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So, last week I shared the 4 principles that I suggest can help us through this crisis: 1. Look after ourselves and others. 2. Control that which we can control. 3. Use this time wisely. 4. Look ahead for opportunities. This week, I am sharing how I have started to put these principles into practice in my own business.
I have 4 distinct elements to my own business: rental portfolio, serviced accommodation units, property developments and a property services business. Most, if not all have been affected in one way or another and I share with you how I am applying my own 4 principles to each of these business segments. It is not all pretty but it is all real! So, join me and listen to a recap of how I am addressing things in my own business, which might just help with yours.
There is also a couple of timely giveaways and also an offer to join me for TPV Live for a virtual lunch on Wednesdays during this crisis too. Drop by why don't you?
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Transcription of the show
So, last week I shared the 4 principles that I suggest can help us through this crisis: 1. Look after ourselves and others. 2. Control that which we can control. 3. Use this time wisely. 4. Look ahead for opportunities. This week, I am sharing how I have started to put these principles into practice in my own business.
I have 4 distinct elements to my own business: rental portfolio, serviced accommodation units, property developments and a property services business. Most, if not all have been affected in one way or another and I share with you how I am applying my own 4 principles to each of these business segments. It is not all pretty but it is all real! So, join me and listen to a recap of how I am addressing things in my own business, which might just help with yours.
There is also a couple of timely giveaways and also an offer to join me for TPV Live for a virtual lunch on Wednesdays during this crisis too. Drop by why don't you?
Property Chatter
Hello and welcome to another episode 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. Well, another week has passed by, anybody going stir crazy yet as we're in, obviously, the start of the second week of lockdown. Most people I guess will be at home with limited opportunity to go outside. And, of course, I think the... was it the Deputy Chief Medical Officer said over the weekend that the measures that we're facing at the moment are likely to go on for some time. So I think we probably could have forecast that, but, yeah, to hear it was, probably... I don't know, my heart sank a little bit. I don't know about yours. But needless to say what I thought I'd do this week is just share a little bit about some of the realities of what's being going on, because obviously last couple of weeks talked about coronavirus part one and part two.
I really wasn't in a great place for part one. Somebody reminded me today. I wasn't feeling very well. And yeah, it did seem like the earth was falling inwards, but nope. It's amazing, isn't it? When you shift your perspective and you shift your energy and your focus, how things can change. So, yes, we might all be locked up and maybe going a little bit stir-crazy or getting a bit of cabin fever, but that actually present some opportunities as well perhaps, which I'll come onto as we sort of expand this conversation a little bit over the next few minutes or so. Of course, in the second coronavirus update last week, what I talked about is if you'd like the four principles that I'm trying to work to and I'm recommending perhaps we can all work to and if I can remember them, because I don't have them written down in front of me.
I think there were something along the lines of take care of ourselves and indeed others. Control that which we can control. Use this time that we have wisely, and then start to look ahead for opportunities. So, yeah, I think I remembered them. So I'm pleased with myself for that. Not having the notes in front of me. This is unscripted as you might be able to gather perhaps. So, yeah, let's just maybe talk a little bit about those four principles to some extent, but equally what's been happening over the last a week in my world, because maybe that can help you in some way.
So I guess the first principle was to take care of ourselves and others. Well, it's obviously a little bit difficult to take care of others because we're constrained to home, but we can do our bit, can't we? We can check in on people we care about. Vulnerable people in particular, obviously, with the virus, and maybe we could send care packages or just notes of expression that we're thinking about people. I think at this point in time, of course, we can go a bit stir-crazy. We were in the four walls that we have and we might be... we might love the people that are with us. We might not as well by the way, but, for example, if you're in a shared house and cooped up with... I mean like a house of multiple occupancy there is what I'm saying. Hopefully, not so much with our own family, but it gets a bit tough doesn't it? If we don't have our own space, we can't go outside, it can be a bit tough.
So checking in on other people and providing an outlet. So one of the things that I've done, for example, is within the sort of inner circle of my community, I've set up a couple of forums, if you like. One is called a Coffee Time and literally just for half an hour a day, with people in my inner circle, we just... I just switch on a Zoom call and whoever wants to join in, can join in, and that's supposed to be just a casual, social chit chatty type of thing. We try and make it light. Sometimes we talk about business stuff, but actually in the large part, we don't. I think today we talked about going out for a run and waving at people randomly as we're running and how much loo paper is costing, and... I don't, I can't think of all of it. Oh, yeah, we had a little bit of a reflection about learning new skills at home.
