In today's episode we talk about one of the most widely used assets to generate wealth, Property. Make sure to tune in if you want you hear the different ways and different strategies in property.
One of the most widely used assets to generate wealth in the UK is property. However, there are so many different ways to invest in property, and in today’s episode Kevin Whelan & Christian Rodwell begin to look at some of those different strategies, and who they may be best suited to. As with all of the 7 Pillars of Wealth, the process for generating recurring income involves turning the wheel of wealth, and that always begins with education.
Resources Mentioned In This Episode:
Episode 009 - The Wheel of Wealth
Episode 011 - Creating Leverage Using F.I.R.S.T
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https://www.wealthbuilders.co.uk/foundation
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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
Hello, and welcome to Episode 26 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders and I'm joined by Mr. Kevin Wayland, founder. How are you today, Kevin?
Unknown Speaker 0:28
I'm really, really great today. Thank you very much, Chris. Nice to have a chance to chat with you. And obviously welcome all of our new members, which is pretty cool.
Christian Rodwell 0:37
Yeah, it's been great. So we dedicated last week's episode, we've talked 25 to listen to some of the stories from our founder members who joined us back in May. And really, really pleased to say that we've had a few more people joining us over the last few days. And it's great to see those people sharing their sign declarations in our Facebook groups that always makes us a place to see doesn't it Kevin?
Unknown Speaker 0:58
Well, it goes because you know, it's Not that everybody's a Facebook, you know, friend, because not everybody wants to be there. We know that through wealth dynamics, but just those who do and they're comfortable doing that. It's just a nice public declaration of their commitment, isn't it? And we all know that wealth is about action. And it's very, very easy to get overwhelmed and drift, when you've got so many different actions to think about, and not more so, Chris, than the subject of today's podcast, which is one of the biggest subjects of all, which is property.
Christian Rodwell 1:32
Indeed, so in moving into pillar four of the Seven Pillars of wealth, and it's a big one property, isn't it? Kevin, we know that the UK traditionally has had this little love affair with property and that's, you know, typically been by to let however, we know that property is multifaceted, and there's a number of different ways that this asset can be used to help build your wealth and sometimes that can lead to even becoming a bit overwhelming. So much choice.
Unknown Speaker 2:01
Yeah, there is so much choice. And I think what's really interesting about the way that we might approach it is we're not coming up this from a point of view, we think, you know, one strategy is better than another strategy. In the same ways we don't think one wealth dynamic is better than another world dynamic. It's all about trying to wrestle with a whole combination of things in the leverage section, which you remember the podcast so that Chris was that one
Christian Rodwell 2:33
leverage was fers t fast and that was a wealth talk. 11
Unknown Speaker 2:39
number 11. Okay, so and, and, you know, we're always going to be, I suppose, reminding people of some of the things they've heard before, for a number of reasons, you know, all of this does join up. And of course, it's nice to be reminded if some while ago, you listen to something, you understood it, but you didn't necessarily put it into action, but you definitely need need to think very carefully about property you know, because if if you're thinking about it I mean obviously properties such a fascinating asset isn't it it's tangible you can feel it you can experience it you know, you can touch you in so many different ways that you can't do with the other big pillar which is investments. And and it's you know you but of course there's so much more involved in that and if you talk about you know, we could really strategies off our tongue quiz Couldn't we, you know, we could go rent to rent sourcing by to let HMO with all the multitude of types of HMO students are service special needs, la j service accommodation, lease options, options, commercial commercial to residential develop, yo,
Christian Rodwell 3:48
there's a number
Unknown Speaker 3:50
going on, I don't know how many that was and that was just so just straight off and you know, this probably well over a dozen real property. These strategies and what we don't want to do is in this episode, Chris is we're not going to dive deep into these. There's no point in doing that. We've got so many trusted partners who are experts in fields, but we know enough of wealth builders to know how each of the strategies work, which is critical, because the starting point for all forms of wealth, Chris, going back to the wheel of wealth is education patient. So there's so many different sources of education. So you know, I don't want this episode to be just a repeat of other people's education, but it might be useful for new members, just to almost be reminded of some of the principal ones, some of the pros, some of the cons, some of the things they should be thinking about in using their sources of leverage, some of the dangers that you always have to keep in mind when you're looking at property, but you know, the The big advantage property when it comes to which is why I think starting with leverage versus a good one is, you know, is the fact that property uniquely, as probably with with all different economies, UK, US and so on, you can just get leverage, you know, you can create, in other words you can, let's give an example because just to bring it to life as we start here, if you've got 100,000 pounds and you want to start building your wealth, the natural place people will go would be say to the stock market. So if they had 100,000 pounds, and we're using a very simplistic example, and they wanted to buy stocks and shares or individual stocks or whatever they wanted to do ETFs whatever, then the amount of money they would be able to buy of that asset. With 100,000 pounds Chris would be hundred thousand pounds would not, not less George's Of course, and and probably too isn't without some charges but but let you know