Don’t Quit Your Job for a Flip: The Cash-Flow First Property Strategy

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Oh, cool. Right. So I'll stop talking about washing my hair. Um, so today we're going to be introducing a few different strategies. Um, this was based upon a conversation I had at a recent networking event. So I've attended a couple of networking events where I've spoken about the multiple strategies that I do. And I came across somebody who's doing flips, which is awesome, but they're using flips to leave the job. And I was like, that's You don't do that. So I wanted to just introduce a couple of strategies to go, this is what you need to do, and talk about sort of my background and where I ended up doing flips.

So quick question for you, Heidi.

Yeah.

Why wouldn't you do flips to replace your job? Because obviously you're getting chunky cash. Is it because it's very sporadic and until you've done your first deal and you've got made a profit of £50,000?

Yeah.

So one, you haven't got income to cover your bills.

Yeah. Chunky money is great, but sometimes it takes a lot longer than you anticipate, and sometimes you don't get the money you anticipate either. So if you are doing a flip, let's say for example, everything's gone absolutely perfectly and you get £40,000 after 4 months. It, it's unrealistic, but let's say for example you do, then you can live off that money, which is great. But then you've got to then keep doing those flips back to back, hoping that they're perfect, then live off that money. So once that money depletes, you need something in the pipeline to come back in so you're not basically shitting yourself. So in regards to where I was speaking to this person, I said, right, you need some cash flow strategies. And it was like, well, what, what are they? And I was like, something you can rely on monthly to pay your bills. So when I first started in property, I had one buy-to-let, couple of hundred quid a month until the tenant trashed the house, and then I had nothing. And then I started on rent-to-rent HMOs to bring that cash flow to leave my job. Once I was then secure in my sort of finances, it paid the bills, it paid my wages. That chunky money is really helpful to, one, do what you want with, but two, you don't have to rely on it.

So I was trying to explain to them that You probably pay that chunk of money as your deposit for your next project.

Exactly. And obviously when you're stacking a deal as well, people don't factor in that you might have to pay stamp duty, solicitors, legals, and they'll go, oh, I've got £40 grand profit. And I'm like, have you though? Because for the next one, you'll need to take that into account. So yeah, I just thought I'd come and talk about some of the strategies and what they're useful for basically, because I've done a lot of them, but I don't use some to rely on, if that makes sense.

Yeah. One's, one's, one's your holiday fund and one's your—

Yeah. Explain that in that case. So I, as me, I have two cash flowing strategies. So I have an HMO business here that is rent to rent and management. And I have a serviced accommodation business here again, which is owned rent to rent and management. So that money coming in pays for mine and my husband's salary, pays for overheads, keeps the business running. That's our day to day. If that stops, we don't have money coming in. So that's your cash flow coming in repeatedly every month. Some people go, oh, it's passive if you give it to a letting agent, that sort of thing. But we, we do it ourselves. Deal packaging again is really good. You can either get £3,000 for selling a deal. 5 grand for selling a deal. Normally it's 3 grand. And if you do an overage strategy, which not many people have heard of, that is you agreeing to sell a property at this amount, but actually selling it for this amount, and you get it in the middle. So you might say to an owner, I'll sell your property for 120 grand. Anything I get above is my deal sourcing fee. Complicated paperwork, but you could earn £10 grand, £16 grand, whatever. That is also good, but it's not money I would rely on to pay my bills. No. Then you've got your flips. So again, flips are really good. They could take 4 months, it could take 12 months, 18 months. Things could go wrong and you get that money coming in, but I wouldn't leave my job for that.

Makes sense.

Yeah. So I think for anyone who wants to leave the job and get into property full-time, you absolutely have to have a cash flowing strategy where you've got that money coming in. Then you can do flips, title splitting, HMO refurbishments, other strategies, assisted sales, to basically get that chunky money in rather than relying on it.

Yeah, and obviously It obviously, like, so positive cash flow is where you take your income minus all your expenses, and then whatever's left is your monthly cash flow.

So, exactly.

A lot of people don't always take into account all the hidden costs.

Well, no, and also—

Employers' period, management fees, council tax, insurance, and all the rest of it.

