Episode 26: How property investment can change your life – with Rob Dix of The Property Hub

Episode 26: How property investment can change your life - with Rob Dix of The Property Hub

Jeremy Cline
If the number of TV shows about property are to be believed, property investment can change your life. But is that right? Can property be used to help you find a better, more fulfilling career, or even help you escape a career completely? And what is property investment anyway? Listen to this episode to find out the answers to all these questions. I'm Jeremy Cline and this is Change Work Life.

Hello and welcome to the Change Work Life podcast - the show that's all about beating those Sunday evening blues and enjoying Mondays again. I'm absolutely delighted to have Rob Dix on the show this week. I've been following Rob for a good few years now, listening to the podcasts he does with his business partner Rob Bence and reading his books. Rob is the co-founder of the Property Hub with Rob Bence which provides a huge amount of free content about all things property related. He's also the reason I first became interested in the whole idea of property investment, and so I had to have him on the podcast to talk about what property investment is, what it can do for you, and whether it can change your life. Here's the interview with Rob Dix. Hi Rob, welcome to the show.

Rob Dix
Thank you for having me. Great to be here.

Jeremy Cline
It's an absolute pleasure. Can you start by telling us a bit about who you are what you do?

Rob Dix
I can have a go! I co-founded a company called Property Hub. We help investors invest in property in two different ways. We offer services, so help people build the portfolios and manage their properties and provide tax advice - but we also have lots of free education. So the whole thing grew out of a podcast that we've been doing for nearly seven years now, scarily. But we've also got a magazine and various books and an online community, all of which is either free or very cheap. So whether people want to come to us to actually help manage their portfolios, or for just pointers about how to do it themselves - we're there to help.

Jeremy Cline
When did you discover that property investment was a thing? And how did you get into it in the first place?

Rob Dix
It's a really good question. It happened by accident, really in that I was kind of in that situation where I'd already bought my own home and then I was in a situation where I had some money saved up and was thinking well, what do you do with this? And being British, the typical answer - almost the default answer, I think - is invest in property. But I didn't know anything about it at all. But I started doing a bit of research and got really, really obsessed with reading online forums and all the information I could find. And I often have these little obsessions that stop after about six months or so - I'll get to a point where I've learned what I want to learn and then I get bored and move on to the next thing, and with property that never happened. So I did all that research, I bought my first investment property for myself and then - whereas I would have thought that would be the end of it - I just kind of carried on and then got drawn deeper and deeper into it.

Jeremy Cline
And how did that then evolve into what you've got now with the Property Hub and the lettings business and the investment business and all that stuff?

Rob Dix
Well, it started when I was running my own PR company, and that was in the music industry, and this was probably about eight, nine years ago. And the music industry at the time was clearly not the place to be anymore. In that YouTube had just started, MySpace was coming out, people were stopping buying CDs and starting to stream things - and so all the perks were going away and the budgets were getting tighter and tighter. So I knew that I didn't want to do that anymore, but I didn't know what I did want to do. So my wife and I - my wife was in a similar situation - we decided to go and live in New York for six months, because it's her favourite place in the world. We thought well, let's go and have a little break and do that and then come back and decide what we want to do. And while I was there, I started blogging about property in a very, very small way - really just to explore my own thoughts because I find that I understand things better when I write them down. So I was really just writing for me, and also using it as an excuse to meet some people as well, because I thought if I contacted them and said it was for a blog or a podcast or something they'd probably talk to me, whereas otherwise they'd be like, 'Who the hell is this random guy.' So that's what I started doing. So I started the blog, started a podcast off the back of that just because it kind of seemed interesting, and it was an excuse to meet people. And that started to get traction quite quickly, which I wasn't expecting. And I also in the third, I think, episode of my podcast, interviewed a guy called Rob Bence, who went on to become my co-host of the Property Podcast. And we then went on to do everything else beyond that together as well. So I always give him all the credit for having the vision about what this could become, because I was kind of doing it for fun, not really knowing what would happen. But out of really just starting to blog about something I was interested in without having any grand vision for it, bizarrely it turned into far more than I ever would have expected.

