Property VS Stocks DEBATE! Which is Better to Invest in? 850+ Unit Landlord VS Wealth Manager | 100

[00:00:00]I don't think this episode really could have come at a better time given what's going on in the market.

[00:00:03]>> You won't hear many property people say this but this is the truth. There was crowding out that went on with Berlet and that's what motivated the hostile environment towards landlords. More people are made aware the more they understand the more they're able to handle deal with compartmentalize.

[00:00:19]>> Quite regularly we complete on property transactions and have to put less than 20k in buy Tesla shares cuz they think Musk is cool is not a strategy. The average person takes a loss twice as hard as if they take a win. Nobody can control the stock market. Property has got to be a better investment class in the face of AI. In the current market that we're in, where would your sort of focus be in a sense of would it be ETFs, index, would it be individual stocks, would it be, you know, bonds?

[00:00:46]>> Okay. How do you kind of take all of that emotion and that noise away from your decision-m? Where are the risks with property? Well, you've both got 20,000. For some reason, you've lost everything. Where would you start?

[00:01:00]Welcome to the episode of the Property Developer Show, the podcast. Today is the 100th episode. So, firstly, a massive thank you to everyone who has been a guest, who's who's tuned into the podcast, everything else in between, the team, Amy, Bill, Jacob, can't name them all because there's too many of them. We uh yeah, when I set off to do this podcast, I didn't think we'd reach 100, but here we are.

[00:01:22]>> On this special episode, it really is a special episode. We've got two absolute titans of their sectors.

[00:01:29]>> No pressure, Jen.

[00:01:31]>> We're going to be doing the debate and argument, property versus stocks. I've even got prompt cards for this one, which never made an appearance before.

[00:01:40]So in the left corner or to my left in the blue we've got Mr. Adam Lawrence who hopefully some of you will know from uh previous guest but welcome today.

[00:01:52]>> Thank you for having me.

[00:01:53]>> Pleasure. And in the right corner in the purple kind of red >> or burgundy go, >> we've got Wes Wilks from Iron Market who is an IFA and a very wellrespected IFA.

[00:02:05]>> I'll do the full intros in a moment. But in this argument, we're going to be or in this debate, we're going to be certainly getting to the the the nuts and crannies of the differences between stocks and property, what the benefits are, and obviously, you know, Adam fighting the property corner and Wes fighting the stocks corner and see where we get to today. But without further ado, the big intros.

[00:02:26]>> Oh wow, here we go.

[00:02:28]>> Adam brings a rare mix of institutional finance and real world property execution. From a background in wealth management and consulting for one of the UK's top lenders, he's gone to be involved in over 850 property deals. So people might think you know something about property.

[00:02:44]>> Building a 60 million portfolio with a sub 60% loan to value. So not just the overleveraged portfolios that sometimes we see online. His focus has always been on buying well and adding value, holding long-term, and all underpinning by strong risk management. Looking forward to uh to your side of the argument today, Adam. And in the burgundy corner, >> we'll we'll go with that. Then >> we got Wes Wilks is the uh CIO and CEO of IM Market Wealth and founder of Network Network. Sorry, Net worth.

[00:03:15]>> I've really tripped you up here, man.

[00:03:16]>> That is a bit of a mouthful. Net worth just Yeah. found him on the street.

[00:03:22]Hopefully he knows something about finance. Uh Wes is a qualified financial adviser since 2001. A certified investment manager. He's built Iron Market from a oneperson practice in 2013 into a multi-arm wealth risk group. In 2025, Iron Market was named the best small firm. Congratulations.

[00:03:40]>> Cautious strategy with the uh four out of five investment strategy shortlisted amongst the UK's top five at the Citywire wealth manager investment performance awards. beating industry giants including AJ Bill and Quilter.

[00:03:54]>> Thank you.

[00:03:55]>> He also is the Times featured toprated adviser, Stafford Staffordshire entrepreneur of the year and co-founder of the Fint Invest app.

[00:04:04]>> There we go.

[00:04:05]>> Which is an investing app for the next generation.

[00:04:07]>> There it is.

[00:04:08]>> Wow. Well, absolutely no pressure at all.

[00:04:11]>> I think we're done.

[00:04:14]>> Thank you for tuning in.

[00:04:18]>> Amazing. Do you know what? We'll start from the top. M >> obviously from the kind of property perspective and the stocks and shares they're very different asset classes but they certainly do cross over in some regards to wealth generation wealth preservation as you know we discuss on this quite a lot in in the um episodes on on these podcasts but really starting with kind of the the major differences from your perspective where you know from a risk perspective where does sort of stocks sort of compare compared to to property.

[00:04:51]>> Yeah, I suppose uh in terms of main differences, it probably sits under two pillars really. One is uh obviously liquidity um with um stocks or investments or ETFs or funds being traded pretty much daily.

[00:05:04]Uh so daily liquidity and obviously property being a little bit more liquid in terms of its uh where it sticks. Um outside of that you can you can although you can have liquidity within it. Um and then I think along with that kind of uh liquidity probably supports the the risk elements of it. So uh availability um control reliability um and I think just two two asset classes in in those in those kind of distinct regards I think.

[00:05:32]>> Absolutely. And from the property perspective >> well I suppose what I'd add to that apart from anything else is volatility because that's where there is uh a significant difference between the two asset classes and that is ultimately why depending on how you measure it depending on where you look you might see better returns from the stock market. you certainly would have done over the last 10 years especially if you own property in London let's say versus owning American stocks for example but volatility is hugely different and I think that's what apart from else keeps a lot of people away from stocks and keeps a lot of people who have very been very keen on property and are keen on property away from the stock market. Um, and that's something you've you've really got to understand what's the what's the variance of the returns you can get over a period of time.

[00:06:14]>> If you're an active property developer looking to get your next deal, you need to be in the right rooms. That is exactly why we've built the Property Developer Show. It's a one-day event designed specifically forme developers and investors, bringing together all the service providers and professionals you need to actually move deals forward. And the best part, our events are free.

[00:06:33]We've got up and cominging shows across the UK. We've got Southampton 10th of June, Birmingham 15th of July, Manchester 9th of September, and Leeds the 7th of October. So, wherever you're based, there's a room for you. If you want to stay ahead of a rapidly changing market, build better connections, and unlock new opportunities, this is where you need to be. Just search property developer show or head to property developer show.co.uk to grab your free ticket today. Do you ever feel overwhelmed when it comes to buying materials and deciding what suppliers to use? Have you ever felt unsure that you're getting the best possible price when it comes to purchasing materials?

[00:07:07]Well, look no further than the property developer buying club. The club was launched to help theme developers, landlords, house flippers, basically all active property professionals achieve the best price with the best suppliers.

[00:07:20]From Top Tiles and Tool Station to Travis Perkins and City Plumbing, the club has negotiated the best rates on your behalf, meaning it's one less thing for you to worry about, so you can continue focusing on those income generating tasks. Use the code PDS to get £50 off your first 12 months membership. Pricing usually £149, but with this code, it's only £99 per year.

[00:07:44]The club also offers a 90-day money back guarantee because they are confident you will save your membership fee and more.

[00:07:51]Go to pdbc.uk to join the club today.

[00:07:55]>> Yeah, absolutely. I mean, I I don't think this episode really could have come at a better time given what's going on in the market, you know, from the Iran war to property prices, the pressures on landlords, the >> mortgages even, I guess.

[00:08:07]>> Exactly. Rates, interest rates, what Bank of England are up to. I think, you know, we're recording this on the 5th of May, so it's all relative. I mean, everything's changing by the day at the moment. I wake up every morning and see what Trump's done and I'm like, "Right, okay. Well, that's that's that today."

[00:08:19]>> You and me both.

[00:08:20]>> I imagine. I imagine.

[00:08:22]>> You, me, and you thrice.

