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Dentists Who Invest

Podcast Episode

Full Transcript

Dr James: 

What is up everybody? Welcome back to another episode of the Dentists Who Invest podcast with returning face resident property expert. It’s becoming these days, isn’t it Jassy? Returning face, dr Jassy Sidhu, how are you, jassy?

Jassy: 

Yeah, good, james, thanks for having me back again.

Dr James: 

Anytime, my friend, we’re looking forward to this podcast another property one, of course, fresh off the back of the other podcast that went down so well. And this specific podcast is going to be a little bit of an outlook, a prospective podcast on the property market in 2024, which is an interesting one because 2023 was a up and down year, that you could say One way of looking at it, jassy. So 2024, hopefully brighter signs ahead, greener fields ahead, but we’ll see, won’t we? What are your thoughts on the 2024 market so far, jassy, and what can you tell us?

Jassy: 

Yeah, I mean, in all fairness, I thought 2023, there was a lot of turbulence, but there’s a lot of good deals out there. Because of the turbulence, 2024, I mean, who really knows what’s going to happen? I know some people that think that there’s going to be a huge crash, probably bigger and commercial than it will be in residential. And I can see why they think that, because if you look at a lot of the kind of like the residential, the commercial spaces out there, profits are plummeting like we’ve like, especially like hospitality and stuff like that. So there’s going to be job losses on the back of that, which means that there’s going to be less people affording their mortgages and so forth. So I can see that argument and I’ve got a lot of friends in poverty who are very high up and doing, you know, really big deals that are literally just holding back waiting for that to happen. And then on the other end, I’ve got people like myself who probably think we’ve already had a crash. The reason being is, if you look at poverty prices this year, they’ve probably dropped by that 10%, but what people don’t do is actually counter an inflation as well. If inflation was at 10% as well, then in actual fact, in actual real monetary value we’ve had a 20% drop, which is a crash by definition. Interest rates are now starting to come down. I think in the last two weeks we’ve had a lot of lenders decrease the mortgage rates, so that kind of gives more confidence in the market. So maybe the worst is over, maybe it’s going to improve, but it’s hard to know for sure, right?

Dr James: 

Absolutely Okay, cool. So, having said all of that and nobody knows, right, Because someone can, nobody know short term is what we should say really Jassy short to medium term.

Jassy: 

Yes yes. I mean, look, pop tea’s a long game. Anyway. Whether you buy now, next year, or whether you bought the year before, in 10 years time you got a good deal, because prices are always going to go up in the UK. So if you’re investing long term which I think most people should be doing there’s no get rich, get quick schemes then you should be fine. But what I find at the moment because interest rates are so high, the cash flow on deals is not that good. But I’m going out there at the moment we’re acquiring property with the mindset that, yes, the cash flow isn’t great right now, but interest rates will definitely come down. They won’t go down to like the 1% 2% that we saw, because that time is never going to come back. That was free money, but they’ll come down for what they are now and then prices will appreciate as well. So in five years time we’ll be sitting fit. And what we’re doing at the moment is everything we buy, we’re fixing it for five years. So we’ll be sitting fine after that. And also, if you look at the swap rates, which is what the banks use to lend each other money, the swap rates over the five years are slowly coming down as well, which means that the banks themselves, who have got more data than all of us, actually can see that you know what the economy is going to be okay, but in two years there’s a bit of uncertainty.

Dr James: 

Gotcha Okay cool. Another question, just to add on what we were just saying how have you adjusted your strategy, if at all, during 2023 relative to how it was before, bearing in mind all the things that we just said?

Jassy: 

Okay. So 2023 was very kind of like uncertain time. So, like you know, when Liz trust came in and all that stuff happened, the pension funds nearly collapsed, rates just went, shut up and you know any due prices were like a pen. You know it’s the end of the world and all that kind of stuff. What I found was everyone just stopped, everyone just kind of held back, particularly this year, and I know a lot of people with a lot of money that have just kind of been like I don’t know what’s going on. So I’m just going to hold back and just kind of see what happens. I went out there and I was like you know there’s a lot of deals on the market now because these people are bidding for these deals. So I was like I’m just going to buy everything I can. I think Warren Buffett said when people are greedy, be fearful. When people are fearful, be greedy. So I was like this guy’s the best investor that we know in common time, so I’m going to listen to his advice. Everyone was fearful, so I just went out and I think this year I think I bought just over a million pounds with a property, so that might have been a good thing. I might be crying next year, I don’t know.

Dr James: 

Let’s do a podcast in five years and ask you then Something like that. But I see the logic. I see the logic.

Jassy: 

Yeah, and then what I did is I fixed it all for five years so I’m safe. Like interest rates go down. If the price is dropped, it’s fine because I’m fixed for five years, and after that I can then kind of like reassess the situation and by that point prices will be up for what they are now. Hopefully.

Dr James: 

Okay, so if anything, you doubled down in 2023.

Jassy: 

Yeah, 100% yeah.

Dr James: 

Yeah, awesome, okay, cool, cool, cool, cool, cool, cool. And I know that we can’t predict things going forward and prospectively, but is that strategy still the same for the moment?

Jassy: 

See, I don’t want to start telling everyone you’re going by everything, oh of course not. I don’t want to give people that gessie city.

Dr James: 

I heard in this podcast one time I should put all my money in the property something like that? No, we don’t want that at all.

Jassy: 

And if you’re actually right.

Dr James: 

It’s good to get a disclaimer in there. The reason why I like these conversations is, whilst they’re not definitive means for a certain specific action, they are wisdom which we can employ into our strategy and use to guide our decisions.

Jassy: 

Yeah of course, of course, Exactly. I think, look, you’ve got to do your own due diligence. You’ve got to look at your own situation, you know. Look at what your kind of like, your plan, is for the area of your five years, Because I mean, we’re coming to the end of the year and I say everyone’s probably doing their. This is what I want to achieve in 2024. So look at your own situations. Generally speaking, property, longterm you will be fine. We live on an island. We’ve got Greenbelt land. Although the government are trying to bring in policies to make planning permission more easy to get, the bureaucracy in the local authorities means that it’s always difficult to build more houses. So there’s always a lot more demand in the UK than there is supply. So longterm you’re always going to do well with it. I think if you find a deal that works now on the current interest rates, I think, yeah, in five years time you’re more likely to be sitting fine than you are to be in deep water, if that makes sense, Cool.

Dr James: 

Any specific? I know that you said you obviously acquired decent bit of property over the last 12 months. Was there any specific areas that you focused on? Was it commercial? Was it battle at HMO?

Jassy: 

Mainly all just residential, so HMOs and single family lets bought a couple of flats as well, actually. And then, actually yesterday, we completed on a pub, which was nice. I’ve always wanted to own a pub.

Dr James: 

That’s awesome. That’s awesome. Let’s 100% talk about that pub because, I’m interested in knowing a little bit more Just before we. Do you know the HMOs that you said that you acquired over the last 12 months? What was the thinking or the logic behind focusing there? Cash flow- Cash flow?

Jassy: 

yes, because at the moment what’s happening is because the interest rates are quite high. When the banks are doing their stress tests, which basically assesses the affordability of the mortgage, the rates are like whether you used to do stress tests on like 5%. Now it’s like 8%, so it’s a lot higher. And some of them, instead of doing like 125% whether they’re in the rental income they’ll go to like 135%. So it’s been challenging to try and hit those stress tests. So that’s why HMOs were an easier way to borrow money to acquire property this year, because otherwise you’ll be putting down really large deposits. But the way I see it is, I’ve got quite a high appetite for risk at the moment calculated risk. So I will try and put down minimum deposits and buy more properties rather than putting big deposits down and buying less properties, because then over the course of 10 years, if I’ve got five properties, the appreciation is going to be a lot more than if I had two or three properties. So I’m using leverage in terms of finances as much as I can to work in my favour. Got you, thank you.

Dr James: 

Okay, Now back to the pub. What was the question? Was it like an ambition?

Jassy: 

Yeah, I mean, look, I’ve always wanted this is actually a derelict pub, yeah, so I can’t go behind the bar and pull myself apart. I’ve always wanted to earn a pub, but at one point in my life I’m 100% going to buy a pub. But yeah, this one’s more of a development opportunity. So I actually had a friend, what’s at me one day and he’s like bro, you guys, I was in some networking event in London and I met a guy and they’ve got a property near you guys in the Midlands and they want to get rid of it. And I was like, okay, that’s fine, I’ll go and just send me the details, I’ll have a look. And they told me the kind of price that they’re looking for. So I had a look at it, spoke to my business partner. I was like, bro, this seems like a good opportunity here, let’s have a look. So we did a bit of negotiations. It was like a family that owned it, so there were like multiple different parties. So every time we went back with something we’d have to wait like a week, week and a half to get a response back, because they had to talk to every single person, which kind of longed things out a little bit, but in the end it all worked out. We exchanged a couple of weeks ago, completed yesterday, using investor finance. We’ve got the builders run today sorting the roof out because of massive leak, and then we’re applying for planning permission in January. So the aim of that one is to convert it into a 15 bedroom HMO, or if we extend it a bit, we can probably get 20 bedrooms out of it. So we’ll see what the council say. You never know your planning. They might just you might have to do something completely different. If we do, then we’ll do like commercial below and like flats above, so we’ll see what?

Dr James: 

And you? Know this is actually interesting, because on the whole planning permission side of things, is there any way that you can shuffle the deck in your favor whenever it comes to stuff like that? In so far as how you can communicate that information to the council, I’m interested yeah.

Jassy: 

Planning is like a minefield. You need to make sure you’ve got a good architect with a background in town planning so they understand all the different policies that are in place. Ideally if you can find someone local, because then they have local knowledge which like, for example, like a national architect won’t have, and they’ve probably got some kind of relationship with the planning team in that council already. But yeah, there’s, it’s always risky. The best thing you can do is basically get a good planning involved and work with the council as well. Some people, like when the council asked for, like they’re going to ask you for all kinds of tests, like sound tests, like traffic tests, like parking, all that kind of stuff. Just get it done and work with them. Some people are like no, why should I have to do this? And it’s like they hold all the cards. They can say yes or no. Why would you argue with them? Do you know what I mean If they ask for something? But like, okay, I can see why you need that. Let’s get it sorted. So work with them. And if you work together you find that you’re kind of more likely to get the outcome that you want. But you just never know with especially bigger schemes like this, like if I was just doing an extension, then that’s, it’s completely different. This is like change of use. So yeah, so. And also, a lot of councils don’t like HMOs. They’ve got a bad kind of reputation. But the thing is, if you’re doing a good standard with en suite, you’re going to attract a completely different clientele than if you’ve got like five rooms and one bathroom. But then it’s your job and your architect’s job in that planning stage to present your case to the council. So yeah, so, a good architect and a planner’s all you can do, really. And then just cross your fingers.

Dr James: 

Talk stuff, talk stuff. Well, I’m interested to know what do you expect, given, given and this is obviously not something you can say for sure but given that you’ve been in these discussions before and you’ve seen the outcomes that come along afterwards a few times, I’m wondering do you think they’ll accept your proposal?

Jassy: 

So, yeah, I think they’ll accept your proposal. So this is a pub. It’s not actually an asset, a community value. So some pubs, for example, would be given that title. If they got that title, then it’s very hard to get planning on it, so that works in our favour straight away. It’s been derelict for like seven to eight years and it’s an eyesore and it’s actually been in the newspapers as well. We’re like you know, some of the local council members have said to the public that, yeah, we’re going to force the co-owners to like do this up, and that kind of stuff. So there’s already a sentiment within the council that we need to do something with this building. So what I’m hoping is, you know, when new owners have come in, we want to like do it up, blah, blah, blah. I’m hoping they’ll work with us and they’ll be like OK, let’s do something. And creating new homes is always a bonus, right, it’s always good. But and we’ve got a good plan as well he’s trying to get a lot of money, so I hope he does a good job and that’s it really. I’ll cross my fingers. I’ll let you know next year.

Dr James: 

I’m actually really interested to hear because here’s the thing you could do. There could be something, really there could be something interesting in here from a PR perspective. Do you know what I mean? It’s already been in the papers and if it wasn’t really going in your favor, you could always go and say hey, I’ve been trying to do this, I’m letting the community know, let me talk to the papers and let me share that they’re actually holding me back from doing this. How crazy could that be?

Jassy: 

Yeah, so last time we spoke about the 32 bedroom on that I did a few years back, that was also in the newspapers that one we actually didn’t get planning permission and I had to go to committee. So when it goes to committee, what happens is it goes to the local councillors and they all sit in a room, they go through the proposition and then they’ll vote whether it goes through or not. And so when that happened, I had to do exactly that. I had to go out there. I actually had to meet with the councillors and be like look, this is my development, this is what we’re doing. You know, it’s going to be a great home for, like, there’s a hospital nearby, so it’s great for nurses and all this kind of stuff. One of their big worries were we’re going to put criminals and all sorts of kind of stuff. And then I was like, look how we’ve done these. These are like. You know, this bedroom is better than the bedroom I live in at home. This is a high quality HMO. So we had to do all that before. I’m hoping we don’t have to go through that same process with this one. But you never know, you never know. You just got to be prepared for it, right.

Dr James: 

That’s flipping interesting. So the fact that it was something that was in the papers and there was like this put you know, like there’s this community, I suppose, aspect to it as well, Did that actually play a role in part of your thinking as to buy the property?

Jassy: 

No, no, no. So this one, we got it a good deal and I was like, even if we don’t get planning for a 15 bedroom HMO, even if we just keep it as like commercial and just resuit or even just flat, then the numbers should hopefully still be okay, depending on like the thing at the moment is. Prices of labor materials are just like they just keep going up, like some builders quotes that we get nowadays is just like absolutely ridiculous, and I think it’s just the case of there’s so much demand that they’re just a lot of builders are just seeing what they can get away with, because your average Joe doesn’t know or won’t have the kind of same level of understanding of how much work is involved with doing certain things, whereas we’ll go in and we were like I know exactly what you’re going to do here. You’ve got to run 10 more cable here. You’ve got to run 2.5 here. First fix, second fix. This is how long it should take you what you charge me, like 6,700 pound a day. Come on, bro, so we can kind of work that out and like, but yeah, labor price and material price at the moment is just something that you’ve got to kind of keeping them back in mind because that any increase in that just eats up in your profits right away.

Dr James: 

Right. So really you have to be there Casting that over their shoulder and it really helps to acknowledge of how much materials they need to do X, y and Z.

Jassy: 

Yeah, yeah. So at the moment we’ve got. So we’ve got five refibs ongoing at the moment and then we’ve got another in January. I’ll have another three starting. So I probably find that I have to go on site probably once a week. Just to kind of like. What I do is I have like a checklist in each room and I pin it up on the wall and then I go in there I can see what’s been ticked off, I can see that it’s right and see what else needs doing. Then I have a good understanding of what the progress is every week. And I’ve also got WhatsApp groups for each kind of like site that’s ongoing so I can chat directly with the builders and then that for that individual properties just on that group, because I’ve got one builder doing two, for example. And then what I also do is I have a window bill at every site and I’ve got one of those you know those routers with like a Wi-Fi SIM card. I put that in so it connects to the ring, and then I’ve got all the sites on my phone. So every day I can see what like who’s coming in on those sites and who’s not, because what you tend to find with builders is they’ll sometimes take on extra jobs and you think they’re on site at your job and they know you might be coming every Wednesday. They won’t come on the Thursday, friday, saturday. They’ll go to another job and then turn up to your job and then be like, oh yes, just taking a bit longer, whereas if you’ve got a ring doorbell and you get, I give them access to it as well. Go look if you, if one of you guys, need to come, you can see that they’re coming. They know they can’t play that game with you.

Dr James: 

That is a flipping trick of the trade right there, that is some hot wisdom, that’s awesome.

Jassy: 

Because it happens a lot. Yeah, it happens a lot. So that’s what I do, just to kind of keep on top of everything. In all fairness, I do have, like people that can manage projects as well, so I’m going to start bringing those guys back in again. I’ve just we’ve just started investing in a slightly different area and the construction of the house is a bit different, so I just wanted to make sure that, for the time being, everything was done properly and that my building teams like knew exactly, kind of like, what they should be doing. But yeah, once I got that back involved, I can take a step back even more and then just spend time on raising more investment and stuff like that.

Dr James: 

I love that, Focusing on the high-level stuff right.

Jassy: 

Yeah, exactly.

Dr James: 

That’s how you hit the next level in any business I was talking to. It’s kind of like this when you focus on the high-level stuff, I feel the reason why people struggle with that is because you often have to take a little bit of a hit in the short term in terms of how much money is coming in.

