2017 my first £1 Million milestone

2017-05-16 at 18-40-09

Cafe in Nice at the time my portfolio passed the £1 Million mark

I couldn’t have been in a better location when my overall portfolio of shares and property passed £1 Million net value. I was in the South of France, in the beautiful city of Nice having a few days away following a busy first part of the year. It was a particularly good week on the markets, I was sat outside a cafe enjoying the company of my partner and watching the world go by, we had ordered champagne for no reason other than ‘why not’! It was May 6th 2017 at around 6:40pm when I checked the progress of my shares which had increased sufficiently to push my overall portfolio across the £1 Million mark. My first instinct was to message my old business partner, however in my excitement and after one or two glasses of bubbles I sent the message to the wrong person!

IMG_2098

Investment, Patek Philippe Nautilus

I wanted to mark the occasion and I always thought that I would buy myself something, perhaps an item that would appreciate in value. A friend had introduced the watch brand Patek Philippe to me, having researched I found that these watches can be a good investment. Later that year I took a trip to London and purchased a Patek Philippe Nautilus, a second hand model from Burlington Arcade which bizarrely was considerably more expensive than a new one. However, having visited the Patek Philippe shop on Bond Street I was quickly illuminated to the 8 year waiting list for a new Nautilus which is currently closed to new names!

I loved buying this watch, I love wearing it, I love what it stands for. I feel an immense sense of appreciation every day that I hold and wear it. I think of my life so far and all its blessings, particularly those that light me today. I hope one day to pass it and its story to a younger Barraclough generation.

IMG_0773

Portfolio screen shot at the time it passed £1 Million

My overall portfolio is spread across property and shares, at the time more weighted to property. I have since sold some property and moved the cash into shares, the mix today (31/12/2017) aprox. £550,000 (net value) in property (excluding my own house) and £450,000 in shares. There is also £50,000 in what I call ‘other’ investments. Albeit still weighted to property, I expect the shares portion to catch up over next few years giving me an even balance between the two.

I have a conservative value on my properties, a realistic price, if anything slightly undervalued. I keep a regular eye on similar properties for sale and sold in each area, adjusting my valuations accordingly.

Losing £40,000 in 6 months

There I was with more cash than I had before, it was 2007 and we (my partners and I) had just sold a business, now what to do with some of the money. The first thing was to give family members £1000 each with one proviso, they had to spend it. I had a family in new trainers, and the fags were being crashed (sharing cigarettes) left right and centre! The second was a family trip to Disney World, duty-free fags and ‘all you can eat’ lobster! I often reminisce and smile about taking my brother to a lobster buffet in Florida for the first time. After getting to grips with the idea that he could eat as many lobsters that he was able to stomach, it was a joy watching him devour lobster after lobster, pausing between tails to excrete profanities of delight, he even smuggled one out under his coat for later.

Then there was the stock market.

I was already feeling like a pro investor on the back of my property portfolio and reading an investment supplement. It was all nonsense, I didn’t really know anything! Did I mention I was cocky, OK not so much these days but looking back, boy have I been arrogant.

I opened an online account with broker Hargreaves Lansdown shovelled some cash across and began trading, I say trading because I’m waltzing around thinking I’m some super day-trader. I was buying shares in banks and other big name brands, watching the share price increase thinking why did I only buy so many and then buying more. As a rule I would buy £5000 standard in any one company, I bought Northern Rock, Alliance & Leicester, Bradford & Bingley among others. I was hearing faltering news on the banks and economy but of course I’m thinking these companies aren’t going anywhere, in fact when Northern Rock started to fall I bought more! I don’t know the exact figure but I had ploughed something around £75,000 into UK stocks within a few months.

The economic events that followed are well documented. Over the following 6 months or so I saw almost all of my shares fall and in many cases wipe out completely. In my first attempt at the stock market, I lost £40,000.

