ASK538: I can quit my job tomorrow. Should I? PLUS: How do I future-proof my portfolio for the kids?

0:02Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, welcome to Ask Rob and Rob, the show where you give us your wonderful property questions, normally property anyway, and we do our very best to give you a great answer in return. We'll try that format once again this week. But before we do, let's give you a quick reminder of how you can get your question on the show.

0:23Rob D:Yep, it is so easy. You just have to go to propertyhub.net slash ask and once you're there you can leave us a voicemail which is amazing because we get to hear other people's voices on the show and we get to hear questions that take us into areas that we would never otherwise cover so we love it and helping us to do that today is liam hi rob and rob my name is liam and i live in devon in the southwest i currently have one hmo i have a couple of single lets and i run a little construction company with my business partner at a bit of a crossroads as to what to do at the minute for a long time I've been trying to replace my income obviously the the HMO is massive for that because it's like a a third of the way to replacing my monthly income so I'm in the process of refinancing my house my business partner who's also on the same sort of trajectory as what I am also an avid listener he's just refinanced his house so we've kind of sacked off what we're going to do work-wise for the rest of the year with the intention of doing projects for ourselves i'm just a little bit stuck as to what to do because i feel like i want to replace my income as quickly as possible so i can crack on and do projects that sort of more brr stuff that maybe me and my partner do together but obviously then i'm spending all of my money that i'm going to get out of my refinance so i could literally replace my income now with buying two more hmos with the money that i'm going to refinance out of my place but i'm not going to be able to recycle that money or do I recycle my money with my business partner we do it together that's sort of our bread and butter and then we take it in turns to keep the single lets because I think that'll be the way to go I'd like an outsider point of view as to whether it would be best to replace my income straight away and then just roll with the punches with whatever comes in so yeah if you could let me know what you guys think it's worth noting that probably could get hold of some investor finance as well from a few people that we work for a few customers a few friends thank you thanks for your shows always listen every tuesday and thursday liam this is a dilemma because the attraction of fully replacing your income and being effectively done is well it's very appealing it's the destination that so many people are aiming for and if it's there if you could do it it's within your grasp then of course you're going to want to do it but there is as you've noticed a problem because it does bring you to a dead stop if you end up putting that money into HMOs then that's you spent and there's no prospect of getting that money back out then you are done you can't expand your portfolio anymore if the desire is there or if your circumstances change then maybe that's not necessarily true because you've said that you've got the ability of bringing in private finance from other investors which is great so you could use that for future projects but I think there is a lot to be said for having your own money in a deal for lots of reasons.

3:11Rob D:One of many being that it will reassure your investors and they'll be far more likely to offer you money on better terms if they know that you've got skin in the game as well. The other thing that I would push on a little bit is saying, well, let's do buy, refer, refinance and then go on to single lets. And what I would say to you, Liam, is pretty much the opposite of what I would say to the majority of people, because you've got a true unfair advantage here. You've got the ability to add value. And that's something that most investors can't do or at least they can't do it better than anyone else.

3:39Rob D:So for most people I'm saying keep it simple just buy the single let buy something that's ready to go let time do all the work but it's different for you because you do have this ability to add value. So I'm wondering if there's actually a hybrid here could you buy an HMO with the intention of holding it for the long term but buy something that needs the work doing first. So you're effectively doing a buy refurb refinance HMO model so you end up with the asset and the income that you want from it but you haven't locked up all your money in the process. Maybe you don't get all your money back out but you get some of it back out.

4:11Rob D:Alternatively maybe you split the difference. Maybe you do just go into one HMO and leave your money there but you keep some of your money aside for doing other projects and so you're getting yourself closer to your income goal and you get to feel good about that but you still have some capital for executing other projects. I know I haven't given you a complete oh here's the roadmap here's exactly what you do but that's because I don't think it's possible. I don't know your situation in full. There's going to be lots of factors and it's different for everyone. But what I'm trying to do is break you out of black and white thinking.

4:42Rob D:I think a lot of us, me included, fall into this position of, well, I need to do this or that. These are my choices. And often rather than options A or B, there's actually an option C, D, E, F that are there somewhere if you just push a bit harder. So Liam, congratulations on everything you've achieved so far. And I hope that helps.

4:58Rob B:Let's listen to our next question in from Ryan.

5:02Rob D:Hi there, Rob and Rob. A huge thank you for everything you've put out over the decade. You've been a huge part of my property education and journey, that's for sure. Having now built a portfolio and continuing to grow, my attention is now turning to hopefully my future generations, keeping the portfolio growing and not being sold upon my death. So from wills to trusts, what do i need to now be considering to really future-proof things so that it can like i say continue growing sustainably and benefiting generations to come many thanks in advance

5:39Rob B:cheers ryan thank you for your question first of all massive congratulations on all your success you've obviously got to a really good point to be in this position where you're thinking of these things it's weird as property investors right we don't often get acknowledged for these things that we achieve nobody's going out their way to say well done for building that i know it can be a lonely game so to you and everyone else listening who's done something property well done onto your question though it may not shock you this answer but you absolutely need to get tax advice we are not tax advisors we are not tax experts so do not now take what limited information i'm about to give you as tax advice it's not and I'm not just doing that as a disclaimer to protect myself it's the right thing to do right you've built something really valuable and really meaningful and I don't know anything about you and never take advice from somebody who doesn't ask about you and wants to understand your situation before giving the advice with that said let's try and offer some value so some of the things that may be presented to you are a corporate wrapper so a way of using a limited company to allow you to have a legacy play.

6:55Rob B:It may even be something like a family investment company as well. That's a possibility. But you have different types of shares within these structures for you and whoever you want to pass the portfolio on to. And that is more common than you'd think. And most tax advisors slash accountants will be able to guide you through that process. I'm not saying it's right for you, but it might be something that's presented to you. Of course, there's trusts as well. Trusts are the famous one, right? That's the one that most people have heard of. Not many people understand, but most people have heard of.

7:31Rob B:They are complex though, and that's why most people don't go ahead with a trust. It doesn't mean you shouldn't, but it's not for everyone. For some people, it's brilliant, but that is something else that may come on your radar when you're speaking to an advisor. Of course, a will in general is an absolute must. And making sure that will is tax efficient is key. It's not going to be enough just to have it well written. That alone probably won't be enough. But again, this is something that a good advisor will be able to help you. Whatever strategy you deploy, a good will alongside it will make a big difference.

8:10Rob B:but whether you go ahead with the rest I've talked about having a will is just a must really you should do that and then whatever you end up setting up the most important thing you can pass on to whoever you're putting in this very lucky and privileged position is your education it is so important to educate the people who are going to benefit from this legacy that you've built because you've put the hard yards in. You've learned through pain. You've learned by doing. They're going to be in a position where they are already at a head start and they haven't had the lessons. So the lessons are just as important from a legacy point of view as the structure you put together.

8:56Rob B:A lot of people do the structure but don't do the education. And it's no surprise that it doesn't take a lot of time for one or two generations to squander through any wealth that's been created. And you could say, well, that's not their fault because they probably didn't have the education. And that is my biggest advice to you and to everyone else listening that yes, get your structure put in place. That's the obvious thing to do, but don't forget the education part. Best of luck.

9:27Rob D:All right. Well, that is two more questions answered, which means our duty is done and we can leave you to get on with your day. We will be back again with the Property Podcast on Thursday. So hopefully we'll see you there. Bye-bye.

9:36Rob B:Bye-bye.