This month our intrepid reporter finally cracks and lies down on the couch to address some of his ‘issues’.

Sometimes I get really wound up by property trainers..  You might find that surprising, bearing in mind that I drag myself down to their courses on a regular basis.  But sometimes I have a real problem with them.  In fact, I have two.

1)      Trainers often seem to be living a lie.  They swan around making out they’re doing well because they’re following the investment strategy they teach.  In many cases, that’s complete codswallop.  You’ve only got to multiply the number of delegates on some courses by the cost per head to work out that your bum on their seat is actually subsidising a very profitable training business.  This means your speaker probably doesn’t need to worry too much about actually following their own advice.

2)      They often fail to realise they’ve been very lucky.  Far too many trainers have been the beneficiaries of benign economic times.  If you look when they’ve made their money, you’ll see that in many if not most cases they did well when times were good.  If all they’re teaching you is ‘by a lot when times are good’, and they can’t even give you the economic skills to identify this boom times, then there really isn’t a lot of point listening to what they’ve got to say.

In order to make sure I’m able to rehabilitate myself back into normal society, I’ve decided to ‘work through’ my ‘issues’.  In doing so, not only have I achieved Zen-like calm, I’ve also realised where I’ve been making some serious mistakes with my own investments.

In short, what I have realised trainers are doing is something rather strange, but yet it contains a very powerful lesson for property investors.  The simple reason why they are often very successful is because they follow the holy grail of personal wealth strategies.  They combine a wealth building strategy with a cashflow strategy. Their training courses can generate the day-to-day money they need to do boring things like eat and make phone calls.  Their long term wealth, which enables them to do fun things like buy yachts is built up using another investment strategy, often the one taught on their property courses.  By following them both together, they have created a synergy that leads to real wealth.  They might be subsidising their portfolio by a few quid (or a few grand) each month, but the disposable income they’ve got makes this possible.  If you don’t need your portfolio to create cashflow, you can concentrate on strategies that bring you real wealth.  That’s the secret of why trainers are often so successful.

You can copy this strategy easily.  The simplest and least glamorous way of doing this is to stay in your job.  As an alternative, you can build up a cashflow business to couple with your wealth-building business.  The two can be related or not as you see fit.  For example, you could rely on your dog-walking business for cashflow, and build your long term wealth by setting up a marina.  It doesn’t matter WHAT you do, it’s the clear and sensible strategy you use to do it that is the key to your success, coupled with your ability to manage both sides to your wealth coin at the same time.  Property offers an ideal route to this, because the field is so diverse that you can find many ways to create cashflow, and to invest for wealth.  This means that the contacts and skills you build up in one aspect of your business will help you in the other.  In some cases, the two strategies combine.  For example, in classic buy to let you benefit both from the rental cashflow and the equity wealth of the portfolio.

Rod from Axis is a prime example of this strategy with his PIPS course.  He trains people in property and makes money from selling properties to them.  That’s the cashflow side.  On the wealth side, Rod holds a substantial property portfolio that should build up a huge personal wealth pile for him.  You can learn from this two-pronged approach – and what better way than doing one of his courses!

PIPS – Property Investment Profit System, is the name of the course I attended.  Axis runs that to focus on providing a structured overview of property investment.  It’s not about telling you how to do a single strategy, but rather on helping you to improve your knowledge and skills as regards the property market as a whole.  If you’re looking for a course on ‘top tips on student lets’ or ‘how to use leaflets to buy below market value’, then look elsewhere.  This course is about helping you to set sail on the investment ocean with a clear bearing to follow.  It’s almost like a personal mentoring service.  The course goes into some depth on various property strategies, and these are mainly focussed on the classic investment plays for time-poor investors, principally buying new build.  The firm promotes and sells such units, which obviously raises questions about impartiality.  However, the strategy taught is sound in principle, although one much be cautious about equity-based strategies in difficult economic times.  Property, as we should all be aware, can go down in value as well as up!

Rod Thomas has been in property for decades.  He started off back in the 80’s on a part-time basis, but over the years he’s come to realise what’s what.  For him, that meant one thing very clearly – ditch your other businesses and get on with investing in property on a full time basis.  He’s also recognised the financial power of providing training and support services to supplement his income.  Consequently, Rod provides investment property and training through his company, Axis.  This provides the cashflow part of the cashflow/wealth-building balance.  His outfit makes money from training courses, and selling investments to the training customers.