Jeremy Cline
Wow. The reason I wanted to have you on was to talk about essentially how property can change your life, particularly if - I know you've mentioned on the podcast before - a lot of people get into property as a means to sometimes to change careers, sometimes they can use it to get out of a job or even to go and work full time in property. Let's go right back to basics. And I guess first question, when you talk about property investment, what are you talking about?

Rob Dix
Could be talking about lots of different things. The standard form of property investment, the absolute basic buy-to-let model that most people will be familiar with, is buy a property - often using a mortgage but not necessarily - and rent that property out and then get rent coming in, which will hopefully be more than your expenses are on the property so you've got some income coming in every month, and then over time, the value of that property tends to go up, which means you could then sell in the future for a profit, or refinance that property to get some money out. That is the sort of the standard that most people probably are thinking when they hear property investment. But then there are loads of different ways of doing it as well. So flipping property - the whole property ladder thing - buying a property to sell it on again, that is a form of property investment. So is refurbishing property. There's absolutely loads of different ways of approaching it. The one that you choose would really be determined by what it is that you want to get out of investing in property.

Jeremy Cline
Turning on to that - what can property do for you. I mean, I've heard about the possibility that people can go into it full time, or they can use it to change jobs, but realistically, what can people do with it? Can they do that? Or is it just topping up a pension? Or can you give some examples of what you've seen property do for people?

Rob Dix
Yeah. There's a distinction to be made that I don't think often is made between property as a pure investment and property as like a hybrid investment slash part time job or alternative career. So property as a pure investment is all you do is take some money, you buy a property with it or you use it as a deposit on a property, and the rent starts coming in. Unless you've got an enormous amount of money to start with, that's not going to be enough for you to live off instead of your job. So you might have an extra few hundred pounds a month coming in, that might be great. And in 10 or 20 years time when the value of that property has gone up or you've been able to save up your rent to buy other properties, you might be in a position where you can then retire or change careers or do whatever you want to do. But it's not going to happen quickly. You can make money in property quickly - people talk about being able to use property to quit their job in a couple of years or less - and that can happen. But to do that you can't just be doing that very basic type of investing - you need to be doing other things such as flipping property, for example, which is far more full on so you can get lumps of cash coming in, or doing things where you're really earning your money - so like maybe you are finding property for other investors, or maybe you are running like an Airbnb type situation, so you've got a property where guests are coming and going, and that makes more money than a regular property. Using those sort of like more intense hands-on kind of methods, you can get into a position where you can start doing that instead of the job that you're doing within a reasonably short period of time. But - it's hard work. That I would not describe as pure investing, because you're having to put a lot of work in as well. So it wouldn't be a case of do that so you can quit your job and then just go and lie on the beach - it would be quit your job so you could do your property job instead. And for some people, that's what they want, because they really don't like the job they're doing and they'd rather do a property-related job, but it is still a job. If you're approaching it as an investment, it's a far longer timeframe.

Jeremy Cline
How do you decide which strategy is right for you? You've talked about lots of different ways you can approach it. As someone who - maybe you are in a position where you're a bit fed up with your job and you've kind of heard that property's a thing - what's your first step to working out what approach to take?

Rob Dix
The two main variables are, how much money you've got to put in, and what time frame you want to see results in. So as I've already touched on, if you've got a really long time to wait until you get the result that you want and have the financial payoff then you'll be wanting to choose probably a more hands-off kind of approach. If you want to get results quickly, and you don't have much in the way of cash to be putting in, that's going to cut down your options dramatically. That's going to take you down to things that are more job-like than investment-like - so that kind of narrows the pool of options down to things where you're either finding other investors to put money in for you, or you're just having to get one property, flip that to raise the money for the next one, or provide property services like managing property or finding property for other investors. It's going to look more like a job than investment. But the real decision to make is how long can I wait to see some kind of results. If you are in a position where it's like, well, I really don't like my job and I want to do something else, then that means that you're going to have limited options, and you're going to have to put a lot of work in - you're gonna have to learn very quickly. And you're gonna have to be comfortable with a lot of risk as well - because of course, like any kind of career change, it might not work out. And this is a career change with without a lot of structure, without a lot of rules, without anyone really telling you what to do. So you have to be willing to make that jump, believing that you can make it work but have some kind of backup plan or be okay with it perhaps not working.

