prices and it may well continue until 2020. He doesn’t think there will be a crash like 2008. “It doesn’t really matter what you or I think. It matters what the general public perception is. If people trying to sell p]\=roperties think prices could crash as much as 35% then this next 6 months RIGHT NOW until the end of March there is an unprecedented OPPORTUNITY. I believe, an opportunity of a life time, IF you know what you are doing to get out there and get some really good deals. Flipping property would not be a good idea but if you are looking to hold for a long time then it doesn’t matter if the prices get slightly lower than when you bought it. Over the long term in the UK property prices go up.”

Simon’s thoughts on Section 24

“Section 24 is not a good thing for landlords and I am very surprised by Conservative government bringing something like that in. I think it’s because they don’t really want individuals to have properties. They want to make it corporate because they think they can legislate it easier and collect tax easier. But things happen and we always need to look for the silver lining and it’s about having the right positive mind-set because there is always a way. We are always going to see change as landlords and we need to accept that and embrace it.”

When asked if there was a chance Section 24 would be abolished, Simon said “Very possibly [as it was introduced and abolished in Ireland after 9 years]. There could be a real issue, if there is not enough incentive for private landlords to have properties and they start selling up. Rents are going to go up and affordability is going to be a problem. There are some long-term implications [that perhaps the government has not thought through].”

How to be wealthy?

Simon shared, 3 things you need to know if you want to be WEALTHY. You need to learn how to

MAKE money

KEEP your money

GROW your money

Simon explained how “Property can do all this for you, which is why property is such a great investment vehicle. What you have to understand is that most

people have a limited mind-set and they don’t like change. If we want to be professional investors we have to get on and FIND the OPPORTUNITY, which is always there.”

This goes with what Samuel always says, “When others are scared, you should be greedy.”

What would Simon do if he had £100k to invest?

Samuel asked Simon what advice he would give to people reading this who have money in the bank and are ready to invest and this was his response:

“Given what I know now, I would say EDUCATE yourself. Any idiot can by property and many idiots do buy property. So I would want to make sure I know what is a good deal first of all. Then I would want to find an area and invest in houses of multiple occupation (HMO).”

Why HMOs? They produce a good cash flow and if there is an economic down turn, people will look at shared houses so it is future proof as it is an cost effective option. Simon went on to say “HMOs are a highly regulation market, they changed all the regulations the beginning of October 2018…but there going to be no major regulation changes because they are already highly regulated. Whereas with a strategy like serviced accommodation, which is a great strategy, my concern is it is unregulated and therefore the most likely thing that could become highly regulated and some people who have built their whole business around that could suddenly get wiped out. So I think it is always good to diversify and put your money in different things but my money would still be going into HMOs.”

Samuel then asked him “What about if you didn’t have any money at all?” Simon’s advice for this person would be

Deal Sourcing

Joint venture

Private loans

Rent-to-rent (R2R)

Purchase lease option

Deal Sourcing

“The very best thing you can do is get good at finding GREAT deals because there are plenty of people who have money but don’t have the time, the knowledge or even the inclination or desire to find properties themselves. So what you could do is actually find deals and sell them to other people.”

Joint Ventures (JV)

“You could also JV on these deals with people that have the money so you have a split of the cash flow and future equity growth on the property.”

Private loans

“This is where instead of getting a share of the equity, they just get a fixed return” on the money they invest, which Simon reckons is the best option.

Deal Sourcing

Joint Ventures (JV)

“You could also JV on these deals with people that have the money so you have a split of the cash flow and future equity growth on the property.”

Private loans

“This is where instead of getting a share of the equity, they just get a fixed return” on the money they invest, which Simon reckons is the best option.

Rent-to-Rent

Simon’s advice was through doing rent-to-rent (R2R) deals. This is when you take on a landlord’s property, give them a fixed monthly rent each month and rent it out differently to them so you are maximising the monthly cash flow on the property, for example rent it out as a HMO or SA as opposed to single let. This way you can earn money through property without even owning it.

Purchase lease option

“One step better than a R2R is a purchase lease option, which is by far one of my favourite strategies. When you get to control the property, get the benefit of cash flow and have the right to buy the property in the future at a price you fix today. You get cash flow and potential equity growth from the property without a mortgage and without a big deposit. It all comes down to EDUCATION.”

These are real strategies, that real people are doing all the time.

Final thoughts

Samuel asked Simon for one piece of advice for people reading this blog and Simon’s response was “Speed of IMPLEMENTATION. Successful people, we hear something we then go and apply it straight away. The really important thing is when you learn something, don’t think about it and schedule time in your diary to make things happen.”

Get your hands on Property Magic, Simon’s best selling book: https://www.amazon.co.uk/Property-Mag…