The training day starts, quite sensibly, with a detailed look on your personal property strategy.  Why do you want to do this?  What are your goals?  So many courses forget the why and concentrate only on the how.  Unless you’re dealing with an audience that already knows exactly what they want to do then this is essential first step.  Personally, I’ve seen an audience that has such a clear direction in investment that this stage could be missed out.  So a big thumbs-up on this point!  Rod also gets into detail about how your personality affects your strategy.  Are you a little details man or an overview woman?  Do you feel comfortable taking big risks?  Do you mind travelling a lot?  This is real gold, and I wish more trainers would do this.  Once you’ve got the right strategy, everything else falls into place – you can look up the details of follow your chosen strategy later.  Inferior property trainers please take note!  If I have one criticism of this section, it’s because there’s no formal personality profiling.  In addition, there was a slight lack of appropriate slides.  What goes up on the screen is OK, but he could do with more frequent slide changes and he also needs to use more pictures, graphs, figures etc.  This would make it a lot easier to remember and absorb the information you’re being given.

Once Rod has gone through the basics of how to select a strategy that works for you, he starts working through the principles of finding the right markets to invest in.  Again, this is something that far too many trainers forget.  I get so sick of ‘pub bore’ investors, who are rich but never made a well-informed decision in their lives.  Pub bores get rich by being greedy and lucky.  If you try and copy their strategy, the chances are you’ll come unstuck, simply because they don’t follow a well thought out and reliable strategy.  They succeed because of opportunism and benign economic times, not because of accurate analysis  Their success is 80% luck and 20% skill.  Where Rod separates himself from the pub bores and gets this element right is he takes the cold hard view of which markets to go for.  His accountancy background gives him the skills he needs and shows you how to look at markets in a rational manner.  The principle he follows by doing this is sound, but I have to say I disagree with him on his conclusions – for example Romania is a place I have less confidence in than I used to, and I wouldn’t touch most UK new build with a dirty stick.  I also don’t think Rod goes into enough detail about analysing important economic factors such as interest rates.  However, the whole approach is right in that it’s top-down, and you can build up your knowledge base and analysis skills later.  Most trainers don’t even bother to address fundamentals, so bully for Rod – even if I don’t agree with his conclusions!

One of the main things that distinguishes this course is the range of speakers.  So many property training courses consist only of the named speaker droning on all day.  No matter how successful and clever they may be, only the very best trainers can hold your attention all day without you wanting to slit your wrists.  For example, Rod brings along a very experienced auctioneer-cum-developer.  This adds spice to the day and a valuable new skillset to learn from.  As usual, I learned something genuinely useful during this course, and this time it was from this auctioneer.  According to him, you can buy houses that have been broken up into self-contained flats and then sell them off as new leases.  This is a really cool way to make money, so let me explain.  You get a house that’s been split into two flats.  You get it for a 200 grand, then sell the leases in the auction next month for 125 grand each.  Bob’s your uncle, 50 grand in your back burner, less some legal and auction fees.  ‘Ah-ha!’ I hear you say.  Won’t po-faced bureaucrats ruin your fun?  Well, apparently not. If the property is an established building conversion, you don’t have to bother with the horrendous ‘Part E’ building regulations, nor with getting planning permission.  These necessary-but-horrible Part E regulations are about noise transmission in new build and conversions.  They are messy and expensive to comply with, but crucially it appears that if the property has a history of use as separate flats then you don’t need planning or building regulations approval to separate off the lease.  Easy money!

Something you need to be aware of before booking is that Rod’s firm Axis sells properties to delegates.  These deals are openly promoted during the course.  There are pros and cons to this.  You could argue that it’s nice to be offered practical examples of deals you might like to invest in.  However, others may argue that it’s a conflict of interest for trainers to be advising and selling at the same time.  You need to bear in mind that all good trainers will be investing somewhere, and they’ll all have a view on what’s hot and what’s not.  Human nature being what it is, they’re not going to stand up and say ‘Well I’ve been investing in Bulgistan but I made a right mess of my analysis and I think the market’s going to tank badly and lose me a packet.  Wish I’d never bothered.’  There is, therefore, a good argument for saying that at least if someone’s overtly selling units, any bias they have is out in the open.  You can therefore be an intelligent and informed sceptic, without it being necessary to deteriorate into cynicism.