[00:08:24]>> So, I mean, from obviously a stocks and shares perspective as the volatility can be there, >> how from an emotional perspective should people be approaching that investment strategy? Yeah, I think it's a really good point you make, but I I I think um it actually comes down to education as it always does and understanding and I think um you know from a uh look looking at stocks as a you know if you think about volatility and people might avoid them because of potential volatility, it's definitely about education, understanding what that volatility is because of course volatility can be managed. Um nobody can control the stock market. If they think they can they're making it up. Um but the the volatility that you you're exposed to with investing more generally uh can be managed. You know, you can you can diversify. Um you can have different types of um um uh ways of reflecting investment or or or investing in the stock market whether it be ETFs or funds or stocks themselves. Um you can diversify across different um regions, themes, sectors, which is what we do in terms of how we build portfolios. Um, and actually it all really starts with the end bit. So what for what you're where you're trying to get to, which which would be the same I guess if you're applying that to a property based uh investment or wealth buildinging strategy has to start with the end in mind where you're trying to get to what you're trying to achieve and and in what kind of time scale and then work back from there because that can actually then dictate what what volatility you might well be able to tolerate or or be comfortable with over a certain period of time. So yeah, I think whilst that is a very much an element that people point to and probably puts them off, it's educating people help them understand the dynamic of that and what that looks like.

[00:10:11]>> Do you think it takes a certain characteristic? You know, I'm I'm thinking obviously there's different ends of the spectrum. You've got someone that has saved up, worked really hard, they've got £10,000, they want to invest >> versus, you know, someone that's got £10 million. the investment strategies are different. But today we talk about, you know, 10,000 sort of >> size.

[00:10:32]>> For someone that's, you know, putting that money into the market and they see this volatility and it's at the moment it's going down. H how >> other than the education piece, you know, what how do people really strip that emotion out? You know, what if you're sat down with a client and they're, you know, oh, this is this is tech. What sort of things are you saying to that individual? Yeah, we have the advantage obviously as well as being investment managers, we are we are financial advisers as well as as you pointed out. Um, and we we the way we deliver that is we hook everything around the plan. It's all about the financial plan. So whether this is somebody just starting out, you know, with Finn for example, um, or it's somebody that's uh we're helping, we've been looking after for a while, they're about to exit to a PLC or whatever, uh, for 40 50 million or 100 million or whatever it is, the principle is still the same. you re you really need to understand why you're about to do what you're about to do or actually where you're trying to get to first and what that really looks like. And the way we start is is to really genuinely get people to um understand where they want to be, what their future looks like, you know, if it if your future is tomorrow, doesn't matter what age is, you don't have to think about retirement, it's whatever the future is. Um what does that look like? Where are you? Who you with? How does it sound? How does it feel? What does it smell like? Is it warm? Is it cold? Where are you? that that and genuinely get people really to understand that. Once they understand that, then we can try and monetize what that might look like or at least create an aim around that because not everybody can be really succinct with it and then build back from there because that then can say that then can uh help us we use cash flow forecasting and various other tools to help us deliver that but that then can help us manage then and dictate how we build and manage a portfolio that delivers that. So, it's not just investing for it the sake of it, which is what I get most most frustrated with and and is often the opinion of investing. You know, buying Tesla shares because they're thinking Musk is cool is is not a strategy.

[00:12:27]>> Yeah. Yeah. No, I get that.

[00:12:29]>> Yeah. I think it it kind of allows them to strip that emotion out from a sense of actually you got to look at the bigger picture.

[00:12:35]>> Yeah. And the you're stripping the emotion out because you're you're understanding that there's going to be as long as they're educated, there's going to be uh times of volatility. But what we're doing is we we we know this is right and this is built to achieve that thing that we've discussed and we know that that's where you want to get to. That's the absolute key thing. So that's the thing we can always refer to.

[00:12:53]Okay.

[00:12:54]>> Particularly, you know, it's been really prevalent this year with obviously the Iran war.

[00:12:57]>> Absolutely. Yeah. Yeah. I think that's obviously with the liquidity of stocks and shares, that's the difficulty with it is that it's easy to access in a sense of oh, you know, panic, I'm going to withdraw. Yeah. But then from a sense of having that liquidity as a worst case scenario or you know x y and zed's happened I need to pull the money out obviously then it allows you to be more reactive in that sort of sense. So that there's a a balancing act with it.

[00:13:20]>> Yeah absolutely is. And and I think um what our industry is is is a little bit bad for and a little bit lazy with is is is and it's kind of this is been a move over the last 10 or 15 years is internally is is kind of um leave it alone scenario which from an investor's perspective and a and a a client's perspective is the right strategy is a good idea but I think that's I think we our sector's kind of adopted that a little bit to kind of move away from this being responsible for what the outcome is uh uh and they focus on planning absolutely fine no problem at all and the reason why we're different is is the fact that we do the planning and we build and manage portfolios because I think you need to have accountability for the bit that you're building and managing too >> um and I think being aware of what that looks like um but again the key thing is having that plan in place so you can all when things are a little bit more volatile little bit rough um we know that it's built into the plan you know we we we forecast with those kind of things in mind we don't you know what's happening coming forward but we can use history to forecast forward and we know that you know if you just take the S&P 500 you said American stocks earlier you know 70% of the time there 70% of years that are positive returns 75% if it includes dividends >> um they're decent odds over time >> and on the other completely end of the spectrum in an asset class that is completely illquid in some cases particularly with how long transactions can take how do I guess It's easier from that kind of shortterm sort of microeconomic perspective particularly as as property price is changing and obviously regulations changed massively over the last you know decade let's say how do people sort of approach investments in a sense of that emotional piece of oh well once my money's there I've got to almost sort of forget about it and is there a sort of downside to that kind of out outlook on the property side? Well, there's definitely a downside to not having great liquidity. As you said, there's an upside and a downside really. You can't access that. You wake up, you read the Telegraph or the Daily Mail or The Guardian or whatever, and it says it's all over. Rent controls are coming in.

[00:15:34]They've changed the law. They've done this, they've done that. What you going to do today? You can't sell your one property today necessarily. You could do you probably sell it at maybe 60% of what it's worth. So, it's not a route that you want to go down if you want a very quick exit. So that could help you if you are look one of the things about human beings and I know Wes will be involved in a lot of behavioral biases and things when when he talks in mind I used to work in wealth management so and I'm a big fan of all of this stuff you know is that ultimately we're loss averse as human beings you know the average person takes a loss twice as hard as if they take a win >> so and part of that is exactly why working with people over time is so important because plans change and plans in property change and life changes and sometimes it's it's choices that you've made and you've worked towards as Wes says not necessarily retirement but whatever the future looks like sometimes things happen to you and that changes the future. Um so that's a a big picture thing to think about. I think the liquidity thing is is probably useful not to have at your fingertips but I do think and I advocate for especially for people who are trying to build portfolios create some liquidity. So you referred earlier on to our loan to value is less than 60%. But what we don't seek to do is achieve that by having let's call it 60%. A 60% mortgage with one lender across the board.

[00:16:58]>> That's a bad idea for a whole number of reasons. Just as it's a bad idea to put all your money in Tesla because you think Elon Musk is cool. Even if you've done really well out of it, doesn't mean you've been that smart, right? So we we create that 60% by looking at 80% of the portfolio being geared to around 75%.

[00:17:18]And 20% having no gearing because that can then allow us to access liquidity at very short notice using short-term financing if we want it or we need it.

[00:17:28]So, we would look at it and say, well, okay, we're making uh if it's unlevered a property, hopefully making something that looks like an 8% return, right?

[00:17:38]Which might come about 5% from rent after costs and 3% from capital growth.

[00:17:44]Now, they're not set in stone figures.

