Stay Ahead of the Winter Weather for Property Success

A survey from online letting agent upad.co.uk, which surveyed 4,000 landlords, showed that nearly half of landlords fail to carry out routine maintenance checks before Winter sets in. The impact of failing to prepare for the bad weather can be huge, especially if your property is an HMO. Frozen pipes resulting in no heating and water, and then water leaks and further problems lead to unhappy tenants who may choose to move elsewhere.
Our maintenance team carry out monthly checks on all our properties, but every quarter they run a more detailed assessment to identify and prevent longer term problems. Here are my suggestions for areas that you need to include in a routine check (or make sure your managing agent does)!

1. Gutters, drains and roofs
Leaves and debris can quickly cause water damage if they’re not cleared regularly. I would recommend that every 6 months someone needs to go up on a tall ladder and check the state of your gutters and downpipes, clear the debris and run a hose of water through them. Make a similar regular date with your roof. Loose or missing shingles may lead to leakages with rain or melting snow, and flat roofs may be prone to leaks after heavy rain.

2. Trees and external objects
If you’ve got a tall tree or foliage that overhangs the property, check whether this needs to be cut back or pruned so that in high winds there’s no risk of damage to the house. Having deciduous trees near to the property can cause other problems such as root growth damage and leaf pile up, so it might be a good idea to assess whether this is the right time to remove a tree altogether.
The television aerial can also get dislodged in high winds, so it’s worth having a look to see whether it is securely lashed to the chimney stack and can withstand some force from the wind.

3. Heating and lighting
Boiler failure is one of the most irritating and costly issues to deal with and can cause real upset with tenants – understandably. Have your boiler serviced at the end of October to flag issues early and consider whether you could add boiler insurance to your policy for extra cover.  You may choose to use a service plan to ensure you have back-up should the boiler fail. Alternatively find a reliable local plumber who is happy to do emergency calls at an agreed price. Furnish your agent with full boiler instructions and a detailed guide as to how to re-set it or top up the water levels as this can sometimes be the issue. Also make sure your tenants know who to call if anything goes wrong.
Heating woes are not all about the boiler, however. While three-quarters of landlords who carry out winter maintenance check the boiler, only half remember to do a health check on the pipes and radiators too, according to the upad.co.uk survey. Bleeding the radiators and checking for leaks across the property ensures the whole system will work more efficiently.
Using a remote thermostat like Hive from British Gas or Inspire will allow you to control the heating remotely. This means that you can set the property’s heating to come on regularly each day. Ensure your tenants understand the thermostat set levels and what to do if they want to change the heating settings.

4. Condensation and mould
Condensation can be a major problem in the winter months and regular room checks will allow you to see whether this is occuring. Air flow through the property is key to reducing humidity as is the use of extractor fans. Check that all extractor fans are in use and working properly, and remind tenants of the importance of good ventilation.

5. Alarms and security
Every habitable floor of a rental property must have a working smoke alarm – and any room with a solid fuel appliance (eg, a working fireplace) should be equipped with a carbon monoxide alarm. While testing your alarms, check the burglar alarm is working for added tenant reassurance on dark nights. If you have an outside light or PIR, make sure it stays on long enough and the range is wide enough to be of use. If your tenants have to pull bins out onto the street, or don’t have enough light to see where to put their key in the front door, their annoyance will only be exacerbated by having to wave at the external light that fails to stay on long enough to be helpful.

6. Insurance
Ensure your current home insurance is up to date and check your policy gives adequate protection for any winter-related damages. And if your property has a flat roof, it’s worth checking your insurer covers flat roof damage – most insurers do not cover flat roofs, and structures of this kind can be prone to collecting water as it can’t drain off.

Having a regular approach to maintenance is both proactive and reactive and will help you ensure that your HMO works well today and for the future.

For more tips, advice and information on running a successful and cash-flowing HMO portfolio please join my Facebook group ‘The Ultimate HMO Success System. Or alternatively you can find out more about my mentoring services at www.wendywl.uk/mentor.html

Image Credit: Getty

From stay-at-home dad to millionaire!

