Today we hone into a specific niche strategy, where rent-to-rent can be combined with one of the emerging strategies of the moment: serviced accommodation. I have labelled this as rent-to-sa to distinguish it a little. My guest today is Rob Stewart, who is a property investor and businessman, as well as being an educator. He has a strong reputation for systemising a property business to achieve growth and scale and as you will hear, will share some of those tips in our discussion too. Serviced accommodation or serviced apartments & rooms are an application of the second ‘rent’ in the rent-to-rent strategy that can realise very attractive cashflow with little or even no finance required.
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Resources mentioned
CRM & Database: Less Annoying CRM
Channel Management System: VReasy + My Booking Pal
Merchant Account: Stripe
Rob Stewart’s contacts: The Property Education Group & Facebook
Link to the Podcast feedback survey
Today’s must do’s
Serviced accommodation (or apartments or rooms) is an emerging property strategy BUT please make sure that you get educated and comply with the regulations to avoid having an unsustainable business model. If you do all that, then you can look forward to a high cashflow property strategy with a very low starting financial capital base.
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Transcription of the show
Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and it’s a pleasure to have you join me on the show again today.
We went into a fair bit of detail about Rent-to-Rent in my discussion with Kemi Egan last week, and now we will hone into a specific niche strategy, where rent-to-rent can be combined with one of the emerging strategies of the moment: serviced accommodation. I have labelled this as rent-to-sa to distinguish it a little.
My guest today is Rob Stewart, who is a property investor and businessman, as well as being an educator. He has a strong reputation for systemising a property business to achieve growth and scale and as you will hear, will share some of those tips in our discussion too.
Serviced accommodation or serviced apartments & rooms are an application of the second ‘rent’ in the rent-to-rent strategy that can realise very attractive cashflow with little or even no finance required, which is why we are featuring it in this series on property finance as a standalone approach. As Rob explains, it is good to have strategies that address both wealth creation through asset accumulation and also income through high cashflow.
Let’s have a listen to our discussion now…
Richard: Hello and welcome to another edition of The Property Voice podcast, my name is Richard Brown and as always, it’s a pleasure to have you join me again on the show today. We went into a fair bit of detail about Rent to Rent in my discussion with Kemi Egan last week, and now we will hone in on a very specific niche strategy where Rent to Rent can be combined with one of the emerging property strategies of the moment, namely Serviced Accommodation. And I’ve labelled this as Rent to SA to distinguish it a little bit. But it’s a variation on a theme. My guest today is Rob Stewart who is a successful property investor and businessman as well as being an educator like myself. He has a strong reputation for systemising a property business to achieve growth and scale. And as you will hear, we will share some of those tips in our discussion as well. Serviced Accommodation or Serviced Apartments and rooms are an application of the second rent in the Rent to Rent strategy. They can realise very attractive cash flow with little or even no finance required. Which is why we are featuring it in this series on Property Finance as a stand-alone approach. As Rob explains, it’s good to have strategies that address both wealth creation through asset accumulation and also income through high cash flowing strategies, at the same time. So, let’s have a listen to our discussion with Rob now.
Richard: Well I’m delighted to say that on The Property Voice Podcast today we have got a good friend of mine, Rob Stewart, and he is doing an awful lot which is making waves I would say in the property industry and a lot of different fronts. We talked to you about a lot of different things, but thanks for joining me today. You are here to talk specifically, in my series regarding creative financing and I know you could talk about a lot of different things in that respect, but specifically about Rent to Rent and Serviced Accommodation but why don’t you say hello to our listeners and introduce yourself, that would be great…
Rob: So, Hello everybody, Hello Richard! Thanks very much for inviting me to come on to The Property Voice and hello everybody who is listening, it’s an absolute pleasure to be on. Thank you for the introduction as well, as you say, got quite a few models going on but if I can summarise it in a nutshell, after going through the, I guess the standard building blocks of property, starting with single layer, then progressing to HMOs—Houses of Multiple Occupation and then on to larger developments, I really focused on systemising our property business which has enabled us to branch out and develop that sort of true multiple streams of property income. One of which is the Serviced Apartment model, and as you said I’m going to be talking to you today about the Rent to Rent side of it.
