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Achieving Financial Independence Through Property Investment with Ayesha Ofori

Millie Ngai-Lenoir

Money management and financial literacy are, unfortunately, not widely taught. According to the OECD/INFE 2016 ‘Survey of Adult Financial Literacy Competencies’, adults in the UK score almost exactly in line with the average of 30 countries when their financial literacy was benchmarked against an unbiased, pre-selected set of questions. Contextually, this places the UK 15th in the ranking against the 29 other countries that participated in the survey, just above Thailand and Albania; below the average for the OECD countries; and well below France, Norway and Austria. This means that many of us Brits have never had the opportunity to learn how to save money, how to invest or how to build wealth.

This is problematic given that better financial capability leads to improved individual and social outcomes. An economic study by the Money Advice Service published in 2016 suggested that people across the UK could be around £108 billion richer over the next 30 years if they were better able to manage their money.

To make matters worse, the UK’s financial literacy gap disproportionally affects black communities and women: in a recent research study conducted by the Financial Times, women knew less on every topic in a series of 28 questions on 8 different areas of finance, and ethnic minority women were at an even greater disadvantage. This has a detrimental impact on the levels of income and long-term wealth, with the financial literacy gap only widening over time.

In this episode of The Wallet, we are joined by Ayesha Ofori who is taking matters into her own hands, financially empowering women and ethnic minorities by encouraging them to embark on property investment. Ayesha, having had a successful career in corporate finance and asset management, is now the founder of property investment company Axion, and two powerful communities – PropElle and the Black Property Network (BPN), which champion financial empowerment. In this episode, Ayesha talks about her journey that saw her dabbling in property investment as a side hustle, to quitting her job and eventually pursuing her passion full time. We cover everything from getting started investing in property, to finding the best option according to your budget, as well as the pros and cons of investing in property as an asset. 

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1. Taking the leap of faith: becoming an entrepreneur

According to SME loans, 64% of the UK workforce wants to set up a business, with 83% of 18 to 24 year olds dreaming of being self-employed. However, 43% of these aspiring entrepreneurs do not believe that these businesses will materialise, with financial constraints followed by the fear of failure being given as the primary reasons that prevent them from pursuing their dreams of becoming entrepreneurs.

It can be very easy to let the status, creature comforts and steady income associated with your salaried job hold you back from pursuing your own business dream. It is for this reason that entrepreneurial start-ups require a “leap of faith” on behalf of the founder. Since an entrepreneur’s faith represents their belief in a venture for which there is limited information and considerable uncertainty, the mindset of the entrepreneur is pivotal to their success at the inception of their business. Faith – the belief in yourself to prevail – is the cornerstone of the success mindset that allows, empowers and compels entrepreneurs to take the risk and to progress ahead with their dreams. Ayesha overcame her self-doubt that initially prevented her from handing in her resignation letter and strengthened her entrepreneurial faith through the encouragement of one of her existing clients, extensive support network and ambition to create meaning. 

Ayesha was inspired during her time at London Business School to move away from her lucrative career in asset management at Goldman Sachs and convert her own passion for property investing into several business ventures. The people she met at the Business School transformed her mindset and the way she looked at the world. Prior to embarking on her MBA, Ayesha believed that she was destined to progress up the corporate ladder, and that founding start-ups were for other, more adventurous people. With a newfound, extended outlook, Ayesha decided that entrepreneurship would provide an avenue for her to create impact and inject greater meaning into her life. She sought to financially empower historically disenfranchised and underrepresented communities – namely the BME community and women at large – to better manage their money through financial education. Her social mission behind Axion was to specialise in finding funding for property projects that provide affordable housing; for PropElle, it was to establish a community to support women win their own financial freedoms through property investment; and for BPN, it was to establish an organisation that financially empowered black communities through education.

2. Investing in real estate

Ayesha explains that through her mission - which lies at the heart of PropElle - “just as [she] was able to use property investing to change [her] life, other women can do it too”. She asserts that the belief that you need lots of money to embark on property investing is a common “misconception” and something that “people don’t understand particularly” because in the UK we are continually flooded with the news that the rise in residential property prices by far outstrip wage growth. In fact, the beauty of property investing is that you do not have to own the whole property in order to benefit from the upside of the investment.

