UK Head of Cadbury's Chocolate Replaces Income, And Then Some

CASE STUDY #8 - GREGG REED

  • Value of portfolio at the end of the 12 months: £1.892million
  • Of that, equity of £991,417
  • Cashflow of £114,274
  • ​£600,000 of joint venture finance raised
It is customary that at the final workshop of each Mastermind Programme, some of the departing Masterminders get up on stage and talk about their experiences and results. Here is Gregg's contribution...

WATCH GREGG'S CASE STUDY

CUSTOM JAVASCRIPT / HTML

TRANSCRIPT AND SLIDES

Thank you. Thanks everyone. Yes, I'm Gregg Reed. Just very quickly, I'd better tell you about my background.
I was in the corporate world for pretty much 20 years at Cadbury, which I had a fantastic time. I loved working at Cadbury, but I kind of recognized that, through the various chores I did, be it operational, be it strategical, as I ended up as the Head of Seasonal Chocolate Supply for UK and Ireland, I kind of knew that that wasn't for me forever. I looked into property in 2004 as a good way of getting out. I'd tried shares before that and done pretty badly in shares. Lost a fair bit of money, made a little bit of money. I could see, for me, property was the way to go forward, because no one was going to sell it under your legs overnight. It kind of seemed quite simple from that side. You just buy a house, it goes to be valued, and you sell it again. That kind of works for me.

I took some education with a company called Inside Track, who were good with their basic education, promising to show you how you did below-market deals, which, let's face it, is the holy grail for us all. Then, couldn't find any deals, so joined their sister company, which was called Instant Access, where you paid to join them. They would source these deals for you, all BMV, and then you made loads of money in the end. Of course, that didn't quite work out. They were a bit dodgy, to say the least. On the back of that, I lost money, other people lost money, people end up in jail. I kind of became a cynic of property investing and thought, no, I've learnt enough. I'll go about this on my own, but actually struggled. I didn't find the deals and for the next six years, didn't buy a property. Just kind of turned away from property in total, back into the corporate career, climbing the corporate ladder.

I guess what changed, because for all of us, I could have ... I had that comfortable lifestyle that I think somebody touched on earlier. It was easy to go to work, and it was easy to have that comfortable lifestyle. Good mates at work and really a good family life, but three things happened to me that made me think again.
The first one was the death of a very close friend of mine, who was diagnosed with a brain tumor. From diagnosis to death was less than six months. That really challenged me to think about you don't know how long you've got. Are you happy with the choices you've made? I had to say probably not, nor do I want to spend the rest of my life being told what to do in a big corporation with a relatively small pay raise each year, albeit it felt good at the time. No, I wasn't happy, but also, it taught me to value my friends and my family a lot more.

So that kind of made me think what is life about? Then, when I had my first boy, Harrison, he kind of galvanized it for me. It is about family. It is about friends. I mean, I loved it so much, I've had another two since, which they also have the challenge. I think you can see the timeline. From 2008 to 2009, I didn't exactly take massive prompt action to do anything different, did I? The third thing, really, the catalyst for me was when Kraft took over Cadbury. Despite the headlines, they are a very good company to work for, but it kind of meant my career prospects lay abroad rather than in this country. When I've got old parents and three young children, it was never going to fit for my value sets to move them around the country.

I made a decision then I'd get out. The Kraft restructure gave me the opportunity, through restructuring my team and being involved with the biggest restructure, to kind of get out with a package, so I had a comfort blanket. I could go out there, try , and if I failed, well, I'll just get another job, won't I? I was determined not to fail. I think the difference being I needed to understand what had gone wrong last time I couldn't source these properties and what I needed to do differently this time. Clearly, I needed to go back to school. I read Property Magic in April 2011. I recognized the bloke, Simon Zutshi, because I used to work with him at Cadbury. I thought I could probably trust him. He won't be like the others. I can genuinely say he isn't. He's a one-off, but he's also very ethical about what he does, so I could work with that, and that kind of resonated with my values.

