September 6, 2024 • 32 mins
Welcome to the Essential Property Podcast. In episode 46, host Amanda Woodward dives into "Not Just a Letting Agent," where she explores the multifaceted world of property management.
Learn how Essential Management handles everything from deal sourcing and refurbishments to joint ventures, compliance & inspections, offering a comprehensive solution to landlords' diverse needs.
Discover real-life scenarios in managing properties, navigating legal and financial challenges, and providing invaluable coaching and mentoring to new and seasoned landlords alike. Whether it's dealing with council tax issues, insurance claims, or optimising property portfolios, this episode is packed with insights to maximise your property investment returns.
Stay ahead of the market trends, enhance your property strategies, and ensure compliance with the latest regulations. Tune in to understand how to transform your property management approach and achieve higher profitability with Essential Management.
Essential Property Options
Property Investment & Development
www.essentialpropertyoptions.co.uk
Property Management Service
www.creweandstokeroomsandsuites.co.uk
www.essentialpropertyoptions.co.uk/landlords
*NEW LAUNCH*
Stay & Co Property Management Services
Property Management in Birmingham, Derby & Burton
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Hello, and welcome to the Essential Property Podcast with your hosts,
Paul Samuda and Amanda Woodward.
With 45 years of combined experience in the world of property buying,
selling, investing and developing,
they are here to share with you their knowledge in the Stoke-on-Trent,
Newcastle-under-Lyme and Crewe property market. Let's get started.
(00:26):
Music.
Hello and welcome to another episode of the Essential Property Podcast with
your host Amanda Woodward.
Today's episode is titled Not Just a Letting Agent and the reason I came up
with that title is because over the last few months we have been inundated with
(00:46):
requests from our landlords and from those that are yet to work with us with
property related problems that they are seeking a solution for.
And the title Not Just a Letting Agent is because the The letting of a property,
especially a HMO or serviced accommodation, is actually only a very small part of managing that asset.
(01:07):
And I don't even refer to us as letting agents. That reminds me of kind of two
people sitting in an office on a high street, you know, doing viewings and letting properties.
And that couldn't be further from what we do here at Essential Management.
So I guess property managers is a better description of what we do.
We've had a lot of requests for other stuff, let's call it.
And I thought, well, if we're getting requests from those landlords,
(01:29):
no doubt some of our listeners would benefit from some of the stories and experiences
to see if they have similar issues or if we can help them with property-related
problems going forward.
So we've grown very organically at Essential Management.
We've obviously been investing now, for those that know us on the podcast,
for 12, 13 years and been actively managing assets for around about eight.
(01:50):
And as I say, the letting element is a very small part of property management.
So I've got about four or five different headings here of things that we do
for landlords that you may want us to do for you.
And the first one I'm going to kick off is stuff related to deals.
So we have two types of landlords at Essential.
We have those one property landlords.
(02:11):
They just have one HMO or service accommodation unit, either based in the UK or based overseas.
And we look after that for them. They have no real intention to buy any more.
They just want that one asset set to perform at its very best.
That's absolutely fine. Then
on the flip side, we have landlords who are building more of a business.
They are looking to acquire multiple properties if they haven't already,
(02:33):
or they might be a portfolio landlord, and they are always in the market for a deal.
And it has actually been quite difficult to find good deals over the last couple of years,
either because the interest rates with the mortgages meant the cash flow wasn't
as strong or because the properties that you're looking to buy either aren't
on the market or on the market at the wrong price.
(02:56):
So it has been a little bit tougher, but we do provide properties that landlords can buy.
They're often existing HMOs that we already manage
from other landlords who are looking and say exit which for
me is is often the the best process to follow
it's already let it's already licensed it's already compliant
it's cash flowing from day one the day that you purchase it we already manage
(03:17):
it it's very very easy effectively all we're doing is swapping ownership so
we source properties like that all the time and we also do refurbishments if
needed now all the turnkey properties where we already have the property up
and running it might only be a light refurb.
If we are, however, helping you to purchase something that's an existing home
at the moment and not a HMO, then obviously a full refurb is needed.
(03:39):
But we can do that and our landlords buy properties from us throughout the year.
There is another way that you can grow your portfolio and wealth with us and that's through JVs.
So we're quite selective on who we work with with regards to joint ventures.
But we have done a number of them over the last decade and our JVs.
(03:59):
Probably about 50-50 in terms of investors that are based overseas.
We have investors in Australia, South Africa, all through Europe,
and obviously the UK as well.
And we have a model where we set up limited companies, we set up SPVs,
we buy assets, we refinance them, we cash flow them.
I rarely ever sell them. Paul has a saying, he says, we're like the queen,
we never ever sell, or we rarely sell.
(04:20):
And those work well. They work very well when we have investors who can't raise finance themselves.
So if you're based overseas and you don't quite have that reputation in order
to get good interest rates with your mortgages, sometimes partnering with us helps to do that.
So whilst it's in a JV, the cash flow and the ROI is still pretty high because
we have a lot more attractive rates than if you were doing it yourselves.
(04:43):
And then we have landlords who are new to property. They want to build their
portfolio, but they need support.
So we provide Provide coaching and mentoring also are essential.
Again, very selective with who we work with.
We're looking to work with people that are effectively action takers.
They're ready to buy. It's not just a learning experience. It's a learning and a doing experience.
(05:05):
And Paul pretty much takes the lead on that. He's very experienced in terms
of working with people all over the country.
We're working with a chap at the moment who is a multiple business owner,
high net worth individual doing very well in his business. and he now wants
to invest his profits from his business into property.
(05:25):
So we're assisting him in terms of a little bit of coaching on that side.
What he values is that we've done it before. We've done it, you know, 100 times before.
He's doing it for the first time. So why not leverage our experience to assist
him, which is a no-brainer, really.
We're also working with somebody who's doing their first deal.
They're an electrician. They are building a good trades business.
(05:46):
They have a couple of people working for them. That side of their business is
growing, but they're also conscious that they don't want to work forever and
they'd like to invest into property.
Property so paul is working with this particular client
one-on-one to get them to the point of getting their
first deal over the line we want to know how much confidence you get
once your once your first deal is across the line so we're
working with him to do that we're also working with a couple on
(06:08):
a portfolio restructure so they have
been very aggressive in terms of building
their portfolio however it's not really making that much
money it's not cash flowing anywhere where near it should
be but we're helping them to restructure that and some
of it is restructuring the finance some of them is restructuring the
strategy to try and make the properties higher cash flowing so we can offer
(06:30):
a whole bunch of different things for a whole bunch of different people in the
area of sourcing refurbs jvs and coaching now we've always done that for a long
time and that works really well but there are a lot of other things that as
a landlord you may may not have even come across yet,
that we help landlords out with on a fairly regular basis.
So the next section I'm going to go to is an area that covers sort of legals,
(06:53):
finance and dealings with the council.
So we had a client who came to us a couple of years ago who had a property and
was receiving letters with regards to council tax by the room.
I know there's been a lot of change in this recently, but the landlord had a
five-bed HMO who's receiving five council taxes is and paying in the order of
(07:13):
£600 a month for council tax, when really it should have only been about £150 a month.
His property was full, but it wasn't cash flowing because he was paying the council tax.
