In this episode of WealthTalk, property investor Raj Beri shares his journey from a career in science to mastering high-cashflow strategies like the Local Housing Allowance (LHA) model. He reveals how mentorship, market knowledge, and tenant-focused approaches can help investors maximise returns and build long-term wealth with hosts Christian Rodwell and Kevin Whelan.
In this episode of WealthTalk, we’re joined by Raj Beri, a former scientist turned full-time property investor, who reveals how he built a successful portfolio using innovative strategies—including the Local Housing Allowance (LHA) model) to maximise rental income. With hosts Christian Rodwell and Kevin Whelan, Raj unpacks the complexities of navigating housing benefit tenants, government regulations, and tenant relationships, while debunking common myths that deter many investors from exploring this path.
Raj shares the ups and downs of leaving behind a stable career, the importance of having a financial safety net, and how mentorship and community support have been key pillars in his property journey. He speaks candidly about the challenges of tenant management, the need for adaptability in an ever-changing market, and how leveraging his corporate skills helped him become a more effective landlord and investor.
The episode also highlights Raj’s belief that anyone can succeed in property with the right mindset, education, and support. Whether you're just getting started or looking to expand your strategy, this conversation offers practical insights into achieving long-term wealth through property.
This episode is essential listening for aspiring and experienced property investors alike—especially those curious about high-cashflow models, buy-to-let, HMOs, and building resilience in the face of regulatory change.
Tune in now to learn how Raj Beri transformed his life through property investment—and how you can too.
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Speaker 3 (00:00.088)
Find out what the market rent is. Step two is to find out for that two bed house, what would be the standard LHA housing benefit rate. So who would move into that two bed house? It'd be kind of a single parent. One bedroom for the parent, one bedroom for the child. It's called the two bedroom rate. Now go off and search what the one bed rate is for somebody who's 35 or over and add that to another one bed rate. That needs to be significantly higher than the market rate. So my minimum
uplift from the market rent is 200 pounds. It's just not the money that you're getting. They're staying.
Speaker 2 (00:39.36)
Welcome to this week's episode of Wealth Talk. My name is Christian Rodwell, the membership director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hello, Kevin. Hi, Yes, and here we are with another episode. And today we're focusing in specifically on one of our seven pillars of wealth, and that's the property pillar. Within all asset classes, Kevin, there's different strategies and property is probably the one with the most different amount of different strategies that there are.
Chris, good to be with you again.
Speaker 1 (01:06.798)
it's definitely the broadest church. hear people say, my strategy is property. And I go, well, which one? If there's 20 strategies, which strategy are you looking at or which combination of strategies? So it's interesting. We've got a good guest today talking about how they discovered a of a subset of a subset within property, which is both brilliant for cashflow and for capital. And that's unique. You don't often find the two together and certainly
As a preference, we focus on cash flow because it builds predictability. It brings more certainty to have income than it does building just on value. yeah, Baraj did a good job today of talking about how it can do both.
That's right. Our guest today is Raj Beri. He's based in Nottingham and he's got a degree and PhD in genetics. A very smart, intelligent man. Previously worked for AstraZeneca for over 20 years and he made that transition from successful employee now to successful property investor.
You know, success comes in many guises. And of course, if you've got a really great intellect from the point of view of academics, then that can help you really do your research, really think through the pros and cons of different things and get there much more quickly. Yeah, it's interesting, you know, because academics is really a part of where I think I was originally starting, Chris, which is my economics degree. was very keen to get involved in being, I thought I'd
wanted to be a lecturer. And when I started, you know, when I was 18, I thought, yeah, this would be great because I loved the economics teaching that was going on at my school. And you just realize there ain't enough money in it. And when you get there, you realize you can apply the brain power that you've learned in that particular aspect for me and in Raj's for him, that you can apply that laser intellect to other areas of life and wealth and fair play to him that he's done that.
Speaker 2 (03:03.99)
Yeah. So Raj will be explaining today how he uses the LHA strategy to convert standard buy-to-lets into high cashflow assets and really supercharging the cashflow. And he looks for at least an extra £200 per month above market rent. So if you're interested to find out more about that, then hang on because we're not far away from our conversation today with Mr. Beri.
Raj, welcome to Wealth Talk today. How are you?
Great, thank you. Thank you for the invite.
Yeah, more than welcome. And whereabouts in the world are you today?
Sunday Nottingham, it has been sunny actually for three, four days, which is good.
Speaker 2 (03:40.344)
Big glorious, hasn't it? Yeah. Looking forward to hearing your journey in property. And we're going to focus in on a niche strategy today, but we're going to share how you've been, I guess, developing, optimizing that as a strategy that's worked really well for you over the last 10 years or so. But where does your property journey begin? Let's start there.
So I'm quite unusual. I call myself the reluctant full-time investor because I actually went down an academic route and we won't dwell on that. People can check me out online. The LinkedIn is there and everything. So I was very much heading towards becoming a lecturer and the advice I was given at the time, I didn't start off well in a city school, really poor GCSEs, what we used to call low levels, really poor A levels, just managed to squeeze into university, but everything changed and we all think it's a cliche.
people around you have a big impact on you and they did and they did when I was at uni and I never looked back after that. So I went down that academic route, degree, PhD, postdoctoral training, eventually landed a job with AstraZeneca who everybody would be familiar with now and I loved it. I loved my job, I loved what I did, it was hard work but I just loved it. know all the sort of running a team, writing articles for scientific magazines.
But something kind of got in my head that I actually needed to do a few investments. I always invested actually savings plans, AstraZeneca shares, all these sort of schemes I was in, but something captured my imagination about property. I didn't know there was any education around at the time. Made some horrendous mistakes in the first year or so, which one does, one has to move on. Then discovered property education a little bit and started, if you like, from the scratch professionally, I would say in 2008.
Just simple buy-to-lets, just as a side kind of business, never really knowing what was coming because as I say, I was very much down the academic route. I was a senior scientist at AstraZeneca. It was good and I was literally going to combine the two. So I was never going to leave my work until retirement came. So that was kind of my background, very, very academic in terms of my background.
Speaker 2 (05:42.562)
We were just chatting off camera, weren't we, about the old formula of get a good job, job for life, good pension, you'll be set up. It doesn't really work like that anymore, does it?
So it didn't and it came as a bit of a shock with AstraZeneca because obviously it's a massive, massive company, but you really never know what's behind the scenes. And what was actually going on behind the scenes was that AstraZeneca is a global business. It had at the time nine research and development sites around the world and the board decided that nine would collapse to six. So three sites would close where I worked with 900 people there.
was one of them that was in Loughborough, which is just down the road from Nottingham. Now, who saw that coming? You know, it's not that AstraZeneca isn't doing well. They're doing phenomenally well. It's just that they didn't want nine R &D sites. They wanted six, and ours was a casualty. We all thought there'd be some job losses. You know, this is going back, obviously, 12 years when I left. But to hear, you know, they gathered us all in a massive marquee. You should have seen the size of it, biggest marquee you've ever seen, because everybody had to be in there because of this announcement.
And the announcement was they were going to close the site. that was it. being a big company, took, I won't labor over it, but it took almost a year and a half of counter suggestions from the employee representatives and then the notice period. But that's the first time I felt, this was in 2010 they announced it, I eventually left in 2011. But in 2008, when I was doing my training for property, that's when the side hustle actually started.
So I don't want people to think, you left work and then started properly. No, I'd already been doing it for three years. So I'd learned quite a lot of the ropes. So, and it was an easy decision, not because I've fed up with the science, because I loved what I did, but it would have meant relocating. So there was a job in my research area at the time, which was respiratory medicine. I'm not a clinician, by the way, I'm a geneticist, but obviously I, you know, give my skills to whichever project I'm working on. And the job on the table was in Sweden.
Speaker 3 (07:41.474)
because that's where they were moving the respiratory research. And I said, well, I'm not moving my family to Sweden. I don't want to move them anywhere. They just settled in school, three kids and all. So I reluctantly decided that actually this was just a brick wall now. I wasn't going to continue with my science career, which was a big shame, but I my family to think about as well. And nobody wanted to leave again. I've worked in Manchester. I've lived in four or five cities, to be quite honest. So we just didn't want to go. And in the end, the payout was really good. been there 22 years.
the two sites in Manchester and Loughborough. It made the decision for me that the payout was great. It was reluctantly. Yeah, reluctantly. But that's what happened. There is no research and development site in Loughborough that shuts in end of 2011, which is when I left.
Everyone's circumstances are different, of course, but there may be people listening now, Raj, who are one for inner job and one for inner side hustle, trying to build some additional streams of income. And property, of course, is one of those popular areas where people begin. For you, said you had a bit of a payout. Maybe there was a safety net, a cushion there that allowed you then to take that time that you now had and focus more of that time on wealth building and property. Was that the case?
Yeah, I mean, that definitely helps. know, and I'm not going to deny that. That was a major, major decision maker for me. And the other big decision maker, I'm happy to share it because, I don't want people saying, well, you said this on another, you know, one of the things that happened is that I bizarrely was able to access AstraZeneca's personal pension scheme, would you believe? I know you're thinking, no, they're somewhere in the contract.
They actually had written down, this must be the trustees. don't know. I don't know where it came from. So a colleague pointed it out to me. She said, have you checked your contract? said, no, this was obviously 2010, 2011 we're talking about. I signed my contract in 1989. I've looked at it ever since. She said, well, on there, it actually says that if you get major redundant by the company, you can tap into your pension before 55. Now, I mean, that was the game changer. I thought, not that I want to leave my science, but if I was ever going to get a safety net,
Speaker 3 (09:49.782)
this was it. And I've got no, we all have a choice, but the choice would have been to relocate because Nottingham isn't blessed with scientific companies. So even if I didn't go abroad, it probably wouldn't in London, one of the big pharmaceutical companies, know, the Glaxo's and the like. so it wasn't just Sweden. I wasn't going to relocate anywhere. So I think when all that happened, yeah. So if you haven't got a, you know, if you haven't got a buffer, if you like, well, you know, I started property quite late. Okay. And if you're younger than, than me, you're never, you're never too old.
I would strongly suggest that you, it doesn't have to be property, we're talking wealth building. It could be something else. There are other investment opportunities out there. just I happen to do property. I would say do it. the difficulties we were talking offline is that if you've already got a busy job five days a week and children, which I had, well, where are you going to find the time? But I'm sorry to break it to everybody. You're to have to find the time. And it was for several years while I was doing the two. I mean, was seven days a week. I don't want anybody to think,
I was sitting nice and pretty. No, I was literally working long hours because I was trying to fit it. The education I was getting, getting to viewings, putting offers in, and as the property portfolio started to build, it brought his own. So don't want anybody to be under any misconceptions that this is a walk in the park. If you want the desired outcome, you're to have to put the graft in. What more can I say?
taking that first step sooner rather than later, which you did because you'd already started educating yourself. You didn't know obviously what was gonna happen two, three years later. And if you hadn't started the education at that point, it might have been a much more of a scary situation for you.
Yeah, I think it would have been. think it's just, I mean, as I said, the thing that really helped to crystallize things in my mind of what I was going to do was a very prolonged notice period. Okay. I mean, it literally, and the fact that they had to bring out the closure with proper UK regulatory due diligence and allowing people to make alternative suggestions. That was all part of the process, Chris. So it wasn't that I was suddenly told one day and that we're all marched off site. No, was literally for me, it was about a year and a half. So I a long time to think about
Speaker 3 (11:51.63)
not just survival because we cut out, you know, this is the only thing about financial independence. We cut out outgoings like fancy cars. We got rid of them all and we just had a couple of rust buckets as I call them for three, four years because that's another way to get to financial freedom. Not reducing your food, but reducing the non-essentials and we did by a lot. Okay. So yeah, so I think you, cope, but if you can plan ahead when you don't know what's coming, side hustle we were talking about, I think that's a better, I wasn't thinking like that, but.
That's kind of how it turned out.
So then let's say you're a full-time property investor. What was your evolution in terms of property strategies?