Jeremy Cline
Some of the things that you mentioned there - getting other people to invest their money or doing management or something like that. If you're just starting out I mean, that sounds kind of very chicken and egg. I mean, how on earth can someone who's just starting out expect anyone else to say, yeah, you can invest my money for me?

Rob Dix
It's a wonderful question. I wouldn't personally give my money to somebody who is just starting out, but believe it or not people do. And it's not something that I really would recommend because to me, I would rather learn my lessons with my own money before risking someone else's. And I'd rather know that I knew how to do something before going to someone and asking them to chip in for it, but I listed it as an option because it is something that people do do. So family is probably the most common. So if you've got a brother or a parent or something like that, who wants to do something with their money but they don't have the time, and they trust you - rightly or wrongly, maybe they shouldn't trust you, but because you're family they do! - then they might put money in. But you do hear about people who've got got colleagues or old friends or things like that who want to put money in because they recognise that property is broadly seen as a good thing in the same way that most people in the UK do and want some exposure to that and you're the person they know who's putting their hand up and saying, I'll go and do it. Like I say, it's not something that I would do, but it is something that people do do.

Jeremy Cline
And the other thing you mentioned about managing a property- how do you market yourself in that area if you've basically had no experience? Do you have to go and work for an estate agent for a year or so?

Rob Dix
Again, it's not something that I would do, but it's something that people do do. If I were doing it, I would probably look to go and get a qualification. Because I think you need to get the knowledge one way or another, so you might as well get it in the form of a structured qualification. And you can then use that qualification as some kind of proof that you know what you're doing. But again, it would be the basis of probably using personal connections to get hold of the first few and then using those to then sort of snowball that into more by kind of going to contacts of those contacts and so on.

Jeremy Cline
If we talk about someone who, let's say they are a bit fed up, and they're thinking, 'Okay, in two years time, I want to quit my job'. From what you're describing it's certainly possible, but it's going to be a lot of hard work. Is this something that someone realistically can do on the side with a day job, so they're kind of minimising the risk - they're kind of getting into a position where they can quit and have sufficient income - but without having that in-between period where you just don't know whether you're going to be able to pay the bills?

Rob Dix
I think it depends on the flexibility of the day job. If you can make it work that way, I think that's a far better way of doing it. The whole kind of, 'I'm going to quit my job and go full time in property' - it's really risky. And I can't say that it doesn't work because people do do it, but also a lot of people fail at doing it as well. So it depends on how much you rate yourself at being able to do that and how okay you are with failure. Doing it on the side is a far better idea if you can do that. If you've got the kind of job where if you're a surgeon and you're operating on people all day, it's probably not gonna be easy for you to sneak off and take a phone call from an estate agent or do anything like that! If you're working 18 hours a day in the city, again - it's probably not going to be something you can do. But if you've got a job with a degree of flexibility, or where you can be taking sneaky phone calls or sending emails and things like that, then doing that during the day and doing any of the hard work that you can do at evenings and weekends is far better, because then yeah, you can be building that up on the side. And in a couple of years time maybe you haven't got enough to replace your full time income, but you've got some money coming in. And more importantly, you've got the confidence to know that you actually know what you're doing. So you can scale that up with the extra time that you have available.

Jeremy Cline
Probably an impossible question. How much do you need to get started?

Rob Dix
It is an impossible question. The answer is more than none. There are people who say that you need no money to get involved in property - but you do, realistically. If you're going to be buying a property, so it's a property that you are either going to rent out or you're going to refurbish, or you're going to do something with it - then I would say the absolute minimum that you need is probably about 20,000 pounds. Reason being is that would be roughly a 25% deposit on a house worth about 60 grand, with enough money left over for legal fees and a bit of contingency. Now that is the absolute bare minimum because that is about as cheap as properties get and you wouldn't necessarily want to own a property that cheap. But if you're looking at the absolute bare minimum, that would probably be it. If you get up towards 50 or 100 grand, far better because then you can be buying a better quality of property or you could be buying more than one property and diversify a bit. If you want to go lower than that, then you're really into the realms of you can't afford to buy your own property, but maybe you can invest a couple of thousand pounds in a business providing some kind of property related service. So then that would be into the territory of, well, I wouldn't really call that investment - that's more starting a business that happens to be property-related. But people do call that property investment.