For example, me trying to cut my own hair over the weekend, which was quite comical. Yeah, so that's kind of light, but what it means is we get to just check in, socialize, connect with one another, so that was the purpose of that. We're just doing it. And then on Fridays we have what's called a Town Hall. And so the Coffee Time is half an hour, it's just to check in. And in fact, one or two people in the community have stolen the idea for themselves, if you like, with their own family and friends and they're just having calls now and again just to check in. So that's kind of nice idea to stay in touch. I understand that Zoom has grown in popularity recently, plus other sort of video conferencing facilities are available. Something without that.
Then the town hall on a Friday is more business focused. So what I thought I'd do is just open up the channel on a Friday for a one hour call, and we just talk about business issues that might be arising. So we were talking about, specifically, how to deal with tenants, for example, during the Coronavirus, we talked about somebody's book writing opportunity. We talked about somebody who might need to pivot a little bit, who was looking to buy their own home, but if the regular residential mortgage market is not there, what alternatives are there? So we started to sort of brainstorm some ideas. So you get the picture. So maybe that's something you could replicate yourself in your own inner circle and community. But equally, don't forget, I've opened up a... what I call a Wednesday lunchtimes or TPV live on lunchtimes Wednesdays. The problem is nobody's called, but Wednesdays, lunchtime you get the picture.
If you want to do... If you want to sort of join him with that, it's literally 1:00 PM UK time on Wednesdays. I'm just going to open up a Zoom call and whoever wants to join in with that can join in with it. We can make it social, we can make your business related. It's just to connect with you guys really. So that's something offering more outwardly. There's only a couple of people so far who've actually reached out and connected with me and asked for details of how to log in. So don't be shy if you'd like to do that.
It's no charge for any of this. It's just something to give back really. So if you'd like to join in, please do and it'd be great to see you in that particular forum. But equally on the health front, you probably gathered I wasn't 100%. I was... I had the coronavirus myself and it was a bit under the weather certainly for the first week.
I'd say it was a nine or 10 day gig. So ran about nine or 10 days in, after I was not feeling great, I was feeling much, much better. And I put that to the test really by going for a run. Well, I first went for a walk, my wife told me I really should take it easy when I'm sort of getting back into exercising. So I went for a walk, initially. But I thought, no, I'm going to try for run. So I ran five kilometers and I'm really pleased I did. So I guess that's the acid test that perhaps I'm through this now. So if you worried about me, you don't need to be anymore. I'm feeling much, much better. Somebody brought me on to another mastermind call and said, "So tell us Richard, how are things with you?" And it's like, "Yeah, I've just told you I had Coronavirus I know what you want me to say."
So, yeah, it was a case of just telling people that I'd had the virus and it wasn't a death sentence. Certainly not in my case. I know, unfortunately, it is in others, so I'm not diminishing the seriousness of this particular horrible virus. But I am trying to explain that it needn't be the end of the world, necessarily, if you get it. So don't worry too much. Hopefully. And I am in a so-called 20% category where it may have affected me more perhaps than it might've done other people, but I've... touch wood, it certainly didn't. So anyway, on the health side, things I've been looking up, in terms of looking after myself and looking after others.
So that was that really, and the second part really was to control that which we can control. So what I decided to do there was just kind of break my business down again. Obviously, we've significant changes and in the midst of a crisis such as this, all the plans that we did have are out the window, aren't they?
So I sat down and I broke my business down into the segments that it falls in, which are predominantly my regular rental portfolio, which is a series of single lets and multi-lets, my service accommodation business, which is predominantly owned assets. But in one case I have a rent to serviced accommodation property, I guess, yes. So that's the service accommodation business, if you like, that I have. Then I have my development business, which is... I have seven UK developments and two USA developments currently in flight, which is not necessarily a great place to be at this point in time. But I do. And then I have a services business, which is the subscription service, deal finding service, and consultancy or mentoring service for property.
They're the main things. I also have income streams from book royalties, but it's not something I can control that much, particularly in the short term. So they're the elements effectively of my business, if you like. So what I did is, looked at each one in turn and just kind of dealt... built a plan for each one. So with the rental portfolio, to be honest with you, it's easy to get carried away, but I haven't been that adversely affected, certainly not so far. Yes, we're starting to get some tenants who are having some problems. One or two who have lost jobs or had their hours significantly reduced or indeed, because of other related issues to coronavirus, have wanted to maybe move on a bit quicker then maybe they would have done otherwise, so... But it's not many to be fair.