So I started on buy to let's, which is kind of what people cut their teeth on and got into HMOs while I was still at work actually. And I'd actually almost matched my wage and I've never done rent to rents and stuff because I rent Richard at Poor Dad, of course, who hasn't? And he only talked about assets. Okay. And of course, so it's taken a while and I've never used investor funds either because it wasn't around in 2008. Nobody talked about it. So I've done a couple of small JVs, but they were very, very small and they're all kind of materialized by now.
So yeah, it was all my money and the bank's money, which means inevitably, you know, the models that people talk about, you know, buy a derelict kind of property, BRR, they call it now, know, terms keep changing, but we know what the terms mean. That became the crux from my training. I had to find those unicorn deals where I could recycle my funds, pretty much all of them, which took longer because they're not as, you know, so easily available.
Speaker 3 (13:24.558)
as what I call retail, which is ready to rent. but you're going to have to just pocket money. So buy to let's was where I started. And I got into little bit into HMOs while I was still at work. The thing that was really nagging me when I was leaving, because I knew the end date was actually my whole structure was going to get lost. I'm a corporate guy. You know, I say nine to five, but we'll call it nine to five. And so I was already thinking, oh no, am I going to wake up as like a full-time bricks and mortar kind of bloke? You know, what am I going to do with my time? I'm not.
I know now I'm not really that interested in refurbs and bricks and mortar. I'm not. Okay. So that was actually what was playing on my mind thinking, where's this brain going to go? The brain that's been educated and all the effort I've put in, I need something else. I need something that's similar to what I do at AstraZeneca. So actually the first job I got, would you believe, was I worked for the National Residential Landlord Association, NRLA. And the interview was really interesting. I went to London for the interview.
and it was similar. could see the job spec, run our local meetings, be able to write reports. thinking, this is what I do already. kind of thing. Give presentations, standing in front of audience, and that was key for them. If you run the meeting, you're going to be at the front of the room. If you're a quibbling wreck, okay, well, you won't do. And it was great because I've been doing presentations. We have so much training at AstraZeneca to present at scientific conferences, big, medium, and large.
So literally the interview at the NRLA offices in London, I went there, we have to give, you know, talk, prepare five slides. I literally talked for one minute and they said, that's fine. You can obviously, it's a skill, isn't it? It's a transfer. I didn't wake up like that, but obviously I had received a lot of training, a lot of feedback from my bosses, you know, where I worked to say, you know, do this and don't do that. And, know, so it wasn't, it's not arrogance or ego. It's just became a transferable skill. So.
I landed that job as as I left AstraZeneca. Actually, they gave it to me while I was still there and said, that's fine, we're going to give you the job, please don't think you've got to start. And that basically allowed me some part-time work. It wasn't full-time, which was great. So that then continued. And obviously, as you rightly say, I left with quite bit of money. And the key thing was to get my wife out of work and just do more acquisitions, to be quite honest with you. So that's kind of, you know, it just continued, but I at least had some structure.
Speaker 3 (15:48.75)
to my week and other things as we'll talk about came along which I'm thinking just like the NRLA one. Hang on a minute, I used to do this at AstraZeneca. So why can't we just switch pharmaceuticals to property and that's pretty much what's happened over the last number of years. Yeah, so it's been good.
Yeah. And I know obviously you have an affiliation with YPN magazine. So co-editor there, your property network magazine and a family you've mentioned children, training with Simon Zucchi as well. So let me ask you now, where did the connection, I suppose, begin? Because that's something you really latched, well I say latched onto, right? Obviously tell us about how that interested you and what was different about that.
LHA actually stands for Local Housing Allowance. And when I give talks, I always say to people, if that's too many words, just call it housing benefit. Okay, that's what it is. Okay, local housing allowance is just the technical, proper technical government word, but people still use housing benefit LHA interchangeably. So what actually happened with that was that the HMO stuff was okay. I could see the value of HMOs and we specialized in Nottingham, although struggling now because of new builds everywhere. We specialize in student.
HMOs. We still do. Although that's under risk, I think, and so we have to work hard. we won't talk about that today. So I already had a buy-select portfolio by this stage. And I'm thinking, by the time you bought something, you've added value through the refurb, you've now remortgaged. And obviously, you're taking on a bigger loan as you remortgage, as everybody should know. There's not that much cash flow, is there, at end of this? No money left in. You got it all out. Brilliant. I could use the capital again. A couple hundred pounds. goodness.
I'm going to need 30 of these damn things. So I started to look, and this was in 2010, 2011 actually, no, just a little bit later, about 2012. I just started to say, well, what are people doing? How are they maximizing their rental income from buy-to-lets? Simple, everybody knows what a buy-to-let looks like. They can vary in standards, but let's just say a couple of bedrooms, magnolia, carpets, curtains, that kind of thing, unfurnished, no bills. That's the standard typical.
Speaker 3 (17:55.33)
Vanilla Byte Let they call it that, they sort of call it Vanilla Byte Let. So just started looking around and I came across this strategy, which has gone through a few name changes. So I'll mention those because people say, it was called, yes, it was called a two plus two. Somebody else then called it Advanced LHA because it was an advanced form of housing benefit, correct? Somebody else wrongly called it two squared. So I just thought, yeah, I need to look at that. And it's not social housing. Social housing is, it's kind of similar because they're all welfare benefit terms, but with social housing, support of living.
You actually give the house to a charity or the council or the housing association on a three to five year lease. And they'll typically give you market rent for that property. But the benefit is it's on a lease. So you get guaranteed rent, most of the maintenance covered, but not supercharged rent. They'll just give you market rent. Okay. You know, that's how they work it. Okay. But it's, passive. Okay. It's not easy because you have plenty of horror stories about people have given this to a charity and it's not come back. We won't talk about that today. So I started following people.
who were actually teaching it at the time. Okay, there's a couple of people, happy to mention that you might've had them on your podcast. Mike Frisbee was one, Arshi Lahey was another one. Okay, they were running one day workshops on whatever they called it, two plus two LHA. But when I looked into that, I thought, this is too complicated for a one day workshop. Okay, you know, get the nice booklet, you get a one day, you do some exercises, and then you wake up on a Monday morning and say, what do I do now?