Jeremy Cline
Okay, so what sort of the business might that be?

Rob Dix
That would be the whole managing property for investors, finding a property for investors, that sort of thing that I've already talked about. So that's very much not an investment, because an investment is you buy something, you derive some kind of benefit from that, and regardless of whether you do anything that money comes in. If you're looking at managing property or finding property for investors or anything like that, then if you stop doing it then the money stops coming in. So that's more like a job. But that falls under the banner of property investment when most people talk about it.

Jeremy Cline
You talked about an absolute minimum purchase price as being about 60,000 pounds. I live in the southeast of England - I doubt you can get a garage for that, let alone property. So where do you find properties you can buy for that amount, and how do you find them?

Rob Dix
Outside the southeast, you could you can find properties that cheap - in probably most of the north, in Scotland, in Wales - there's large parts of the country where you can. Again, I wouldn't necessarily recommend going that cheap because cheaper properties have lots of disadvantages. One of them is that they tend to not have the tenant types who are the easiest to manage, which is a bit difficult - especially if you're in the southeast and your property is elsewhere, that could cause some problems. They also tend to not to grow in value as much as more expensive properties. And even if they did then in percentage terms the growth would still be smaller. And also, the cost of something like a new boiler is the same, regardless of the value of the property - so your expenses are going to be a higher proportion of your income. So there's lots of reasons not to go that cheap. But if you're in a position where you have to go that cheap, then there are large parts of the country where you can find property at that price. And you would find it, you can find it, very simply just by going on Rightmove and searching. You just need to have an area in mind first. That's the challenge for most people. If you're looking at investing in your local area then it's really, really simple. If you go outside your local area - for reasons of price or anything else - then well, that opens up a lot of territory. So it's difficult to know where to actually look - do you look in South Wales or the North East of England? It could be anywhere. So that's where you have to sort of narrow it down based on something, so you can then get your search area gradually down. So you might choose somewhere for a pretty arbitrary reason like it happens to be on a train line - that you can get there directly in under two hours. And then having had that kind of arbitrary criterion, you can then start investigating that area more, getting to know the area better, and then gradually reducing that search radius. And so you speak to people, you learn that one part of town is a lot more popular than another. So you're now down to an area of a town rather than the entire town. Then you speak to people further, and you go and do viewings, and you develop that kind of street by street level, and you might have it down to like a half mile radius. So it's starting from a very broad - could basically be anywhere - and then narrowing it down to till you're down at the point where you really know a small patch very, very well.

Jeremy Cline
That sounds like quite a lot of hard work if it's an area that you don't live in. If the values are such that you can make the figures work, is it better to invest closer to where you live? So you can more easily go and see things? Or is this going further afield the way to do it?

Rob Dix
All else being equal, investing locally would be better, because you're going to have some kind of knowledge of that area already, and you're gonna have probably connections in the area already. And if you are going to be hands on and go and do things there yourself, of course, it's far easier. If you had a property managed, then you might not particularly care. All else being equal, local is better - but things aren't equal generally. And especially the most common situation is somebody in the South East where it's expensive, and where yields are low, wanting to go and get a higher return or find property they can actually afford. In that situation, going further afield is the only way of doing it. I interviewed a lady for one of my books who lived in South London and had her whole portfolio up in Barrow-in-Furness in the North West, which is about as North West as you can go before you hit Scotland. And so she would go and do a four hour drive each way, every week, to go and manage her portfolio and look for acquisitions and things like that. And she did it for a period of time until she got to a point where she had people locally who she trusted to do things for her. You probably wouldn't choose to do that if you have an option, but she for whatever reason felt like that was the place for her and she was determined to make it work.

