In today's episode we are joined by Wendy Whittaker-Large. Wendy tells us about HMOs, what they are and how they can potentially help you gain financial independence from just 5 deals. Make sure to tune in to hear the strategies that Wendy has to share with us.
Imagine if you could achieve financial independence from just 5 property deals? This week’s episode of WealthTalk is all about HMO’s. An HMO stands for ‘House of Multiple Occupation’ - a property that is rented out by at least three people who are not from the same household, shared living, essentially. We have invited experienced HMO investor and Author, Wendy Whittaker-Large, to talk us through some of the strategies and ways in which you can set up your own HMO portfolio to run almost entirely without you, allowing you to break free of the time-for-money trap and enjoy more freedom.
Resources Mentioned In This Episode:
>> Connect with Wendy Whittaker-Large
>> Download the WealthBuilders 9-Step Recurring Revenue Roadmap
>> JOIN THE WEALTHBUILDERS ACADEMY - CLICK HERE TO LEARN MORE
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Unknown Speaker 0:01 The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Okay, welcome to Episode 97 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined today by our founder, Mr. Kevin Whalen. Hi, Kevin.
Unknown Speaker 0:28
Hello, Chris. Good to be with you. Yeah, it's
Christian Rodwell 0:30
good to be here again. And today, we are looking at a wealth building strategy. And it sits within the property pillar. And it's the strategy of HMOs. And we've invited friend of wealth builders, Wendy Whittaker large to share some insights with us today. Yeah, it's
Unknown Speaker 0:47
interesting, because HMO is a kind of a odd strategy in some way. Because it can mean many things to many people. And as Wendy will explain, when when she started, it didn't the term didn't even exist. You know, so home for multiple occupancy or multiple occupation, whatever language you use, but essentially it shared living and there's so many different strategies in shared living. So I wouldn't prejudge, you know, any particular way of doing that. And there's just so many different ways, so many different tenant types, so many different ways to convert a property from you know, something that's normally would be a say a single family lead to something which got the capacity for higher cash flow. So as always, we'll debrief the lessons, but just think about the language and think about what you're saying not just in the context of HMO, but in property, in general.
Christian Rodwell 1:45
Yes. And for anyone, perhaps, listening outside of the UK, who is not familiar with the term of HMO, it's defined as a property which is rented out by at least three people who are not from the same household. So for example, a family that share facilities like the bathroom and the kitchen. So I'm sure there's different terminology across the world for for this similar strategy here. And, and Wendy has a keen eye on the economy as well, Kevin, obviously, we're coming off the back of the budget announcement in the UK last week, and some increased taxes on the way for business owners, any thoughts from yourself?
Unknown Speaker 2:21
Well, you know, all countries having to face the pandemic, helping to support people with their lives and their livelihoods. And as a result, taxes will increase. So, in due course, you know, the tax savviness of your strategy. And that's really quite an important aspect of the wealth building process in the tea of debits, Chris, the debt, education, bills, insurance, tax, and support costs. So we'll be focusing on tax wherever we can. And of course, tax works in different ways in different countries, just as you mentioned, terminology is different. But principles are the same in all countries, Chris, aren't they? So we didn't we hear something about that from somebody in the states just in the last few days?
Christian Rodwell 3:08
We did. Yes. So, you know, it's always great to have emails from people enjoying the podcast, and I had an email from a woman called Kyra, and she's in Pittsburgh, Pennsylvania area of the USA. And she said that she finds the principles of our discussions are universal. And please continue putting out great content. your listeners appreciate it. So thank you so much for that email, Caro. It's really lovely to receive that.
Unknown Speaker 3:34
Yeah. And it's great. And how many countries are we in now? Chris?
Christian Rodwell 3:37
Have over 100 countries now we've been downloaded in so that's another milestone for the show.
Unknown Speaker 3:43
And we're just getting on to our 100th episode coming up soon. So yes, and big milestone. So if you're enjoying the podcast, enjoying the way we interact, and if you think like Kyra, the principles, are adding some value, then share it with somebody else. You know, we're trying to reach as many people as possible to increase the Financial Intelligence of as many people as we can. So give someone a nudge, say, hey, haven't listened to this quite interesting. You know, and if you are, if you're not enjoying it, then tell us what we could do better.
Christian Rodwell 4:13
turns off. Okay, so we've got lots to talk about. We're Wendy. So let's head on over to our conversation today with Wendy Whittaker large Wendy, welcome to off talk today.
Unknown Speaker 4:23
Thank you. Great to be here.
Christian Rodwell 4:25
Yeah, good to have you on. And we're diving into the property pillar today. And specifically Step six in our roadmap, which is the strategy around HMOs. And we're talking about how to run a hands free HMO portfolio, which I think is is a dream for many people. We know that people strive to have more time freedom, Wendy and of course the financial freedom as well. And you've got some great experience of why the HMO strategy can absolutely allow people to to realize those dreams.
