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Dentists Who Invest

Property with Dr. Harry Singh

Dr James: 

Fans of the Dennis who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dennis who Invest podcast episodes that really, really, really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome.

Harry: 

Welcome to the Dennis.

Dr James: 

Who Invest podcast. Hello and welcome everyone. I’m absolutely thrilled to be here tonight. My name is James Martin and this is, of course, the very first, the inaugural Dennis who Invest community group for Dennis who Enjoy Tradings podcast. And I didn’t really expect to be sat here in any capacity in front of a computer at any point, but really I’m just so pleased that the group has just got to the level of what it is. I didn’t expect the first thing when I set it up. I’ve been on a few podcasts. I think they’re an absolutely wonderful medium or a vehicle to explain and elaborate on certain topics and I’m really really happy to be able to be here and be able to do this for everybody tonight. And what I’ve managed to do? I’ve managed to procure someone who’s quite well known in the dentistry world, or at least I knew of him. I think quite a few people have heard of him. He is the founder, the owner of Dental Property Club. He is formerly a dentist, or so he has just advised me. He now focuses fully on his business. So in that respect of capacity, I would say he might be living the dream for a lot of us dentists. I suppose he’s managed to get out. So hats off to the guy. He must really know what he’s doing, is all I can say. His name, in case you haven’t heard of him his name is Harry Singh. Harry, how are you tonight? Welcome?

Harry: 

Thank you, james, welcome. Yeah, I’m living their life. You can see the background. I’m on the beach, on the sand. There’s no lockdown over here, so Harry is living it up in the Bahamas in case you must have to do that from the background.

Dr James: 

So he’s doing pretty well for himself Not over here in cold England during lockdown. Yeah, but we’re making the best. We’re doing our best over here, Harry. That’s all we can say.

Harry: 

Anyway.

Dr James: 

I’m absolutely thrilled to have Harry on here tonight. He is, of course, a expert in the field of property. He was formerly a dentist. I thought it would be really interesting to have him on because we can chat, we can discuss, we can elaborate on something that I don’t know really much about, but I know a lot of people that are interested in, and it does, of course, affect all of us at some stage in our life, because we all have to think about buying a house. So we’re going to delve into that a little bit in future. So the first thing I wanted to ask, harry, I just wanted to know a little bit about you, because we know well. I know I know the business, I know Harry Singh Dental Property Club. I know a little bit about what you offer. We’re going to delve into that a little bit later. But I just wanted to know a little bit about your journey and maybe what made you think I want to get out of dentistry, or maybe it just happened organically. I just I don’t know. So I’m curious.

Harry: 

Yeah, yeah, no, thank you. Thank you again, james, for the invitation. Fantastic group. So yeah, I qualified as a dentist. Being from a typical Asian parents, I didn’t really have much choice in my career. Back in the 1990s my parents said to me either become a doctor, dentist, accountant, pharmacist, something to do with medical. I was good at science, good with my hands. I went to the local library for those youngsters that don’t know what a library is is where you get the books. There was no Google, there’s no Google internet in those days and I looked at careers and dentistry and spun to my mind, went to do some work experience with my local dentist saw his watch, saw his car. I go, okay, that sounds good, I’ll have some of that. And then did dentistry because I like the business side. So I knew I wanted to do I mean a business to some extent, and it was much harder being a doctor or an optician in those days to do that. So dentistry. But then I knew early on that I didn’t have the real passion for dentistry and that’s quite important, which we’ll come on to later on, especially investment vehicles, where you need to have a passion what you’re doing, vocation, but also what you’re investing in as well because you look after it a lot more. I don’t regret getting to dentistry because it got me the skills, the experience becoming a business owner, bought and sold a number of dental practices, made some fantastic contacts, networked a lot. So I don’t regret getting to dentistry. But it wasn’t my true passion. And we say to people yeah, I’m not that obsessed. I gave up dentistry back in. So I qualified 96 from needs and I enjoyed it to some extent. So I was a course junkie. I was doing all the courses. My dentistry was good. It was just a stress with timekeeping, patience et cetera. And I said to many people if dentistry was a bit like phantom head, patients could chop their head off, leave it in the surgery, come back at 5pm to pick it up. I would do that all day and all night.

Dr James: 

Part of why teeth is they’re attached to people. That’s the attached, isn’t it?

Harry: 

Yeah, yeah. So I enjoyed the clinical side of the technical side, but it’s just dealing with patients that didn’t really want to see you. You do your best work and obviously with the GDC as the way it is, it’s always on the patient side. So I knew early on and we always go back to a strong, compelling way. So I knew I wouldn’t be doing dentistry for the next 20, 40 years. So I go okay, I needed some alternative source of income and I looked at property because I remember when I was about 14, 15, used to do newspaper round and one of the guys I did the newspaper round for he wasn’t there on a Sunday. He left me a note on the door saying keep the newspaper. So it was a Sunday Times and if you’ve ever read the Sunday Times, it’s quite a big chunk. So I think I killed my back carrying it back home. And luckily on that week was the Sunday Times Rich List. So I looked at all the people. There’s a top 100 people in the UK and I looked at it and 80% of people on that top 100 list either made their money directly from property or they had made their money from business and invested the profits from into property. So I’m always a big believer copy what other people do, learn from them. So I thought, okay, that’s going to be my weapon of choice vehicle that I’m going to invest in. So I just started educating myself in property and it was quite funny in the society that qualified, 96, 98, 99 started going to property workshops, 40 courses. And it was quite funny because you get to network with people and they say what do you do? And most of them were IT consultants or unemployed, etc. That’s why they want to get into property. When I said I was a dentist, they were quite shocked that a dentist was actually at the course. We got to go. You make good money. Why are you here? I go, yeah, I’ll make good money while I’m working, but when I’m not working I’m losing money. I’m not making the best use of money. So that’s why I wanted that income stream and, as we mentioned before, we started recording during the first lockdown. By the time this recording comes out might be on our fifth lockdown by then. So on the first lockdown we yeah, the way things are at the moment who knows yeah. Yeah, especially with that. It doesn’t make sense, with the furlough being extended to March, but then boy Johnson’s saying the lockdown is only until December. So those two don’t hide that it’s suspicious that yeah, yeah, we need to.

Dr James: 

Yeah, well, I didn’t even really take the possibility that lockdown two would happen seriously. I just thought we’d. It seemed rather simple in my head that once we had one it would be over and done with. But I don’t know, it seems a bit silly looking back. But here we are.

Harry: 

Yeah, people don’t listen or people don’t follow. So during lockdown one, we had so many inquiries for the dental property club. I’ve always been telling people, okay, you need to have a backup plan because when you’re earning if you’re earning good money, it’s good it’s not going to last forever. You may become ill. I wasn’t expecting COVID to come along. You may not be able to work. Something may happen to your practice. What are you going to do with your income then? And we had a lot of dentists saying, okay, it’s never going to happen to me, because you never think it’s going to happen to you. And then, with this lockdown number one, dentists couldn’t, most dentists couldn’t work and their income dropped dramatically. And then you’ve probably seen yourself with your Facebook people were looking at alternative sources, not income, because I always look at investment as making your money from business, your vocation, and then investing those profits in investment vehicles. When it shares, stocks or property, very few people make their money from the stock market for X or property as a business. So, yeah, making money, making your money working hard and not actually making money as your primary vocation.