Jeremy Cline
There's quite a lot in the press about property investment. I mean, there's lots on TV, there's all sorts - but I get the impression that property's had a bit of a negative press recently. There's been tax changes, we have so far avoided a government which might impose rent controls or right to buy for private lets and all that sort of thing. Looking at the press, it feels like the bulls are closing in a bit on property investment, and some people might be thinking 'What's going to happen next? Anything for a quiet life'. What's your take on all that sort of stuff?

Rob Dix
I think that there has been a lot of that. And I think the direction of travel is only one way. I think it's going to continue to get more difficult from a legislation point of view particularly. Laws aren't going to get taken away, they're only going to get added. And so I think that there will be more security for tenants and things like that, which does make it more challenging, but I don't necessarily see that as a bad thing. Property is a unique investment in that it is someone's home. And we had a 20 year period - which is kind of anomalous when you look at the rest of history - where property values were going up really really fast. And so everybody wanted to get involved in property, so they'd go and become a property investor or become a landlord, and they wouldn't really have a clue what they were doing. And so they were just doing it purely for the money without really being willing to put the work in, and therefore the people who had to live there were not having a very good time of it. So I think that as a result of that, things are now correcting, and we're getting back to a point where property prices aren't rocketing upwards. It is harder to get into, there is more legislation around it and that is now pushing out the people who have been in it for that 20 year period, done really well out of it, but now are thinking this is a bit too much like hard work. But it's only like hard work compared with what they're used to - which is not normal. If you're looking at property as a long term investment, where you're willing to put the work in, you're willing to take it seriously, you don't have unrealistic expectations, and you're either going to build the knowledge yourself or work with people who do then I think property as a long term investment is pretty hard to beat. But it is with all those caveats. If there's one thing I'd want people to take away from this is that it's not easy. It's not something to get into on a whim. You can go and buy some shares on a whim if you want to, but I don't think you should go in and buy property on a whim, because it's a big purchase. Unless you've got loads and loads of money, you're only going to be buying a few - so your risk is very concentrated, and it comes with a lot of responsibilities. So it is a hard thing to do. It's becoming less attractive for people who aren't willing to do that. But I think that's probably a good result for people who are renting property, you're going to end up with a smaller number of landlords who have larger portfolios and are taking it more seriously.

Jeremy Cline
So the aim is to be one of those people with the smaller number of landlords with the larger portfolio?

Rob Dix
Yeah, if property is sufficiently attractive to you to to put the work in and build the knowledge. If it is more like, well, I've got 10 grand and I'd I quite like to invest in something, then property is probably not the way to go. If you've got 100 grand and you're 'Well, I'd like to invest it in something' but you don't have the time or the inclination or the interest to make property something that you spend a fair bit of your time thinking about for a while until you get the hang of it and it all settles down - then it's probably still not the thing for you.

Jeremy Cline
But if you have the capital, and you accept that it's difficult and you're prepared for that, is property something that can still change your life?

Rob Dix
It can change your life. But the way I like to think of property is it can change your life slowly or gradually, maybe. You get a lot of things being pushed as 'follow this way of investing, and you can quit your job in a year' - and can you? Maybe you can, maybe a percentage of people who do that do end up doing it. A far larger proportion of people fail to do that. But if you look at property as something for the long term, then it can change your life over a longer period of time, because if you're looking at retirement in 20 years, then you can have a real asset base behind you. Or even in a period of time that's longer but not that long, you can build up a really nice stream of side income that gives you more options. And that's what happened for me. So by the time I wanted to quit what I was doing and not know what I wanted to do next, I had the income from a few properties - which wasn't enough to pay all my bills, but it's very different from going down to absolutely nothing. So if you've got a job and that job is the only stream of income you've got, then it's very scary to think about walking away from it, and it's very scary to think about losing it. But if you've got even something going on on the side, it changes your mindset around the whole subject. It makes you more likely to go off and pursue your own thing. And it gives you I think, a bit of peace of mind that if you did wake up tomorrow to not have a job, you'd be okay. Or you'd be more okay than you would have been. And I think that that is life changing - even if it's not what people think of as life changing as in, 'Oh, I had this job that I hated' and then a couple of weeks later, 'I've got this life that I love, and I've got all the money I need!' That's not realistic, but that doesn't mean that property can't do wonderful things for you, because it can.