Oh my God, there's so many moving parts in it. Okay, so many regulators. It's the government, isn't it? It's the government and all their terminology. They're paying. They're paying the housing benefit. The government's paying it. So I thought, no, no, no, no, I'm not going on this one day workshop. I think it needs more. I think I need some hand holding. Okay, so just kept my eyes and ears open to be honest and just a chance conversation with a very quiet guy sat at the back with me and we're just talking about stuff. And he started that. That's really...
So actually he became my one-to-one mentor. No training courses, one-to-one mentor. I worked with him for 12 months and I paid him accordingly. Yeah. If you're going to get mentoring for a year, you know, if somebody's thinking, Oh, can I have that for, you know, one nine nine five, not for a year. can't. Okay. No. So I paid him a fair bit. Okay. And it just happened. was buying another buy to let at the time. So that became the test bed and we're talking 2012, 2013 here.
Speaker 3 (20:20.942)
And it was hard because this is what I've learned. And I said to you earlier offline that it can all be learned. Yeah, that's my strap line. It can all be learned. And I'm 100 % convinced about that. Anything you want to do in life, it can all be learned. You just got to give it enough time and dedication to doing it and you will get there and a few ups and downs and few errors along the way. So it was really, really hard on the first one because your level of knowledge is quite low, isn't it? So, you know, when you're making these sort of calls, but eventually we set that up and then as tenants left,
my pre-existing portfolio of ByteLets, I switched them over to this LHA strategy, which is what I've called it now in the last two years, because some of the old terminology, two plus two, it doesn't exist anymore. We won't go into it. It's an old terminology. There was a reason why people called it that. I just want to call it what it is, the housing benefit strategy or the LHA strategy, whatever you want. I just call it the LHA strategy. Then I started simplifying it before I went out there to give talks. I thought, I like models.
I'm just going to call it model one and model two to explain things when I'm giving talk. So that's it. And I've written about it now. I've appeared on a few podcasts and I'm wanting now. Finally, people are starting to call it. Maybe I've just brainwashed them, Chris. They're starting to call it what I want them to call it because that's what it is. So bit by bit, all of my properties in Nottingham, all my vitalets in Nottingham over a period of time, I haven't bought anything for a few years, but I bought a couple which were earmarked just for that. Okay. The others,
switched from working tenants over to this LHA strategy as tenants left. Okay, I'm not one of these to throw people out onto the road, but there's turnover, isn't there? When you're working tenants, you know, they're like two, three years or whatever, job changes and all the rest of it. So as they left, I switched. As they left, I switched. I think I had to evict one who was causing problems anyway. I'm not a big fan of evicting, to be quite honest with you. And with the renter's reform bill, if you haven't heard of it, it's coming soon on your screens. Eviction is going to become a whole lot more interesting.
Let me pause you there for a second, Emraj, and someone listening now who perhaps is completely new to this, so they don't really fully understand how it works. You mentioned a couple of models. What's the easiest model? Perhaps you can talk us through that.
Speaker 3 (22:30.082)
Yeah, the easiest model and what I tell people to do and is actually just think if they know anything about HMOs to think about HMOs, okay, because that's the easiest way. HMOs have shares and that's what model one is in a nutshell. There are some government rules you have to follow because the government has set rules on age. Have you got kids? How much housing benefit you're entitled to is driven by government rules.
You can't pluck it out the air. It's not market rent like, I've broken the ceiling on this room in an HMO. No, there is no ceiling to break. The LHA rates, the housing benefit rates are set by the government. To get that rate, those rates, you have to qualify for those rates because the government's got all these rules and it's about knowing those rules. So model one, based on entitlements, just says that you need two shares.
Obviously not an HMO because anybody who knows, you need three. Okay? And I can't do that in Nottingham because we have Article 4 direction here, which we've had for years. So two sharers in a vitalette. There you go. It's pretty simple. The added thing that you do on top is that, and that's kind of a little, I suppose, a niche of a niche, is that I'm not going to, just like all vitalettes, Chris, I'm not going to pay for the utilities because you don't in vitalettes. I'm not going to pay for the furniture.
you don't in Pice of Lesk. I'm not paying the council tax because you don't in Pice of Lesk. They're going to move in into an empty Pice of Lesk. And they're going to have to sort the furniture out, which they get from charities. Sometimes they're moving from another house. Sometimes they're two people who just living in an HMO. I've had that. An HMO full of housing benefit tenants. I've had two friends recently moving that were living in a six-bed housing benefit HMO. Now, they actually are good friends. They want to live together in a smaller house, not in a big
with all the trouble and all the hassle with four others doing what they do. So there you go. Two have approached me. Yes, they've got to pay the bills and they have to budget for that. That's something. And typically I move in two people who know each other. Because it's just easier. Whereas in HMOs, you know, apart from student HMOs, all the others, well, they're all random people, aren't they? You can do your credit checks, reference checks, but what's their personality like? You won't find that out until they move in. Do they wind other people up? Leave everything in a mess.
Speaker 3 (24:58.702)
don't clear up after them. These are all the problems that we see, I see in HMOs. that's how I tend to move in. So is that clear? Model one, there are some government stipulations. I'm happy to share those because they're published. If you Google away, chat GPT away, they're there. To get the higher rate, which is called the one bedroom rate, you have to be 35 or over. Not my rule. Okay, it's an ageist government rule. So if you're 34 and a half, you get the lower rate, which is called the shared accommodation rate. And that makes the difference to the cash.
Big time, okay? And it varies around the country, of course. So the beauty of this methodology, I suppose, is it's all out there. You can get all this information. The difficulty is in piecing it all together, joining the dots, which is what I'm meant to talk me to do.
