In today's episode we are joined by four members of the WealthBuilders Community, Ian McBain, Ian Morton, Adrian Taylor, and Lee Pemberton. Make sure to find out what our members' have to say about serviced accommodation, and how this property investing strategy has generated more cash flow for them from their already existing assets.
What is serviced accommodation, and what are the pros and cons of this property investing strategy? Instead of renting a property in the traditional sense for a number of years, this strategy focuses on short term lets - taking a property and treating it more like a guest house or hotel. In recent years companies such as Airbnb have completely revolutionsed this market, and in doing so, have created new opportunities for property owners to leverage their existing assets to achieve higher cash flow. You’ll hear from four members of the WealthBuilders Community who share their experiences, along with a whole host of things you have to learn about - not just delivering the service, but how do you get the customers in the first place? What's your tenant type? Are you catering for corporate customers, or leisure, or both? Where's the location? Is there a demand for people who would want to rent for short term?
Show contributors - Ian McBain, Ian Morton, Adrian Taylor, Lee Pemberton.
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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 0:19
Welcome to Episode 29 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined by an aside from Mr. Kevin Wayland.
Unknown Speaker 0:27
Hello, Chris. Welcome to my haunt in London. And as you appreciated London, it's a busy spot. So you will hear a few people and a bit of clanking over the wooden floors. But we made a reliable me today. We're live on location
Unknown Speaker 0:40
live and ready to go. Okay, good. So Kevin, Episode
Unknown Speaker 0:43
29. Today, and we continue with the property pillar. Yeah. And we're now having a look at the strategy known as serviced accommodation.
Unknown Speaker 0:52
Yep, service accommodation? Well, that's a very interesting strategy. And a definitely worthwhile giving a little bit of a founder to that one, Chris, because, you know, for many people, service accommodation is kind of language they don't know. And, and it's really language invented by the property industry, because there is no technical definition. It's just really thinking about the creativity, of being in property and understanding that property is space. And there's a different demand and use of that space. You know, so we've talked about in previous episodes, you could take a property and you could rent it to a single family. That's fine. You know, you've got a language there by to let a short short all tendencies that kind of thing. And then we talked about a GMOs and other people talk about minimums and maximums, and all sorts of language, but but HMO multiple occupancy properties is kind of letting rooms, you know, but still, for the longer term, almost like a home from home for different types of tenant types. And service combination is just taking the same space, you know, and instead of renting things for the long term, six months, nine months, 12 months, it's looking at that space, almost in the way that you look at a guest house, or a hotel, or an apartment, you're giving somebody who would occupy that space, usually a much shorter term, comparing it a little bit like a hotel, in some respects, in that it's shorter term, you tend to be there with shorter terms. But also it has the benefits of being a bit like a home. So for many people, for example, one of the reasons they would look at a service accommodation, accommodation they can live in, but it's taken care of like a hotel, and a big part of that language, if you can just read into that serviced. And it's accommodation. Yeah, well, service means you've got to deliver great service. So you have to be in business. And this is a step change. You know, if you've got a an apartment and you rent is about to let you can be a novice, you can be a landlord, you can be an investor. When you get into service to accommodation, shorter term, lets you got a whole host of things you have to learn, you know, not just delivering the service, but how the hell did you get the customers in the first place? What's your tenant type? How do you think about that? You know, is it corporate? Is it leisure? Where's the location? Is it suited? Is there a demand for people who would want to rent for short term, the big pluses of it, actually, to massive, massive, massive, that's three but but to anyway, one is the cash flow, if you get the the occupancy level, right. And I think most people would work on a kind of 70% occupancy. But if you get if you get that, right, the cash flow is really strong, because people will pay comparably more per night than they would if they were renting for a year. So it tends to be a premium price. That's why you need to put in the service. So you got the costs of all the things that go alongside that. But the other thing is, because it's a business, it's a service business, like a hotel is a business, then it sits outside of this section 24. In other words, the tax position is not affected as the business or all of your expenses will be tax deductible, and all your revenue is liable for tax. But either way, you're not as a person going to be affected in the same way. So so huge advantage, big advantages. But you have to regarded as a business. So like every strategy, Chris pros, cons. And the best way to dive into those pros and cons is to listen to some of our clients and members who are using this strategy. Maybe some of them accidentally, you know, but the key thing is finding the demand. And we'll maybe dive into some of that afterwards and see what their lessons were, in terms of that 10 times. I think
Unknown Speaker 4:56
so. And just before we do that, another little piece of language that often comes up alongside service combination, is this term rent to rent and run? Yeah. And I think we'll hear from some of our guests as well. So there's a difference. What exactly is that difference?
Unknown Speaker 5:09
Here, they're completely different rental rent is a method by which you would find a property, you know, so in other words, for most people, if they're thinking about wealth in the pillar of property, the method by which they would turn that property into an investor owned the property. So you physically buy it, you physically own it, you know, whether you own it in your pension through a SAS or whether you own it, personally, or whether you run the company, you've got the ownership of the asset. Now clearly, that's the best thing to do. Because if you own the asset, you will earn the right to that cash flow forever. rent to rent, then is a method by which you secure the right to get an income from a property. And if you get it wrong, to me and expense of the property, because you're essentially renting the property from somebody else who owns it. And there's a whole host of reasons why people would choose rent to rent, which can be serviced accommodation, just as rent to rent could be an HMO, you know, so there's really rent to rent is more just a way of getting into the market to get some controlling the profit. Yeah, but never really owning it. So you have, but for some people who don't have enough capital, then getting rent to rent, which means you don't have to buy the property. So you're not going to pay stamp duty, you're not going to incur those costs. But the inquiry to that Chris's, you're gonna have to spend more time finding those motivated sellers. If you remember Simon, Zoo cheese Golden Rule number one, yes, you know, you got to find motivated sellers. So so the skill there is different. Yeah, you know, so that's why this is a very, very interesting pillar. And the multiple strategies and they overlap, hence, is rent to rent, same as HMO is rent rent, same as service combination, not not at all. One's a method of occupying a property temporarily, where you use three to five years, and you're using that space from somebody else, you're paying them a fee, but then you're hoping to get more cash flow by increasing the premium on what you're charging for that space. And that's being creative. And which is, again, if you look back at podcast, 28, Kevin McDonald, all about being creative. And this is the skill of being in business in property is being creative.
Unknown Speaker 7:24
So just as we heard in last week's episode, around, he knows different niche markets yet that can be targeted. Again, we will hear from our guests today, in the same way, the service accommodation can be tailored to different markets as well, yes.
Unknown Speaker 7:37
And, you know, I'm pleased to have worked with with some of these people to, to help work with them to discover their niche and master their niche. Because it's really, really important service combination, when you're putting all of your energy, you know, into, you need technology, you need to understand, you know, where where your bookings can come from, you need to then manage all of these things. So, all of this stuff, become all part of your education. And you need to spend time in that space. Getting that education, right. So who better to boot to start thinking about that, than people who are doing it who've mastered English? Well, why don't we hand
Unknown Speaker 8:13
it over to them to share their storeys now?
Unknown Speaker 8:16
I'm with wealth builders, client M. Bain. How IN very well, Christian, nice to hear from you again. Yeah, good. Speak to me in
Unknown Speaker 8:23
now. And you've been on focusing on property pillar for a number of years and for the last few years, specifically on service accommodation. So would you mind sharing why you decided to focus on that strategy in particular?
Unknown Speaker 8:35
Sure, absolutely. We are so thin and see and sex. And obviously, it's a fairly big leisure market and the summer, and the corporate market and the winter, and what is the heart and connection, we had a beta let property next to Suzanne DF port. And we wanted to switch assets are retailed at as a service accommodation unit, which means that you're working on a within a within a week in a month. And obviously, the cash flow that we achieved was was far greater than what we were deserve more and more vital it.
Unknown Speaker 9:12
And we often hear the term rent to rent and service accommodation side by side. But would you mind clarifying him because I know you've cater for both markets? Exactly what the differences and how you approach and choose those individual
Unknown Speaker 9:25
strategies? Sure, absolutely. So if you want to get into the market fairly swiftly. And then obviously, you can offer the the landlord, a landlord, the guaranteed rent. And that is what is known as rent of interest issues yourself question. As an example, for the listeners, let's say you had that property, I wanted to rent to all of you, I would guarantee your rent, that this market rent for the next three to five years, that's a normal length of contracts that we work with. And this has been going on for years and event event event. And then obviously, once you've secured the property, it's up to you how you want to operate it. So do you want to operate it as service accommodation? So I began to New York rent, I'd be running a service accommodation as a strategy. And obviously, after win and after bells, what is left as the profit that I would keep effect of what I thought makes sense.
Unknown Speaker 10:26
Yeah. And in terms of the market that you aim for, do you have a particular niche that you that you tend to focus on?
Unknown Speaker 10:35
That's a great question. Yes, we obviously try and target the corporate market. And service accommodation, like a lot of businesses as does suffer from seasonality. And so and there's so much, you know, schema, and there's loads of tourists and it's really busy. And the winter it can take off. But if you're tired, get the corporate market, then you know, there's no seasonality and Nicole waddled at walks all over the year. So we're trying on some corporate sites, there's a lot of construction and development, what's going on in the local area. And our goal is to target that specific demographic, and that we get can a guaranteed income through through the winter and keeps your profitability, much higher, your costs are lower, because you don't have to do as many cleans, you don't have as many laundry you may not have booking fees, you don't have card processing fees, because you can just deal with the company that they saw if you have less than an essay episode and thinking you know, how should I do it then I would say you definitely more than the corporate strategy.
Unknown Speaker 11:44
And in terms of time, now, a lot of people might look at the service compensation model and think oh, it can be systemized, you know, it's pretty hands off. What's the reality in
Unknown Speaker 11:55
the honest answer as it can be systemized by job the style is hard work as a corporate businesses were also I think people get sucked in by the cash for Yes, that has great cash for but obviously you're starting over costs are higher. So you've got cleaners, you've got handyman, you need an accountant or bookkeeper. That doesn't, there's loads of different things that you know, can happen. And Gordon because obviously, you've got people coming in and Oh, the property a lot quicker. So I think a lot of people as a proper business, there's got to be marketing behind that there's a science behind that. That's technology as well that you can utilise. So actual, the podcast itself is just a vehicle to operate the idea behind this that attitude of rent event or service accommodation as a proper business.
Unknown Speaker 12:53
And for that reason, then would you say that it's probably not a strategy for someone right at the beginning of their property? Joe?
Unknown Speaker 13:01
That's a good question. Obviously, we started it with probably a little more education and found out the hard way. But I think if you're going to start, you should just do one, and do all the tasks yourself to find out how long they take and exactly what's involved in it. Before you try and outsource it. I mean, that's on a lot of the property forums, you cpvc and I just outsource this and get mad that are and done novel is always better. And I feel yourself to understand everything so you know exactly where any source code me should have.
Unknown Speaker 13:38
Yeah, that's brilliant. Thanks so much for sharing with us today in
Unknown Speaker 13:43
no problem pleasure.
Unknown Speaker 13:45
I'm with wealth builders foundation member, Adrian Taylor, welcome to wealth talk, Adrian. Adrian, can you explain for our listeners, the process that you follow to acquire your properties,
Unknown Speaker 13:55
it's really just a case of approaching lots of landlords. And finally, anyone who, who understands or is open to the x later about the the whole concept of first accommodation, as well as that you when you're starting up, you really get your systems in place, right from the start. So we use a channel manager, which is called co creators with several other programmes out there to the exactly same thing is so key. And they've all got their individual upsides and downsides. And the reason the channel manager is it manages all your bookings. So especially when you start out, you're going to be getting lots of bookings, from the likes of booking.com, Airbnb and Expedia. And you need to manage your bookings on all three of those simultaneously. So that's where the channel manager comes in. It sits in the middle of them, and updates calendars on each platform. As soon as the booking comes in from from any one of them or from you from yourself from interview, someone gets more thoughts, they will start getting people can strip cookie coming in, or we can add those in as well. And is there a particular market that you aim for, we own lightly for the for the business customer. So we've set up our crop even areas where we we've got a lot of business clients around the area. So there's large business parts that are bringing in business guests coming into the area, we can have them saying our properties, but they'll actually be working a fair distance away because this good, mostly leaks and they can get all around the Bristol area from from staying in our property, which is, which is good for generating a longer term booking until the long, long term on medium now with this strategy and not owning the asset. So I'm presuming it's the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model. That's correct. Yeah, it's a great way of cash flowing property while still paying the landlord there, there are no more rent. So they they're happy, they've got a good long term tenant who's looking after the property, a clean room once a week to clean the property, making sure everything's in perfect condition, coming out minor little bits of my niche to keep the landlord happy. And we charge what so close to what the hotels are charging in the area for the property for a room if you like. So we get a lot more coming in than the money going out to the landlord. And I should also mention the guests like that as well, because they they're paying similar amounts of the pay for hotel, but they're getting their own private space, they get a kitchen they can get they can go and cook if they want to cook 20 takeaways. So
Unknown Speaker 16:39
sounds good. Thanks so much for sharing. Adrian.
