The 3+1 Plan. Brett Alegre-Wood
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you come to create your own 3+1 Plan, all you have to put up is the amount which a lender will not give you. It could be 10, 20, 30 or 40% depending on the market conditions, but a lender will always put up over half.
This is an extraordinary advantage. If you buy £10,000 of shares, you pay £10,000. If you put £10,000 into a savings account, you put in the whole amount. If you put £10,000 into a new company, again you put in the whole amount. If you put £10,000 into a pension plan, the government will add to it, but then grab it back at the end and tax you on your annuity.
What this power of leverage means is that you can buy, say, a £200,000 property for anything from £20,000 upwards, depending on the mortgage market at the time. The lender granting you a mortgage will pay the rest.
And, you know, there is another extraordinary benefit to you. When you decide to sell one day, the Lender doesn’t want a share of your profit. You take all the profit; he just wants his loan back.
Successful investment is all about leveraging, and only property investment has that beautiful bonus.
Take an easy example. You buy a £200,000 property with a 70% mortgage. You therefore put up £60,000. Ten years down the road it doubles in value to £400,000. You have all the equity, so you can receive all £400,000 from a sale. You just pay off the loan of £140,000, and you net £260,000.
Renters have paid your interest costs to the lender and you have over four times your investment. 400% return: where else could you get that amount of profit?
Are you convinced? I hope so, but some of you may still have some concerns, because changing your future financial plans into property and away from pension plans or the stock market is a serious decision.
Before you read the rest of this book, before you begin to create The 3+1 Plan for yourself, I want to try to answer any concerns. I don’t want you to start the book with doubts, I want you to be clear, here and now, why I am suggesting that you will find your answer in my plan.
Let’s take the points one by one.
1.I don’t like being in debt. Absolutely right, but this isn’t bad debt, this is good debt. This is not a consumer debt that takes money from you; this is a debt that is paid by somebody else, in your case a tenant. This is a debt that is covered by income, not a debt that takes money from your bank balance.
2.I wouldn’t know what to buy. You can learn that in a later chapter in The 3+1 Plan and how I can help.
3.If I buy at the wrong time, my property might crash. Of course it can, but it doesn’t matter. You are making a long-term investment and the market will catch up at some point. You are not putting your money in for a quick profit; you are in for the long term.
4.I don’t know the people to look after my investment. No, but I do. Lawyers, accountants, property managers, mortgage brokers, property managers and bankers are part of my service. Even if you don’t use a service like mine, the high street is filled with people who can manage your investments for you.
5.I don’t know if I have enough money to buy another property. You may well have it, but don’t realise it. Remember that you only have to put up a small part of the total price. Remember, also, that you are planning to have your annual mortgage and running costs paid for by your rental income.
Once you start reading The 3+1 Plan, you will see how easily it can be done and how well it can be organised, so that you do not have anymore worries.
The rise of the buy to let market in the UK has made a property portfolio much easier to control and, although it has only been going here for a decade, it has already produced thousands of millionaires.
This confirms the remark made to me by the famous Robert Ki-yosaki, of ‘Rich Dad, Poor Dad’ fame, that the rich may make their money from shares or businesses, but, whatever its source, they hold their wealth in property.
Is it really easy to build up a property portfolio? The truth is ‘No’ at the beginning, but ‘Yes’ once you understand this market. This is why I have written The 3+1 Plan.
Everything in this book is about making it easy for you to start growing your property portfolio, without the day-to-day hassles of being a full-time landlord. The 3+1 Plan is a very clear concept and I support that with what I call My Set and Forget Philosophy. This gives you the attitude and strategies to ensure that you can live your life to the full along the way, secure in the knowledge that your future (and present) is in safe hands.
This book will show you everything you need to know, so you too, can achieve The 3+1 Plan, while being a Set and Forget Property Investor. Then, all you will need to do is decide how you would most like to enjoy your time.
You will be guided through my processes, procedures, structures and strategies for developing and managing a property portfolio. I will do this by coaching you with all my knowledge and experience. I’ve never lost money on a property deal, but I’ve had some hair-raising experiences - that’s where I often learned the most!
I am going to tell you a load of different stories, but I am also going to give you the basics of building a portfolio; real strategies, time-proven, not just the same old stuff on how to find the right property.
While the property is definitely important, the experienced investor doesn’t ignore the strategy and structure that they use to purchase and hold the property.
One thing I ask from you. Be clear from the beginning as to your aims and objectives, so that your portfolio is created to achieve these. You should also understand that I am not talking about buying and selling for a quick return.
The 3+1 Plan is about creating a portfolio that will enable you to have enough money, ten or more years down the line, to answer those original three questions which we asked ourselves at the beginning of the introduction. Then it will be time to fulfil all your dreams.
About the author
BRETT ALEGRE-WOOD
I thought that I should add a brief note on myself, so that you had some idea about me before you begin to read The 3+1 Plan, and hopefully, before we meet to discuss your own 3+1 Personal Property Plan.
I grew up in Australia, spending most of my early life in Melbourne, until my father - who was in the army - got posted to Brisbane. It was there that I spent most of my school years, until I graduated from high school and also chose a career in the military. I spent a year in the army full-time, and then enrolled in university to study international business while still in the army part-time.
It was only after leaving the army that I moved into the lucrative field of management consultancy. At a young age, I had a chance to work for many of Australia’s largest companies as a consultant and I very quickly learned that a high-profile job had very little to do with financial security!
My interest in property first developed in 1994, when I trained as an estate agent with a local entrepreneur. As an estate agent I realised that although there was an abundance of people interested in purchasing property, deals would often fall through due to lack of finance.
It didn’t take long before I met Peter James - one of my mentors - who was also an expert in mortgages and insurance. Peter runs one of Australia’s largest non-bank lenders. He inspired me to become a mortgage broker, and soon after, I had a successful mortgage business and was training mortgage brokers across Australia. This eventually led to being accepted into the State Committee for the Mortgage Finance Association of Australia (similar to the UK’s Council of Mortgage Lenders).
During this time, I began running seminars on ‘How to Build Wealth through Property’. I noted that the majority of people attending my seminars were there for a similar reason: they had also come to the realisation that they couldn’t