Unknown Speaker 4:58
Well, I agree. I think But one of the biggest challenges that people have in investing in HMOs is that they think they've got to do it all themselves. So I'd like to share how you don't have to.
Christian Rodwell 5:08
Yeah. So why don't we rewind a little bit, Wendy. So people know, obviously, your background and experience that you've built up. So where did your property investing journey begin?
Unknown Speaker 5:19
Well, I first started investing in property in 1996. Was it 1997. It was so long ago, I can't remember which year it was, but it was about 1996 and 97, when I bought my first investment property. Now, this is before buy to let mortgages have even been created. So I was in the phase of investing where you had to go to the bank to get a loan. So I had to write a business business plan and take it to my business bank manager and ask him for a loan rather than a buy to let mortgage and he approved the loan. And the reason was that it was a shared house. It was a shared student house that I was buying. It had six tenants in it. And it was, by all accounts, an HMO. But of course, the word HMO House of multiple occupancy hadn't been described in law, and wasn't described in law for another few years. So it was just called a shared, shared house shared living. And that's how I got started.
Christian Rodwell 6:19
Right. And I mean, we see now obviously, so much property education available out there. Was there the same level of education, you know, back then?
Unknown Speaker 6:28
Well, the problem was, of course, the internet was still in its it's kind of nascent years. And so it was really hard to learn about property, except for going on very expensive courses. So at the time, I learned about it from friends from other investors that I knew I had a very I subscriptions to various magazines that came through the door, and newsletters I in fact, I remember one of them called property auction news. And this was a monthly newsletter that came through. And funnily enough, many years later, I met somebody at another networking event, and he had been a writer on this magazine. And I had been telling him about my journey and how I used to get this property auction news. And he said, I used to write for property auction news. I was blown away by that, because at the time, I thought, these people who wrote for these magazines must have been, you know, extremely wealthy and experienced property investors. And this guy was, of course, he fitted the bill, but it was then I was speaking to him on the same terms. And I was very excited about that. But yeah, I in those days, it was much harder to there were no networking meetings, it was much harder to find information on property investing. And so I had to pick up bits and pieces as I as I went around the country, I bought properties at auction, that became my main strategy, finding good deals, and you know, investing in property. So, and I did this really by re re circulating the money I had I did at that stage, I hadn't learned to raise money from investors. I wasn't using investor finance, I was using my own money. And I was just trying to be savvy about the deals that I secured and bought.
Christian Rodwell 8:07
Yeah, yeah. Well, it's interesting that you talk about, you know, working with other people and raising money. And that certainly comes further on down the journey, doesn't it? But at the beginning, you just have to take that first step. And often people hold back, they try and consume too much information, or they want everything lined up to be perfect. But in order to start your wealth building journey, you just have to do something, don't you?
Unknown Speaker 8:30
Absolutely, I think that I, I realized that I couldn't just wait until everything was perfect. And sometimes I think because fear does play a large part in our behavior as human beings. And I think particularly when you're talking about investing and investing large sums of money, fear can become an overwhelming kind of force that holds us back and therefore we we procrastinate, or we think everything's got to be perfect before we can take action. But you know, I've made mistakes, I bought properties that didn't cashflow particularly well. I put money into properties that later on, I learned were not the right type of property. I bought an off build property in about a lot of the department in Portugal, just before the global financial crash, bad timing. I bought a new build property, which didn't really ever go up much in value because of course, the first 10 years generally the the premium you pay for new bills is sort of absorbed into the capital growth. But even with these experiences of making some mistakes, and you're having some setbacks, I didn't stop. And I think, you know, it's it's like the rocket that's just landed on Mars, it was called perseverance. And I think that you know, if you're going to go far in your property journey, you've got to see yourself a bit like a rocket you are, you're leaving Earth's atmosphere, you're leaving the safety of Earth. You're shooting off into the unknown, you've got a direction you've got, you've got a goal, you want to land on that particular goal, that particular target. But you need to have a guidance system to get you there. You've also got to have enough fuel to get you there. And you've also got to have a plan. But ultimately, you've got to launch. If you never launch, you're never going to land. So my view is, you know, it's no coincidence that the rocket was called perseverance. Because to me, that's a fantastic analogy for being a property investor.
Christian Rodwell 10:33
Yeah, I think those are really important lessons. And it's good for people to hear that, you know, you've made mistakes everyone has right you have to in that process of just learning and moving forwards. So you talked about getting into property with biter, let's, which is probably where most people begin, Wendy, at what point did you then think, okay, you know, it's time to maybe look at a different strategy. And how what led you into the HMO strategy exactly?
