Industry Report: Northwood - Rewarding & secure
Lettings and estate agency franchises offer a chance to benefit from the exciting returns of the property market. Andy Goodson, founder of Northwood, reflects on his experiences
I can still remember my father's words as I bought my first home in 1973 for £10,250. 'What a ridiculous price to pay for a three bedroom semi,' he said.
'I think you have bought at the top of the market, it's never going to increase much beyond what you have paid for it.' Well how wrong he was! Despite the big property crash in the late 1990s the same house would now sell for around £165,000, which is why the property market has been one of the best places to invest.
When I decided to go into business, property seemed the logical choice. Since forming Northwood in 1995 the property market has become even stronger ,which is one of the reasons that property related franchises are so popular and lucrative.
As far as franchising is concerned there are two basic ways to be in business in the property market: estate agency and lettings. Both can be enormously rewarding but for me lettings are the more secure. When property prices rise quickly as they have done in the past two or three years rents remain virtually static, and conversely when property prices fall again rents remain very stable - so to have a lettings business with a portfolio of 200 to 300 properties means you can become almost immune to property market fluctuations.
The lettings market is enormous with most reasonable size locations having somewhere between 5,000 and 10,000 properties to rent. My personal philosophy is to have a lettings business that pays for all your overheads and makes you a profit, and then estate agency and associated products such as mortgages are nothing more than cherries on the cake. There are many different property franchises to choose from. Some offer lettings, which can either be office-based or home-based, others offer estate agency, which are normally office-based or shop-fronted. A few offer both lettings and estate agency, which effectively gives you more 'tools' in your 'toolbox' and increases your opportunities to earn money.
Another small benefit of working in the property market is that you are able to make the most out of investment opportunities which present themselves. With the current price of property being as high as it is the actual percentage return on investment (the yield) may only be in single figures, but so long as you look upon it as a long-term investment, the real pay back comes in the capital growth of the property. Your actual lettings/estate agency business becomes the vehicle for you to generate cash, which allows you to invest in property therefore ensuring your future is even more secure.
Finally, whenever you invest in a business you should always consider an exit strategy. Most people sell their businesses and a business with longevity, such as a property lettings business, will command a higher value than one without.