Richard: Fantastic. Brilliant. So, as I say, I could talk to you about many different things, and you never know, we might to do that again in the future. But, in terms of Rent to Rent itself, I suppose we can break down Rent to Rent and Serviced Accommodation into two separate parts—but if we start with Rent to Rent, how would you define that in general terms, assuming a zero base of understanding the concept?
Rob: You are right, they are two separate strategies really. Now for me, Rent to Rent is where you find a landlord and you would rent, and I would also say lease as well…I know a lot of people don’t talk about leasing, there is different ways we can take control of a landlords existing property, but for today let’s talk about renting it from him and then effectively rent it to somebody else. Now, I know a lot of people, when you say Rent to Rent immediately think, HMOs, houses in multiple occupation, where you would rent the property off the landlord and then sub-rent to multiple tenants by the room, take a three, four bed house and you can rent it out to five or six tenants. So, that’s one end of the Rent to Rent, but really there’s lots of different, sub-elements to the Rent to Rent market. You could do it with commercial property for example, you could take a commercial unit and then split it up into different areas and sub-lease those to different companies. Or in this case Serviced Apartments. So, what we are doing is taking probably smaller accommodation units. So, one-bed flats, two-bed flats, maybe even some houses, and rather than renting out by the room, what we are then doing is renting it on a short-term basis, to, I guess one identifiable group of people.
Richard: Ok, so, drilling down into the Serviced Apartments or the Serviced Accommodation type of route as you quite rightly say, we are renting off somebody who owns that property, be it a private owner or it could be a landlord I expect. Then we are going to rent that accommodation out, let’s talk about Serviced Apartments, what makes that distinct from HMOs and other kinds of sub-letting models.
Rob: So, I guess the two main elements that differentiate are the serviced element, so what we are providing is a full walk in unit, so its fully furnished, the kitchen is fully furnished, there is bedlinen on, there are towels, almost like a hotel room I guess. But as a whole apartment and its self-catering accommodation. So, a lot of people know this concept from the holiday let type model, although there’s lot of different sub-sectors within Serviced Accommodation. So, we specialise in city breaks, we are based in Chester and the North West of the UK, and also the blue-collar contractor market. There is a lot of companies, like contractors who move around the country, work around the country and they will come up on a Sunday night and they need somewhere for Sunday night to Friday morning and then they will go home for the weekend. But, they are in on a short-term let basis, so, they don’t come in under an AST, a short-hold tenancy, and we will I’m sure, talk about it in a bit, but we source the people who take the units in very different ways to a normal residential AST. So, those are the two main differentiators, we service the units, we clean them and the laundry and also, it’s on a short-term basis, by short-term I mean less than six months, because if it’s above six months, we would be looking in the AST territory.
Richard: Yeah. Would I also be right in saying that from, probably getting a little bit too deep too quickly, but you mentioned furnished holiday lets, in your description there, from a tax point of view would they potential be classified as furnished holiday lets?
Rob: Yes, they are actually. We are getting quite deep into the detail straight away but when you start to look at things like VAT, for example, it’s going to have VAT implications, as you say with tax, how you can then run through direct expenses of running it, furnishing allowances…with all of this stuff, without going too deep into the detail, what you need is a good accountant who understands the model and can really identify exactly what model you are operating within the Serviced Accommodation model if you like.
Richard: Ok, let me correct myself and come back a little bit before we get too much into the detail. So, in terms of a strategy for property investors then, would you say that right now, it represents a good opportunity? Right at this moment and perhaps looking a little bit further down the horizon as well?
Rob: I would say from what I have seen, we have got quite a lot of different property models going concurrently, I would say in terms of a cash flow strategy, this is the best that we have ever operated, in terms of the cash flow per unit that we get out of a Serviced Apartment. Now, whenever I talk and work with clients talking about property, I always recommend having two strategies going concurrently—one being a wealth building strategy i.e. physically buying assets that you can then rent out and get a return on, and the other is a cash flow. And the reason I like to have both of those is that the wealth building strategy is actually very capital hungry, and I’m sure you have experience of this yourself, Richard, and many people who are listening today will know that going to buy a property, you need a load of cash to do it. And then, when you buy it, you have got all your fees, you are probably going to have to renovate it, and when you look at your cash flow, it’s quite a long cycle from putting money in to potentially getting money out, if you do get any money out at the other end.