[00:17:46]They're more like averages that we look at, but there's 8%. So, that's why we want to hold it in property rather than in cash because in cash, we can't get that 8% return. But we can only access maybe about 75% of what those assets are worth by using a very quick loan. You know, we're very conversant with with fast finance. We've done lots of it. We could get that money in under a week quite easily. Rarely, unless it's a hostage situation and the kids are at gunpoint, in which case you don't want it in the bank necessarily. Um, you're going to be able to get the money pretty quickly. So some of it is about creating and I know similarly with stocks as well. It's not just doing what everybody else does and it's not putting yourself in a position to make mistakes. You know everybody whether it's property or stocks can have a tendency to buy high and sell low. Get on the hype train maybe a bit late right? get off the train quickly cuz everyone's panicking because CO's come and it's ending the world or what's going on in Iran at the moment. Although it hasn't necessarily affected the markets like many of us maybe thought it would, but it might do might be doing it as as we're recording this. We don't know, do we? Um, but look, it's definitely got to be definitely got to be watched out for liquidity, but there are ways to to mitigate it. And I think probably it's a good time to say, you know, I'm a big advocate of investing over time because time can be your advantage here. If you start investing in the stock market and you say, "I'm always unlucky. I don't want to do this, but I'm going to do it." And then the market goes down 10 or 20%. Good, right? Hold your nerve. Keep that. It's bad. If you had all your money in stocks and you're 64 and you're set on retirement at 65, then it's bad.

[00:19:19]Absolutely. Right? If you're one year into a 30 plus year investment journey, see the positives. you're going to buy more stocks.

[00:19:26]>> As I always say, I mean, from a stock market perspective, the the the stock market and pretty much wherever you look at has got a 100% recovery rate and a 100% recovery rate into new new all-time highs. So, from any bare market or from ever from any kind of uh significant, we don't use the word crash very often, but they even call it a crash or bare market. The stock market has always recovered and you know and and gone on to to to new alltime highs. I think you make such a good point and this this is where I think it's really this is the education piece again really but where um professionals uh in terms of you know I do this every day you do that every day we're very uh acutely aware of what we think is obvious in terms of looking at things like the risks um you know that that you know in terms of loan to values and and making sure you got some uh liquidity and what we both seem to stick to from what I'm getting from you is we have a process We have a very clear process by which we follow. Now some sometimes no matter uh how good your process is the outcome you can't necessarily control but you always know the reason why you've gone down that road or or or you've selected that I know that that allocation or or that property or whatever it is that you've selected. And I think that's the the big difference for that that I'd love everyone to understand that that what in terms of how professionals tackle it as opposed to you know I know on trading 212 I shouldn't say the name I suppose but um you can go and buy a stock for a pound but should you buy a stock for a pound why are you buying the stock what you doing just ask yourself why um because that's what we do as professionals and that's kind of what you know I think that's where people come unstuck and probably make mistakes >> just remember the Wolf of Wall Street it was the penny stocks they used to sell to people, right? Big sheets as they call them, right? So, uh it's where a lot of people get hoed and make big mistakes sometimes.

[00:21:20]>> I remember he was a criminal.

[00:21:22]>> Absolutely.

[00:21:23]>> Cool film, but he was a criminal.

[00:21:26]>> Absolutely. I mean, on that sort of sort of vein then from a investment perspective. You've both got 20,000 for some reason. You've lost everything.

[00:21:36]House has gone, properties have gone, everything.

[00:21:40]>> It's all mine now. Got to have it.

[00:21:44]>> Yeah, of course. That's worth something, I tell you.

[00:21:47]>> Where would you start with that 20,000?

[00:21:49]We'll start with you, Wes. What where what's your first sort of plan with that? Apart from obviously baked beans on toast, but from an investment perspective.

[00:21:57]>> Yeah, sure. Um, yeah, I mean, it would definitely be a plan. I know I sound boring with this, but but it really would be, and I, you know, nobody will ever shake me off that kind of kind of view. And it would be, you know, the reality is if you have lost everything, you've got you've got 20 guns, right?

[00:22:10]Okay, where am I going to get to? how do I want what do I want it to look like?

[00:22:14]Um and then from my perspective then it would be right okay if this is where I want to be and this is this is going to help me get there then I've defined that then I would build uh an investment strategy around it uh and it would be you know then in terms of how we do build a portfolio and the way I build one now >> would that be a high-risk sort of strategy or would you kind of middle ground you know where if you've got say say you know you're in your 20s you you've got that 20,000 you know scenario where where are you looking to to invest that >> yeah I I think if If I'm in my 20s, I' I'd still really really want to get something around it that's that's kind of um you can you can make tangible. It doesn't have to be tangible, but you can make tangible. You can really think right actually even if it's a first house, you know, something as simple as that. Yeah, in 10 years time I want to be ready to get get my own get my own place. Then you've got a timeline, you've got something to aim for. In today's world, that would cost me X. So, right, this is this is what I need to look at. And I think yeah I mean keeping it very simply although you know it's better to look at these things based on circumstances of individuals families businesses whoever they are um keeping it very simple the younger you are load the risk because the reality is as I've said you know 70% of the time the stock market um delivers a positive return 70% of years um the average uh bare market lasts about 11 months um and a bull market when it's going is about four four or five years. So when you are young, you really can afford to do that. Uh but that also doesn't mean you then go and pick shares based on what the guy in the pubs told you. You still can still diversify well across that, but it probably just means you don't need >> uh those assets within a portfolio that you're building at that age with that time horizon that are uh more defensive or more riskaverse to reduce volatility.

[00:24:09]You could probably handle the volatility as long as you understand that you're going to get it over that period of time.

[00:24:14]>> Of course. Yeah. And from a kind of where because you know stocks and shares are are very broad.

[00:24:20]>> Yeah. Yeah.

[00:24:21]>> Where would your sort of focus be in a sense of is it would it be ETFs, index, would it be individual stocks? Would it be you know bonds? Where where would your in the current market that we're in? Where would your focus sort of?

[00:24:32]>> Yeah, I could probably apply what what we do and the way we work to that effectively. We we we very much focus on on uh and understand um data points u macro analysis uh and we're macro uh investors so top down and what I mean by that is kind of what's going on in the world. What do we think um are things likely to look like from a regional sector theme-based perspective over the next 6 to 9 to 12 months. And that's kind of how we that's how our world looks. And then we have loads of data points and analysis that comes in that helps us take those views. And then my preference in reflecting that actually is be is uh tends to be ETFs first. And the reality of that is because um what I'm trying to do over and above the right process to deliver amazing outcomes for for for the end user is then how can we access more of the market at a lower cost. So I would tend to tend to be ETFs would be my preference for vehicle unless we've got another vehicle that is really that we know through the analysis that we're getting is re really stand out within a certain area and the way we build that is is is re regionally first. So it would be >> when you say regionally first >> so yeah I'll expand on that. So that would be for example we uh um so if you took a um uh just a a global index for example uh MSEI all country world index aqui which is kind kind of supposed to capture the global market the reality if even even if you go and buy that on trading 212 and instead of a Tesla share you're still buying the US market effectively nearly 70% of that is the US market and then underneath that nearly 35% of that is in seven stocks so you're really really concentrated without knowing it and trying to do the right thing. You're trying to diversify by buying a global index, not but unwittingly buying the US market and 35% of uh of that being being tech effectively. It's done well and not to say it won't carry on doing well, but you don't you're unwittingly concentrating your your assets. So when we when we look regionally, we're looking more at the macro data that's telling us which regions um are depend on various factors might be the right places to be. So that might be we might for example we might be rather than if we're looking at something equivalent to global index we not be 60% 70% US we might be 34% US and then we might have an overweight in Japan an overweight ine markets UK underweight Europe or whatever and that that's how we look at it as a starting point then we'll drill down to sectors so sectors would look like uh materials indust industrials uh technology um v various others uh energy or whatever. And again, the prevailing data points and macroeconomic analysis helps us choose which of those areas we might be overweight, underweight compared to our peers and compared to the market uh to try and there's two two scopes of that that is all uh and these things I I found in my uh in how we've done things the two things really work well together. It helps reduce volatility but whilst we're reducing volatility, it actually helps to uh improve overall return. Um because then the biggest thing I found in in kind of managing assets and and buil building portfolios myself is because uh my history is sitting in front of the client, that's what how I started off as a financial adviser and moved into investment management. Um I know what bothers them more. they'll be more bothered by a 5% draw down than a 15% piece of growth.