Unknown Speaker 16:41
Thank you, Christian. Thanks for inviting me on.
Unknown Speaker 16:44
So I'm with wealth builders client in Morton, welcome to wealth talk, Aaron.
Unknown Speaker 16:48
Hello there. So and I
Unknown Speaker 16:50
know you've been involved in property for a number of years, and but more recently focusing on the service accommodation strategy. So would you mind telling us how you kind of got into that place?
Unknown Speaker 17:01
Yeah, it was almost by default, really, I yeah, I actually bought a lovely house in the Lake District to the summer just to go for weekends, and extended it and did all sorts of alterations and really realised that I ought to rent it out. So I ended up doing a business by default, really, in that way. And I'm also sort of also commercial conversion side loads of alterations to buildings and new builds. So I merged the two things together really thought maybe I should do service accommodation as a business.
Unknown Speaker 17:30
Hmm. So tell us, in your own words, exactly what service combination is, and how that model differs from something like by to let so he knows.
Unknown Speaker 17:39
Right? Yeah, well, I initially started out with my commercial conversions converting into single that's the strategy of, of Hmm, it was, but yeah, differs in the respect of, really, the management side of it is quite intense and needs, you know, so it's a much higher skill set that you need to be able to manage service accommodation, you're basically dealing with almost hotel customers, you know, who want really, to know that you care about them? And what would be the typical time frames that people would be booking into your apartments for here? Yeah, well, that's the other thing. That's why sometimes the banks are not as happy as they are with some of the other strategies is that it's, it's almost a very much last booking, you know, last minute booking. So you can often if you look too far ahead, you can start worrying. But all of a sudden, all the bookings come in. I mean, since we've opened, we've been open with the support hotel that we've done for about 18 months, and it is consistently full, you know, I often thought I'd love to go there myself. And I can't actually get in there because it's just full all the time.
Unknown Speaker 18:43
Yeah. And where are you finding the bookings? or How are people booking themselves into those?
Unknown Speaker 18:49
Yeah, well, initially, we use my booking.com is our market marketing and Airbnb. But then we as soon as we get customers, we, you know, we try and get direct with us. Hopefully, nobody booking.com is listening. And by that we've already built up I think it's about 65%. Direct bookings. There's also local businesses that book, but we have a core of foreign visitors as well. So we get people from coming is literally one room where French people book all the time we've got Chinese people.
Unknown Speaker 19:22
It's just from all over the world.
Unknown Speaker 19:24
Yeah. And is there anything you do differently or uniquely with your apartments to stand out? Would you say in?
Unknown Speaker 19:31
Yeah, that's a good point. Actually. Yes. So what we've always worked on, in fact, Kevin was a fundamental in actually getting this idea together, is it's all based on, on heritage really. So we tech heritage buildings and convert them inside into contemporary apartments. And so especially foreign visitors, but also getting something special. So you're in maybe a beautiful listed building, like a Georgian merchant house or church, or a school that's been converted inside of the so called a sleek, modern apartment.
Unknown Speaker 20:03
And am I correct to think that you might be utilising one of the other pillars as well to help with with this process? To the pillar?
Unknown Speaker 20:09
Do me
Unknown Speaker 20:11
a test your knowledge of the pillars here? If I would say pillar?
Unknown Speaker 20:17
You sorry, with Pulitzer, what is believed to be the pension pillar? Yeah, that's right. Yeah, I use SAS pensions. Yeah. So I founded the power hotel using my own SAS pension. That was the first time I'd also bought property with a sip, actually. So I converted from a sip into a SAS pension quite heavily. And always I've been interested in pensions, because I love the idea of people having control over their own pension. So yeah, and then from that, moved on to a sort of much bigger project now, which is, is involved using other people's SAS pensions so that people are investing into the company. And they're also investing looms as well. So the company, so different types of ways of investing in your SAS pension, and I'm putting a pot of my own money in there as well to, you know, to put some skin in the game. From that it's a very big scheme that we're doing, we're looking for further investors as well, to come along. Hmm, sounds good. And how
Unknown Speaker 21:17
do you see the future of this market of this strategy? And
Unknown Speaker 21:21
yeah, well, we've sort of ended up specialising more moving more towards instead of city centres, which are actually getting quite overwhelmed with the amount of surface accommodation, the health, we've moved into a sort of a different market, we believe there's going to be a big strong staycation with everything that's going on. I won't mention the B word. But everything that's going on in there and the currency thing, so it's going to be quite cheap for foreign visitors to come to the US UK. See some of our beautiful historic buildings and the fantastic scenery we've got, as well as a staycation people. So we've got that market that we're aiming at, which I believe is going to be, you know, massive growth. I mean, just as a forensic in the Chinese market, only 5% of the population population ever leave China, but by 2025, it's going to be 15%. So that is a massive market of people that are going to want decent quality accommodation in the UK.
Unknown Speaker 22:18
That's great. Thanks so much for sharing with us today in
Unknown Speaker 22:22
Okay, no, it's all enjoyed it. Thank you.
Unknown Speaker 22:24
And with wealth builders foundation member, Adrian Taylor, welcome to wealth talk. Adrian.
Unknown Speaker 22:29
Thank you, Christian.
Unknown Speaker 22:30
Thank you very much. Adrian, can you explain for our listeners, the process that you follow to acquire your properties?
Unknown Speaker 22:36
Yes, certainly. Yeah. First of all, thank you so much for inviting me on to the podcast Christian, I really, really appreciate that. So service accommodation. For me, I've been focused on as a as a investment strategy for the past 20 years. Very briefly, I came from a hotel background prior to that. And then over the past 20 years, I have developed a whole range of if you like, models under service accommodation. And so when I started off is very much along the lines of I mean, there was nobody doing service accommodation, obviously, 20 years ago, there was no booking.com, Airbnb or anything. So I literally started by renting a property looking for landlord and then letting out on a nightly basis. That's how I started. And it was only really a couple of years ago that I came across this model called rent to rent. And so I didn't realise it actually had a name a label to it. But over the years, as technology has improved, and booking.com, and Airbnb and different platforms for guests to book through who have come along, it's really opened up a lot of opportunity. So it's great to kind of sit here now 20 years later and see that this model has really developed not just throughout the UK, but throughout the world. And is there a particular market
Unknown Speaker 23:49
that you aim for yet. So
Unknown Speaker 23:51
you know, what's really interesting Christian, is that what the market, I say the market hasn't really changed. So when I first started, my whole aim was to focus Cooper clients because they stay with you slightly longer. And then you fill the gaps with your leisure guests that was always like my sort of strategy. So corporates Monday to Thursday, let you guess, Friday through to Sunday, and that really maximises like the return you get on your property. So where things have changed is that the government has done a great job of like really messing up the whole pie to let set up. And so you know, section 24 is now in play where existing landlords that have properties on the Vita that basis are no no longer able to claim their mortgage interest relief payments back on and this is the final unit is being phased out. We've serviced if the property is managed as a service accommodation or a furnished holiday lead on the agency's terms, they can actually sit outside of Section 24. So there's a great opportunity for existing by to let landlords to be able to have their properties, managers service accommodation, where they can get a higher cash flow, obviously be able to also be able to clean their their tax cuts into their tax back. So that's a big opportunity. There's some other really key kind of tax advantages around capital allowances and being able to claim back things like your kitchens and bathrooms and electricals and all those things that happen within the property because it's a operational business that you're running, you're able to claim a lot of these costs back through capital allowances. So there's some real attractions there for landlords. But at the same time, and legislation is definitely getting more strict, throughout the UK. And with so with the success of Airbnb, there's a lot of restrictions now slowly starting to come into play. So I think I think although I've seen a massive growth in the last 20 years, there's some great opportunities around tax of working with tax. But at the same time, there's definitely some challenges coming our way and some threats when it comes to the deflation stuff. So let me the focus is really looking at like in the next 20 years and seeing where where is this hospitality business going? And that's really what I'm focused on now now with this strategy and not owning the asset. So I'm presuming is the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model? Yeah, so it's a really good question. So that there's some great tools. And there's some, there's lots of training, there's lots of information out there in terms of how to if you're an investor, you own a property, let's say you've, you've got your single next property you'd be letting out and you want to create more cash flow from that as a strategy and branding a certain combination. You can get yourself set up on booking.com, and Airbnb, and you can manage the guests. It's quite straightforward, so to speak, how to do that. I think the key the key thing that is really important to understand that with everybody that I work with, with clients and investors, what have you is, you've got to really understand what your strategy is. So do you like I really enjoy I'm a people person, and I really enjoy looking off the guests like, that's what I've always done, I come from a hotel background, and I love service. And so you need to understand as an investor, is your strategy, do you? Do you enjoy doing that, and it's no problem if you don't, so you may want to become more be investor and you invest and create, if you like service accommodation units, which could be like, say, a block of apartments, or super single x units. And then you have you read in Panama over to a management company that doesn't enjoy that part. So I think the key thing is really crucial is understanding investors have to understand like, do they want to be kind of front facing? Or do they want to be sort of more in the background and create the product? And then you can instruct a really good deal around that between? You know, who you're working with, if you like along those lines?
Unknown Speaker 27:53
Sounds good. Thanks very much for sharing. Adrian.
Unknown Speaker 27:56
That's okay. very welcome.
Unknown Speaker 27:58
Right, well, we had a number
Unknown Speaker 28:00
of different strategy strategies, but
Unknown Speaker 28:03
you know, ways of approaching service commendation their, from our guests. So what would some of the key lessons that you picked up on Kevin?
Unknown Speaker 28:10
Well, I think the inevitable one that you should really pick up straight away, is that this is a business, you know, every one of these individuals have chosen this as a business strategy to generate high levels of cash flow, and they're not doing by accident, they're not doing it by a hobby. They're doing it as a profession, because it's very profitable. And, and they've all built necessary, you know, they've turned the wheel, you know, they, they've worked out their niche, they've, they've gone to see things sometimes by accident, some of them have actually really worked hard to build on existing knowledge they've had before. So, you know, they've used their own skill and their wealth dynamically. Pemberton, for example, you know, talks very specifically about that. So this is, it's a real business idea. So it isn't something you can have a go at,
Unknown Speaker 29:03
hmm.
Unknown Speaker 29:05
It's something you have to commit to.
Unknown Speaker 29:06
Yeah. And we've covered on earlier episodes, you know, the importance of thinking like an entrepreneur, and we had a couple of examples there had began with just a bite of that, and then spotting the opportunity, adapting to the market.
Unknown Speaker 29:19
That's right. So that's when you you, you know, we heard from the GMO guy last week, you know, talk about pivoting, you know, CSP from student to to young professional. And you can see as this happens here, so, what so the thing to recognise is just doing something, being in the market and building your wealth, and, and being sensitive to changes and timing opportunity. You can pivot and, and leverage up. Whereas if you keep thinking, thinking, thinking but not doing, you can't pivot anywhere, you just go spinning again. So, but it's really clear, though, that these, these gentlemen have all taken onboard, that this is a business and remember, not all of them are fully just in service combination. It's not a all my cards are in the service accommodation thing. They're all flexible enough to move in different directions. That's important to to recognise that positioning, they're telling us about their service combination plan, but that's not what they just do. That's right. Well, we we heard from him
Unknown Speaker 30:25
first. And in this dress, again, about it is a business. And the good point that he made was, you should really get your hands dirty and understand all the aspects of it before outsourcing. So I asked him, you know, who is this strategy for? Can? Can anyone come in at any stage? And I
Unknown Speaker 30:43
think that's a really good point.
Unknown Speaker 30:44
I think it's a really interesting point. Because this this constant challenge I have when people are learning their wealth, is they'll prejudge that they don't want to manage anything. You know, it's almost like you hear the word passive, I want to be passive, you can't be passive. And in service combination, you can't be passes you have, you have to know what needs to happen. For example, you need to understand what actually happens in the process of changing the room over you know, from one tenant to the next 10. And it's not every six months, every 12 months, it's could be every, every day. And so you need to know what goes on in order to then determine how you want that to be managed. So having some experience of the management is really key to then working at how do you want to get that managed for you studied support you in the long term? So you can't start with no management? I would say get your hands dirty is in probably say it. Musician thing about EN is, you know this to kind of double tenant type. You know, you've got the workers during the week. And what did you say that? Well, yeah, a weekend. But that's, that's in you know, because he's in South End, you know, so that's a seaside town. Right. Yeah. Would that work? In Coventry? I'm not sure, you know,
Unknown Speaker 32:05
and there was a point picked up again by by later on, about, you know, really aiming at the corporates during the week. And yeah, and having the leisure guests at the weekend.
