In the Spotlight with Matt Cottle

We caught up with property developer and landlord, Matt Cottle to ask him about his views on the main challenges facing landlords today, BTR, and if Wales will win the World Cup.

Related topics:  In The Spotlight
Property Reporter
17th November 2022
Matt Cottle 2 850

PR: When did you first get into the property industry and what is your current role?

MC: I started investing in property 23 years ago, around the time I started my first finance brokerage. Throughout the noughties, I gained significant earning power from scratch. I could and should have bought a lot more investment property than I did. Instead, I chose to spend more than I should have on unnecessary expenses such as fast cars and champagne.

It was a hell of a lot of fun, until the credit crunch hit that is. Being a finance broker is often a feast-and-famine business - one moment you could be earning half a million a year, and the next you’re going through the bins to find food.

When the financial crisis hit hard, I managed to keep my head above water only because of the rental properties I owned and some savings I had put aside. That was when the property light switch really turned on in my head. I wished I had invested more. I ditched the liabilities and from then on I only bought income-producing assets. When my finance companies recovered, I vowed to invest every spare penny into acquiring rental properties. I’ve been doing that ever since. I exited my brokerages 2 years ago to be with my family, but only once I was able to survive on my residual property income.

In addition to my property business, I teach others how to build portfolios without making the mistakes I made.

PR: If you don’t have any liquid capital and you want to invest, what are your best options?

MC: There are several ways to get money. You can earn it, borrow it, marry it, inherit it or steal it. I don’t recommend the latter. I paid my first property deposit with a credit card because I was foolish, optimistic and skint. It worked out for me as the market was rising. But I would not recommend it to a new investor, especially in this market. I used the Buy, Refurbish, Refinance, Repeat (BRRR) format to get going. As my career improved, I supplemented my purchases through the income I earned from my finance companies.

If eager people approach me for help to invest in property and they have no capital, I tell them to go away and save hard before making a borrowing decision that could cost them everything.

Anyone can be an investor, but first, you need access to funds where the rug won’t be pulled from under your feet. If you don’t have that yet, make it happen. Get another job, work evenings and weekends, buy and sell things. Today we have the internet, and we can access all the world’s information in our hands. We can make money doing almost anything we are good at. Then take that money and invest it to make more money, and so on. If you don’t want two or three jobs, and you don’t want to think too hard, then it’s not for you.

PR: PRS landlords have seen their tax burden increase in recent years and with rumours of a further attack in the form of higher rates of Capital Gains Tax on property disposals and higher rates of National Insurance, is it still actually worth being a landlord?

MC: If your business is well-structured and capitalised, it is still very much worth being a landlord. But many are stretched and are leaving the sector. I know some older landlords that have made a ton of money and are cashing out. I also know of smaller landlords who have made bad financial decisions along the way. Some are just not good at it. It’s mostly these types of landlords that will depart the sector leaving it stronger and fitter for those that remain.

PR: What are the main challenges facing landlords at the moment and how can they overcome them?

MC: Access to mortgage finance, affordability and stress testing are likely to be the main things on a landlord’s mind right now. Everyone is still dreaming of the best fixed-rates, but consider variables or discounted rates with low or no ERCs. Think outside the box and remember that there is a big property sale just starting. Also, be very involved in understanding a potential new tenant’s affordability.

Check their bank statements, has their rent gone out on time every month for 12 months? If they have a gambling problem, avoid them. Speak to their old landlord, don’t rely on a piece of paper.

A tenant is not just living in your house, they are paying the mortgage too. Ensure they have the means to pay the rent.

PR: How big a threat is Build to Rent to private landlords and the PRS?

MC: We live in a small country where there are nowhere near enough homes being built, smaller private landlords are being driven away by government policy and there are 15 potential tenants for every rental property that’s available. And it’s going to get a lot worse before it gets better. The supply/demand issue is so colossal, it will take a generation or two to change that if indeed ever.

Build to Rent is a great idea and I welcome more quality properties for tenants. But it’s unlikely to cause private landlords any loss of sleep.

PR: What is the best piece of advice you would give to someone looking to become a landlord?

MC: If you’re only planning on buying 1 or 2 properties or you don’t plan on being in it long-term, then Invest elsewhere. You need economies of scale to thrive and survive the modern PRS sector. Only rent out clean, warm, safe properties - a quality offering. People are happy to pay for quality and you can pick and choose the best tenants.

They will pay the rent on time and look after your investment for a long time. If you get a bad feeling or are unsure about a potential tenant, move on. You wouldn’t give an unsecured loan to someone you don’t trust. Why would you let them live in your property? Once they have their feet under the table, they become your problem.

PR: Are Wales going to win the World Cup?

MC: Erm, next question…

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