Private Landlords and Finding Information that is Useful
When it comes to gathering information on the private rented sector or any sector, choose what you read with care says David Lawrenson of www.LettingFocus.com
Back when I was working for a bank I acquired a lot of bank shares. So did my partner who worked for another bank. They were worth quite a bit back in 2007.
And then, along came the credit crunch – and our shares tanked.
They are still worth maybe only 10% of what they were worth in 2008 and less than a third of the value of our own money that we put into them by way of share save options and profit share discounts.
Well, that’s life I guess – and there is a lesson in there about diversifying holdings in shares. (I also tell this story of the dangers of shares in my book, “Successful Property Letting”)
Of course, I know that one should have a balanced portfolio of shares, but I, like many others, thought that bank shares were as safe as houses.
Lack of Knowledge
Looking back on those days of 2006-7, it is pretty clear now that most people in government, probably all those in the FSA and probably quite a lot of senior executives in the banks too, did not know what was coming either. Hardly any of them understood or had a clue what the investment bank parts of the banks (what Vince Cable called the “casino sections”) were up to.
In the media, there were a few warnings in the FT, the odd insightful article, some murmurings that all might not have been quite right in the financial world, but that was about it.
So, what’s all this got to do with residential property and buying and managing property to let?
Well, actually rather a lot.
You see, very occasionally, I read all the broadsheet press to see what they are saying about the private rented sector and buy to let.
That Which Is Not Reported Matters a Lot
I always find that what they say in the mainstream press about the private rented sector is never completely wrong. True, it’s often biased and does not give a balanced point of view. But it is rarely factually wrong.
But what is interesting is what they don’t tell you.
Often journalists don’t report on some things, either because they don’t understand it or, more likely because they are too constrained by “word count” – and explaining the finer details just takes up too many words.
The fact is that they leave out quite a lot of the stuff that’s really important.
It’s for these reasons that I tell people who come to my landlord events not to read the mainstream press to find out about the private rented sector and how to make a success if it.
There are some two excellent online resources I refer them too and one great published magazine – and of course I refer them to this blog and my book.
But I don’t discount all the papers. Every Saturday morning I get the “Weekend FT.” I have got it for years.
I like it because it has lots of different views on the outlook for the economy and for shares – and even the odd good article on buy to let – sometimes, when “trade go-tos” Ray or Melanie are not contactable they will even quote me!
Seek Out the Wise Men and Women
I still buy shares. And I use the FT and the “Investors Chronicle” to give me ideas of which ones to buy – and I build a widely balanced portfolio. I have learnt my lesson! And I always avoid hyped sectors. (At the moment I think the likes of Unilever, is the classic hyped stock. Back in 2008-10 it was any mining stock.)
But I never read any article which has been written by or extensively quotes a fund manager, stock broker, government Minister or anyone who has a “vested interest” in or who is “too close to the wood.” Equally, any piece on the housing market written by a mortgage lender or estate agency chain gets ignored too.
What I look for is articles that give one a different take on what’s happening in the economy, especially those written by “practitioner-outsiders” who have an independent point of view. (One reason there are few such pieces is because the people who are really in the know are often media shy, don’t like speaking to journalists, are too modest or too difficult or are just too busy being successful at what they do to want to be quoted by journalists. Richard Bowser and Tom Entwistle are two knowledgeable guys on the PRS who are rarely quoted in the mainstream press.)
Back in 2007, in the FT, there were few such articles warning of the coming crisis. These pieces were not abundant, but they were there. Sadly, these kinds of pieces rarely made the rest of the mainstream press’s pages. It’s the same with good stuff on the private rented sector.
So, be careful what you read.
Long Term Tenancies – Please Tell Ken and Boris!
Finally, from my Tweets this week:
Some in the London Mayor’s office and London local government keep insisting private landlords offer longer term tenancies. If they understood the PRS better they’d know that most mortgage lenders don’t allow their borrowers to offer fixed term ASTs longer than 12 months.
There will be no blog post next week.
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