Unknown Speaker 32:13
Exactly. And, you know, they just come at it from different places, you know, one of the load not on this particular podcast, Chris, but one of one of the people that I know who's doing service combination is actually got a passion for music, right. So concerts, and he knows that people love concerts, music, concerts, and attending live gigs and events. So he's got a service accommodation strategy that's entirely driven around the proximity to where major gigs are held. And that's a great strategy, you know, but that's reflection of who they are, and what their interests are,
Unknown Speaker 32:51
which is why it's
Unknown Speaker 32:52
really quite important. If you can think about, if you have a natural interest that you already, like, you're already good at, you're already excited, be rinsed in, and then turn that into a reflection of how you do business.
Unknown Speaker 33:05
So continuing then the theme of the management, we then heard from Adrian, and Adrian talked about some of the systems they use as the software systems to manage, you know, booking.com, Airbnb, Expedia, and something called a channel manager. What's Yeah,
Unknown Speaker 33:21
what's this all about? Kevin?
Unknown Speaker 33:23
Well, it's not a TV tuning station, right? So it isn't another Netflix. Channel managing is really all about using technology to have an interface with where people can make booking. So it seems, you know, you can you imagine if you were just sitting on the phone all day, waiting for someone from booking.com, or Expedia or any there there are dozens and dozens and dozens of what we call OT as online travel agencies, you know, in the three big ones were mentioned there, you know, booking.com, late rooms, Expedia, Airbnb, you know, there's many many more And as we'll hear from maybe we'll Don't forget to mention in Malta new talked about overseas guests in so it's a different thing. So having something that's like a seamless bit of technology, often low cost, and depending on how many rooms you've got, you can dive in at different levels, like it kind of minis booking system, so it works seamlessly. So you don't spend all your time. Yeah, because we're currently coming in 24 724, seven, yeah, all different time zones. And, and you need to go to manage that and understand that all of these associated costs associated with them, usually in the sort of 10, to 15%. So you want to factor that in. And then you need to be able to convey the messages to the, you know, to your cleaning staff to be able to do that. And so there's a whole host of the How do people get in, you know, what automatic Key System Do you have, so you don't have to turn up and open the door and element in. So all of these, this technology is quite key, when you've got a regular turnover of staff and people and it's not like you got a hotel reception desk, you need to automate this. So you using technology, and learning what that technology is, and choosing the right technology. You know, we've got the people who know what that technology is. So if anybody's interested in looking into service combination, often do all this by trial and error.
Unknown Speaker 35:14
We talked last week on the episode about HY is about proximity, you know, you students, you know where you're going to be situated located. And I hearing the same here with service commendation, and Adrian mentioned about their properties being close to motorway, so good transport links for workers to get in and out. And, yeah, so you know, that's something that needs to be considered as well, isn't it?
Unknown Speaker 35:34
Yeah, that's well thought through, isn't it. So you know, where we've got seaside towns, it kind of becomes a bit obvious, you know, almost like holiday type accommodation, where you got workers and again, that's another key point. If you happen to have a link or knowledge with a key employer, you know, you know where they are, you know, where they're going to be, or you know, where there's a demand, you can see what's happening, then you can use a combination to to have some, you know, workers coming for a few days, you know, and what were you mentioned, being a worker going build working on a big building project? Do you want to stay in a hotel? And, you know, perhaps go down to the lounge and have a beer and have rubbish food? Or do you want to be able to relax? You know, cook your own food, have a few people around maybe several workers together? So it's cheaper, isn't it? Really, when you've got 234 people, it's, it can be a cheaper accommodation than having three or four hotel rooms. And that applies the same for family, as it does for workers. So for anybody, there's real benefits to service combination. I think Adrian is is picked his niche very well. Yeah,
Unknown Speaker 36:47
we've essentially seen a threat to the hotel industry, certainly at that lower level that more b&b level.
Unknown Speaker 36:52
unquestionably, that's the case, you know, the whole shifting sands of this and lead. got that right doesn't you know, I love it when I talk to these so full of energy, but he talks about sort of, you know, helping and reviving, which is the name of his business, you know, old, tired b2b people and old type b2b buildings, and turning them into modern up market, you know, much more customer focused and friendly and automated way, still bringing the same service and the strength of service, which, which really goes to what we talked about, because the I know, we're jumping ahead a bit to leave but but Lee is using these wealth dynamic correctly, he's using his experience correctly, his love for service correctly. And, you know, all that good stuff.
Unknown Speaker 37:40
Yeah. And in Morton, again, mentioned the intensity that comes with the managed right. And, and the high level of service, which I think we, you know, picked up from all of our guest today, but he talks about his niche being the foreign markets, and, you know, seeing a big opportunity here, you know, certainly with the the pound drop, we may see that influx of more investors. Yeah.
Unknown Speaker 38:07
Ian has got some beautiful properties, I remember spending a whole day within a couple of years ago, when he had a different brand. And I looked at his properties and said in these are beautiful properties, they're like, you know, you'd almost have a blue plaque outside the door. This is this is heritage, this is, this is the type of accommodation that people just feast with their eyes, you know, and he's done an outstanding job of being able to do that, both in terms of the quality of the externals, the quality of the internals, they're beautiful, beautiful properties. And when you put the pictures in all glorious colour, as it does on overseas websites, he's got a rich opportunity then to attract people who love the British heritage. So instead of just looking at the local market, you know, he's attracting the Chinese market. He's, he's, he can see, and there are special channels, where you can bookings from a Chinese guests. So you know, he's, there isn't something that happened automatically for him. This is something that he's grown into, and built a team around him to treat this very, very seriously. And I think he's going to do outstanding,
Unknown Speaker 39:13
it seems like we've never had an episode go by whether the mention of SAS doesn't pop up.
Unknown Speaker 39:20
Well, this is all about the interconnection, isn't it between all of the different pillars, and they all do interconnect, you know, they, they, they kind of merge and move. And SAS is just a way of turning your pension, which traditionally, if you remember would be stuck in the stock market outside of your control. And now you've got that self control where you can direct that money to where you want. And if Ian's got a skill in the development of property, and that properties, commercial type property, and he can buy that property known in using his pension. Well, why would you do that? Yeah, you know, he's in control of the risk is in control of the cash flow. He's in control of everything. And that's why I think he's been so successful, he's now attracting other people who want to both share in that opportunity and share in the learning and in is a good and warm teacher. So you know, fair play to him. Yeah.
Unknown Speaker 40:16
And I guess just to touch again, on the point that you made at the beginning, which Lee made as to some of the tax benefits, and you know, why service combination? should be, you know, something to consider? And if you're looking to maximise your cash flow?
Unknown Speaker 40:33
Well, look, you know, the the skill of wealth building, is to be aware of all of the opportunities, all of the tax opportunities, all the legal situations, it's all in the due diligence process, and in the education as well. So, I think Lee makes the point, you know, helps landlords keep more money, or what's wrong with that, you know, if you can do something that you can pivot to one direction, which is tax free, and another way, you're going to pay a lot more time, why wouldn't you consider it because you're just going to make more money. And if you make more money, then it helps you build more wealth, actually, and one other point that's worth mentioning, just going back to the modern, which is a little bit different to channel management, is when you get successful, then you can start encouraging by rating and by using your own website, more visitors to book directly with you. So then you missing out the cost of paying for the booking.com. so on, but the beginning you need them, you know, because they're booking thousands and thousands and thousands of rooms every single day, for why not be part of that technology. But as you get more successful, you can become less, less reliant on that as a channel, and more, you know, doing some of the things yourself.
Unknown Speaker 41:46
We always talk about leverage, don't worry, you know, it's the starting point, when you're looking at how you can build wealth, where's your point of leverage, and they're leveraging those other platforms? So the beginning
Unknown Speaker 41:55
works exactly right. And so that's why it's important in your education to know what online travel agency is what a channel manager looks like, you know, so, like anything, Chris, you know, this is for a novice, this is going to sound like a complicated strategy. But it's just the language really, it's like anything, you just got to learn how to, and the combination of the people we know, and the lessons they've learned. It's easy to share,
Unknown Speaker 42:19
huh?
Unknown Speaker 42:20
Well, I hope that everyone listening today has learned a bit more about the service commendation strategy. Yeah. And where might we be looking? In our next episode?
Unknown Speaker 42:31
Well, you know, properties still, we're only scratching the surface the property, there's still so many strategies to go, why don't we dive into the commercial area, you know, and give a feeling where, again, that's genuinely much more tax efficient, looking at dealing with commercial top tenants, and there's some very unique and special benefits in there. How about if you could learn that the the tenant pays all the maintenance costs, the tenant pays all the bills that pays for anything that goes wrong, and the rent only goes up?
Unknown Speaker 43:07
I would you like to learn about that. I see. I
Unknown Speaker 43:08
couldn't see some people's ears picking up
Unknown Speaker 43:11
to the fault of that. So
Unknown Speaker 43:13
that sounds like a good one to cover off next, do that.
Unknown Speaker 43:15
All right. Thanks, Kevin. See ya.
Unknown Speaker 43:21
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders don't care.uk slash membership
Transcribed by https://otter.aiUnknown 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 0:19
Welcome to Episode 29 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined by an aside from Mr. Kevin Wayland.
Unknown Speaker 0:27
Hello, Chris. Welcome to my haunt in London. And as you appreciated London, it's a busy spot. So you will hear a few people and a bit of clanking over the wooden floors. But we made a reliable me today. We're live on location
Unknown Speaker 0:40
live and ready to go. Okay, good. So Kevin, Episode
Unknown Speaker 0:43
29. Today, and we continue with the property pillar. Yeah. And we're now having a look at the strategy known as serviced accommodation.
Unknown Speaker 0:52
Yep, service accommodation? Well, that's a very interesting strategy. And a definitely worthwhile giving a little bit of a founder to that one, Chris, because, you know, for many people, service accommodation is kind of language they don't know. And, and it's really language invented by the property industry, because there is no technical definition. It's just really thinking about the creativity, of being in property and understanding that property is space. And there's a different demand and use of that space. You know, so we've talked about in previous episodes, you could take a property and you could rent it to a single family. That's fine. You know, you've got a language there by to let a short short all tendencies that kind of thing. And then we talked about a GMOs and other people talk about minimums and maximums, and all sorts of language, but but HMO multiple occupancy properties is kind of letting rooms, you know, but still, for the longer term, almost like a home from home for different types of tenant types. And service combination is just taking the same space, you know, and instead of renting things for the long term, six months, nine months, 12 months, it's looking at that space, almost in the way that you look at a guest house, or a hotel, or an apartment, you're giving somebody who would occupy that space, usually a much shorter term, comparing it a little bit like a hotel, in some respects, in that it's shorter term, you tend to be there with shorter terms. But also it has the benefits of being a bit like a home. So for many people, for example, one of the reasons they would look at a service accommodation, accommodation they can live in, but it's taken care of like a hotel, and a big part of that language, if you can just read into that serviced. And it's accommodation. Yeah, well, service means you've got to deliver great service. So you have to be in business. And this is a step change. You know, if you've got a an apartment and you rent is about to let you can be a novice, you can be a landlord, you can be an investor. When you get into service to accommodation, shorter term, lets you got a whole host of things you have to learn, you know, not just delivering the service, but how the hell did you get the customers in the first place? What's your tenant type? How do you think about that? You know, is it corporate? Is it leisure? Where's the location? Is it suited? Is there a demand for people who would want to rent for short term, the big pluses of it, actually, to massive, massive, massive, that's three but but to anyway, one is the cash flow, if you get the the occupancy level, right. And I think most people would work on a kind of 70% occupancy. But if you get if you get that, right, the cash flow is really strong, because people will pay comparably more per night than they would if they were renting for a year. So it tends to be a premium price. That's why you need to put in the service. So you got the costs of all the things that go alongside that. But the other thing is, because it's a business, it's a service business, like a hotel is a business, then it sits outside of this section 24. In other words, the tax position is not affected as the business or all of your expenses will be tax deductible, and all your revenue is liable for tax. But either way, you're not as a person going to be affected in the same way. So so huge advantage, big advantages. But you have to regarded as a business. So like every strategy, Chris pros, cons. And the best way to dive into those pros and cons is to listen to some of our clients and members who are using this strategy. Maybe some of them accidentally, you know, but the key thing is finding the demand. And we'll maybe dive into some of that afterwards and see what their lessons were, in terms of that 10 times. I think
Unknown Speaker 4:56
so. And just before we do that, another little piece of language that often comes up alongside service combination, is this term rent to rent and run? Yeah. And I think we'll hear from some of our guests as well. So there's a difference. What exactly is that difference?