Dr James: 

Well, yeah, I mean, it’s part of this wider sort of theme that my group touches on quite a lot, which is, just, as you say, making your money work for yourself. And I think, for me, what shattered the illusion of just how much Well, how much we almost miss out by just keeping our money in the bank. I mean, the rate of inflation that is normally at is normally about 6 or 7%, and to think that you’re losing 6 or 7% over the hours or effort that you’re putting in in a year is just ludicrous to me. So you’ll be coming from an addict from the point of view of hoises diversifying into property, and this is why I thought it would be really interesting, and you’re quite right. Just another thing that you touched upon there this whole COVID, covid, you know, kind of this new paradigm or how the world is going to be going forwards. We don’t know when we’re actually going to get a vaccine for COVID and, yeah, I just think it’s really important to think about these things and, as you say, just make your money work for you. But you’re going to detail in just a moment about how to do that with hoises. I’m actually really curious to hear, because I don’t know the first thing about hoises. I really honestly don’t know. The first thing I know what stamp duty is, I think anyway maybe you’ll correct me later and that’s who this podcast is really. And that is just people that, like myself, they’re very much beginners. They want to foray into the housing world, but yeah we’ll come to that in just a moment. So, harry, in my group I touch upon stocks, I talk touch upon gold. We touch upon diversifying. Why do you think that property is a useful method of diversifying your portfolio? What does property offer that other asset classes may not necessarily offer? Real quick guys. I’ve put together a special report for Dentist entitled the Seven Costs in Potentially Disasters Mistakes the Dentist may whenever it comes to their finances. Most of the time, dentist are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwDentisttoInvestcom forward slash podcast report or alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them Really. Looking forwards to hearing your thoughts.

Harry: 

Yeah, excellent question there. So I always say obviously, start with your. Why. Why do you want to invest in property? What I see my advantage is with property is an asset. So an asset is something that appreciates in value. It’s not going to go up every year. You’re going to have peaks and troughs, but the trend is always upwards. Because we live in the island, this restricted space on how many properties we can build On average year on year. We have a net immigration of 250,000 people and the maximum number of houses we’ve ever built in any particular year is 100,000, and that’s the best year. So there’s always going to be a shortage. Demand is going to outstrip supply. So long term it’s going to appreciate in value. The second reason is leverage, which is the main reason I invest in properties. So you can put a small percentage into the property but you benefit 100% from the uplift. So let’s say you’ve got 100,000 pounds. You could buy properties that, say, worth 500,000 because you could put 20% deposit. The bank would give you the remaining amount because they know it’s an asset. But if you want to invest in, say, half a million pounds worth of shares, you cannot go to a bank and say I’ve got 100,000, can you give me 400,000 to invest in shares? They’ll probably lock you up or throw you at the bank. So that’s the beauty there. So if the property goes up in value, you benefit 100%, but you put a smaller amount of money in. The third reason is where people get really confused is good debt versus bad debt. So if you read Rich Dad, poor Dad, then you know bad debt you want to clear as quick as possible as personal credit card, car finance, etc. It’s coming out your own pocket and it’s on the liability. Good debt is on the asset that you don’t pay yourself. So we’re going to be getting tenants that pay us rent, which covers the mortgage, the bills, utilities, and then we have excess money coming in after all those costs. So with good debt you can leverage your money based on the appreciating asset, but it doesn’t come out to your own pocket. And then the fourth is deposits. So this is a downside with property. So, unlike shares or stocks, you cannot get in for a few hundred pounds. You do need a few thousand pounds, which is what I thought, because when I first invested in property I thought these guys that got 30, 50 properties, they must have millions in the bank. But it’s one of my mentors said to me early on you make your money when you buy, not when you sell. So what we can do is recycle our deposit or there’s certain strategies. We don’t need deposits. So a lot of people do think you need a lot of money to get into property. Yeah, the more money you have, the better deals you can do, the better rates you get. But you can start off with a lot less money than people think. So it’s an asset. You can use the benefit of leverage. It’s good debt and there’s a way of getting away with minimal deposits or no deposits at all.

Dr James: 

Wow, okay, so we’ve got some decent compelling reasons there and a few things that I didn’t necessarily know as well. What was I going to say when you talked about the very minimum? Am I right in saying that it’s 5%? You can bring to the table nowadays, 5% of the value of the house, or is it 10%? Is it still?

Harry: 

10%. Yeah, I would say yeah. So there’s buy to let and residential. So residential, you may be able to get away with 5% or 10% buy to let. You’re looking more at 15 to 20% deposits.

Dr James: 

Oh, I see, I didn’t even know there was a difference.

Harry: 

Yeah, so, yeah, so there’s a difference there, there’s 5%. You can get. I’ll say the lowest you could put in a buy to let would be 15%. I don’t recommend 15% because there’s less lenders there and their interest rates are quite high. So we normally say minimum 20% of loan to value and then you’ll get access to more lenders. That will give you better deals and there’s a more cushion as well, because you don’t want to over leverage. Leverage is good, but you don’t want to over leverage in cases of downturn or interest rates go up and you can’t. Your rent doesn’t cover the mortgage.

Dr James: 

Right, yeah, of course, and that comes back to now. Again, I’m coming at it from the point of view of a total novice here. I hope this is a benefit to people listening. The mortgages that you can get, you can am I right in saying there’s a tracker mortgage and then there’s also a type of mortgage that the interest doesn’t vary. So those are also things that you would talk someone through on your course, Because my understanding of it correct there.

Harry: 

Yeah, yeah, there’s two variations in mortgages. The first one, as you said, will be a fixed rate or a tracker rate. So a fixed rate you pay the same interest for three to five years, whatever the period is. The tracker obviously follows the base rate. But the other point, with mortgages as well, is interest only and capital. So with your biotelette properties you have two choices. You can get interest only mortgages where you’re just paying the interest off, or you can get capital and interest where you’re paying the capital into interest. It all depends on your strategy. So if your strategy is to get maximum cash flow, you want an interest only mortgage. If your strategy is to get a better pension part lump sum at the end, then you’d want interest and capital repayment.

Dr James: 

Right, I see. So this is the nuance that I was sort of unaware of. But okay, interesting to learn. One thing I wanted to ask can I help to buy Ices and Lices? We’re fed this narrative that we should save, we should put money into those. Is that what you would suggest, or do you think that there is a better way of maybe undertaking that? I know that the benefits of what they offer should you have some money in is 25%, so that’s a fair old whack of money towards a house. You know what I mean, particularly if you’re saving short term versus other investments. What’s your take on the subject?

Harry: 

Yeah, I knew it was funny doing the first lockdown on our online program. We had a couple of young dentists, just like yourself, and they were asking exactly the same question and I never heard about it. So I did my own research. But no, it’s actually a fantastic scheme and I would encourage people to take maximum advantage of it. So any government assistance you can get then I would definitely recommend to go for it.

Dr James: 

Yeah, they look good on paper. 25% Wow, over a short period, a guarantee over a short period of time. It’s hard to beat that in terms of. Yeah definitely Right. Where were we? So the next thing I wanted to ask oh yes. So the other thing I wanted to ask when you have a property and you think to yourself, wow, this is a golden, this is a cash card, wow, sign me up, where do I buy? Or you get what. You have another property and it’s at the other end of the scale and you think, well, I need to steer clear of this, for whatever reason, what are your succinct, I suppose, list or common pitfalls of things that people should watch out for when they’re buying a house? There’s going to be like a little, there’s going to be a list of completely obvious greenhorn mistakes that probably people like myself will make all the time, and I’m sure from people such as yourself it’ll draw sort of eye roll, kind of you know expression on your face. I don’t really know, but I just wanted to know what those are and what we should watch out for.

