At the other extreme, there are many times when the most brilliant of investors can’t muster a conviction about the birds to emerge, not even when a very broad range of estimates is employed. This kind of uncertainty frequently occurs when new businesses and rapidly changing industries are under examination. In cases of this sort, any capital commitment must be labeled speculative.

Follow the practical way,
George

After watching Series 1 & 2 I was really looking forward to watch the third one. I find the advice that Donald gives valuable and I think it can help people become winners.

The third series of “The Apprentice” is full with more advice on the same topics. By now you will start to see certain topics repeating themselves. Donald is big on thinking big and leading with authority. This is where Donald places his focus and what has helped him to build his empire.

It is surprising that Donald refers to the same topics again and again. The candidates in the series keep doing the same mistakes. Please make sure that you do not repeat your mistakes. Learn from them and improve.

Here is the advice from Donald Trump give in the third series:

• Perseverance – Go ahead and do not give up when things get tough.
• Respect comes from winning – The people around you will respect you more when you show them that you are a winner.
• Lead with authority – When you lead you must have authority
• Never settle – Do not settle for the second best. Push for the best.
• Instinct – Listen to your instinct.
• Shut up and listen – You must listen and value your team’s opinion.
• Play golf – Be social and get to know the people you deal with.
• Go big or go home – Think of big ideas and go for them.
• Sell your ideas – You must be able to successfully sell your ideas.
• Know when to fold – Know when a plan is not working and cut it and move on.
• Let nothing get in the way – When you are moving towards your goal do not let other things distract you.
• Pulling all-nighters – Many times you need to push yourself very hard to achieve you goal.
• Take control – Be in control of the project and not let others wander aimlessly.
• Keep your eyes on the prize – Keep focused on your goal and go after it.

I will follow up in a future post with the advice from series 4. Till then have fun and be a winner.

Follow the practical way,
George Traganidas

Last week I covered the advice that was given by Donald Trump in the first part of the series “The Apprentice”. This advice is covering practical ways that can help people become more successful in business and become better leaders. I think that these are steps that Donald has followed and he lives by. These steps have helped him to build his huge empire and become a billionaire.

The second series continues in a similar style. A new group of people face business challenges every week and hope to work for Donald. The tasks are similar to the first series, but the pressure is more and the deadlines are more aggressive. Donald continues to evaluate the performance of the teams each week and give feedback and advice.

Here are his gems of wisdom from the second series:

• Be quick but be careful – You need to make decisions fast, but you must not be careless.
• Get organized – You need to be organized and move decisively.
• A penny saved is a penny saved – You must be able to control your costs.
• Be respected – You must be able to get the respect of the people you work with and that work for you.
• Price is right – You must price your product correctly for the market you target.
• Know your market – You must know the market that will buy your product.
• Sell your ideas – You must sell your ideas all the time.
• You have to love it – You must love what you are doing.
• Control your contractor – You must control the people who are working for you and make sure that they deliver.
• Believe in yourself – You must have faith in your abilities to succeed.
• Never lose your cool – You must always keep your temper and composure.
• Form your own opinion – You must be able to decide for yourself and not ask for other people’s opinion all the time. You are the one to make the final decision.
• Know your enemy – You must know the person who you will negotiate with.
• Winning is everything – You must focus your energy in winning.

I hope the advice from the first two series starts to paint a clear picture of what you need to be a winner. There is some repetition and that shows the importance of the particular skill.

I will follow up in a future post with the advice from series 3. Till then have fun and be a winner.

Follow the practical way,
George Traganidas

I came across the other day a series called “The Apprentice”. I am not a big fun of reality TV, but a friend recommended that I should watch this, because it is different and full of practical advice on how to succeed and run a business. As you know by now, I am very interested in practical advice and I thought of giving it a go and see what Donald Trump has to share.