So we need to keep a sense of perspective. What we did in our case is we contacted all of our tenants and just shared with them a kind of a policy document. A, about how to keep themselves and people around them safe at this time. Obviously, we're just pointing to government advice and general tips, so we just sort of pointed that out. And then second of all, really if they're struggling financially and as a result of Corona, what may be we could do, what responsibilities they have, what responsibilities we have, and keep the lines of communication open. I guess, if you'd like to see a copy of that policy, it's just a one pager, by all means just drop me a line, podcast@thepropertyvoice.net. Happy to share it. There's no great intellectual property in that, but if that would help you, that would be great.
We did have a conversation, funnily enough on one of our calls about whether we contact tenants proactively or maybe reactively. I sit in the former camp, contacting tenants proactively, just letting them know we're there, just reminding them of their responsibilities, but equally saying that we're here to help as well. So we didn't... it's not like we had the flood gates open with people saying, "Oh, can we have a rent holiday?" But, yeah, we did have a couple of people comment but actually I don't think it would have made any difference. I think people... One or two contacted us before that anyway, and we didn't have that many contact us after that. But... So we were taking a proactive lead there. And indeed one of the actions I took upon myself is that one of my properties was a little bit adversely effected because of Coronavirus, which is a kind of precondition for mortgage lenders, including, by the way, buy to let lenders to grant up to a three month payment holiday on your mortgage.
So I contacted one lender and asked if that was possible. Also, checking that it wouldn't affect my credit rating, because I don't want that to happen. But there was one property that was affected. So, for example, it was... Well I won't go into the detail, but it wasn't a difficult process. That particular lender has a... has the details on their website, they list what you need to do, you can do it by email, so you don't need to sit in a long, 45 minute wait time queue or anything like that to ask for the holiday, so I did that. That was a proactive step. There's a couple of tenants, who've had some issues, so we've been talking them through what they can do perhaps and come to some sort of arrangement with them. So that's the rental portfolio.
The service accommodation business, yeah, kind of fell off a cliff a little bit to be honest with you. Yeah, we had a series of cancellation, certainly, for the month of... or the months rather of March and April. All the bookings that we had in the calendar kind of fell away. Understandably, obviously, with the lockdown and limits on travel, whether it's local, domestic travel or international travel, it has had a significant effect on our service accommodation business, short term rentals, et cetera. So much like the leisure tourism industry generally, of course, we're a subset of that. So that was a big bitter pill to swallow, I guess, but that happened. And so what we're doing there is really just looking at the... Well, I don't know if you have a lot of service accommodation units. I had one, for example, it was a rent service accommodation. And I've looked to exit that contract and that looks like that's going to be possible and achievable.
So that's a defensive measure, if you like. It was just, I'm renting a property in the service accommodation out, well, I've got no income stream, so it kind of reduced my cost base, I asked the question. "Yes, it's possible." "Okay, let's execute." So that's what I'm doing there. But the ones I own myself, of course, they're my asset, so I need to protect my asset and protect my business model. So what we're looking at there is alternatives to pivot the service accommodation rentals that we've got. We're checking... just rechecking, if you like, the locations. For example, if they're near a hospitals. So there's probably a lot of demand from health workers and actually visitors, unfortunately, who need to stay near a hospital for a relatively extended period of time. So we're maybe moving that towards, what I call, a sort of a longterm, short term stay model.
And we're going to advertise it away from the OTAs, the on the online travel agents, which is Airbnb, booking.com et cetera. And we're going to position that in different places. So, for example, Gumtree, SpareRoom, OpenRent to try and attract a different type of guest. Things like cleaning is going to be difficult, if people are in quarantine, for example. So it might be rented furnished, but without maybe some of the services such as cleaning. So we're pivoting the service accommodation business. We're actually in the throws of doing that. We just sort of battened down the hatches a little bit in terms of the staffing and the hours that people are working as well there just to kind of make that line up with the revenues that we're seeing there. But I'm not necessarily expecting that to go on forever, but I think it could have a negative effect for a while.
We still have some bookings in the calendar for the month of May and onwards, but based on sort of current expectations, I'm probably expecting some of those bookings to disappear, if not all actually. So making provisions for that but trying not to get too bent out of shape, because A, still own the asset and B, we have the opportunity, one, of rekindling the service accommodation once the lockdown is eased, or B, we could pivot into say an HMO into the short... into the, sorry, longer term, short term lets or back into a single let opportunity. And of course, I always revisit properties to see if a sale is an appropriate thing to do at any point in time. I have decided that's not the case with these, we're going to keep them, but we're just going to repurpose them. So that's what's going on there with a service accommodation business.