Yeah, so so recapping their model one, we've got two sharers, independent sharers, they must know each other. And then what agreement are they signing? So
We generally put them on a joint tenancy, just like I do with my students. I've got student houses. There's sometimes a group of five, six. I've got five, six bed student houses. They're friends. They know each other. It's just easier paperwork. There are financial considerations as well to stick them on a joint tenancy. Of course, they'll sign a joint tenancy because they know each other. This model works well. As I say, my students do it every year. I've got students in there at the moment. There's five and six. There's only one tenancy agreement because that's typical.
in student HMOs, not in professional HMOs because they really don't know each other. that's all the slight, the tenancy agreement isn't weird, okay, because as I said, I it for my student HMOs, it's just for two people and you're creating a joint AST. So that's kind of what I do. And there are pros and cons to this approach like every other approach that anybody ever walks on. I won't hear anything otherwise.
Speaker 2 (26:44.204)
And is there anything additional in terms of do you need to register in order to be able to do this? Anything extra that someone might need to know?
I think you have to know the LHJ, the housing benefit rates. That's all published so you can find all that, know how to structure things and set things up. The one thing I will say to people, because when you mention housing benefits, people do run over the hill a mile the other way. when you have two people who know each other, then my experience and I didn't train yesterday and I'm teaching it now, 12 years ago I've been doing this, flying my trade as I call it. So no, there's no registration. They are private rented sector tenants.
I don't get them from the council. It's just standard advertising and then vetting and filtering. Okay. I know what I'm looking for. I'm looking for two friends, could be two cousins. It doesn't matter. It's about knowing what the government's entitlement is. So let me ask a question because this will help clear the fog a little bit. Let's you had...
So what are some of the common myths, shall we say, or some of the reasons why people do shy away from this, as you mentioned, Raj.
perceptions that they're going to trash my property, they're going to damage my property. I've never had a property where somebody's taken a sledgehammer to it and suddenly gone mad with a drill. Some of them are not the tidiest people, but I have to look beyond that tidiness and say, but that's the way they live. You're telling me that you haven't got HMO tenants who are a bit untidy? Come on. You're kidding. My students, you should see some of their rooms. It's a nightmare. Untidy. Are they damaging it?
Speaker 3 (28:16.436)
No. Okay, so that's one of the myths that perceptions are wrong. And they're all troublemakers. They're not okay, most of them, you know, they are where they are. I mean, that's, that's, that's, you know, that's what that's what's kind of happened to them. So I don't I've not really had any trashing of my properties. Yeah, they're messy sometimes. And then, you know, there's a little bit of refurb to do, but you've to balance that off with the fact that I think three of my tenancies this year are reaching nine years.
of uninterrupted supercharged cash flow. So do you think I might be saving some of that for the refurb? What's the refurb going to look like? Paid it throughout probably several layers because some of them start smoking. That's not going to be a cause for eviction in the future anyway. So just people think, oh, my HMO tenants will be told not to smoke. Well, if they smoke, what are you going to do? Evict them? Well, good luck with that under the renter's reform bill because it won't be grounds for eviction. You'll have to sort it out and tell them you can't do this. But the tenancy agreement says,
smoking. Yeah, yeah, I see what the tenancy agreement says, but you won't be able to evict them. So people are under this impression that if you don't quite like the way they are, you won't be able to easily get them out. There'll be some mandatory grounds, but I don't think smoking will be one of them. And in my bite to let, if they move a dog in, that won't be grounds for eviction either, because the government's very pro-pet for some reason. don't know why, but we keep hearing that. So yeah, so that's been...
One of the things I think people should be under no misconception that this tenant will be whiter than white. Okay. As I always say that they'll have the first month's in advance. The council has been helping with that because guess what? There's a shortage of housing. Really? How did I know that? Well, we know there is so they've got nowhere to put them. Okay. So where do think they've been putting them? My last few have had in temporary accommodation and they're paying my local council's paying two, 3000 pounds a month. Out to the council's budget.
want to get them into my houses, so they're actually paying the first month's rent upfront because these guys haven't got it. And sometimes the last one we did, they paid the first month's rent upfront to each share and the equivalent deposit to each share, which was obviously protected. So they're helping me financially, but not with tenant find. I do the tenant find myself. if you're looking for somebody who's going be white and the white, impeccable credit history, raft of references behind them, a guarantor who's a brain surgeon,
Speaker 3 (30:42.922)
Okay, I'm using extremes. This is not your market. Okay, this is not your market. You're better off sticking to, I won't use SA because SA is hospitality. Really, if you're trying to maximize your rental income, in a nutshell, you've either got this model or HMOs. I won't get SA because it's short term. It's a hospitality model. People are staying for three days and a week and stuff like that. These are ASTs, Tenants' Agreements we're talking about. So really, these these two models.
So what would be an example then Raj of how someone listening now who perhaps got a property that's on the open rental market, it's a single let, how they could actually maximize and get a greater return by following this strategy?
There's a few things which I'm happy to share that people can go off on their own. Yes, I do offer training and I do offer mentoring. I'm not a hard sell person and I'm quite happy if people want to what I call DIY it and join the dots. Perfectly fine. I think it's a mistake. I've always learned to offer this. Simon Zucci, my mentor for the LHA because I leverage other people's expertise all the time, but that's me. I always look for a return on that investment thinking, well, how much did I pay them?
and have I got that money back and now some? That's the way I might say. So step one, let's say it's a two bed house in your area. Step one, obviously, as I say on some of my talks and stuff, you're not gonna want to buy the property. If you've already got it, I suppose it's a problem because you've already got it. But if you're buying something, it's not to buy in the Bronx. Not to buy in the worst of the worst of the worst of the worst streets. Local tenants know where those streets are.
And you might say, they're only housing benefit. They won't, they'll know there's trouble, drug dens, police around every night. They won't. So, but you won't be able to buy in the poshest part, the same two bed house because the numbers won't stack. Okay. So somewhere there's a balance. So that's the first thing to tell people. If you've already got one, well, you're going to have to work it out obviously, because you've already got the asset. Then just find out for that two bed, we'll just stick with the model one, which is good for two bed, because there's two bedrooms, two people. Okay. Simple. Okay.
Speaker 3 (32:47.042)
Find out what the market rent is. What is your friendly agent telling you if they moved in a couple, working people, what is the market rent? Yeah, that's step one. Step two is to find out that for that two bed house, what would be the standard LHA housing benefit rate? So who would move into that two bed house? Well, I'll tell you, it'd be kind of a single parent. Yep, one bedroom for the parent, one bedroom for the child. Okay, that's a standard.