less the buy and cost. But if we take that to one side and say all assets have got some sort of buying costs, you've got 100,000 pounds, however, with with property and again being very simplistic Chris 100,000 pounds worth of money when it comes to property, when you understand the financial leverage of mortgaging for example, and again being simplistic if you can get a mortgage of 75% of the value of a property, in other words, you know, for every hundred thousand pounds, you can borrow another 300,000 pounds, then it means the same ownership of your capital of 100,000 can have you own and take control of 400,000 pounds with property. And then if you understand that property has the capacity to generate income, you're generating income from 400,000 pounds worth of property asset, instead of the income you could generate with 100,000 pounds worth of stock assets. So the fundamentals completely change. So the speed of which you can build your wealth, potentially anyway is massive. You know, such a such a big accelerator, but we should always bear in mind the danger, that leverage is a dangerous tool, and it cuts both ways, doesn't it? So just as you can leverage up, you know, if you get something wrong, that leverage can hurt you as well. So there's always pros and cons with any form of strategy, but it's a successful, it's a strategy people have used successfully for for many, many years, and continues to be if you can get all the rest of the ingredients of the wheel of wealth in play. So once you've got your education, you know where you're getting your support from, and we've got many places of support. Please don't be, whether it's trusted partners, whether it's you and me, whether it's the buddy system, you know, others that they would even choose to collaborate with, then they take it from there into, you know, the connection. So who's the who's the right place? Or who are the right people to share with you. And that's a really big one. And the idea that whatever property strategy you're thinking about, we will know someone who was outstanding in that field. And from our perspective, you know, we've learned to trust them, and therefore, they're a good source of connection. And just this week, Chris, I'll be connecting some of the
Unknown Speaker 8:41
foundation members, with some people in a specific property strategy. One of our one of our members asked me about HMOs, which will come on to and wanted to meet some people who are specialists in that field, and with a few questions for me You know about what type of HMOs and which geography they're looking at, will make those connections or fleek so that they can go in, bring that education not just from paper, or from a course. And I guess we should talk about different ways people can get education, but also bring that education to life. Then once you've done that, it's then about the due diligence. And that's a really big topic. And it's never lost on me that sometimes there's a temptation, once you understand what you think is enough to bypass the due diligence stage. But we're going to suggest you don't do that you do follow our due diligence pathway. And then from there, you go straight into getting the action taken. And not worrying actually, that the action that you take is always because it will never be the best one. Because whenever you do anything for the first time, never going to be your best job is it
Christian Rodwell 9:53
so i think is definitely worth maybe any of our new listeners who didn't hear episode nine where we talks about the wheel of wealth is to definitely check that out after finished listening to this episode, and I'll put a link to that in the show notes along with the link to the episode on leverage, which was Episode 11. And wealth dynamics, because we said that all of these these fit together, and if someone is at a stage of overwhelm, or maybe at the beginning of the property journey, and not quite sure, which is the best fit, then understanding those three areas will help massively, won't it?
Unknown Speaker 10:27
Yeah, well, and you know, I think sometimes, if we go back and just say we'll look, you know, the starting point for yourself, in all wealth matters is to know yourself. And it's very obvious that when we see people with different strong dynamics, you know, we know we measure the wealth dynamic in terms of the four frequencies, but you know, and the reason I need to know the four we need to know before is this somebody particularly strong in one field, I'll give you a couple of examples. If someone's extraordinarily strong and in Dynamo energy high level of creativity. And usually that's that's kind of reflected and I was talking again to one of our hopefully coming members, Chris, because she was very kind of she kind of brought to mind that she she's very high Dynamo energy and was getting yourself stuck and probably actually choosing the wrong strategy in property. Because, you know, I suppose what was happening is when somebody is very high in Dynamo energy, one of the weaknesses they will often display, which is needs to be acknowledged, it's not a bad thing is that the attention to detail on the due diligence wasn't that strong. So there can be a temptation to do things just a bit too quickly, or without really thinking them through and then making mistake, you know, and I think the mistake that this particular person made was buddying up with someone before doing due diligence on on them and then finding the, you know, got a partner in a project where there wasn't a good match as they thought it was going to be. So you know, that's one, the other two did the there's obviously often a connection crisp between high levels of Dynamo and low levels of steel, which is the due diligence piece really. And the other thing, which we often see is those people who are high in steel, will often want to know everything before they start anything. You know what I mean by that, so they'll, they'll get stuck in wanting to know every strategy before they choose one strategy. And the whole thing, it's about stepping stones, you know, so you don't have to know every strategy to know which one is best suited to you with the various sources of leverage that you have at your disposal, particularly levels of funding. levels of time. Because the big challenge for everybody if they're building any new asset is one of the challenges with properties, it takes more time. So you could choose, a set of stocks couldn't increase in an afternoon.