[00:28:03]That's that as you said the loss of loss humans. So managing downside and volatility by using the data >> actually is a a better outcome from a human management perspective but actually I found it's a better way of managing money to achieve better outcomes overall.

[00:28:22]>> Amazing. Great insights. over to the property side. 20,000 starting out. I I suppose I'm I'm a bit more lean in this way. Obviously, property podcast.

[00:28:32]>> I realize I'm the underdog today, by the way.

[00:28:33]>> Certainly.

[00:28:34]>> Yeah. Significantly.

[00:28:35]>> I suppose with property, you can be a bit more creative in a sense of that kind of initial start. What sort of strategies you can look at to get the the momentum early?

[00:28:45]>> Yeah, there's there's a ton of different things you could do. So, I'm probably going to try and answer this in a couple of different ways. uh one and this is a bit of a you know war what does Warren Buffett do daytoday um he analyzes companies looks to gain edge on those sort of single stocks which 99.9% of people should stay away from which he says himself what does he tell people to do by buy ETFs buy index funds right um so what would I do assuming I've still got the knowledge that I've got today you know quite regularly we complete on property transactions and have to put less than 20k into them and that's on the basis we're belowind buying them below market value so We're creating value on day one. We're we're boosting our balance sheet on day one and we're using a bridging loan that's going to allow us to borrow more than 75% usually 90% or more of the purchase price. So that's what keeps it and also I target properties that are ultimately end value is under 200k and a lot of the time is under 150k. So I can do that and that stacks up. now might still need money for the refurb things like depends what problem we're solving but quite often we buy properties like that and the problem that the market has deemed that it's got is that the tenant isn't paying enough rent it's it's underlet dramatically underlet um and there aren't massive investments of of money that need to go into those properties there's investments of time there's investments into building a relationship there's an investment into keeping things on track um and then potentially pulling all the money back out or even a bit more that's what I can do dayto-day. That isn't what I think anybody watching this can go out and do from day one, but they can work towards it. So, I'd be I'd be asking questions like, where's the 20k come from? And and more importantly, maybe where's the next 20k coming from?

[00:30:29]>> Are you going to need to live out the proceeds? Because we could I could cheat quite a lot here and say go out and I've bought portfolios for less than 20K. um do an active asset management strategy like short-term rentals for example, but that's going to make any of us a a hotelier uh or someone in the hospitality business rather than someone who can put their trust in Wes or if they're crazy enough try and learn how to do it themselves um and let ultimately the companies do the work.

[00:30:55]That's what Warren Buffett does invests in great managers, right? Great great opportunities, great great sectors and things like that. So, it's also 20K.

[00:31:04]There's still an ability to diversify within stocks, right? You're very likely to not be particularly well diversified with 20K in a property investment. You could double hack this and put it into a property stock like a real estate investment trust, right? That's also or a number of real estate investment trusts. So, you could still diversify in that way. The reason why I would do what I said is because I'm going to be able to buy something below its accepted value on day one and get a big a big lift. I'm going to put 20K in. I've got a couple of purchases settling this week where we will put less than 20K in and they will add more than that 20K on day one to the balance sheet. So, I'm getting 40 for 20, but I'm trading the liquidity off to do that. And there's there's work to be done. There's a problem to solve. I only get that money in the bank when I sell it. And the transaction costs are so much higher than sounds like a podcast with trading 212 if I say it, doesn't it? But the transaction costs are so much higher than they are on some of these incredibly lowc cost or nearly free platforms these days. You know, 5% stamp duty, all of that sort of stuff to think about. So >> trading property as of you've had people on the podcast who trade property, it's a seriously uh difficult skill set and it needs complete. Don't be that loss averse person because it's not going to be for you. Same as trading stocks.

[00:32:22]>> You will Yeah, you will have to take losses. You will have to deal with them.

[00:32:25]And in fact, it's how you take your losses and then how you run your winners that will define how successful you are at that or even if you can do it at all.

[00:32:33]But of course, what you could do if if the answer to where's the next 20 grand coming from is, well, don't worry. I'm making a surplus 20 grand a year. I've got a nice job or a nice business or whatever. Um, and the next 20k is coming in 12 months time and I want to do my first property investment. I'm probably going to look for somewhere fairly solid up in almost inevitably the northeast, possibly parts of the northwest of the country where I can use that as the deposit plus the stamp duty. Not the sole cheapest of the cheap areas where there used to be a mining town and there's no work and the boiler doesn't last more than 5 minutes in the property. Someone breaks in and nicks it to sell it for the copper value or whatever, right? And and that's where research again comes into it where you're going to need to know those areas. You you want a growing population. You want local employment.

[00:33:18]Ideally, you'd like there to be, little plug for Middlesbrough. I don't know why I'm not I'm not I'm not on the payroll up there from uh from the mayor or anything like that, but T-side Valley uh regeneration project for example, that sort of big infrastructure investment over time, it always brings over um enhances yields and allows people to get what we boring economists would call sort of supernormal profits and things like that. You can do that and then if you can afford to put all the money back into the company, you collect the net rent and then you put your next 20k in.

[00:33:51]Then you buy another one and it then goes 1 2 3 and a bit five 8 15 and that's how a portfolio can spiral over a number of years if like you like you correctly said how old are you all the rest of those things as well.

[00:34:05]>> That's really interesting and again like um because what we've both done and rightly so is assumed we've got still got the knowledge we've got. Yeah.

[00:34:13]>> Um, so actually what you what you what you might well say is for 20 20 from that 20k if we if we hadn't got that knowledge and if we're talking to somebody that is you know completely new use some of that to go and you know educate yourself for sure. Absolutely.

[00:34:28]Cuz obviously as we I know it's bit cliche these days but it's so so true.

[00:34:32]The best investment you'll ever make is in yourself.

[00:34:34]>> Yeah.

[00:34:35]>> 100% always. Yeah. And we're constantly doing that >> and there's a massive queue of places, people and wherever else that can help you lose that 20k and more.

[00:34:42]leverage it on crypto and see how you get on, you know. Good luck.

[00:34:46]>> Yeah. Yeah.

[00:34:47]>> Yeah. I think it's important to highlight as well that from the kind of perspectives that were were coming out, obviously from from your side, it's super passive. You know, it what is it a couple of hours we'd have a conversation, you go like this is the long-term plan, leave it with us and we'll get you the return.

[00:35:03]>> Obviously on on your side of the fence, it's time equity that goes into that.

[00:35:08]The scalability and upside is obviously a lot bigger, more exciting, but obviously that comes with an element of risk with it. From the risk perspective, what is a worst case scenario for the property side?

[00:35:22]>> Well, I suppose what's the I could answer that by looking at what's the worst deal I've ever done or I could answer that by looking at what's the worst deal I've ever bought that has been on ultimately something that's gone wrong for somebody else. So on our side of things, uh the the probably the certainly the worst deal we've ever done in terms of where we thought we would be versus the actual returns. Uh it involved leaseold. Um we were told and we had photographic evidence there'd been a roof repair a significant cost a couple of years before. It turned out the freeholder was a local crook. He'd kept the money from the roof repair that the things on Google, it weren't wasn't AI generated or anything. These were genuine photos from Google Street View where there was scaffolding up and all this was done. Um but ultimately two flats that look really really cheap in a block of four four weren't cheap at all.

[00:36:12]Now we had two choices there. Um because there is effort involved as you say and we're willing to put effort involved but not where the effort is going to be asymmetrically rewarded you know. So we would have needed to sue this person.

