Beyond rent to rent: The exact property strategies we used to grow the multi-million pound property we own

October 17, 2023 Stephanie Taylor

200 - What a super juicy episode we have for you today! We will be discussing the property strategies we used to grow our property portfolio in just a few years into a multi-million pound business!

Let's go behind the scenes to see how we did it and how you can do it too - once you get the information you can move forward and take action - it will really change everything!

With rent to rent you get cashflow, which means you make money in business.

But you don’t own the assets.
Long-term wealth requires assets.
Assets make money when you sleep.

When you buy the right assets
Your money works hard for you.
You don’t work hard for money... AND that is a game changer!

I want that for everyone listening...
Maybe you already have this, but if you don't, listen on.

BUT with buy to let you need £50k + to make £200-300 per month.

You can see how it can take years to save enough to build a portfolio to replace even an average salary.

That’s why most full-time investors use OPM.

Let me give you a clue

Rent to rent is about opp

Other people’s property.

Not Naughty by Nature

This part is about opm

Other people’s money

Property is one of the only asset classes where using other people’s money is standard.

This is where we go behind the curtain.

I always assumed property investors had huge amounts of money to start with.

Some do

But you don’t have to.

What we’re going to talk about today is all the ways we grew our portfolio including

Private finance

Commercial finance

Lease options

Exchange with delayed completion

There are others such as remortgage, loans and more

We’re not going to make this dry and crusty abstract finance talk though.

It’s going to be juicy.

We’re going to talk about 3 of the properties we own.

And exactly how we funded them.

We’re going to end with a Make it Happen

With practical tips for how you can make it happen too.

And as I go through this remember that this is only 3 properties.

I’ve chosen these 3 properties because they’re interesting financially.

Keep your eyes peeled because we will be releasing video of the event so if you couldn’t be there in person, watch out for that. It’s going to be less than the price of dinner out for a more of what I’m talking about here. But with all the photos of the properties too. And the buzz of the live event.

PROPERTY 1

The first property we bought in 2017.

Commercial finance/bridging finance

Commercial to residential conversion development

Title splitting

We completed on this property in October 2017.

It was a cash purchase for £148k

We were so excited to buy this property.

It was 18 months since we’d started full-time in rent to rent and it felt like a milestone.

The purchase price was £148,000 which was below market value.

Because we were paying cash.

How did we fund the purchase

Half was from our rent to rent business.

Half was from a family friend who lent us the money at 2% interest.

We didn’t think we knew anyone like that.

The magic question

Do you know anyone who…?

5 magic words

Do you know anyone who..

Speak the language of opportunity and not the language of requests.

And as a cherry on top it had a tenant under contract until 11 months after our purchase paying £10,000 per year.

On completion, a lump sum to cover the remainder of the contract was transferred to us.

One of the perks of commercial is that often rents for periods of a year (or more in some cases) are paid in advance.

We naively thought we could buy cash to get a good price and quick sale for the seller and easily refinance afterwards.

Little did we know...

After purchase, it took us over 12 months to refinance

The problem: We don’t have commercial property experience.

And lenders like to see ownership experience in the same asset class.

Luckily our rent to rent experience did help us as we’d done some pretty impressive refurbishments and were able to supply photos and testimonials from happy landlords.

You need a good broker to present your case and tell your story.

Adding value

The great thing about property is that you don’t just buy the asset and wait.

You get to do stuff that increases its value!

It was a commercial building with D1 planning classification.

We were confident we’d be successful in securing planning permission to convert to residential.

Our original thought was to convert it to an 8-bed HMO.

Our architect though, came up with a plan for 4 self-contained 1-bed flats.

We wouldn’t have seen 4 flats on those plans because it was 3 storeys and common sense said one flat per storey.

However, the architect saw that we could have 4 flats if one of the flats was a duplex (ie over 2 floors) and it works beautifully and now seems so obvious.

Don’t be afraid to pay for professional advice.

Next steps

Our commercial tenants renewed the lease at £15,000 per year.

We secured planning permission for 4 flats in May 2019.

By mutual agreement we agreed for tenants to move out March 2020.

Note the date:

This was not a good time to start a renovation!

We estimated these works would cost £150,000.

Challenges

To build wealth you have to become a problem solver.

Purchase price £148k

Refurb and buying costs £230k

Valuation £500k

Uplift £122k

Annual rent £36k

PROPERTY 2

3SS Let’s move on to another interesting property we bought

This one we includes an Exchange with delayed completion.

We exchanged on this property on 20 February 2020

At that time we took control of the property.

This is a 4-unit conversion in Newport.