Jassy: 

It’s really hard for us to do that mentally yeah yeah, 100%, and also it’s kind of like letting go over that kind of like I wouldn’t. It’s controlled. But it’s not controlled in a way Because like, look, if I’m keeping on top of my refurbs, that’s my money that’s been spent, and the longer it takes, that’s my. You know my bridging fees, my counter taxes cost me more money, so I’ve got a big incentive to turn the product around quickly and in the most efficient way possible. When I have someone managing that project, they’ve got the same kind of incentive, but it’s not their money, so it’s. They’re not going to be as highly geared to be as meticulous with it as I am. So my projects I know will take longer and I know they’ll cost me slightly more. But if I’m out of there and I’m raising more money, that means I can do more deals. So that will be a better kind of improvement within the company. And acquiring assets then to that kind of leak is that goes with delegating it out, or at least I hope it’s abundance mindset isn’t it, it’s like you’re chasing pennies to sacrifice points.

Dr James: 

You know what I mean. If you were to not do it that way. So it’s a good way of looking at it. Is there any way that you can incentivize it for the product manager so that at least is minimized that effect?

Jassy: 

Yeah, I mean to be honest. I’ve got a great project manager and she’s like wicked. So with her I know that she’ll probably pretty much do it the same cost as me, but it might take a little bit longer because she manages a lot of other properties as well, but she’s like awesome. If you find impoverty, if you find a good property manager and you find a good project manager, you stick with them because they’re worth their weight and gold. They’re very, very hard to find, but if you find them you’re flying and, luckily, touch wood. It’s taken a lot of time, many, many years, kissed a lot of frogs, but I found them now.

Dr James: 

You’ve got your princess charming now, so it’s great, yeah you got there Well it’s true in recruitment right and it’s anything is like that, like you kind of. There’s a lot of skills going on here and one of the skills is a skill of recruitment. You know what I mean. It’s like being able to smell that person and in reality, you have to do something wrong a few times before you get it right. But it’s just in that one particular game. It can be not easy to let somebody know that things are not working out. However, what is worth remembering is when you get that right person, it just makes such a huge difference that worth that hardy. I can kiss in the frog, so to speak, 100% definitely, definitely. Yeah, yeah, cool, cool, cool, cool. Well, listen, I can tell that you love this stuff, mate, because when we were delving into it, then you get really energized, which is wonderful, right, and when you, when you feel that way about something, you know that you’re in the right place and you find something that’s really cool. And that’s actually really helpful whenever we talk about it, these things on the podcast as well, because when we deliver something with energy, it gets other people excited and inspires them in their property journey too, which is flipping cool Jassy. We’re coming up to the 30 minute mark ish, which is roughly where I like to end these podcasts usually 30, 40 minutes, just to keep them really impactful. Any other wisdom whenever it comes to property, whenever it comes to perspective property purchasers, there’s a tongue twister perspective property purchasers in 2024. Anything else we can say to round things off?

Jassy: 

Oh, okay. So anyone looking to get into property Firstly listen to the last two podcasts that me and James is doing.

Dr James: 

Hell yeah, isn’t there three, or is my math off? I think there’s two or three yeah.

Jassy: 

Anyway, listen to all of them. There’s a lot of little golden nuggets in those, but I think the main thing is this like there’s so much going around on social media and in conversations right now with people talking about, you know the market’s going this way, the market’s going that way, and I think too much focus is put on trying to time the market at the bottom because that’s when you’re going to make the most profit. The reality of the situation is no one can time the market at the bottom. It’s always guesswork and no one actually really knows where it’s going, and in property it’s a long game. So don’t worry too much about typing the time in the market. Look at it as a long-term investment and if you do that and you do your due diligence, I don’t think you can go wrong in your property. I think you’ll be fine long-term Boom.

Dr James: 

Jassy, thanks for the mic. Why could you drop it? Boom, awesome, jassy, thank you so much for your time as ever on the Dentist Invest podcast. I’m already looking forward to the next episode. I hope you have a smash in Christmas and a smash in 2022, watch that after that, and I’m already looking forward to all the content we’re going to make in 2024. Yeah, sounds good. Youtuber, much love.

Jassy: 

Cheers.