LHA rate. called the two bedroom rate. It's all published. So find the market rent. Find what the two bed LHA rate is in your local area. Now go off and search what the one bed rate is for somebody who's 35 or over and add that to another one bed rate. Now you've got three sets of figures. But particularly you're looking at market rent. Yep. And the two times one bed rate.
That needs to be significantly higher than the market rate. If it's 50 quid, I wouldn't bother. Because there's a lot to learn. You won't get the guarantees that you're looking for from a professional working tenant. So my minimum uplift from the market rent is 200 pounds. Otherwise, and in any area, you can go and do this scenario. I'm in Nottingham, and I get that. 200 pound plus. And that's good enough for me because it's just not the money that you're getting, They're staying.
which means your running costs are lower in between tenancy refreshers. Well, on those three properties that are nine years, there haven't been any. They haven't been. Okay. So you've got no voids and I'm not freshening up the property, which is all going to affect your bottom line, isn't it? Over that long period of time. So yes, the cashflow you want, but don't forget part of the cashflow is longevity of tenancy. And in my 12 years of doing it, they haven't all lasted. Can't tie them to the bed, as I always say.
They have disagreements, tendencies have fallen apart because a friend doesn't get on with a friend. HMOs, they go, don't they? So this is no different. They leave. So you kind of have to... I've just had one tragic circumstance where he's been there eight years. It's quite messy inside, but he doesn't want to leave. He likes that house. Unfortunately, his friend passed away last year. Okay. And I can't keep one person in there because he's suddenly gone down to half. So I said, look, I know you want to stay, but...
Speaker 3 (35:11.214)
There's nothing I can do because, you know, suddenly, you know, it's sad because obviously they've been there eight years. So he's actually gone off and found a friend. Housing benefit tenant. Okay. He said he's known for years. So we've had to obviously redo the tenancy agreement. And so the income stream has been reestablished. So that's the only other choice. Either they leave because one person can't cover it. Imagine in Nottingham, the one bedroom rate is 550. Yeah. So two times 550 is standard 1100. There's no ceiling to break. It's 1100. Okay.
If one goes, you're back down to 550.
And what would that property be? Open market rent.
So that particular one that I'm talking about is about 758.
Okay, so there's your margin.
Speaker 3 (35:49.836)
Your margin cash flow obviously significantly high. I'm talking about the uplift here cash flow on that's about 650 650 it is yeah, which is which is brilliant for a vital air, course, but it's the uplift I think it's really important and that's what people really need to consider that if the uplift is miniscule Then it's really not you know, it's really not worth learning this unless you change areas Okay, and the beauty is you don't need any training to work these numbers out because it's all out there. You know, you just need to pump
Find the LHA rates, be able to add one bed plus one bed, complete the market and say, yeah, I think it would work in my area. It doesn't work in every area, 100%. I've checked a of LHA rates and yeah, there's some cities where it just doesn't work. So do what you did or convert it to an SA if that works for you. Obviously, we're two bedders here. Yeah, so it's very easy to do the due diligence and the financial analysis. It's not complicated.
Look, we never know in property what the government are going to do week to week. We have been through COVID, we've been through credit crunches, but this is something that you've navigated all of those and obviously still going. Yeah.
Yeah, and of course, as we all know as property investors, if you've been doing it for a few years, even when you stop, you've got to have plan B. What's the exit? If the government suddenly wakes up tomorrow and say, right, we're changing all this, that could be HMOs or service accommodation is going to come under scrutiny now because they've done with HMOs. They've put as many regs as they can. Now service accommodation, they're having a good go at that because a lot of people are complaining, particularly in flats, blocks, there's comings and goings. Let's put it that way. And those people are residents there.
people running SA units. That's usually what my experience working for the NRLA and stuff. When people start lobbying their local MP, it gets noticed because people are, they don't like it. People are coming in at three o'clock in the morning from the airport to this SA unit and they get woken up. The exit here is quite simple. It's not what I want to do. Standard buy to learn because cash flow will get knocked back to market rent. That house I've just described to you, in 1100, I've backed out to 800 obviously. That's the exit.
Speaker 3 (37:57.506)
We all have to have an exit there because I don't know what regulations the government's going to change and if that's going to kill HMOs, kill SA, kill the buy-to-let, kill this LHA thing. I just don't know. So the best place you can be is to say, what happens if I can't run this model? Do I have to sell it? No, I'll just go back. There were always standard buy-to-lets anyway. I don't know, I'll just have to work B &Q and increase my cash flow or something.
We're recording March 2025 in certainly in your role as co-editor of YPN. Since the budget back end of 2024, what are some of the questions? What are some of the feelings within the property investors of the UK, Raj?
There's a lot of stuff that's obviously constantly coming out. There's a lot of sentiment that constantly comes out that we're anti-landlords, more regulations are coming. was increasing stamp duty threshold. It's gone up to 5 % for second time purchases. So all those challenges, not just specifically for what I do, but just generally any purchase. And I don't think those regulations are ever going to stop because they haven't since I started in 2008. But I don't want people to think that there's a new regulatory thing every week. There isn't. But it's...
It's your role to keep an eye on what's coming over the horizon and prepare. We've got EPC changes kind of happening. I might have to sell some of mine because I can't see how I can get some of those terrorist properties from ETC. I just can't. Okay. And spending 15,000 pounds, well, it's not viable for me. There's no return. Okay. So I feel sorry for the tenants who are going to have to leave and that I will be able to get them evicted because I think if you're selling a property genuinely, that will be a ground for eviction because they can't force you to keep a property. So I'm sorry I'm having to do that. And the government should rethink that.
because a lot of them are going to be made homeless because I'm not going to spend 15, 20,000 getting my E up to a C because I need external insulation or solar paneling. We're talking that level of expense, a couple of TRBs and a new boiler ain't going to do it. I've already done all those. But they're single brick terraced houses that are 100 years old. They're still standing, which is good. So you've got to keep an eye on what's coming, the regulations, and prepare.