Richard: Yeah, I totally agree, I think from the dual strategy approach, wealth building, which you say, is capital intensive, we all know about that and a cash flow strategy, which I guess you can take out and top up or even spend the cash along the way. Good sensible advice, I can see the merit in having a Serviced Apartments, or Serviced Accommodation strategy running alongside maybe longer term asset building. I guess I wanted to pick your brains about the potential benefits, and when I say benefits, there is a number of different stakeholders or parties involved with this kind of Rent to Rent, Serviced Accommodation model, or Serviced Apartment model. So, what would you say are the respected benefits for those particular stakeholders, Rob?
Richard: I think this is the really cool bit about the model, we love to talk about win/win don’t we, in property and getting win/win deals. And I really think with this model we have got that genuine win/win/win with the three parties. So, for the property owner, what they are achieving is a guaranteed income for themselves, they know what they are getting month in month out, they are not going to have to worry about voids, we cover a certain amount of maintenance up to a certain level, sort of £100-£150, we will cover that ourselves, and they know they have got that guaranteed income. For the guests, I will talk about the guests before we get to what’s in it for the investor, what we are actually providing is a really high quality product, a really high quality place for them to live actually at a price that probably rivals most of the hotels, again depending on the model you are operating, we have got a unit for example, that will be cheaper than the local Premier Inn, or Travelodge, but it’s a fully kitted out flat, kitchen, self-catering facilities, very comfortable place for a contractor to live. And in Chester we have got some very high quality units which are on the same road as, anybody who knows Chester will know the Grosvenor Hotel, it cost about £500 per night, well for the same sort of quality, you can get a two bed Serviced Apartment through us for £100-£150 per night which can get 4 people in. So, as a guest, you are getting hugely high quality stuff for £40, £50, £60 per night per person, depending on how many there are in the group, which is excellent. So, really serving the needs of both the property owner and the guests. And of course, as the investor, what we are doing is we are tying that together, and our margin is really made from creating this synergy, creating this joint venture. And I think when you are generating no money down strategy to creative finance strategies, almost, as the investor you are acting as a joint venture broker, you are putting parties together and you are solving a problem. By solving that problem, you are able to take your margin. Now, one of the great things about Rent to Rent Serviced Apartments over Rent to Rent HMOs is, it’s a much cleaner model. And I say that, I don’t particularly operate in the Rent to Rent HMO market, I do actually Rent to Rent some of my own HMOs, for ease, as a landlord, it suits my purposes, but a couple of things with the HMO model is the exit at the end—so, if you have got a house full of five tenants and you have got to give them all notice under Section 21, you have to manage that process quite carefully. And you have also got the issue of framing it so the landlord in the first place is going to be sub-letting rooms on an individual basis. So, with the Serviced Apartment model, it’s much cleaner, you only have short term tenants and we have definitely found it’s an easier sell to the landlords or to the investor who owns it. It’s an easier sell to frame it to them, to allow us to take control of it.
Richard: Got you. So, I think, is it the next wave? You talked about HMOs there and a lot of people are talking about high cash flow strategies with HMO but would you say Serviced Accommodation, Serviced Apartments is the next wave of that type of model?
Rob: Yeah, without a doubt, and I think as with any strategy, with any model, there’s going to be a natural evolution of it, in that it will start, somebody will think of this idea or reinvent it, repackage it, so, Rent to Rent is probably nothing new, it’s been going on in commercial property for many decades. And then, you will get the earlier doctors, they will get it in very early and have huge returns from it, and then it will become more mainstream, then eventually, the market will become more saturated or the competition drives the price down and the margins and the returns to climb. And I think that’s natural in any market, not just property, but any business really. So, certainly in our areas, and again every area is going to be different, we probably here, saturation in the HMO markets, a couple of years ago, really. And we almost seen it drop of a cliff overnight. And that’s one of the reason we started looking at other cash flowing strategies. Now I would say, we are still at an earlier doctor level for Serviced Accommodation and as our nation, as our culture becomes more transitory, I think information revolution, more people can operate with a laptop and a phone from anywhere and people are working in a more transitory capacity, rather than just sitting in an office 9-5. That is actually really helping fuel the fire of the Serviced Accommodation model. So, you have got two things, in earlier doctor phase and we have got this change in how we work as a culture, and a nation and that’s giving that great opportunity to get in at this point in time.
