Keep it simple CASH is king!

by Dan Trivedi

3 months ago

Keep it simple CASH is king!

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Keep it simple CASH is king!

The very things I love about property investing are often the things others can’t stand!

For me, buying and holding or buying and selling go hand in hand. I would never buy a property I couldn’t sell for a profit and I would never buy one I couldn’t rent with a strong ROI! This helps safe guard against changes in the market. I’ve said it more times than I can remember buy for the long term, but take short term wins.

Everyone has heard the phase, turnover is vanity and profit is sanity? Well in property numbers and value is vanity.

You’ve all been there, at the networking event and there are 2/3 people talking “I’ve got 100 flats or my portfolio is £8million!” This is Pure vanity!

People often get confused around Equity. How real is Equity? What does equity actually do for you? How do you spend equity?

Don’t get me wrong, having equity is a very good thing, and more equity is always better than less. Parking cash, paying down debt not only can improve cash flow, and de-risk, but does give a sense of comfort.

For example, having a portfolio with zero debt will always mean you don’t have to answer to a bank and could be safe guarded against things like interest rate spikes. This is a personal goal for me, and to eventually have a smaller, zero debt portfolio, but I’m not ready for retirement yet.

However don’t get confused! Equity doesn’t always equal security!

CASH is KING!

We’ve all read the books, seen the you tube videos and watched the links which pop up on Facebook about how inflation eats away the value of your cash, and you are fool to leave cash in the bank etc etc.

Let me tell you first hand, that in some ways this is correct, but on other it’s false! For me, having cash is KING! In fact having cash is far beyond king, it’s closer to the emperor of the galaxy!

  • If lenders come calling, or Developments loans are slow…. CASH wins!
  • If a deal comes your way, and you can show proof of funds…. CASH wins!
  • If other peoples deals hits the rocks, and they ask for your help….. CASH wins
  • If the banks stop lending, the financial world collapses and 90% of your competitors can’t buy…… CASH wins!

I can’t tell you how many people say they have £50/£100/£300/£500k and they have to get it into a deal. When a deal doesn’t come long, they look at all sorts of schemes like forex, crypto, airport spaces etc etc.

I also CAN tell you I don’t know how many times CASH has saved the day! Some of the best deals I’ve been able to buy, is because I could show the cash! So although I earn pretty much next to nothing in interest while my cash is parked, if I added up the deals it’s allowed me to buy it would show how strong holding cash can be.

Keeping it really simple is the under lining fundamental to this point.

People look at me in disbelief when I sell. “Why would you sell that?” As they look at me as if I’ve gone mad.

There are times where complex techniques, are the best way to win and take forward deals (crikey I’ve built a business off the back of it), but the end result is always a simple project.

Never feel rushed in property!

Something I tell every one I work with is if you feel rushed, you should walk away, because one thing in property is certain, and that’s there will always be another deal. Don’t confuse the felling of being rushed, with that feeling the deal is so good, that you have to get it exchanged in 7 days and you are literally transferring the funds to the solicitor whilst your signing the client care letter.

I have a deal like this at the moment, and it’s so good, I lay in bed at night looking at it on google earth (I know, I know I’m a super geek) I can’t tell you much about it at the moment, but the point is this deal is only happening because of cash.

So if you’re wondering, should I sell, should I refinance or you have a cash pot, but feel you have to do something with it, just remember CASH is king.

Contact Dan Trevidi

Dan is the CEO of Grace Charles property company Ltd


Comments

Mark Alexander

3 months ago

Hi Dan

Whilst I follow the logic of low gearing / no debt I am still an advocate for having a balance of high gearing and strong liquidity.

I documented my strategy in a series of 16 linked articles back in 2011 (link to the starting point below) and would barely change a thing now, even with all the tax and other changes since then. The only difference is that tax planning and appropriate business structuring is more important now than ever before.

https://www.property118.com/the-roots-of-my-property-investment-strategy/

david porter

3 months ago

The best deals are opportunistic.
When an agent calls you up because a chain is falling apart, can you help?
You can go in and make a cash offer so as to repair the chain. You can complete in two weeks if the vendors conveyancing team are on the ball.
The vendor is advised by a lawyer and an estate agent and so they either like the price or do not?
Or a tenant has decided to leave and become a ftb, what price will he offer?
He does not even have to move home. No hassle, no chain.
When you have a plan you sometimes do a deal because you are bored.
That is why I worry about buying off plan. Buying off plan is usually a result of boredom.


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