Unknown Speaker 5:09
Here, they're completely different rental rent is a method by which you would find a property, you know, so in other words, for most people, if they're thinking about wealth in the pillar of property, the method by which they would turn that property into an investor owned the property. So you physically buy it, you physically own it, you know, whether you own it in your pension through a SAS or whether you own it, personally, or whether you run the company, you've got the ownership of the asset. Now clearly, that's the best thing to do. Because if you own the asset, you will earn the right to that cash flow forever. rent to rent, then is a method by which you secure the right to get an income from a property. And if you get it wrong, to me and expense of the property, because you're essentially renting the property from somebody else who owns it. And there's a whole host of reasons why people would choose rent to rent, which can be serviced accommodation, just as rent to rent could be an HMO, you know, so there's really rent to rent is more just a way of getting into the market to get some controlling the profit. Yeah, but never really owning it. So you have, but for some people who don't have enough capital, then getting rent to rent, which means you don't have to buy the property. So you're not going to pay stamp duty, you're not going to incur those costs. But the inquiry to that Chris's, you're gonna have to spend more time finding those motivated sellers. If you remember Simon, Zoo cheese Golden Rule number one, yes, you know, you got to find motivated sellers. So so the skill there is different. Yeah, you know, so that's why this is a very, very interesting pillar. And the multiple strategies and they overlap, hence, is rent to rent, same as HMO is rent rent, same as service combination, not not at all. One's a method of occupying a property temporarily, where you use three to five years, and you're using that space from somebody else, you're paying them a fee, but then you're hoping to get more cash flow by increasing the premium on what you're charging for that space. And that's being creative. And which is, again, if you look back at podcast, 28, Kevin McDonald, all about being creative. And this is the skill of being in business in property is being creative.
Unknown Speaker 7:24
So just as we heard in last week's episode, around, he knows different niche markets yet that can be targeted. Again, we will hear from our guests today, in the same way, the service accommodation can be tailored to different markets as well, yes.
Unknown Speaker 7:37
And, you know, I'm pleased to have worked with with some of these people to, to help work with them to discover their niche and master their niche. Because it's really, really important service combination, when you're putting all of your energy, you know, into, you need technology, you need to understand, you know, where where your bookings can come from, you need to then manage all of these things. So, all of this stuff, become all part of your education. And you need to spend time in that space. Getting that education, right. So who better to boot to start thinking about that, than people who are doing it who've mastered English? Well, why don't we hand
Unknown Speaker 8:13
it over to them to share their storeys now?
Unknown Speaker 8:16
I'm with wealth builders, client M. Bain. How IN very well, Christian, nice to hear from you again. Yeah, good. Speak to me in
Unknown Speaker 8:23
now. And you've been on focusing on property pillar for a number of years and for the last few years, specifically on service accommodation. So would you mind sharing why you decided to focus on that strategy in particular?
Unknown Speaker 8:35
Sure, absolutely. We are so thin and see and sex. And obviously, it's a fairly big leisure market and the summer, and the corporate market and the winter, and what is the heart and connection, we had a beta let property next to Suzanne DF port. And we wanted to switch assets are retailed at as a service accommodation unit, which means that you're working on a within a within a week in a month. And obviously, the cash flow that we achieved was was far greater than what we were deserve more and more vital it.
Unknown Speaker 9:12
And we often hear the term rent to rent and service accommodation side by side. But would you mind clarifying him because I know you've cater for both markets? Exactly what the differences and how you approach and choose those individual
Unknown Speaker 9:25
strategies? Sure, absolutely. So if you want to get into the market fairly swiftly. And then obviously, you can offer the the landlord, a landlord, the guaranteed rent. And that is what is known as rent of interest issues yourself question. As an example, for the listeners, let's say you had that property, I wanted to rent to all of you, I would guarantee your rent, that this market rent for the next three to five years, that's a normal length of contracts that we work with. And this has been going on for years and event event event. And then obviously, once you've secured the property, it's up to you how you want to operate it. So do you want to operate it as service accommodation? So I began to New York rent, I'd be running a service accommodation as a strategy. And obviously, after win and after bells, what is left as the profit that I would keep effect of what I thought makes sense.
Unknown Speaker 10:26
Yeah. And in terms of the market that you aim for, do you have a particular niche that you that you tend to focus on?
Unknown Speaker 10:35
That's a great question. Yes, we obviously try and target the corporate market. And service accommodation, like a lot of businesses as does suffer from seasonality. And so and there's so much, you know, schema, and there's loads of tourists and it's really busy. And the winter it can take off. But if you're tired, get the corporate market, then you know, there's no seasonality and Nicole waddled at walks all over the year. So we're trying on some corporate sites, there's a lot of construction and development, what's going on in the local area. And our goal is to target that specific demographic, and that we get can a guaranteed income through through the winter and keeps your profitability, much higher, your costs are lower, because you don't have to do as many cleans, you don't have as many laundry you may not have booking fees, you don't have card processing fees, because you can just deal with the company that they saw if you have less than an essay episode and thinking you know, how should I do it then I would say you definitely more than the corporate strategy.
Unknown Speaker 11:44
And in terms of time, now, a lot of people might look at the service compensation model and think oh, it can be systemized, you know, it's pretty hands off. What's the reality in
Unknown Speaker 11:55
the honest answer as it can be systemized by job the style is hard work as a corporate businesses were also I think people get sucked in by the cash for Yes, that has great cash for but obviously you're starting over costs are higher. So you've got cleaners, you've got handyman, you need an accountant or bookkeeper. That doesn't, there's loads of different things that you know, can happen. And Gordon because obviously, you've got people coming in and Oh, the property a lot quicker. So I think a lot of people as a proper business, there's got to be marketing behind that there's a science behind that. That's technology as well that you can utilise. So actual, the podcast itself is just a vehicle to operate the idea behind this that attitude of rent event or service accommodation as a proper business.
Unknown Speaker 12:53
And for that reason, then would you say that it's probably not a strategy for someone right at the beginning of their property? Joe?
Unknown Speaker 13:01
That's a good question. Obviously, we started it with probably a little more education and found out the hard way. But I think if you're going to start, you should just do one, and do all the tasks yourself to find out how long they take and exactly what's involved in it. Before you try and outsource it. I mean, that's on a lot of the property forums, you cpvc and I just outsource this and get mad that are and done novel is always better. And I feel yourself to understand everything so you know exactly where any source code me should have.
Unknown Speaker 13:38
Yeah, that's brilliant. Thanks so much for sharing with us today in
Unknown Speaker 13:43
no problem pleasure.
Unknown Speaker 13:45
I'm with wealth builders foundation member, Adrian Taylor, welcome to wealth talk, Adrian. Adrian, can you explain for our listeners, the process that you follow to acquire your properties,
Unknown Speaker 13:55
it's really just a case of approaching lots of landlords. And finally, anyone who, who understands or is open to the x later about the the whole concept of first accommodation, as well as that you when you're starting up, you really get your systems in place, right from the start. So we use a channel manager, which is called co creators with several other programmes out there to the exactly same thing is so key. And they've all got their individual upsides and downsides. And the reason the channel manager is it manages all your bookings. So especially when you start out, you're going to be getting lots of bookings, from the likes of booking.com, Airbnb and Expedia. And you need to manage your bookings on all three of those simultaneously. So that's where the channel manager comes in. It sits in the middle of them, and updates calendars on each platform. As soon as the booking comes in from from any one of them or from you from yourself from interview, someone gets more thoughts, they will start getting people can strip cookie coming in, or we can add those in as well. And is there a particular market that you aim for, we own lightly for the for the business customer. So we've set up our crop even areas where we we've got a lot of business clients around the area. So there's large business parts that are bringing in business guests coming into the area, we can have them saying our properties, but they'll actually be working a fair distance away because this good, mostly leaks and they can get all around the Bristol area from from staying in our property, which is, which is good for generating a longer term booking until the long, long term on medium now with this strategy and not owning the asset. So I'm presuming it's the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model. That's correct. Yeah, it's a great way of cash flowing property while still paying the landlord there, there are no more rent. So they they're happy, they've got a good long term tenant who's looking after the property, a clean room once a week to clean the property, making sure everything's in perfect condition, coming out minor little bits of my niche to keep the landlord happy. And we charge what so close to what the hotels are charging in the area for the property for a room if you like. So we get a lot more coming in than the money going out to the landlord. And I should also mention the guests like that as well, because they they're paying similar amounts of the pay for hotel, but they're getting their own private space, they get a kitchen they can get they can go and cook if they want to cook 20 takeaways. So
Unknown Speaker 16:39
sounds good. Thanks so much for sharing. Adrian.
Unknown Speaker 16:41
Thank you, Christian. Thanks for inviting me on.
Unknown Speaker 16:44
So I'm with wealth builders client in Morton, welcome to wealth talk, Aaron.
Unknown Speaker 16:48
Hello there. So and I
Unknown Speaker 16:50
know you've been involved in property for a number of years, and but more recently focusing on the service accommodation strategy. So would you mind telling us how you kind of got into that place?
Unknown Speaker 17:01
Yeah, it was almost by default, really, I yeah, I actually bought a lovely house in the Lake District to the summer just to go for weekends, and extended it and did all sorts of alterations and really realised that I ought to rent it out. So I ended up doing a business by default, really, in that way. And I'm also sort of also commercial conversion side loads of alterations to buildings and new builds. So I merged the two things together really thought maybe I should do service accommodation as a business.
Unknown Speaker 17:30
Hmm. So tell us, in your own words, exactly what service combination is, and how that model differs from something like by to let so he knows.
Unknown Speaker 17:39
Right? Yeah, well, I initially started out with my commercial conversions converting into single that's the strategy of, of Hmm, it was, but yeah, differs in the respect of, really, the management side of it is quite intense and needs, you know, so it's a much higher skill set that you need to be able to manage service accommodation, you're basically dealing with almost hotel customers, you know, who want really, to know that you care about them? And what would be the typical time frames that people would be booking into your apartments for here? Yeah, well, that's the other thing. That's why sometimes the banks are not as happy as they are with some of the other strategies is that it's, it's almost a very much last booking, you know, last minute booking. So you can often if you look too far ahead, you can start worrying. But all of a sudden, all the bookings come in. I mean, since we've opened, we've been open with the support hotel that we've done for about 18 months, and it is consistently full, you know, I often thought I'd love to go there myself. And I can't actually get in there because it's just full all the time.
Unknown Speaker 18:43
Yeah. And where are you finding the bookings? or How are people booking themselves into those?
Unknown Speaker 18:49
Yeah, well, initially, we use my booking.com is our market marketing and Airbnb. But then we as soon as we get customers, we, you know, we try and get direct with us. Hopefully, nobody booking.com is listening. And by that we've already built up I think it's about 65%. Direct bookings. There's also local businesses that book, but we have a core of foreign visitors as well. So we get people from coming is literally one room where French people book all the time we've got Chinese people.
Unknown Speaker 19:22
It's just from all over the world.
Unknown Speaker 19:24
Yeah. And is there anything you do differently or uniquely with your apartments to stand out? Would you say in?
Unknown Speaker 19:31
Yeah, that's a good point. Actually. Yes. So what we've always worked on, in fact, Kevin was a fundamental in actually getting this idea together, is it's all based on, on heritage really. So we tech heritage buildings and convert them inside into contemporary apartments. And so especially foreign visitors, but also getting something special. So you're in maybe a beautiful listed building, like a Georgian merchant house or church, or a school that's been converted inside of the so called a sleek, modern apartment.
Unknown Speaker 20:03
And am I correct to think that you might be utilising one of the other pillars as well to help with with this process? To the pillar?
Unknown Speaker 20:09
Do me
Unknown Speaker 20:11
a test your knowledge of the pillars here? If I would say pillar?
Unknown Speaker 20:17
You sorry, with Pulitzer, what is believed to be the pension pillar? Yeah, that's right. Yeah, I use SAS pensions. Yeah. So I founded the power hotel using my own SAS pension. That was the first time I'd also bought property with a sip, actually. So I converted from a sip into a SAS pension quite heavily. And always I've been interested in pensions, because I love the idea of people having control over their own pension. So yeah, and then from that, moved on to a sort of much bigger project now, which is, is involved using other people's SAS pensions so that people are investing into the company. And they're also investing looms as well. So the company, so different types of ways of investing in your SAS pension, and I'm putting a pot of my own money in there as well to, you know, to put some skin in the game. From that it's a very big scheme that we're doing, we're looking for further investors as well, to come along. Hmm, sounds good. And how
Unknown Speaker 21:17
do you see the future of this market of this strategy? And
Unknown Speaker 21:21
yeah, well, we've sort of ended up specialising more moving more towards instead of city centres, which are actually getting quite overwhelmed with the amount of surface accommodation, the health, we've moved into a sort of a different market, we believe there's going to be a big strong staycation with everything that's going on. I won't mention the B word. But everything that's going on in there and the currency thing, so it's going to be quite cheap for foreign visitors to come to the US UK. See some of our beautiful historic buildings and the fantastic scenery we've got, as well as a staycation people. So we've got that market that we're aiming at, which I believe is going to be, you know, massive growth. I mean, just as a forensic in the Chinese market, only 5% of the population population ever leave China, but by 2025, it's going to be 15%. So that is a massive market of people that are going to want decent quality accommodation in the UK.