Richard: Excellent. And, talking about getting in at this point in time, I guess we have to try find some of these properties, don’t we? We are talking about Rent to Rent here, so it’s not a case of going to buy a property and turning it into a Serviced Apartment. The whole idea of it being creative financing is we are leveraging an asset that somebody else owns. So, how do we find them Rob?
Rob: Oooh, do you know what, this is the question we always get asked for every strategy! And, there is actually a really simple answer to this, which is hopefully good for people, in that anytime you are trying to find property for any strategy there is only three things you need to know—you need to know the circumstances of the vendor or the landlord, you need to make sure the timing of the deal is right for all parties, and you need some leverage to go in with. So, whatever we are doing in property, we look for those three things in every deal. Let’s say we are looking for Serviced Apartments and we are on the Rent to Rent strategy, the real easy quick wins here, are to find units that are sticking on the rental market, and work out why they sticking on the rental market and offer a solution to the landlord that will fix that. So, you know, if you are looking in a rental market that’s really buoyant and properties are coming on and renting out in a couple of days and there is not a lot of stock on, then it’s probably going to be more difficult to find a landlord that’s going to have the motivation to take your deal. Whereas if you look at different sectors, and I don’t want to—well I will give away all our secrets actually, and that our gift to you. What we look at in Chester is we look at larger units, so we look for flats which are two or more bedrooms, so three seems to be a bit of a sweet spot, with no parking and no garden. So, if you are in a city centre apartment, you have got a big flat, which, three plus bedrooms, is probably going to appeal generally to a family market, however, no parking, no garden, that’s going to put a family market off. So, with those set of circumstances you will identify there is an opportunity there, especially if the property has been on the rental market for a bit. We have a couple that were sitting on the rental market for, one of them for at least 3 months and one of them for 6 months, when we picked them up and the landlord had a bit of interest but nothing much and he put, I think he had put a company in for a week or something like that and they had left. So, there’s huge motivation there, for him to take it. So, when we come along and offer him a guaranteed rent for 3 years, they jump at it and for a good price as well. So, that’s a really good thing, to identify your niche, identify your market, and see what’s sticking and go for that.
Richard: Sounds good! Very good, I see I have got a few notes after that, thanks Rob! So, there is a purpose really. I guess just more generally then, just to get back to headlines, generic principles. What kind of general tips and pointers have you got for people who may be starting out? So, whether they are starting out in property generally, or particularly with this type of model?
Rob: This is probably going to sound slightly clichéd, but I would always say the place to start, is work out what you are trying to achieve and then work out a roadmap to get there. So, I will go into specifics in Serviced Apartments, but I just want to start with this, overarching point—a lot of people think they are going into property or into anything for a reason, but don’t really have that strong enough reason, it kind sounds like a good thing to do. But, what you need to do is, define exactly what you are doing, what you are trying to achieve out of it and a roadmap of goals and steps to do it. And then really, when you have outlined that roadmap and you have got your stepping stones, you then just do everything you can to hit those milestones that you have set yourself. So, I know a lot people do, they will come onto the market, there will be 3 or 4 properties and they won’t get…they will put a few offers in and they won’t get accepted and they will kind of lose heart and give up at that point. Whereas if you know where you are going and what you are trying to do, then it’s much easier to push through the hard times and eventually you will get those deals, and I can show you that out of experience with a lot of the people we work with, sometimes it might take a week, sometimes it might take 6 months. But everything is putting you towards that certain goal and direction. Now, with the Serviced Apartments, I would say this is a great model, because anybody can really start today with this model. The biggest thing is identifying them, but I would say have self-belief. So, when you identify a suitable property, you speak to the agent or the landlord, we do both, we have relationship with the letting agents and we also go direct to landlords. You need to have that self-confidence in the value that you add to this equation when you are speaking to them, because if you don’t believe in yourself, that will come across in your negotiation and the letting agency or the landlord, they won’t want to work with you. They won’t believe what you are talking about, congruency with you and what you can offer is a major, major thing when you start out in this. So, self-belief, I would say, is the biggest step.
Richard: I agree with that, and you know, when you haven’t got one, it’s very hard to position yourself. It’s the kind of, fake it till you make it type of principal, isn’t it? So, maybe not the best term to use, but it is a case of demonstrating the benefits, being a professional and just being as you say, confident and having that self-belief then you will get that first one. Once you have got that first one, the second one gets easier.
