In today's episode we are joined by four members of the WealthBuilders Community, Kevin McDonnell, Andy Bedwell, Chris Paton, and Kevin Kinsella. Make sure to tune in if you want to hear what they have to say about HMOs, and how they are delivering value for their tenants and customers using the HMO strategy.
What is an HMO, and what are the pros and cons of this property investing strategy? Instead of renting a property on an Assured Shorthold Tenancy (AST) to a single family, a way to leverage the capacity within that property is to rent the individual rooms to unconnected tenants - generating increased revenue and cash flow for the property owner. You’ll hear from four members of the WealthBuilders community who are each focusing on different market sectors, and discover how they are delivering value for their tenants and customers using the HMO strategy. You’ll also hear why ‘not having enough money’ is not a reason to delay getting started!
Show contributors - Kevin McDonnell, Andy Bedwell, Chris Paton, Kevin Kinsella.
Resources Mentioned In This Episode:
No Money Down Property Investing - Kevin McDonnell [Book]
Houses of Multiple Occupation Guidelines - Gov.uk
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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.
Unknown Speaker 0:18
Welcome to Episode 28 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined once again by Mr. Kevin Whelan. Hi, Kevin. Good morning, Chris. Nice to talk to you again. And are we having some fun? Wasn't that a great episode last week with Simon ZG dispensing with wisdom? It was really enjoyable. Yeah, we've had some great feedback in the Facebook
Unknown Speaker 0:39
Facebook community from our members. And it was very kind of Simon as well to offer that free entry to a pin event for anyone listening. So if you didn't catch last week's episode, definitely do. Go back and check that one out. So Kevin, we're continuing with the property pillar this week. And we're diving in now we're starting to look at some of the different strategies that sit within or sit under that property pillar. And today we're going to be focusing on HM owes, people may have a couple of different ways of describing HMS. But Kevin, would you like to kind of give your version of really what an HMO is? Sure. Well,
Unknown Speaker 1:10
you know, whatever label you use, whether it's, you know, home for multiple occupancy or home for multiple occupation, you say potato, I say potato, it's there's no legal definition here. What we're really saying is, is the fundamental difference between taking a piece of property and creating value from it through the renting of rooms and space in the property, compared to renting the whole family, sorry, the whole property out to a family on an assured Shorthold tenancy agreement. So it's just a way of creating higher levels of cash flow. For many people, it's an accelerated way of being able to build their wealth, because the evidence is when the HMO portfolio building process works, compared to the tradition of the buy to let portfolio, it helps people create wealth so much more quickly, so much more systematically, and easier to run as a business. Because you can, you can make it really quite formulaic, not that everything's a cookie cutter, but you know, you can create a model that is very specific to your talent type, very specific to what experience, you want to bring in more of that from our contributors. So it's a really, really interesting way. And I would say that probably in property, while it's got some challenges right now, and some of our speakers will talk about the challenges coming, and that are already here with government intervention. And Hmm, I think what we are still seeing though, is, you know, I can at least count, possibly 150 of my clients who are completely financially independent, through the use primarily of the HO strategy. So it's definitely one to really, really wrestle with and dive deep into, and try and iron out any misconceptions or misunderstandings, because there's lots of those around. And why don't we start with that? Some of those thoughts now.
Unknown Speaker 3:19
Yeah. And just to touch on Kevin h Moser, and nothing new, and some people may be might refer to them as multi let's and would you say that it's become even more popular with recent years, just the shortage of property space that exists in the UK and, and having to multipurpose, you know, some of the bigger properties that are out there and just to fit more people in? And that's perhaps a problem that's only going to get worse, or the opportunity grow bigger, shall we say?
Unknown Speaker 3:51
Yeah, I mean, I think there's look where even Simon was talking last week in the big demographics of, we need more space. And you know, it's not unusual now with places in Europe where there's a high propensity of people to rent. And there are definitely communities within the UK rental types, you know, where their natural place in their lifetime, is the only one property for a shortest period of time, so to bring to life to enliven properties, which perhaps, you know, would be wasted in terms of space, you know, five bedroom houses with three people in it, and so on. You know, there's a big opportunity. Now, the opportunity, of course, has been spotted by many, and councils have an issue with something called article four. And there's definitely limitations and the government intervention is made limitations, which is why some people have moved to different strategies, which will cover on different different episodes like service accommodation, but there's still always going to be a demand for people particularly, let's, let's take some of the key tenant types you want me to describe those crews?
Unknown Speaker 5:03
Please do.