[00:36:26]They're arguably a local gangster there.

[00:36:28]All these other things. Is it worth doing that or is it worth saying hands up, give up, sell them for whatever whatever the hell we can get for them?

[00:36:36]Um, so we lost money on a deal that looked like we should have made money.

[00:36:39]Now, the sort of money we lost is the sort of money we would make up in the next deal. So, don't cry for us, Argentina, right? Don't get me wrong, but still, we didn't go into that. We didn't go into that to lose money. It took effort. It took uh, you know, the co-directors were understanding, but it's not funny. You don't you don't go into to business to do that. But you can very much lose money in property like that even though everything looks like you've done the right thing. Um what the some of the bad decisions I perhaps I'm going to focus on some of the bad decisions I see people make time and again. Um like there are sort of timeless ways on the on the tactical level you can add value in property. So turn that generous two bed into a three bed. Right. There's that's a a classic.

[00:37:22]certainly been around since I remember hearing that on the circuit when I first went out to the networking and it still works today. Doesn't sell many courses.

[00:37:28]It's not that sexy, right? There are probably some quite clever AI ways to to do that these days that that would help you with doing it. Um, so one of the silly things I've seen is the reverse.

[00:37:39]So when people actively destroy value, so they knock a bedroom through to make it into like one huge bedroom that maybe they used for goodness knows what as a podcast studio for example or whatever else, right? Anything you do to a property that's very niche for you is not going to help it appeal to the wider market. So it costs you money to do it.

[00:38:01]It then destroys value. It causes people a problem because how do you then value things like that? Have you changed something where you then need planning to put it right again? Again, you're going to put off a lot of people by doing that. Some of the worst lots I've seen for sale in auction is when someone owns two properties next door to each other and they sell it as one lot because no homeowner is going to buy that, right? But only a developer investor is going to buy that, sort the problems out. And of course, when we're sorting out problems, we expect to be paid for sorting problems out. So value destruction is quite easy. And and that's the difficulty with being actively involved. You can make mistakes. The mistakes you can make in stocks are maybe more like selling at the wrong time, losing losing your bottle for one of a better phrase or not being able to sit on your hands when the chips are down and trustworth when he has that difficult call with you that says, "Yep, okay, we're not we're all not doing that well, but now is not the time to get out. Let's >> there is a global pandemic, but don't worry, stick with it. We'll we'll get back there."

[00:39:00]>> Absolutely. It's an interesting one because um you know you were saying about the um you know knocking it into a bigger bedroom all that kind of stuff.

[00:39:06]It's um it's not dissimilar that it's kind of you know the in that in that scenario it's been uh purchased as an investment. So you you're trying to think as an investment to make money but the natural human tendency is uh wouldn't this be really nice? Wouldn't this be really cool? And it goes it's similar to kind of the conversation I was saying earlier in terms of I really like Teslas or I really like yeah you know I use Amazon all the time or and again I'm not saying those are bad ideas but they're the wrong reason to do it.

[00:39:36]Yeah.

[00:39:38]The human nature kind of kind of side of things when you're it's trying to se separate yourself being objective having that process no matter what your investment vehicle is. And I think some of that's that's a really good way of drawing a parallel between real life and and investment. You know, ultimately property primarily exists for us to live in. Absolutely. And you should, in my opinion, try and make your environment, your day-to-day environment as good as you possibly can.

[00:40:02]>> Um, but if you don't have half an eye on what it does to the value, then it might make life more difficult for you or for your heirs or for whoever else realistically.

[00:40:11]>> Absolutely.

[00:40:12]And on the risk side for stocks and shares, what is a worst case scenario?

[00:40:18]>> Um, yeah, we that's so wide because ultimately depends on what you own.

[00:40:26]>> Yeah.

[00:40:26]>> So if you know worst case scenario if you're you know if if you're uh buying stocks and shares and you've got a single company is a single company disappears and you lose everything.

[00:40:36]There is a worse more the more more worst case scenario that terrible English um that uh if you add leverage to that for example which again you know is not might feel like you know leverage stocks um that kind of might feel a little bit like it's it's out there somewhere but this this was happening in 2020 and 2021 when when um you know younger investors shown and Gen Z was loads of amount of energy to make a start but we're getting caught up in kind of you the Terral Luna side of crypto leverage, you know, 3x leverage.

[00:41:10]Um, it sounds like I'm having to pop a Tesla, but it keeps coming in my mind.

[00:41:13]3x leverage ETFs, um, that that kind of stuff. Um, so yeah, I mean, you you can end up uh owing the uh >> owing the the company as well. But >> yeah, remember, look, 1929, it was 10 for one, I think, and that's what caused the problem because it becomes all speculation and not not based on >> it's not investing fundamentals. That's that's the difference. But in terms of if I bring it back to kind of our world, real world I guess is um uh would be ultimately you know taken out at the wrong time because we we do get draw downs. So for example I mean this year is a really good example to explain that. So I explained how we position which is based on data and analysis um and a really kind of strict process. So, we're positioned a certain way coming into the year. Um, and and the market plays out in terms of um exactly as our analysis was telling it it is most likely to we never say it's certain obviously um and that that was brilliant. January, February and then Trump decides to rate Iran and and what happened during that period of time specific to to to kind of market dynamics is the things that were let's say the things that were winning in in in Jan Feb and and into March which should have been winning based on the scenarios that we played out and the analysis that we' done just completely flipped um and and switched aside from energy that carried on working but because of oil prices Um, and that that's that's kind of a a danger that if you are then inexperienced in the markets, the danger at that point is to react to that scenario. Right? The world's changed. Um, sometimes it does, but the world's changed. I need to flip this around. But really, that's when you go back to process analysis. Uh, understanding also understanding things like, you know, Trump is a macro factor.

[00:43:09]Um, you know, there's a great analys um >> starts with MF Wiz, but it's not that great wearing the red hat.

[00:43:19]We won't go to politics. Um, but yeah, it's a really good one. Um, but there's there's a great um analyst that I'm connected with and he he's literally devised a Trump playbook. Um, and he he has a playbook. He 10step playbook. So it goes back from his first term, Venezuela, Taris last year.

[00:43:41]>> So the start of Fatan, >> McDonald's, but in fairness, not too dissimilar. Um and yeah, and then kind of kind of very much just go through. So you've and this is where kind of um the understanding of of of of how these things have played out historically. you know, I'm a nerd for the market history, but understanding those things, how they played out in history, how these different macro factors, how how individuals work. Um, to to then look at these things and think, well, hang on a minute, no, we're at this point. The likely next point is this. We don't know how long that's going to take, and we can't predict that that's going to happen, but the most likely outcome is this and being being patient through it.

[00:44:21]Um, so to kind of go back in circles, but I think the the the biggest risk factor uh when you're investing um more broadly as opposed to kind of trading stocks when you're investing is actually yourself.

[00:44:36]>> It's that human instinct, that human nature. And you me mentioned ear you mentioned about kind of, you know, um not so good and the phone's ringing and stuff like that. I think from a professional perspective, what's really important, we always try and get out in front of things. So we're we're really, you know, I'll send a weekly newsletter when if something was to like it has kicked off constantly in the last few weeks is I'll be writing a note on you know seeing what's happening over the weekend pop a quick note get that out because it's it goes back to the point around education. The more people understand uh or the more people are made aware the more they understand the more they're able to handle deal with uh compartmentalize move on with their lives and not worry about the the the stuff that's going on. I think that's just good business, isn't it? Pushing the communication before it's pulled from someone ultimately is is good business. And that that makes loads of We've got a lot in common there. And I think you you've mentioned education a couple of times, which I'm I'm a definitely a big fan of. And then also then sort of economic history, which I wish I'd paid more attention in history at school. I don't know why I didn't like it more, but economic history is so valuable because it's exactly what I do when I look at what's the market done over this period, what were we expecting. One of the things I was a big advocate of saying to people, look, stop investing in London 2016. It was pre-rexit, you know, early because the market had already peaked. It was nothing to do with Brexit.