I was pleasantly surprised by “The Apprentice”. It is all about business and how to be successful. Each week Donald gives the candidates a business task to complete and then at the end he judges them on how they did and gives his advice on what they did wrong. The tasks range from creating products to marketing to creating and running a business. The advice that Donald gives is great.

In each episode Donald gives a piece of practical advice on how to succeed. I have created a list of all the advice that Donald gave in the first series. Here is the list and my notes:

• Location, location, location – You already know that the location that you choose for a project is key to its success. What you must also focus on is the person who is behind the project and that the person is as important as the location.
• Don’t negotiate with underlings – You need to speak with the boss and not the employees when you are negotiating.
• The art of the deal – You must master the art of striking good deals.
• A deal’s a deal – You must follow through with the deal once it is agreed. This will build you a positive reputation.
• Stand up for yourself – You must stand up and fight for yourself. No one else will do this for you.
• Know what you are up against – You must do your homework, before you start a project.
• God is in the details – You must pay attention to all the details. This can impress your clients and show you are a professional.
• Beggars can’t be choosers – You do not beg to sell your services/product. If the person does not want to buy then walk away.
• You gotta believe – You need to believe in what you are selling.
• Think outside the box – You need to be creative with your ideas.
• It’s easier to think big – You need to think big ideas and implement them. Few people make bold big moves and that will differentiate you from the mass.
• Passion – You must be passionate about what you are doing.
• Dog does not eat dog – You must surround yourself with other great and successful people.

As I said in one of my previous posts you must seek advice from people who are successful in their field and they are active players. Donald passes that test and I believe that his advice is valuable and can lead you to success.

Next week I will talk about the ideas that Donald presents in the second series.

Follow the practical way,
George

I was curious about this book, because it was written by a UK author and it covered how to let your property in the UK market. Its reviews were good and I decided to have a look. After I finished reading it I agreed that it is a very useful and informative book.

David is very down-to-earth and he explains in his book the whole process of how to search for a property and how to select the appropriate one. He gives guidelines on how to rent it and most importantly how to manage your tenants. In the end, he gives more advice on tax and other general issues. As the title says, he puts more focus on the letting side of property than on the buying side. He covers the buying at the start of the book, but the main focus is on how to be a successful landlord.

The chapters are full or practical steps. He explains in detail how to write advertisements for your property, how to screen tenants and how to manage them once they are in the property. His style is easy to understand and follow and he talks about things that you can do instantly. He does not fluff a lot and he goes straight to the point, which I like a lot.

If you have not read any other books about property letting then this is a must. If you have already read a few of them, then I am sure that you will pick up some extra tips from his book to make you a better and safer landlord. At the end of the book he includes a sample Shorthold Tenancy Agreement (STA) that you can use.

I would recommend this book for people who are starting now as landlords or for people who have had some issues with their tenants. It has a lot of useful tips and I am sure it will help you. If you like the book you can buy it from here.

Follow the practical way,
George

For a long time I was searching to find a way to calculate if a property is profitable and I should buy it. I was looking at the cash flow and at the value appreciation of it over the years.

Many property investors were talking about the importance of being able to cash flow a property and the need to have a positive cash flow at the end of the month (or at least a break even). What no one was telling was what you need to include in these calculations. So, after a lot of search here is an extensive list of items to include in the calculation. This list is quite strict and you might need to relax some of them. I have included here everything for the benefit of you and you can make the call if you want to ignore some things. But do it with your eyes open and knowing the consequences.

Income:

• Rent – The rental income that you get from the property
• Other – Any other forms of income that you might get from the tenants

Expenses:

• Mortgage – This is the mortgage that you pay to your money lender.
• Management fee – This is a fee that you pay to a management company that takes care of the property. They deal with everything and you just get the money at the end of the month. This value goes between 12-15% of the rental income. If you chose to manage it yourself, you do not need to include this.
• Ground rent – Rental that you pay if the property is leasehold.
• Service charge – Amount you pay to a company to manage the communal areas of flats.
• Building insurance – Insurance that you pay for the structure. Sometimes this is included in the service charge, so be careful not to include it twice.
• Repairs – General repairs to your property. This will not occur every month, but you should save every month for the one off expense that will cost you £3,000.
• Void periods – Periods of time that you have no one renting the place and you have no income. This will usually be between 2-4 weeks.
• Collection failure – This is the failure of you (or the management company) to collect the rent from the tenant.