Unknown Speaker 10:59
Well, my first property, of course, was an HMO, which was, I suppose, purely coincidence, I wasn't really looking for an HMO at the time. And as I say, it wasn't really an HMO. So it's a shared shared property, it's shared accommodation. But of course, I knew from day one that that was making me very good cash flow. After that, I went into buy to let and I bought some buy to let properties because I felt that they were easier to manage, and they were more straightforward. And I wasn't responsible for the bills. Whereas in the shared property, I'd been responsible for some of the bills, not all of them, actually, some of the students did pay for them themselves. But after a few years, I realized that the cash flow I was getting from my vital acts wasn't really going to particularly change my life. By then my career had started to take off, I was doing a master's degree, I was focusing on my main career. But with a young family, I've got four boys, and my husband was working away from home. And I just found that in terms of my time, I had limited time. So therefore, looking at where I wanted to be in terms of my income from property, where I was, at that time, I just thought this is gonna take me too long, I'm not going to achieve it until I'm in my 60s at this at this rate. So I decided that I had to examine other types of property investing. And for me, one of the quickest and easiest ways to if your next step sideways was into HMOs. So I'd heard a lot about HMOs, I'd been on some training courses about various different property investments, and strategies. And we decided that we would invest in a bita HMO, so as sort of a test HMO, local to where we lived. Because Andy, my partner was nervous, again, the fear factor held him back a little bit. And he said, Well, let's just test it, and see if we can make this work before we choose to launch. So we decided that we would do a beta HMO, so a small four bed HMO, and if the rooms rented well, and we had, we had kind of set deadlines for how long we wanted to take to rent those rooms, before we would count the project to success. If those rented if those rooms rented, well, then we would expand. And sure enough, we did a very fairly light refurb on this property, because it was already in quite good condition. And within a month, all the rooms had rented out, we were making pretty good profit on that much, much better about three times the amount that we would have done if it was a single buy to let, and and he was convinced and I was convinced. So we said let's do it again. And that's really how the journey began into moving into HMOs.
Christian Rodwell 13:44
And and how long was it after, you know, really beginning to focus on HMOs, that you were able to then completely leave your job?
Unknown Speaker 13:52
About 18 months later? So yes, we started investing in HMOs, at the end of 2012. And then I gave up my job towards the end of 2014. And I then persisted in working in my the property business. And then in 2015, Andy gave up his job. So just a couple of years later, he was able to leave as well. So by then we've created about five, five and a half 1000 pounds a month net cash flow from our property business, which was just about enough for us to live on. It didn't fully replace Andy salary, but it certainly gave us a much. You know, it gave us time. And actually, of course, because of the tax efficiencies of investing in property. He didn't have to earn as much money. Of course, he wasn't paying for his travel costs. He was living in London, three days a week and having to rent a room. Actually, funnily enough, he lived in an HMO, which was tremendous research, I have to say, I'd always recommend you go live in an HMO for a few weeks or a few months to learn what they're like because they It was really, really helpful for us when we started to develop our HMO portfolio. And he would say, Oh, you don't want to put the bins there that won't work and that the kitchen shouldn't be on the second floor, it always has to be on the ground floor, all sorts of, you know, insider knowledge that we wouldn't have had if he hadn't himself had to live in HMO. But of course, those are some additional costs. And we negated all of those costs. By now we were living both together, in at home and working from home. And so therefore, we didn't actually need to earn as much money as we had before. So it was it was a really good, really, really good time. It was very exciting to to be able to leverage enough so that we can now no longer be employed by anybody, nobody would tell us when to get up, or what to do, or how we should spend our days. What a tremendous feeling of freedom that brings.
Christian Rodwell 15:50
Yeah, no, it's really good to hear the progression there from you know, a place of what we call financial insecurity where there's not enough money coming from assets yet in order to completely replace the jobs to a place of financial security when the assets are covering your outgoings. And then of course, then the next target is to reach financial independence. So once you were at that point of security, and you had your HMO portfolio, Wendy, how did you then move forward from there? And did you begin to look at any other strategies? At that point,
Unknown Speaker 16:21
we started to learn more about how to raise money from other people, we had already worked a couple of investors up into that point. And we realized that because we have run out of our own money, that the only way we need to grow the portfolio and grow the business would be to continue to find good ways to give other people a return, and create win wins. So that was at the point where we started to develop portfolios with other investors. And we also recognize that by creating a cookie cutter approach for our business, we didn't have to recreate the wheel each time. So that was really when I started to write our operations manual for our business. And as a result of writing the operations manual, it taught us how to find properties, how to fund properties, how to finish or reefer properties, how to fill properties. But finally, the key step was how to future proof them. Because one of the things that we had seen that happen in the past with many other property investors and our own property portfolio, was that if you hadn't developed systems and processes a to maintain the properties and to continue to grow, but be to release your time, all we could see we were going to be heading into was this black hole of time and energy as we manage the growing portfolio, and neither of us wanted that. So we knew we had to create a system and a process whereby we would our time would be reduced every month, but our income would be increased every month. And for me, that's the the Nexus where futureproof comes in, because it allows you to outsource and to to leverage and yet still be able to grow the portfolio. So that was what we focused on. And yes, along the way we did commercial conversions, we've got commercial property, we done other other types of property as well. But we mostly still focused on the bread and butter of HMOs, we bought a couple of single nets along the way as well.
Christian Rodwell 18:25
Hmm. So I can see a nice five f formula that that you've got there. So does that lend itself I imagine to obviously then being able to help other people and we're, you know, friends, family connections, beginning to ask you kind of, you know, how you how you've done it, and whether you could help them as well.
Unknown Speaker 18:43
I started to be asked to go and speak at different property networking events. And my mentor said to me, when do your, your system, your five f system, you should usually write a book about it. And I thought, oh, writing a book that sounds like a massive endeavor, could I really ever write a book but I did. And in fact, the second copy the second edition has just come out of my my very first book 101 essential tips for running a professional HMO, giving you time, money and freedom. So I put my my five step formula into the book. And that came out in October 2015. And yeah, as a result of that, people did start to then approach me to say, could you mentor me, could you train me How have you done this Have you created a portfolio of cash flowing assets, which gives you time and money freedom. And so that was really how my my next business which is called HMO success was born out of that, that that first year of being financially free and having the time to write a book, having the time to put into thinking about our the future proofing aspect of our business, so that we have more time to be able to do what we wanted to do and not feel that we had to spend. We have to now now spend our lives on managing our property portfolio, which is unfortunately, where I think a lot of people find themselves after a few years, they've invested heavily, they now have a great cash flowing portfolio, but there's been a lot of time managing it. And that wasn't what we wanted to do.
Christian Rodwell 20:16
Yeah. So let's dive into that. Then Wendy, let's really talk about now how someone can run a hands free HMO portfolio. And I guess there's people who are earlier in their journey. And there's people as you just say, who may already have a number of HMOs, but feel kind of trapped. So are there different approaches for the two sets of people? And how can someone who's already got some and most start to step back and put some systems in place?
Unknown Speaker 20:41
Well, I think the key is, if you're starting off, start the way you mean to carry on. So start with the end in mind, I think it's really crucial that you plan how you're going to grow and develop your HMO portfolio so that it is hands free. And that's a practice that starts from day one. It's much harder to shift later on, it's possible. And I want to give some help to those people who might find themselves in that position and thinking now, oh, I really want to get out of this business, I want to get out of running this business. But I don't know how to. So I'll come on to that. But initially, what I'd say is start with the end in mind, if you want to get to a point where you have a cash flowing HMO portfolio, but you're not running it yourself, I would recommend a number of things. First of all, you need to be thinking about leveraging and outsourcing from day one. So one of the lessons I learned was the importance of having a process that you could then give to somebody else. So this was where our operations manual was incredibly important. Because by by operationalizing, I think that's a word. By operationalizing. Our systems, it meant that I could easily pick up a chunk of the workload and delegate it to somebody else. So I started to recruit members of our team. And I would say to them, okay, your job is written out in Pages 15, two pages 21 of the operations manual. And in that operations manual, I went into a lot of detail. So I would go into the detail about the tools, the systems, the processes. Now, one of the other things that we've always maximized is profit. So a key area that I see mistakes being made by people, is using expensive tools. And there's only two use expensive tools and a lot of low cost or no cost tools out there that can help you run your business. So for example, we don't use software, we don't use management software, or land or software, we use Google, we use Google Sheets, and Google Forms. And up to, we now have a portfolio of over 150 rooms. And we've got other properties as well that we manage, and it's completely free. Now, we have moved on to G Suite, which is you pay a little bit more for G Suite every month, there's a little bit of subscription there. But at the lower levels, you don't have to pay anything, it's completely free. And it's very, very easy to set up. And it's very easy to use. Now, it might not look as sexy, and it might not, you know, have all the functionality that maybe a piece of land or software does. But it's completely free. And my view is what you want to be spending your money on is good staff, you want people who can run the processes, and you want to be able to manage and run the people. So your job should be to oversee the people on the team. And then the people in the team run the processes. But what you want to do is spend money on people not on tools. So we try and keep our tools as low cost as possible. So I think having a having an operations manual, however small, however thin it might be, because you've only just started is really the key to starting to systemize and leverage your business. Now, I think for somebody who already has property, they will have have more experienced knowledge and insight to be able to do this really easily. And actually, what I found in working with my private clients is that when I've suggested to them, they need to take some time out from their business and work on and not in their business, they've actually been really pleasantly surprised by how much they can write down very, very quickly about what they do. And actually the process of doing that has also illuminated to them some of the areas where maybe they're not as efficient as they could be. And systems that maybe need a bit of a tweak or a change to work better for them. So I always start with the operations manual. And for me, you know, having it broken down into those five steps covers everything, so feel free to copy it if you like.