[00:45:55]Realistically, Brexit didn't help, right? We're 10 years down the track now. And the people who in 2016 were saying, you don't know what you're talking about. My friends had these returns and things like that. And I'm like, well, look, >> the key word there is had. You've had those returns. I remember a year in his LinkedIn when it went up something like 22.3%. I said there is that's not possibly sustainable. If you were in, well done. If you missed it, guess what?

[00:46:19]You missed it realistically. So don't go and chase that now. Look at where there maybe, you know, past performance is no guarantee of future returns. There's a reason why the make people say that, right? That's the thing. So you know history and cycles and going back especially when you're talking about wars and things like that sometimes and when we talk about pandemics you had to go back 100 years or even 300 500 years where there are only very very basic macroeconomic measures but they were there and the sort of stuff that I went and studied when the pandemic came >> aka inflation is going to be raised maybe by about 1% maybe for up to 30 to 40 years. I was saying that I don't think people were taking me seriously, but now we're five or six years down the track. We've obviously had much more than 1% inflation loaded on, but it looks like we'll have ongoing inflation.

[00:47:09]And the reality is the government's not that upset about it because how else do they get rid of the debt apart from anything else? But you couldn't do do better than looking at macro history because it puts everything into perspective for you when you when you as you said the I very much identify that the greatest risk is yourself.

[00:47:26]Absolutely.

[00:47:27]>> Yeah. Yeah. No, I like that from a kind of I suppose looking through the noise from this is more of a generic question for the for the the pair of how you know from a simple uh perspective of at the moment it's all kicking off in Iran oil prices are you know going up there's going to be risk for some flights to be cancelled there's this that and the other however despite all of this information the markets do continue to go up property prices obviously a little bit flat how from a kind of looking forward perspective, you know, for for me that sort of smells a bit like a bubble and the fact that the markets are sort of still going up despite everything that's going on, particularly from an oil price perspective, which obviously has an impact on the wider economy.

[00:48:13]>> How do you kind of take all of that emotion and that noise away from your decision- making?

[00:48:20]>> Yeah, it's a that's a it is a really good question on on multiple levels. So I think um I mean in terms of the market still going up I probably challenge it in terms of which market um and also they didn't they they they did fall >> yeah they did fall in March but they have recovered pretty quick again uh as they did as they did last year um and I think actually it's uh yeah so so looking from from from two perspectives is um I would never ignore the noise. I I would really encourage I guess I encourage our members to ignore my clients to ignore the noise.

[00:48:56]Um and they probably do anyway because I think Wes is taking care of that which is absolutely fine the way way it should be. But it's really important actually that you uh it's the noise. It's not the noise you're listening to really. It's often the source of the noise that you're paying attention to.

[00:49:11]>> Um the noise is popular obviously it's media. It creates news. It's easy to listen to. But actually what's the source of of the noise and what's what does that really mean? Um so the for example what you've just described the the the oil price um scenario what we had for probably a 2 and a half 3 week period is a really binary market uh environment where if the oil price went up, energy went up, stocks went down. Um if the oil price came down, stocks went up and energy came down. And it was literally that bi binary for about two or three weeks. So what you do during that time is you think that's a bit mad.

[00:49:51]Let's just leave that alert for a bit and see what happens. And that that is the kind of the reality with with all the analysis and data we've got coming in. It's kind of that's that's not usual.

[00:50:02]>> And it takes obviously knowing history to kind of understand that that's not usual. And I think in terms of giving you a bit insight what I think in terms of what's what's happened to to to that is um I guess more so US but particularly globally I I think markets have you know the Iran thing was big big big big and I think it's kind of okay well you know oil is is still pretty high but um it's almost a butterfly effect so it's kind of this is really important right now um this is happening it's still happening it's still happening AI and and it's kind of the the it's come back over here again and I think the market has kind of priced in $100 uh a barrel oil and it's looking through that and going back into what because we're in earning season now in the US in particular again still the biggest market um and it's looking at what companies are delivering now in terms of the earnings push through based on where their their their kind of multiples are so it's kind of getting down to more fundamental stuff. So noise noise noise what the fundamentals are that's what's actually driving it. Um so it's a it it's it's a fascinating kind of dynamic. Um but you've got to pay attention.

[00:51:14]>> Mhm.

[00:51:15]>> Um not just ignore. You got to pay attention but you've got to be able to tune it out.

[00:51:19]>> Thinking about your next development.

[00:51:20]Finding the right piece of land shouldn't be guesswork. Using exclusive data from the national planning portal.

[00:51:26]Terraquest land finding service delivers powerful land insights revealing offmarket opportunities. Verified ownership data and planning intelligence. Make faster, smarter decisions from day one with the UK's trusted home of planning and infrastructure. Discover more at terraquest.co.uk.

[00:51:45]On the the point of AI, that that to me that's the kind of >> the bubble talk. Okay. Yeah, I can give you my view on that if you like. Um so um AI is a bubble. everything's a bubble but does not all bubbles have to burst um collectively as one thing right so I think uh what we've what we've had already and I think this probably where uh people are just kind of uh I guess looking at AI in a total I think AI is incredible amazing transformational generational uh kind of and I'd even tag onto this uh thought that it's the new industrial revolution because I genuinely think it is and it can get there um but uh I think we've already had a couple of little bursts within that broader bubble. So, um whether you know or not, but the um the software complex within the stock market has had a horrific selloff this year. It's recovered a little bit. Um but that's because, you know, a lot of it has sold off. So, this is things like uh you know, workday and >> SAP.

[00:52:47]>> Yeah. Yeah. Absolutely. Yeah. um um Salesforce, those kind of companies because again, you know, with the development of an particularly anthropic and the way they're pushing, you know, what they're doing with Claude is is mind-blowing. Um >> uh all of those kind of things have have been cut in half or worse. So, I think um you know, if AI is a bubble, I think elements of that are getting re are getting tested as to whether this is can this carry on, can this not carry on?

[00:53:17]you know, some some really good stuff that's going to be fundamentally important past this will get dragged down with that and that's where opportunity that's the whole point of investing and stocks. That's a massive opportunity because you know things like cyber security are going to be even more important in an AI world than than they were beforehand. So to tend to get dragged down is is is strange but um but I I think um that's where we will see it happen almost like in 2021 or or uh or 22 uh whilst we didn't see a global recession I think we saw sectorbased recessions I think we saw recessions little recessions in technology little recessions in construction and I think that's the way that the AI kind of thing settles itself out to move forward.

[00:54:02]interesting from the property perspective. Obviously the kind of would that industry is not really or investment strategy is not really impacted by that sort of input. However, the regulatory side obviously that's where the kind of unknowns sort of happen where the panic selling sort of begins where you know there's been I think I saw an article yesterday a quarter of a million less uh landlords in in the market.

[00:54:28]>> That's the prediction by the end of 26.

[00:54:30]Yeah. Yeah. So from I suppose lack of not so much an industrial revolution type technology that can just wipe out stock straight away. It's more so from a government pressure, tenant pressure, you know, market pressure in that sort of sense >> from that sort of perspective. Where are the risks with property?