Unknown Speaker 22:18
That's great. Thanks so much for sharing with us today in
Unknown Speaker 22:22
Okay, no, it's all enjoyed it. Thank you.
Unknown Speaker 22:24
And with wealth builders foundation member, Adrian Taylor, welcome to wealth talk. Adrian.
Unknown Speaker 22:29
Thank you, Christian.
Unknown Speaker 22:30
Thank you very much. Adrian, can you explain for our listeners, the process that you follow to acquire your properties?
Unknown Speaker 22:36
Yes, certainly. Yeah. First of all, thank you so much for inviting me on to the podcast Christian, I really, really appreciate that. So service accommodation. For me, I've been focused on as a as a investment strategy for the past 20 years. Very briefly, I came from a hotel background prior to that. And then over the past 20 years, I have developed a whole range of if you like, models under service accommodation. And so when I started off is very much along the lines of I mean, there was nobody doing service accommodation, obviously, 20 years ago, there was no booking.com, Airbnb or anything. So I literally started by renting a property looking for landlord and then letting out on a nightly basis. That's how I started. And it was only really a couple of years ago that I came across this model called rent to rent. And so I didn't realise it actually had a name a label to it. But over the years, as technology has improved, and booking.com, and Airbnb and different platforms for guests to book through who have come along, it's really opened up a lot of opportunity. So it's great to kind of sit here now 20 years later and see that this model has really developed not just throughout the UK, but throughout the world. And is there a particular market
Unknown Speaker 23:49
that you aim for yet. So
Unknown Speaker 23:51
you know, what's really interesting Christian, is that what the market, I say the market hasn't really changed. So when I first started, my whole aim was to focus Cooper clients because they stay with you slightly longer. And then you fill the gaps with your leisure guests that was always like my sort of strategy. So corporates Monday to Thursday, let you guess, Friday through to Sunday, and that really maximises like the return you get on your property. So where things have changed is that the government has done a great job of like really messing up the whole pie to let set up. And so you know, section 24 is now in play where existing landlords that have properties on the Vita that basis are no no longer able to claim their mortgage interest relief payments back on and this is the final unit is being phased out. We've serviced if the property is managed as a service accommodation or a furnished holiday lead on the agency's terms, they can actually sit outside of Section 24. So there's a great opportunity for existing by to let landlords to be able to have their properties, managers service accommodation, where they can get a higher cash flow, obviously be able to also be able to clean their their tax cuts into their tax back. So that's a big opportunity. There's some other really key kind of tax advantages around capital allowances and being able to claim back things like your kitchens and bathrooms and electricals and all those things that happen within the property because it's a operational business that you're running, you're able to claim a lot of these costs back through capital allowances. So there's some real attractions there for landlords. But at the same time, and legislation is definitely getting more strict, throughout the UK. And with so with the success of Airbnb, there's a lot of restrictions now slowly starting to come into play. So I think I think although I've seen a massive growth in the last 20 years, there's some great opportunities around tax of working with tax. But at the same time, there's definitely some challenges coming our way and some threats when it comes to the deflation stuff. So let me the focus is really looking at like in the next 20 years and seeing where where is this hospitality business going? And that's really what I'm focused on now now with this strategy and not owning the asset. So I'm presuming is the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model? Yeah, so it's a really good question. So that there's some great tools. And there's some, there's lots of training, there's lots of information out there in terms of how to if you're an investor, you own a property, let's say you've, you've got your single next property you'd be letting out and you want to create more cash flow from that as a strategy and branding a certain combination. You can get yourself set up on booking.com, and Airbnb, and you can manage the guests. It's quite straightforward, so to speak, how to do that. I think the key the key thing that is really important to understand that with everybody that I work with, with clients and investors, what have you is, you've got to really understand what your strategy is. So do you like I really enjoy I'm a people person, and I really enjoy looking off the guests like, that's what I've always done, I come from a hotel background, and I love service. And so you need to understand as an investor, is your strategy, do you? Do you enjoy doing that, and it's no problem if you don't, so you may want to become more be investor and you invest and create, if you like service accommodation units, which could be like, say, a block of apartments, or super single x units. And then you have you read in Panama over to a management company that doesn't enjoy that part. So I think the key thing is really crucial is understanding investors have to understand like, do they want to be kind of front facing? Or do they want to be sort of more in the background and create the product? And then you can instruct a really good deal around that between? You know, who you're working with, if you like along those lines?
Unknown Speaker 27:53
Sounds good. Thanks very much for sharing. Adrian.
Unknown Speaker 27:56
That's okay. very welcome.
Unknown Speaker 27:58
Right, well, we had a number
Unknown Speaker 28:00
of different strategy strategies, but
Unknown Speaker 28:03
you know, ways of approaching service commendation their, from our guests. So what would some of the key lessons that you picked up on Kevin?
Unknown Speaker 28:10
Well, I think the inevitable one that you should really pick up straight away, is that this is a business, you know, every one of these individuals have chosen this as a business strategy to generate high levels of cash flow, and they're not doing by accident, they're not doing it by a hobby. They're doing it as a profession, because it's very profitable. And, and they've all built necessary, you know, they've turned the wheel, you know, they, they've worked out their niche, they've, they've gone to see things sometimes by accident, some of them have actually really worked hard to build on existing knowledge they've had before. So, you know, they've used their own skill and their wealth dynamically. Pemberton, for example, you know, talks very specifically about that. So this is, it's a real business idea. So it isn't something you can have a go at,
Unknown Speaker 29:03
hmm.
Unknown Speaker 29:05
It's something you have to commit to.
Unknown Speaker 29:06
Yeah. And we've covered on earlier episodes, you know, the importance of thinking like an entrepreneur, and we had a couple of examples there had began with just a bite of that, and then spotting the opportunity, adapting to the market.
Unknown Speaker 29:19
That's right. So that's when you you, you know, we heard from the GMO guy last week, you know, talk about pivoting, you know, CSP from student to to young professional. And you can see as this happens here, so, what so the thing to recognise is just doing something, being in the market and building your wealth, and, and being sensitive to changes and timing opportunity. You can pivot and, and leverage up. Whereas if you keep thinking, thinking, thinking but not doing, you can't pivot anywhere, you just go spinning again. So, but it's really clear, though, that these, these gentlemen have all taken onboard, that this is a business and remember, not all of them are fully just in service combination. It's not a all my cards are in the service accommodation thing. They're all flexible enough to move in different directions. That's important to to recognise that positioning, they're telling us about their service combination plan, but that's not what they just do. That's right. Well, we we heard from him
Unknown Speaker 30:25
first. And in this dress, again, about it is a business. And the good point that he made was, you should really get your hands dirty and understand all the aspects of it before outsourcing. So I asked him, you know, who is this strategy for? Can? Can anyone come in at any stage? And I
Unknown Speaker 30:43
think that's a really good point.
Unknown Speaker 30:44
I think it's a really interesting point. Because this this constant challenge I have when people are learning their wealth, is they'll prejudge that they don't want to manage anything. You know, it's almost like you hear the word passive, I want to be passive, you can't be passive. And in service combination, you can't be passes you have, you have to know what needs to happen. For example, you need to understand what actually happens in the process of changing the room over you know, from one tenant to the next 10. And it's not every six months, every 12 months, it's could be every, every day. And so you need to know what goes on in order to then determine how you want that to be managed. So having some experience of the management is really key to then working at how do you want to get that managed for you studied support you in the long term? So you can't start with no management? I would say get your hands dirty is in probably say it. Musician thing about EN is, you know this to kind of double tenant type. You know, you've got the workers during the week. And what did you say that? Well, yeah, a weekend. But that's, that's in you know, because he's in South End, you know, so that's a seaside town. Right. Yeah. Would that work? In Coventry? I'm not sure, you know,
Unknown Speaker 32:05
and there was a point picked up again by by later on, about, you know, really aiming at the corporates during the week. And yeah, and having the leisure guests at the weekend.
Unknown Speaker 32:13
Exactly. And, you know, they just come at it from different places, you know, one of the load not on this particular podcast, Chris, but one of one of the people that I know who's doing service combination is actually got a passion for music, right. So concerts, and he knows that people love concerts, music, concerts, and attending live gigs and events. So he's got a service accommodation strategy that's entirely driven around the proximity to where major gigs are held. And that's a great strategy, you know, but that's reflection of who they are, and what their interests are,
Unknown Speaker 32:51
which is why it's
Unknown Speaker 32:52
really quite important. If you can think about, if you have a natural interest that you already, like, you're already good at, you're already excited, be rinsed in, and then turn that into a reflection of how you do business.
Unknown Speaker 33:05
So continuing then the theme of the management, we then heard from Adrian, and Adrian talked about some of the systems they use as the software systems to manage, you know, booking.com, Airbnb, Expedia, and something called a channel manager. What's Yeah,
Unknown Speaker 33:21
what's this all about? Kevin?
Unknown Speaker 33:23
Well, it's not a TV tuning station, right? So it isn't another Netflix. Channel managing is really all about using technology to have an interface with where people can make booking. So it seems, you know, you can you imagine if you were just sitting on the phone all day, waiting for someone from booking.com, or Expedia or any there there are dozens and dozens and dozens of what we call OT as online travel agencies, you know, in the three big ones were mentioned there, you know, booking.com, late rooms, Expedia, Airbnb, you know, there's many many more And as we'll hear from maybe we'll Don't forget to mention in Malta new talked about overseas guests in so it's a different thing. So having something that's like a seamless bit of technology, often low cost, and depending on how many rooms you've got, you can dive in at different levels, like it kind of minis booking system, so it works seamlessly. So you don't spend all your time. Yeah, because we're currently coming in 24 724, seven, yeah, all different time zones. And, and you need to go to manage that and understand that all of these associated costs associated with them, usually in the sort of 10, to 15%. So you want to factor that in. And then you need to be able to convey the messages to the, you know, to your cleaning staff to be able to do that. And so there's a whole host of the How do people get in, you know, what automatic Key System Do you have, so you don't have to turn up and open the door and element in. So all of these, this technology is quite key, when you've got a regular turnover of staff and people and it's not like you got a hotel reception desk, you need to automate this. So you using technology, and learning what that technology is, and choosing the right technology. You know, we've got the people who know what that technology is. So if anybody's interested in looking into service combination, often do all this by trial and error.
Unknown Speaker 35:14
We talked last week on the episode about HY is about proximity, you know, you students, you know where you're going to be situated located. And I hearing the same here with service commendation, and Adrian mentioned about their properties being close to motorway, so good transport links for workers to get in and out. And, yeah, so you know, that's something that needs to be considered as well, isn't it?
Unknown Speaker 35:34
Yeah, that's well thought through, isn't it. So you know, where we've got seaside towns, it kind of becomes a bit obvious, you know, almost like holiday type accommodation, where you got workers and again, that's another key point. If you happen to have a link or knowledge with a key employer, you know, you know where they are, you know, where they're going to be, or you know, where there's a demand, you can see what's happening, then you can use a combination to to have some, you know, workers coming for a few days, you know, and what were you mentioned, being a worker going build working on a big building project? Do you want to stay in a hotel? And, you know, perhaps go down to the lounge and have a beer and have rubbish food? Or do you want to be able to relax? You know, cook your own food, have a few people around maybe several workers together? So it's cheaper, isn't it? Really, when you've got 234 people, it's, it can be a cheaper accommodation than having three or four hotel rooms. And that applies the same for family, as it does for workers. So for anybody, there's real benefits to service combination. I think Adrian is is picked his niche very well. Yeah,
Unknown Speaker 36:47
we've essentially seen a threat to the hotel industry, certainly at that lower level that more b&b level.
Unknown Speaker 36:52
unquestionably, that's the case, you know, the whole shifting sands of this and lead. got that right doesn't you know, I love it when I talk to these so full of energy, but he talks about sort of, you know, helping and reviving, which is the name of his business, you know, old, tired b2b people and old type b2b buildings, and turning them into modern up market, you know, much more customer focused and friendly and automated way, still bringing the same service and the strength of service, which, which really goes to what we talked about, because the I know, we're jumping ahead a bit to leave but but Lee is using these wealth dynamic correctly, he's using his experience correctly, his love for service correctly. And, you know, all that good stuff.
Unknown Speaker 37:40
Yeah. And in Morton, again, mentioned the intensity that comes with the managed right. And, and the high level of service, which I think we, you know, picked up from all of our guest today, but he talks about his niche being the foreign markets, and, you know, seeing a big opportunity here, you know, certainly with the the pound drop, we may see that influx of more investors. Yeah.