Jeremy Cline
There was an example on the podcast, your podcast, I think, a while ago - was it someone who worked in the city, invested in property and then quit their job for another job but a job that they really liked and really love doing?

Rob Dix
Yeah, well he actually lived the dream in a way and then found that the dream wasn't all that great in that he had a high paying city job, he was earning really well, he was sensible enough not to spend all that money that he was earning - which lot of people do - and invest it into property. Got to the point where he built up a decent sized portfolio where the income was enough for him to live off, and then he quit. And he didn't have a job, and he had enough money coming in - not as much as before, but still enough, and he didn't have to go to work and it was fantastic - for a bit, and then he got bored! So then he went and got a job in a bike shop because he loved bikes, and so now - he just works in a bike shop, I think part-time, earning not very much - it's not exactly a high paying career - but he's spending his time doing what he loves, which is messing around with bikes and talking to people about them, instead of doing what he was doing before, which was a fairly, to him, soulless job in the city. So, again, even if he didn't have enough property income to live off full-time he had enough - he did, but he even had he not - he still maybe would have had enough to be able to drop down to a lower paying job that he far preferred to the one he already had.

Jeremy Cline
Rob, this has been absolutely fascinating - really, really interesting. And thank you for your insights. I know that on the podcast, you have a resource of the week so I'm at risk of asking you for a resource that we're going to go on for another hour and a half! But do you particularly like a website or a course, or something that maybe helped you in your journey, or which you recommend other people have looked at?

Rob Dix
Yeah, this is nothing to do with property at all, but a blog that you've probably heard of but many people won't have done is Mr Money Mustache. He is a blogger - I think his tagline or his claim to fame is that he retired aged 30, because he had a high paying job throughout his 20s and saved up enough, not through property - in the stock market actually - that he was able to live off that and not work again. And especially if you go back and read some of his earliest posts, he lays out his line of thinking so clearly that I think there's a lot of lightbulb moments in there. Because he takes something which can be very complicated - a lot of personal finance and investing stuff can be complicated - and just makes it really, really simple and puts it in such a compelling way that you just can't argue with it. And so it gives you that kind of real foundational thinking, I think it's really helpful.

Jeremy Cline
Okay, so that's the Mr Money Mustache blog?

Rob Dix
Yes, right. Yeah.

Jeremy Cline
Okay. I will link to that in the show notes. And where can people find you if they want to get in touch with you, assuming you'd like them to?

Rob Dix
The best place to go is just propertyhub.net. That's - if you are interested in property - where you can find our podcast and all manner of free educational stuff.

Jeremy Cline
I will also link to those. Rob, thank you so much for your time.

Rob Dix
Thank you.

Jeremy Cline
After I'd finished this interview with Rob, he commented about how he sometimes feels as though he's a little bit down on property - and this is from someone who for whom property investment is basically his life. And I wouldn't say that he's down on it, he just presents a very realistic picture of how much work can be involved. Investing in property isn't like investing in stocks and shares. It takes a lot more work, but the rewards really can be there. And I really liked his story about the person who used property to enable them to quit a city job and then go and work in a bike shop. If you've got any interest in property investment, particularly in the UK, check out the Property Hub. They've got tonnes of great free resources and there's a link in the show notes for this episode which are at changeworklife.com/26. One of the things the two Robs do on their podcast is read out the success stories that they've been sent by listeners, even if it's just small things - people who've taken their first steps towards buying a property. And likewise, I'd love to hear your stories too. If you've got a story of a career change that you'd like featured on the show, or maybe you know someone who's been through a career change, do please get in touch via the contact page, which you'll find on the website. That's at changeworklife.com/contact. In next week's episode, we're going to be talking about how you can finance a career change. If you know you're going to need to take a pay cut to change jobs, or maybe you need to find cash to pay for a qualification - how can you get yourself financially prepared? It's going to be a great episode with loads of tips, and I can't wait to see you there. Cheers. Bye.