In the below market value industry there are very few investors that have not heard of Glenn Armstrong. Over the past 4 years Glenn has built up a personal portfolio of in excess of 180 properties and through his armchair investment service has purchased a further 80 properties for other investors. Through his training and mentoring courses Glenn has introduced hundreds of investors to the BMV market many of whom have gone on to build vast portfolios using his techniques.

Glenn remains the industry expert that many highly experienced investors turn to when they need advice on a deal.

Here Glenn talks to YPN about how he has continued to invest successfully at a rate of around 3-4 properties per week through the credit crunch and he also considers why so many investors get it wrong.

I qualified as a mechanical design engineer and the day that I actually qualified I handed my notice. At the time I owned a couple of suitcases of videos and a few video machines and used to go round renting them out. I found I was making more money than I could make in my £100 per week day job. I also found out about the politics of owning a better car than your boss!

My video business grew to be pretty successful, this was in the mid eighties when I had about 4 properties that were increasing in value by up to £30k per month. I sold some of the properties to expand the video business which I later ended up selling. I ran a number of businesses that were pretty successful but I was always on the lookout for the business that would build me real wealth.

I owned a property that I sold for around £250k which I had a mortgage of £40k after everything I ended up with around £120,000 which I decided to use to buy 6 properties. All properties were purchased below market value but of course leaving the deposit in I had run out of money.

When I was offered deal no 7 I didn’t have the money so this was when I started the BMV stuff. I borrowed £20k off of somebody for the deposit to buy and would then refinance with the lender to get the deposit back out. I then discovered the small print that would allow me to refinance immediately with mortgage express – this is when it got really big and I decided to set myself a target to buy 52 properties in a year.

We actually did this in 48 weeks but they all met our buying criteria.

My buying criteria has remained the same. I aim for each property to be £150 per month cash flow positive and in addition to get between £6,000 and £12,000 cash back on the deal.

The cash back is set aside for refurbishment costs or if it is a rent back to pay for any work to be done if the tenant leaves. As the cost of borrowing increased our buying criteria has remained the same but we have just been buying cheaper.

Cashflow. This is why I set up a leaflet distribution company so instead of having to pay for my marketing it was actually making me a small profit each month. It would have been very easy for me to have been spending perhaps £500 per week on leafleting but we put the effort in and our marketing ended up costing us nothing.

I went for 2 years doing this without taking a holiday and I only started running my courses because so many people kept asking “how do you do it?”

We have gone from around 25 people per month last year to around 15 but I am really pleased that most people who attend the course do so because it has been recommended to them. My mentorship programme is still extremely busy and this is because we teach people to buy for cash flow not capital growth.

If I can buy something and get £6,000 - £12,00 cash out of the deal and I know that it will make me £150 per month then why wouldn’t I buy?

There are a few, the first is getting deal fever which causes them to go outside their buying criteria. Some people seem to get obsessed by the number of deals that they are doing and will continue to buy even if they are likely to lose money each month as there is a rental shortfall.

Often they will fall into the trap of thinking so what if I will lose £100 per month on the property, I am getting £20k cashback. Then they go out and spend the cashback. If they then get the situation where they need to spend £10k on a refurb then they are in trouble.

Another very common mistake is mis-management, investors like to do deals but don’t enjoy actually managing the properties to ensure that the rent is coming in. It doesn’t take many properties sitting there empty for the whole portfolio to be costing money.

A very common mistake is overtrading where investors have insufficient working capital to support the number of deals that they are trying to do.

I now run a portfolio review service free of charge for investors that find themselves in trouble with a portfolio that is not working and am happy to take a look and see if there is anything I would do differently.

A year ago any mistakes that investors made were put right through capital appreciation, now that is no longer the case so you really need to know what you are doing and that the deal works.

Property is not a vehicle to get rich quick it is a method of getting very rich slowly. You can also come unstuck very fast if you don’t know what you are doing and I have met plenty of people that have bought lots of property only for them to regret their investment decisions. We teach people the way we have done it which has worked very well for us.

Working in property can also afford massive opportunities that you just don’t get by just working the 9-5. Nowadays I run a very tight diary so that I know every Thursday morning I play golf, it would be very easy to end up working instead but it is about quality of life.

I am very fortunate that I have been able to develop a number of very profitable businesses alongside building my own portfolio. I have also been very lucky with the staff that I have employed so poor management has not been a problem.

Yes we now have a number of companies that have run alongside our own portfolio. We run the monthly BMV courses as well as a number of specialist days and also I mentor a number of investors that really want to grow their portfolios.

A number of my original course attendees are now well respected property mentors and trainers in their own right. In addition I run an armchair investment service for those people that want the profitable portfolio without going through the pain themselves.

I also have a motivated seller lead trading site that enables investors to sell on their leads or deals to other investors. We are also now building our own property management software.

I would have started 10 years earlier! I know this is the typical response that you hear from investors but it’s true. I am lucky that most of my deals have worked out really well and again I think this is because we don’t step outside of our buying criteria.

There is one deal that I look back on and cringe a bit – in the very early days I made all of the classic mistakes that you see Sarah Beany telling people not to make by spending loads on a property and decorating it to my own taste. We did end up making a £5k profit on it but it took a year to sell!

Article from the BMV Property Investment Magazine - Your Property Network Magazine.

Reproduced by David Kyte from the online Property Mentoring website - Property Cow