Don’t worry too much about what Rod might say about individual markets, as this will always be a matter of heated and often drunken debate amongst economists and investors.  What matters is the process of developing an investment model.  Rod has a really good academic understanding of this process.  You can forget your gold jewellery and your big flashy cars from Mr. Considerably-Richer-Than-Yow.  He isn’t a pub bore, he isn’t flashy – he’s the real deal.  This course will go through the principles of finding markets with great growth potential, picking out the risky ones you don’t want to be in, and then working out exactly what to buy within these remaining markets.  This is a bog-standard, bread and butter, classic put-your-money-in-and-leave-it strategy.  If you’re a doctor and you want to invest your surplus wage money, or you’ve got some equity you can draw out of your house, this will give you a sensible way of investing for long-term growth.  Rod will also help you find many other sources of funding that you might have overlooked.  But remember, this is a managed-risk strategy, not a risk-free strategy.  You choose emerging markets (Rod picks out Romania and Brazil as examples) work out what leverage you can obtain, and pick investments that can use the bank’s money rather than your own wherever possible.  This gives you the power to borrow money at say 6% and invest in a property that might grow at 15% per annum or even more.  Therefore, you’ll be making 9% margin per annum on the whole value of the property, assuming that you’ve borrowed the deposit from somewhere on similar rates.  That’s a huge return.  In fact, it’s comparable to the profit you’d get from managing a headachy UK student let or bedsit.  It’s fantastic money, but let’s be cautious.  Firstly, whilst it’s to an extent predictable, it’s not reliable.  Unlike buy to let, you can’t do much to mitigate some of the risks.  Recessions, terrorist attacks, and a host of other factors will all knock out your investment, at least in the short to medium term.  You need to rely on skillfu management of your investments to manage your risk.  The second point to make is that you really mustn’t try and eat your equity.  Do NOT rely on this strategy for cashflow – this is for wealth building.  If you can’t afford to tie up cash, don’t do it.  It’s too hard to liquidate your investment to use it to generate day-to-day cash, and you’ll end up going into crappy deals or selling out too early if you’re trying to use this approach to put food on your table.  You will also be hugely vulnerable to economic shocks.  Don’t write off a strategy just because it’s cashflow negative.  Be like a property trainer, and build a cashflow approach alongside your wealth approach.

Another guest speaker was a graduate from one of the old PIPS courses called Barry.  He’s a relatively new investor having started about 4 years ago.  He’s able to give you the real-life story of someone who’s got started quite recently and has built up a decent, multi-million pound portfolio.  Not quite a rags to riches story, but a not-worth-anything to decent-investment-business story.  Needless to say, he’s not a flash Harry with spiv suits and bling.  He’s an ordinary looking chap with a sensible strategy to build up towards a £100m portfolio.  He might not make it.  The looming recession might slap him down.  He might find he can’t manage the portfolio past a certain size, or he might just get bored and stop.  But he might well do it, and if he can, you can too.  If you educate yourself, choose the right time to enter each market, and fix up a strategy that suits your personality then you’ll be able to succeed.

The course is held in a training centre in Southwark.  The room was pretty cramped, with boardroom-style seating.  The start was a bit disorganised, with a late kick-off and some catering cock-ups, but that’s really not enough to spoil the experience.  On the plus side, the slides are all downloadable so you can sit at home and go through what’s been covered.  No-one seemed too grumpy about the minor cock-ups.  There’s fairly easy parking quite close to the venue, and it’s great for trains as it’s very near London bridge.  City Airport is the obvious choice if you choose to fly in.

The delegates range from total newbies to reasonably experienced investors, so it was a challenge for Rod to keep the level right for everyone.  It seemed like his balance was about right as everyone seemed engaged and focussed.  There were several couples on the course, and it seemed to work well for them.

This is a course that will help newer investors to create and plan the funding for their property strategy before they set out.  Just remember you will need to sustain the cashflow for your lifestyle if you follow the strategies they focus on.  The course is also going to be useful for people who feel they haven’t got the clarity of direction they need.  If you’re supremely confident that you’re on the right track, maybe this course isn’t for you, but if not then take a look.  The strategies that are covered in most detail are not the high-cashflow, secure UK strategies that some people might like to follow, so you should expect to do some additional research and training to balance out your knowledge.  Don’t worry, the day will still offer you a great deal of valuable learning.  The strategies taught in detail are part of the core understanding that all property investors need to get their heads round.  Would I follow these core strategies?  Well, I wouldn’t buy UK new build or conversion stock in the current economic climate, because I think the market’s too risky at present.  I’d only want to take on nice, sensible, cashflow deals.  Similarly, I don’t want to gear into low-yield commercial, which I feel leaves me exposed to downside risk.  What about overseas stuff?  A very cautious yes.  I’d look for stuff with a local appeal that doesn’t rely on overseas demand.  In a post-Kyoto, post-peak-oil, post-credit-crunch world, you shouldn’t really be relying on international tourism and holiday property demand to prop up the price of your investment portfolio.  I’d also be very cautious about timing.  Maybe it would be better to wait six months for a better look at how the US economy fares.  That six months is just about enough time to do some really detailed research into your chosen markets.  There’s a whole heap of jolly sensible overseas stuff that will simply house the growing population or swelling middle class of foreign cities, and isn’t strongly affected by the flighty funds of the herd investors.  Overall, whilst I think that this course offers some good quality tuition on some very credible strategies, I think that the content is a bit too closely focussed around the strategies that Axis sells properties for.  In practice, if you want to be independent in property, you would be well advised to add in some cashflow properties and strategies, such as student lets, if you want to replace your existing income.  But let’s face it; you can’t fit everything into one day, can you?  There’s nothing fundamentally wrong with the Axis approach, but do recognise that it’s primarily a wealth-building, not a cashflow investment strategy.

In summary, therefore, this course is a very smart academic grounding in investment – but do think carefully about both the deals and strategies that are being promoted.  I’m not saying they’re bad, but they may not be right for you at this time – as Rod will quite openly state on the course.  Be a sceptical delegate, and you’ll gain the most, both by improving your critical reasoning and by learning the important strategies taught.  Perhaps the best lesson you can learn from watching the Axis sales pitch is how important it is for you to find your own source of cashflow and investment capital.  This will give you the freedom to build your long term wealth without raiding your portfolio every time you need to eat.  They teach this point both academically, and by their own example.  If you learn this cashflow lesson the easy way rather than the hard way like I did, you don’t need to end up being all bitter and resentful of property trainers!.

After the course, Rod and I discussed the approach he takes.  I suggested to him that the strategies he concentrates on may not be the best for investors in the current market, and he explained his reasoning.  It’s hard as a reviewer to get a flavour of the delegates on a course, and I have to rely on the course organisers to explain the demographic they’re aiming at.  Rod talked about how the majority of his delegate are time-poor investors, who are looking for a structured investment plan that fits around their daily lives.  That’s all very well, but my personal opinion is that we are entering a very difficult period economically for a strategy based on buying lots of property with borrowed money and waiting for it to rise in value.  I think we could see large, sustained and possibly unpredictable falls in prices across many markets.  However, that’s not to say that this method of investment doesn’t work.  You just need to apply it cautiously and carefully, and check out the risks in each individual market you’re investing in.  You need to be very clear whether you’re investing for cashflow or for wealth.  Then you need to choose each of your strategies carefully to fit your skill set, means and aims.  Finally, you need to make sure that they work well together, both financially and practically.  As a footnote, it is possible for both your approaches to wealth to be wrapped up in one strategy.  For example, you may let out HMOs for cashflow, and hold them for capital growth.  But these are two separate objectives and you need to analyse them separately.

The course is marketed at nearly £1,997 for 2 seats.  This is high compared to many other courses on the market, which typically sell for around £500 delegate per day.  There is a wealth of support material and consultancy support available as part of the package, but comparable extras are also offered on some cheaper courses.  However, what makes this course slightly different is the range of extra materials and tuition, that is available from a single course.  It’s very hard to effect lasting change from a one-day course, and the follow-up package is a crucial benefit if you’re looking to achieve enduring benefits to your investment life.  What sets this course apart is the quantity of materials available.   For example, there’s a substantial audio course – longer and more comprehensive than anything I’ve come across with other courses.  You will get a full audio recording from a previous course, so you can go over the material again and again.  You can listen in full, or focus on the stuff that’s relevant to you right now.  You also get two books, which set out the principles taught in the course in a written format that will work for many people as a reference tool.  They’re a lot better written than some of the other books I’ve come across!  It’s also worth noting that the follow up training and mentoring is carried out by Rod personally.  For many people, it’s a big advantage to get the follow-up training from the course lecturer.   Rod is developing a DVD version of the course, which was filmed whilst I was there.  The price for this is yet to be announced.  To book a place on this course, check out http://property-investment-profits.co.uk/masterclass/ or call him on 01926 621682.