Rob: I would say perception is a huge thing without a doubt and I think from that, I would go in with a back story, with a brand. I don’t mean go and spend thousands of pounds on branding agencies to give you a brand. I just mean you can talk about yourself, talk about what you do and why you do it. Now it could be, for example, I’m just plucking stuff out the air here, you could be living in Manchester and you look at properties within two miles of Manchester Airport, and your brand is, you are working on behalf of a client who puts in contractors that work at Manchester Airport and they have got a demand for two or three properties over the next three months, anything you can do to help me? And then, it’s not just somebody calling up and saying you got anything I can rent out from you and put some other people in. You have actually got that backstory and the ability to communicate on a level with the letting agents or the landlords.
Richard: So, it goes back to good old marketing really. Very good.
Rob: Not always. As you know the marketing world.
Richard: Exactly, exactly. So, I guess, we talked about some of the benefits, some of the upsides and you know, maybe how to get going. I can’t really leave it without actually saying, and I know you are very transparent Rob, in the way you work, that’s one of reasons that we have invited you on. What about the downsides/risks or the ‘gotchas’, things to watch out for if you like, with this type of model?
Rob: As with everything, there is always a long list, but as long as you are aware of them, and you know how to combat these things, nothing is going to ruin this model for you. I think we have mentioned one of them already, actually, that’s the finances. So, when you are looking at finances with Serviced Apartments it is a VAT-able income streak. So, therefore when you reach the VAT threshold, which actually you can do very quickly with the Serviced Accommodation model, you know if you think you are renting a room for £100-£200 per night, you have a few units on and you are hitting the VAT threshold, I would say when we stated we were probably working on about 20% net profit margin in the business. And of course, you hit the VAT threshold, suddenly, you have got 20% VAT, so your margin gets wiped out. So, you need to make sure your pricing strategy is right otherwise you are doing this work and not making any money. So, that’s one thing to consider. So, as an example, one of the things we are doing with that is we are going on the flat 10% VAT rate, because you haven’t got that many expenses coming out. Definitely, the income exceeds expenses, the rent you pay to the landlord, you can’t claim any VAT back on, so that’s one thing. You need to make sure that you are working totally above board with the landlords. So, you need to make sure the properties you are taking on, you have the ability to actually take them on and put short term tenants in. So, if a landlord has got a property with a buy to let mortgage for example, the chances are, a mortgage lender being happy with you running it as a short term let, I think are pretty much zero. I don’t know of any off the top of my head, so we only work with landlords who have either un-incumbent properties or are on commercial products, where the lender has said they are happy for short term lets i.e. less than six months. Again, insurance, make sure you get the right insurance product on. And these are all things you are going to have to guide the landlord through, and are all, might be hurdles, they might suddenly think, I’ve got to do all these extra things to do this, is it worth it? So, just make sure it’s worth it for the landlord. We do the whole process. If it’s going to cost them anymore, things like insurance products, we will pay the difference. We will pay for any, small bit of maintenance. And then, you need to systemise it as much as possible. So, here is probably the key difference between running, let’s say an HMO model versus the Serviced Apartment model. You have people checking in at 10pm on Friday night or a Saturday night, you will have people at 7am on a Sunday morning phoning you with questions, like why the TV isn’t working for example, and these are all things we have experienced and therefore put systems in place to combat all of these things. And actually, we have had discussion off air once before Richard, that really, with this model it’s impossible to take human totally out of the loop? Just because there are so many variables that can happen with running short term lets and having a high turnover of occupants. So, really, you have to start building your team, be it Virtual Assistants, Personal Assistant, physical person sitting in an office, you need to start building your team as soon as possible, so that you aren’t dragged into the day to day running of your apartments.
Richard: Yeah, it is a business isn’t it, at the end of the day. And as you said right at the beginning of the call, it’s like a hotel model, so, if you think about a hotel, what do they have? They have a reception desk, they have maintenance people, they have cleaners, they have a whole range of different people performing different duties and it’s not too dissimilar to that. So, you definitely need the systems and the people. We did have that conversation about you can’t get rid of the human in the loop. It has to be there. There was one, I don’t know if you mentioned and I missed. Is there any planning issue that people need to be aware of?