Unknown Speaker 13:17
It's difficult to find a property in an afternoon.
Unknown Speaker 13:21
And some people get tempted to do that, which is why they the often will look for the lowest and easiest access point, which, let's say, typically has been in past Chris by delays and it has
Christian Rodwell 13:33
Yes. And we know there's obviously been changes in property market always has been always will be. And what about the people that are out there saying, well, is property still a good asset class? You know, it's changed so much. It's got so much harder now over the last few years. What are your comments on this? Kevin?
Unknown Speaker 13:48
Well, that's a great question, Chris. And the point is, is you know, wealth is built on understanding all seven assets. So, property, just one of those. If you choose to use it because you feel that the value that you can bring, because let's let's remember that one of the big differences in property in a big plus point of property, let's give a few plus points of property showing. So one of those I mentioned already, you can get leverage, you can't get that traditionally, if you put the money in stock market. The second thing is, you know, you can, you can really bring added value yourself. So let's, let's take difference here. So if traditionally, and there is a market and still a demand for buy to let this, why not because it still provides a yield. So let's give an example. If someone, you know, spends time does some online research terms of an area that they want to buy a property, they will you let's say in simple terms, the easiest way to do it is you find a property online. You make an offer. You buy the property, you put a tenant in and I'm Being extraordinarily simplistic here and not recommending this at all. But let's say people do that, and it's not uncommon for that to happen, then and they buy property for, I don't know, let's, let's say it's, you know, I'm making a 400,000, just as we did before, and then they can work out that if they're getting a rental income, you know, of 20,000, then they're getting a 5% return on their money. Well, you know, for some people 5% return, again, simplistically, might be a decent return on their money, and they'd be happy with that compared to either the uncertainty of the stock market, or diversify, diversify to the stock market, or an alternative to holding money in cash. And then in addition, you know, there could be some capital appreciation in the future. The other value there, Chris, is there's a disconnect between what I call a counter correlation between the value of the asset and the value of the income so If you are retired, let's say and you were drawing income from your pension in the stock market and the stock market goes down 10% and you're drawing income from that, then it will necessarily impact on your income because essentially your value is gone down. And if you want to preserve it is the chance that if you keep spending what you were spending before you're going to run out of money more quickly. Whereas if you've got a property and the property market goes down, but you're still getting your 20,000 in rent, has the rental income changed, so it hasn't has it so the property value could fall by 10% and you bought 1000 could go down. But it doesn't mean the rental income because there's no real urgency in speed of connection and often the correlation doesn't work to work. The way things work together is what correlation means. And so you get a disconnect there. So which is good because it protects you. The other thing which is really fascinating about property is, you know, there's a buyer and a seller that you can physically then make a connection and understand what's the motivation of the seller, what's the condition of the property, you know, and then use your own wealth dynamic to create value. So instead of buying the property online at, and that's example of 100,000, you know, you could be in a position if you were looking for property, or seeking out property in a way that allows you to spot and learn how to see property where did the motivation of the vendor or the condition of the property will allow you to buy that at below, you know, a typical value, and that's very common to do that often called BMV or below market value. Then you can create some appreciation immediately. In other words you buy well and then if you change and do something To property many strategies for, for changing and improving properties, then you're creating some forced appreciation. So then the skill that you build in your own network or in your in yourself, allows you to create more value from that. So there's just multiple ways, Chris of, of actually finding value. So you're not buying into just a market, you're creating a sort of a pocket of opportunity and opportunity to create value for yourself by being involved in that market. So that's one of the big benefits of property as well. Your ability to do something to create more value. Does that make sense?
Christian Rodwell 18:44
Yes, it does, indeed.
