Investing in a Recession - Ollie Phillips Case Study
Ollie Phillips is the most successful England Rugby Sevens captain of all time, having led his team to three World Series Cup victories. Following his retirement from professional rugby in 2014, he sailed around the world, cycled across America, climbed Mount Kilimanjaro and broke a Guinness World Record for the ‘Most Northerly Rugby Match’ at the Magnetic North Pole. In addition to his sporting achievements, he also founded a leadership business and is Director for Real Estate & Construction at PWC.
Phillips began investing with rebuildingsociety.com in Spring 2020, using his annual ISA allowance to benefit from tax savings on a Director’s Loan to his property development company, Spod Properties Limited.
One of the first peer-to-peer lending platforms to receive full FCA authorisation, rebuildingsociety.com launched its Innovative Finance ISA (IFISA) accounts shortly after. Phillips spoke with platform founder Daniel Rajkumar about IF ISAs and property investment:
Ollie, what’s your background and why did you get into property investing?
My background is as a former professional rugby player. I played for 3 different clubs: Newcastle Falcons, Stade Français and Gloucester, and was part of the England set-up for about 11 and a half years, and fortunate enough to captain for about 6 of those.
And my background in terms of property investing is that I’ve always been interested in it. I think there’s a natural affinity for me because of the product itself – I like bricks and mortar. I think they’re a core essential of everyday life for people. People need a home.
One of my life’s ambitions is to have income-producing assets, and there aren’t really many better than property, in my eyes.
Obviously, there are lots of things out there that pay some form of dividend, but for me, housing seems to be the most consistent and most reliable. It’s probably the one that I understand the most and have the closest affinity to.
When did you learn about the Innovative Finance ISA? Did you have another ISA before?
I learnt about the Innovative Finance ISA through one of my very closest friends – in fact the best man at my wedding – who is a business partner of mine as well. He and I are always looking for innovative and creative ways that we might be able to invest in property, and also some of the most tax-efficient ways of doing it, and we came across the Innovative Finance ISA and the Director’s Loan Account ISA and both of them looked pretty attractive so we did some digging around it, and some sense-checking with people we knew and it all sort of stood up.
I personally have been a long-term investor in my ISA portfolio, mainly because of the tax security that comes with it. I try to use my ISA allowance every year and encourage my wife to use hers too. We have 2 young kids, so now we try to utilise their junior ISAs as well. I’m a big supporter of ISAs in general, and the Innovative Finance ISA was an attractive proposition, and in particular the Director’s Loan Account.
Why did you want to put your Director’s Loan Account (DLA) into your ISA allowance?
I had disposable income sitting in ISA allowances that I was deploying within the markets, in ETF trackers and funds, and they’d done well, but obviously in a Covid-19 environment they hadn’t done so well and with lots of equities getting rid of their dividends, and fixed income interest rates going through the floor, it wasn’t an attractive marketplace anymore.
So the DLA and the ability to effectively loan from my ISA out through to any registered limited company was definitely of interest, and for me, the opportunity to do that into my property investment company was even more attractive. Now it’s just another avenue or angle for my ISA in order to make sure I’m maximising and optimising my returns.
How did you find the process of setting up your account and transferring funds?
All in all, excellent. It’s a brilliant product that the team at rebuildingsociety have got. It wasn’t without its teething issues at the beginning, but I don’t think that was anything to do with the technology. It’s probably just to do with my ability to utilise the technology and understand it all. But now, the process is fairly seamless.
All in all, I think it’s a cracking platform which is only going to evolve and get better.
Will you do it again next year?
The answer to that is yes. I try to do all the homework at the beginning, make sure it’s definitely something I want to participate in, to be involved in, and once I’ve made that decision, then we’re off and running.
The plan for me and my family and for our ISAs moving forward is to make sure that we are maximising and utilising the DLA and the Innovative Finance ISA as much as possible.
Would you recommend it to others in a similar situation?
100%. I already have done. I’ve already sent a few people over, so they can start to get an understanding of what it is and how it works. So hopefully those have been useful introductions and they have been benefitting equally from the same insight I received.
The plan is definitely to try to recommend it to as many people as possible once I think I’ve got my feet under the table and really got used to how it operates, and the gains and efficiencies that you can get from it.
What’s next for your property portfolio?
I want to make sure that I’m buying income-producing assets, delivering a 6%+ gross yield and that I’m building a passive income over the next 5 years of upwards of £10,000 a calendar month. So that’s the focus point for me at the moment.
The hardest part is probably finding the deals. So it’s making sure that I’m building up a good network with the agents, to make sure I get sight of opportunities, and then having the framework - for example with the DLA or the IFISA through rebuildingsociety that I’ve got in place and ready to rock and roll - so that I can move when I need to move.
Already a fan of ISAs for their good rates of interest and tax-savings benefits, Ollie Phillips found that by using the rebuildingsociety.com Director’s Loan Account IFISA to lend to his property business through his ISA wrapper, he could continue to receive interest and save tax, and still have access to his capital. Combining an Innovative Finance ISA with a formalised Director’s Loan is a cheaper and quicker way to secure business funding than borrowing from a bank, with benefits for both the investor and the business.