Mick Regan was a stay-at-home dad with a busy schedule when I first met him. He had been made redundant from a well-paid job, and was now able to to spend more time at home with his children, which was great. However, he realised that unless he did something soon, his redundancy money would soon be spent!

While it feels nice to buy all those things you’ve always wanted, Mick knew that he needed to replace his income FAST. His redundancy pot was not massive, and he knew that he could fritter it away if he didn’t have an investment plan.

He didn’t know much about HMOs except that they could make him much more money faster than a single buy to let property. So he joined me on my HMO Magical Mentoring Programme and started to look for his first property. Using the knowledge, information and systems from the programme he found an amazing deal almost straight away.

It was a three storey house that had been neglected, and included the bonus of a basement flat conversion. By this time his confidence had grown enough to put in a cheeky offer, and it was accepted. Here are the figures from this, his very first deal:

£178k purchase price

£82k refurb costs

£300k re-valuation

£35k left in the deal

£2500pcm (5 units @ £500pcm)

£600pcm (basement flat)

£3100pcm Gross income (£37200 pa)

The amazing thing that happened to Mick was that after this experience he just got bolder and bolder. He continued to raise money and do deals and he now has a portfolio worth over £1m.

Here’s what he said about working with me’

I started out knowing nothing about HMOs. Wendy taught me how to find the right ones in the right area, and rinse and repeat it. My first HMO makes me £1600 profit per month (fully managed in Stockport) and I now have a pipeline of deals worth over £600k”

It all started with a small investment pot and a desire to create income with what he had.

Could you do that too? Yes you could…

Contact me NOW if you want to find out how you can achieve the same things that Mick did.  I offer a FREE 30 minute consultation call to explore your options and see if mentoring is right for you.

Here’s the link to book your call: https://fwfozt-free.10to8.com/

Books for Christmas!

What’s on your gift list?

Do you have a book you’re hoping someone will buy you?

These are the books on my list (hint hint) … anyone??!!

The 80/20 Principle: The Secret of Achieving More with Less by Richard Koch

ReWork: Change the Way You Work Forever by Jason Fried (Author), David Heinemeier Hansson (Author)

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist Kindle Edition by Kate Raworth (Author)

What’s on your book list?

Education: A Dirty Word?

I hated school. I really did. Ask my parents, and they’ll tell you how much I resisted getting up in the morning, I resisted getting dressed. I resisted homework. In fact I was pretty good at finding a number of reasons why I should not have to go to school. I didn’t think that school was important, or that I was learning anything useful and I believed that the subjects were completely irrelevant to my life.

And the end result: I failed miserably at my ‘A’ Levels. A year later, with some theatrical experience under my belt, I scraped into a college of Higher Education to do a Drama degree.

What astonished me immediately, was how much I enjoyed it. I bounced out of bed in the morning. I rushed to my lectures to be there on time (gasp!). I spent time in the library, reading and applying myself. Even when I was struggling, I somehow found the focus to keep going. I ended up getting a BA (Hons) 2:1 in Creative Arts. When I phoned my parents to tell them, I think my mum nearly fainted with amazement.

What I realised was this: to learn at your best and your highest level you need to find out what intrinsically motivates you and then spend time learning this on your own terms. I chose the college I attended, I chose the course, and I chose the time commitment. Somehow these three factors had a massive impact on me, to the extent that on the day of graduation, I said “I could do that degree all over again. I LOVED it”.

Fast forward many years later and I felt as equally trapped as I had done at school. Only ironically I was now the teacher, and had a teaching role in Higher Education! In truth, I loved teaching and sparking the process of an amazing lightbulb moment where a student grasped a new concept or understood a theory for the first time. Working directly with students was what I loved best. There were much wider political and structural forces at work, though,  that meant I was often drawn into debates and challenges that had really nothing to do with teaching. I began to feel that there were no other options but to pursue this career to the exclusion of all else. Forever, until I retired. And that I resented.