As I said above this is an extensive list. Based on the above calculations 99% of the properties that I find do not give you a positive cash flow. The above list is very strict. Now what you have to do is tailor the list to your specific situation and make sure that you have a very good idea on why you do not include some of the above charges.

When you talk with professionals to get the financing for your property, they will ask you about the above points. When you have studied them, it shows that you are a professional and you are serious about business. Even if you exclude things from the list, when you have a good reason for doing so, they will respect your professionalism.

Follow the Practical Way,
George

I have been looking for a long time for a way to evaluate if a property is a good one for investment or not. There are so many properties on the market, but which one is going to make me the most money? That is the question.

I would like to make a distinction here before I go ahead. This article is about properties for investment. It is not about your dream house/flat. You should keep this in your mind all the time. Based on this you should throw all your emotions out of the window. This is all about the numbers. We are looking for a property to make money and not one that looks nice. Therefore, we will at the numbers and not if the living room is cosy.

A lot of people have been asking me if they should buy flats or houses, if they should buy 1-bed or 2-bed, if they should buy in London or in another town. I do not really care about this. First of all I would say, buy in an area that you know. Do you know about an area in London? Buy there. Do you know about a town in Scotland? Buy there. As for how many bedrooms, I would say look at the numbers. If the numbers are good then buy it.

First things first, you need to look if you can cash flow the property. Will you make money at the end of the month; will you make money at the end of the year? You might buy a property that will have a small negative every month, but at the end of the year when you release equity you are ending up in a positive. That is ok, as long as you can cover the small monthly negative cash flow.

What you need to consider is the amount you will use for a deposit. You can get 95% or 100% from a mortgage lender, but they are going to charge you a very high interest rate. Does your monthly income cover it or come very near it? If no, then you need to put down some money for the deposit. Most experienced investors that I have spoken to recommend getting an 85% LTV mortgage and then put down the other 15% which could come from your pocket or from other sources.

On the next post I will continue this discussion about the incomes and expenses you are to use in your calculations for the monthly cash flow. I will also discuss some guidelines on how to release equity each year so you can get some extra income from there.

Follow the Practical Way,
George

People wait for property to get cheaper and then they will buy. They wait for the prices to hit the bottom and then the great opportunity will appear. The fact is that they will never know where the bottom is. Usually they miss it and they start to buy when prices start to increase again. After a few months, you hear them say “I should have bought earlier”. Yes, you should.

I think that any time is a good time to buy. The reason is that you need to know what you are looking for. What I look for is a property where the numbers make sense. I can find this kind of property when the market is going up or when it is going down. I do not care what the market is doing. When I find the deal that makes financial sense I will buy it. Then I will wait and wait and wait. And I will make money by releasing equity.

There is one big point here that might help people who are worried about the market going down. Who is affected by the market going down? Think about it. The people who are affected are the people who want to sell. If the market is going down they will sell for less than what they bought and they risk of getting in negative equity and not covering their mortgage. So, if you do not sell, why would you care if the market is going down? You bought a nice property that makes you a bit of money each month. You just wait till the market goes up and then you make more money by releasing equity every year.

So, as long as the property makes sense financially buy it regardless of what the market is doing. Buy it and wait. It will make you money and it will keep rising in value. To paraphrase what Warren Buffett said “If you buy a burger today for 1 dollar and tomorrow the burgers are 0.80 dollars will you feel bad about it? No, you buy more burgers tomorrow.”

In following posts, I will go into more detail about what I mean when I say that property must make financial sense.

Follow the Practical Way,
George