Unknown Speaker 18:45
So. I mean, that's why I think even all this talk of, you know, the bees, the Boris, the Brexit, you know, banks, there's all sorts of things that can change and governments intervene as They have done with, you know, with the new rules on taxing landlords in a different way. So all of these things are easy to find out the rules, I'm not going to go into those rules, but there's always some overlay to any asset, you know, what is the government doing? How do you fund it? What's the tax position? You know, if you're borrowing money, what are interest rates, and now you stress testing your your returns against interest rates. And, you know, how are you planning to, to grow your education and turn the wheel again on another strategy. If, for example, you learn something about one strategy that moves you forward. And then you look at a higher level or a more complex strategy as you build your confidence because the whole thing about wealth is, is taking small steps. Chris, you remember I keep saying this, is every month make a decision that moves you well forward. So I would say to anybody You know, find a way to get started and then get started. Because the very act of getting started, a will create an asset for you be will create some cash flow, or possibly capital we'll talk about these in a minute. And then it will move you forward to build your confidence it will make more connections for you. So the whole you know, the whole dynamic of taking action will just move everything forward. And what we normally see is a sort of a hierarchy of this from the simplest strategies and then getting increasingly more complex as you need more skill to create that force value that I mentioned to earlier on. And you probably just against an example perhaps Chris before we dive in. Last week, we had a number of our investors a number of our members who attended an event which was to go visit a commercial to residential property. In other words, this is a client of ours who bought an office block in near near Gatwick Airport in Crawley, in fact, converted that to around 50 apartments and one that's way, way, way, way, way beyond the skill of somebody starting off for the first time. Nonetheless, the value in seeing these things going along, putting on the hard hat, wearing ideas, you know, making sure you're all kitted out properly. But seeing something it just brings education to life, it lets you see well. This is what's possible in the future, whether I choose to be someone who does that, or just someone who collaborates and participates with somebody who is doing that. In other words, you can, you can become a finder of property. You can be a funder of property. You know, you could be somebody who owns the property and you want to, you know, fill it up and generate the rental So you just multiple ways where you can use property and your particular dynamic and will particular time to be able to do the right thing. So one thing that sets the scene, I guess a bit of a ramble, but I think it was all about saying it all boils down to almost trying to put on a spreadsheet, a little kind of mini matrix of who you are, how much time do you have? How much funding Do you have, you know, what's your particular feeling about where you might want to start, and then get a bit of education in one or two strategies, so that you get a, you know, you get a point of contrast at the beginning. So I always suggest comparing two and just choose a couple and if you're not certain, then connect with us and we'll help you distill your own leverage down to one or two. But there's some really, really good books Chris. out there that will give a much deeper view. There's some, obviously some very established trainers out there who've written some things and like anything, you know,
Unknown Speaker 23:13
there's different ways of getting training. And we can also talk about that. But certainly, you know, property magic Simon Suchi there's, there's books by Rob Moore and markoma. There are many others as well that, you know, we can build a library of to give people access to those books, and we have Chris relationships with all of these people to provide both, you know, return education, classroom education, again, back to our dynamic, what suits you best. And you want to work in groups, do you want to work on your own, you know, so all of these things will come into play. And that's why it's really, really important to have the support of a coach or somebody who can help you, you know, overcome that inertia to get your property journey on track instead of drift. Thinking about Well, which one should I look at? And which one should I start with? And, and so, so where do we start? Chris? What should we dive into? Just a little bit just to give people a feeling? Well,
Christian Rodwell 24:12
we mentioned you really have a good number of strategies there, didn't you? And it's worth saying that as we have done with previous pillars over the last few episodes, we will be asking and inviting some of our members of the wealth builders community to come and share on forthcoming episodes, how they have approached these strategies. So we will be doing that over the coming weeks and deep diving into some specifics. I know Sony HMOs we want to cover in a bit more detail, don't we, Kevin?
Unknown Speaker 24:39
Yeah. Hmm. So
Unknown Speaker 24:42
we've got trusted partners, you know who look I you know, I probably Chris just touched on ojos. You mentioned it probably got something like 150 something like that, I guess clients who build their entire wealth pretty much around the HMO concept. Now, I'm not saying that's right, but it was right for them. And, you know, they managed because of the huge potential value to create, you know, their target income, whatever that level would be 5000 a month, 10,000 a month, whatever. And usually it's about 10,000 a month. And they're getting that entirely from, you know, HMOs. And that doesn't mean entirely but you know, they have a stock market portfolio, they'll have assets in their pension, they'll have assets in their, in their home and so on. But primarily, there's a driving force behind anybody's wealth. And they've been a very common month. Why don't we start with the base of our members, Chris, who might be saying, well, nature Mo, you know, I'm a multiple occupancies interesting strategy, but isn't it expensive? Why don't we start with saying, Well, look, you know, you've you've got to look at you. The first balance once you understand your own self and your wealth dynamic is this balance of time. Money. Another critical thing. So if you don't have If you have time, but you don't have money, why don't we talk about what you could do that?
Christian Rodwell 26:11
Hmm, the sunny Alyssa couple of strategies that springs to mind for someone in that position.