Now, at the age of nearly forty, I could feel that same resistance I felt when I was a teenager. “I don’t want to get up. I don’t want to get dressed and go to work. I want a hot dinner not a packed lunch”!

I took a long hard look at my life and realised that I had stopped learning. I had cornered myself into a small place and it was time to expand my mind and my reality. As a side-line and a future legacy for my children, I had been developing another small income stream from a few single buy-to-let properties. But I had ignored it, and become rather blase about this small portfolio. This moment of emptiness with my job made me realise that the time to make a change was now. If I didn’t take the leap now (even with a job and four children to manage) I would never do it.

So I started to educate myself. I attended loads of webinars and networking meetings. I read books and subscribed to relevant magazines. I asked lots of questions and attended courses. And more courses!

And I started to buy bigger houses to convert into Houses of Multiple Occupation.

I began to apply what I was learning, and this made me hungry for more. My resistance lowered. I WANTED to learn, I wanted to read and know and I wanted to be AN EXPERT at what I did. I recognised that I was intrinsically motivated to learn how to create HMOs, how to create passive income and how to become financially free…

It’s true that for me, traditional education felt like a waste of time. Only learning what I was self-motivated to learn has ever inspired me enough to maintain my interest. Staying the course depends on you having the interest and aspiration that you feel for the subject matter.

Since that time, I recognise that I love entrepreneurship, business, communications, and people. These are the areas of life that I could study all day long.

It makes it even more fun when I apply it too.

You have to take risks when you are learning something you’re motivated to learn that’s not a school subject. People will think you’re a bit crazy, stupid or mad. No worries. Let ‘em think it.

  • Stay centred on your passion.
  • Make time for learning – theory and practice
  • Keep applying what you’ve learned to make it fresh and real (practice)
  • Take a break when you need some space to cogitate
  • Invest wisely – books, courses, materials.

And above all, find something you are intrinsically motivated to learn. Whether it’s crochet, cookery or computing. Patchwork, pottery or property. As Ray Croc, the McDonald’s owner once said ‘When you’re green you’re growing, when you’re ripe you rot’!

Saturation, Supply and Shifting Sands

If anyone tells you that the laws of supply and demand don’t apply to property, be very careful to analyse their motivation! Whilst property prices are much more linked to the supply of mortgage lending rather than the supply of properties, when it comes to rental availability there is a clear correlation between supply and demand.  In any market place, where there is an over-supply of product there will be an impact on the strategies used to sell that product. This might result in lowered prices, or better deals, or an improvement in quality. HMO rooms are no exception to this rule. If you are investing in HMOs you might have seen some changes to local supply. The fact is that in some areas of the UK there are more rooms than demand at present, and landlords are struggling to fill their HMOs. Why is this?

  1. The first reason is that investors have realised that the only way to maximise their portfolio income has been to invest in HMOs a) to counteract the pernicious new tax laws that are being introduced b) to benefit from higher monthly cashflow c) to leverage commercial finance and d) to protect against potential voids. With access to better information, training and support, more and more investors are recognising the power of HMOs for long term wealth and immediate profits.
  2. Secondly, the introduction of stamp duty on second properties over the price of £40,000 has meant that smaller, single buy to let properties are proportionately more expensive to buy. Coupled with the minimum mortgage or purchase price requirement from lenders where investors are investing via a limited company has lessened the appetite for cheaper properties, and increased the need for a higher return linked to a higher purchase price. HMOs make the perfect foil to these prerequisites.
  3. Brexit and immigration. Certain parts of the UK have already felt the negative effects of Brexit, with many Eastern Europeans migrating back to their home countries. According to Migration Watch UK ‘Although we have seen a fall in net migration of EU8 citizens there have been continued increases in immigration from Romania and Bulgaria, so it is too early to say what effect the referendum result has had on long-term international migration’. In other parts of the UK there is a growing immigrant population. Predictions are that immigration will stay steady in terms of net figures, but that certain immigrant communities may change substantially in terms of culture and mix.
  4. Student housing impacts. In many traditional University towns, an enterprising landlord could make a good living from students renting rooms in the locality. Recently there has been an explosion of high quality, contemporary purpose-built student accommodation wiping out the demand for individual HMO housing, necessitating a shift in market offering from landlords still wanting a profitable return. In many instances, they have adapted and upgraded their HMOs to attract the professional market, and this has in turn impacted the current professional HMO stock.  