Christian Rodwell 24:54
Now, I know one of the other things that often kind of puts people off when they is the compliance and regulation And around HMOs. So any words of advice there,
Unknown Speaker 25:03
compliance regulation, you have to learn a significant amount in order to be able to remain compliant. And we teach that on our courses as well, we're really, you know, clear about what you need to learn and, and how to learn it, we're trying to make it as interesting and as, you know, accessible as possible. But actually, it's only hard the first time, once you've learned how to do it, once it's a bit like driving a car, you don't have to keep taking your test again, you don't have to keep learning how to do a three point turn, once you've learned how to do a three point turn, you can do it in different streets, different parts of the UK in different parts of the world, you don't have to keep relearning it. So while there might be a little bit of a learning curve here, if your aim is to create a hand, at hand full of cash flowing properties, which replaces your job income, you only need to learn it once. And then you just rinse and repeat it. So yes, there are aspects to learn about compliance, there are aspects to learn about regulation. And it's a case of really understanding how they apply to your HMO. And, again, a useful tool for this would be Google Calendar. So in Google Calendar, we always put in when our gas safety certificates are needed, when the alarm test certificate is needed, when we need to reapply for the HMO license, and it becomes a routine. And then you can again delegate to somebody else to oversee and manage that and plan for that. And it suddenly is no longer a headache. Because it's systemized, it's routine eyes, and it's delegated. So you can leverage it. So you do not need to be the one phoning up the plumber to organize the gas safety check, you do not need to be the person organizing, you know some some safety check in your HMO, somebody else can be doing that for you when you get on with the important job of building your wealth.
Christian Rodwell 27:02
Now we know for from our members that for many people, Wendy to kind of really hit that point of financial security and break free of that time for money trap. It's around about 5000 pounds a month. And that could be less for some people more for others. But you know, roughly speaking, what are we talking about five HMOs here to hit that target?
Unknown Speaker 27:24
Yes, I would say about five HMOs. For me, it was more like nine because I had a joint venture with another investor. So we did 5050 on our properties. So for four of those properties that I had, I was only getting 50% of the of the cash flow. So that's something to look out for that if you're doing a joint venture, then you're going to have to do more properties. But the benefit, of course, of course of doing a joint venture is that you're probably not using your own money. So there is you're getting 50% of the cash flow. But of course, if it hasn't cost you anything, it's an additional 50% wouldn't had otherwise. So yeah, I probably have more than five HMOs. At that point, maybe nine or 10, which was a very good stable position to be in. I would also say that you need to calculate for voids, you're going to have some level of voids, you're going to have some level of maintenance. So erring on the side of caution is always wise. And having some level of savings, I would recommend that people have between three and six months worth worth of savings in the bank, and also trying to reduce consumer and expensive debt. I think these are all very good money management approaches to have. I'm very much in favor of using debt to buy assets. But I'm not in favor of using debt to buy fripperies So focus on reducing consumer credit, consumer debt, increasing debt that's leverage against assets, which gives you cash flow.
Christian Rodwell 28:57
And one of our recent guests when they actually talked about how when he sat down for the weekend with his wife, and looked at their portfolio, they realized that just by reducing some of their outgoings and reducing their expenses, they actually were able to hit that financial independence figure. So do you have any tips at all for how someone can maximize their income from HMOs when they
Unknown Speaker 29:20
so I would say that I what I see some of the mistakes that people make, first of all, not understanding the impact that voids has on your business. Now occasionally I'll speak to a landlord and they'll say Well, I'm not renting that room out for anything less than 120 pounds a week that's a 120 pounds a room a week room any day of the week. And also brilliant or how many days of the week is it rented right now? Oh is not is empty, are okay. We have to realize that the HMO market is very fluid. It's it's not like a pint of milk or or You know, a tender peaches, the price doesn't vary, the price can vary massively, it's not just by a small percentage that have Aires, or that it's standardized, you know, genuinely a pint of milk is fairly standardized across England. But that's not true of HMO rooms, there is no standardized price for an HMO room, your room is only what somebody will pay for it, as is true of property, actually. So in terms of your flexibility about how much your your room should be rented for, try not to have a fixed price in your own mind. And that goes for increasing your prices as well. If you've got plenty of demand, if you've got plenty of people looking at your rooms, then maybe this is an opportunity to actually increase your prices, maybe by a small amount, a few percentage points. But this can really make the difference between having a profitable and a non profitable HMO out outgoings if you're not regularly assessing your outgoings your utility prices, and checking on those and again, this isn't something you necessarily need to do, you can you can outsource it, you can get a virtual assistant to do this for you. We take a check of our meter readings across our portfolio every month. And it gives us an idea of how much gas and electricity is being used. And in those properties that got water meters. That way, we can see if there's a spike in usage or demand. And we can address it. Sometimes we have spotted errors. For example, we have spotted leaks, we have found that in one of our properties, the tenants had left the emotion heater on for about six weeks. So they had plenty of hot water at the drop of a button at the flick of a switch at the turn of a tap. They had as much as they needed. But of course we were paying for it. So we said to them, you know, please turn off the emotion heater. And of course, our fuel bills came right down. But this was only predicted because we had our meter readings. So this this kind of data is extremely helpful when you're trying to maximize your profit in an HMO, having regular data that you can look at. So how many days has one of your rooms been empty for how many views have you had of your advert either on spare room or other sites that you might use by utilizing some of the other channels such as your own website, your Facebook, Instagram, and now you do offline marketing as well. We seem to forgotten that actually, offline marketing is just as effective as online marketing these days. And there are plenty of people who respond to a leaflet, or a card in a shop window, or an invitation by a friend to look at a room. So we have we have a policy that incentivizes people to give us referrals for tenants. And these are things which I think they are small tweaks, but they can make a big difference to your bottom line. And it's about having a very sound business approach. I think with single byte selects, it's reasonably easy to buy them reasonably easy to let them out. And really to let set and forget, you don't have to do much work with them. And you can manage them yourself or you could utilize an agent HMOs are definitely more work because you have more concentrated number of people living in one property. So they do take more work. But you know, it's only about mindset, this is not work you have to do. It's simply about creating a system, the process, a flywheel, if you like, that gathers the information and reacts to the information. And you're simply the person who is the architect of that process, and then allows other people to run it for you. And when that happens when you can create that. It's a very, very powerful wealth building tool.