Unknown Speaker 38:07
Ian has got some beautiful properties, I remember spending a whole day within a couple of years ago, when he had a different brand. And I looked at his properties and said in these are beautiful properties, they're like, you know, you'd almost have a blue plaque outside the door. This is this is heritage, this is, this is the type of accommodation that people just feast with their eyes, you know, and he's done an outstanding job of being able to do that, both in terms of the quality of the externals, the quality of the internals, they're beautiful, beautiful properties. And when you put the pictures in all glorious colour, as it does on overseas websites, he's got a rich opportunity then to attract people who love the British heritage. So instead of just looking at the local market, you know, he's attracting the Chinese market. He's, he's, he can see, and there are special channels, where you can bookings from a Chinese guests. So you know, he's, there isn't something that happened automatically for him. This is something that he's grown into, and built a team around him to treat this very, very seriously. And I think he's going to do outstanding,
Unknown Speaker 39:13
it seems like we've never had an episode go by whether the mention of SAS doesn't pop up.
Unknown Speaker 39:20
Well, this is all about the interconnection, isn't it between all of the different pillars, and they all do interconnect, you know, they, they, they kind of merge and move. And SAS is just a way of turning your pension, which traditionally, if you remember would be stuck in the stock market outside of your control. And now you've got that self control where you can direct that money to where you want. And if Ian's got a skill in the development of property, and that properties, commercial type property, and he can buy that property known in using his pension. Well, why would you do that? Yeah, you know, he's in control of the risk is in control of the cash flow. He's in control of everything. And that's why I think he's been so successful, he's now attracting other people who want to both share in that opportunity and share in the learning and in is a good and warm teacher. So you know, fair play to him. Yeah.
Unknown Speaker 40:16
And I guess just to touch again, on the point that you made at the beginning, which Lee made as to some of the tax benefits, and you know, why service combination? should be, you know, something to consider? And if you're looking to maximise your cash flow?
Unknown Speaker 40:33
Well, look, you know, the the skill of wealth building, is to be aware of all of the opportunities, all of the tax opportunities, all the legal situations, it's all in the due diligence process, and in the education as well. So, I think Lee makes the point, you know, helps landlords keep more money, or what's wrong with that, you know, if you can do something that you can pivot to one direction, which is tax free, and another way, you're going to pay a lot more time, why wouldn't you consider it because you're just going to make more money. And if you make more money, then it helps you build more wealth, actually, and one other point that's worth mentioning, just going back to the modern, which is a little bit different to channel management, is when you get successful, then you can start encouraging by rating and by using your own website, more visitors to book directly with you. So then you missing out the cost of paying for the booking.com. so on, but the beginning you need them, you know, because they're booking thousands and thousands and thousands of rooms every single day, for why not be part of that technology. But as you get more successful, you can become less, less reliant on that as a channel, and more, you know, doing some of the things yourself.
Unknown Speaker 41:46
We always talk about leverage, don't worry, you know, it's the starting point, when you're looking at how you can build wealth, where's your point of leverage, and they're leveraging those other platforms? So the beginning
Unknown Speaker 41:55
works exactly right. And so that's why it's important in your education to know what online travel agency is what a channel manager looks like, you know, so, like anything, Chris, you know, this is for a novice, this is going to sound like a complicated strategy. But it's just the language really, it's like anything, you just got to learn how to, and the combination of the people we know, and the lessons they've learned. It's easy to share,
Unknown Speaker 42:19
huh?
Unknown Speaker 42:20
Well, I hope that everyone listening today has learned a bit more about the service commendation strategy. Yeah. And where might we be looking? In our next episode?
Unknown Speaker 42:31
Well, you know, properties still, we're only scratching the surface the property, there's still so many strategies to go, why don't we dive into the commercial area, you know, and give a feeling where, again, that's genuinely much more tax efficient, looking at dealing with commercial top tenants, and there's some very unique and special benefits in there. How about if you could learn that the the tenant pays all the maintenance costs, the tenant pays all the bills that pays for anything that goes wrong, and the rent only goes up?
Unknown Speaker 43:07
I would you like to learn about that. I see. I
Unknown Speaker 43:08
couldn't see some people's ears picking up
Unknown Speaker 43:11
to the fault of that. So
Unknown Speaker 43:13
that sounds like a good one to cover off next, do that.
Unknown Speaker 43:15
All right. Thanks, Kevin. See ya.
Unknown Speaker 43:21
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders don't care.uk slash membership
Transcribed by https://otter.aiUnknown 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 0:19
Welcome to Episode 29 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined by an aside from Mr. Kevin Wayland.
Unknown Speaker 0:27
Hello, Chris. Welcome to my haunt in London. And as you appreciated London, it's a busy spot. So you will hear a few people and a bit of clanking over the wooden floors. But we made a reliable me today. We're live on location
Unknown Speaker 0:40
live and ready to go. Okay, good. So Kevin, Episode
Unknown Speaker 0:43
29. Today, and we continue with the property pillar. Yeah. And we're now having a look at the strategy known as serviced accommodation.
Unknown Speaker 0:52
Yep, service accommodation? Well, that's a very interesting strategy. And a definitely worthwhile giving a little bit of a founder to that one, Chris, because, you know, for many people, service accommodation is kind of language they don't know. And, and it's really language invented by the property industry, because there is no technical definition. It's just really thinking about the creativity, of being in property and understanding that property is space. And there's a different demand and use of that space. You know, so we've talked about in previous episodes, you could take a property and you could rent it to a single family. That's fine. You know, you've got a language there by to let a short short all tendencies that kind of thing. And then we talked about a GMOs and other people talk about minimums and maximums, and all sorts of language, but but HMO multiple occupancy properties is kind of letting rooms, you know, but still, for the longer term, almost like a home from home for different types of tenant types. And service combination is just taking the same space, you know, and instead of renting things for the long term, six months, nine months, 12 months, it's looking at that space, almost in the way that you look at a guest house, or a hotel, or an apartment, you're giving somebody who would occupy that space, usually a much shorter term, comparing it a little bit like a hotel, in some respects, in that it's shorter term, you tend to be there with shorter terms. But also it has the benefits of being a bit like a home. So for many people, for example, one of the reasons they would look at a service accommodation, accommodation they can live in, but it's taken care of like a hotel, and a big part of that language, if you can just read into that serviced. And it's accommodation. Yeah, well, service means you've got to deliver great service. So you have to be in business. And this is a step change. You know, if you've got a an apartment and you rent is about to let you can be a novice, you can be a landlord, you can be an investor. When you get into service to accommodation, shorter term, lets you got a whole host of things you have to learn, you know, not just delivering the service, but how the hell did you get the customers in the first place? What's your tenant type? How do you think about that? You know, is it corporate? Is it leisure? Where's the location? Is it suited? Is there a demand for people who would want to rent for short term, the big pluses of it, actually, to massive, massive, massive, that's three but but to anyway, one is the cash flow, if you get the the occupancy level, right. And I think most people would work on a kind of 70% occupancy. But if you get if you get that, right, the cash flow is really strong, because people will pay comparably more per night than they would if they were renting for a year. So it tends to be a premium price. That's why you need to put in the service. So you got the costs of all the things that go alongside that. But the other thing is, because it's a business, it's a service business, like a hotel is a business, then it sits outside of this section 24. In other words, the tax position is not affected as the business or all of your expenses will be tax deductible, and all your revenue is liable for tax. But either way, you're not as a person going to be affected in the same way. So so huge advantage, big advantages. But you have to regarded as a business. So like every strategy, Chris pros, cons. And the best way to dive into those pros and cons is to listen to some of our clients and members who are using this strategy. Maybe some of them accidentally, you know, but the key thing is finding the demand. And we'll maybe dive into some of that afterwards and see what their lessons were, in terms of that 10 times. I think
Unknown Speaker 4:56
so. And just before we do that, another little piece of language that often comes up alongside service combination, is this term rent to rent and run? Yeah. And I think we'll hear from some of our guests as well. So there's a difference. What exactly is that difference?
Unknown Speaker 5:09
Here, they're completely different rental rent is a method by which you would find a property, you know, so in other words, for most people, if they're thinking about wealth in the pillar of property, the method by which they would turn that property into an investor owned the property. So you physically buy it, you physically own it, you know, whether you own it in your pension through a SAS or whether you own it, personally, or whether you run the company, you've got the ownership of the asset. Now clearly, that's the best thing to do. Because if you own the asset, you will earn the right to that cash flow forever. rent to rent, then is a method by which you secure the right to get an income from a property. And if you get it wrong, to me and expense of the property, because you're essentially renting the property from somebody else who owns it. And there's a whole host of reasons why people would choose rent to rent, which can be serviced accommodation, just as rent to rent could be an HMO, you know, so there's really rent to rent is more just a way of getting into the market to get some controlling the profit. Yeah, but never really owning it. So you have, but for some people who don't have enough capital, then getting rent to rent, which means you don't have to buy the property. So you're not going to pay stamp duty, you're not going to incur those costs. But the inquiry to that Chris's, you're gonna have to spend more time finding those motivated sellers. If you remember Simon, Zoo cheese Golden Rule number one, yes, you know, you got to find motivated sellers. So so the skill there is different. Yeah, you know, so that's why this is a very, very interesting pillar. And the multiple strategies and they overlap, hence, is rent to rent, same as HMO is rent rent, same as service combination, not not at all. One's a method of occupying a property temporarily, where you use three to five years, and you're using that space from somebody else, you're paying them a fee, but then you're hoping to get more cash flow by increasing the premium on what you're charging for that space. And that's being creative. And which is, again, if you look back at podcast, 28, Kevin McDonald, all about being creative. And this is the skill of being in business in property is being creative.
Unknown Speaker 7:24
So just as we heard in last week's episode, around, he knows different niche markets yet that can be targeted. Again, we will hear from our guests today, in the same way, the service accommodation can be tailored to different markets as well, yes.
Unknown Speaker 7:37
And, you know, I'm pleased to have worked with with some of these people to, to help work with them to discover their niche and master their niche. Because it's really, really important service combination, when you're putting all of your energy, you know, into, you need technology, you need to understand, you know, where where your bookings can come from, you need to then manage all of these things. So, all of this stuff, become all part of your education. And you need to spend time in that space. Getting that education, right. So who better to boot to start thinking about that, than people who are doing it who've mastered English? Well, why don't we hand
Unknown Speaker 8:13
it over to them to share their storeys now?
Unknown Speaker 8:16
I'm with wealth builders, client M. Bain. How IN very well, Christian, nice to hear from you again. Yeah, good. Speak to me in
Unknown Speaker 8:23
now. And you've been on focusing on property pillar for a number of years and for the last few years, specifically on service accommodation. So would you mind sharing why you decided to focus on that strategy in particular?
Unknown Speaker 8:35
Sure, absolutely. We are so thin and see and sex. And obviously, it's a fairly big leisure market and the summer, and the corporate market and the winter, and what is the heart and connection, we had a beta let property next to Suzanne DF port. And we wanted to switch assets are retailed at as a service accommodation unit, which means that you're working on a within a within a week in a month. And obviously, the cash flow that we achieved was was far greater than what we were deserve more and more vital it.
Unknown Speaker 9:12
And we often hear the term rent to rent and service accommodation side by side. But would you mind clarifying him because I know you've cater for both markets? Exactly what the differences and how you approach and choose those individual
Unknown Speaker 9:25
strategies? Sure, absolutely. So if you want to get into the market fairly swiftly. And then obviously, you can offer the the landlord, a landlord, the guaranteed rent. And that is what is known as rent of interest issues yourself question. As an example, for the listeners, let's say you had that property, I wanted to rent to all of you, I would guarantee your rent, that this market rent for the next three to five years, that's a normal length of contracts that we work with. And this has been going on for years and event event event. And then obviously, once you've secured the property, it's up to you how you want to operate it. So do you want to operate it as service accommodation? So I began to New York rent, I'd be running a service accommodation as a strategy. And obviously, after win and after bells, what is left as the profit that I would keep effect of what I thought makes sense.
Unknown Speaker 10:26
Yeah. And in terms of the market that you aim for, do you have a particular niche that you that you tend to focus on?
Unknown Speaker 10:35
That's a great question. Yes, we obviously try and target the corporate market. And service accommodation, like a lot of businesses as does suffer from seasonality. And so and there's so much, you know, schema, and there's loads of tourists and it's really busy. And the winter it can take off. But if you're tired, get the corporate market, then you know, there's no seasonality and Nicole waddled at walks all over the year. So we're trying on some corporate sites, there's a lot of construction and development, what's going on in the local area. And our goal is to target that specific demographic, and that we get can a guaranteed income through through the winter and keeps your profitability, much higher, your costs are lower, because you don't have to do as many cleans, you don't have as many laundry you may not have booking fees, you don't have card processing fees, because you can just deal with the company that they saw if you have less than an essay episode and thinking you know, how should I do it then I would say you definitely more than the corporate strategy.