Harry: 

So don’t worry, everyone makes mistakes. I’ve probably made more mistakes in property than all your viewers put together. I remember my first house I bought. I was so eager to get the deal done. My surveyor comes in and said do you realize? There’s no doors or radiators in the rooms, which obviously are completely missed out there. So the first thing I would always say is take emotion out of it. So this is not a residential purchase. You are not going to live there yourself. So I’ve spoken to many dentists that bought penthouses in town centers and it’s the worst returns you can ever get. I go, why do you buy that? And they say because I like to live there myself, I go, you’re not living there. A tenant’s going to live there. So if you look at my house, it’s for most dentists. They wouldn’t want to live there. It’s normally two straight free bedroom terrace houses. So take your emotion out of it. Number two don’t rush into your first deal, because people are so eager to do a deal they will just pay over the top, especially at this particular period of time where we’ve got the stamp due to exemption. People are just paying stupid money and it’s going over market value. And then my main strategy is. Obviously one is look at your strategy. Are you buying it for capital gain or cash flow? So a lot of dentists say I want to reduce my commitment to dentistry. I’m going to say, okay, you need maximum cash flow. So you might need to invest in the Midlands or further north or maybe do a HMO where you rent each room by room in the house. If you’re after a better pension pot, then you’re going to be investing maybe in London, the Southeast, where historically you get a better capital growth. So know why you’re investing in the property. As I mentioned, look at the area. You want good amenities, good transport links. So what I do in my course we do a gross yield figure. So the gross yield is the annual rent divided by the market value and we want that to be above 6%. So the annual rent divided by the market value, we want that to be above 6%. Anything above 6% that will show you is a high demand from tenants. Because once you’ve got the property maybe a fantastic deal, maybe in the middle of no rent or sticks, if no one’s going to rent it, you’re going to be paying the mortgage out of your own pocket. So if you’ve got a gross yield of above 6%. You know there’s going to be a big tenant demand. You’re going to get that easily rented and minimise the voids there. And then, as I said alluded to earlier, you make your money when you buy, not when you sell. So we look for motor vehicle distressed sellers where they need to sell quite quickly and in that way we can buy at discount and recycle our money much quicker there. So don’t rush into your first deal. Don’t buy an emotion. You are not living there. See what the tenants want, because if it’s in a city center, it may be more flat apartments, young people that want to live city living. If it’s in a school commute area, it’s going to be more two, three bedroom houses. Then look at your area, look at the price of your paying and look at what you’re doing it for cash flow, capital gain. Have spreadsheets and what I do is a simple equation Just look at the spreadsheet, do your figures, does it stack up? Take the emotion out of it and is it a good deal or not a good deal?

Dr James: 

It’s interesting to hear you say that people also make bad decisions in purchasing houses on based on emotion, because that’s one of the golden rules of general investing. I suppose I just never really thought of houses in those terms as well, but it’s interesting that also applies. I guess we’re all just people and no matter what we do, no matter where we’re putting our money, we can’t let it.

Harry: 

Yeah, it’s the motion. Yeah, yeah, it’s the motion. It’s harder judgment, you know and they decorate the place that they’re going to live them themselves. I remember I did. I tried Forex for a couple of years and I just I like action, quick results and I wasn’t a patient guy. So poker and Forex were not for me. So because they’re one of mine, so Forex is not actually.

Dr James: 

Do you know what? Forex is one of the assets that you can trade most frequently as well in my experience. So if you would, if that wasn’t enough action for you, I think maybe those other sources of investment might be for you either, because I know I put money in crypto and you’ll probably go for about two months where you won’t make a trade and then all of a sudden it’s like bang, bang, bang. But it’s actually a skill in itself to wait until the right time to do that, and there will be. There is such a thing as over trading, and those are the people that get impatient and they kind of they want something to happen, so they turn up with their computer screen and they wind up blowing all their money. That’s me Got you right, yeah, so Forex you can do. I believe it’s better to do it on certain days than others. It’s all about watching the sessions, so. So I used to trade it a little bit. So when London opens, the stock exchange opens, it will move in certain ways on certain pairs. So it’s an interesting one. That’s my understanding of it, anyway. But yeah, any who? I think what I’m getting from you is that if you’re going to do it? If you’re going to invest in property, there is a lot of nuance to it. You really, really need to know what you’re doing. Am I right in saying that?

Harry: 

Yeah, you got treated like a business, like your dental business is a business.

Dr James: 

Yeah, so fair enough, there’s a lot of nuance to it. There’s a lot of know how, there’s a lot of skill. I suppose in a way In your business dental property club, how do you assist dentists to get into property? Is it you purely, is it purely an educational course, or is there some sort of mentorship capacity offered to them in a degree where you’ll come in? I don’t know? Explore looking at houses together. I’d love to hear yeah.

Harry: 

So yeah. So, as I said earlier, I gave up dentistry in 2012 and my intention was just to carry on property investing on my own. There are not many dentists who were giving up dentistry in 2012. So the first reaction I had for most dentists were did you get struck off? I don’t know. I haven’t been struck off. I’m still on the register. This is my GBC number. So then they said okay, how did you give up dentistry? And I said because of property. And they go oh, you never told us you were into property. There was no reason to tell you. Can you teach us? So that’s where dental property club was formed in 2012,. Mainly educational workshops. Because I thought everyone’s going to be like me, because I had a strong compelling why that I want to get out of dentistry. That’s why I implemented. But then what I found after a couple of years the people that came in the course of it was good content, learned a lot. After two years, they never implemented anything and I said why they go? Okay, we haven’t got the time, we haven’t got the network, we don’t trust the builders, we’re too busy with dentistry. So then we created two arms of the dental property club. So we’ve got the educational workshops, which range from online programs to two day workshops to master my mentoring. So those are for people that want to do property deals themselves. I give them all the resources, the materials, the templates, the spreadsheets and they can go out and do it themselves. Then we created the second arm about a couple of years ago the joint venture opportunities. So a lot of dentists said to me we’ve got the money, the cash, rich time pool, we want to invest in property, but we haven’t got the time to do it. With experience, can we give you the money? So I took all their money on. That’s why I’m in the Bahamas now. So we’ve got the opportunities, we’ve got the network. We know the deal sources. We’ve got so many opportunities presented to us on a monthly basis that I cannot physically do all the deals myself. So I’d rather have a smaller split or a bigger pie than a bigger split of a small pie. So that’s where the joint venture opportunities came along. So dentists happy with dentistry don’t want to give up dentistry but want to make better use of their money. We are regulated, there’s all due diligence, we present deals and if they want to invest, they can invest in our deals.

Dr James: 

Interesting. So there’s a variety of things I suppose there really you’ll assist dentists with. So it’s right from the fundamentals, just the education, right up to if they did want to take the plunge. You’ll be there by their side. Yeah, yeah, I’ve grasped that correctly, haven’t I?

Harry: 

Yeah, yeah, yeah, that’s perfect Cool.

Dr James: 

I was browsing on your website earlier, harry, and I came across something. It was a little. It was an acronym, I suppose, or a method that you use to invest. I’m just looking. I don’t hope you don’t think I’m being rude, I’m just going to read it off here. I just it’s a bit of a one. I just want to say a few letters Passive income, investment income, savings and the simplify formula. And am I right in saying that’s your philosophy on investing, or? So I gathered from the website anyway. What is that?