Unknown Speaker 26:16
Yeah. So you know, and again, I'm not recommending any strategy. I'm just saying this why they they're there is because you can have a look at them and choose them or not choose them. So, you know, one strategy is something known as rent to rent. And essential ingredient to have a rent to rent strategy is the fact that your time there, you have to be time engaged. And you're looking to find landlords who have property but maybe if they become tied disinterested, you know, maybe they make mistakes. They thought they'd like to be the manager of the property, but in the end, they hate it and there is no shortage of landlords who are like that maybe fed up with a government intervention, maybe just getting old, all of these things. And, you know, typically a landlord, let's say, let's use our 400,000 pound property again, Chris, and say they're renting a property in the typical way to rental properties to a single family. So let's say they're renting the property to a single family and they're getting, what would they be getting on that? So said, What did it say they were getting? 20,000? Yeah, it's getting 20,000 a year. And so if they're getting that kind of level of income from one property, then they may be happy with that. So the principle of rent to rent is to say, Well, okay, what if I was able to secure a contract, say for three to five years with the landlord, and then instead of renting the property in a way that they were doing for, you know, for a whole house, what if I was a To turn that property into several rooms, and that by the room instead of letting the whole property and this is the rent to rent essence here, so you're creating more value. By spend sense, you have to spend some money, Chris because you've got to a, you know, get a legal agreement between you and the and the owner. But be you know, spend some money on making some changes, so that you can effectively let the property is in multi rooms. And let's say if you rented the rooms and including conversions of things like big lounges in two bedrooms and so forth, you can often you know, turn a property from from one level of rent to double that rent, it's not uncommon for the rent to be double. And then if you can create that extra value, you're paying the current landlord, either the same rent or some negotiated rent, but then you're able through your own skills to market and they're released a couple of places where you can test this out. And I'll come on to that in a second. And you can turn this into a multi lead, then you're in a position to generate some income from an asset somebody else owns, but you had the tenacity and the creativity, to bring that asset or to live for you. So that generates rental income for you. But of course, you've had to involve yourself in the time of finding the property and negotiating with the landlord and then finding the tenant. So that's why you need time to do that strategy. And it's an interesting strategy. For a I got one person I know Chris, this is a shocker. She doesn't own a single property, but she's generating 1 million pounds a year in income from internet. So it's doable. And yeah, and that's all through local authority. So finding properties, usually in blocks. Then brings them back to local authorities notice, obviously, there's a skill there, you would argue there's a relationship bit of leverage there, that she's managed to develop with her local authorities build that reputation, and then little by little, you know, million pounds a year in rent to rent without owning property. Now, there's dangers there, because you don't own the property. So if you don't own the property, of course, you know, some point, you've got an income, but the whole point is, if you're generating income, then you're building up capital, and that you can either reinvest or use that for future deposits. If you get the point. That's quite good.
Christian Rodwell 30:36
Sure. And I guess similar to that would be sourcing properties, because they kind of both go a little bit hand in hand, don't know you need to source those rent rent properties, but instead of them taking it on yourself, you may wish to build a relationship with an investor and source a property deal and negotiate with the seller and then able to pass that on to an investor.
Unknown Speaker 30:58
Oh, absolutely. I mean, Suppose with this one, you you then having to find an additional skill, haven't you so you'll need have the right wealth dynamic, to be able to find and negotiate not just with the vendor, but in if you're sourcing property to sell to somebody else, then you've got to negotiate, you know, deal with them and find them, you know, find a supply of people who are looking. And again, there's, there's usually this balance isn't there. So somebody who's sourcing property is often sourcing property for somebody else who has less time. So balance of understanding, you know who the other person as I mentioned, there are a couple of sites, Chris, that you can test this out really, quite cheaply, in fact, and possibly even for free. So if you're looking at rent to rent as an example, if you want to check whether there's a demand and what kind of average prices there are per room, just by way of research, in the same way as you can runner up if we're teaching people how to do options, let's say in property or stop losses, you can teach them in a fact similar you can teach them in a in an account which isn't live a PayPal account really, you could do the same here you know, you can have a look at spare room calm. Or
Unknown Speaker 32:20
the other one which is remind me Chris of the country is a good one for property as well.
Unknown Speaker 32:26
Yeah. And also Airbnb, of course. And by looking at those you can see, you know, you can almost build yourself a matrix of in the geography you're looking at is what's the average rent, you can click to find out what's the demand for people who want to buy rent property in that area. And what the average rental income is, you know, per room. You've got a whole kind of inbuilt research. And if you wanted to to test the market, you could even create a dummy advert to build to see if people we're responding, you know, just to get a feeling if you're serious about doing that, so that you can test the market before you actually deliver to the market. So some various interesting things you can do if you've got the time. And your, your, your challenges you're lacking in funds. And those people who've got time and funds, then they've got the, the whole sort of gamut of different types of property at their disposal. Beyond that, so should we get into a bit more say? Maybe, hmm, we could touch on that. Absolutely.
Christian Rodwell 33:35
And then kind of intros us into into our guests in the following week. Yeah.