Repairs.

You've got to account for all your expenses.

Yeah, and I've had mentees as well, so I, I, I could let— I could have left my job on 4 rent-to-rent HMOs, but I didn't leave my job till I got 8, because— and I left after, I think, 2 and a half years of building this up, because one, you've got 18 months to do your first year accounts, which people don't realise. Also, you need to factor in your overheads. So when those rent-to-rents might replace your salary, But does it replace paying for your accountant? Does it replace any software you need? Any equipment you need? Insurances? Anything like that? People don't take that into account. So basically when I left my job as well, I got my 4 rent to rents to replace my salary. Then I got some more to replace the overheads. Then I got some more to get me a virtual assistant. Then I left my job. Once I knew I'd gone through a couple of cycles of a business year. And you, if you're in serviced accommodation, for example, people don't, they go, oh yeah, I'll get 100% occupancy. Well, you might get 30% one month, then you get 70, then you get 100. I wouldn't leave until you, again, you've done 1 to 2 full years, unless your expenditure's very, very low and you can afford it. You need to see the peaks and troughs of winter, summer, spring, et cetera. In-serviced accommodation to understand what your true occupancy is before you leave your job as well.

Yeah.

Yeah.

Because at the end of the day, you've still got your bills to pay.

Exactly. And then people get a little bit worried that they go, oh, bloody hell, now I can't afford it. And then you'll always get, you need like a rainy day fund as well. So again, before I left my job, I had personal savings. I had a little rainy day fund in the business for if anything went wrong. I had my cash flow coming in and then I did deal packaging as well. So when I, before I left my job, I paid up most of my debts down. So I had a couple of credit cards that I put property training on, that sort of thing. I made sure all of that was done first. So when I left my job, if shit hit the fan, I was safe.

Yeah. How did you find doing property and keeping your job as well? Because obviously Time-wise, yeah, sort of managing your time, if you like, so that, because obviously if you're employed full-time, that cuts into your day a lot.

So I actually do, yeah, I did a little bit of both, to be fair. So in, in respect of, I could, I'll do another time management live another day because that's, that's my true passion. But basically I came up with a plan of compartmentalizing my life. When I started business, I had a 1-year-old and a 4-year-old. And then I basically said, right, I've got, I've got a 9 to 5 and I've got a business and I've got 2 young children. And annoyingly, and you have to do this at the start, work evenings, lunch breaks, weekends to then pivot over that time as well. So when you're juggling everything, you do have to make some sacrifices and then you start clawing it back. So now I do everything around the school run. I don't work weekends unless I really have to, something goes wrong. So again, it's, it's juggling it, but making sure you've got the balance. And I'll, I'll admit I fucked up for a few years. I really burnt out, I think about 6 times. I either didn't do things with the kids when I should have done, I forgot to look after myself. Um, so, and that's why I've created this plan as well. So I've got balance. So yeah, at first you've got to sacrifice, juggle a little bit, and then I was a little bit naughty as well. So for example, if I needed to do a viewing, I would go in work time. I would have to, I would have two computers on the go if I'm sat in a 3-hour— because I was a manager as well, don't matter now because I've left. Yeah, but if I was sat in a meeting for 3 hours, I'd be doing stuff in the background.

Yeah, multitasking.

Yeah, exactly. And they're like, Heidi, can you answer this online?

Yeah, what was the question? I wasn't paying attention.

Yeah, but we'll, um, we'll schedule in a time management live because again there's loads of tips I can give you on, on multitasking and stuff. But I thought it'd be ful today to talk about the different strategies and that it's okay to do several at once. My, my biggest tip is do one, get it to a great standard, add another one. And then if people didn't know this, the 70-20-10 rule. So 70% of your time on your main strategy, 20 on another one, 10% on another one. And that's effectively doing them all at once. So yeah, definitely get a cash flow strategy in your tool bag or You'll be worried.

Yeah. I can relate to that.

Yeah. Cool. Well, hopefully that was helpful for people and we'll schedule in some more.

We will. So if you're watching this back, thank you very much. Thanks, Heidi.

Thank you.