Christian Rodwell 33:55
Now 2020 was one of your best years ever Wendy despite the lockdown and pandemic going on? Why was that?
Unknown Speaker 34:03
It's very hard to know. Christian, I wish I could be, you know, have a really deep insight into why 2020 was a good year. We had some bad debt. So I can't say that we didn't have any problems. It wasn't a perfect year. We didn't have 100% occupancy across 12 months. We still had a couple of troublesome tenants. But overall, yes, it was one of our best years. It was our best year ever, actually. And maybe that was because tenants weren't moving so much. We have stability of population. So the tenants were staying in our HMOs for longer. We had we reached we regularly reached 100% occupancy with 150 rooms. It's unlikely you'd keep 100% occupancy all the time, but we regularly hit on percent occupancy and I remember in December we hit 100% occupancy and we're all celebrating over Christmas which is great. So I think it was perhaps a mixture of offering great service, great accommodation and having very, very responsive team. But having a very responsive team. I think tenants like that they'd like to know that they have somebody they can call on, who will respond to their questions or queries or comments very quickly. And we've always prided ourselves on offering a really good system to our tenants. I think also, during COVID, we were very, very quick to respond with COVID policy, we issued COVID, posters to all our properties, we were very clear with our tenants about things like rent delays, or rent arrears, what they should do, if they needed to apply for a reduction in rent, how they could go about doing that, and what we would do to collect the arrears. So certain policies were very quickly communicated to tenants. And that I think, gave them clarity and gave them certainty about the way we were managing in that rather uncertain time. And then I think as the year progressed, we also made sure that we implemented very good cleaning methodologies, with our cleaners, and with the contractors and the team who would go into the properties. So we carried on doing viewings when we were allowed to, but we did them very safely. So we also had always done online viewings, we often done video viewings, and this became more popular as well. So I think we were fast to adapt to the changing nature and what was going on. And we were able to support tenants, but we were also able to still keep the business vibrant and alive and growing. And in fact, we did. We did an HMO conversion in the middle of last year. And two months later, we had it all fully tenanted and rented out. So even during COVID, we were still working with our builder and we were still developing property. We didn't stop,
Christian Rodwell 37:00
I know you keep a keen eye on the economy as well, when the and how that affects local impact for property investors. So So where do you see the future of HMOs? At the moment,
Unknown Speaker 37:11
I think that's very strong. Despite quite a number of people selling up, I also see quite a lot of HMOs coming onto the market. And I suspect that's because those people are finding that they are struggling to rent their rooms, or they're struggling to maintain them in the face of some quite stiff competition. But what I would say is that when there is a need, if your product or service meets a need, you will always be able to sell it. So one of the key areas that I'm always looking at is, as you say, the market the economy, understanding what's happening in the world today. So I think moving forward this year, of course, furlough will be coming to an end. And I think that is going to provide somewhat of a kind of test a little bit of a thermometer for the general economy, we'll see whether indeed employers are creating the jobs which we're led to believe they are creating. And will some of those people who are currently furloughed, go into new jobs, or will those businesses come back to life and those furloughed individuals who just go straight back into their employment? Or will we see an increase in unemployment. Now, whichever way the economy goes, HMOs always provide a level of accommodation is needed. Because particularly if you're providing all inclusive accommodation with bills included, you are always going to be in demand, you're always going to have somebody who does not have the money to pay for bills or doesn't really have the inclination to pay for bills individually. They don't want to set up a separate direct debit for gas and electricity and council tax, they want to have it all included. So it's a very powerful model where you just simply pay one price every week or every month and get everything included. There aren't many standards or types of accommodation where you get that. So I believe there's going to be very, very steady demand from continuing through 2021. I also think we're going to see some changes in working patterns. Often we saw this after the last global financial crisis was that people know they've got to move around more to get jobs. So we're going to see people moving into and out of cities, we're going to see people moving into areas where there are going to be different types of jobs, distribution, jobs, warehouse type jobs. Now those kind of jobs are not particularly highly paid. But they do often require suddenly, you know, a huge increase in the working population that you know that they're their working clients, and where are those people going to live? If you've got an HMO near to an Amazon warehouse, you're going to be absolutely fine because that's exactly Be the kind of accommodation that often those workers need when they're first moving into the area. And I think even post Brexit, although we have seen some people go back to Europe, some people decide that they don't want to stay in the UK anymore or unable to send UK anymore. We do know that immigration from other parts of the world has been steadily growing. And I think once we get out of lockdown, and the travel restrictions are removed, I think we're going to see that even more than ever, because one of the things that COVID has definitely done is increase the gap between the wealthy and the poor. And this is not only just locally, but it's also internationally. And I suspect we're going to see many more people wishing to come to the UK, a because we have a strong healthcare system and a strong NHS, B because we have good other support services. But see, because potentially, we have very good employment prospects too. And again, people who come to the UK from abroad, they can't afford to rent somewhere individually. And in fact, quite often they don't want to because they're sending money back home. But also they're not able to buy because they're not mortgageable. So So I I'm very, very confident about HMOs. Moving forward.