Unknown Speaker 33:42
So you know, the multi unit property, there's a difference. Oh, by the way, you know, I don't want to get too cautionary right now, just before I leave into rent, by the way, but whatever you're doing, when you're dealing with landlords, you've got to make sure in the due diligence stage that you've, you've made sure that you're not crossing into on the renter and as you take control of that into needing an HMO license. And that's not for me to cover here, but you could Google HMO licensing. And the other thing is to make sure that your landlord if they're subletting on breaking any terms and conditions if they have a mortgage. So there's, you know, there's some due diligence is the rules is around these things. But turning into HMOs, you've got different different ways to look at the multi level strategy. So you know, I'd say there's probably, I guess, three main types, probably that we could talk about now just briefly, as it gives our members a chance to think about this. And before they start on their reading. The simple one is it's not dissimilar to rent to rent actually. But because it's just that now you own the property as opposed to your You're, you've got a contract to manage the property. So as an HMO, you're buying property. The principle of the buying then is the conversion of the property, the right standards to generate a room by room letting and say there are three sort of types of 10. Really, one would be the young professional market. And most HMO landlords that I know, are kind of focused on that, where they're looking for properties where there's a high demand for, you know, professional workers so that they almost the bringing an experience of higher quality than let's say, you were I did when we left University, you know, where the very first properties we move into, and we're not will always have the best quality certainly not when I was University anyway. So this is kind of a step up, really. And there's some outstanding Examples of that will bring to the two to a podcast or a webinar, people who've done an outstanding job in that. And it's been a great solution for people over recent years. And so young professionals, that's a good market to look at the second market, again, very popular, different dynamic, in terms of timing, is the student market. And I know because, you know, my kids have been in there and different times over their lifetime when they were at university. And the issue there, of course, is you're renting property to the student market, which means you've got to get the property right and the timing right, and the marketing right in order to make that work, but of course, what the pros and cons of on the one hand is a big pros, often mums and dads are the guarantors so that your property even though it might will suffer a few, you know, challenges. There. Some some Some scrapes and scratches and all sorts of different things. You know what I mean them. But of course mums and dads often sign as a guarantor to make all that, right. So that's a good thing. But if you get the timing wrong, you could have an empty property, you know. So that's really an interesting strategy for some. And the third one is what we would i would often call special needs. And what I mean by that is where the tenant of the property is specifically chosen because they need some form of special protection or special they're afforded some special protection in law, and often that's in association with local authorities. So we've got clients who have done that with
Unknown Speaker 37:49
providing homes for protected children who need protection.
Unknown Speaker 37:55
asylum seekers, those rehabilitating from you know, challenge Is with, with violence or drugs or whatever it would be. So again, you've got to choose and understand that there are just different markets for different things. And it's about just trying to work out what would likely be best for you. And everybody's different. And you can almost hear that there's just different reactions to people when you talk about the different ways that you seeking a tenant in a multi layered environment. So it also depends on, you know, yourself and how you feel about that. So that's the big mark of that one. Hmm. And some people would argue that, you know, with the changes the government have made, it's made it tougher. And and certainly there are rules, where different councils put restrictions on a court article for, you know, where they want to limit the number of HMOs in an area, but this is all part of the education. Chris, once you get into it, you know, this is why we'll have you know, people who've been doing HMOs for years who can bring all these lessons because You know, it's easy to make a mistake. I've definitely seen somebody who came to us looking for help Chris where they bought a property, they thought they were going to turn it into an HMO they've done all the Matador look right. This was before they were engaged with with with us. And lo and behold, when the due diligence piece would would have been done, what turned out to be there was a specific condition in the in the in the clause of the state where they bought a property that it was not possible to run a sublet, and they fought this and they lost and they had to turn the property into an assured Shorthold tenancy property and st property, single family property. And all the hard work and effort they put into it was to no avail. And in the end, they sold the property but the whole point about this is you have to know what you're doing and have to think and prepare and turn the wheel full circle before For you make a decision, and that's the danger would probably get it right. And it's a it's a, it's an acceleration of you of your journey, get it wrong, and it will slow you down forever because you keep being fearful of making mistakes you say to me? Well, that's that's been a good overview, I think, Kevin for for today's episode, and, and there's a lot to look forward to over the coming weeks for sure. And so anything that we haven't touched on that you feel is important when we're talking about an overview to the property pillar, Kevin? Well, I think there's been a massive growth hasn't there in what's called service accommodation, as well. So instead of letting the property by the family or by or by me or by the building or by the room for a long term, let the service accommodation model or really there's a whole kind of section in property, which deals with properties led by the evening in the By the night or the day, and this is where the service accommodation comes in. And again, I think we're seeing increasingly very specialist very clever people who are choosing to find properties in an area where there's a demand, a very specific demand for people who want to be rented properties and alternative to hotel,
Christian Rodwell 41:23
such as the Airbnb
Unknown Speaker 41:25