Building a £1 Million property portfolio without a plan

My first real step into investing, like many was a house, a straight forward 3 bed semi-detached in Cowplain, Hampshire. I bought it in 1999 as somewhere for me to live and not as an investment or with any plan to buy more. A solid family home in a pleasant neighbourhood with good local schools, qualities I didn’t seek out at the time but have since proved valuable. My mortgage was interest only plus an endowment policy, both with Abbey National, now Santander.

Building work on mums house

Renovating mums house

Two years later in 2001 I bought my mums house in Birmingham, it was a council house at a great price. Mum was very happy living there, mainly because she had spent years on her garden, a good-sized plot that had matured beautifully, she would often refer to it as her tonic, especially during Spring. We were talking about doing some work on the house which felt emotive not owning the property so I decided to buy it. At such a good price I was able to buy it with a personal loan, the interest payments were higher than a mortgage but I didn’t see it as long-term repayment, I wanted to pay it off within 5yrs. With it being a personal loan I didn’t need a deposit or have to jump through any hoops to get a second mortgage. This house remains my happiest buy, I had a wonderful time with mum turning her little old council house into something special. She would often hold church meetings in her newly extended open-plan state-of-the-art kitchen-diner looking out to her fabulous garden. Her showing off always made me feel great, she was very happy there.

Interior of my apartment in Gunwharf Quays being built

Gunwharf Quays apartment being built

The property market was doing well and by 2004 I had gained real equity in both properties. There was a local development at the seafront in Portsmouth called Gunwharf Quays. I used to go there most weekends to browse and shop, go to Starbucks, visit the cinema and often eat at one of the many restaurants. I liked the idea of owning one of the stylish apartments being built. This was the time that I started to think investment, I already had a couple of properties both of which had equity, I was feeling confident. I went to a mortgage broker and found a buy-to-let mortgage with Mortgage Express, I needed a £23k deposit so I remortgaged my first house. I had my third property, a very stylish seafront apartment (or flat, if like me you’re from a council house). Someone told me if you are buying to let, buy somewhere near a hospital, a university or a station, Gunwharf Quays is right next to Portsmouth University and a train station, I have yet to experience a problem finding tenants.

Meanwhile, business was growing and we soon moved from a small rented office to something a little bigger, along with my two business partners we set up a separate company to buy a commercial unit in Luton that we rented to ourselves. Business continued to grow and we bought the unit next door and soon after a larger unit within the same business park, spreading our company across the three properties. We sold the business in 2008, we still own the properties which we now lease.

I was working in Luton and living over 100 miles away in Cowplain, although I have always been able to work from pretty much anywhere, I decided to buy a small place closer to the office where I could stay during the week. With the idea that I may rent it out in the future I bought a small cottage in a village called Harlington, a few minutes walk from the train station with a direct line to London. This was in 2008 just before the financial crisis, within 6months I was down some £25k on the price I had paid for it. This property was bought cash and since moved to a buy-to-let mortgage with The Mortgage Works.

In 2010 mum died. Unable to take care of himself my brother was living with her at the time, I moved back to Birmingham. The prospect of living with my brother long-term wasn’t practical for me although I needed to keep a close eye on him for a time. I put in an offer on the house next door to me which was accepted. It was a cash buy and the sale went through very quickly, I was able to move my brother into his own little place right next door to me. He has since moved on from the property and I now have tenants.

I noted someone say “buy what you can, sell nothing”, something that pops up in my head when considering what to do about a house. Even though I do look forward to having a lovely big home (I call it the end house), the idea of building a property portfolio has been more interesting to me than selling and upgrading. Although my last two properties were bought cash, I had enough equity to raise the deposit required for buy-to-let mortgages. The only deposit I had to find out of my savings was £5000 for the first house I bought in Cowplain, the rest came from equity gained in a buoyant property market between 1999 and 2008. Today the portfolio, including share of the commercial property business, is worth more than £1 Million with over 60% equity.

I have a soft spot for property, it’s an asset you can see and feel. A house can bring income from rent as well as capital growth. It’s an investment that’s easy to understand, I have always felt secure with bricks and mortar, the investment term ‘safe as houses’ has proved true to me. I feel that now is a good time to buy again.