[00:54:52]>> Yeah, it's fantastic question and there's there's macro factors to to explore within all of that as well. So, I I like to I'm going to be quite long here, so I apologize in advance, but context is super important. And what frustrates me day in day out, listening to some podcasts on the way up here, and there's not context being provided. So, politicians do this all the time. They kind of do it deliberately. They want a figure that any of us are going to remember and go, right, that makes us think X or Y. Whereas really, context is everything, right? For example, the welfare bill is not dramatically higher as a percentage of GDP than it has been over the last 40 or 50 years. But you wouldn't believe that if you read certain podcast, newspapers, substacks, whatever, whatever. Right? So between 20 2002 and 2015 by tolet sector more than doubled in terms of how many homes there were to rent. Now some of that was because ultimately there was the right to buy and homes were not being replaced. They're not replaced by rebuilding when right to buy is exercised. Right to buy now in terms of the number of units we lose every year from the social sector is low. It's under 10,000 properties a year. So, it's not a big deal. Um, social rent waiting list has not really moved much at all in the past 12 or 13 years. Over a million homes, granted, it's terrible. It's especially in certain cities there's absolutely no hope whatsoever of a social home in our lifetimes around this table especially for three and four bed properties. So it's bad but it's not getting worse per se. In fact as a percentage of population it's probably getting better. There was and you won't hear many property people say this but this is the truth. There was crowding out that went on with Berlett and that's what motivated I think part of what George Osborne started in 2015 where I would say the hostile environment towards landlords began right since then the sector has pretty much flatlined and of course we all know I'm sure that the population has grown since then but the sector in terms of supply has flatlined what you've also seen and certainly what I've also seen is that alternative uses have grown significantly they now one of those HMO creates more units. The rest of them take units out of the private rental sector. So short-term rentals leasing to a housing provider. Leases to housing providers have gone up and up and up and up. And if you think about just pick asylum for example, the government want people out of hotels, they've got to put them in private sector housing, which there's a little bit of awareness of and some significant misinformation spread about by certainly one political party, but we're not going to get political, so I'm going to I'm going to leave that one alone, but it definitely starts to inform investment decisions. So, people can't necessarily, not everybody wants to buy. This is the bit that the the leftleaning media tend to leave out. People want to rent.

[00:57:43]Sometimes it's a good idea to rent. When stamp duty is as high as it is, certainly in London, if you're a firsttime buyer, even with the stamp duty exemption, your average stamp duty contribution is 3% of the value of the property. So they're first- time buyers there are dealing with something they weren't dealing with 10 years ago, 12 years ago when they reformed the stamp duty side of things. So you've got a a historical context of there was supern normal profit being made. The berlet sector charged on post 2008. Even with the near withdrawal of credit for a while, people had houses and they bought a second one or they rented theirs while they worked things out. They did all of that. That's now in complete reversal.

[00:58:28]So ultimately the outcomes of that, as we'll probably all know, is likely to be a shrinking sector or even if it stays flatlining, it still shrinks as a percentage of the population unless population falls. right well below the the birth replacement rate. We've met Metron Elon Musk a few times. He's obsessed with this stuff about the depopulation of the planet. He's trying to do it on his own to repopulate it.

[00:58:51]You could say him and Boris Johnson together done some good work in that department if you look at it like that.

[00:58:56]Um so there there is that side of the argument to consider. And if we have more people leaving the country than coming in and again this gets politically completely confused by well everyone's leaving the country because of the tax or something. It's not what the figures say at all. is more to do with students than it is to do with anything else. But immigration rules have rightly been tightened because ultimately from an economic perspective and again you don't hear many people say this. If you came to the country as a student, we probably want that. If you come and bring three dependents with you as a student, we probably don't want that because we can't can't necessarily afford that in the now, right? Depending on if you're a nuclear physicist or someone we really need or whatever, we'll probably swallow it, right? But if you're just coming to do a course somewhere, we probably won't. Um, so that that's all sort of been tweaked in 2020 uh 2023 2024 by the last administration and now we're seeing the the benefit of that. But when you have a million net migrants in a year, they need housing somewhere. And I I actually I've tried to do this. I tried to break down where did they go because in the numbers I was about 660,000 I just could not account for which meant they were probably sleeping in short-term accommodation sleeping on sofas staying within their communities from countries they've come from and things like that which is frightening and that takes time to sort of drip into the sector. Then you've got to consider how old people are. So ultimately 25 to 34 is a big demographic for when you're going to be renting as a general rule and maybe pre-25, but a lot of people are staying at home. Average first-time buyer, they make a lot of fuss about this, but there's a little bit of noise around that age has kind of stayed the same for the last decade or so. And actually, again, another thing you won't read in the Guardian, affordability has improved quite significantly of late. Wages are up 40% since 2019. House prices are not up 40%. Even though interest rates have doubled in terms of what people are paying on their mortgage, it's still more affordable for them to buy property. So those who can buy as a rule, if they're in full-time work, if they cut their cloth accordingly, if they don't want to buy in central London, we have to add all these caveats, right?

[01:01:00]>> Real wage growth, too.

[01:01:01]>> But yeah, genuine real which we hadn't had since the financial crisis.

[01:01:05]Significant wage growth above inflation.

[01:01:07]We've probably unfortunately tracked back now to where we're only struggling to beat inflation. And now with inflation being enhanced again because of Iran, the one thing we know is going to happen over the next >> 18 to 24 months perhaps maybe even longer than that is that that wage growth is being pulled back in towards but still break even maybe a small and then you've got the frozen tax thresholds which cause people problems but they don't cause the median or the average person problems because they're not earning at the higher rate threshold right they cause more the middle class however you want to define that they cause some problems >> but that demographic effect up to about 2030 the the population of renters when we're just talking about age is still growing. So they need more rentals not fewer. Then there will be a point when it starts to shrink slightly in terms of where we are. So that cycle up to 2030 2032 you're going to see more demand.

[01:02:01]Now you have to then look to places that have got better data like Scotland who've had regulatory changes years and years ago back in the last decade 2017.

[01:02:11]They took they made every teny periodic right and what you're seeing overall at the moment is fewer landlords year on year the number of landlords is down about 3%. But the stock is staying roughly level or has increased a small amount. Right? So at the moment it's keeping pace with population growth.

[01:02:29]Right now just because a landlord is registered doesn't mean they're housing in the private sector as I said. So the data starts to break down and you can't get certainly the level of detail that I would like. There are no there are no real sources for that. But ultimately um you know rent is needed a property provides huge utility. I must say over the past very interested to hear where's your thoughts on AI and they certainly concur with with a lot of mine realistically but I like to look at things that are relative rather than absolute. So ultimately property has got to be a better investment class in the face of AI because we aren't yet and we're despite what Elon says surely 20 years plus away from robots laying brick and we'll still have a horrific planning system right to deal with and all the rest of it. So it doesn't necessarily mean it solves a housing problem overnight. Then those robots have got to be cheap. Elon tells me we won't need money in a short period of time in which case maybe he can lend me a billion now.

[01:03:25]He's not going to miss it. He wouldn't miss it anyway. um it wouldn't miss it wouldn't miss 100 billion. Um but that that's where that's where we are ultimately. So property is safer in the face of an AIdriven world. Um but does that mean everybody's better off? I think we will all be better off and I do agree with the industrial revolution comments. Absolutely. But the pathway there might be bad before it gets good >> and there will have to be a repricing at some point as a business owner of of any size. I was chairing a panel on AI the other week and a guy who who owns anme said to me, he said, "I'm getting at least £10,000 a month worth of value out of a £75 a month claude subscription."

[01:04:08]Right? That can't go on. And apart from anything else, these guys aren't stupid.

[01:04:11]In fact, they're some of the cleverest people in the world. So extracting the full value via token charges or whatever it's going to be is going to be the way forward because imagine what some if you can take out your SAP bill and you're paying SAP $25 million a year and it's only going to cost you $1 million a year for one genius and a bit of Claude Claude will want 23 million of that pretty quickly and they're going to need it because the amount of money they've been spending on it as well. Well, the reality is I think um SAP um Salesforce, Workday, pretty smart, pretty pretty cashrich firms, >> they'll they'll they'll and and and equally when you've when you've got when you're a big enterprise and you've got I don't know, you might have >> 150 seats.

[01:04:53]>> Um you know, it's it's it's a big shift to move away from 150 seats with workday >> and workday are like it's are work days.