We converted it from a house into 4 studio flats

We bought it using exchange with delayed completion.

What is exchange with delayed completion?

Typically when you buy a property you exchange contracts and complete the sale very shortly afterwards.

An exchange with delayed completion is where you exchange on a specified date and complete the sale on an agreed date, or date range, in the future which could be years into the future.

In the time between exchange and completion, we have control over the property.

How we funded the deal

Cashflow from rent to rent business

Exchange with delayed completion

Traditional mortgage finance

Here are the numbers for this.

Agreed purchase price: £160,000

Option fee: £16,000

Monthly payment: £320

Balance @ 5 years: £124,800

Agreed completion date: within 5 years

What’s happening in this deal?

We pay for the property over time.

We pay an upfront £16,000.

And then £320 per month.

And then at the end of the 5 years we pay the outstanding balance.

We don’t need a deposit of 30% which would be £48k

We don’t need to get a mortgage.

We don’t pay rent!

Exchange with delayed completion is sometimes called a no money down property strategy because typically you won’t need a 30% lump like you would for a deposit on a standard buy to let property purchase.

And typically you won’t need a mortgage upfront either.

It’s known as a creative property strategy which allows you to buy property over time without having £50k in the bank.

The option fee can be just £1!

Development

The conversion took 10 months to complete and cost £65,000, which includes over £8,000 paid to suppliers to split the utility supplies.

Delays due to COVID, which meant the usually protracted utility splitting process took even longer than it should have.

Scarcity and increased costs for materials.

And having fewer contractors on site.

Things that come up that you haven’t budgeted for.

The stuff you cannot see prior to starting works.

For us on this project spongy flooring concealed rotten floor joists that had to be replaced.

To build wealth you have to become a problem solver.

Completing

We got a mortgage and completed on this purchase on in date

We didn’t need to pay a lump sum.

PROPERTY 3

Let’s now talk about the third property.

It’s Stow Hill Studios

This property included

Private finance

Commercial finance

We completed on this property on 11 March 2019.

It was a conventional purchase with a deposit and commercial finance.

A family friend helped us fund the deposit by loaning us £50,000.

We used profit from our business to make up the remainder of the deposit which was £59,500.

The purchase price was £375,500.

It’s a grade II listed building in a conservation area

This is a 12-unit mixed use property in Newport.

It’s made up of

- 1 x two-bed flat.

- 10 x studio flats.

- 1 x commercial unit.

Because it has a shop it requires commercial finance.

Commercial lenders are rigorous in their assessment process to ascertain your credit worthiness and to test you have a credible and proven track record and experience.

This time it was much simpler because we had experience.

We purchased it with 8 tenants.

So it was already cashflowing.

We’ve now spent £111k on refurbishment.

We’ve spent an additional £18k on interior design, furniture, window blinds/privacy film, etc.

This has proved to be a very good investment.

This was the first property we worked with an interior designer because I wanted the spaces to work as well as possible.

She did an incredible job on a budget.

When you look at the before and afters, it’s a big difference.

I love the simplicity of it.

Functional

Beautiful.

And I think because of all that the studios are very popular.

Let’s talk numbers

Purchase price £375k

Refurb and buying costs £111k

Valuation £680k

Uplift £194k

Annual rent £68k pcm

Best case is we’ll be valued at £680k

At 70% we’d take out £476k

We spent £110k + £111k = 221k

That’s all our money out plus £255k cherry on the cake

Asset magic

Just from these 3 properties

Property 1 2017 - £148k to £500k up £352k

Property 2 2020 - £162k to £280k up £118k

Property 3 2019 - £375k to £680k up £305k

Total £685k to £1.5m up £775k

Cashflow magic

Just from these 3 properties

Property 1 - £3.0k pcm £36k pa - £180k 5yrs

Property 2 - £1.9k pcm £23.4k pa - £117k 5yrs Property 3 - £5.7k pcm £68k pa - £340k 5yrs

Total £10.6k pcm to £127.4k pa up £637k 5yrs

How the rich get richer

And you can too

And we’re making over £32k each year on this property AFTER all costs.

Including a repayment mortgage.

So we own the asset

Paid for by the increase in value of the property and the cashflow.

Sometimes when people say ‘you’re lucky Stephanie & Nicky
I don’t agree.
We’re just willing to do things most other people aren’t willing to do.

We were willing to manage other people’s properties with care.
We were willing to start rent to rent when we didn’t know if it would work for us
We were willing to take action.

And when it came to buying properties, developing properties and growing our portfolio, we were willing to pay the price.

We knew that long-term there payoffs are massive.

Have you found this useful?
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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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