Then, I read Rich Dad, Poor Dad, which is all about understanding how your assets work for you. The combination of those two things gave me enough of an appetite to think I could probably do this, but let's go and sample it. Went on a Quick Start in April 2013, quickly followed by the Accelerator, where Julie Barlow bullied me, I mean really coerced me, at the end of the day, to sign up with my wife, who was eight months pregnant by then. She was saying, "The two of you can do it. Come on, you'll love it." I was lucky enough to get away with that, but I'm really grateful to Julie for doing it, because I was determined not to get into Quick Start, so thank you for that. I knew all the strategies under Accelerator, but I know I kind of wanted the support. Given that I'd now gotten myself into a position to leave Cadbury, I thought I'd really need to replace my cashflow quickly, so I signed up for Mastermind, because I thought with this bunch around me, how can I fail? I'm glad I didn't see your faces when I made that decision, by the way.

My reason why and my goals, it's very simple, really. Quality time with family and friends. No different to most people in this room. Richard touched on being selfish, as well as the family and friends bit, I want to do things. I want my freedom. I want to choose what I do with my life and to go around the world looking at sporting events with my kids. I'm not going to leave them behind, by the way, and my wife. To take my family around the world to see World Cups, to see golf. If we get any better, to watch cricket. That's what I want, and that's important to me.
Very simplistically, my goals were to replace my income through cash flow as fast as I possibly could, because when you're in the corporate world, you get kind of an expensive lifestyle, and you need to cover the bills first and foremost to really take the pressure off, particularly with a family. I'd got three children when I joined Mastermind. They were four, two, and two months old. If you were going to plan when to leave work, it wouldn't have been then. I guess the lesson then is there's never a good time, and actually, there's never a bad time, so just go and do it and get the right level of education. Then, with the strategies we've learned, aim as high as you can.
Unoriginally, my core strategy was HMOs, because I needed the cash flow. I hoped that they would grow in value, but you can't ever guarantee it. Above that, I think if I'm going to position myself, and this was about the mindset I'd learned and developed from Mastermind, I'm not just buying houses anymore. I'm now a professional investor. That's what I kept telling myself. So I had to monetize every single lead I got. I guess Rich has touched on it already. There are loads of leads that come to nothing, but if you have the right set of skills, more of those leads can be used than you think. I've looked to monetize a lot of leads, and my plan was to get involved with most of my leads in some respects and apply the skills I'd learned in Accelerator to make money from them. Also, not just that, to appeal to the investors like would you please invest in me. Very simple strategy.

Now, here was the first deal I did.
It was a three-bed semi, which was in Erdington in Birmingham, which isn't the nicest area, but it lets really, really well. Apologies if you're watching at home in Erdington. There's a lot worse areas. It was a three-bed semi. Sorry, it was a three-story semi. It was a five-bed residence. We found this through an estate agent, which was a sale that fell through. The motivation was that the lady who owned the house needed to move because her daughter was in a catchment area and she would have missed that year of school, so she had to move out. It was only a modest discount, but it was 10%, and that solution was just to buy it and convert it.
Because it was a five bed already, to convert it from a five to seven bed just meant we had to change the downstairs reception room. Very simple stuff. None of this is complex, but that was a straightforward plan. With all the build cost going in, that conversion cost us around £38,000.
Just very quickly, the numbers. We bought it for £162,000. It was valued at £180,000. With joint venture partners, I bought this property because the difference about when you leave a company is you have no provable income, so I bought it with JV Partners because I needed commercial finance for HMOs, and that's something I learned in the course. To get their credibility was really important so I was mortgageable. Once I got this deal under my belt, I could then go back and get more and more.

As it stood, we actually spent around £43,000 on this to convert it. With, on top of that, the deposit money, it meant that the total rent achievable was about £2,800 a month, which we are getting more than that, thankfully. That cash flow is £980, so the return on investment for us, which is a really important metric for me, is it worth me putting my money into this house or not? These numbers kind of suggested that it would be a 13% return on investment, and that's based upon a repayment mortgage, as well. Just through the top tip is if you're going to get commercial, mainly it's repayment, so make sure your numbers work for you. As a 13% return, it's respectable, but not life-changing. Actually, at £980 per month, you don't need too many of those before you build a covered.
My second deal, I enjoyed more. One, because I did it on my own. Secondly, because it's lots more money. This was something that, by this time, I was telling people I was an investor. My neighbours heard me say that. They believed me, which is fantastic. They worked on the board of a charity who really needed to sell this property quickly, because they'd been managed badly and then their [inaudible 00:09:35] kicked in. Therefore, between those two things, if they didn't sell the house, they would end up losing all the services they could deliver in the community.