Harry: 

Yeah, definitely, and I got taught by this in America by a billionaire, in terms of how the wealthy make their money but also keep more their money, because the actual easy part is making the money. Well, easier is how much money you keep. So the first two is passive income and investment income. So you need a combination of both, and one of the biggest mistakes property investors make and I made it is every property deal I did, I kept and you’ve got to be like a football manager. Some of them are good players, some of them are bad players. You’ve got to get rid of the bad players, substitute them, rid good players. So you need a combination of passive income where you’ve got properties that you let out. They work at the background, giving you a good couple of hundred, 300 quid a month, but obviously you’re not going to become financially free straight away. So what you need is some investment income where you make a capital gain. So you are going to be doing some buying and selling whether it’s houses, stock shares trading where you make a capital gain, but you can reinvest that money. So you do need the passive income, which is, as I say, slow and boring like the marathon. You will become wealthy, but it’s long term wealth and investment income which is much shorter, a bit like a trader. You could have the day trader and the long term trader there. So you need a combination of both. But I said that’s how you make the money. And then the hardest part especially for dentists I find is how much money they keep. So the two S’s stand for savings and simplifies, so the savings. I divide my money into six jars before I spend a single penny. So at the end of each month, doesn’t matter where the income’s coming from, I would divide it into six jars. The first jar is my essential jar and that’s for my living expenses, mortgage, car payments, utilities, petrol. No more than 55% of your monthly income should go on living expenses. There’s a book called A Millionaire Next Door and most millions in America have quite modest lifestyles. They live beyond their means. So no more than 55% of your monthly income should go on living expenses. Then I have 5% I’ll give away to charity. No matter how much we complain, someone else has always got a worse life than you and one of my mentors said to me your problems are someone else’s dreams. So we’ve got 55% living expenses, 5% for charity. Then we’ve got four jars left, which are 10% each. So the first one is savings. So for a raining day, if we have another COVID lockdown, except for to pay my bills, then we have 10% for investment. So 10% of my monthly income always goes to investment, 10% into personal development, because you can only grow to extend your growth. So I’m big believer in personal development courses, workshops, books, education. And then the final 10% is enjoyment, fun. It’s no use working hard, saving all your money, because I learned that from my parents. My parents were working two jobs and they saved every single penny. They didn’t spend it at all, hardly enjoyed their life and they regretted it now. So 55% living expenses, 5% charity, 10% personal development, 10% enjoyment, 10% savings, 10% investment.

Dr James: 

I really like that. I really like the way they actually live in your life, as accounted for in there. And there’s been times in my life where I look back and, yeah, I’m not exactly long on the tooth, you know, I don’t think I’m that old, but I’ve got the work-life balance all wrong and I had to do that before I learned my lesson. Yeah, yeah and yeah, having a structure like that, something that you can adhere to, where you know what your budget is, you don’t go over it and, if you’re quite right, living a modest lifestyle is beneficial for any sort of investment, particularly if you want, unless you’re making mega bucks but those lucky that’s certainly not me anyway. You know what I mean. So, if you have a structure or if you have a plan, it’s just about saving consistently and I think that it’s on as like. You’ve accounted for that in your philosophy, I suppose.

Harry: 

Yeah, yeah. And I remember when I qualified straight after VT I went straight and lived back at home, had a really simple car and, it’s quite funny, people were laughing at me and now they’re not laughing at me now because you’ve got to make sacrifices. And then, going back to that book, the Millionaire Next Door, they did an experiment where they, you know, invited these millionaires for lunch. On the one side they had caviar, the best steak, et cetera, champagne. On the other side they had normal burgers, chips, and most of the millionaires went to the side where there was burgers and chips because that’s what they were used to. Yeah, that’s how they made their money. Yeah.

Dr James: 

Yeah, I’d believe that you know, because it’s actually I’ve read, I’ve got all the. I’ve got the books in front of me. I’ve probably read about five books on long-term investing and every single. There is certain kind of common ground between them all and that is the first thing they mention in every single one and there is a how can I say? Like a perception that because you earn more, you maybe have to spend more, which you can do. Okay, but rare is the person who doesn’t have some sort of limits on that, who actually becomes wealthy later in life, and I think that that’s just a really important message and a really healthy thing to encourage and invest in.

Harry: 

Yeah, definitely, yeah, yeah, because once you upgrade your lifestyle, you never want to go down. You always want a bigger house, better car. That’s it.

Dr James: 

Well, that’s the trouble because it’s a black hole as well, and unless you’re literally a billionaire where you can’t, you know there is no limit to what you can buy you can always find something to chuck your money out. It’s absolutely true. It’s absolutely true and, yeah, that’s definitely something that I’m becoming a little bit more savvy, to, you know, as the years go by, as I said, but not that I’ve ever been really careless with my money, but I’m definitely a bit more of a tightfisted, a bit more of a miser these days.

Harry: 

But Okay, is that the squatting you?

Dr James: 

It’s got oh Northern Irish but close to that Northern Irish, northern.

Harry: 

Irish.

Dr James: 

Northern Irish are notorious for spending all their money.

Harry: 

I know, yeah, every time I go to Belfast they’re so generous.

Dr James: 

Yeah, exactly, they like a drink out there so they spend a lot of their money on that. So I try to behave myself. Harry, you mentioned earlier you were talking a little bit about cash flow and I’m just checking over here the terms that we use because I wrote them down cash flow or capital appreciation. So these are two things that you’re conscious of when you’re buying houses and I’m gonna do my very best to give you give the layman’s definition of what I believe those to be. But feel free, this is the uneducated person’s sort of understanding of what they may be. Now, you may change this, you may disagree, that’s fair enough. So we’ve got cash flow, so that’ll be your yield, that’ll be the properties that you buy and, yeah, you’ve got one eye on the price. But the main thing you’re thinking about is what’s gonna be my return at the end of the year. How much money can I make from rental and things like? that and then the other one capital appreciation. That’s just where you’re looking at an area you think is up and coming. They’re building a new road, they’re building HS2, you think the house is gonna go up in value. Have I grasped those correctly?

Harry: 

Yeah, perfect, yeah, oh, it’s nice, perfect. And that’s where a lot of dentists come up to me and say I started investing in the North or the South and I go there’s no right answer depends on your strategy what you want property to give you. If it’s cash flow or midlands up North, because you get better yields but you don’t get as much capital appreciation. If it’s a capital appreciation or better pension, pot down in the South.

Dr James: 

Interesting. So even at this point, even though London has been sort of a bubble for however long now I mean that’s very much my from the outside looking in knowledge of property I always know that people who buy houses in London. They went up exponentially in value over the previous few years, previous few decades, and you believe that that trend is going to continue even now?

Harry: 

Yeah, london is a strange market because, as you said, it’s not my bubble, it’s not dictated by UK residents, it’s more foreign overseas investors, and what the government have done is made it harder for overseas investors to have the tax perks there because there were a favorable stamp duty, capital gains tax for foreign investors, which have been clamped down on. So, and I, yeah, central London is more riskier, but no one knows the trend. So we go more to outskirts and what I’ve been finding red lockdown. People want a garden so they’re going for more to outskirt, like Wilburton, where it’s much more greener, much more space or they have a garden. We may still have foreign investors parking because London is a safe haven. So a lot of investors from overseas will buy the night’s bridge, chelsea houses or flats, leave them empty, but it’s nice, regulated and they can park their money and get the money out when they need it. So, yeah, central London is a strange one, more for the experienced investor. If you’re completely new, I wouldn’t recommend to invest in central London straight away, but once you know the area is new, it says there may be a good bet long term.