Unknown Speaker 5:05
All right. Well, you know, the most popular one, and the one that people will obviously resonate with, if, like me, and I'm an old guy now. But you know, I still went to university. And for the most part, you know, I occupied properties that were owned by somebody else. And I wouldn't say they were the best accommodation, but they accommodated, lots of young people who will put up with that. And of course, by maximising the use of that space, then there was a high level of cash flow. So you know, that's a real big win, as far as the student market is concerned, so students are a key market in the multi net space. And of course, like any tenant type, you've got to wrestle with the pros and the cons. So the big Pro with students is, you know, they're relatively easy to identify, you know, where the university and college towns are. Some people actually specialise in colleges, and small colleges, they don't end up competing with universities and more of that in the risks, I suppose. And there's pros and cons discussion, you've also got the issue of increasingly, mums and dads are guaranteeing the rent, you know, so if the students don't pay moms and dads do, and that's a good thing. And because they tend to occupy the property from, you know, point A to point B, you don't really get any void. So, you know, there's good positive cash flow, good security, good wins.
Unknown Speaker 6:31
But, you know, some negatives that go along with that, as always, one of those is it's not unusual is it to hear that they need more maintenance, you know, people don't tend to look after things as well. There's some much evidence about that. You if you want to get into the market, and you're looking for student accommodation, but something goes wrong on a purchase, which I've seen happen before, unfortunately, where people buy a property with the expectation of getting it ready for that term time, you know, that readiness for when students are signing up. And they miss that. And if you miss that, and you're gearing up specifically for student market, you know, you could completely devastate your cash flow. So you really got to be on the ball and know what you're doing. But that's a rich market that I think many people are going for the other markets, Chris would be, you know, professional people, I suppose the students who graduate and then they move on, they're not ready yet. They're not ready to settle down and, and build the family and build homes and things for themselves. But they're certainly looking for higher quality accommodation. And some of our clients are specialising in this one in particular is, you know, specialising in providing accommodation for young doctors, because from his experience, and he's a doctor himself, hated the quality of the content nation. And his view is the brightest minds. And those people making great contributions is designed to get the worst accommodation, why is that, and he's trying to create a business that changes that and provides really high quality accommodation, but aimed specifically at young doctors. And because he's a doctor himself, he's using his, the leverage of his own relationships in his own intellect to maximise that. So that's another point, you know, you have to look at what's most natural and logical for you to be looking at, if you're thinking about a GMOs and for our doctor client there, that's a, that's a perfect fit for others. And we'll hear from Andy, he'll be speaking later about the young professionals, you know, which is a transient market, but they expect high things, you know, they're being paid, getting well paid, and they want somewhere to live, but a sense of belonging, a sense of almost like a home away from home, you know, they want to feel on their own. So it's almost I think he refers to them as housemates, you know. So, there's a whole language of how to do that. And that's the unprofessional market, and you need to tie into well, where are the big employers, that would serve your tenant type, the equally there are blue collar workers, you know, so large number of our clients have got properties where they aim specifically, you know, towards factory type workers or other type workers where, you know, the, the living in and that sort of accommodation, and again, it's just slightly different markets, slightly different locations, slightly different features and benefits that are needed and look for by these people. But you know, these are all the key ones, and then you get really specialist and really niche. And of course, wealth building is is all about looking for your niche, if you can find one. And you'll also hear from one of our clients, Kevin, who is niches in a very, very specific, and that's what he would call supported living, you know, which you could also refer to is those people who got certain special needs in life, where whether it's, you know, adults needing certain things or, or children who need protecting. There's there's very specific collaborations between landlords and housing associations or councils, and the public sector. And that can work as well. So when you think about HMO, it's a multi multi, it's a kaleidoscope of opportunity, it isn't one single thing, and you know, it isn't too much of a differential, then when you look at service combination, that's just the same thing that's almost renting rooms, but instead of renting them long term rooms, you're renting rooms, for much shorter terms, typically, and probably not in this podcast, but maybe the next one, Chris, we can interview and bring in some of our clients and members who are doing that. So is that a good overview? I think so.
Unknown Speaker 10:55
Yeah. And I liked the fact that you, you know, you mentioned there, as entrepreneur, we need to be creative. We need to constantly be looking for the niches, the opportunities, and also your reference there, that your portfolio, you should look at that as a business. Right? So we talked about the different pillars, and we're focusing on property now, but your HMO portfolio is a business in itself, right?
Unknown Speaker 11:18
Yes, everything should be regarded as a business. And I think it's probably a good idea. That theme of creativity and business might be worthwhile. Having listened to our good friend, Kevin McDonald, who's a very outside of the box thinker. And while he doesn't talk specifically Chris about HMO in particular, one of the factors for many people thinking about HMO is is they think, well, maybe, you know, this is more expensive, because I'm looking for bigger properties. I need more funding. And Kevin speaks very loudly and proudly of of how you can think outside the box and be able to find access even into the HMM market with very little money, probably worthwhile listening to that, and then diving a little bit more into those people who are doing it with more traditional funding. Would that work?
