This is the second in the series of deeper insights into the lessons that I spoke of in the 10 Lessons in Property Learned the Hard Way post on Property Tribes in the January pop-up category, 31 Days of Property Inspiration.
A Dynamic Era …
We were still fairly young when David thought we might be on to something with property. By young, I mean late 20’s (me), early 30’s (him), certainly younger than we are now and young enough for any action we might have taken to have a major impact on our future.
The period was the late 1980’s. We worked in London. David was director of a mortgage company, I was carving out a career in the rapidly growing world of software support and training. For those who remember this era, it was a dynamic time.
… Or Was It?
Not so true for everyone of course. Some of our friends and family who lived in rural Wales and Cornwall have very different memories. My family were farmers and for them life was not quite so rosy, likewise for traders and businesses who depended on the rural communities for their living. Those who had jobs kept and nurtured them.
In this environment, the one in which I had grown up, the attitude to money was “you work d****d hard to get it, so once you’ve got it, keep it safe.” Safe, of course, meant putting it in the bank.
The word ‘risk’ did not apply to money. Money was never risked for anything other than reinvestment in the business (in my parents’ case, that meant cattle, a tractor or piece of machinery) and then only once it was more or less certain that it would not be lost. One was not supposed to spend one’s hard earned cash on property other than one’s home, and even that one went into with a great deal of caution.
Reckless Property Rebels
So here we were in a dynamic environment. Through his job with a lender, David was exposed daily to the property market. Considered reckless and hedonistic by many, we had accumulated three properties:
- Our home, a bungalow in Oxfordshire, which David had bought after selling his house in Newport when he first moved to London.
- A holiday home, a 3-bed semi in Cornwall, that I had bought after selling my flat in Cardiff, when I moved to London to marry David (aah … the romance!). We holiday let this during the summer months.
- A bedsit in Russell Square that we bought to ease the long commute from Oxfordshire, and because we could.
Our families were so against owning property that we kept quiet about the bedsit for quite a long time after buying it. We’d had quite a lot of grief about the holiday home. (“What do you want that for?” “Why do you want to go back and fore to Cornwall when you’ve got a perfectly nice home?” “You’ll need that money one day, then you’ll be stuck.” “You must be b****y mad!”)
Friends in a similar position bought bigger and better houses and considered us as crazy as our families did. Why did we want three times the cost and hassle?
I found it too hard to go against what others were constantly telling us. David regularly talked to me about buying, renting out and recycling deposits but I couldn’t get it – why wasn’t everyone doing it in that case?
Eventually, we sold the bedsit and the bungalow and bought a bigger house nearer London at the peak of the market in 1989. We had flirted with keeping the bungalow and trading in the bedsit for a flat, but bombarded with advice from every angle, we (or rather I) thought we had it wrong and decided to do the conventional thing.
Three years later we had lost everything we had gained and more. We could have sat tight and weathered the crash, but by this time David loathed the location so much it was no longer an option.
We recovered financially. But we didn’t learn enough not to repeat the same mistake a few years later when negotiating on a piece of land. It’s a long story that will keep for another time, but in short, listening to someone else cost a much higher price than following our own instincts.
In those days, I didn’t understand about locations, markets and opportunities. I only knew what I had grown up with – when you have money, put it in the bank and keep it safe. I also had no idea, really, that circumstances change and that we need to change with them. In other words, not all the rules of farming applied in central London. Deep inside, attitudes conditioned by the financial circumstances of my upbringing prevailed and I had not adapted.
Lesson #2: Work things out for yourself instead of relying on others who have little or no experience in what you are doing.
It sounds as if I am blaming others for actions that I took. Au contraire, I blame only myself. I did not believe David when he took me through the figures, I did not have the confidence to go against the grain and I was not financially aware.
It would be another fifteen years before I understood and had enough confidence to believe in our own convictions.
How much did that fifteen years cost me?