Dr James: 

So there’s no sign of that trend abiding anytime soon. This is.

Harry: 

Now some of the London properties we’ve been looking at is going back 10% 15% above market. Badly, because people still want to buy central London.

Dr James: 

That is crazy. Wow, interesting, Fair enough. And the north of England? Is there any particular? What do you think it leads? I’m based in Leeds and I hear there’s a lot of whispers and kind of old wives tales that HHS2 is going to make Leeds property go through the roof, so I’ve been thinking about buying in Leeds. Is that wrong? Is that a silly thing to think?

Harry: 

Yeah, if I had that pan for every time someone said the next golden hotspot, I’d be a billionaire.

Dr James: 

Now I like this. It’s over. Actually, we can have a little chat here.

Harry: 

Yeah, it’s a little tips. So I like Leeds because I qualify for Leeds, but now by the time it gets, by the time the general public know about something, it’s going to be affluent areas. Too late, you’ve missed the boat. Right, okay, Because the deal with the properties that would have been done a year ago and there’s already inflated prices. So I’ll say, go back to the basics, make sure it’s good yield, good quality property and look at the long term. But yeah, don’t second guess. I know people bought in certain areas because of HHS2, the Olympics, et cetera, and if you bought early enough where people didn’t know about those areas, you would have been quizzing. But once the general public know you probably missed the boat.

Dr James: 

Actually, that’s another thing that applies to general investing. Another parallel that I suppose I’ve never really considered when you have something that’s in a bubble, there’s only so much. If there’s a saying on Wall Street, if your taxi driver starts talking about an investment, it’s time to get out of that investment. It’s time to sell off. There’s only so much money that can go into it, and when something’s suspended up here, if we go to Bitcoin in 20,. I don’t know whether you follow Bitcoin and crypto. Yeah, yeah, yeah, A little bit. So at the end of 2017, 17th of December, it hit its all-time high $20,000. People were talking about it, it was on the news and you didn’t even need to know the first thing about investing to know that that’s a red flag. You know, Because it’s common. People are talking about it everywhere. There’s only so much money that can go in, and when people there’s not enough pressure pushing it up, it just falls under its own weight and that’s pretty much what happened. You know it’s not always as simple as that, but it’s definitely a huge red flag. So houses are similar really.

Harry: 

Yeah, yeah, yeah, definitely yeah, when someone, as you said, when the general public know about it, it’s too late.

Dr James: 

I saw a house in Burnley for 22,000 pines the other day. Surely it can’t get any cheaper. Maybe that’s. Is that a good investment?

Harry: 

And depends if you can rent it, because I’m a big Liverpool fan and this house is around Anfield that been boarded up for years that you could probably buy for 15 grand but no one wants to live there.

Dr James: 

Around Anfield. I would have thought that would have been hot property.

Harry: 

So some areas are, but some of the ones really close are quite a bad area. So you always got to look. Yeah, the price may be low, but can you rent it out? Who wants to live there?

Dr James: 

I think for a reason. Then, okay, fair enough. Yeah, cool, cool, cool, right anyway. So, oh, yes, this was a question I got requested Now, what we’re going to do at the end, harry, if we’ve still got time, we’re going to freestyle a little bit because we’ve got some questions on the group which, if you’re comfortable answering those, we’ll come to those in just a minute. But I’ve got one question. This is I’m going to take full credit for this one. It’s and that’s not in a positive sense either. I think you probably get asked this about 100 times a day. I’m sorry in advance. Is Naya good time to buy in the UK highs and market?

Harry: 

Okay, the best time to buy would have been 30 years ago. The second best time to buys now. So because Really.

Dr James: 

Oh, I see, I see Got you I thought you meant specifically Naya. That’s just the saying, is it?

Harry: 

Yeah. So I was still saying the long. People want to buy their own house, want to live in their own house, as I said, because they restrict their space. Planning is quite strict. They have relaxed some regulation with planning. It’s sort of a ball to get planning development through the local council. So I’ll say it’s a long term. Yeah, slow and steady, it’s not going to. I always say to people popty is not get rich quick scheme, it’s get very rich, very long term scheme. So if you’re in it for the long term, you will make it work there because I guarantee, if you come back in 20, 30 years we listen to this podcast people say I wish I invested in 2020 or 2021 there. So, yeah, no one knows what’s around the corner, but people need houses to live in, whether to buy themselves or to rent. We’re getting more fragmented families, more divorces. Younger people live in their parents a lot quicker, not sooner. So, yeah, obviously I’m a bit biased because that is my focus, but I will still say yeah, popty is a good time. It’s a good time now to invest.

Dr James: 

So there’s a lot of factors, I suppose, that are unique to the UK market is what I’m gathering from what you’re saying that mean that it’s a good or it’s a viable long term investment. You know, and it doesn’t look like that’s going to change.

Harry: 

Yeah, yeah, because you always want to have two exit strategies for popty. So your main main move to be renting it out. If you can’t rent it, can you sell that property quite quickly? So I said there’s always going to be buyers, there’s all going to be tenants, etc. So yeah, I’m saying yeah, go for it Interesting.

Dr James: 

What do you think about stamp duty? And it’s sort of well, it’s absence at the minute. And when do you think it might return to? Well, to paralyze the UK housing market, because I don’t know if it’s going to be too much. You know when we’re into the very near future, that’s obviously you know at the minute, because credit is well, because of how the coronavirus situation is, there’s not as much money about it as there is traditionally. Do you think that that’s going to return soon? It’s my first question and do you think that that’s going to have a major effect when it does return?

Harry: 

Yeah, so we think the government’s stupid. They may look a bit stupid, but they are quite clever in certain instance. So when they announced they knew the property was going to crash because obviously people losing their jobs can’t keep up mortgages, so they wanted to give artificial inflation to the property market. And that’s where they made the stamp duty exemption. And it’s a bit like what they did. They gave the property market a candle red bull. So inflate to the market for the short term. Obviously they need to get there. They’ll be given away all these grants, loans, furlough payments. They need to get their money back. So I expect stamp duty exemption to end a suit minutes. I think it’s January 31st, is it?

Dr James: 

Oh, is there actually a hard limit on it? Then They’ve actually overgrew the part in right Showing my lack of knowledge there about houses.

Harry: 

So I’m sure it will go back to normal, to stamp duty, because they need that tax there. And then what will happen? Because, yeah, the property market, as you said, the credit is so low in terms of interest rates. The property market’s been booming, so I do think there’s going to be a correction in the market. We’re not in a financial recession Obviously it’s because of a health-related recession but there will be. I don’t think it will be a major crash, but there will be a slump in the property market. As stamp duty exemption goes, interest rates go up and the other thing that they are risking on the quiet is capital gains tax. So when you sell a property, you pay capital gains tax and it’s normally at the end of the tax year. But from anything you sell from April this year onwards, you had to pay the capital gains tax within 30 days, which a lot of people don’t know about or they introduce. So that indication gives you. They’re going to increase the tax. They want their money as quick as possible. So the stamp duty exemption will end quite soon and there will be a slump in the property market.

Dr James: 

I see. So when you say they’ll increase the tax, you think that it’ll return and they’ll also make the tax more of a proportion of what you buy in terms of a percentage.

Harry: 

Yeah, it may not necessarily be stamped with the other taxes, so you know where.