Unknown Speaker 12:09
Yeah, I think so. I think Kevin definitely sets it up before we really go into the different aspects of HMO. So yeah, let's head on over to Kevin McDonald now. So I'm with wealth builders client, Kevin McDonald. How are you, Kevin?
Unknown Speaker 12:21
I are good. Thank you. Now, Kevin,
Unknown Speaker 12:24
I know you've written a book on no money down. And we've been talking to other members of the wealth builds community about specific strategies. But would you mind just sharing a bit more about the strategy of no money down?
Unknown Speaker 12:36
Yes, and no money down. For me, it's not actually a strategy. It's more about how you deliver the strategy. Because what what I've been in property for 17 years now. And one of the biggest challenges I always have had was, I don't have the money, I kind of knew what I wanted to do. So and most people know what they want to do. And that what I mean by that is the strategy. So single FH commercial conversion, and by to flip whatever it may be. But the common problem that everybody has is knowing what they want to do, but not having the money to implement what they want to do. And no money down is, for me, it's not a strategy, but it's how you deliver the strategy. Because even if you've got no money, and people might be listening to this thinking, I don't have any money to get started in property. But actually, people with money, even if you've got a quarter of a million pounds, you don't have enough money to build, maybe, you know, 4050 100 property portfolio that you might be aiming to build, what what a quarter of million pounds generally does this get you started, it might buy you four or five properties, and you'll end up with four or five properties and the job. But to build that large scalable business, you need to start thinking more creatively. And normally down is about being able to secure any property deal using little or none of your own funds. And whether that be single lead teacher models, whatever it may be, it's getting enough properties create cash flow.
Unknown Speaker 14:02
So obviously, wealth builders, we look at the Seven Pillars Are there any of the other pillars that can help with this, this this concept of no money down
Unknown Speaker 14:10
every every pillar of of the wealth, building Seven Pillars, which helps around no money down because it's more about a way of thinking. And, for instance, you said, I'm a wealth builders, client. And one of the things I did is I was sitting on a pension pot from my job, and I didn't really I thought I had no money, I didn't realise I could release my money. And I, I've got a soft spot now, and I use that to fund some property deals. But also, other people have soft spots. So other people's money, you could if you're sitting there listening to this at the moment thinking, well, I can't I don't have a pension pot, I don't have a soft spot. And I don't have a big enough pot. Other people do, there's more money in the world, then there's ever been. So joint venture with other people use other people's pension pots to build your portfolio. There's the one no money down strategy, as I would call it a one nominee down method. But there's many other ways as well, there's loads of different things to do. But all the pillars of the of the Seven Pillars are part of the concept of your money down. And, of course, we also introduced the wheel of wealth concept, which was begins with education. So understanding and obviously reading books like yourself, and coming to some of the events that you speak out and do training at Kevin is, is the education aspect is learning what's possible, and then having the right connections and support around you to help facilitate that. And why do you see that as so important for someone who maybe is at the beginning and doesn't have done any, it's, it's critical, because you don't know what you don't know. And when I started in property, I thought you had to buy a house, put down a deposit, and and then you know, get some rental income from it. And, and I see so many people I mentioned about starting with maybe a couple of hundred grand of money, the best thing that ever happened to me was I lost 135,000 pounds was in Eastern Europe, and I had not just no money, but I had negative money. So I had to start thinking differently about how I build my portfolio, because I was starting with nothing. But people that start with, say, a quarter of a million pounds, what they do is they they take their life savings and they put it into property to try and get back out a couple of grand a month. And they spend the rest of their lives getting back what they started with. And the whole point of property isn't to put your life savings in is to get money out. So using creative strategies, helps you actually make money from property instead of putting your life savings in and having to think that it's about thinking differently and not not just thinking one dimensional, which is I've got to save up a deposit. I mean, if you're thinking of exchanging your time for money in a job saving up a deposit to buy a house, and then sit do the exact same thing to save the next deposit and the next deposit it just to slow your life will be over before you've got five houses. The only way to build that big enough business, whether it be an essay, whether it be in HR moles, whether it be in commercial, whatever it may be single, that's the only way to do it is to think differently is to think creatively. And to use normally down techniques and to use other people's money to use other people's property. And a lot of people see no money down as other people's money as just joint ventures. But actually it's not joint ventures it's being creative, are a joint venture and looking at it differently, because quite often people think a joint venture has to be borrowing money from another investor. But what about just joint venture in with the homeowner of a house, because quite often that the homeowner of the house, the reason they're selling is because they don't have maybe money to do a refurbished something you could joint venture with the homeowner and refurbish their houses and the two of you sell it together. So there's, there's loads of creative ways that you can that's an assisted sale, but there's loads of creative ways that you can think about and do property deals that benefit you and the homeowner. So yeah, there's no money downs, the time me as the only way to do any of the strategies you want to do. And so if people are listening to the thinking, you know, I know what I want to do, but I'm struggling to actually get started. That's because the thing that's missing is the funding and the concept of no money down. That's what helps you fund any property deal.