As far as the development business is concerned. Yeah, I have to be honest with you, that is the worst affected part of my business, but it's only one part of my business, and I need to get things in perspective. And I guess the lockdown has had the immediate effect of stopping pretty much everything. It we could... There are some sites where we could work under safe conditions with two meters social distance and that sort of thing. Probably a small number of people onsite, and protective equipment. I'm looking into that but we're not doing that just yet. We're sort of taking stock. Obviously, following government guidelines and not taking any unnecessary risks to health and safety, including people getting potential exposure to viruses. So we're trying to avoid that.
But at the same time it does mean that the projects are not moving forward, and probably expecting it to go on for a bit of time now. So I'm taking some proactive steps with regard to those developments. I'm looking at the cost base, the number of people that are working and engaged with me on those projects, and just do some rationalization in that respect. Of course, that has a consequential impact on other people. I'm sensitive to that, but at the same time I need to protect my own business. So, yes, some tough decisions do need to be taken, but I'm taking those. And I think the other thing is to make provisions for debt and equity finance and the partners that we're talking to there. So open up channels of communication, having regular dialogue with partners, talking about various strategies. And I'll be very transparent with you, I think a restructure of some of those arrangements is something that I've openly been discussing.
Whether that's some sort of breathing space on payments or on equity or capital. I've been having those conversations and just sort of talking things through. I think I'm so fortunate the people I work with in my business, predominately private investors, are really nice people, they're smart people, sophisticated and they understand what the situation is like. And we see ourselves as partners and we're in this together. So we're working things through, trying to make sure it works for all parties, and just give that bit of breathing space, make sure there's not undue pressure and keep the lines of communication open with partners. Look at the developments to... Is there a sort of an easier way of progressing, I guess. So that's that.
And I guess the fourth element to the business is my services income... Oh, not service income, but services business, the... it hasn't really been effected in all honesty. We've got a subscription service whereas a couple of people have canceled, but I've taken a proactive step to kind of mothball that for a month. Nobody will be charged for that period of time, but rather than maybe people on annual subscriptions just canceling on mass, I've taken a more proactive position, which is, look, nobody can really go out and view properties at the moment, so we can't really service you in terms of providing opportunities for you to look at, because you can't really go and look at them. So we're going to mothball the service. We're going to suspend it temporarily, but we're also going to suspend payments that are due. So if people are paying monthly, which is... we're literally giving them their money back for a month, if people pay annually. We're giving a pro rata monthly return on their subscription, because I think that's the right thing to do.
But at the same time I'm not necessarily proactively canceling subscription, and we're not doing the, oh, we'll tag it onto the end type of thing either, because I think at this point in time people are concerned about finances. So that's the approach we've taken with our subscription service deal, find a service, which is called Property Deal Tips. As far as the mentoring and training... Oh, well, it's more a mentoring business that I have active clients I'm working with and just making sure I'm delivering great value to them, and I'm just about to effectively open the doors to look at other mentoring type client opportunities going forward as well, because this is going to be an income stream that's going to be important. And most of the way I work with people is remote anyway, so it's no difference, it's business as usual. We do video base calls and so it's easy to work in that sense there's no difference. So there we go. That was just a quick run through of, if you like, control that which you can control.
So I guess the first third element is to use this time wisely. So this time when we're locked down. So I guess the most important thing for me is, apart from the business side of things and that we've just been through and obviously the health, and looking after other people. I was also starting to think ahead in terms of personal development and indeed book writing. So, literally, today I joined an accountability group aimed at getting a book written in the next couple of months or so. Nicole [Brendan 00:20:42] is actually running that, so if you're interested, if you're writing a book and you want to join in with that, she set up an, yeah, accountability group.
And I think there's 40 people already. So there's quite a lot of people who are going to use this time to write a book. But I've heard other people who training and they perhaps want to do a bit of project management training, for example. Whatever floats your boat really. But get yourself prepared. Study, learn a new skill, put some... do more project based work. Book writing for me is a project, I guess, so I'm looking to do that. In fact, I'm looking to do two things. One is to write a book and I'm doing it in a certain way. I'm actually doing a series of short form books. That's what I'm actually planning to do. And then the second thing I'm going to do is I'm going to record a specific podcast series for Audible, because, yeah, that's a new channel for me. So I just though I'd focus in on that.
So that's what I intend to do yet, hold me to account, if you'd like, over the next couple of weeks or so. Well, maybe a couple of months or so actually. But that's if you like making the use of this time wisely. I might've forgotten other things, if you like, as I've been talking here, but the other thing there is to look for opportunities. Now, I kind of haven't got so far into the opportunity side of things, not in a week, but I have in a slightly unusual way, and an unexpected way.