I managed to talk to them and really generally put their needs first. That's the other important thing I learned on Mastermind. It isn't about you negotiating, it's about you really listening, really understanding. If you can help those people, then you will feel better about life, but also, you will really be able to serve them the right way. It was a great deal for us both. I could give them the money they needed to avoid laying people off and folding. It was a big house, already set up for a charity. It was a seven-bed HMO. Really, it was a straightforward opportunity to buy it from them and lease it back to them so they could carry on delivering the great care that they were doing. They chose not to choose that option in the end, but it kind of opened my eyes to opportunities which I'll go on to later.
Very simplistically, it was about adding value. There were two rooms in this house they weren't letting out, and I thought, well, for another two rooms, at the kind of income you can get in the area, it wouldn't cost me a lot of money. In fact, it cost me £3,800 to put curtains, carpets, and furniture in and then apply for my license to upgrade the HMO and then let it back out again. The deal here, I bought it for 183,000, which is exactly what they bought it for a few years earlier, and that's all they wanted out of it. The cost for me buying was £7,200. I used joint venture finance on this one. This is people that have lent me their money, because I'm now educated and I know what I'm doing. I took their money, put it into this house, and was able to then go to the banks afterwards and refinance it.
It made a gross rental of £3,315 per month with a net cash flow, after I paid back my investors, of £2,673 a month, so it was a pretty good return on investment for the money that I put in to effectively be the rental income I was getting of around 40%. Then, when I went back to the bank and refinanced it a few weeks later, they valued it at £350,000 purely because a lot of extension work had been done on it, which the charity hadn't told me about. That increased the value overall, and it stacked up brilliantly. I could then take all of my money out and it still makes £24,000 a year with just one house. I was really happy with that deal. I guess a key tip to pass on at this point in time is look to commercial. If you buy cash and then you go to the commercial financers, you can get your money out within 12 weeks. You don't have to wait six months. Think about that if you need to build your momentum and you invest.
My summary so far, and I'm sorry it is a busy one, but there's a number of deals I've done applying my techniques with assisted sales and whatever else. In total, the property value is £1.9 million. The mortgages, I've got around £991,000 with the investors and mortgages. The equity's just £900,000 in the 11 months so far. The net income I have, with all bills and all the rest of it coming out, my total profit will be £114,000 a year. Now, on a repeatable basis, it'll be £110,000, because I did assisted sale. That's effectively what I've done in the 12 months with the help of the people I've worked with. For me, it means I can relax a little bit now.
I think if I look at my journey so far over this year, I left my job in January 2014, felt absolutely fantastic, and I've never looked back. I did enjoy it there, but I've never looked back since. It doesn't feel like work, what I do now, the freedom of choice to do what I want to do. I've made loads of mistakes, by the way, but far fewer in this environment, thanks to your help and the guys on the forum and my coaches and mentors. I've made far fewer mistakes than I would have done, and less severe ones, but if you're going to take action, you're going to make mistakes. I've learnt absolutely loads as I've gone through this, and I must admit, I've got some amazing new friends, new business connections, and I've had loads and loads of fun, so I thank you all for that.

I've raised over £600,000 with the JV finance that would never have happened without me educating myself, knowing what I'm talking about, and going out and talking to people and sounding like an expert. You know what? You become that when you do this process. Every day, I spent quality time with my family, taking the kids to school, going to various events with them, spending time with my parents, which is important for me because they're not in the greatest shape at the moment. Also, I'm doing a lot of stuff now, presenting at PIN meetings and going to various events where, as an investor, you can kind of add value.