Speaker 3 (40:07.918)
If you look at it logically and look at it critically, what else, if you've got the bit of investment, what else are you going to do? I still think property is a phenomenal thing with its challenges because where else are you going to put that money and leverage the banks 75 % but the growth is 100 % yours and the cashflow if you set up the right models. I just don't think there's another and it's highly leveraged. I've got staff. I don't do any of the work myself.
It's so leveraged. It's just contractors are there. We've got some agents in place now, so we don't get those calls. We are self-managed. We've learned from the scratch how to self-manage. We've been doing it for over a decade. I just think it's still a great strategy and something people should consider alongside, where else am going to put my X amount of money? Over time, you do put a bit of diversity in, and I get that, but my diversity thinking is do something different in property rather than do something
outside of property. With all these strategies, as you say, I hear about in YPN, there's probably 90, not that many, not that high, but certainly 60%, 70%, I've never touched. Why is that? Well, the two have been doing HMOs and variations of vital. It had been enough to generate me the kind of income. You can always just extend that a little bit and say, well, think I'll just do this because that's another income stream. There's always that diversity within property, think.
So I don't think YPN is going to shut down anytime soon. The strategies will carry on, you know. They're not new. They're not new. They just keep changing. They're not new. They're the same.
It's been great. Speaker, maybe Raj, thank you for sharing all of your knowledge and wisdom with us today. For anyone listening, who's perhaps looking at this as a strategy. Any final words just to part with? Yeah.
Speaker 3 (41:57.102)
consider it, this is the lowest, I you know, I don't know your background, but when we're talking property investing, this is the lowest entry point for assets. I'm not talking rent, rents and stuff because that's not your wealth, wealth builders. That's not wealth creation strategy. That's just an income model. Wealth creation is through both, okay, because don't lose sight of the capital appreciation. You know, I now know what the eight wonders of the world is all about, okay, because things are just shot up in price. And that allows you to do is obviously take some equity out.
and go and get another unit. Where are you going to save that £100,000? It's very difficult to save it. So thank God there's capital appreciation. yeah, just, know, bitalettes are still the easiest asset model in terms of cost to get into. and that's, you know, without a doubt. And with this model, because they're very, very basic vanilla bitalettes, it's ultra cheap to get into compared to some of the eye-watering refurbs I'm seeing for HMOs.
Okay, all on sweet things, 140, 150,000. I mean, you need deep pockets for that. This is the easiest approach because it's standard buy-to-let. It's vanilla buy-to-let. The complexity of this is not the buy-to-let, it's the people you're going to put in there. It's the LHA strategy component of it. So, you know, I would just say to people, consider it alongside other investments. Okay. And you've only got two others to choose from.
you'll be glad to know. I I buy to let. The other ones are HMO and service accommodation is your rental income models. I'm not talking flips and stuff. If you're looking for recurring rental income, you've got those three. And I do two of them. And I'm never going to do SSA because I like long-term tenants. So that doesn't work for me. It never has. So that's what I would say to people. Have a look into the entry levels for buy to let. And then if you want to maximize your rental income from buy to let, sound me out. Look me up, as they say.
And where should someone head to if they would like to connect with you, Raj?
Speaker 3 (43:54.75)
Raj Beri, obviously, know, R-A-J-B-E-R-I. I'm on social media quite a lot, okay, because of YPN stuff I do, stuff I do for Property Investors Network. I'm not hidden. I'm very contactable. LinkedIn there. I'm not really using Instagram and stuff. Facebook is there. I post quite a lot on Facebook, particularly about this LHA thing. Some tips, you know, I just share because, you know, I've kind of learned stuff. I've been doing it for 12, almost years now. So you can find me on those platforms. There's no need to share anything else. You're typing.
Vajaberi property and I'm sure you'll find me on there. You can just connect through those portals.
Thanks so much for sharing with us today, Raj.
Excellent, thank you for your time, thank you.
Speaker 2 (44:36.59)
Okay, so really interesting to hear about the strategy there that Raj has been deploying for a long time now. And sometimes Kevin, people think about strategies can get really complicated and they can overthink things, but actually Raj just said, look, it's pretty simple. Go out, do your research, all the information is there. Often people just delay taking that first step.
the two things that stop you from building wealth. One is getting started and two is stopping. So the quicker you can find a strategy, you can always get better. Getting going is getting better than getting it 100 % right. So I think it's great to be doing some things that just the momentum that it takes you when you start working and getting good education, getting good support, being in a community, being in the right environment, you see things as you move.
That always changes. I think invariably when people work with world builders, Chris, they see that movement. They see the momentum shift and their ability to make distinctions and to find the right combination of things for them gets ever clearer. So I think that's a good lesson from Rush.
You mentioned about the education community that definitely came up. And, Raj said that without that, he don't, doesn't feel like he would have made the progress straight away. And there's lots of different education out there. can get free education, books, webinars, listening to podcasts like this, or you can pay for it. And there are some differences there, but of course it's personal choice as to how you wish to get that.
That is certainly true. And it was obvious from Raj that he made a personal decision and I applaud him for that decision to say, well, you know, I could have got an education and a conventional kind of a classroom style and worked with a bunch of other people and listened to what they do and participate in what they do and sometimes get slowed down by the slowest member in the group. But no, he didn't want to do that. He wanted that support, felt that if he had a mentor, which would accelerate that journey.
Speaker 1 (46:33.464)
then and he was willing to pay for it. And I applaud him for doing that. So everyone is different. I would definitely counsel anyone from just taking education from an online source because we know ourselves. mean, how many times have I been challenged by chat GPT Chris and find chat GPT is almost always wrong when it comes to wealth building strategies, but it's a good place to start and it's free. So find a place to start your education, but deepen it.
and delve more to help you understand how to do it. that you can't do due diligence online. The big risks is not enough information and nobody who does anything for the first time does it perfectly well. Whether you're a builder, whether you're a property expert, whether you're an investor, the first one or two times you do something, you missed something because you didn't know enough first time around. And in property, they can go seriously wrong.