Dr James: 

I said I think stamp duty specifically Right.

Harry: 

Yeah. So I think stamp duty is quite high, especially for second time buyers. Yeah, but other taxes I’m forecasting you know where my savings jar. I’m putting 50% away each month for tax Because I expect there’s only one way tax is going to go. They’ve got to get the money somehow.

Dr James: 

Yeah, I do agree that they’re in all likelihood, increase it after this is all hopefully over.

Harry: 

Yeah.

Dr James: 

Yeah, that’s pretty much a given really at this point, isn’t it? I should think so. Yeah, yeah, yeah, they’re going. A government can make money. They can either make it through printing money yeah, they’re doing a lot off at the minute or they can do it through increasing tax. So when all the financial levers are, you know they’ve pulled, because they’re all we saw the other day. What did I see the other day? Was it 150 billion with printed currency? The Bank of England are releasing over the next month. So they can only do that for so long before it goes through the roof. So this will be their second means.

Harry: 

Yeah, they’ll give rid one hand and take back with two hands.

Dr James: 

Well, yeah, well, that’s the trouble. I mean not to get too in too deep into conspiracy theories and things like that, but when they print money, inflation is actually a hidden tax on you. Yeah, because it takes money from our bank account that we don’t know about otherwise.

Harry: 

Yeah, yeah.

Dr James: 

And it’s just another way for a government to generate money. But yeah, I’d say we’ll not get too deep into the conspiracy aspect of it or anything of that nature. This is something I’m familiar with and maybe something you’ve heard off as well. There is the financial economy and the real economy. So when the government creates money in the bank because they sell it to other banks by issuing who buy their bonds, what they tend to do is they invest it into financial apparatus such as stocks, such as houses, such as commodities and bonds for other companies, and a grossly disproportionate amount of that winds up in the housing sector and this is why we see houses shoot up in value greater than well as a proportion to the relative to the rest of the economy. So you say you go to the shop and you’ve got your chocolate bar and things like that. Maybe it goes up by like whatever inflation is, like five, six percent actual inflation, but the housing market is far beyond that. That’s because a disproportionate amount of this printed money winds up in the financial economy and houses and things of that nature. Is that something you’ve come across or is that something you teach on your course?

Harry: 

Yeah, I’ve come across. I don’t teach here on the workshops, but yeah, I do that. And also because you’ve got the big pension providers getting into property. And it also makes me laugh when financial advisors come and say to me oh, we don’t encourage our clients to invest in property. We say to invest in a pension. I go well, half those pension funds invest 80 percent of your clients money in property anyway. So you’re indirectly.

Dr James: 

I didn’t know it was that much Wow.

Harry: 

Yeah. You indirectly say yeah because I’ve been to auctions and the way I found out 10, 12 years ago I went to auction. There’s a guy in a three piece suit at the fund. He must have bought about 20 millions hands worth of property. So I got this guy. I need to meet him. So I said, ok, how come you bought so much? Where do you get the money from? He goes no, I think it was a Viva Life pension fund he was working for.

Dr James: 

Wow. So this is why property prices go through the roof, because they’re being actively bought by pension. There’s all this demand beyond the people in the housing market, and that actually is another reason why stocks tend to go up historically. Yeah, because when, when you buy yourself a stock or when you buy yourself a house, you’re effectively hijacking this vehicle that someone else is using to generate a profit for their long term hedge fund and things like that. So they’re artificially pushing the price up, essentially, and you can own your part of that for via through houses, via through stocks, things like that. But if you want to hold this, harry is, of course, your man, and there’s lots of reasons why, as Harry has just touched upon, that he believes housing getting being diversified and having some money in housing is definitely a good idea.

Harry: 

Yeah, and also, yeah, follow other strategies, while in terms of, obviously I would say, become a master of one, then, once you made your money there, continue with that, but then diversify. So I’m always looking for other opportunities in terms of that’s why I look at forex trading, but it wasn’t for me looking at other stuff. But, yeah, people do watch his wine, you name it.

Dr James: 

Yeah, of course. Diversified, diversified, diversified. It’s the only free lunch on Wall Street, they say. That’s what I’ve heard, right Smashing Well. Thank you so much so far, Harry. I think what you’ve said has been really informative. Certainly lots of things that I didn’t know about houses, but I’m a self-confessed total rookie when it comes to the subject. I’m totally unknowledgeable, ill-knowledgeable I don’t know what the adjective is, but I certainly don’t know the first thing. So I hope everybody’s learned loads from that. Harry, of course, been doing this for a long time, so really knows what he’s talking about. What I’m going to do, harry, if it’s all right with you, we’re going to freestyle a little bit. We’re going to freestyle a little bit. So what I mean by that is we’ve got some questions. I posted on the group earlier a little promo post just to let people know we’re doing this podcast tonight and I asked on the group. I asked on the post. I said has anybody got any burning questions that they would love to ask? Harry and a few people have piped up with a few interesting questions which I thought were quite good. So Harry hasn’t seen these before. We’re just going to freestyle a little bit, but they’re pretty good. I think people will get some value from them. So Jazzneet, I’ve been on his podcast before Top Guy. Jazzneet has asked after taxes, solicituries, tenet headaches and opportunity costs. Is real estate still superior to stocks and shares?

Harry: 

Yes, so was it tax. So I’ll see, Everyone looks at the worst case scenario. So tenet problems. So, as I said, if you go for a growth yield of 6%, you know there’s going to be more tenants than properties because that’s why it’s got a 6% growth yield. Then you could pick the cream or the top of the tenants to get the best tenants at your properties. So over 20 years investing property, I’ve only had two evictions out of all that time because I’ve got good quality properties and we pick good quality tenants and we always use letting agents because they can vet the tenants properly. I mean, the other one was tax. Yeah, depending on how. There has been obviously some tax penalties with mortgage interest. But if you buy under a limited company you can still claim the mortgage tax release. So before, if you have a mortgage of, say, 500 pounds and the rent was 900, your profit was 400, you would only get taxed on that. But if you buy in your individual name you get taxed on the whole 900 pounds rent. But if you buy as a limited company you can claim that 400 pounds tax and mortgage off your tax bill.

Dr James: 

Oh right, so it’s about being a little savvy there.

Harry: 

Yeah, so it’s the structure you set up.

Dr James: 

OK, yeah, there’s tax and problem tenants and the visitor fees was the final one, I believe the final part of the trio.

Harry: 

Yes, list of fees is only about 700 pounds. Then I was listed You’re using and there’s, and also when we buy from this, just so there’s. We pay for this list of fees, but we take that off our offer, so it actually doesn’t cost us any money in terms of legal fees.

Dr James: 

Right, cool, fair enough. So that’s a really comprehensive answer that hope that’s helped us. Really. Good question, by the way, because I think probably a lot of people tend to get out to themselves about property actually. So that’s a good question, jars. Then we’ve got Victoria and Michelle. Oh there’s, I’m just reading this question. There’s layers to this question. There’s about so Victoria, michelle, little shout out for Victoria Michelle. She has asked what type of buy to let mortgage would use a repayment or interest only one, and why excellent question.

Harry: 

So it all depends on your Strategy. So if you want to buy numerous properties, then you want maximum cash flow, so you’d want interest only because you don’t want to pay the debt off, and then you can use less money and then you can buy more properties. If you’re a Investor who only wants one or two properties for a better pension part, then it’s probably gonna be better for you to get capital Repayment and interest so you can pay the debt off. So you’ve got two properties mortgage free at when you come to retire. So yeah, if you’re looking at maximising your income, go for interest only. If you’re looking for a better pension pot, go for repayment and interest.

