Russell Short, 38, started his career in property at 26 with two credit cards - and has successfully grown his portfolio to £6.5 million. He also runs a lettings agency, Property Partners in Crookes, and boiler installation, repair and servicing company Home Team.
Q.How did you buy your first house?
A.I found our first investment in Dinnington. it was a very cheap, run-down end terrace in need of a full refurbishment - something I’d never done before. I didn’t have any spare cash having left my job – so I bought on two credit cards. To get the work done I sold my Audi TT for £11K, bought a cheap van and some cheap tools and got stuck in.
Q.You had no property knowledge and no spare cash. What made you take the risk?
A. I had wanted to get into property since I started university. My first year was at Barnsley College and I moved into a rat-infested property in Royston with three other students. We each had to handover around £1,500 in cash to cover our first term. That was £6,000 in one meeting! I decided I wanted to be in the landlord’s shoes one day.
I left university with massive debs, had to start work quickly and was fortunate to get a good salary with a local web company, which allowed me to buy a car, clear some debts and live a nice lifestyle. Then my future wife and I went to Northern Spain on holiday. Up in the mountains of Picos De Europa, you get a sense of perspective. I decided it was time to do my own thing. Within two weeks of returning to Sheffield I’d left the company.
Q.What happened with that first house?
A.It was hard work, especially as I had almost no experience in DIY. In hindsight it was maybe not the best property to buy. It wasn’t in the best part of town (hence why it was so cheap) and was broken into at least twice while I was working on it. It took me six months to turn it around when it should have taken six weeks. I was luck though - I sold it and made around £30K profit.
Q.You were only 26. Did you think Property Street was paved with gold?
A.It certainly looked like that from that first deal. But I was really fortunate as the market was rising and fast. It enabled me to buy and sell a few more properties, and buy one I could rent out. But I wasn’t making enough. The business was only providing me with a living and enough capital to buy the next house.
Q.Is buying and selling property an easy way to make money?
A.Absolutely not. The first three years were about hard labour, long days and stress. You also don’t win them all. On a couple of properties I didn’t make quite as much as I was hoping for due to unforeseen issues with them. I also blew the engines of three vans and had all the costs of running a small business. Life is a little easier now as I have built a fantastic team and don’t get my hands as dirty.
Q.You made money from buying “Below Market Value”. What does that mean?
A.I was getting frustrated at how hard it was to find property I could afford to buy, refurb and remortgage to get my money back out. A friend told me about a technique called ‘Below Market Value’. I went to a seminar on it and it was a Eureka moment.
I joined a team of investors using this technique and we purchased thousands of UK properties. It works like this: The traditional selling process can take months. We could complete on a purchase within 24 hours. We gave the vendor an offer typically 30% Below Market Value, paid for the legal fees on both sides and arranged all legal documentation to be exchanged. The seller had no costs and could stay in the property after the purchase as a tenant. Later I would re-finance the property, take my money back out and move onto the next deal.
Q.Can people still make money this way?
A.Not exactly. Since the financial crash in 2007/8 mortgage-lenders and regulators have tightened the lending criteria. It is very difficult for new investors to use the systems we used to employ. You can still source property using BMV techniques but you can’t refinance or sell the property for a minimum of six months. You now have to be regulated to conduct deals in which the previous owner becomes a tenant.
Q.How big is your property portfolio now?
A.In the region of £6.5million.
Q.What skills does it take to become an investment property millionaire?
A.Nerve and determination, a lot of long hours and resilience. The property market is not for faint-hearted - it’s hard work.
Q.Where there any hairy moments along the way?
A.Plenty. One of my worst investments was an off-plan ski apartment in Bansko. Off-plan investing is great strategy in a rising market and when we started looking at this project the market was strong. But due to building complications the project dragged into the recession. The developer collapsed and we lost £28k.
Q.Why did you launch a property lettings agency and Home Team?
A.Soon after we started building our portfolio we found that having a direct relationship with the tenant was not the best way to deal with things. I tried using a couple of local agents but found them to be poor. So we named ourselves Property Partners and acted like an agency to manage our portfolio.
At this time the property investment part of the business was going from strength to strength and we were buying, selling, refurbing and letting property at an unbelievable rate. To manage the tenancy and maintenance we needed to bring in staff and get an office. Shortly after we found other landlords and investors wanting to use us. Recently we have rebranded and moved into sales. Property Partners has been a great asset, specially through the financial crash. Home Team came about because we were forever being let down by gas and electrical engineers. I decided we could do it ourselves. Now we carry out installation and boiler repairs and have accreditations with Worcester Bosch, Vaillant, Ideal, Which and are Green Deal Accredited surveyors and installers.