[01:05:01]>> What does that cost you in in lot in transition? Yeah. Yeah. Yeah. Are they likely also to be just using that as an example I don't know enough about word day specifically but um those kind of companies the software companies and SAS based based companies are they likely to work something out actually that they've got to benefit from AI more than any other firm so actually it's kind of isolating which one of those are likely to do okay >> absolutely agree and this is the we're in that transitionary period aren't we where we'll we'll see value massive value created then we'll see the value capture at the moment you're in the land grab stage. You know, if you proctor and gamble and you suddenly work out you can go to Venezuela because the regime allows it and this is how you sell fastmoving consumer goods in Venezuela, you're quite happy to lose money in Venezuela while you grab the land. Then when you own the land, then you're going to extract the value. That's all that's going on at the moment. Does that make it a bubble?

[01:05:55]>> Not necessarily. I do worry about people like Open AI who surely can't afford to keep losing 100 billion a year. Whereas the reality is the Googles of the world, they can afford to invest it rather than lose it because they're again sitting on huge piles of cash and they've got all these other facets to their their massive massive conglomerates that make a fortune web service.

[01:06:15]>> And if we're sitting uh this time last year, people are talking about Google Google's over search is dead.

[01:06:20]>> Yeah.

[01:06:21]>> Um but people forgot who Google were.

[01:06:23]Yeah. Right. and then and the the cash they have and the and the the brain power they have and you know look at if you look at the stock from from from then to now and and and also kind of you talking about the bubble side of things what we were talking about there in terms of this this transition period with AI and understanding where it's going to be uh a real winner and create huge efficiencies to to drive things forward or where it's going to take market share um that's where the volatility level comes >> um so kind of within a call it a bubble you'll have lots of lots of volatility but ultimately volatility creates huge huge opportunity too and I think um within within the property sector for example you know there's a lot that AI will will replace it's likely to replace it certainly does you can see that now a lot of uh what would be kind of I guess administration uh processbased tasks >> and I guess that could get reflected in the property market if you're in that commercial real estate office type of environment Uh so again I guess it's kind of um goes back to understanding your market. Um you know a lot of what we spoke about is residential kind of stuff but other kinds of property and being aware of that.

[01:07:34]>> On the flip side you might be looking at data centers and how they connect to the grid and that might be something you were looking at two years ago or even a year ago.

[01:07:40]>> Our second best performing asset this year is data centers. Yeah.

[01:07:43]>> Amazing. Great stuff to very quickly. So we've got two minutes. So to very quickly round the episode off I'm going to do quick fire questions. Okay.

[01:07:53]What's the biggest Yeah. Yeah.

[01:07:56]>> What's the biggest misconception in your asset class?

[01:08:02]>> You can lose all your money.

[01:08:05]>> That property makes money without making any qualification to that.

[01:08:11]>> Okay. And this is the question I've been looking forward to the most. Ask ask you Wes.

[01:08:18]>> Oh dear.

[01:08:19]What would it take for you to switch sides?

[01:08:23]>> Okay. Well, I did have uh personally I did have a little property portfolio going back. I think I had eight at one point. Um and it was kind of the epiphany of um I've got these um and they're a bit of a pain in the backside uh because I got I get a call about this and a call about that and a call about this and you can have an agent but they still have to ring you. Um, and I've also got this over here that never calls me, never asks me about a light bulb or a boiler. Um, and is earning I can control because I know it. Um, I can get a better return from or at least the same return from. Um, so my view on on on on property and again I didn't want to say this at the start because it kind of makes for a boring. The balance is important, right? Um I would uh if you're going to buy property by do it physically. I we have a house rule that we don't have any property allocation within our portfolios whether that be REITs or anything else because I think it's a real asset that you should do outside of >> Amazing.

[01:09:30]>> Interesting.

[01:09:31]>> I know your answer because you uh have got a very diverse mind. Well, I was going to say apart from anything else, a I believe you should use your ISO like allocation every year apart from anything else, especially with the the tax regime being where it is. So, nothing wrong with stocks whatsoever.

[01:09:45]But I would need to gain the same sort of edge that I have built myself in property within stocks. I'd have to go back to the books, back to the drawing board, try and do what Warren Buffett has done, reread Benjamin Graham, do all of that sort of stuff and say, "Right, how can I buy company stocks 25% below market value?" and and a bit of my fear around being able to do that dayto-day if you like because I do like to keep myself busy and keep things ticking over is when you listen to someone like Bill Aman let's say who's an amazing activist investor unbelievable genius most of the stuff he's done that's brilliant when he does gain those 25% discounts is when something in the market has allowed him so everything's got sold off because there's a pandemic that's when he's made these huge huge gains and he's going into fundamentally good companies that have just had a bit of a a downswing and then you got to sit there every day waiting for those things to happen in order to gain those big edges.

[01:10:38]Yeah.

[01:10:38]>> Um I wouldn't want to be a day trader.

[01:10:40]It's not my personality type and all the rest of it. So it's very much sort of hanging and who wants to spend their time hanging around waiting for bad things to happen in the world unless you get grid out of it. It's not it's not a nice way to do it, is it? So um I'm not I'm not completely I think everybody should diversify. I very much believe in that. I think you can diversify a lot within property and without property.

[01:11:00]But if you got you're making decent money, you should at least need to be putting your lifetime ISER allowance in. And you if you're under 40, you probably want to put it in stocks, right? So you should definitely be doing that. If you're making decent money, you should definitely be using your whole 20 grand iser allowance.

[01:11:15]Beyond that, the rappers now that pensions are back in the scope for inher inheritance tax and things like that.

[01:11:20]It's a bit more difficult than it was.

[01:11:21]It's back down to individual circumstances. But um yeah, like we're I mean look, let let it do the work for you. I'm all for that. But I think having eight and I don't mean to say this like wa look how many properties I've got, but it's one of those examples of a bigger business is easier than a smaller business at the end of the day.

[01:11:39]And if you so you have to be able to get from or want to get from eight to 50, let's say, in order to be able to have the people in place, the systems and the processes in place so that you don't have that day-to-day involvement.

[01:11:51]>> I think the big thing is knowing that it's a business.

[01:11:53]>> Yes.

[01:11:54]>> Yeah. We we I I see a few people that we've looked after that have exited businesses and built a built a portfolio not realized that they've created another business after retirement. Yeah.

[01:12:05]>> So, you know, often we've switched that out and done it a different way. But yeah, that makes that a business. Yeah, I think that's a big thing.

[01:12:11]>> Amazing. Well, it's been a pleasure, gents. Thank you very much for coming on.

[01:12:14]>> Thank you. No, thanks for asking.

[01:12:15]Thanks. Enjoy the show.

[01:12:16]>> Information show notes obviously put your Instagram, fintech, obviously Adam, everyone knows hopefully where to go to find your uh economic uh in your insights. I suppose that's what we call it.

[01:12:28]>> Do we call it that?

[01:12:30]>> I hope we do.

[01:12:32]>> Great stuff.

[01:12:32]>> Ramblings, something like that.

[01:12:34]>> Brilliant. Thanks again, gents.

[01:12:35]>> Thanks, mate. Enjoyed it. Thanks for having us.

[01:12:37]>> Thank you very much for tuning in. Uh obviously as Wes very kindly highlighted and took the words right out of my mouth. It's it's very clear to understand that stocks are a kind of passive investment. You pass your money to Wes and off he goes. Property a little bit more complex and it is a business in some regard. They're both will generate you wealth in some capacity as long as you're doing the right things following that process as been highlighted in this episode.

[01:13:02]Hopefully you've had some good insights from both sides. That diversification is a big big word from this episode for sure. There's no real right or wrong way of doing it. I think it just comes down to what your end goal is. And having a bit of both really I think is to maximize that exposure. As I always say, please do like and subscribe and we'll see you again soon. Looking forward to it. Bye-bye.