These factors have created excess provision in some areas especially where investors have failed to understand the forces at work in the local economy and the necessity to adapt and change to the marketplace. So what can an investor do who is facing competition and wants to resist the lure of price reductions just to fill rooms?

  1. Ensure that you are creating a product that not only offers great value but also has a niche offering. Whether you offer personal service with a smile, have wonderfully designed interiors, or make HMOs great communities, you need to identify what it is you are good at and tell your market place about it. In this day and age, unique and niche brands get people talking and sharing, and your HMO business is no exception.
  2. Tell everyone what you do. Use social media like Instagram, Facebook and Pinterest to share your message and learn how to create advertising copy that sells your rooms (linked to the ideas above).
  3. Work with local businesses and estate agents to create win-win referral deals that benefit them too. Incentivise your tenants to give you referrals and ensure you get plenty of feedback that you either act upon or share!
  4. Respond fast and flexibly. If you cannot respond to a viewing or request quickly, in a competitive market place you will probably wait much longer to fill your rooms.
  5. If you are unsure about consistent supply of tenants, always have a plan B. What else might you do with an HMO that you just can’t fill? Might this present another opportunity that you have missed?

The ebb and flow of supply and demand in HMO rooms is constantly shifting. As investors we not only have to adapt to survive but also to thrive. In this changing landscape of rooms and provision, the creative, savvy and determined investor has the edge. Make sure you’re one of them!

 

How to Future-Proof your HMO

Future-Proofing your HMO is all about systems and processes that allow you to maximise your profits and minimize your costs while still providing excellent service and value to your customers – your tenants.

There are the three main parts of this process which are:

  • Maintaining Customers
  • Management of the HMO
  • Maintenance of the HMO

Maintaining Customers

Communicate with tenants regularly.  Simple steps like a monthly group email (try mailchimp.com) lets your tenants know that you care about the quality of their experience in the property. It’s a great, easy-to-use automatic email system that allows you to schedule emails in advance. You can gently cover topics that might become issues or risks to the overall smooth-running of the house by introducing the topic and then saying something about it in the main body of the email. We have found this reduces rather than raises queries, as tenants then understand procedures and policies more clearly and also what kind of behaviour is expected of them!

Using a telephone answering service is invaluable as it allows all calls to be answered and dealt with professionally while freeing up your time to attend to other aspects of the business. I have found that tenants like having ONE number to call and don’t cope well if you give them a variety of different numbers to call depending on the severity of the issue.

Management of the HMO

Keys can become a major headache for a landlord (or agent) if you don’t have a clear system for managing and tracking them. If you don’t want to go to the expense of installing a masterkey system (although I would heartily recommend it particularly if you wish to scale up your business), you need to develop a system using a spreadsheet and large cabinet! Code each keyring so that you  know which door the key opens in each property, always have at least one copy made and track them as they leave and enter your office!

Compile a list of tradesmen and maintenance people who you can work with to undertake the routine and emergency work that will no doubt be required from time to time, no matter how well you have Finished It! Always have a preferred supplier and a back-up for the times when your original tradesperson isn’t available. You may wish to set up a retainer or a regular payment to maintain the flow of availability. There are companies that offer landlord emergency cover for a small monthly charge and ensure an immediate emergency response to any problems in the property.

Maximising your profits

Ensure you are collecting rents on time and regularly checking them. Even a few days of late payments per month will make all the difference to your cash flow.