Unknown Speaker 18:17
Fantastic. Thanks so much for sharing that with us today, Kevin.
Unknown Speaker 18:21
No problem.
Unknown Speaker 18:22
Okay, so how would you assess the key points there that Kevin raised?
Unknown Speaker 18:25
Well, I think it's obvious that, you know, Kevin is a very clear thinker on being creative and thinking outside the box. And I think he made a really great point, which is one of the benefits of HMO, which is the traditional buy to let portfolio. You know, when you work out the cash flow, I probably it's an important point, Chris, just to go back to the overall wealth building principles, that whatever strategy you use, you know, you have to work out. Let's say it's, you're comparing HM, most to buy to let you know, you'd look at what how many buy to let properties on in a short, short or tenancy property, with your assumed occupation rate or void rate, with your assumed return, would you assume the interest rate, so you've got to build in all of these things of your costs to run these, any kind of property strategy. And you work out how many so let's say the average and I'll just make some numbers up, Chris, if the average by to let yielded you 500 pounds a month net. And you had an objective of reaching, you know, 10,000 pounds per month net, as your figure for complete financial independence, then you can work out how many
Unknown Speaker 19:42
particular property you need, because it'd be 20.
Unknown Speaker 19:45
And if you then flip that and say, Well, okay, if I do the numbers, and what's the net net position on, you know, a well managed, well structured well tenanted, same, you know, you do the same thing, do the same variables, which means you really have to know the numbers, which is the due diligence stage, in the in the new accumulating property, you've got to do the due diligence on the cost. And then of course, you got to test it in real time afterwards to make sure the assumptions you made were real. And then if that's just super secret argument, you know, the, the value of an average mo was 1000 pounds a month, then you need half the number. And you know, that would mean potentially you could do in half the time, putting aside the issue of funding. And while it's always easy to say that funding is no object, clearly, funding has to be in place. But there are so many creative ways to achieve funding and joint ventures between people lending and learning and all sorts of other ways that joint venture funding and funding can be raised. We know this, because we raise millions, then we know that the only lack of resources is the resourcefulness of individuals to think outside the box. So I think Kevin make them great, great points. That it can be quicker if you leverage other people's money rather than buy to build your own. And similarly, if you leverage higher yielding strategies, but of course, when you think about the strategy, you've got to think about work, and some people mistakenly believe and they say, Well, I would rather do bad select this passive. And I don't want to do HMO because it's active. But all wealth needs to be managed. Like all property needs to be managed. Otherwise, the property left alone would dilapidated. So there is no such thing as passive income. So let's dispel that myth right now, Chris, it's not passive, it needs to be managed. And the skill is understanding the management that needs to be done to make it work at the highest level, and then work out whether you want to do the management, or delegate the management. But either way, you've got the choice, and you can deal with it in the way that you want to. So I think Kevin makes some great points there. And maybe as we hear from three people who are building their wealth in a GMOs, and again, very well might be worth hearing them and the reconnect.
Unknown Speaker 22:00
Yeah, I think so. So let's head on over to our first guest, and that's Andy Bedwell. Okay, so I'm with Andy Bedwell. Welcome to wealth talk, Andy. Thank you very much. Now, Andy, I know you've been focusing on h Mo's. So would you mind sharing with our listeners why you decided on that strategy in particular?
Unknown Speaker 22:18
Yeah, sure. So my, I guess the bulk of my career background been in corporate so I was looking for a way of getting out of corporate life. About eight years ago, probably eight, nine years ago, now we started just looking at ways we could do that. And we were looking at ways that we could build a business that didn't involve us having to be actively involved with it, you know, all day, every day. So the isolated to get off the clock. And we just started looking at a range of franchising options, actually, we started working with Platinum property partners to to start on our HMO journey, and really sort of carried on that journey for eight years. It was largely a player of corporates and then looking for a way to get the right business model to fit what we wanted to do.
Unknown Speaker 22:57
Right? And is there a particular market that you aim for your tenants?