So we restructured that property for him. He moved the property management over
to us. We restructured the property.
We got the council tax completely removed.
We converted that property to serviced accommodation.
(07:36):
We switched from council tax to business rates.
And because this particular killer owner only had this property he was able
to qualify for small business rate relief.
Now those of you that have applied for that before will realize that small business
rate relief often means that your business rates is zero.
(07:56):
That's right, zero. So you have gone from £600 a month in council tax,
which is the best part of £7,200 a year, to nothing.
And that's just where we didn't do anything different to the property,
but all we did was change the strategy, moved it over to service accommodation.
Enabled the business rates relief, and that investor all of a sudden was making
(08:19):
an additional £600 per month, which meant he was no longer in negative cash
flow and he was profitable on that property.
Now, that sounds really easy, but let me tell you something.
Dealing with the valuation office, the VOA is a nightmare.
So we did that whole process for him. We said, this is what we're going to do.
This is the process we're going to follow. We will do all that for you.
Move the management to us and we'll make sure that property is profitable.
(08:40):
And we've totally done that about five times for other landlords.
So if you are in a situation with the VOA, it's probably not going to be council
tax by the room related because the laws have changed on that.
However, if you do run run into issues with the valuation office
in some shape or form with regards to
incorrect banding especially if you're buying commercial property or
if you have a property that's maybe commercial downstairs and flats upstairs and
(09:02):
they haven't quite banded it correctly then for sure we can we can give you
a hand with that we had a landlord that approached us in early q2 this year
to assist with an insurance claim now insurance is one of those things that
we all have from our properties When we buy a property at exchange,
our sister says, you must have insurance.
We keep our properties insured, hoping really that we're never going to utilize that insurance policy.
(09:27):
But we had a bad storm in around about April this year. I remember it because we were away at the time.
I was in France and I got a call from a member of the team to say that we have
had a chimney collapse. Yes.
On a landlord's property, as it's collapsed, it's taken off a whole bunch of tiles off the roof.
The bricks have then fallen off the roof and gone straight through a car.
(09:50):
The whole chimney has ended up going through a car.
It's an end terrace. There's bricks all over the street.
Firefighters are there. Police are there. The council are there.
Dangerous buildings department are there. And it's all kicking off to say the least.
So in that scenario, you need two things. You need one, a property manager that's
going to be able to deal with that in the moment, And two, you need an insurance
(10:11):
policy that's going to support you with the costs.
So our team were there at the site immediately.
We had to evacuate the house. So we had five tenants in a licensed five-bedroom HMO.
The dangerous buildings department of the council said nobody is allowed to
enter that building, not even to gather their things.
So we had to evacuate all five tenants, put them in temporary accommodation,
(10:31):
which we paid for on behalf of the landlord at the time, you know,
just to be able to get them sorted there and then that night.
We then liaised with all the different emergency services, liaised with the council.
Once the dust had settled the following day, we then had to start the insurance
claims. So we worked with the landlord.
We got ourselves onto the policy from a communication standpoint.
So we took over the communication with the insurance company.
(10:53):
We got the roofers out, we got quotes in, we presented that to the insurance
company. We had to meet the loss adjusters, who I was actually really quite
disappointed because the loss adjuster arrived and he effectively told me,
you know, I'm here to make sure that this claim is as low as possible.
You know, he was not there really supporting the landlord. He was very much
supporting the insurance company.
Anyway, cut a long story short, we got some temporary repairs done on the roof
(11:16):
because otherwise, you know, more bricks are going to fall down and we've got
tiles on the roof that have come off and they're all in the street.
We actually had to, we didn't, but the council closed the road.
So it was a pretty big deal.
So where are we now? We're now at the point whereby the claim has been accepted by the insurer.
They actually paid out about six and a half thousand pounds.
The scaffolding is up. The roof work is taking place. It took a while to get
(11:40):
to that point because the insurance company was shocking.
And I personally took on that sort of battle with them and really had to negotiate
hard just to get them to actually take the application seriously.
But what's our learnings here? our learnings is make
sure you have good quality insurance make sure that if you have
to do a claim you have somebody that can assist you with that claim maybe the
(12:02):
insurance company can and they're great maybe you need somebody like us on the
ground to do it for you or maybe you feel competent enough to do it yourself
but insurance is great to have obviously for these scenarios but please make
sure that you have a sufficient policy so it might be worth just checking right
now as in stop the podcast obviously not if you're driving and check your insurance policy.
(12:22):
Because when you're doing a refurb and you insure your property as empty,
you need to go back to the insurance company afterwards and say,
hey, it's now rented. There's a slightly different type of policy.
You want to make sure that your reinstatement value is correct.
You know, if this building was to drop to the floor and it had to be rebuilt,
how much would that cost?
Because if you're underinsured on your reinstatement value and then you do an
insurance claim, they can actually reduce the money that they pay out to you
(12:44):
because you have underinsured yourself.
And we all know insurers are looking for ways to find a way not to pay out.
So insurance is super important and take this as a lightning bolt to check yours
and make sure that you're insured correctly.
With interest rates reducing, we're now starting to see more and more landlords
refinancing and we're in exactly the same position.
We haven't bothered with some recent refinances that were due because we know
(13:09):
that rates are coming down.
We hope they're going to come down as quickly as possible.
And as we have had a Bank of England base rate chop, lenders have felt more
comfortable but about reducing their rates, i.e. landlords are now more confident
about locking in some two years and five years deals.
So applying for a mortgage with a new lender, even on an existing property,
(13:30):
it's not straightforward.
And one of the most important parts is, are they going to value that property
at what you want it to be valued at?
Now, if you're refinancing and looking to pull out cash, it's even more important
that you get that figure.
But equally, even if you're just effectively switching your mortgage,
you want to make sure that you get the right valuation because that can also
help with your loan to value and a 75% loan to value versus a 70% or even a
(13:53):
60% can really bring your interest rate down.
So it's important you get that mortgage refinance right.
So we have done a few of those for our landlords. I put some stuff up on my
Instagram stories earlier this week where as soon as you're...
That mortgage has effectively been accepted with your broker.
So you said, yep, that's the product I want to go for. That's the lender that I want to go for.
That's where we then kick in. So we speak to the surveyors and we book the survey
(14:15):
in, time that works for us.
And then we will physically meet that surveyor at the property and start the process.
Process does actually start, however, before that, because we're already looking
to engage with the surveyor before the valuation.
We want to know who it is. Do we have any history with them?
Do they know us, which is always helpful? helpful can we get information to
them with regards to the rents comparables our valuation.
(14:38):
So we can start to steer the valuation where we want it
to go as much as we can we're then obviously looking
to meet them on the day escort them through the property provide them with a
valuation pack which explains everything about the property that they need to
know including the license for example the rents how the tenants have been there
all the information that a valuer wants on the day he doesn't even have to ask
(14:58):
it's all there or he had he or she has it already ready.
And we just want to make that process as smooth as possible so we can handle it entirely.
We can also give you a little bit of advice, not financial advice,
but a little bit of a steer. And I'll give you an example why.
I got called out to a valuation in Stoke.
It was a six-bedroom licensed HMO, big, gorgeous, fully rented,
(15:19):
looking good, an absolute slam dunk of a valuation.
And then when we got to the property, the survey was conducted by Connells.
And I know the lady there at Connells and she's lovely, great,
qualified, gives good solid valuations. But she reminded me that Connells do
not do investment valuations. They only do bricks and mortar valuations.
(15:42):
So they will generally do valuations for the Mortgage Works and Birmingham Midshires
and the more traditional buy-to-let lenders with a bricks and mortar valuation.
But if you've got a six-bed licensed HMO, you're not looking for bricks and
mortar. You're looking for something think investment-based.
And they said, look, we just don't do that. So I then had a couple of other
landlords also looking to use Connells for HMOs. And I said, look, just don't do it.
(16:04):
It's nothing against Connells, but you're not going to get the value that you want.
You need to be looking at somebody like a Shawbrook or a Paragon who takes an
investment value to get the valuation that we want.
So we can give you a little bit of a sear of that. There's even a valuer that
if you get him to value your property, it's going to be so downvalued,
it's not worth it. And sometimes it's even zero.
We won't mention names, but do reach out to me directly if you are doing a valuation,
(16:26):
because there's one particular guy who it's just not even worth turning up because he hates HMOs.
So we can give you a little bit of a steer on that. And we have done over the
summer with quite a few refinances. As early as last week, we had three that are going through.
On the same sort of subject of finance and legals and so on,
lawful development certificates is something that we've been instructed to do
(16:48):
for landlords and for those people that don't work with us as an agent at the moment.
But hopefully we'll work with them in the future.
So a Lawful Development Certificate for those that don't know is a certificate
that you need that confirms your HMO was operating correctly prior to Article 4 coming in.
So in Crewe where we have this issue and actually in Burton some of you will
(17:10):
be aware that we branched out to Birmingham, Burton and Derby last year.
Burton has the Article 4 issue as well is if you're selling a property or if
you're financing a property your lender sender will likely ask you for do you
have planning now if your hmo has been operating before article 4 and it's below
seven bedrooms you won't have planning because it wasn't needed.
It had permitted development rights. You didn't need to do it.
(17:31):
But the lenders are now saying, prove it. And the license isn't enough.
So you do need to support it with a lawful development certificate.
So we had a landlord who wanted to sell his property.
It was on Edelston Road in Crewe, which is like a solid HMO road,
but it's smapping in the middle of Article 4.
Now, prior to that, when Article 4 came in, we actually messaged all of our
(17:52):
landlords and said, as a preventative or as a proactive approach.
I think you should get lawful development certificates for all your HMOs that
are sitting in Article 4.
So if at any point you need to refinance or sell, you've got your certificate.
And this was the perfect example of that.
He sold the property. He had the certificate a few years prior,
provided it to the lawyers, and the sale went through very easily.
(18:14):
I did have a call last week from a new investor who's buying his first HMO,
which is an existing HMO on Edelston Road.
And he called just to ask about out the rents and to see what the comparables
were and just to check us out as a potential agent for him to use.
And he didn't necessarily know about lawful development certificates and his
(18:35):
lawyer hadn't raised it and he wasn't really aware of what he would need.
So if you are in that situation, please do reach out to us. We can advise you.
I have actually two at the moment that I'm working on.
I did a lot of lawful development certificates in the pandemic and they were
probably a little bit easier to get through during then, that time.
Now, Well, there's a little bit more information needed. I've got two that I'm
(18:55):
currently working on at the minute, but they should be okay because I've got
the support of the housing team at the council.
So we can do that for you if you need it. Having an LDC does boost the value of the property.
It's almost like having planning, but it pretty much is like having planning
because the planning department have to issue you with the LDC.
So it boosts the value. It makes your asset more saleable.
So I would really, really recommend it.
(19:17):
On a similar theme, HMO applications. So doing a HMO application for the first
time can actually be quite daunting.
One, the application page is about 30 pages asking lots of questions,
some of which you won't know the answers to.
And then the actual visit from the HMO officer, again, can be quite daunting.
So we do that on behalf of other landlords, whether we manage their properties or not.
(19:38):
We can organise an application for you, organise the visit with the local authority.
We'll do a pre-check of the property before they come to make sure that it's
compliant so you can fix any issues before they arrive.
And we'll just take you through that process on application right through to
actually getting that HMO license granted.
So we do those all the time. As I say, I've got about three at the moment that
(19:59):
we're just waiting for the certificates to come through on post the application.
So we do that day in, day out, and we can certainly help you with that as well.
On a similar vein, but a separate section here, I've come up with a section
on compliance items and inspections.
So over the last couple of years, we have really ramped up our property inspection
reports for our landlords.
And it always surprises me when I meet landlords who say that they either don't
(20:23):
get inspection reports from their agent or as self-managers,
they don't even inspect their properties frequently themselves.
Now, we are in our HMOs as a minimum every month because we're either in doing smoke,
we're actually in every property every week because we
clean over 120 properties every week
so there's somebody in your HMO every single week from
(20:45):
a cleaning perspective there's somebody in there every single month doing
smoke alarm testing or carbon monoxide detector testing we have departure reports
anytime that anybody actually leaves a property we have to obviously go out
go and check the room and so on do a report on that and see if we're going to
retain anything from their deposit we've then got our quarterly inspection reports
where we're in the houses every quarter in all the bedrooms.
(21:07):
And for us, that's the only way to consistently manage your HMO.
Leaving the tenants to it is a disaster.
So we provide inspection reports for our landlords. But if you are a self-managing
landlord, maybe you're not local or maybe you just don't feel comfortable having
that level of interaction with your tenants.
We can provide for you your inspection reports.
So we'll go in, we'll go into all the rooms and, you know, we'll do a full status check.
(21:31):
Even if you're with another agent if you feel like perhaps
they're not doing your inspections for you and you just really want to know
what is going on in my house we can organize that for
you as well if you want to take it up a notch we can do compliance inspections
so we can go in and check all of the compliance that you need to be compliant
with hmo housing standards so we can go in and we can check the fire blankets
(21:54):
the carbon monoxide detectors the smoke detectors we can check the fire doors,
we can check the fire exits,
we can check the banister heights, we can make sure the tenants are complying
and not putting shoes on the landing and bikes on the landing,
make sure the thumb turn locks are on the doors and just all of the general
stuff that really your agent should be doing for you anyway.
But if they're not, we can step in and do that.
(22:14):
And then the most detailed report that we can do is your fire risk assessment.
Now, I put myself through a bunch of fire safety training over a year ago to
get to the point where we can competently carry out fire risk assessments.
And we operate under landlordfra.co.uk and it's a brand that we've set up to
offer fire risk assessments to the local landlord community in Stoke-on-Trent and Crewe.
(22:37):
And we also are going to be rolling out that through Birmingham,
Burton and Derby as well.
So we will arrive and then we will effectively provide you with a full fire risk assessment.
Now, if you rent a property to a charity, then you probably have been asked
for a fire risk assessment in the past.
Charities ask for them. Sometimes corporate lets ask for them.
The council now going forward for a licensed HMO will say to you that you have
(22:59):
to ensure that your fire risk assessment is in place and it is maintained regularly
or checked regularly for any changes.
Is some lenders will ask for them okay a
lot of my international investors who are using some more
let's say non-mainstream lenders they are
being asked for fire risk assessments for all their properties some
for fire door reports as well so we thought it makes sense to bring ourselves
(23:22):
up to speed in that area of legislation and then we can provide them for you
whether you work with us as a landlord or not yeah we're more than happy to
do that okay that covers quite a lot of the the stuff that we've been doing
over recent months, there are a couple of other things.
We had some issues around utilities recently.
Some of our landlords, particularly our international landlords,
(23:44):
don't always quite grasp the level of micromanagement needed for managing gas
and electric, but also water bills, council tax, Wi-Fi, etc.
So this is something that we've always offered. But if you want us to,
we can manage all that for you.
You do have to be one one of our landlords already because obviously
the cost of the gas and electric and water and wi-fi and so
(24:05):
on is deductible from the rent but we can set up
those accounts monitor those accounts for you pay them
and then just deduct it from your rental income and some landlords
just prefer that model because they just want it to be completely hands-off because
they just are too busy or don't quite understand how
it all works and they just want us to manage it for them which is
absolutely fine and we can do that we had a situation recently
(24:26):
where a landlord had a property and the electric
bills were too high and he couldn't quite
work out why and we couldn't quite work out why either they
were just coming in a good almost 30 to
40 percent more than they should be anyway we did
a deep dive on it and we realized that the energy supplier was actually charging
them what we believe to be the wrong rate they had the system on an economy
(24:49):
seven setup and their night rate just didn't make sense anyway we made a few
changes and the next bill after that That came in at about half of what it would be charging.
Just because we managed to speak to the supplier, interrogate them a little
bit, interrogate the tariff and switch the rate.
So that's what we like doing. We like saving landlords money.
It's important that their houses remain profitable.
(25:10):
If they're not profitable, they're not going to want us to continue to rent them.
So we can certainly help with anything utility related with that.
Now I'm going to move on to the final section of this episode where we can help landlords.
And that's keeping up with the market. Now, having been in the market for more
than a decade, we've seen cycles.
(25:31):
We've seen the development and improvement of quality accommodation across the
town and cities that we operate in.
We've seen rent increases dramatically in line with that.
And something that we're going to start talking to our landlords about is having
a second or third iteration of their property.
(25:51):
Because the four-bedroom, one-bathroom HMO that was created eight years ago,
that yes, has been kept compliant and clean and tidy,
is just not going to generate the likes of rent that a four-bed with two bathrooms
or a four-bed all-on-suite or a four-bed with a little studio could create.
Now, there's two schools of thought here. You can just keep the property as
(26:13):
it is, keep it clean, tidy and compliant, offer lower rents and still generate an ROI.
That's absolutely fine. But what we would recommend is creating that second
iteration of this property.
How can we improve it to stay in line with what the market wants?
And how can we improve it so we can max out on rental income and max out on return on investment?
So I did a few sums here. Let's just say you've got a five-bed HMO.
(26:33):
It's a little bit tired. You've had it a while and you're managing to rent each room for £500 a month.
Okay, five-bed, let's say, all-onsuite. Now, there is a market out there at
the moment whereby if you provide a modern en suite with a TV,
with a desk, that's a good size that has modern interior design and perhaps
has a little fridge in there or a tea station and a kettle and a toaster.
(26:56):
And just providing as much sort of facilities we
can get 600 to 650 a
month for those rooms and we know that because some of the new properties that
we've been developing that are like that big tvs desks t stations etc are close
to that 650 so you can stick with the 500 a month as is or you can invest a
(27:17):
little generate 650 if all five of your rooms generated 650 a month rather than 500.
That would be an additional income of £750 a month, which is £9,000 a year.
Now, I know people that are generating £750 a month total cash flow for a property.
And effectively, as a landlord, you could be generating enough profit that you
(27:39):
would get by buying another property, but you haven't got to buy it.
You've actually got it here right in front of you. All you need to do is modernize
and upgrade your existing building, and it's going to cost you nowhere near
as much as buying another house.
Let's just say that it cost you if it cost you
nine thousand pounds to do those improvements you'd
have all your money back in a year let's say it cost you eighteen thousand pounds
(28:01):
to do those improvements which i don't think it would that's a 50 roi money
back in two years it's kind of a no-brainer really and we do have some landlords
that have some nice big rooms that i think we could do a lot with so i will
be reaching out to them between now and the end of the year
to say in 2025 let's raise the game a bit let's make these modern and more attractive,
because we can get the rents rents are soaring in
(28:23):
stoke and crew we've just gone for our i
think it's our fourth or fifth rent increase since
before the pandemic we're not talking about huge talking about you know 25 and
50 pounds at a time but an ensuite room that was once 400 we can now comfortably
get you know 600 654 and if you're one of those landlords still getting those
low rents you've got the ability to get more but we do need to make some improvements to the property.
(28:48):
If you are not working with us at the moment as
an agent but have a property that you
think this needs a second iteration it needs a second lease of
life i'm done managing it myself or the existing agent has only been renting
it at its sort of bare minimum we can look at taking it over we can apply our
interior design expertise we can tell you what's needed to get it both compliant
(29:10):
and very very much design focused and looking good with what the market needs.
And then we can then take over that management and we can get a lot higher rents.
So that's definitely something to think about.
And again, something that we will be promoting as we go towards the end of the
year, because you're sitting on thousands of pounds of additional cash flow
that you're just not getting because the property is just a little bit stuck in time.
(29:32):
Some other things we can look at is a change of strategy. As the market changes,
we've got more international tenants coming into Stoke and crew.
We've got people wanting shorter stays. And that's an area that we've always
flourished in, being able to be a little bit more flexible with our houses because
we do have the service accommodation element of the company.
So if somebody wants a one-month stay, two-month stay, three-month stay,
(29:53):
somebody wants a one-week stay, on some of our properties, we can provide that.
And the rate that we can charge is very attractive, both to the guest,
because it's a lot cheaper than a hotel but equally it's profitable for the
landlord so when you're when you have an asset you need to look at do i need
to improve my asset to stay in line with the market demands.
(30:14):
Or do I even need to change my strategy to stay profitable?
And because we do have our own properties, that's the sort of stuff that we're
thinking about all the time.
So if you're a landlord and you say, I've got this property,
I'm thinking about doing X and Y, we're thinking about it ourselves as well.
So we're more than happy to guide you and shape that asset to get it performing as good as possible.
(30:35):
And effectively, that's the business we're in as owners, as property managers,
as property problem solvers is we need to make sure that our assets are making money as best we can.
It has been a tough couple of years. Interest rates have eroded a lot of cash flow and profits.
So has compliance. The compliance requests have been so advanced that we're
(30:55):
having to spend cash flow on certificates and fire risk assessments and upgrades
to smoke alarm systems and so on.
But if you have a fully compliant property that is now ready to be sweat in
the market, then that's a really good position to be in. You don't want to be
sweating an asset and it's not compliant because all you're doing is creating risk around your asset.
So I hope you found that useful and that gives you an idea of the different
(31:16):
services that we can offer at Essential Management.
And I'm sure there's some that we haven't offered yet that we can help with.