Christian Rodwell 41:13
Look, I really appreciate you sharing everything that you have done with us today, Wendy, it's been really informative. If people would like to find out a bit more about the work that you're doing, obviously, your book and you have your own podcast as well, ah, my success, where's the best place for them to head to online.
Unknown Speaker 41:29
So you could come to my website, which is www dot HMO, success.co. dot you get.co.uk you can email me Wendy at HMO success.co.uk. Those are probably two of the best ways you can find me on Facebook, Wendy Whittaker large I'm on Instagram, I'm on LinkedIn, all the social media platforms, you know, the drill.
Christian Rodwell 41:56
And the thanks so much for being a great guest on wealth talk today. So like many of our guests, Kevin, Wendy said that you've got to start with the end in mind. And in fact, we had Ryan Luke, as one of our guests not that long ago, back on episode 90, he was talking about having 1000 property mindset, and, you know, is a good place to begin,
Unknown Speaker 42:17
or always begin with the end in mind. It's that seminal quote from Dr. Stephen Covey, you know, begin with the end in mind. And I think that's true. And what's interesting about that is, Wendy, is crystal clear on what her outcome was, you know, she focused on getting to a place where, you know, she could get to that level of security almost heard the language there, didn't you in terms of what she was doing with her and a partner and getting to a certain level of income to allow them to get to freedom. So they had a long term plan, but short term milestones, it's really, really important wealth building, because if you're brand new to wealth building using will never get 150 rooms, get one. But actually, if you're an HMO, you know, get four or five in one go, why not? Do it's definitely tailor talk about buying property in blocks didn't mean recently. So it isn't just one, you can often get four or five in one go. So there's a value in that, and then get the next four or five, and then get the next four or five. And as you'll hear, or as you heard, rather, from Wendy, you know, different strategies to help you accelerate when you get to a certain point, and you need to do something to keep you going. Like all property people, you run out of money before you run out of ambition, but there's no shortage of money. It's just your own resource on this. That's the key. And then how you present that and make that known to the wider world, which I think Wendy does outstandingly Well, not just in terms of being a warm and engaging person, you can hear how sharing she is. But also she has her own group, she has her own mentees, you know, she's reaching out to private investors. So you can see that her experience has given her the confidence and the capability of being able to expand.
Christian Rodwell 44:02
And that's something we spend a lot of time with our members doing as well. And our wealth coaches, when we create the initial wealth map, when when a new member joins, and it's about looking at what that next wealth level is, whether it's to get to security or to get to independence, and how big the gap is from where you are now to where you want to get to and then you look at the strategy based on the points of leverage based on experience based on wealth dynamics, and then say, Okay, well if the strategy is HMO, what's the average cash flow or monthly income that you'll expect from that? And then you can start to get an idea of well how many properties will you need? How much funding will you need? How long is that likely to take? And it all starts slotting into place doesn't that
Unknown Speaker 44:43
exactly right? And you can almost see the the roadmap Can you in Wendy that she applied this intuitively, of course and people often do that. When, as you heard herself you she didn't have a guide should never mentor. She was a DIY few words, you know, you would say that but DIY with passion and purpose and the trial and error method is a slower method. And now of course, we know Chris, that if you can bring in some kind of guide and a mentor to lead you on the path that's already well trodden, it can save you years, intellectual shortcuts, financial shortcuts, connection shortcuts all over the place. And that's to accelerate you not to cut corners, here, we're talking about shortcuts in just getting you to a place that you want to achieve more quickly than you would simply by trial. And now,
Christian Rodwell 45:36
in Step nine of our recurring revenue roadmap is titled accelerate. And I think for Wendy, Step nine was obviously then running out of money and realizing she had to learn about joint ventures and raising joint venture finance. But then, as importantly, is putting those systems and processes into place.