Unknown Speaker 11:44
And in terms of time, now, a lot of people might look at the service compensation model and think oh, it can be systemized, you know, it's pretty hands off. What's the reality in
Unknown Speaker 11:55
the honest answer as it can be systemized by job the style is hard work as a corporate businesses were also I think people get sucked in by the cash for Yes, that has great cash for but obviously you're starting over costs are higher. So you've got cleaners, you've got handyman, you need an accountant or bookkeeper. That doesn't, there's loads of different things that you know, can happen. And Gordon because obviously, you've got people coming in and Oh, the property a lot quicker. So I think a lot of people as a proper business, there's got to be marketing behind that there's a science behind that. That's technology as well that you can utilise. So actual, the podcast itself is just a vehicle to operate the idea behind this that attitude of rent event or service accommodation as a proper business.
Unknown Speaker 12:53
And for that reason, then would you say that it's probably not a strategy for someone right at the beginning of their property? Joe?
Unknown Speaker 13:01
That's a good question. Obviously, we started it with probably a little more education and found out the hard way. But I think if you're going to start, you should just do one, and do all the tasks yourself to find out how long they take and exactly what's involved in it. Before you try and outsource it. I mean, that's on a lot of the property forums, you cpvc and I just outsource this and get mad that are and done novel is always better. And I feel yourself to understand everything so you know exactly where any source code me should have.
Unknown Speaker 13:38
Yeah, that's brilliant. Thanks so much for sharing with us today in
Unknown Speaker 13:43
no problem pleasure.
Unknown Speaker 13:45
I'm with wealth builders foundation member, Adrian Taylor, welcome to wealth talk, Adrian. Adrian, can you explain for our listeners, the process that you follow to acquire your properties,
Unknown Speaker 13:55
it's really just a case of approaching lots of landlords. And finally, anyone who, who understands or is open to the x later about the the whole concept of first accommodation, as well as that you when you're starting up, you really get your systems in place, right from the start. So we use a channel manager, which is called co creators with several other programmes out there to the exactly same thing is so key. And they've all got their individual upsides and downsides. And the reason the channel manager is it manages all your bookings. So especially when you start out, you're going to be getting lots of bookings, from the likes of booking.com, Airbnb and Expedia. And you need to manage your bookings on all three of those simultaneously. So that's where the channel manager comes in. It sits in the middle of them, and updates calendars on each platform. As soon as the booking comes in from from any one of them or from you from yourself from interview, someone gets more thoughts, they will start getting people can strip cookie coming in, or we can add those in as well. And is there a particular market that you aim for, we own lightly for the for the business customer. So we've set up our crop even areas where we we've got a lot of business clients around the area. So there's large business parts that are bringing in business guests coming into the area, we can have them saying our properties, but they'll actually be working a fair distance away because this good, mostly leaks and they can get all around the Bristol area from from staying in our property, which is, which is good for generating a longer term booking until the long, long term on medium now with this strategy and not owning the asset. So I'm presuming it's the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model. That's correct. Yeah, it's a great way of cash flowing property while still paying the landlord there, there are no more rent. So they they're happy, they've got a good long term tenant who's looking after the property, a clean room once a week to clean the property, making sure everything's in perfect condition, coming out minor little bits of my niche to keep the landlord happy. And we charge what so close to what the hotels are charging in the area for the property for a room if you like. So we get a lot more coming in than the money going out to the landlord. And I should also mention the guests like that as well, because they they're paying similar amounts of the pay for hotel, but they're getting their own private space, they get a kitchen they can get they can go and cook if they want to cook 20 takeaways. So
Unknown Speaker 16:39
sounds good. Thanks so much for sharing. Adrian.
Unknown Speaker 16:41
Thank you, Christian. Thanks for inviting me on.
Unknown Speaker 16:44
So I'm with wealth builders client in Morton, welcome to wealth talk, Aaron.
Unknown Speaker 16:48
Hello there. So and I
Unknown Speaker 16:50
know you've been involved in property for a number of years, and but more recently focusing on the service accommodation strategy. So would you mind telling us how you kind of got into that place?
Unknown Speaker 17:01
Yeah, it was almost by default, really, I yeah, I actually bought a lovely house in the Lake District to the summer just to go for weekends, and extended it and did all sorts of alterations and really realised that I ought to rent it out. So I ended up doing a business by default, really, in that way. And I'm also sort of also commercial conversion side loads of alterations to buildings and new builds. So I merged the two things together really thought maybe I should do service accommodation as a business.
Unknown Speaker 17:30
Hmm. So tell us, in your own words, exactly what service combination is, and how that model differs from something like by to let so he knows.
Unknown Speaker 17:39
Right? Yeah, well, I initially started out with my commercial conversions converting into single that's the strategy of, of Hmm, it was, but yeah, differs in the respect of, really, the management side of it is quite intense and needs, you know, so it's a much higher skill set that you need to be able to manage service accommodation, you're basically dealing with almost hotel customers, you know, who want really, to know that you care about them? And what would be the typical time frames that people would be booking into your apartments for here? Yeah, well, that's the other thing. That's why sometimes the banks are not as happy as they are with some of the other strategies is that it's, it's almost a very much last booking, you know, last minute booking. So you can often if you look too far ahead, you can start worrying. But all of a sudden, all the bookings come in. I mean, since we've opened, we've been open with the support hotel that we've done for about 18 months, and it is consistently full, you know, I often thought I'd love to go there myself. And I can't actually get in there because it's just full all the time.
Unknown Speaker 18:43
Yeah. And where are you finding the bookings? or How are people booking themselves into those?
Unknown Speaker 18:49
Yeah, well, initially, we use my booking.com is our market marketing and Airbnb. But then we as soon as we get customers, we, you know, we try and get direct with us. Hopefully, nobody booking.com is listening. And by that we've already built up I think it's about 65%. Direct bookings. There's also local businesses that book, but we have a core of foreign visitors as well. So we get people from coming is literally one room where French people book all the time we've got Chinese people.
Unknown Speaker 19:22
It's just from all over the world.
Unknown Speaker 19:24
Yeah. And is there anything you do differently or uniquely with your apartments to stand out? Would you say in?
Unknown Speaker 19:31
Yeah, that's a good point. Actually. Yes. So what we've always worked on, in fact, Kevin was a fundamental in actually getting this idea together, is it's all based on, on heritage really. So we tech heritage buildings and convert them inside into contemporary apartments. And so especially foreign visitors, but also getting something special. So you're in maybe a beautiful listed building, like a Georgian merchant house or church, or a school that's been converted inside of the so called a sleek, modern apartment.
Unknown Speaker 20:03
And am I correct to think that you might be utilising one of the other pillars as well to help with with this process? To the pillar?
Unknown Speaker 20:09
Do me
Unknown Speaker 20:11
a test your knowledge of the pillars here? If I would say pillar?
Unknown Speaker 20:17
You sorry, with Pulitzer, what is believed to be the pension pillar? Yeah, that's right. Yeah, I use SAS pensions. Yeah. So I founded the power hotel using my own SAS pension. That was the first time I'd also bought property with a sip, actually. So I converted from a sip into a SAS pension quite heavily. And always I've been interested in pensions, because I love the idea of people having control over their own pension. So yeah, and then from that, moved on to a sort of much bigger project now, which is, is involved using other people's SAS pensions so that people are investing into the company. And they're also investing looms as well. So the company, so different types of ways of investing in your SAS pension, and I'm putting a pot of my own money in there as well to, you know, to put some skin in the game. From that it's a very big scheme that we're doing, we're looking for further investors as well, to come along. Hmm, sounds good. And how
Unknown Speaker 21:17
do you see the future of this market of this strategy? And
Unknown Speaker 21:21
yeah, well, we've sort of ended up specialising more moving more towards instead of city centres, which are actually getting quite overwhelmed with the amount of surface accommodation, the health, we've moved into a sort of a different market, we believe there's going to be a big strong staycation with everything that's going on. I won't mention the B word. But everything that's going on in there and the currency thing, so it's going to be quite cheap for foreign visitors to come to the US UK. See some of our beautiful historic buildings and the fantastic scenery we've got, as well as a staycation people. So we've got that market that we're aiming at, which I believe is going to be, you know, massive growth. I mean, just as a forensic in the Chinese market, only 5% of the population population ever leave China, but by 2025, it's going to be 15%. So that is a massive market of people that are going to want decent quality accommodation in the UK.
Unknown Speaker 22:18
That's great. Thanks so much for sharing with us today in
Unknown Speaker 22:22
Okay, no, it's all enjoyed it. Thank you.
Unknown Speaker 22:24
And with wealth builders foundation member, Adrian Taylor, welcome to wealth talk. Adrian.
Unknown Speaker 22:29
Thank you, Christian.
Unknown Speaker 22:30
Thank you very much. Adrian, can you explain for our listeners, the process that you follow to acquire your properties?
Unknown Speaker 22:36
Yes, certainly. Yeah. First of all, thank you so much for inviting me on to the podcast Christian, I really, really appreciate that. So service accommodation. For me, I've been focused on as a as a investment strategy for the past 20 years. Very briefly, I came from a hotel background prior to that. And then over the past 20 years, I have developed a whole range of if you like, models under service accommodation. And so when I started off is very much along the lines of I mean, there was nobody doing service accommodation, obviously, 20 years ago, there was no booking.com, Airbnb or anything. So I literally started by renting a property looking for landlord and then letting out on a nightly basis. That's how I started. And it was only really a couple of years ago that I came across this model called rent to rent. And so I didn't realise it actually had a name a label to it. But over the years, as technology has improved, and booking.com, and Airbnb and different platforms for guests to book through who have come along, it's really opened up a lot of opportunity. So it's great to kind of sit here now 20 years later and see that this model has really developed not just throughout the UK, but throughout the world. And is there a particular market
Unknown Speaker 23:49
that you aim for yet. So
Unknown Speaker 23:51
you know, what's really interesting Christian, is that what the market, I say the market hasn't really changed. So when I first started, my whole aim was to focus Cooper clients because they stay with you slightly longer. And then you fill the gaps with your leisure guests that was always like my sort of strategy. So corporates Monday to Thursday, let you guess, Friday through to Sunday, and that really maximises like the return you get on your property. So where things have changed is that the government has done a great job of like really messing up the whole pie to let set up. And so you know, section 24 is now in play where existing landlords that have properties on the Vita that basis are no no longer able to claim their mortgage interest relief payments back on and this is the final unit is being phased out. We've serviced if the property is managed as a service accommodation or a furnished holiday lead on the agency's terms, they can actually sit outside of Section 24. So there's a great opportunity for existing by to let landlords to be able to have their properties, managers service accommodation, where they can get a higher cash flow, obviously be able to also be able to clean their their tax cuts into their tax back. So that's a big opportunity. There's some other really key kind of tax advantages around capital allowances and being able to claim back things like your kitchens and bathrooms and electricals and all those things that happen within the property because it's a operational business that you're running, you're able to claim a lot of these costs back through capital allowances. So there's some real attractions there for landlords. But at the same time, and legislation is definitely getting more strict, throughout the UK. And with so with the success of Airbnb, there's a lot of restrictions now slowly starting to come into play. So I think I think although I've seen a massive growth in the last 20 years, there's some great opportunities around tax of working with tax. But at the same time, there's definitely some challenges coming our way and some threats when it comes to the deflation stuff. So let me the focus is really looking at like in the next 20 years and seeing where where is this hospitality business going? And that's really what I'm focused on now now with this strategy and not owning the asset. So I'm presuming is the ability to generate cash flow, that you can then reinvest into other assets, which is what attracts you to this model? Yeah, so it's a really good question. So that there's some great tools. And there's some, there's lots of training, there's lots of information out there in terms of how to if you're an investor, you own a property, let's say you've, you've got your single next property you'd be letting out and you want to create more cash flow from that as a strategy and branding a certain combination. You can get yourself set up on booking.com, and Airbnb, and you can manage the guests. It's quite straightforward, so to speak, how to do that. I think the key the key thing that is really important to understand that with everybody that I work with, with clients and investors, what have you is, you've got to really understand what your strategy is. So do you like I really enjoy I'm a people person, and I really enjoy looking off the guests like, that's what I've always done, I come from a hotel background, and I love service. And so you need to understand as an investor, is your strategy, do you? Do you enjoy doing that, and it's no problem if you don't, so you may want to become more be investor and you invest and create, if you like service accommodation units, which could be like, say, a block of apartments, or super single x units. And then you have you read in Panama over to a management company that doesn't enjoy that part. So I think the key thing is really crucial is understanding investors have to understand like, do they want to be kind of front facing? Or do they want to be sort of more in the background and create the product? And then you can instruct a really good deal around that between? You know, who you're working with, if you like along those lines?