Rob: Yeah, this is something I would recommend everybody touches base with their planning department. There will be slight variations council to council. I would say still, there are some grey areas, in this model with planning for sure. I mean, definitely if you are going to buying a big building converting into 8 bespoke Serviced Apartments with a concierge, without a doubt that’s going to go under a different planning use class. Also, you will be able to operate it for a certain number nights per year, on short term lets, before they will class it as hotel/B&B. So, definitely liaise with your local Council, make sure everything you are doing is above board. If you operating without that, or against those regulations, that can put you into hot water with the Council.
Richard: Good advice. I’m going to ask you in a minute if you have got anything in particular you could share with our listeners perhaps before that, are there any particular tools, resources or applications, I know you love all this sort of stuff, anything in particular that you found very helpful in this space, in terms of Rent to Rent Serviced Accommodation, that potentially you could recommend for our listeners?
Rob: Yeah, so, the big thing that we use to find property, we pipeline all of our property, so, we have, this is a real marketing term so don’t worry too much about the term, we have funnels of property, and we use a database, Customer Relationship Management database to find property and put them through the various stages of the process and keep up to date with that. So, we actually use something called Less Annoying CRM, and I’m going to give a link in a little bit to a free training video that we have put together on how to use that and start pipelining properties. That’s finding them, when you have actually got them, we talked about systems, getting the systemised as soon as possible you need a channel management system. Now, a Channel Manager is effectively, you will list your properties on one side and they will ripple them across all the big booking portals, like Airbnb, Booking.com, Expedia, because what you don’t want to have to do is, let’s say somebody books on Booking.com, and therefore you have then got to go to Airbnb and update your diary there and the Expedia and update your diary there, so I know one of the big channel managers that people use is Kygo. We have not actually gone down that route, we have gone down a slightly different route, because we want to get the automation in even more early. So, we use a combined system called Breasy, which is actually a property management system rather than a channel manager, but it puts a lot of automation in the process. So, if somebody books, they will then get a series of emails that get sent to them, they will get an email sent to them when they are in property saying when you check out you need to do x y and z. It will automatically allocate cleaners for the check ins and check outs, all that cool stuff which I get a bit geeky and involved with in systemising the business. But I like it and that links through a channel manager called MyBookingPal.com and then MyBookingPal ripples it across all those big portals I talked about. So, you definitely need something like that, and then the last thing which you will need is a merchant account, to actually take payments. So, we use Stripe.com, very easy to set up, you will be able to set it up in 30 seconds or so, and then you log in, have a dashboard, and either take payments over the phone or you can send them a link and they can click on the link and pay for it as well. So, there is three big things, Less Annoying CRM, Breasy in combination with MyBookingPal and Stripe.
Richard: Brilliant, I wasn’t expecting so many, that’s fantastic. You did mention Airbnb, booking.com, you have got all sorts of things now, you have got Trip Advisor, HolidayRentals.com.
Rob: This is just a little anecdote on the side. We were going through the Channels Manager to see what there was and we obviously, work in Chester, one of the portals that Channel Manager links it to is the Cheshire West Tourist Board. And you think, how could that be any more perfect, it actually puts your properties up on the Tourist Board, which then links to all the attractions in Cheshire, Roman Walls and Beaver Experience and all this sort of stuff. So, there’s is lots of cool resources you can hook up to. And, of course, you don’t have to use, the booking portals, they are not cheap. One of the big expenses you are going to have is the booking fees, you can market them yourself, Facebook, Google, but of course, we are back to marketing again, and it is a business so you are going to need to do some marketing of it at some point.
Richard: Excellent, so you did touch on just now, maybe something that you could offer our listeners, I’m going to pick your pocket there, what have you got in mind that you could share especially for our listeners on The Property Voice podcast Rob?