So if you find yourself in a bit of a unique scenario and you're in Stoke and
you're in Crewe or you're in Birmingham, Derby or Burton and you have a property
problem, I'd go as far as saying that we can help you to solve it or we'll know somebody that can.
On that note, I hope everybody enjoys the rest of their summer,
(31:37):
that your property businesses are going well and as best as they can.
And I look forward to catching up with you on the next episode.
Music.
We hope you enjoyed today's episode. And if so, please hit subscribe and share
with those who you think would enjoy it too.
To get in touch with Paul and Amanda directly, please visit their website,
(32:01):
www.essentialpropertyoptions.co.uk for more information.
Music.
Hello, and welcome to the Essential Property Podcast with your hosts,
Paul Samuda and Amanda Woodward.
With 45 years of combined experience in the world of property buying,
selling, investing and developing,
they are here to share with you their knowledge in the Stoke-on-Trent,
Newcastle-under-Lyme and Crewe property market. Let's get started.
(00:26):
Music.
Hello and welcome to another episode of the Essential Property Podcast with
your host Amanda Woodward.
Today's episode is titled Not Just a Letting Agent and the reason I came up
with that title is because over the last few months we have been inundated with
(00:46):
requests from our landlords and from those that are yet to work with us with
property related problems that they are seeking a solution for.
And the title Not Just a Letting Agent is because the The letting of a property,
especially a HMO or serviced accommodation, is actually only a very small part of managing that asset.
(01:07):
And I don't even refer to us as letting agents. That reminds me of kind of two
people sitting in an office on a high street, you know, doing viewings and letting properties.
And that couldn't be further from what we do here at Essential Management.
So I guess property managers is a better description of what we do.
We've had a lot of requests for other stuff, let's call it.
And I thought, well, if we're getting requests from those landlords,
(01:29):
no doubt some of our listeners would benefit from some of the stories and experiences
to see if they have similar issues or if we can help them with property-related
problems going forward.
So we've grown very organically at Essential Management.
We've obviously been investing now, for those that know us on the podcast,
for 12, 13 years and been actively managing assets for around about eight.
(01:50):
And as I say, the letting element is a very small part of property management.
So I've got about four or five different headings here of things that we do
for landlords that you may want us to do for you.
And the first one I'm going to kick off is stuff related to deals.
So we have two types of landlords at Essential.
We have those one property landlords.
(02:11):
They just have one HMO or service accommodation unit, either based in the UK or based overseas.
And we look after that for them. They have no real intention to buy any more.
They just want that one asset set to perform at its very best.
That's absolutely fine. Then
on the flip side, we have landlords who are building more of a business.
They are looking to acquire multiple properties if they haven't already,
(02:33):
or they might be a portfolio landlord, and they are always in the market for a deal.
And it has actually been quite difficult to find good deals over the last couple of years,
either because the interest rates with the mortgages meant the cash flow wasn't
as strong or because the properties that you're looking to buy either aren't
on the market or on the market at the wrong price.
(02:56):
So it has been a little bit tougher, but we do provide properties that landlords can buy.
They're often existing HMOs that we already manage
from other landlords who are looking and say exit which for
me is is often the the best process to follow
it's already let it's already licensed it's already compliant
it's cash flowing from day one the day that you purchase it we already manage
(03:17):
it it's very very easy effectively all we're doing is swapping ownership so
we source properties like that all the time and we also do refurbishments if
needed now all the turnkey properties where we already have the property up
and running it might only be a light refurb.
If we are, however, helping you to purchase something that's an existing home
at the moment and not a HMO, then obviously a full refurb is needed.
(03:39):
But we can do that and our landlords buy properties from us throughout the year.
There is another way that you can grow your portfolio and wealth with us and that's through JVs.
So we're quite selective on who we work with with regards to joint ventures.
But we have done a number of them over the last decade and our JVs.
(03:59):
Probably about 50-50 in terms of investors that are based overseas.
We have investors in Australia, South Africa, all through Europe,
and obviously the UK as well.
And we have a model where we set up limited companies, we set up SPVs,
we buy assets, we refinance them, we cash flow them.
I rarely ever sell them. Paul has a saying, he says, we're like the queen,
we never ever sell, or we rarely sell.
(04:20):
And those work well. They work very well when we have investors who can't raise finance themselves.
So if you're based overseas and you don't quite have that reputation in order
to get good interest rates with your mortgages, sometimes partnering with us helps to do that.
So whilst it's in a JV, the cash flow and the ROI is still pretty high because
we have a lot more attractive rates than if you were doing it yourselves.
(04:43):
And then we have landlords who are new to property. They want to build their
portfolio, but they need support.
So we provide Provide coaching and mentoring also are essential.
Again, very selective with who we work with.
We're looking to work with people that are effectively action takers.
They're ready to buy. It's not just a learning experience. It's a learning and a doing experience.
(05:05):
And Paul pretty much takes the lead on that. He's very experienced in terms
of working with people all over the country.
We're working with a chap at the moment who is a multiple business owner,
high net worth individual doing very well in his business. and he now wants
to invest his profits from his business into property.
(05:25):
So we're assisting him in terms of a little bit of coaching on that side.
What he values is that we've done it before. We've done it, you know, 100 times before.
He's doing it for the first time. So why not leverage our experience to assist
him, which is a no-brainer, really.
We're also working with somebody who's doing their first deal.
They're an electrician. They are building a good trades business.
(05:46):
They have a couple of people working for them. That side of their business is
growing, but they're also conscious that they don't want to work forever and
they'd like to invest into property.
Property so paul is working with this particular client
one-on-one to get them to the point of getting their
first deal over the line we want to know how much confidence you get
once your once your first deal is across the line so we're
working with him to do that we're also working with a couple on
(06:08):
a portfolio restructure so they have
been very aggressive in terms of building
their portfolio however it's not really making that much
money it's not cash flowing anywhere where near it should
be but we're helping them to restructure that and some
of it is restructuring the finance some of them is restructuring the
strategy to try and make the properties higher cash flowing so we can offer
(06:30):
a whole bunch of different things for a whole bunch of different people in the
area of sourcing refurbs jvs and coaching now we've always done that for a long
time and that works really well but there are a lot of other things that as
a landlord you may may not have even come across yet,
that we help landlords out with on a fairly regular basis.
So the next section I'm going to go to is an area that covers sort of legals,
(06:53):
finance and dealings with the council.
So we had a client who came to us a couple of years ago who had a property and
was receiving letters with regards to council tax by the room.
I know there's been a lot of change in this recently, but the landlord had a
five-bed HMO who's receiving five council taxes is and paying in the order of
(07:13):
£600 a month for council tax, when really it should have only been about £150 a month.
His property was full, but it wasn't cash flowing because he was paying the council tax.
So we restructured that property for him. He moved the property management over
to us. We restructured the property.
We got the council tax completely removed.
We converted that property to serviced accommodation.
(07:36):
We switched from council tax to business rates.
And because this particular killer owner only had this property he was able
to qualify for small business rate relief.
Now those of you that have applied for that before will realize that small business
rate relief often means that your business rates is zero.
(07:56):
That's right, zero. So you have gone from £600 a month in council tax,
which is the best part of £7,200 a year, to nothing.
And that's just where we didn't do anything different to the property,
but all we did was change the strategy, moved it over to service accommodation.