Unknown Speaker 23:02
Yeah, so we try and be at the top end of the market that we're in. So our particular businesses is sort of based in Oxfordshire. And we were trying to target largely sort of 25 to 35 year old young professionals, you know, typically in our areas, people who might work in motorsport, or people that work in some of the high end retail outlets. And we're trying to provide a sort of all inclusive, hands off service for them. So they get a really good response in us in a very nice house. And we take care of all the pain for them. So it's very much top end of the market. And trying we're trying to style the houses and invest the houses to do that.
Unknown Speaker 23:37
And what are some of the advantages that you see of using the HY strategy over perhaps, you know, typical beta let's or some of the other strategies out there.
Unknown Speaker 23:45
And we'll we'll come back to let's Originally, we, the very first property I bought actually was a vital item, we run it back in this was back in 2008, as a as a service department, this was sort of pre Airbnb and all that sort of setup. So when we did it, we found it was you reasonably high touch and didn't really get great returns, I think, when we, when we started to look at the HMO model. And we started to look, you know, again, platinum, were very useful in helping us to set that up. We started to work through through the numbers, it was pretty self evident, actually, that it was a, you know, it was probably the one of the better returns that were available. Albeit, it's you know, it's not without work, and you certainly are running a business with doing them. It's not as straightforward as a single by two lads. But, you know, for the work you get, you get a better reward.
Unknown Speaker 24:32
And I mentioned that, you know, systems are important with ATMs, as you say, there's a lot more work. So is it really important to have the systems in place early,
Unknown Speaker 24:40
um, I don't know about for all singing or dancing systems, or we do run an operating system. And with our business partners, actually, they use a slightly different one. But we do have two professional lighting systems operating certainly in the early days, though, we were we're moving through spreadsheets initially. I think the main thing that's changed over the years is this the end as much more now around compliance. Obviously licencing is ubiquitous now wasn't when we started in our area. So there's a lot more you have to do to make sure that houses are safe and legal and data protection and things like that. So you cover all the bases, that that world is more complex. And it's certainly important to you know, to make sure you know, know the ground before you just dabble into it.
Unknown Speaker 25:21
And is there anything that you do uniquely with your hmm and would you say Andy to differentiate yourself from from the market?
Unknown Speaker 25:29
I think we would we would try and be at the top end of the market in the area we're in we try and build a community so you know with our lettings manager that works for us to clients are housemates as we call them, you know, have a connection with us and our connection with our lettings manager This was more personal maybe. So you know, we run social nights we get people together, we we we proactively will connect somebody in the area who's just moved in with with somebody else in one of our houses who might also be looking to to meet up folk. So we try and get to know our our people as individuals and make them fit into them, or help them come in fit into the community as well as into the house. And that might involve connecting them with other housemates in other houses. Well, that's unique. I don't know, man, I guess from our point of view, we try and do as much as we possibly can do to get to get the best experience of the housemates.
Unknown Speaker 26:19
And your shared living space, I know has now LED on to a new business for you as well, hasn't it?
Unknown Speaker 26:25
Yeah, sure. So we were done and done sort of got nine, eight years running in the residential side. And about three years ago, I started looking more into commercial property as well. So we've started to three years ago, a commercial property business that does shed off serviced offices and co working. So that's got one co working site, and to shadow to service officers now that are that are up and running.
Unknown Speaker 26:48
Yeah. Fantastic. And how do you see the future of the HMO market, Andy,
Unknown Speaker 26:52
um, I studied, he's got tighter legislatively and you know, the tax environments changed.
Unknown Speaker 27:00
They'll always be a market for it. I suspect, if you look sort of 10 years down the track, some of the things that might happen to high end HMO, it could be similar to what's happened in the student market where there's some of the bigger players come into town and invest heavily in big buildings. I think there's definitely a you know, there will be new players come in the market and bigger buildings, I suspect, they'll still always be a market for the sort of things that we're doing. I think when you get to, you know, the lower end of the market, certainly licencing and things like that will will hopefully shake out some of the some of the other some houses that get bad press. So in the market overall will change will be will be stretch in terms of volume with some big players coming in. I think some of the some of the some of the lower end, hopefully I'll clean itself up and the middle. You know, they'll always be a market for the people are in the short term, people are moving into it to get out of single beta lights because the returns are getting squeezed by the detox situation. medium term well as people stay in the market when their workouts and the complex running it. I don't know, to be honest. Well, the ultra tunnel I have to tell them.
Unknown Speaker 28:00
Yeah, great. Thanks for sharing with us today, Andy. Really appreciate it.
Unknown Speaker 28:04
No problem at all.
Unknown Speaker 28:05
So I'm with wealth builders member Chris Payton. Welcome to wealth talk, Chris. I that
Unknown Speaker 28:10
you've been focusing on the property pillar for a number of years now. And more recently, ah, emos. Why did you decide to focus on h Mo's in particular?