Rob: So, we have got a series of training videos, we call them our MAPs, or our Management Automation Procedures. It’s all the things we do in our business, we put computer training videos together to help people. Now, what we are doing is, we are making one available for listeners of The Property Voice, for free. To get into it, it’s a bit.ly link. Its bit.ly/PEGMAP1 and what this does is, it’s about 10-15mins, it tells you how to set up your CRM on Less Annoying CRM, how to identify properties, put them in the system, set up your funnels, it’s got a basic funnel you can use to start from scratch, and start finding the properties. And of course, you can actually re-purpose this and use it for any strategy, it will work for your Serviced Apartments, for your HMOs, finding commercial developments, whatever you want to do. It will work for that. It’s a really good resource. It’s something I actually get my Virtual Assistants to do now, they do all the data scraping and put everything on the database for me, and then it’s easy, you just drop into the database, see what they have found and decide if you want to take it any further. So, that’s bit.ly/PEGMAP1
Richard: Fantastic, I will put the link in the show notes, obviously so people don’t have to scribble all that down, they can just visit the show notes and find that link. But I think more generally Rob, how can people find you, where should we point them to? Whether that’s specifically to one of your business interests or to Serviced Accommodation, where should they go?
Rob: Probably the best way to find me is at The Property Education Group website which is, www.thepropertyeducationgroup.com we have quite a lot of resources on that site, all free resources, and next steps as well. Now, as I alluded to earlier, we have quite a few strategies going on and different business interests as well, but we really focus, myself and my business partner John Paul, who some listeners might know, he once casted in group in the North East of the country, we are all about helping investors systemise their businesses. Really creating a sustainable, scalable business model in property. So, if you go over to that website and see what’s there and it would be great to see you at one of our events in the future.
Richard: Yeah and I can highly recommend it, I have been on one of your events…The Systemising Summit I think it was called, something like that, The System Summit, wasn’t it?
Rob: (inaudible)
Richard: Thank you! You would know the name better than me, yeah, I have been on that, it was very worthwhile. The whole idea of 80/20 thinking has certainly stuck with me. And, I think if you are still sharing that. I think on that vein actually, maybe, I will be a bit cheeky to be honest with you, Rob, your systems, 80/20 thinking, property technology is definitely where I got to know about you and I know you are more than that. But, would you be interested in coming on maybe another time and talking more generally about systemising and leverage and that kind of thing?
Rob: I couldn’t think of anything better, than spending another 30 minutes talking about systems and leverage, so that would be an absolute pleasure.
Richard: Maybe we should both get out more…that sounds fantastic. Absolutely brilliant Rob, thanks so much for sharing that. That’s scratched the surface a bit, but hopefully it’s given a lot of our listeners some insights into this new strategy, this new model. And in particular, in the context of creative financing, how maybe you can get involved in a property strategy, a high cash flowing property strategy with minimal, or fairly low levels of capital. That’s been invaluable. I really appreciate your time and experience and knowledge here, Rob, it’s been great.
Rob: Pleasure, thank you.
Richard: No problem at all, you take care and I will catch up with you soon…so I hope that was interesting to hear, how the principal of a low cash investment strategy such as Rent to Rent can be applied, along with a property marketing strategy like Serviced Accommodation for maximum leverage. This combination of a legal structure in the form of sub-letting or sub-leasing along with an alternative route to market, through holiday rentals or short term lets, can be used to generate high income, from a very low capital base. And this is very much like a hotel model, so as such it requires some different skills, management and regulatory requirements when compared to other more mainstream property strategies. I often talk about the trade-off between time, money and know-how, in this case, the level of money to get into a deal can be low, but the level of time and know-how required is a lot higher. However, the time factor can be reduced, as Rob said, by systemising, delegating or out-sourcing some of the workload. Rob is pretty good at the systemisation side of things actually, so do make sure you go and have a look at some of the tools and apps that he mentioned in our discussion and his website as well.
As for the know-how side, this is a specialist area of property investing and this means its subject to different rules and regulations to other aspects of property. For example, in London, it’s illegal to let out a property as a short-term rental for more than 90 days in a year without having planning permission. Some people having been flirting the rules, and they may actually have got away with it as well. But things are now starting to tighten up, as shown in fact by Airbnb’s recent policy change to ban people who are in breach of these planning rules. Insurance and lender approval are also, areas that we need to get familiar with. So, do make sure that you do research thoroughly, before ploughing ahead with this type of strategy. That’s all said, as Rob also mentioned and highlighted, Serviced Apartments and similar variations can offer a real productive win/win/win between property owner, guest and investor. And often, with a very low starting fund as well. Ok, so that is the discussion part of things over.