Enabled the business rates relief, and that investor all of a sudden was making
(08:19):
an additional £600 per month, which meant he was no longer in negative cash
flow and he was profitable on that property.
Now, that sounds really easy, but let me tell you something.
Dealing with the valuation office, the VOA is a nightmare.
So we did that whole process for him. We said, this is what we're going to do.
This is the process we're going to follow. We will do all that for you.
Move the management to us and we'll make sure that property is profitable.
(08:40):
And we've totally done that about five times for other landlords.
So if you are in a situation with the VOA, it's probably not going to be council
tax by the room related because the laws have changed on that.
However, if you do run run into issues with the valuation office
in some shape or form with regards to
incorrect banding especially if you're buying commercial property or
if you have a property that's maybe commercial downstairs and flats upstairs and
(09:02):
they haven't quite banded it correctly then for sure we can we can give you
a hand with that we had a landlord that approached us in early q2 this year
to assist with an insurance claim now insurance is one of those things that
we all have from our properties When we buy a property at exchange,
our sister says, you must have insurance.
We keep our properties insured, hoping really that we're never going to utilize that insurance policy.
(09:27):
But we had a bad storm in around about April this year. I remember it because we were away at the time.
I was in France and I got a call from a member of the team to say that we have
had a chimney collapse. Yes.
On a landlord's property, as it's collapsed, it's taken off a whole bunch of tiles off the roof.
The bricks have then fallen off the roof and gone straight through a car.
(09:50):
The whole chimney has ended up going through a car.
It's an end terrace. There's bricks all over the street.
Firefighters are there. Police are there. The council are there.
Dangerous buildings department are there. And it's all kicking off to say the least.
So in that scenario, you need two things. You need one, a property manager that's
going to be able to deal with that in the moment, And two, you need an insurance
(10:11):
policy that's going to support you with the costs.
So our team were there at the site immediately.
We had to evacuate the house. So we had five tenants in a licensed five-bedroom HMO.
The dangerous buildings department of the council said nobody is allowed to
enter that building, not even to gather their things.
So we had to evacuate all five tenants, put them in temporary accommodation,
(10:31):
which we paid for on behalf of the landlord at the time, you know,
just to be able to get them sorted there and then that night.
We then liaised with all the different emergency services, liaised with the council.
Once the dust had settled the following day, we then had to start the insurance
claims. So we worked with the landlord.
We got ourselves onto the policy from a communication standpoint.
So we took over the communication with the insurance company.
(10:53):
We got the roofers out, we got quotes in, we presented that to the insurance
company. We had to meet the loss adjusters, who I was actually really quite
disappointed because the loss adjuster arrived and he effectively told me,
you know, I'm here to make sure that this claim is as low as possible.
You know, he was not there really supporting the landlord. He was very much
supporting the insurance company.
Anyway, cut a long story short, we got some temporary repairs done on the roof
(11:16):
because otherwise, you know, more bricks are going to fall down and we've got
tiles on the roof that have come off and they're all in the street.
We actually had to, we didn't, but the council closed the road.
So it was a pretty big deal.
So where are we now? We're now at the point whereby the claim has been accepted by the insurer.
They actually paid out about six and a half thousand pounds.
The scaffolding is up. The roof work is taking place. It took a while to get
(11:40):
to that point because the insurance company was shocking.
And I personally took on that sort of battle with them and really had to negotiate
hard just to get them to actually take the application seriously.
But what's our learnings here? our learnings is make
sure you have good quality insurance make sure that if you have
to do a claim you have somebody that can assist you with that claim maybe the
(12:02):
insurance company can and they're great maybe you need somebody like us on the
ground to do it for you or maybe you feel competent enough to do it yourself
but insurance is great to have obviously for these scenarios but please make
sure that you have a sufficient policy so it might be worth just checking right
now as in stop the podcast obviously not if you're driving and check your insurance policy.
(12:22):
Because when you're doing a refurb and you insure your property as empty,
you need to go back to the insurance company afterwards and say,
hey, it's now rented. There's a slightly different type of policy.
You want to make sure that your reinstatement value is correct.
You know, if this building was to drop to the floor and it had to be rebuilt,
how much would that cost?
Because if you're underinsured on your reinstatement value and then you do an
insurance claim, they can actually reduce the money that they pay out to you
(12:44):
because you have underinsured yourself.
And we all know insurers are looking for ways to find a way not to pay out.
So insurance is super important and take this as a lightning bolt to check yours
and make sure that you're insured correctly.
With interest rates reducing, we're now starting to see more and more landlords
refinancing and we're in exactly the same position.
We haven't bothered with some recent refinances that were due because we know
(13:09):
that rates are coming down.
We hope they're going to come down as quickly as possible.
And as we have had a Bank of England base rate chop, lenders have felt more
comfortable but about reducing their rates, i.e. landlords are now more confident
about locking in some two years and five years deals.
So applying for a mortgage with a new lender, even on an existing property,
(13:30):
it's not straightforward.
And one of the most important parts is, are they going to value that property
at what you want it to be valued at?
Now, if you're refinancing and looking to pull out cash, it's even more important
that you get that figure.
But equally, even if you're just effectively switching your mortgage,
you want to make sure that you get the right valuation because that can also
help with your loan to value and a 75% loan to value versus a 70% or even a
(13:53):
60% can really bring your interest rate down.
So it's important you get that mortgage refinance right.
So we have done a few of those for our landlords. I put some stuff up on my
Instagram stories earlier this week where as soon as you're...
That mortgage has effectively been accepted with your broker.
So you said, yep, that's the product I want to go for. That's the lender that I want to go for.
That's where we then kick in. So we speak to the surveyors and we book the survey
(14:15):
in, time that works for us.
And then we will physically meet that surveyor at the property and start the process.
Process does actually start, however, before that, because we're already looking
to engage with the surveyor before the valuation.
We want to know who it is. Do we have any history with them?
Do they know us, which is always helpful? helpful can we get information to
them with regards to the rents comparables our valuation.
(14:38):
So we can start to steer the valuation where we want it
to go as much as we can we're then obviously looking
to meet them on the day escort them through the property provide them with a
valuation pack which explains everything about the property that they need to
know including the license for example the rents how the tenants have been there
all the information that a valuer wants on the day he doesn't even have to ask
(14:58):
it's all there or he had he or she has it already ready.
And we just want to make that process as smooth as possible so we can handle it entirely.
We can also give you a little bit of advice, not financial advice,
but a little bit of a steer. And I'll give you an example why.
I got called out to a valuation in Stoke.
It was a six-bedroom licensed HMO, big, gorgeous, fully rented,
(15:19):
looking good, an absolute slam dunk of a valuation.
And then when we got to the property, the survey was conducted by Connells.
And I know the lady there at Connells and she's lovely, great,
qualified, gives good solid valuations. But she reminded me that Connells do
not do investment valuations. They only do bricks and mortar valuations.
(15:42):
So they will generally do valuations for the Mortgage Works and Birmingham Midshires
and the more traditional buy-to-let lenders with a bricks and mortar valuation.
But if you've got a six-bed licensed HMO, you're not looking for bricks and
mortar. You're looking for something think investment-based.