Unknown Speaker 28:20
Primarily because of the income generation that HMS can provide. Yeah, and also the type of product you can deliver as well, as is something that was interested me.
Unknown Speaker 28:33
Yeah. And do you have a particular market like a tenant that you look to, and cater for?
Unknown Speaker 28:40
Yeah, so we're professional, solely professional.
Unknown Speaker 28:45
And we're based in Newcastle.
Unknown Speaker 28:49
And we have had a student portfolio as well. But having pivoted, just recently, we've sold all those student properties off and college concentrating solely on professional.
Unknown Speaker 29:01
Okay. And and what are some of the differences that that you see in the way that you operate your h memos for those different markets,
Unknown Speaker 29:10
the product is almost identical. It's the service that you provide is different. I feel that because we self manage, I feel that the service you provide with professionals, is a lot more I suppose. Its hands off to a degree where the service that you provide with students, you are a lot more involved. And because you you are effectively helping educate them and the world as well, sometimes as the first I moved away from home, so it's quite involving at times.
Unknown Speaker 29:40
And in order to kind of stand out from the crowd, shall we say, Is there something that you do uniquely with your Hmm, we just say, Chris,
Unknown Speaker 29:50
we've always went on the all on sweet route. So since we entered the market was always went on that route. So I think that combined with the, the the aesthetic of the building, it's quite unique style that we've developed internally. And, and the service that we we back up product with as well is, is quite unique. And I think we're we're we're pretty good at that.
Unknown Speaker 30:18
Now, how many years have you been actually active in in the HMO market? Now, Chris?
Unknown Speaker 30:24
Well, I bought the first one in 2005, when I was going to university, chose to live on my own as post in a halls and then I renovated up, completed that in 2007 spent all my student loan on it. And most of my time, because I'm quite hands on. I come from I come from a construction background. So that helped move back around much my parents and mines. So 2007 was my first one, but I didn't acquire a further one till 2013.
Unknown Speaker 30:54
And would you do something differently now looking back and the experience that you've had?
Unknown Speaker 31:01
Yes, if I if I could have went back to 2007, I would have been certainly buying a lot more just before the recession anyway.
Unknown Speaker 31:12
I think with regards to 2013 onwards,
Unknown Speaker 31:18
I would have been a lot more systemized from the start, I would have grown a team because it was from day one, it was me in the early I was a property manager, builder and maintenance contractor. So I would have definitely done that. And I think that would allow me to scale faster.
Unknown Speaker 31:38
And how do you see the future of the market now.
Unknown Speaker 31:43
So there's obviously a lot more competition within the market. In terms of operators. I think you have to be slightly more creative in your product. I think that having a great product isn't necessarily always the the most secure way of doing it either. I think in terms of you've got to make that asset safe and secure as possible. Now think back an adult with a service as well. I mean, we manage in house for this reason. But backing up a great product with a great service, I think is vital. And part of that service, I think experience LED. I think when you look at the millennials, and in the generation said, I think you need to be part of their life revolves around experience. And I think you need to involve an element of that within your within your product. Brilliant.
Unknown Speaker 32:44
Thanks so much for sharing with us today, Chris.
Unknown Speaker 32:47
No problem. Thank you.
Unknown Speaker 32:48
Thanks. I'm with wealth builders client. Kevin Kinsella, welcome to off talk, Kevin.
Unknown Speaker 32:53
Hi, Chris, how are you? Very, very good today. Thank you.
Unknown Speaker 32:55
So Kevin, I know you've been working on the property pillar for a number of years and specifically in a very niche area of HMO. Would you mind just sharing a little bit about that strategy with our listeners?
Unknown Speaker 33:08
Yes, sure. Sure. We actually operate within the supported living. section of HMO, specifically with homeless homeless is quite an encompassing a label, should we say the term, often people have drug issues and alcohol issues, or fleeing domestic violence. We've currently got 70 beds, but we're looking to probably double that within a year, what we do is we work with the Housing Association, to gain what's called exempt status. what that actually means is we are exempt from the Housing Benefit cap, we did try and run these properties within the framework of the Council and the Housing Benefit camp, but you can't really solve the properties and you can't really, you know, you help the people as much as you can without staff. So we think we found the formula and we're, we're really pleased to be able to, you know, push this thing forward.
Unknown Speaker 34:13
Yeah. Now, that's really good, Kevin, and what was it initially that that made you decide to focus on this market in particular?