Dr James: 

Oh, nice one. So it’s a pretty black and white kind of answer. Yeah one then really oh, that’s not often you get that in finance. Is it clear, concise, clean, cut. Answer, lovely job. Leave more of those, please, oh Okay, this is a nice question actually. So this is from Josh Evans and this is one that’s very pertinent to our Current circumstances, so this is a goodie actually, josh. Well done. Josh wants to know is not a good time to think about investing in a holiday let property, given the recent boom in staycations? I really like that. I think that’s good.

Harry: 

Yeah, yes and no. So. So, yes, definitely stay. Vacations gonna go on the up and we actually looking at our project at the moment that I’m invested in, so you gotta have a look. Say, mate, can you get tenants all year round or People visiting the boxes? Though if you’ve got rush season for summer only and it’s empty for I don’t know three quarters of a year, then you’re gonna wipe out any profit. You’re making your peak times with the point. So you need to have a look at. Yeah, it may be. You still get certain properties that will rent out throughout the year, so you need to pick wisely and carefully that you can rent it for at least 11 months out or 12.

Dr James: 

Seems like it might be a bit of a headache then, because you have to think about who you’re getting in week on week to and your returns Aren’t necessarily that great.

Harry: 

Yeah, so a lot of people do Airbnb but it’s quite time-consuming, a lot of Expenses cost. You got factor in the cleaning, washing, all that kind of stuff.

Dr James: 

That’s true. Yeah, fair enough. So maybe Might be a good idea to give the staycation houses a bit of a wife.

Harry: 

Yes, let’s see. If it’s your first, if you’re new to property, stick to the bread and butter bite in there. Simple family venting it.

Dr James: 

Okay, good answer, fair enough, right. Next We’ve got next up, we’ve got Peter Doyle. For someone in their early 30s trying to make the big decision before 40, would you advise? Practice property or trading or investment is somewhat linked to what we’ve said before, but Peter has just chucked the up the possibility of buying practice in there as well. Peter has also said his main focus is on quality of life. Obviously, money helps here, but he wants to be able to spend time with his growing family. So yeah, that’s put in another little slant or twist on it. That’s probably going to be relevant. So what’s your thoughts on that one, harry?

Harry: 

Yeah, I’m a big believer in business and property, buying your own business, where it obviously I take it’s gonna be a dental practice, especially for the early years. You’re gonna be working 18 hours a day Slugging your guts out there. So if you once family time, maybe a business is not gonna be the best choice. Yeah, and it may be investing or property that you can do, where I say work once, get paid forever. So you’re making passive income in the background so you can take more time off work. You’re not relying on your dentistry so you can spend more family time. And I always say to people business and property is gonna make you good money and and I always I never say it’s either or do both if you can.

Dr James: 

Yeah, absolutely so. Are you finished on that one?

Harry: 

So yeah, his question was obviously about family time and then business probably not gonna be the best option If you want to spend more family time.

Dr James: 

Yeah, fair enough, the the little part where you threw in about your family there, peter, yeah, that’s very relevant and I suppose that kind of Harry’s giving you a good answer there. Hinge on what you’ve said, I suppose, which is great, and next thing we’ve got I’m here empty ass and I’m here would like to know oh, we’ve actually just covered this, which is quite helpful. So you okay, was you when we discussed earlier about purchasing a property under your own name or as a limited company? So am I right in saying, if I understood what you said correctly earlier, harry, that if possible, it’s always a good idea to buy it under a limited company name?

Harry: 

Yes, yes or no. So obviously first, we’re not qualified to give financial advice. So obviously speak to your counter. So it depends on your personal circumstances. So yeah, the benefits of a limited companies you get the tax relief off your mortgage payment. This, as you know, with the limit companies, much harder to get your money out. With buying your own name, you can Get your money out a lot quicker, easier, with less tax, but then you can’t claim the mortgage interest of your profit. So there’s pros and cons with each one.

Dr James: 

See, because from what? If I go back to Business studies class, which was a long time ago for me, I recall that a limited company, it’s a separate legal entity, and that would mean that you have to pay yourself a wage from that company to be able to withdraw the funds, and you obviously can’t withdraw. You can’t pay yourself such a wage as to totally bankrupt the company. Yeah, yeah, you’ve got this extra layer or obstacle Before you can actually get your hands on what you put into it. Is that the reason why, then?

Harry: 

Yeah, so you’ve got dividends. You see, yeah, you can pay up to, I think, about 8,500 per year without the extra tax. Anything more than that you’re gonna get dividends, tax, corporation tax and also don’t forget, with a limited, it’s a public in the public domain is gonna be on company’s house. So if you did want to be more private, not let anyone know what you’re doing, then limited company may not be the best option either as well.

Dr James: 

What about if you’ve got your company in the British Virgin Islands, where you are right now? Harry, all right, no, harry.

Harry: 

Yeah, that’s the exception. Yeah, you can do it, it’s just on.

Dr James: 

Parchus, Well played, Well played, Harry, Right. The Amir MTAs has also asked another question. Oh, this is a good one actually. I like this Again, maybe slightly difficult to answer, so if it is, feel free to say Amir has said I suppose there’s a rule of thumb what would you classify as a good return on investment annually in the current market in Hoise?

Harry: 

Yeah, so, yeah. So say 6% gross yield, so that’s the annual rent divided by the market value.

Dr James: 

So that’s what I would be going for myself 6%, and is that fairly average, or is that a slightly higher return on investment that you place upon yourself because you have experience in the property market?

Harry: 

Yeah, it’s a slightly higher level because we want to stress test Aussie upings, for example, grimsby, I know you could get 15% gross yield. Central London you’d be lucky to get 2%-3% gross yield. That’s 6% based on common interest rates. So if the interest rates went up by or the base rate went up by 1%, then I would change that figure to 7% gross yield. So it’s not a fixed. 6% is depending on what the base rate is at the moment.

Dr James: 

Right, I see fair enough. So perhaps it’s not as simple as this, but surely Grimsby would be a good area to invest in really For cash flow, but not for capital, because you can get a house for £40,000,.

Harry: 

You’ll come back in 20 years time and it’ll still be worth £40,000.

Dr James: 

Right, I see, I see interest in fair enough. And then another, sorry mate, we finished.

Harry: 

And it will smell of fish as well.

Dr James: 

You have to bear that in mind, and Amir has just said as well as that well, we’ve talked. He wants to know about capital gains tax and how that might affect your income. Further down the line, do you expect there to be an increase in capital gains tax? But we’ve already said that we pretty much both unanimously agree and it’s looking pretty likely that that is going to go up. As to how much, is difficult to say. I don’t know if there’s anything you’d like to add to that.

Harry: 

really, harry, yes, obviously, capital gains tax you would only pay once you sold the property. As we said, one yeah, we’re expecting it to go up, but also, don’t forget now, since April this year, you have to pay your capital gains tax within 30 days of selling a property.

Dr James: 

So just be aware of that Interesting and would capital gains not apply if you were earning over 12,300 in terms of as rent every year?

Harry: 

So there’s two types of tax you would pay in property. One is income tax, which you pay on the rental profits.

Dr James: 

Oh, I didn’t know that. So it actually falls under income tax.

Harry: 

Yeah, so rental profits will fall under income tax is only when you sell a property you would pay capital gains tax. Every person has allowance per year, so I think it’s about 12,000 at the moment. So the first 12,000 per year will be free from capital gains tax per person.