Unknown Speaker 45:55
Well, you can hear this a beacon here, she's been on a journey a lot, she didn't quite chart the journey for us, because it was, you know, a roving one, but you know, you heard the mistakes. And she had the humility to say, Hey, I made some mistakes along the way. And you have to be willing to make mistakes, you know, so you have to be willing to say, not everything I do will be perfect, but it will move me along the journey, you know, so she heard some of those mistakes, but now she's powered through. And you can see that private investors finding a story attractive, she's got a good story, people investing in that story. They're seeing themselves participate in that story. And that's another thing that we talk about a lot, Chris, isn't it when you're looking to get to the place of expansion, is you need to be able to craft, the message that you bring, and the value you bring into a story that other people can hear can understand and can be compelling. And Wendy's done a great job with that.
Christian Rodwell 46:54
Yeah. And then Wendy mentioned, of course, the word leverage, which is at the heart of our roadmap, it's Step six, and for when Well, in fact, you know, we know that you have to create value first. And if we think back to wealth dynamics value is either created through the innovation at the top of the square or through the timing at the bottom, but then in order to leverage that, and, and scale, you either need to look at the right hand side, which is using teams and people to leverage or, or the left hand side, which is systems. And Wendy certainly is someone who likes to put a system in place. She talked about getting the ops manual in place, right from the beginning. And she mentioned her five F's, but I know we love sevens, don't we? Kevin? So have you got a take on on when these four malarial?
Unknown Speaker 47:44
Well, it's a great formula. And, you know, again, I love the humility when he's saying, you know, steal whatever you want to steal. And of course, I'm not going to steal, but I will kind of embed that in the kind of wealth builder way, which is, you know, to, to think about things in sevens like the Seven Pillars, the seven different ways of doing things. And so I would summarize it as somewhat similar to her in terms of the first process you need is a is a genuine process to find property. And there's a whole skill around that. And you could take each one of the seven things I'm going to talk about, and you could make that a podcast episode in itself, Chris, so I'm not going to get into detail. But finding, you know, whatever opportunity it is, by the way, isn't just property, but to apply this to the principle of everything you're doing. fund, you know, what, what's the money? What's the investment? What, what is that needed, and certainly in, in property, you've got deposits and refurb. So you've got money that needs to be found there. So find fund, and then somehow, you, you, you converting something, you know, wealth is a conversion process of creating more value from what value there is there. And I think she refers to that as fix, and that's a good one. So you know, you fix the property, you fix it up. I think that's a term used in America of fixer upper, isn't it? New, you get the property to a place of more able to accommodate and in HMOs, that could be soundproofing, its bedrooms, it's on suites, it's a whole range of different things. And then you need a strategy to get the right tenant type, whatever tenant type it is, you know, then that's called the fill. So find fund, fix, fill. Then I think what was interesting about Wendy, when she talked about kind of paying attention to what was happening inside the business, you know, seeing it as a business and measuring the flow. Now, she didn't use the word flow, but she talked about keeping an eye on the cash, keeping an eye on things, the bills, you know, we've like the immersion heater story. So you know, you need to keep an eye on these things. So you're measuring the flow. And then like one of the best lessons I think she taught I want to really tease that one out. Which is an important one that people will overlook or get the timing wrong. And this is when you create the system, when you create the formula, the F for formula. And when you create the formula, particularly if you're bringing in other people, and she talked about people over paperwork Didn't she really she talked about using people more than tools. And I think that's a great skill. But whenever you engage with people, you have to learn the process yourself. So you know what to create in the formula. And this is often at the beginning of the journey, I hear people talk to me, Chris, they say, I want to be hands free. I want to be completely passive. But you can't be you know, the beginning, you've got to learn the process. Otherwise, you become a delegator, and you can't create wealth from delegation. Now, once you've got the formula, you put the time in, and yes, you've got to put in the time. But once that time is taken, you're then free, financially free for that process to work because you've got people in there. So let me summarize. Find, fund, fix, fill flow, formula, freedom, that's your seven steps to basically pick up what Wendy said, and many others have said, and you could apply that process. And think about what you need to do in each of those steps to achieve the financial freedom that you want. Okay, hope that helps, Chris?
Christian Rodwell 51:35
Yeah, very useful. I can kind of picture people scribbling those down right now. So perhaps we can, well, obviously, you know, elaborate on that in future episodes as well and dive in some of those different aspects.
Unknown Speaker 51:47
Yeah. So I really enjoyed Wendy's contribution today. And I think she brought out so many lessons, and, and gave us a really nice way to be able to frame those lessons too. And we're delighted. She's part of the wealth builder family, so to speak. And we're building a relationship with her as we grow. And we're looking forward to seeing many more great people interviewed on web talk in the coming weeks.
Christian Rodwell 52:12
Yeah, and if you're not part of the wealth builders family as well, then you can take that first step by joining our free Facebook community. So just head on over to Facebook search for wealth builders, or you can go to wealth builders.co.uk forward slash Facebook. So we hope you enjoyed listening today. Kevin, thanks for your time, and we'll catch up Same time, same place next week.
Unknown Speaker 52:34
Until next time, my friend so yeah.
Unknown Speaker 52:38
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membership.