Ayesha argues that real estate specifically is an important asset class for her communities to invest in because of its unique tangible nature. The majority of us live in a property so it is easy for us to understand the fundamentals of rent, appreciation and, in some cases, debt. Investing in equities can be a little harder to work around because they are not as immediate to our surroundings. Investing in real estate in conjunction with other asset classes can enhance the risk-return profile of an investor’s portfolio, while, on its own, real estate investment offers stale cash flows, equity building, competitive risk-adjusted returns and a hedge against inflation. Through the distinct tangibility of the real estate asset class, Ayesha hopes that her communities will be able to increase their financial literacy through property investing. 

As previously mentioned, it is not the case that investors must own the entire property in order to reap valuable returns. For those who are reluctant to do the heavy lifting associated with property ownership, or who do not possess the funds or time to do so, passive investment in real estate offers an attractive opportunity. Investors must decide whether to pursue real estate investing on either an active or passive basis by considering the pros and cons of each strategy. Passive investing is a hands-off investment approach, meaning that as an investor you have little to no involvement in the actual management of the property asset. One example of passive investment in property is buying a share in a real estate investment trust (REIT). Holding these shares provides investors with an indirect investment into property since the REIT owns and operates income-producing real estate on behalf of shareholders. There are also a number of property investing opportunities through real estate crowdfunding platforms that are becoming increasingly accessible to private investors. Real estate crowdfunding platforms have democratised property investment, with private investors being able to buy shares in particular property developments from as little as £100. Active property investment is the direct opposite strategy, requiring a large amount of hands-on involvement in the investment process and during the lifespan of the investment. Active investors are involved in every aspect of the investment from sourcing it, to obtaining financing, to personally guaranteeing the loan, to subsequently managing the investment. In the context of a buy-to-let strategy, this would mean speaking directly with property sellers and all of the related parties, and being responsible for property maintenance. Ayesha describes a number of additional bespoke property investment strategies, both active and passive, in the episode. 

Investing in real estate can also be fundamental to winning financial independence. Ayesha managed the transition from her salaried role to becoming self-employed through setting up multiple income streams that stemmed from her property portfolio. By the time Ayesha left her executive role at Goldman Sachs, she was generating more money from the return on her investments than what she was earning in her salaried corporate role. In this sense, investing in real estate can grant you the financial freedom to pursue your dreams through the buffer of a secondary income source - for Ayesha, it enabled her to transform her idea of starting a business into a side hustle and, ultimately, into her full time passion.

3. The greater need for financial literacy

As consumer habits and financial products have evolved over the past century, levels of financial literacy have declined across the UK. The results of OECD/INFE 2016 ‘Survey of Adult Financial Literacy Competencies’ highlighted this decline, finding that three-quarters of those surveyed across the 26 countries could not calculate simple and compound interest correctly – the UK was among them. The data also highlighted that more than a third of people reported spending more than they earned in the financial year of the survey. Given that many consumers have very little understanding of personal finances, especially where credit is concerned, the temptations of online shopping and impulse purchases have created ample opportunities to accumulate debt.

 Among those most disadvantaged when it comes to financial education are BAME communities and women. These groups have been shown by academic research to fall below average levels of financial literacy. Patrick Jenkins (2020) argues that this is particularly troubling since, given that we “no longer live in a world of paternalistic employers, nanny states and friendly bank managers”, BAME communities and women are far more likely to fall into unsustainable debt and be open to exploitation. Jenkins goes further to explain that, while insufficient income is at the root of poverty, gaps in basic financial knowledge only compound the issue. At a time when BAME communities and women’s finances have been disproportionately affected by the pandemic – since these groups are more likely to work in roles impacted by lockdown and less likely to have access to childcare – financial literacy is all-the-more crucial in shielding these groups against negative economic shocks. Ayesha explains that the lack of financial education among BAME communities arises due to a lack of intergenerational knowledge sharing; Ayesha describes that, growing up, no one was sitting at the table to talk about finance – something that would happen in much wealthier families – and this issue is prevalent across the black community. As such, Ayesha was inspired to set up PropElle and the BPN to empower historically disenfranchised groups financially through workshops, thereby contributing to the much needed effort to narrow the gap in financial literacy we see across the UK.

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You can listen (50 min) and subscribe here:

Apple Podcasts

Acast

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Resources: 

You can follow and connect with Ayesha at:

Ayesha shared a great resource in this episode. See the link below: