In today's episode we are joined by three WealthBuilders Community Members: Stephanie Aitken, Bronwen Vearncombe, and Carol Robinson. Make sure to tune in if you want to find out how these members managed to turn their house into a cash-flowing asset and how you can too.
How can you turn your home into a cash-flowing asset? This week we begin to look in more detail at how to create recurring income from each of the 7 pillars of wealth ...and remember, in Kevin Whelan’s exhaustive research over the last 30 years ...there are only 7 ways to build wealth! This week we take a look at Pillar 1 which is Home Capacity, and hear from 3 members of the WealthBuilders community exactly how they have created income from their homes, without selling.
Show Contributors - Stephanie Aitken, Bronwen Vearncombe, Carol Robinson.
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Unknown Speaker 0:12 Hello, welcome to Episode 15 of wealth talk. My name is Christian Rodwell, the membership director. And today, I'm not joined by Mr. Kevin Whalen. However, I do have some company. And I think you're going to specially enjoy what we have in store over the coming weeks for you. So what are the Seven Pillars? And why is it important to understand what they are and how they work? Well, if wealth can only be created from the ownership of assets, and from Kevin's exhaustive research over the last 30 years or so, there are only seven, there aren't more, there are only seven. And it really makes the process of building wealth, very scientific and quite simple and straightforward. Albeit you have to choose the right combination. And there's a lot to learn, but there are only seven ways
Unknown Speaker 1:00
To build wealth. So once you understand them, you can get to a much better place of a working out which assets fit you and be which combination of assets to work with. Because it's really important to recognize that one asset will not create enough wealth, because it will be uncertain. Okay, and no asset is without risk. So over the next seven episodes of wealth talk, we're going to be inviting members of the wealth builders community to come and share how they have been able to generate recurring income from each of the seven pillars. And today, we're going to begin with pillar one, which is home capacity. So what do I mean by home capacity? Well, if you live in a home the traditional way that people have turned their home into some form of income, recognizing that when you would live in a home, it's not really regarded as an asset because it's somewhere to live and stay, raise your family. So how they turn their home into an asset is almost always too late. And most people turn their home into an asset when they downsize
Unknown Speaker 2:00
When they downsize, they tend to do that at the end of their working life. And almost always, when they recognize their wealth building has not been done well. And as a result of that, then they moved to a smaller home, often undervaluing the extra income that could be created from the downsize. So the key is to recognize that your home can be turned into an asset in other ways.
Unknown Speaker 2:23
So let's dive in now and hear from some people who have done just that.
Unknown Speaker 2:29
Hey, welcome Bronwyn to wealth talk. How are you today? Hi, Chris. I'm very well. Thank you. And where are you in the world right now. I'm in Queensland in Australia. So in the Whitsundays beautiful, peaceful place. Excellent. And what we're going to be discussing today is definitely, you know, all centered around that freedom to be able to travel and see the world which I know is really important to you. So why don't we just start off from by if you don't mind, give some us a little brief introduction as to the
Unknown Speaker 3:00
You are and your connection with wealth builders. Yes, of course. So, yes, Bronwyn burn can. I've known Kevin Whelan for about five years I've tried to work it out actually. It's it was when I first started in property and learning about property. I was obviously looking for funding as you always are. And Kevin, I was introduced to Kevin by somebody who wanted to lend me some money from his sip and all his SAS. So I was borrowing from other people's
Unknown Speaker 3:29
pension funds when I first started out. I then created my own couple of years later, but that's another story.
Unknown Speaker 3:36
Yes, well pensions are pillar two and we're going to focus on pension one today and I'd love to hear Bronwyn, your and your story of how you have utilized your home to generate recurring income and give you that freedom as well to travel so and what Yeah, what's what's your first sort of piece of advice on one way of going around this? Well, I'd like to share with you some things that
Unknown Speaker 4:00
A little bit unusual. I mean, the normal would be, you know, you release equity from your property. You know, that's fairly standard. But that's something that we've chosen to do really came from following our dream, it was something that we both wanted to go out and do some adventures and my husband decided to do the around the world yacht race, which takes nearly 12 months of time. And in the preparation for that it was all what are we going to do with the home? Am I going to follow him? Or am I going to stay at home and just travel out occasionally? Well, I knew which one I really wanted to do, which was to follow Him and that's what I ended up doing. So So our our choice of what to do with the house was about renting it well. If we rent it at a market rate, that actually we can make a profit from it, we can actually create an income. So rather than being a liability is quite often it is if you're living in it, as long as we we had someone to manage it for us, then we can rent it.
Unknown Speaker 5:00
So we were single let it to a family for the period we were away. So it was fortunate that we managed to find somebody or an agent found somebody for us.
Unknown Speaker 5:11
We had to let it unfurnished, of course for that period of time. So we did have to put our furniture into storage. But that worked brilliantly for the year that that we were traveling. When we came back, of course, we finished it again. And then we both said, Well, what do we want to be doing? In the future, we've given the amazing adventure we had. So we came up the idea that we could leave our furniture in it, and then short term let it so provider like an Airbnb house
Unknown Speaker 5:45
and let it for holiday purposes.
Unknown Speaker 5:49
That gives us a much greater income, but also, more importantly, gives us flexibility. So not only do we have our own furniture in there, we've sort of got to make sure
Unknown Speaker 6:00
We didn't got too many too many trinkets and things but you know having enough basics in there for it to be comfortable.
Unknown Speaker 6:08
And then for us not to have the cost of the storage but for us to book it. So we started doing this last September, we booked it for Christmas for so that we as a family with the two children we've got who were in their 20s we could actually stay it'll be at our home. Say what we do now is we we either house settle we travel, when the when the house is being let we found that actually it seems to be very popular, even though it's quite a large house.
Unknown Speaker 6:38
So we've been doing short term house sitting and we've been doing long term house sitting and that's what we're doing in Queensland now we're here for three months, we're going to write a book. And because it's for that length of time, it just means that you can settle and you can do some fun things while you're away. So the income from the property
Unknown Speaker 7:00
It is being managed by somebody else in the village. It is earning us more than it would be as a single let. So it's something I felt would be really important to share, you know, start thinking a bit more innovatively. And it's actually great fun to go and sit for other people in their houses and actually doesn't cost us a penny. So the wonderful lady that owns the house, I mean, now, she just wants us to also have a garden for us, for her so that's really not a big deal for us. so fantastic. Great. Well, that sounds great. And it just gives you the flexibility and convenience as you say, you can just you know, make up your mind book your own place when you want to come back and it's it's pretty much as easy as it sounds. Well, it is it is I mean I do I do teach people this this strategy, holiday letting. Thanks so much for sharing that with us today, bro man.
Unknown Speaker 7:58
Hey, so welcome, Stephanie. How are you?
Unknown Speaker 8:00
Thank you. Yeah, I'm great. Thank you. How are you? Very good. Very good. So why don't you just start by introducing yourself and your connection to wealth builders? Yeah, absolutely. So my name is Stephanie again. And I got connected to wealth builders when I was starting on my property journey. And I heard that there was a possibility of being able to unlock your pension, to be able to invest in property. And I my background is I used to be a lawyer used to have MTV for many years, and had moved into corporate coaching and training and so forth. And so I was connected with wealth builders, I was able to move my pension into what is a SAS small self administer scheme. And through that journey, got to know Kevin his values and I thought, what taxes are amazing and also really aligned with with what wealth builders were seeking to achieve, and actually started to work more closely with Kevin, and over the past few years. I'm a speaker for wealth builders.
Unknown Speaker 9:00
And I help out with various projects and so forth. But I still do my other activities. So I feel like we're, we're kind of part of the family. Definitely one of the family. Yeah. And of course, we're not focusing on specifically the pension pillar in this episode, but what we are focusing on is pillar one, which is home capacity. And you've got, you've got a story to share having you have how you've used this to generate some income from your property. Yeah, absolutely. And obviously, there's multiple strands of building wealth under the wealth builders model. And many years ago, I'd read the Robert Kiyosaki book Rich Dad, Poor Dad, which I'm sure many people have read, and this concept of your own residential home being a liability, and through, you know, being educated and being around Kevin thought, Well, actually, there's something I can do here doesn't just have to be a liability. So I own a two bedroom flat in conjunction, very central location, nicely decorated and I thought, Well, why don't I when I do
Unknown Speaker 10:00
fair amount of traveling when I'm traveling Why don't I put it on Airbnb and
Unknown Speaker 10:07
a couple of things I know some people feel a bit funny about that. So I did have to come over overcome a psychological barrier to to thinking about other people being in my home. But I kind of got over it and focused on the on the benefit and but I knew that I didn't want to have to manage it myself because that would be too much particularly traveling and being on the road, not being able to manage all the different intricacies of it so I started looking for management companies and I spoke to several and pick the one that felt like the best fit for me. And so what this management company does is actually takes care of everything from start to finish. So they take over my my Airbnb account, and they also put the property on different sites so it's not just Airbnb, but obviously Airbnb is is the the primary ones.
Unknown Speaker 11:01
And they deal with guest requests, they vet the guests, they they arrange the booking their cleaners that come that will clean the property, do all of the linen towels and everything so they really handle everything, which is exactly what I wanted. And they only charge a 12% fee which I think is quite reasonable given that they're doing all aspects of it. I don't know what you think but
Unknown Speaker 11:25
but that felt like a good Yeah, a good amount, a fair amount. And so I've been doing this now for a year. And it's, it knows how I do it just to give some tips for people if they're listening. So how I've managed to do I've got a big storage cupboard in the middle of my flat quite lucky. And what I did was put a lock on that and every time I put the flats and make it available for short let's I put away everything anything valuable or anything that would
Unknown Speaker 11:59
you
Unknown Speaker 12:00
That I wouldn't want to have to pay to replace. And,
Unknown Speaker 12:05
and and I put that in the cupboard and I lock it.
Unknown Speaker 12:08
And so that gives me a level of comfort. And then I also create space in, in, in in my own wardrobes and all around the house and leave some instructions for how to do things and went to the plants and so forth. And so works, it works very well from that perspective. What else can I do about it?
Unknown Speaker 12:32
Sounds Sounds like very hands off solution that you've got there. And obviously, you paid a little bit of an extra premium, as you said for for them the agency to come in and do that. And are there any drawbacks at all to to this strategy? Or have you had any experiences where you've learned how you would do things differently in the future?
Unknown Speaker 12:52
Yeah, so the the benefit of using an external management company is obviously they're handling everything and you don't have to worry
Unknown Speaker 13:00
I found I have had some challenges because I think how this particular company and I won't name any names, but how this particular company is set up, and it's quite a well known brand is to have everything as automated as possible, which I'm sure many of your, your listeners will, will know is it is a good thing to do in a business, have it automated, have systems in place and so forth. But I think sometimes it does mean things can fall between the cracks. And I also get the sense that it's company that is rapidly growing and then some of the teams aren't joined up. So for example, what has happened once and I'm almost reluctant to share it because I may put people off, but I still think it's a great strategy, but I have come back and the guest was still the property because there was a mixup on the data availability. Now, luckily, that just meant I had to sit around for an extra day I just came back from Asia and I was bit tired and it really wasn't obedient and I was bit peeved. But but it got resolved.
Unknown Speaker 14:00
fairly, fairly rapidly. I have had, I've come back and I've seen so what they do is they'll always at the end of the day, they'll clean it getting ready for next day. But as the host, I'll come back and, and come back into the flat already already set up for guests and then I sort of pack it down. And once or twice the quality of the clean hasn't been great. So there's been things like that. So I won't deny that hasn't been a completely smooth process. And what I'm going to do now is actually look to change management company and use a different one, which which what they do so how it works with my current company is they put a key box which is about five minutes from the property, which means that the guests are given the codes to keep up to the location they can let themselves in and then they put the key back so it makes it very streamlined and easy to do. The other company that I'm considering will actually come and have somebody in person to do the bookings in May will be
Unknown Speaker 15:00
I have lessened pocket because they may have higher fees because of that, but they are checking the guests in and out and I get a sense of them might have a higher level of quality control. So the other thing I just I think it'd be useful for people to be aware of in terms of other potential risk is obviously damage within the property. I've actually found the guests have been very respectful. And I think it's part of the the quality of the vetting process. And I haven't really had too many issues, think some minor things and you can get specialist insurance. There's a company called God hog, which will
Unknown Speaker 15:41
provide insurance for shortlists and it's it you can actually link it into your booking system so that it automatically creates cover only for when you make the fat available and have bookings. So that's really convenient. And I think there's a premium of about 100 pounds on that
Unknown Speaker 16:00
insurance policy. The way I see it for me, yeah, so for me, I think anything under 100 pounds and I think that would that would irritate me to have to replace like my neutral bullets or my with some other things as well.
Unknown Speaker 16:14
I just I just locked them away. And then I know I have the comfort of knowing that if anything else happens is more serious than I have insurance. And in fact, Airbnb do have a level of insurance but but they it's at their discretion.
Unknown Speaker 16:27
Yeah. That's great. Well, I was going to ask you about insurance, you covered that off. And I know in the path of other people if they have loft, light storage space, and they can put all of their stuff in there and keep it out of the way so, so that sounds great. Well, thanks for sharing. Can I have one more thing just but just to help people
Unknown Speaker 16:44
here so one thing to be aware of, I'm living in London and your listeners may be relatively savvy about this already, but if you're not, it's it's important to be aware that there is a limit of a maximum of 90 days that you can make your property available.
Unknown Speaker 17:00
As a short let, and it's something that's done on a local level in London. And councils have different policies around how much they enforce it, how strict they are with it. But it's something to be aware of. So don't think Oh, great. I'm living in London, let's just put it on for the whole time. I think some people are doing that, but that's a risky strategy because you can be fined. So,
Unknown Speaker 17:26
so yeah, important to be aware that there is that 90 day cap in London and outside of London, do check I think most places okay, but it's, that's that's worth checking to make sure that you don't in adversity go over that. And the other thing to check of course, is your if you have a flat, your lease your leasehold contract to make sure that it allows you to do that if it's freeholds and obviously that's different situation. But,
Unknown Speaker 17:52
but certainly there's a particularly if you've got new build flats and so forth. I think a lot of them are the developers and are quite savvy.
Unknown Speaker 18:00
And putting in very explicit clauses to prevent short stay Latin people basically are being those those properties. That's great. Well, thank you for sharing so much information. There's def, I'm sure our listeners have gained a lot from that. And let's hope it continues. Nice and well for you in the future. Yeah, thank you. Yeah, I hope I hope that's been helpful.
Unknown Speaker 18:20
So hey, Carol, welcome to wealth talk. And you have got a really good example of a way that you've been able to use home capacity and to actually advance your property investments as well. So really looking forward to hearing that, but before you share that, maybe you could just share how you first got connected with wealth builders. Yes, sir. Hi, Chris. Hi, everyone. Yeah, I think it was back in 2000 and back into 2015 and was progressing the proxy journey, full time property investment developer and went to ppl.
Unknown Speaker 19:00
breach. And I met Stephanie, though and Kevin. And that's where our relationship started as far as trying to
Unknown Speaker 19:09
being, I guess, enlightened to how I can access my pension that I've worked very hard for, and how I could make it work even harder for me by transitioning over to a SAS. And as a result of that, I was so impressed with what I could do with my pension part that because I'm a mentor and a teacher, the people about property, I felt it wasn't really fair that I kept this amazing secret to myself. So now I'm a I'm an ambassador for Kevin and wealth builders. And I like to share the story of how services have helped me build my property portfolio and how it can help other people. So that's really my connection to Kevin and wealth builders. Yeah, and for anyone listening, you know, is not sure what SAS is we're going to be diving into that next week, which is pillar to pensions, but I'd love to hear
Unknown Speaker 20:00
Your example, Carol of how you managed to actually turn your home into an asset by releasing some money from that.
Unknown Speaker 20:09
Yes. Okay, so I guess it was back in 2013 moved down to Southampton and
Unknown Speaker 20:17
also property manager negotiate a really good deal on it. And over the space of about two, two and a half years, I've managed to increase the value of it just through smart buying and also through natural capital appreciation. The value increased by about 60,000 pounds about 20% uplift in the property. Now, my partner at the time and I, we used to squirrel away our money and pay down
Unknown Speaker 20:51
our mortgage on our own house. That was one of our strategies whilst we leverage up on buying our properties. For our
Unknown Speaker 21:00
professional portfolio for our home, we've made a strategic decision to really just not have any mortgage on it just for our sanity, that was our approach at the time. And it made us feel quite safe. However, as we progressed, the property journey, and I realized, you know, it's going to be one of the cheaper forms of financing, um, you know, really low rates that I think it was about one and a half percent, we were paying. And when I compare that to trying to raise funds elsewhere, I don't be paying way more, particularly because I'd have to find additional cash props to a mortgage. And I could be paying for private finance, Angel financing, upwards of 8%. So what we decided to do was, go against the grain of what our original strategy was and put a mortgage on it to allow us to go and buy a it was a derelict property in
Unknown Speaker 22:00
I was in another county as a pimp booking a show. And an old lady had lived there. She died in he didn't have any close friends or family and yc have gone through probate and I guess she was older to be disabled, she'd never looked. She looked after the property for a very long time. So it was in a really bad state. And you would not have been able to get a mortgage on it.
Unknown Speaker 22:27
However, I saw the potential because it originally been two properties that she'd knocked through chatbot through it in a great design, it wouldn't meet modern standards. It was still very pokey and very old fashioned. And you know, there was water coming through the ceilings, it was just wild, you know, garden and everything. So you won't be able to get a mortgage on it. And
Unknown Speaker 22:51
I thought, wow, I could take this property, turn it into two properties. We needed to move to the area. So we were going
Unknown Speaker 23:00
Move into one of the cottages and we were going to extend it the houses and extended and then the other one we were going to sell. So it would make a really nice tidy profit on all of that. So by leveraging the equity in our home that we lived in at the time, we we put the mortgage on it pulled out a ton of cash, which was enough to buy in effect these two houses and buy it for cash which meant I've got an amazing deal. Plus not many people were interested in buying a property like that that couldn't see the potential. So I can I think how to negotiate about 60 grand off the asking price I've been on the market a long time because I could move quickly it's been a probate the family you know they weren't interested in inheriting a house like this at all. So they wanted to get rid so they were quite happy doing the deal the finally were able to cash in against the will
Unknown Speaker 24:00
So I got this property. And not only did I have enough money by lease, releasing the equity, to buy the properties for cash and get a cracking deal, but also to pay for the works.
Unknown Speaker 24:14
What actually happened was that, despite it originally been to properties, and you think all planning set a precedent, that should be a no brainer, we got turned down from planning
Unknown Speaker 24:27
because of the visibility displays going on to a BCI 41. So it's the 40 mile an hour, Rosie needed visibility displays of 90 meters. And despite the been lots of other houses there, and it used to be two properties we got turned down. But of course, like a good property investor, you always have your contingency plans. So we knew that we would still be able to make money by converting it into an executive home. So
Unknown Speaker 25:00
That's what we did. It's a nice large executive home. And I decided to move into it myself because life also happens to you as well. And my partner at the time decided you wanted to go to grass was greener on the other side apparently. So
Unknown Speaker 25:18
what this enabled me to do was have a house a beautiful house of my own that I designed. And then I was able to put a mortgage on this property, and I was able to buy him out of this home as well. And
Unknown Speaker 25:35
at that time, we'd also sold the Southampton one and pay down that mortgage as well. So in effect, it enabled me to capitalize on the equity growth and by using that I was able to find a cracking deal where I wouldn't have been able to progress with such cheap financing.
Unknown Speaker 25:57
It would have been very expensive to get the W
Unknown Speaker 26:00
Financing plus also top up with private financing. So now we enabled me to do a deal that I wouldn't have normally been able to do unless I knew that releasing the equity could give you an amazing chance, a very cheap form of financing.
Unknown Speaker 26:18
So that's well, there's a lot to be asked the question.
Unknown Speaker 26:24
So, you know, I think that a lot of lessons there for people and, you know, really opening people's eyes to what can be done. And Carol, is there anything for anyone who's maybe hasn't done releasing equity and refinancing in the past? Is there anything that you would, you would say they need to look out for or any kind of words of wisdom around releasing equity from your property? So if you think about releasing it from your home, and I think there's a bit of a mindset to go to get over really because, and we all probably program to try and pay down our home.
Unknown Speaker 27:00
Because it's the roof over our head and it gives you a level of comfort. So psychologically, you've got to get over that hurdle. And how I did it. I'm actually a chartered accountant by trade, so I'm naturally risk averse.
Unknown Speaker 27:15
And so I didn't need to get over that mindset. And the reason I was able to do it was because I knew once I released the equity, I knew my numbers, I knew how to be an investor. I knew that I would be able to pay that all back and still have made a huge amount of money. So all I was doing was really looking at my Look, I was looking at money as if it's a commodity and like you buy in the skills of
Unknown Speaker 27:45
Okay, so Okay, tax evaders, and things like that. I was just buying in money to enable me to get far more profits on a deal, a cheap form of financing, and I knew at the end of the day that I wouldn't
Unknown Speaker 28:00
paying back all of the all of the debt. So that was the plan, temporarily,
Unknown Speaker 28:06
just take out the leverage on my home with a plan to repay that back to the profits and the growth I would generate on the project that I was using the money for. Now, as it turned out, because I had split up from my partner, I ended up we did have a totally unencumbered home property again, but I've now been able to use the power of leverage again, to be able to buy him out of the property. So now it's all fully in my name. So my plan now is to do another project to then make sure that my own home is unencumbered. So I use it like an elastic band, my home equity. I use it for a specific purpose to allow me to progress either stuff that's happened to me personally, or on a professional basis, but I always have a plan to then repay it back
Unknown Speaker 29:00
And then I'm okay for but then if I need it again, I will go and do the same thing as long as I have a plan to repay it. Brilliant. Thank you so much for sharing that with us today, Carol.
Unknown Speaker 29:13
Well, I hope you found that interesting and inspiring. And it's got your brain thinking as to ways that you can turn your home into an asset and generate additional streams of income. And I'd really love to hear from you. If you have also done this. There are many, many different ways that this strategy could be approached. And we've just touched on three of the common ways today. But if perhaps you've got something that you want to share, then the best way to do that would either be to head on over to wealth builders.co.uk forward slash wealth talk, and you can push the orange button on that page and leave us a voice message. And we potentially can play that in a future episode and share that with everyone else listening and the other way is to get connected.
Unknown Speaker 30:00
To the wealth builders community with nearly 1000 members in the private Facebook group. And if you're not already in there, then head on over to wealth builders.co.uk forward slash Facebook. And you can introduce yourself, let people know that you've been listening to the podcast. And you've been inspired by some of these principles that myself and Kevin have been talking about over the last few weeks, and ask questions, learn from the community. We've got a huge variety of people in there who are at different stages of their wealth journey, and focused on many, many different strategies across the Seven Pillars. So I look forward to seeing you in there. I look forward to seeing you next week on the next episode of wealth talk, when we're going to be looking at pillar two, which is pensions, and surely one of the biggest sources of finance out there that people just do not realize they're sitting on. So don't forget to tune in next week. I know you're gonna love it. So yeah.
Transcribed by https://otter.ai