Dr James: 

That’s really interesting. I didn’t know that. Okay, and one final question for Amir MTAs. Amir MTAs has been a source of a lot of inspiration for me and Harry tonight. This is really interesting. He’s really driven the conversation, so shout out to you, Amir, Thank you so much. Final question what is an ideal property for you? To? What would you consider the ideal property in terms of purchasing, Harry, in terms of a return on investment? I suppose is what Amir’s getting at and he said student let HMOs, which I’ve never heard of before city flats, suburbian, semi-detached. What would you? Is there kind of a hot sector or something that you specialize in or you particularly think is a good investment?

Harry: 

Yeah. So I go for the first time buyer market, which is normally two to three bedroom terrace houses. So I find the first time buyers. If they can’t afford to buy the house, they want to live in the house near good schools. So it’s a young couple, a couple of young kids at the local school, and what I find is they look after properties. They’ve got two income streams coming in the kids at the local schools. They actually end up staying with me for about seven or eight years because they don’t want to move, because the kids don’t want to change the kids’ schools. And also, if I need to sell that property because the first time buyer market wants that property, it’s going to normally be quite a quick sell because they’ve got no chain. I tend to stay away from flats and apartments because you’ve got service charges that eats away to your profit, ground rent. There’s no flexibility in terms of creating extra rooms or extending the property. Also, what I find you get more temporary tenants. It may be the cynic in me but you normally get a young couple that are living together for the first time, realize after three months that hate each other’s habits, separate and then move out after six months. You’ve got to find more tenants there.

Dr James: 

Well, I mean, it happens. We’ll just say that, shall we? It happens, but yeah, you’re quite right. I suppose tenant selection is definitely a big factor, something that you think about.

Harry: 

Yeah, the first time buyer did the biggest market. They can move in quickly to buy or to rent. They want to live in a house, They’ve got kids and they’ve got the local schools.

Dr James: 

Awesome, brilliant. Hope that’s answered your question, namir, and I’m really sorry about this, omar. I’m really sorry about this, harry, but I’ve just spotted at the bottom of the page that Omar has asked another question, but I think it’s a quickie and I think it’s one that we’ve already covered. Do you think there is going to be a property price crash? We suspect that it might be likely when, at the end of January, just as you said earlier.

Harry: 

Yeah, because of the artificial inflation, the interest rates, we are due a slump in the market. No one knows, obviously, how severe and how deep it’s going to be and how long it’s going to be, but I do expect some correction in the property market.

Dr James: 

Okay, so it might be worth thinking about Omar, okay, cool. Well, anyway, thank you so much to Harry on behalf of me, on behalf of everybody who’s listening. He’s been absolutely wonderful. I think we’re just scratching the surface of Harry’s knowledge perfectly, because that was amazing. There was a few points that I was lost there. The people who are watching, who know a lot more about property than me, will have been able to follow it. I’m sure you know what, even if you don’t know the first thing, there’s a huge amount you can take away from this, and certainly things that I’ll be bearing in mind if and when I ever do get round to buying a house. Harry, is there anything that you’d like to say? Just to round things up, no, no, no.

Harry: 

Thank you again, james, for the invitation. Fantastic group. As I said, there’s no right or wrong way in terms of investing. It’s obviously become an expert, it become a master, it become focused, disciplined, learned a trade, learned a content, stick with it, be determined. Yeah, with everything. It always goes back to your why. Why are you doing it? And you need to invest? Because obviously it’s limited money. How much you can earn with your own hands, time-wise, is what you do with the money. That’s probably more important than how much money you make at the beginning.

Dr James: 

Brilliant. Yeah, I think investing certainly something that I’ve had my eyes open to since I began investing is just how much I honestly think it should be a life skill for everybody, because we all have most of us have some spare cash and that cash can be put to work with relatively little effort in certain specific ways that it is very likely to grow over time. One of those ways you can do that is stocks. Another way you can do that is commodities, gold, things like that. Another way you can do that is crypto and something that is a little bit safer. There is the saying, of course, safe, as Heusis is where Harry comes in, and that’s Heusis.

Harry: 

Yeah, definitely, and as it’s a long-term game, so it’s not like, as I said, keep on saying, not a get rich quick scheme.

Dr James: 

Yeah, yeah, definitely, and that’s a healthy mentality to have, not just specifically with Heusis, but with anything. So finally, just for anybody who didn’t catch it at the start, it’s dental property club. You can find it on Google, you can find it on the internet. If you were to get in touch with them, harry will, of course, be there to greet you. He’ll talk you through how you can expect him to help you, harry. Anything else you’d like to say on dental property club, it is, of course, your company, your area of expertise.

Harry: 

Yeah, so yeah, any members of the group feel free to apply to IAM and in the Investor James’s group. So you can private message me. If you’ve got any specific questions that you want to ask in private, that’s fine, I’m happy to answer anyone’s questions. Listening to the podcast.

Dr James: 

Nice one and, of course, this podcast is going out to the world, so there may not even be people who are on the group. So if you want to join the group, it’s on Facebook. It’s called Dentist who Invest Community Group for Dentist who Enjoy Trading. I very much started it with the ethos of educating dentists on how to invest responsibly. A lot of us do it, but a lot of us don’t know how to do it, and there’s a lot of knowledge on there. There’s a lot of people who know so, so so much about investing and there’s so many different asset classes. To have that spread, to have that spread of knowledge, is really a remarkable thing, and totally unbiased as well, because there’s nobody, there’s no advertising on there, there’s nothing like that. It’s just a community group. That’s what it is. That’s what it always will be. It’s for dentists to get together and discuss things of that nature. And I think it is particularly pertinent or relevant because of what’s happening at the minute in the world with COVID. Really, we don’t know what’s going to happen from day to day. We’re on lockdown two. What about if lockdown three happens? What about if we actually go back to when we were in March and none of us could leave our houses. It’s possible. I didn’t take it seriously until lockdown two came along. Well, I didn’t take it seriously. You know that any of this could have happened until we find ourselves where we were. So it’s just made us all think that perhaps dentistry it’s not really something that we can rely on as much as we once did. It’s a little fragile and it’s definitely worth thinking about things, not just for the short term, not just because of COVID, but so that you can have a great quality of life going forwards. And whatever path you go down, whichever path you’re interested in, there’s hopefully going to be someone on that group will help you, and if you’re into property, then Harry will definitely be there to assist in any way that he can. Wonderful, yeah, definitely Wonderful. All right, well, thank you so much, hi. Thank you, james. I just say it’s been absolutely amazing tonight. I’ve learned so much. Thank you so much for coming on the very first, the very first episode of dentistry invest podcast. I think the bar has been set quite high. I’m sure everybody who’s watching will agree I’m going to have to do some real legwork to top this one, but I’ll see what I can do. It’s all downhill from here. It’s all downhill from here, probably.

Harry: 

I’m sure it won’t be our show. I’m looking forward to it. I’m looking forward to the next podcast as well.

Dr James: 

Oh, brilliant. Yeah, I have to have a little think about who I can get on there. If anybody wants to reach out to me, they think that they might be able to do a good podcast, or they like to do a podcast, a collaboration with me on anything that they think might be relevant, then feel free to reach out. Harry, it’s been a pleasure. I’ll hopefully speak to you again soon.

Harry: 

Thanks a lot, james Cheers. Okay, bye.

Dr James: 

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