model. Exactly. And, you know, a few come to mind with clients that that we have one. He's got a real punch on Christmas music, you know, music concerts. And so his strategy is to buy properties as close as possible to major places where concerts are played, and then he'll find his tenants from the people who tend to concerts. So if you really love you know, whoever you love, and you want to go see it You know, then why not have the one advertise and the places where those people are, you know, showing themselves to be interested in that. And in all sorts of great places in in all the big cities. So not just caught not concentrating in one city, but the big cities. Next two concert halls, you know, so that's a strategy. Another one is a client that we have is properties are all focused around, let's say, you know, what we would say would be classic heritage type properties, you know, the sort of properties that would really be appealing on the eye, they look like they're being a blue plaque outside, you know, they're just fantastic looking properties and generating very high levels of rental much, much more so in the same ways, you can get double the rent from a single family let into multi let, often you can get a multiple of that, you know, 234 times the rental income By doing it, quitting it, like a business really is almost like an apart hotel or, or Hotel in your mind, you've got to have all of the necessary facilities to be able to change, you know, the bedding and do all the things that I've been good booking systems sorted all of these things in play. And there's just a couple of examples. But But and another one in the Lake District, you know, were specifically looking for people who, who love walking in the lake. So you just have to find your niche. And so service accommodation, and an extension that would be you know, small hotels and holiday let's and all sorts of different things, which are much more focused around a shorter term that's than the longer term that's and so, you know, and then you moving from dealing with retail customers in the main to, you know, moving into the area of commercial and in the same way with commercial questions. Got commercial property very simple. A lot of our clients have got the SAS pension that you can often hear our members talking about. And then they use the fast pension to buy the building that they want to operate their business from. And therefore, they become a landlord to themselves which great or they wanted to they could buy a building and rent it to somebody else. Then the same was the same way as a buyer to let would be a single family lead. commercial property can be a single corporate lead, but increasingly, we're seeing, you know, in the same ways HMO has changed the way that properties are let, then there's commercial Hmm. You know, we've started to work with one client who's a specialist who learned HMOs in the residential side, and is now buying commercial properties that are tied and maybe distressed in some way and then rent them out to small business. This has been a burgeoning of smaller businesses, Kristen, they need somewhere to operate from. So he provides that accommodation. So instead of having a single company, renting the property, for us a typical deal, there would be, say six to 8%, you could be getting 12 to 15% or more by letting the property to a multiple co working is popping up
Christian Rodwell 45:24
all over the place now,
Unknown Speaker 45:25
right? So you can see there's, you know, the market changes and intelligent people will respond to that market in a certain way. And just as there's never been an if you full circle that one and say well, okay, you know, we talked about residential, and we know that the government demand or their intention to create residential units houses for people, it's never really going to be reached and it's still not reached. One of the ways increasingly, that's being done is through commercial to residential, as I mentioned earlier, on with one of our clients who, who's turning an old office block into 50 apartments, well, that's a huge potential influx if if people can find a skill to do that, and the government have made incentives to help that through something known as permitted development, centrally, meaning it of obviates the need to do as much of the planning. It's more complicated than that. But But let's say for simplistic terms, so you know, you're able to, for the, for the developer, to spend less money and less time to be able to convert that property under permitted development rules to be able to get the property and, and have more units. And if they're built, specifically, as they often are first time buyers with Help to Buy, which makes them more attractive, and so on, then, you know, that demand for those properties can be can be easily met. However, there's a risk isn't there that you You choose the wrong area or you spend a lot of money or something goes wrong or, you know, you need planning. So you need the specialist education and knowledge and we've got many clients in our community or our trusted partners who will bring that knowledge and skill to share with those people who feel that that would be something that they're interested in, in exploring, and just seeing and experiencing, or is it something they may learn to want to do in the future? So there's possible Chris in the world of property to be, you know, the Finder of property and, and the owner of property, it's also possible to simply be a funder, a property, you know, we know that many of our clients with their sasses I've got lots of money, and often don't have the skill just yet. So part of their method by which they would put that money to work is often to be a funder of other people's projects, which serves two purposes. One it gives them that return on investment, subject to whatever Due Diligence they do what we help them do, gives them a good return on their money, typically, you know, eight to 12%. But then in addition are getting that access to people with the skill, the knowledge, the experience that they can see. And if necessary, learn how to absorb that knowledge in the futures either as a supplement to their training that they might get from training professionals or as a replacement for that, if they think they can get all the knowledge directly from that trusted source. So it's just an incredible place of collaboration, of learning, of getting an experience in marketing what I found more than anything else Chris and our clients will testify to this is how much free and shared knowledge there is in the community. Whereas if you're paying for training, you know, it's, it's a, it's a transactional thing, isn't it really and nothing wrong with paying for training by the way. But if you can get that training, together with the combination of a great relationship and a real experience, then why not think about that as an alternative, or as a supplement to any training you've either got, or you're thinking about getting.