So I wouldn't advise anyone just learns a bit online and then does it. Take the steps, follow the wheel of wealth, Chris, which is something we talk about a lot and wouldn't mind if you could signpost that again, which is a proper robust process that people can follow on their own. They don't have to work with wealth builders to do it because we set it out for them in a way that they could follow the education, the support, the connection, the community, the whole process of
coaching and due diligence can help them. And you can, as long as you do five of those things, you're probably going to be okay.
Yeah, I will link to the episode that we did a little while back talking about the Wheel of Wealth and the local housing allowance strategy wasn't where Raj began. And many people start somewhere and then navigate through until they find things that work for them. So he talked about starting out with single-byte let's moving into HMOs, diversifying a little bit within the property pillar. And local housing allowance is where he has specialized, shall we say.
Speaker 2 (48:34.702)
There's often misconceptions around this and he touched on that as well. People think that you're going to get a bad tenant type. You're going to have constant issues and problems. And that was what he talked about really was that there is a way if you make sure that they're friends, that they get on well and you do due diligence at the front, that actually you can have some really long tenancies with minimal disruption.
Well, I think you talked about a number of those being almost a decade in the making really. And that makes for a much easier life as a landlord claiming that rent with minimal disruption to that income stream from voids or from disruption or from, know, challenge, just challenging people really. But there's myths everywhere, Chris. And the challenge that I see with myths is it's normally, the myth is normally held fast by somebody who isn't doing anything. You know, it's a reason not to start.
I don't want to do property because I'll fix toilets. I don't want to do LHA because I'll get terrible tenants. don't want to do, there's so many excuses that people will come up with not to do instead of actually saying I'm committed to the journey of building wealth and I'm committed to finding the right strategy. And rather than prejudge everything, because another word for prejudgment is prejudice. So rather than prejudge it, I will spend some time to learn.
the pros, the cons, the hows, the wherefores. And so I can see what it is that's happening. And that's where I think the power of community helps because there isn't a strategy, at least as far as I know, Chris, I don't think I've seen a strategy that we don't know somebody who's been through that journey. Turned the wheel multiple times, in other words, made the mistakes multiple times, got better at it, nailed it, Black Barrage has nailed LHA and therefore...
puts them in a position to be able to be a great teacher, but also often great people are great sharers. They'll share what they've done and the lessons they've learned if they're involved with the community. And we're grateful to Raj and many others who do share their time, both on the podcast and in real life, to help people minimize their mistakes. And surely that's got a better place than trial and error.
Speaker 2 (50:46.07)
Well, Raj, we didn't mention too much about it, but he's also the co-editor of YPN, your property network magazine, very, very popular magazine in the UK property industry. And he kindly shared actually, which he would be happy to share a link to an article that he wrote to support this podcast episode, which I think was about four pages worth where he goes into more detail. if you'd like a copy of that, then click on the link in the show notes and we'll give you details of how you can get hold of it. I mean, the
The YPN magazine, obviously they've updated now because printed stuff is less relevant for some these days. So they're online and they've got a whole bunch of really, really great tools for education. But the magazine itself is just a great inspiration to bring case studies of people who've achieved certain things. And then, you you can read them, either be inspired or a reason not to do something because you
see what they're doing, warts and all, so to speak. And I think it's an incredible inspiration for people. And there's a whole back catalog that you can search through. So definitely worth checking out YPN Magazine, Your Property Network. I think we've got a link to that if anybody wants to get access to it. It's definitely a terrific resource.
Okay. So if you're a property investor, if you've got some buy-to-lets and perhaps you're looking for increased returns, then hopefully today's episode has lifted the lid, pulled back the covers on a new strategy, which you might want to investigate further for local housing allowance.
busted a myth or two. It's always good to bust those. Chris, what about the fact that we get a lot of people downloading the podcast, but sometimes they don't leave us a review? What about Spotify? Because I access pretty much everything now through Spotify. What are your thoughts on that?
Speaker 2 (52:33.154)
Yeah, well, I do too. And we can see all the statistics in the background and iTunes and Apple still out in the lead, but Spotify is definitely on the increase. And not that long ago within Spotify and obviously all the podcasts that you can listen to, they've introduced a feature where you can rate your favorite shows and had a little look. And because it's quite new, we've got 21 people that have rated us so far, but we're 4.6.
4.6 stars out of five. So people are enjoying it, but yeah, we definitely would love to get a few more votes. So if you are listening on Spotify right now, it's not too difficult. I'll try and guide you through. You want to have a look on your phone, look at the Wealth Builder logo there, click on that, which will take you through to our Wealth Builder's podcast profile page. And if you're not already following us, click the follow button first. And then just to the right, you'll see a cog and three dots and click on that and it'll say rate show.
So sounds complicated, but it'll only take you two seconds to do that and vote accordingly, however many stars you wish to give us.
Yeah, well, probably slightly longer if you're a bit of an old codger like me, but nonetheless, no, I think I could do that, but I better not rate the show because it wouldn't be right, would it really?
So yeah, we'll look forward to seeing a few more of those coming in. And if you did enjoy today's episode, whilst you're figuring out how to give us the stars, perhaps you can hit the share button as well and send this to a friend who might enjoy listening to.
Speaker 1 (53:56.526)
Well, we'd really appreciate it because, how long we've been doing this now? Six years. You know, we're doing it because we love doing it, but it's so often when we meet someone who decides to engage in wealth pullers in some way that they've had a number of touch points with us and many of those are the podcast. And, you know, we'd love for you to tell somebody else about it because just one comment, one distinction, one podcast might make the difference.
six here now.
Speaker 1 (54:26.168)
to somebody else going, know, I really should check that out. Even wherever they go, we just want more people to be wealthy. And in a world that's getting increasingly uncertain, Chris, there's no more important reason to create wealth certainty than right now.
Thanks once again to our guest today, Raj Beri. Thank you for listening. And Kevin, we'll be back same time, same place next week.
will indeed my friend until then see ya
Speaker 1 (54:53.176)
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the WealthBuilders membership site to help you create, build and protect your wealth. Head over to wealthbuilders.co.uk slash membership right now for free access. That's wealthbuilders.co.uk slash membership.