Unknown Speaker 34:21
It was it was it was twofold, obviously, to help people and we've got a fantastic reputation with a lot of local authorities, police and crisis, we are known as a very, very good supplier. But but it's great doing good things, but they've got to be repeatable. So we've got the business side of it right, as well. We've got currently around about 10 staff. As I said, 70 beds spread over four buildings, we are also looking at getting step down facilities. So it's twofold. Really, it's it is a business, and I think it has to be a business. Of course, you're not really, you know, going to be able to help anybody. And I'll probably end up in one of my own clients. So you know, so that's, that's, that's, you know, that's probably the the drive on both things, it's it is good feeling, you know, actually being able to be very proud of what you do as well. And what do you feel are some of the benefits of the HMO strategy over some of the other more traditional, you know, and property investing strategies. I've I my first HMO actually accidentally bought in 1995. And it was attached to another business that I was running at the time. So I've kind of been in in the market for quite a long time. I found that particular property to be quite difficult to run, because he was remote, there was a lot of admin to do. Whereas with the tenant group I'm with at the moment, be there, they are an awful lot more challenging, but the fact we're 24, seven, have staff on site, issues don't escalate, you know, and we can, we can sort out things very, very quickly. You know, we're not an absentee landlord, which is, some of the lower end HMO as I have had in the past, where you're not on site can be extremely problematic. So yeah, hey, GMOs are a great strategy for cash flow, that you've really, really got to keep on top of the so think we found in Asia?
Unknown Speaker 36:32
Yeah. And how do you see the future of the HJ market? Kevin GC, this is a growing market.
Unknown Speaker 36:40
As I say, certainly, that there is a massive, massive shortage of bed spaces at the end of the market I deal with, I'm not ofo with, you know, the top end stuff, which I know a lot of people are doing now with professionals. But the local of what we turn away probably 2030 people awake, and let's just one borrow. We're currently dealing with five boroughs and have we're putting strategies in place to repeat the model in those areas are all in northeast, by the way. So yeah, it's it's it's certainly a market, which is not going to go anyway, go away anytime soon. Which is, in some some ways unfortunate, because of the current that we do have, but it's just a sign of the times, unfortunately.
Unknown Speaker 37:26
Yeah. Well, thank you very much for sharing with us today, Kevin.
Unknown Speaker 37:29
Absolute pleasure.
Unknown Speaker 37:30
Thank you, Christy.
Unknown Speaker 37:32
Okay, so our first guest, there was Andy Bedwell, and he talks about moving to the HY strategy to allow him to escape that corporate life. And what did you pick up as some of the key points that Andy talked about there? Kevin?
Unknown Speaker 37:45
Well, you know, we finished the last debrief of Kevin talking about time, you know, one strategy being slow, one strategy being quick. And with Andy, you know, you wanted to get out of the corporate life, so you need to know, accelerated models, so the Battle of model just would have taken too long. So the other thing Andy did was he got the support of a community in a franchise, which was unique, and, and it's good for him, and it served him well. And if I remember, rightly, he's built nine properties. And, you know, you can do your own maps and your own estimate of what that would be, but it's a significant sum, every month, but what I liked about Andy is the way that he's changed the sort of view of the professional market in building a community, you know, within his own numbers of rooms, you know, connecting one person to another. And seeing how, by giving people enriched experience, you know, seeing you're not just a provider of rooms, you're a provider of an experience, then you've got a real opportunity to make this work and have more people actually elegantly refer somebody else, whenever you build another HMO, and you've got a spare room. And he knew the other thing, which I liked about Andy's presentation there, as brief as we've got it, but so many lessons to learn, is once he built his number of HMO was, you know, he applied the very logic that he learned in that business and applied it to another business, which is applying a multi unit theory, which is kind of an HMO concept to commercial property and creating multi let spaces for small businesses to operate as opposed to renting commercial property to a single tenant. So he's logically applied his intellect and accelerated and done something different, which gives them more diversification is wealth building. So Andy's a brilliant example of how to do this well.
Unknown Speaker 39:44
And then it was really interesting to hear from Chris how he pivoted from the student market, to the professional market. And he talked about the product being the same, but the service being quite different.