I just wanted to conclude with a couple of final things from me today before I finish…the first is that many of you have contacted me to say that you would have like to have joined us at our 360-degree property business workshop that we held in London in November, well the good news is, that we are planning to run another one. Early in Q1 of 2017 in fact, probably a bit further North of England, so watch out for more details of that through our various channels. Numbers will be limited, you can also get on the waiting list, to get an early bird invitation before most other people get to know about it. All you need to do is just email me, podcast@thepropertyvoice.net with 360-degree workshop in the title, or words to that effect, and I will know what you are talking about. Finally, a big shout out to my dad, he is not very well at the moment actually, and unfortunately he is in hospital, and I have travelled to see him and be with him or be near to him at a tough time. I mention this for a couple of reasons really, one is that I am hoping to get some collective positive energy going his way, his name is Bill Brown, so if you could spare a thought for him right now, I’d be very grateful, and I’m sure he would be as well. The second really, is just to highlight that my content might be a little more infrequent, or as one rather unkind person highlighted, a little bit more error strewn than usual. Well, I don’t claim to be perfect, but I do claim to deliver valuable property content, so if you can live with the odd typo or grammatical error, that’s fine, but otherwise you are happy with the value I share freely on the topic, then feel free to stick round. If not, well, hasta la vista baby I suppose!
As always, email me personally if you want to talk about anything from today’s show, or more generally in property investing in fact. The show notes will be over on the website, thepropertyvoice.net but right now though, I just want to say thank you very much for listening, once again this week.
And until next time on The Property Voice podcast, its ciao ciao….
Property Chatter
Interview with Subject Matter Expert: Rob Stewart.
Resources mentioned:
CRM & Database: Less Annoying CRM
Channel Management System: VReasy + My Booking Pal
Merchant Account: Stripe
Rob Stewart’s contacts: The Property Education Group & Facebook
I hope that was interesting to hear how the principle of a low-cash investment strategy, such as rent-to-rent, can be applied along with a property marketing strategy like serviced accommodation for maximum leverage. This combination of a legal structure in the form of subletting or subleasing, along with an alternative route to market, through holiday rentals and short-term lets, can be used to generate high income from a low capital base.
This is very much like a hotel model though, and as such requires different skills, management and regulatory requirements when compared to other more mainstream property strategies.
I often talk about the trade-off between time, money and knowhow. In this case, the level of money to get into the deal is low, but the level of time and knowhow required is higher. However, the time factor can be reduced, as Rob said, by systemising, delegating or outsourcing some of the workload. Rob is pretty good at the systemisation side of things actually, so do make sure you take a look at some of the tools and apps that he mentioned in our discussion.
As for the knowhow side…this is a specialised area of property investing. This means it is subject to different rules and regulations to other aspects of property. For example, in London it is illegal to let out a property as a short-term rental for more than 90 days a year without having planning permission. Some people have been flirting the rules and may have got away with it, but things are now starting to tighten up, as shown by Airbnb’s policy to ban people in breach of the planning rules.
Insurance and lender approval are other areas to get familiar with too, so do make sure you do your research thoroughly before ploughing ahead.
That all said, as Rob also mentioned, serviced apartments and similar variations can offer a produce real ‘win-win-win’ between property owner, guest and investor…and often with a very low starting fund basis as well!
OK, so two final things to mention before I finish today.
The first is that many of you have contacted me to say they would have liked to have come to our 360° Property Business Workshop that we held in London in November. Well, the good news is that we are planning to run another one early in Q1 of 2017, probably in the north of England, so watch out for more details of that through our various channels. As numbers will be limited, you can also get on the wait list as an early bird to receive the event details before anyone else, simply by emailing me: podcast@thepropertyvoice.net with 360 Workshop in the title.
Finally, a big shout out to my Dad. He is not very well at the moment and is in hospital. I have travelled to see him and be near at a tough time. I mention this for a couple of reasons. One, hoping to get some collective, positive energy going his way…his name is Bill Brown, so if you could spare a thought for him right now I would be very grateful. The second is that my content might be a bit more infrequent, or as one rather unkind person highlighted, a little more error-strewn than usual. Well, I don’t claim to be perfect, but I do claim to deliver valuable property content…so if you can live with the odd typo, or grammatical error but otherwise happy with the value I freely share, then feel free to stick around. If not, well…hasta la vista baby 😉
As always, email me personally if you want to talk about anything from today’s show or more generally in property investing, the show notes will be over at the website www.thepropertyvoice.net
Thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.