And they said, look, we just don't do that. So I then had a couple of other
landlords also looking to use Connells for HMOs. And I said, look, just don't do it.
(16:04):
It's nothing against Connells, but you're not going to get the value that you want.
You need to be looking at somebody like a Shawbrook or a Paragon who takes an
investment value to get the valuation that we want.
So we can give you a little bit of a sear of that. There's even a valuer that
if you get him to value your property, it's going to be so downvalued,
it's not worth it. And sometimes it's even zero.
We won't mention names, but do reach out to me directly if you are doing a valuation,
(16:26):
because there's one particular guy who it's just not even worth turning up because he hates HMOs.
So we can give you a little bit of a steer on that. And we have done over the
summer with quite a few refinances. As early as last week, we had three that are going through.
On the same sort of subject of finance and legals and so on,
lawful development certificates is something that we've been instructed to do
(16:48):
for landlords and for those people that don't work with us as an agent at the moment.
But hopefully we'll work with them in the future.
So a Lawful Development Certificate for those that don't know is a certificate
that you need that confirms your HMO was operating correctly prior to Article 4 coming in.
So in Crewe where we have this issue and actually in Burton some of you will
(17:10):
be aware that we branched out to Birmingham, Burton and Derby last year.
Burton has the Article 4 issue as well is if you're selling a property or if
you're financing a property your lender sender will likely ask you for do you
have planning now if your hmo has been operating before article 4 and it's below
seven bedrooms you won't have planning because it wasn't needed.
It had permitted development rights. You didn't need to do it.
(17:31):
But the lenders are now saying, prove it. And the license isn't enough.
So you do need to support it with a lawful development certificate.
So we had a landlord who wanted to sell his property.
It was on Edelston Road in Crewe, which is like a solid HMO road,
but it's smapping in the middle of Article 4.
Now, prior to that, when Article 4 came in, we actually messaged all of our
(17:52):
landlords and said, as a preventative or as a proactive approach.
I think you should get lawful development certificates for all your HMOs that
are sitting in Article 4.
So if at any point you need to refinance or sell, you've got your certificate.
And this was the perfect example of that.
He sold the property. He had the certificate a few years prior,
provided it to the lawyers, and the sale went through very easily.
(18:14):
I did have a call last week from a new investor who's buying his first HMO,
which is an existing HMO on Edelston Road.
And he called just to ask about out the rents and to see what the comparables
were and just to check us out as a potential agent for him to use.
And he didn't necessarily know about lawful development certificates and his
(18:35):
lawyer hadn't raised it and he wasn't really aware of what he would need.
So if you are in that situation, please do reach out to us. We can advise you.
I have actually two at the moment that I'm working on.
I did a lot of lawful development certificates in the pandemic and they were
probably a little bit easier to get through during then, that time.
Now, Well, there's a little bit more information needed. I've got two that I'm
(18:55):
currently working on at the minute, but they should be okay because I've got
the support of the housing team at the council.
So we can do that for you if you need it. Having an LDC does boost the value of the property.
It's almost like having planning, but it pretty much is like having planning
because the planning department have to issue you with the LDC.
So it boosts the value. It makes your asset more saleable.
So I would really, really recommend it.
(19:17):
On a similar theme, HMO applications. So doing a HMO application for the first
time can actually be quite daunting.
One, the application page is about 30 pages asking lots of questions,
some of which you won't know the answers to.
And then the actual visit from the HMO officer, again, can be quite daunting.
So we do that on behalf of other landlords, whether we manage their properties or not.
(19:38):
We can organise an application for you, organise the visit with the local authority.
We'll do a pre-check of the property before they come to make sure that it's
compliant so you can fix any issues before they arrive.
And we'll just take you through that process on application right through to
actually getting that HMO license granted.
So we do those all the time. As I say, I've got about three at the moment that
(19:59):
we're just waiting for the certificates to come through on post the application.
So we do that day in, day out, and we can certainly help you with that as well.
On a similar vein, but a separate section here, I've come up with a section
on compliance items and inspections.
So over the last couple of years, we have really ramped up our property inspection
reports for our landlords.
And it always surprises me when I meet landlords who say that they either don't
(20:23):
get inspection reports from their agent or as self-managers,
they don't even inspect their properties frequently themselves.
Now, we are in our HMOs as a minimum every month because we're either in doing smoke,
we're actually in every property every week because we
clean over 120 properties every week
so there's somebody in your HMO every single week from
(20:45):
a cleaning perspective there's somebody in there every single month doing
smoke alarm testing or carbon monoxide detector testing we have departure reports
anytime that anybody actually leaves a property we have to obviously go out
go and check the room and so on do a report on that and see if we're going to
retain anything from their deposit we've then got our quarterly inspection reports
where we're in the houses every quarter in all the bedrooms.
(21:07):
And for us, that's the only way to consistently manage your HMO.
Leaving the tenants to it is a disaster.
So we provide inspection reports for our landlords. But if you are a self-managing
landlord, maybe you're not local or maybe you just don't feel comfortable having
that level of interaction with your tenants.
We can provide for you your inspection reports.
So we'll go in, we'll go into all the rooms and, you know, we'll do a full status check.
(21:31):
Even if you're with another agent if you feel like perhaps
they're not doing your inspections for you and you just really want to know
what is going on in my house we can organize that for
you as well if you want to take it up a notch we can do compliance inspections
so we can go in and check all of the compliance that you need to be compliant
with hmo housing standards so we can go in and we can check the fire blankets
(21:54):
the carbon monoxide detectors the smoke detectors we can check the fire doors,
we can check the fire exits,
we can check the banister heights, we can make sure the tenants are complying
and not putting shoes on the landing and bikes on the landing,
make sure the thumb turn locks are on the doors and just all of the general
stuff that really your agent should be doing for you anyway.
But if they're not, we can step in and do that.
(22:14):
And then the most detailed report that we can do is your fire risk assessment.
Now, I put myself through a bunch of fire safety training over a year ago to
get to the point where we can competently carry out fire risk assessments.
And we operate under landlordfra.co.uk and it's a brand that we've set up to
offer fire risk assessments to the local landlord community in Stoke-on-Trent and Crewe.
(22:37):
And we also are going to be rolling out that through Birmingham,
Burton and Derby as well.
So we will arrive and then we will effectively provide you with a full fire risk assessment.
Now, if you rent a property to a charity, then you probably have been asked
for a fire risk assessment in the past.
Charities ask for them. Sometimes corporate lets ask for them.
The council now going forward for a licensed HMO will say to you that you have
(22:59):
to ensure that your fire risk assessment is in place and it is maintained regularly
or checked regularly for any changes.
Is some lenders will ask for them okay a
lot of my international investors who are using some more
let's say non-mainstream lenders they are
being asked for fire risk assessments for all their properties some
for fire door reports as well so we thought it makes sense to bring ourselves
(23:22):
up to speed in that area of legislation and then we can provide them for you
whether you work with us as a landlord or not yeah we're more than happy to
do that okay that covers quite a lot of the the stuff that we've been doing
over recent months, there are a couple of other things.
We had some issues around utilities recently.
Some of our landlords, particularly our international landlords,
(23:44):
don't always quite grasp the level of micromanagement needed for managing gas
and electric, but also water bills, council tax, Wi-Fi, etc.