Unknown Speaker 39:55
It's interesting, you know, I know Chris very well. And Chris is a storey a fairly understated guy, and you might not really pick up his brilliance. From you know, he's quite a low key gentleman. But if you meet him, and you see what he's capable of doing the space, it's absolutely incredible. So he gets massive, massive ROI is on his properties. But he sees it as a business, you know, by referring to it as a product. You heard him say that, then, you know, you can see he feels like this is a business opportunity. It's not a hobby. So Chris is absolutely in business. And the good thing about that is if you were an investor, if you're a part time hobbyist, and you went into student accommodation, and then that for whatever reason, I know we didn't go into the reasons, but if that didn't work for him, rather than so Oh, no worries me, let's get out of the property market. He said he pivoted you know, so that was a deliberate and a conscientious change, to focus on something else building on experience and learning and moving on to something else, which is a you know, then takes him to a higher level. And he did without moaning and without bemoaning where he's been, he's just saying, hey, this works better for me, let's do that. And this is the other thing that you have to do is, you're not links to Kevin's, again, be creative, learn what works for you, and then change what doesn't work for you, and learn something new and adapt to that. Because you're always learning, you're evolving and moving to bigger and better things. And that's the same with Andy. And the same with Chris. And another learning that Chris shared is that if there was one thing he would change, looking back, it would be to start growing that team earlier to be able to scale faster. Well, exactly right. And also I reflect back, he said, you know, the, the key thing is the word experience, which you know, if you link that to Andy's word community, it's back to giving people that are in, you know, as your tenants, as clients or housemates, however you described them, it's probably good to have a language that you use for that, then you know, you can you can demonstrate that to the people who occupy the property, that isn't just something, you know, that they feel they live in, they feel part of, and if they feel part of something they're going to look after the property better to. And Tim was mentioned, again, by Kevin, you know, again, treating it as a business with a team that can staff the properties 24. Seven, and
Unknown Speaker 42:19
what what were the key points you picked up on? Kevin, who's looking at the supported living sector?
Unknown Speaker 42:24
Well, look, this is an issue, isn't it. And it's great to have Kevin on, because, you know, he's gone through various iterations in property, but he didn't necessarily describe those. But like the others, you know, he's been changing the face of how he's done that, and trying to find the solution. That for him is the perfect combination of both the business, and something to be proud of, and giving back to the community. And while it can be easy to create a sort of a care environment with all the necessary compliance and rules around that, nonetheless, that's just an example of somebody just covering a niche that works for them. And I can attest to the numbers being very profitable. But that profit is not a bad thing, because it enables them to do even better to support even more people. So you have to be a certain type of person to want to get into that. But then we're all have our own issues. Don't we all do what we want to do. And we have our own way of seeing that the property is giving something back. It's not just simply a business, or simply a set of rooms. And I think that's when it works outstandingly Well, when the people see it as a business, and see it as an experience, however they're serving. And they see it as that level of service, rather than tenants are a pain in the rear. They see their tenants as a really strong connection between them, and what they're trying to do and who they're trying to serve. And I think these are all great example. Yeah.
Unknown Speaker 43:51
And Kevin, certainly serving the community and building that reputation, as you mentioned, with the local authorities, with the police and, and with crisis as well. So doing tremendous work all three of our guests there. So Kevin, to summarise on the HMO strategy, and before we perhaps move on next week, to a different strategy, and perhaps we will look at service accommodation, which is a shorter term, letting strategies net then he knows which tend to be really, you know, homes for people that are unconnected under one roof.
Unknown Speaker 44:25
Yeah, that's a different strategy. So more of that, I guess, then next week, you know, in summary, you got to think through, is it a strike definitely strategy work looking at, work out your pros, work out your cons, understand the law, understand the tax position, understand that nobody actually mentioned it. But generally speaking, with a GMOs, you know, you're as the owner of the property, you know, you're making an experience. So that experiences you tend to end up paying the bills. But I've seen some wonderful uses of technology, to help manage those bills with, you know, automatic thermostats and all sorts of different things, and keys and all, you know, so you've got to learn the technology, you got to learn the language or learn the tax position. And just as importantly, work out how many of that strategy will it take you to get to independence, so that you don't get caught up with I need to manage the property, if you need that, say, and it was nine, if you need nine, by the time you get to nine, you're no longer managing those on your own, unless you choose to. And then you've got a team behind you, you know, you can delegate that out. And certainly, that's what we find that when you know what your strategy is, you know exactly when you're at the point when you can afford to delegate that. So it becomes more hands off, not passive, but more hands off later. It never is at the beginning. Because if you try and delegate everything from the beginning, you won't really understand where it's going wrong.
Unknown Speaker 45:53
That's a great, great summary for today, Kevin. So we will be moving on to another strategy within the property pillar next week. And be great to get feedback from from those of you that are listening today. If you've got some experiences with h Mo's, if you have any questions, then definitely head on over to the wealth builders, Facebook community, just search for wealth builders in facebook and join the group if you're not already a member, and it'd be great to see you there. And of course, we always are so grateful for the reviews that we keep getting on iTunes and different podcasting platforms. So if you're enjoying what you're listening to, then please do take a couple of minutes and and proper review. We really really would appreciate appreciate that wouldn't be Kevin definitely would.
Unknown Speaker 46:38
So look forward to seeing you next time, Chris. Thanks, Kevin. Yeah.
Unknown Speaker 46:44
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Transcribed by https://otter.ai