First of all, we've been having some conversations within our sort of inner circle about opportunities and being ready, readying ourselves, ready to pounce. So having funds ready, having a way to execute on a transaction that doesn't necessarily rely on a institutional investor. Having the professional support who's able... that's able to execute on a purchase.
For example, let's talk about a legals conveyancing service that can do title searches in lieu of requesting them. And, oh, there was something else there in the legal side that I was thinking of, but I can't think of what it was now, off the top of my head. Anyway, there we go. So just having the legals ready, having the finances in place, and being ready to jump on opportunities. And, indeed, somebody in our community actually bought a property at auction. It was supposed to be a physical auction but switched to online and telephone, and then the online service dropped. So two of the three major channels that they would normally have available disappeared, left, very little competition, and this particular individual was able to pick up an income generating commercial property, at significantly below value.
So they did really well. So they were capitalizing on the opportunity and they were able to strike, because they were ready. They got themselves ready, they did their due diligence, and they acted bravely, I guess, with courage at this point in time. But in my own case, I've got one particular project which I'm looking at, well how can I simplify this project to get it moving? And one way to do that is to avoid planning application.
So I'm looking at a simple reconfiguration of the project, which would not require planning approval. I would get it built out, get it done and dusted, move it on. Yes, it won't be the same, but it will allow us to keep moving. So I was looking at that, but in that research, we discovered that probably with the planning application we might be a bit challenging anyway, because there's a couple of... there was a property on the same row that we were planning to do something similar to their plan, and we understood that it was quite a battle. Just quickly, it's commercial on the ground floor or commercial retail on the ground floor and residential above, but we wanted to convert the whole thing to, to residential.
But because there's allegedly a high flood risk in the area that getting approval for residential on the ground floor is going to be problematic to say the least. So we're not going to change the use on the ground for, we're going to leave it as commercial, in our case. We're going to upgrade the upper to residential. But we understood that there were other properties on the same streets that went through the same process and they went for a lengthy planning application. Long story short, the developer concerned doesn't want to carry on with the projects anymore, and so there's an opportunity. So we're going to reach out, we're going to connect with that developer.
We're going to see actually if we can pick up their opportunity, which now has planning in place for a certain configuration. Obviously, we'll look at the numbers, make sure it makes sense, but there's an opportunity that came out of potential adversity. So that was unexpected, but I think the key there is have our eyes open for opportunities, and be ready to strike if they come about.
So there are the main things I really wanting to share with you. There's just a bit of a glimpse, if you like, into what's happened in my week over the last week, funny enough, in my world over the last week, and I thought that might be handy to share. So there's been some ups and there's been some downs. There's been some positives and there's been some things that are not so positive to deal with. But you know me, I'm real and I like to talk about the reality of property investing and developing in good times and in bad times.
And so if... Hopefully, that's been helpful to you. There was something I meant to mention actually earlier, there's a giveaway I'd like to make available, if that would be useful to you. It's a one pager, it's called the Recession Response, and it's being produced by a guy called Mike Mikhailovich and really it's just a one pager about what you could be looking at right now. Breaks it down into segments, which is cashflow, debt management, strategic planning, accounting and tax, all on my page.
And effectively, if you can imagine a defensive strategy and an offensive strategy in each one of those areas, that's what the document does. So if that would be useful for you as a bit of an [inaudible 00:00:26:30], podcast@thepropertyvoice.net, and I'll share that with you gladly. So just ask for the recession response and I'll gladly share that with you. And obviously if you want a copy of the policy that we've been sending out to tenants that I referenced earlier, same thing just say, Can I get a hold of the tenant's policy, Richard?" And I'll send it to you.
So there we go. I want to wrap up now. As I say, it was unscripted, although I will get the transcription of the show. There'll be show notes over at the website, thepropertyvoice.net. You know you can always reach out to me a podcast@thepropertyvoice.net, or you can give me a call 0208-144-5895 weekday afternoons, please, not other times, if you just want to chat about anything. Don't forget lunchtime Wednesdays, property... TPV live lunchtime Wednesdays. If you send me an email, I'll give you the details. I just want to qualify who's joining in with that call, that's all. That's how you get ahold of it. Send me a social media request, if an email is not suitable for you, that's no problem at all. But I guess all that's left to say, for now, is thanks very much for listening, once again, this week on the Property Voice podcast, and until next time, it's chao, chao.
That's all from me this week, remember if you want to talk about anything from today’s show, or just talk property investing more generally, email me at podcast@thepropertyvoice.net, I would be happy to hear from you! The show notes can be found at our website www.thepropertyvoice.net
Thanks very much for listening again this week, so all that left to say is ciao ciao!