Behind the scenes in our rent to rent business HMO Heaven in the unforgettable year that was 2020!
Hello, hello, hello, welcome aboard episode 048 of the Rent to Rent Success Podcast.
Today we’re going behind the scenes in HMO Heaven and talking about what happened in the unforgettable year that was 2020!
And you'll love this episode because we’ll be getting real about the highs and the lows of business in a pandemic.
If you’re listening when this episode goes live and you’ve been on the fence about joining Rent 2 Rent Kickstarter Programme, now is the time.
On 21st January 2021 at midnight the price to join will go up significantly. Right now you can join for a heavily discounted, never to be repeated, crazy good value price to get your 2021 off to a flying start!
So if you want to join us to get your first deal now and get started in property go to rent2rentsuccess.com/lastchance
Let’s dive in…
I’m going to talk more about the behind the scenes in our business and how 2020 affected us.
When it first kicked off with coronavirus, I was shocked by the first lockdown. It was just such a shock to see the world locked down like that. And of course I was worried about our business and delivering for our team, our housemates and our landlords.
We were concerned that with many businesses closed, and many people being laid off, our housemates may not be able to pay their rent. With us guaranteeing our rents to landlords of course that was a concern.
The government’s handling of the announcements gave tenants the idea that they didn’t need to pay rent for the next few months and also that landlords have a ‘mortgage holiday’. Of course the mortgage holiday is a fantasyland. Landlords could pause payments, but the mortgage payments would still be due in full plus interest. And future lending would be impacted, even though they said it wouldn’t!
And with the government ban on evictions, it would mean landlords needed to fund that financial-gap. And that was worrying because no one knew how long it would last. Thankfully what happened is the government stepped in with a number of financial supports including the following which would help housemates who were sick or lost their jobs:
Coronavirus Job Retention Scheme (aka furlough) pronounced furlow
Changes to Statutory Sick Pay (SSP) so more people are eligible sooner
Changes to Universal credit to increase the payments and make more people eligible sooner
These announcements meant that from being in a position where we were worried about how we’d afford to subsidise housemates affected by coronavirus, our business is actually better protected than it was. Previously, if people lost their jobs they wouldn’t be able to apply for Universal Credit, now most people can.
The key thing throughout all of it, right from 23rd March 2020 when the first UK lockdown started, was communication with our landlords and our tenants.
I saw rent to rent businesses on Facebook saying they were keeping their head down and not getting in touch with tenants in case tenants use that communication as an excuse not to pay. We were of the view that it’s important for you, as the business owner to act first. The media is telling tenants every day that they don’t need to pay their rent so rather than adopting a ‘wait and see’ mentality we wanted to set out our process to tenants.
And we set out our 3 step plan for what to do if your tenants can’t pay due to coronavirus. And the information is useful in general if your tenants can’t pay rent.
You can watch episode 13 here: What if my tenants can’t pay rent?
What was impacted in lockdown?
We have over 100 housemates.
We usually operate at 0-1% voids. And just prior to the first lockdown we had one room which someone was due to move into without a void. Normally how we operate is that all move out dates are the last day of the month. And all move in dates are the first day of the month.
So there is no gap. Cleaners do all the end of tenancy cleans. Luke does all end of tenancy inspections. And the handyman does any work needed all on the last day of the month. This is all in everyone’s calendars for the year.
Anyway, the person didn’t move in as their new job was cancelled. And things started unravelling.
After the first lockdown some of our tenants moved out and moved home. We take tenant deposits, so even for those tenants moving out at short notice, their deposit was able to cover their notice period. We weren’t able to replace them immediately so our voids went up. And with uncertainty about how long lockdown would go on we were worried. We did our cashflow planning and tested against higher voids. We knew we could sustain at least 3 months and then review and reassess.
Part of the reason we could get through with higher voids is because we allow a buffer in any deal which is what we show you in the Kickstarter Programme.
What’s been great to see is that as we came out of lockdown, demand flooded back.
People still wanted to live in HMOs.
It seems like common sense that no one would want to live in an HMO post-corona but it isn’t true, because people do still continue to live in HMOs and continue to choose to move into HMOs.
I went into the reasons why this is episode 39 - No one wants to live in shared houses or HMOs after coronavirus
And our business grew in lockdown.
One of our landlords had some properties with another agent who offered a lot more rent than we were able to. We wondered how the agent could make it work with such a high guaranteed rent to the landlord. Turns out they couldn’t and the landlord asked us to manage the 3 6-bedroom HMOs which we took on.
We’ve found there’s more opportunity now as there are fewer high quality HMO Managers around. The one thing I want you to takeaway is that HMO landlords struggle to find someone who can manage their HMOs well consistently.
You can be that person.
And many landlords have been burned by traditional high street letting agents with hundreds of properties who are unable to give their property the attention it deserves. Many are actually saying to our Kickstarters they just want someone they can trust.
Remember in the episode with Kayleigh Pritchett and Troy Badaloo of TK Lifestyle Properties who grew their business to 6 figures in lockdown.
That’s such a great episode including the way they funded their first deal and their learnings.
2020 had so many challenges and worries.
Yet I’m so proud of our team they just stepped up and delivered.
Luke, our Assistant Property Manager did an incredible job of filling the empty rooms once it was possible.
The biggest thing I love is that I look at my life and I’m so delighted with it. I remember in 2016 being at my desk knowing that I should have been with my Mum who was sick. And I remember feeling trapped and stuck and frustrated.
Now it is totally different.
Yes, stuff still happens and the world’s crazy, but I love what we’re doing and creating in our businesses and I have more control. It’s not up to someone else to determine whether I’m employable, we get to actually be the employers!
Which feels so amazing.
We get to be flexible in the way we work.
And we get to do what we want to do.
And we get to employ and work with amazing people.
Our business supports other people too.
I speak to so many people now who’ve been affected by Covid who say that it’s really made them take a new look at their life. Julian told me that his 18 year career is in jeopardy so he’s focusing on property now whereas before he wasn’t as focused.
Hayley told me that she’s determined now to make money as a stay at home mum so that her family can have a lifestyle they want.
And we heard from so many Rent to Rent Rockstars thriving right now.
Maria is now on her fourth property and also has a lease option, meaning she’s buying one of the properties without an upfront deposit or mortgage. And she did it all as a busy Mum of three.
You can watch Maria’s episode here.
If you want to make 2021 your year.
If you’re ready to get started and make this the year you get started in property without buying it.
You don’t want to miss this.
If you know it’s something you’re going to do this year.
Join us before 21st January in Rent 2 Rent Kickstarter.
It’s always been an incredible Programme, we’ve just updated it and it’s phenomenal value.
On the 21st January 2021 the price will go up substantially so visit to get on board if you know you’re ready now.
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Until next time, have a great rest of the week.
And remember,
Believe Bigger, Be Bolder and Be a Gamechanger!
See you soon!
Stephanie & Nicky
xx
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