So this is something that we've always offered. But if you want us to,
we can manage all that for you.
You do have to be one one of our landlords already because obviously
the cost of the gas and electric and water and wi-fi and so
(24:05):
on is deductible from the rent but we can set up
those accounts monitor those accounts for you pay them
and then just deduct it from your rental income and some landlords
just prefer that model because they just want it to be completely hands-off because
they just are too busy or don't quite understand how
it all works and they just want us to manage it for them which is
absolutely fine and we can do that we had a situation recently
(24:26):
where a landlord had a property and the electric
bills were too high and he couldn't quite
work out why and we couldn't quite work out why either they
were just coming in a good almost 30 to
40 percent more than they should be anyway we did
a deep dive on it and we realized that the energy supplier was actually charging
them what we believe to be the wrong rate they had the system on an economy
(24:49):
seven setup and their night rate just didn't make sense anyway we made a few
changes and the next bill after that That came in at about half of what it would be charging.
Just because we managed to speak to the supplier, interrogate them a little
bit, interrogate the tariff and switch the rate.
So that's what we like doing. We like saving landlords money.
It's important that their houses remain profitable.
(25:10):
If they're not profitable, they're not going to want us to continue to rent them.
So we can certainly help with anything utility related with that.
Now I'm going to move on to the final section of this episode where we can help landlords.
And that's keeping up with the market. Now, having been in the market for more
than a decade, we've seen cycles.
(25:31):
We've seen the development and improvement of quality accommodation across the
town and cities that we operate in.
We've seen rent increases dramatically in line with that.
And something that we're going to start talking to our landlords about is having
a second or third iteration of their property.
(25:51):
Because the four-bedroom, one-bathroom HMO that was created eight years ago,
that yes, has been kept compliant and clean and tidy,
is just not going to generate the likes of rent that a four-bed with two bathrooms
or a four-bed all-on-suite or a four-bed with a little studio could create.
Now, there's two schools of thought here. You can just keep the property as
(26:13):
it is, keep it clean, tidy and compliant, offer lower rents and still generate an ROI.
That's absolutely fine. But what we would recommend is creating that second
iteration of this property.
How can we improve it to stay in line with what the market wants?
And how can we improve it so we can max out on rental income and max out on return on investment?
So I did a few sums here. Let's just say you've got a five-bed HMO.
(26:33):
It's a little bit tired. You've had it a while and you're managing to rent each room for £500 a month.
Okay, five-bed, let's say, all-onsuite. Now, there is a market out there at
the moment whereby if you provide a modern en suite with a TV,
with a desk, that's a good size that has modern interior design and perhaps
has a little fridge in there or a tea station and a kettle and a toaster.
(26:56):
And just providing as much sort of facilities we
can get 600 to 650 a
month for those rooms and we know that because some of the new properties that
we've been developing that are like that big tvs desks t stations etc are close
to that 650 so you can stick with the 500 a month as is or you can invest a
(27:17):
little generate 650 if all five of your rooms generated 650 a month rather than 500.
That would be an additional income of £750 a month, which is £9,000 a year.
Now, I know people that are generating £750 a month total cash flow for a property.
And effectively, as a landlord, you could be generating enough profit that you
(27:39):
would get by buying another property, but you haven't got to buy it.
You've actually got it here right in front of you. All you need to do is modernize
and upgrade your existing building, and it's going to cost you nowhere near
as much as buying another house.
Let's just say that it cost you if it cost you
nine thousand pounds to do those improvements you'd
have all your money back in a year let's say it cost you eighteen thousand pounds
(28:01):
to do those improvements which i don't think it would that's a 50 roi money
back in two years it's kind of a no-brainer really and we do have some landlords
that have some nice big rooms that i think we could do a lot with so i will
be reaching out to them between now and the end of the year
to say in 2025 let's raise the game a bit let's make these modern and more attractive,
because we can get the rents rents are soaring in
(28:23):
stoke and crew we've just gone for our i
think it's our fourth or fifth rent increase since
before the pandemic we're not talking about huge talking about you know 25 and
50 pounds at a time but an ensuite room that was once 400 we can now comfortably
get you know 600 654 and if you're one of those landlords still getting those
low rents you've got the ability to get more but we do need to make some improvements to the property.
(28:48):
If you are not working with us at the moment as
an agent but have a property that you
think this needs a second iteration it needs a second lease of
life i'm done managing it myself or the existing agent has only been renting
it at its sort of bare minimum we can look at taking it over we can apply our
interior design expertise we can tell you what's needed to get it both compliant
(29:10):
and very very much design focused and looking good with what the market needs.
And then we can then take over that management and we can get a lot higher rents.
So that's definitely something to think about.
And again, something that we will be promoting as we go towards the end of the
year, because you're sitting on thousands of pounds of additional cash flow
that you're just not getting because the property is just a little bit stuck in time.
(29:32):
Some other things we can look at is a change of strategy. As the market changes,
we've got more international tenants coming into Stoke and crew.
We've got people wanting shorter stays. And that's an area that we've always
flourished in, being able to be a little bit more flexible with our houses because
we do have the service accommodation element of the company.
So if somebody wants a one-month stay, two-month stay, three-month stay,
(29:53):
somebody wants a one-week stay, on some of our properties, we can provide that.
And the rate that we can charge is very attractive, both to the guest,
because it's a lot cheaper than a hotel but equally it's profitable for the
landlord so when you're when you have an asset you need to look at do i need
to improve my asset to stay in line with the market demands.
(30:14):
Or do I even need to change my strategy to stay profitable?
And because we do have our own properties, that's the sort of stuff that we're
thinking about all the time.
So if you're a landlord and you say, I've got this property,
I'm thinking about doing X and Y, we're thinking about it ourselves as well.
So we're more than happy to guide you and shape that asset to get it performing as good as possible.
(30:35):
And effectively, that's the business we're in as owners, as property managers,
as property problem solvers is we need to make sure that our assets are making money as best we can.
It has been a tough couple of years. Interest rates have eroded a lot of cash flow and profits.
So has compliance. The compliance requests have been so advanced that we're
(30:55):
having to spend cash flow on certificates and fire risk assessments and upgrades
to smoke alarm systems and so on.
But if you have a fully compliant property that is now ready to be sweat in
the market, then that's a really good position to be in. You don't want to be
sweating an asset and it's not compliant because all you're doing is creating risk around your asset.
So I hope you found that useful and that gives you an idea of the different
(31:16):
services that we can offer at Essential Management.
And I'm sure there's some that we haven't offered yet that we can help with.
So if you find yourself in a bit of a unique scenario and you're in Stoke and
you're in Crewe or you're in Birmingham, Derby or Burton and you have a property
problem, I'd go as far as saying that we can help you to solve it or we'll know somebody that can.
On that note, I hope everybody enjoys the rest of their summer,
(31:37):
that your property businesses are going well and as best as they can.
And I look forward to catching up with you on the next episode.
Music.
We hope you enjoyed today's episode. And if so, please hit subscribe and share
with those who you think would enjoy it too.
To get in touch with Paul and Amanda directly, please visit their website,
(32:01):
www.essentialpropertyoptions.co.uk for more information.
Music.
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