Unknown Speaker 27:53
Sounds good. Thanks very much for sharing. Adrian.
Unknown Speaker 27:56
That's okay. very welcome.
Unknown Speaker 27:58
Right, well, we had a number
Unknown Speaker 28:00
of different strategy strategies, but
Unknown Speaker 28:03
you know, ways of approaching service commendation their, from our guests. So what would some of the key lessons that you picked up on Kevin?
Unknown Speaker 28:10
Well, I think the inevitable one that you should really pick up straight away, is that this is a business, you know, every one of these individuals have chosen this as a business strategy to generate high levels of cash flow, and they're not doing by accident, they're not doing it by a hobby. They're doing it as a profession, because it's very profitable. And, and they've all built necessary, you know, they've turned the wheel, you know, they, they've worked out their niche, they've, they've gone to see things sometimes by accident, some of them have actually really worked hard to build on existing knowledge they've had before. So, you know, they've used their own skill and their wealth dynamically. Pemberton, for example, you know, talks very specifically about that. So this is, it's a real business idea. So it isn't something you can have a go at,
Unknown Speaker 29:03
hmm.
Unknown Speaker 29:05
It's something you have to commit to.
Unknown Speaker 29:06
Yeah. And we've covered on earlier episodes, you know, the importance of thinking like an entrepreneur, and we had a couple of examples there had began with just a bite of that, and then spotting the opportunity, adapting to the market.
Unknown Speaker 29:19
That's right. So that's when you you, you know, we heard from the GMO guy last week, you know, talk about pivoting, you know, CSP from student to to young professional. And you can see as this happens here, so, what so the thing to recognise is just doing something, being in the market and building your wealth, and, and being sensitive to changes and timing opportunity. You can pivot and, and leverage up. Whereas if you keep thinking, thinking, thinking but not doing, you can't pivot anywhere, you just go spinning again. So, but it's really clear, though, that these, these gentlemen have all taken onboard, that this is a business and remember, not all of them are fully just in service combination. It's not a all my cards are in the service accommodation thing. They're all flexible enough to move in different directions. That's important to to recognise that positioning, they're telling us about their service combination plan, but that's not what they just do. That's right. Well, we we heard from him
Unknown Speaker 30:25
first. And in this dress, again, about it is a business. And the good point that he made was, you should really get your hands dirty and understand all the aspects of it before outsourcing. So I asked him, you know, who is this strategy for? Can? Can anyone come in at any stage? And I
Unknown Speaker 30:43
think that's a really good point.
Unknown Speaker 30:44
I think it's a really interesting point. Because this this constant challenge I have when people are learning their wealth, is they'll prejudge that they don't want to manage anything. You know, it's almost like you hear the word passive, I want to be passive, you can't be passive. And in service combination, you can't be passes you have, you have to know what needs to happen. For example, you need to understand what actually happens in the process of changing the room over you know, from one tenant to the next 10. And it's not every six months, every 12 months, it's could be every, every day. And so you need to know what goes on in order to then determine how you want that to be managed. So having some experience of the management is really key to then working at how do you want to get that managed for you studied support you in the long term? So you can't start with no management? I would say get your hands dirty is in probably say it. Musician thing about EN is, you know this to kind of double tenant type. You know, you've got the workers during the week. And what did you say that? Well, yeah, a weekend. But that's, that's in you know, because he's in South End, you know, so that's a seaside town. Right. Yeah. Would that work? In Coventry? I'm not sure, you know,
Unknown Speaker 32:05
and there was a point picked up again by by later on, about, you know, really aiming at the corporates during the week. And yeah, and having the leisure guests at the weekend.
Unknown Speaker 32:13
Exactly. And, you know, they just come at it from different places, you know, one of the load not on this particular podcast, Chris, but one of one of the people that I know who's doing service combination is actually got a passion for music, right. So concerts, and he knows that people love concerts, music, concerts, and attending live gigs and events. So he's got a service accommodation strategy that's entirely driven around the proximity to where major gigs are held. And that's a great strategy, you know, but that's reflection of who they are, and what their interests are,
Unknown Speaker 32:51
which is why it's
Unknown Speaker 32:52
really quite important. If you can think about, if you have a natural interest that you already, like, you're already good at, you're already excited, be rinsed in, and then turn that into a reflection of how you do business.
Unknown Speaker 33:05
So continuing then the theme of the management, we then heard from Adrian, and Adrian talked about some of the systems they use as the software systems to manage, you know, booking.com, Airbnb, Expedia, and something called a channel manager. What's Yeah,
Unknown Speaker 33:21
what's this all about? Kevin?
Unknown Speaker 33:23
Well, it's not a TV tuning station, right? So it isn't another Netflix. Channel managing is really all about using technology to have an interface with where people can make booking. So it seems, you know, you can you imagine if you were just sitting on the phone all day, waiting for someone from booking.com, or Expedia or any there there are dozens and dozens and dozens of what we call OT as online travel agencies, you know, in the three big ones were mentioned there, you know, booking.com, late rooms, Expedia, Airbnb, you know, there's many many more And as we'll hear from maybe we'll Don't forget to mention in Malta new talked about overseas guests in so it's a different thing. So having something that's like a seamless bit of technology, often low cost, and depending on how many rooms you've got, you can dive in at different levels, like it kind of minis booking system, so it works seamlessly. So you don't spend all your time. Yeah, because we're currently coming in 24 724, seven, yeah, all different time zones. And, and you need to go to manage that and understand that all of these associated costs associated with them, usually in the sort of 10, to 15%. So you want to factor that in. And then you need to be able to convey the messages to the, you know, to your cleaning staff to be able to do that. And so there's a whole host of the How do people get in, you know, what automatic Key System Do you have, so you don't have to turn up and open the door and element in. So all of these, this technology is quite key, when you've got a regular turnover of staff and people and it's not like you got a hotel reception desk, you need to automate this. So you using technology, and learning what that technology is, and choosing the right technology. You know, we've got the people who know what that technology is. So if anybody's interested in looking into service combination, often do all this by trial and error.
Unknown Speaker 35:14
We talked last week on the episode about HY is about proximity, you know, you students, you know where you're going to be situated located. And I hearing the same here with service commendation, and Adrian mentioned about their properties being close to motorway, so good transport links for workers to get in and out. And, yeah, so you know, that's something that needs to be considered as well, isn't it?
Unknown Speaker 35:34
Yeah, that's well thought through, isn't it. So you know, where we've got seaside towns, it kind of becomes a bit obvious, you know, almost like holiday type accommodation, where you got workers and again, that's another key point. If you happen to have a link or knowledge with a key employer, you know, you know where they are, you know, where they're going to be, or you know, where there's a demand, you can see what's happening, then you can use a combination to to have some, you know, workers coming for a few days, you know, and what were you mentioned, being a worker going build working on a big building project? Do you want to stay in a hotel? And, you know, perhaps go down to the lounge and have a beer and have rubbish food? Or do you want to be able to relax? You know, cook your own food, have a few people around maybe several workers together? So it's cheaper, isn't it? Really, when you've got 234 people, it's, it can be a cheaper accommodation than having three or four hotel rooms. And that applies the same for family, as it does for workers. So for anybody, there's real benefits to service combination. I think Adrian is is picked his niche very well. Yeah,
Unknown Speaker 36:47
we've essentially seen a threat to the hotel industry, certainly at that lower level that more b&b level.
Unknown Speaker 36:52
unquestionably, that's the case, you know, the whole shifting sands of this and lead. got that right doesn't you know, I love it when I talk to these so full of energy, but he talks about sort of, you know, helping and reviving, which is the name of his business, you know, old, tired b2b people and old type b2b buildings, and turning them into modern up market, you know, much more customer focused and friendly and automated way, still bringing the same service and the strength of service, which, which really goes to what we talked about, because the I know, we're jumping ahead a bit to leave but but Lee is using these wealth dynamic correctly, he's using his experience correctly, his love for service correctly. And, you know, all that good stuff.
Unknown Speaker 37:40
Yeah. And in Morton, again, mentioned the intensity that comes with the managed right. And, and the high level of service, which I think we, you know, picked up from all of our guest today, but he talks about his niche being the foreign markets, and, you know, seeing a big opportunity here, you know, certainly with the the pound drop, we may see that influx of more investors. Yeah.
Unknown Speaker 38:07
Ian has got some beautiful properties, I remember spending a whole day within a couple of years ago, when he had a different brand. And I looked at his properties and said in these are beautiful properties, they're like, you know, you'd almost have a blue plaque outside the door. This is this is heritage, this is, this is the type of accommodation that people just feast with their eyes, you know, and he's done an outstanding job of being able to do that, both in terms of the quality of the externals, the quality of the internals, they're beautiful, beautiful properties. And when you put the pictures in all glorious colour, as it does on overseas websites, he's got a rich opportunity then to attract people who love the British heritage. So instead of just looking at the local market, you know, he's attracting the Chinese market. He's, he's, he can see, and there are special channels, where you can bookings from a Chinese guests. So you know, he's, there isn't something that happened automatically for him. This is something that he's grown into, and built a team around him to treat this very, very seriously. And I think he's going to do outstanding,
Unknown Speaker 39:13
it seems like we've never had an episode go by whether the mention of SAS doesn't pop up.
Unknown Speaker 39:20
Well, this is all about the interconnection, isn't it between all of the different pillars, and they all do interconnect, you know, they, they, they kind of merge and move. And SAS is just a way of turning your pension, which traditionally, if you remember would be stuck in the stock market outside of your control. And now you've got that self control where you can direct that money to where you want. And if Ian's got a skill in the development of property, and that properties, commercial type property, and he can buy that property known in using his pension. Well, why would you do that? Yeah, you know, he's in control of the risk is in control of the cash flow. He's in control of everything. And that's why I think he's been so successful, he's now attracting other people who want to both share in that opportunity and share in the learning and in is a good and warm teacher. So you know, fair play to him. Yeah.
Unknown Speaker 40:16
And I guess just to touch again, on the point that you made at the beginning, which Lee made as to some of the tax benefits, and you know, why service combination? should be, you know, something to consider? And if you're looking to maximise your cash flow?
Unknown Speaker 40:33
Well, look, you know, the the skill of wealth building, is to be aware of all of the opportunities, all of the tax opportunities, all the legal situations, it's all in the due diligence process, and in the education as well. So, I think Lee makes the point, you know, helps landlords keep more money, or what's wrong with that, you know, if you can do something that you can pivot to one direction, which is tax free, and another way, you're going to pay a lot more time, why wouldn't you consider it because you're just going to make more money. And if you make more money, then it helps you build more wealth, actually, and one other point that's worth mentioning, just going back to the modern, which is a little bit different to channel management, is when you get successful, then you can start encouraging by rating and by using your own website, more visitors to book directly with you. So then you missing out the cost of paying for the booking.com. so on, but the beginning you need them, you know, because they're booking thousands and thousands and thousands of rooms every single day, for why not be part of that technology. But as you get more successful, you can become less, less reliant on that as a channel, and more, you know, doing some of the things yourself.
Unknown Speaker 41:46
We always talk about leverage, don't worry, you know, it's the starting point, when you're looking at how you can build wealth, where's your point of leverage, and they're leveraging those other platforms? So the beginning
Unknown Speaker 41:55
works exactly right. And so that's why it's important in your education to know what online travel agency is what a channel manager looks like, you know, so, like anything, Chris, you know, this is for a novice, this is going to sound like a complicated strategy. But it's just the language really, it's like anything, you just got to learn how to, and the combination of the people we know, and the lessons they've learned. It's easy to share,
Unknown Speaker 42:19
huh?
Unknown Speaker 42:20
Well, I hope that everyone listening today has learned a bit more about the service commendation strategy. Yeah. And where might we be looking? In our next episode?
Unknown Speaker 42:31
Well, you know, properties still, we're only scratching the surface the property, there's still so many strategies to go, why don't we dive into the commercial area, you know, and give a feeling where, again, that's genuinely much more tax efficient, looking at dealing with commercial top tenants, and there's some very unique and special benefits in there. How about if you could learn that the the tenant pays all the maintenance costs, the tenant pays all the bills that pays for anything that goes wrong, and the rent only goes up?
Unknown Speaker 43:07
I would you like to learn about that. I see. I
Unknown Speaker 43:08
couldn't see some people's ears picking up
Unknown Speaker 43:11
to the fault of that. So
Unknown Speaker 43:13
that sounds like a good one to cover off next, do that.
Unknown Speaker 43:15
All right. Thanks, Kevin. See ya.
Unknown Speaker 43:21
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders don't care.uk slash membership
Transcribed by https://otter.a