Keep a sharp eye on your outgoings – and take time to identify how you can reduce your bills on a regular basis. Reducing bills, even by 5-10% per annum will compound your cash flow and profits. If bills are rising fast you need to investigate and identify why. Keep an eye on new technological developments in the HMO industry. Whether it is a new piece of software that can help notify you of late rent payments, or an app that can control your heating remotely –  use technology to systemise your business, thus saving you time and money.

And finally, enjoy your investment! You have worked seriously hard to create a property that will serve you now and for years to come, so look after it and it will look after you!

 

 

How to FUND your HMO Project!

You’ve heard the phrase ‘ Money Talks’ no doubt. But if all yours has ever said to you is ‘Goodbye I’m off’ then you’ll know that making money from property is not as easy as it looks!

Funding your project is often the hardest part of the system unless you know what you’re doing! If you’ve FOUND a great property but have no money to buy it or develop it. you are well and truly STUCK.

Here are some of my top tips for ensuring that you DON’T GET STUCK without money when you are investing in HMOs…

1) Your money mindset is the most important part of the process.
If you believe, trust and TAKE ACTION, you can raise as much money as you want to. I know this may seem a little airy fairy, but trust me, I have worked with many people who say that the difference between being wealthy and being broke is what is between your ears! Not what you can do, your background or your education. It is purely how you THINK and ACT that makes the difference.

2) Create a clear budget for what you need.
Purchase Price – £140,000
Refurb costs – £50,000
Legals – £700
Stamp Duty – £4,500
TOTAL = £195,250
It looks like a lot of money doesn’t it? But how about if you break it down and challenge yourself to raise each part, bit by bit? (In reality most of this will come from your investor but it’s a great challenge to get lots of little pieces and put them together).

3) Do the maths on the project
How many rooms will you create: 6
How much will the monthly rent be on average per room: £600
Total Annual Rent: £43,200
With those figures you can work out the Return on Investment for your investor, your yield and the possible re-valuation at the end. It’s not an exact science as there will be voids, maintenance and so on. The key thing is to understand the maths behind it, so that you can give your investor some rough ideas as to their return.

4) Create a compelling reason why your investor should work with you
This might be because of your personality, your work experience, or your relationship with them. It is very rarely just about property investing experience or money.


5) Network and learn continually.
You are always pitching, whether you realise it or not. Your social media, your emails, your meetings and your networking say a TON about who you are. Make it great and make it memorable. People will fall at your feet to lend you money!

Multilet Income Multiplier Event
If you are dribbling to know more(!) I am leading my VERY last Multilet Income Multiplier event next weekend – 17th and 18th November at Crewe Hall in Cheshire. It is a fabulous hotel, and I’m even gonna take you out for dinner on Saturday night!
The event will cover everything you need to know to set up, scale and systemise your HMO business and is the very last one I will be running. As this is my last event, I am offering a very special rate for the last few seats I have available.
Just £499 plus vat for your ticket to this amazing weekend experience.
If you would like to know more, please click here https://goo.gl/6kERgs for full course details and information about what will be covered on the two day event.

The Information I Gather…

I’d like to share the pieces of information I gather when doing due diligence on a new area:

  • The local population number (you want it to be no less than around 80,000)
  • The mix of local employers (are there a couple of larger employers taking more than 100 new people on per annum)?
  • The mixture of properties available  – a mixture is important for steady rental demand
  • The demand for rooms (look at Spareroom as a guide – but notice the low quality of many of them)
  • The price of property versus the rental income
  • The public transport system and connections
  • The connections to the wider region in terms of jobs, transport and partnerships

All these are important factors when deciding where to invest.If you can nail down these facts, and demonstrate a strong demand for high quality rooms, in a place where there are good opportunities, and connections, you may have found your perfect investment area!

Are there other factors that you think I’ve missed?

Did I mention that I got into the last 100 for the Great British Bake Off 2018?

The experience reminded me that when you’re trying to create 6 cakes that are identical, you need a clear recipe to follow and a very logical approach. If not you get a terrible mess!

My recipe for success is simple. It’s five steps that are easy to remember:

Find It
Fund It
Finish It
Fill It
Future Proof It

Follow this and you won’t go wrong!