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No `magic' here, just misrepresentation!
on 19 March 2011
Although this book focuses purely on the UK market, so it is more relevant to a UK investor than other books on real estate, if you have already read your Robert Kiyosaki and Dolf De Roos, you will already know the difference between an asset and a liability and that you should only buy properties at below market value (BMV), so that makes about 70% of the book redundant. As for the UK-specifics, these are explained in more detailed in other books.
Please also note that this book is only 136 pages long, and the last 30 pages are essentially advertising for the author's course (with more of the same interspersed throughout the book). Basically, much of what you pay for is advertising.
Does it at least deliver the goods it offers on the cover? If it did, one wouldn't mind the advertising, or the redundant repetition. On the cover it says:
"2010 and beyond revised edition. How to buy property using other people's time, money and experience."
If you are an experienced investor you will already know about the day-1 remortgage deals that USED to be available from Mortgage Express - and you will also know those deals were withdrawn way back in 2008. So I bought this book as a bet more than anything else, because I had every reason to believe it would not deliver what it promises. Unsurprisingly, I was right.
After pointing out that the day-1 remortgage cannot be done any more, the author suggests earth-shattering alternatives (not) such as:
1) Remortgaging one's other properties to raise a deposit (if you already have a portfolio chances are you built it by remortgaging, so you don't need this book to tell you about it!)
2) Digging into personal savings or hidden assets (but hang on, that's YOUR money, isn't it?)
3) Asking someone who is planning to leave you some money when they die to gift you the money now (which is both presumptuous and in a very bad taste, not to mention the fact that they will probably need it themselves while they are alive. Plus, one's inheritance-to-be is not other people's money!)
4) Doing a joint venture whereby you put in your time and expertise and someone else puts in the money (but hang on, people who have money to invest are not stupid; chances are they will buy a property in their own name and have it professionally managed; it's much cheaper than doing a JV with YOU!)
So, to claim this book shows "How to buy property using other people's time, money and experience" in "2010 or beyond" is a misrepresentation.
Additionally there's nothing in this book for the experienced investor. Nothing, nada, zilch!
Does it at least offer something of value to the newbie? Yes and no. I mean, yes, it does offer, very briefly (remember, it's a very short book) some of the nuts and bolts, but IMHO it also mixes in some very dangerous advice (see below). This is worrying because a newbie may not be able to distinguish between the two, taking both at face value.
To maximise the cash flow that can be obtained from a property the author advises multi-occupancy lets, i.e. HMO's, even to newbies!! What he sadly forgets to mention is that:
1) with HMO's you are really scraping the bottom of the barrel and attracting the least desirable type of tenants
2) many lenders don't allow HMO's, and those who do may charge you a higher interest rate
3) in addition to the possible need of becoming a licensed landlord (which the book does mention) the rules, which already involve considerable outlay and red tape, are undergoing further tightening
4) there are experienced landlords such as myself who would not touch HMO's with a barge pole because of the additional pitfalls they entail, so why recommend this type of investment to a newbie??
Yet, recommend it he does. There is a section entitled "First-time buyer multi-let strategy". Now, THAT is a recipe for disaster!
The only reason I could imagine for anyone to encourage a newbie to become involved in multiple lets would be to sell them a property (or a `deal') which would not stack up as a single self-contained unit - in other words, a lemon.
Also worth pointing out is that most of the case histories in the book are very dated and relate to deals that are no longer available in today's mortgage market (as already mentioned above). Worse still, some of the deals we are supposed to be awed by actually don't stack up in my book (and shouldn't stack up in the author's either, if he were consistent).
For example, in the good old days of 85% LTV BTL mortgages Susan Alexander (who attended a Property Mastermind Programme) paid a finder's fee for the privilege of buying a property at an alleged 20% discount. The property was allegedly worth £110,000 but she was lucky enough to have it offered to her (for a fee) at a paltry £88,000, which she cleverly reduced (after paying a surveyor for a valuation) to £86,400. Sounds like the bargain of the century, doesn't it? But wait a minute, she says the rent she agreed on it was only £440 per month, and she reckons `in time this will break even." But hang on, Zutshi has been preaching that you should never, ever, ever buy a property that does not give you a positive cash flow from day 1, and then he goes and sells `deals' like this where the buyer isn't even breaking even? Hardly an endorsement for his Property Mastermind Programme. You don't need to be a mastermind to find a better deal than that!! For a property that doesn't even fetch £500 a month, a savvy investor would not have paid more than £80,000 (tops), even in a buoyant market. And to claim that she had £13,500 in equity after paying £86,400 for it (plus a fat `finder's fee') is, frankly, delusional poppycock.
This book may, however, be useful to Mr Zutshi if it will bring him complete beginners who are eager to pay him finder's fees for such ridiculously poor deals.
If Mr Zutshi is such a `magician' with property, which he claims still to be able to buy with no money of his own (although he does not tell us how), then what is he doing running up and down the country running `meetings' and courses, instead of looking after his properties and adding more to his portfolio, since property is where the real money is?
This list below is from his website (...):
* Southampton - meetings 1st Tuesday of the month
* Worcester - meetings 1st Wednesday of the month
* Cardiff - meetings 2nd Tuesday of the month
* Bristol - meetings 2nd Wednesday of the month
* Watford - meetings 2nd Thursday of the month
* Nottingham - meetings 3rd Tuesday of the month
* Manchester - meetings 3rd Wednesday of the month
* Birmingham - meetings 3rd Thursday of the month
* London - meetings 4th Tuesday of the month
* Leeds - meetings 4th Wednesday of the month
* Cambridge - meetings 4th Thursday of the month
And these are just the monthly meetings! Much more time (presumably the rest of the month) will be used to cater for the people who sign up to his `Mastermind...' whatever.
I'm sorry Mr Zutshi, but I'm not convinced. Like some of the deals you describe, this doesn't stack up!