Christian Rodwell 49:15
And again, there's always that risk of overwhelm. Because there are so many podcasts, there are so many property networking events, there are so many Facebook groups and meetups online. But then, as you say, there's a great, great amount of resources out there for people to start just learning a little bit about some of these different areas and then using that knowledge of themselves, the wealth dynamics, the leverage, then hopefully, start to focus in on the ones that make the most sense for them.
Unknown Speaker 49:41
Well, you know, the members of course, who joined forces with us, Chris, get that opportunity to have a coaching call every, every so often, don't they every couple of months, I think so. If the if they're having that call, then they're in a place where all of these resources and all of these thoughts are kind of clear. instructed to help them prop their way through it. So they don't get overwhelmed because we see and give them clarity as opposed to themselves sometimes getting into a place of just getting a bit of confusion and soon as confusion sets in, your brain shuts down, and no action takes place. And as wealth only flows from action, then you know that's going to be it's going to slow it down and sometimes even bring it to a stop. I've seen people who've taught being thinking about property for years. And, you know, somebody has to be a catalyst for them to overcome the inertia and the inertia often cannot be overcome by somebody, actually, they trust helping them. But how do you find people you trust? Well, we would certainly argue, well build is a trusted community a safe harbor so far, you know, for the length of time we've been doing it. I've been looking at this and working in collaborative Writing with people now since 2008, Chris, in the way I'm doing it. And so far we haven't had any disasters or tragic stories that have gone wrong. Obviously, sometime sometime soon, I guess, you know, something will go wrong. But thousands and thousands of connections have taken place without anything, you know, that will cause anybody any stress financially, intellectually, or from a relationship point of view. So I'm very, really pleased with how we've done. But of course, the podcast isn't about, you know, just talking about wealth builders community, but anybody can tap in and just see some of our members and what they're doing and who they're connecting.
Christian Rodwell 51:38
Yeah. And that may well be questions that people listening right now have around property. And as always, we would say, please do ask us any questions, anything that you'd like us to discuss or talk about on a future episode, and you can do that by heading over to wealth builders.co.uk forward slash wealth talk. There's a big orange button on top of that page. You can Just hit record and send us a voice message. ask us any questions that you might have. or post them in the Facebook group if you're in the wealth builders Facebook group. And thanks to everyone who's been leaving reviews, we sometimes forget to acknowledge these, don't we, Kevin? But we've had a number of reviews left on that very same page wealth builders.co.uk forward slash wealth talk. And thanks to everyone for your kind comments so far really, really does mean a lot to us. And we we surpassed 10,000 downloads in we recently Kevin as well and, you know, downloads increasing every week. So we're very, very happy that people are sharing this and enjoying this and hopefully getting lots of value.
Unknown Speaker 52:37
Yeah, and it's going to get tougher From now on, because, you know, everything else up until now, Chris has really been the foundation element. It's really been getting ready to take action. And we're already seeing some, you know, definitely you can see the confusion. You can see the questions pick up from the investment side last time. How do we you know, the big question is how How do we do this? How do we do that? And the same thing is going to apply here and how do we do this. And part of the challenge at the beginning, when you've got so many options is is what to do. So go back, do a little stocktake make sure you've done your wealth dynamic work out, you know, what funding you do have, Workout, what time you do have, what's your preferred learning style, you know, for example, you know, some people will not want to, to simply to go to networking meetings and stuff like that, and others will love to do that. So what's your natural style of connecting? And, and then let us know when we'll help you build your own matrix, whether we connect with you or not to help you, you know, start to look at each different strategy. And maybe even try and think about matrix in. Todd would say that, putting together a matrix to help people at least them see the pros and cons within their wealth dynamics, Chris
Christian Rodwell 54:00
Yeah, I think that'd be very useful. Great. Well, that's been a great start, I think compeller for today, and lots of good stuff to come over the coming episodes.
Unknown Speaker 54:10
We're looking forward to diving in and looking forward to giving a platform to some of our trusted partners, and some of our wealth builder clients who've demonstrated their own strength and taking actions in each of the different property strategies that we uncover in the coming weeks and months. Great.
Christian Rodwell 54:27
Looking forward to that. Thanks for your time today, Kevin. Thank you everyone for listening today. And we'll catch up on the next episode of off top.
Unknown Speaker 54:34
Okay, see ya.
Unknown Speaker 54:38
We hope you enjoyed 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
Transcribed by https://otter.ai