One of the things I've been able to do, and I've been invited onto the board of trusts for a local business that offers care packages. I'm about to take this position, because I've got a business sense and I know about property. What they're great at is care and provision but not particularly business savvy, so I've got the time to do that for nothing, but it's something I really enjoy doing. Really excitingly for me, this is kind of the next step, I've set up a company with two of the Masterminds, Dave Morris and Dan Norman, who are also experts with complementary skill sets to mine that mean that the thing I love doing, we can do and scale up incredibly. For the properties I buy, I lease them out long-term. There are no costs to me other than the actual provision of a roof and some insurance. It costs us very little money to do that.

Working with those two guys, we've really accelerated our progress, and we can actually provide something for the most needy in our community now. This is our logo. This is a plug. Look out for that. It is about quality accommodation for supported living, and we're very proud of what we're doing. I think not only has this process given me the skills, but also, we've got a partnership with that charity now to supply 80 to 100 units a year for the next four or five years, which is a pretty sustainable model and, again, would never have happened without the people in this environment.
My top tips, therefore, if you're watching at home and you're thinking about it or if you're not and you're in this room, just have a clear reason why. Everyone's said it, but if you're not driven to do what you want and you don't know what you're trying to achieve, you'll never get there. This is the bit about anchoring it in your emotion. When you think about your reason why, it should bring a tear to your eye or a smile to your face, and if it doesn't, chuck it out and find something that does. That, as Leslie's already talked about, gets you through those tough times that you will have, and it can be lonely in this business. Also, remember to celebrate your achievements. My kids have been involved in setting my targets all the way through. They've drawn pictures of houses we've got to get before they can go to Disneyland, all those things they've been involved with, and I thank them for that. I have to say hello Harrison, Cameron, and Lachlan and Mom.

Next tip is to really invest in your own education. Mastermind's been phenomenal for me, and I would never have chose it without this process. As you go through that, keep an open mind. The education gives you the chance to spot opportunities. You then need to know to take them. It also gives you the credibility with investors and to generate £600,000 with their funds. Would not have happened, again, without me being a credible investor. If you're in Mastermind, embrace the process. I am nothing special. I've just followed the process, done what Simon's told me to do, and had a pretty good year on the back of it.

I guess the other really important thing I would recommend, this is a mistake I made, know what your key metrics are upfront, because if you don't know what they are, you can't act urgently and quickly. You can't act with certainty, and that's what most of the people that we deal with need. Finally, I wish it'd line up with funds. I guess the final point for me is just do it. Take massive, massive action. The correct stuff, as Leslie's already said. Don't go out there doing the wrong thing, but just take action. You will come across the perfect deal, but don't wait for it. I think you will amaze yourself with what your capable of doing just by getting out there.

Finally, I just want to say thank you. This isn't the Oscars, I know, but I just wanted to say thank you to Jane, my wife. She's been amazing, and I couldn't have done this without her. That's absolutely true. To my coach, Simon, you couldn't be here today, but Simon, brilliant, thank you. You've drugged a lot of stuff out of me, and I'm really grateful for that. Andy Haynes' to have been the avuncular presenter. I always look forward to seeing Andy. I will miss that on this stage and your putting gags up. That will be a real loss, a loss to me.

I think, seriously, everyone in this room. To listen to your stories every single month, which are inspiring to me, and to listen to my buddies and really kind of get that connection with you guys, it's been brilliant. Thank you so much for all your help over that year. I mean it. I couldn't have done it without you guys. I guess there's somebody else I've forgotten. I have to say thank you to Simon. I mean this. There are very few people who would create an environment like this. I think if you relive a number of the success stories over the last few years, Simon's made very many people's dreams come true. I am eternally grateful to Simon for that, because I can now live the lifestyle I choose to live because he's been generous enough to share, so massive thanks to Simon.

A NOTE FROM SIMON ZUTSHI

Ready to begin the journey of a lifetime? Become my next success study by joining the Mastermind Programme.
Mastermind Principles Ltd
Registered in England No. 07106363 Office: Quadrant Court, 49 Calthorpe Road, Edgbaston, Birmingham, B15 1TH
Tel +44 (0)121 228 2223 / simonzutshi '@' mastermindprinciples.co.uk
Copyright © Mastermind Principles Ltd
pin Website
Property Mastermind Website
Simon Zutshi Website
Crowd Property Website