Short Stay Success: Recent Episodes
by Guestflow
Aimed at new and experienced property investors alike, each week we explore different aspects of serviced accommodation as a property strategy. For more, visit: http://www.thesapodcast.com/
In this episode, Chris and Ritchie talk to use about the lessons learnt from the outcomes of the pandemic on operations, particularly the higher expectations regarding cleaning standards.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this episode, Chris and Ritchie discuss the impact of the pandemic on short stay business finance, and the importance of cashflow rather than straight-up profitability moving forward.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this episode, Chris and Ritchie talk to us about the lessons learnt during the pandemic that can help with managing revenue in the future, including analysing minimum length of stay and prices, and judging property and booking channel performance.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this episode, Chris & Ritchie share what they've learnt from Covid-19 about improving guest management for your short stay business.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this episode, Chris and Ritchie talk to us about the current state of the short stay market and how the upcoming changes to covid regulations may provide opportunities.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this episode Mike and Carey will be talking to us about how standardising your product can make your Short Stay Business more profitable and scalable.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this series of Covid-19 survival stories, we talk to business owners to find out how they are surviving Covid-19. We explore the impact on their business, the changes they've made and their plans moving forward. In this episode, Ritchie talks to Kay and Grant from KG Inspired Property.
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this series of Covid-19 survival stories, we talk to business owners to find out how they are surviving Covid-19. We explore the impact on their business, the changes they've made and their plans moving forward. In this episode, Ritchie talks to Theo from Per Person Per Night (PPPN).
Short Stay Success is brought to you by Chris Poulter and Ritchie Mazivanhanga. The show is aimed at new and experienced property investors alike. With each episode, we help you Start, Systemise and Scale your Short Stay Business.
If you would like to ask us a question or discuss anything in this episode, please join The Short Stay Success Community on Facebook, and ask away. To listen to more episodes or get more information go to https://www.facebook.com/groups/shortstaysuccess/?ref=share
In this series of Covid-19 survival stories, we talk to business owners to find out how they are surviving Covid-19. We explore the impact on their business, the changes they've made and their plans moving forward. In this episode, Ritchie talks to Gill from Treetop Property.
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
In this series of Covid-19 survival stories, we talk to business owners to find out how they are surviving Covid-19. We explore the impact on their business, the changes they've made and their plans moving forward. In this episode, Sean and Jerry Govere discuss how Southampton Apartments are surviving Covid-19.
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
In Part 2 of this Covid-19 survival special, we explore reducing your costs and retaining capital, and go into detail about the government support schemes available.
In Part 1, we discussed the impact of Covid-19 on your business, whether you should even be open, current booking sources and working with the NHS.
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
The world has changed immensely since our last episode. In this episode, we explore the impact of Covid-19 on your business, discussing whether you should even be open, current booking sources and working with the NHS.
Keep an eye out for Part 2 which explores finance - reducing your costs, retaining capital and accessing government support.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode of the Serviced Accommodation Podcast we bring you the first talk of our Winter Conference from 2019. In this talk Chris Poulter talks about how aligning your personal goals, and lifetime vision with your business can lead to huge and direct success.
He tells the story of his own lifetime vision, the emotional story behind it, and how aligning this with his business has led to them being where they are today with their Serviced Accommodation Businesses.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
In a Serviced Accommodation Business there are a lot of risks to the operational side of your business. You need to be working with other individuals and companies from day one and therefore you need to mitigate those risks to be successful.
This episode of the Serviced Accommodation Podcast is part two of those risks and how you can minimise some of the operational risks that come with working with other people. (Part One out last week)
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
In a Serviced Accommodation Business there are a lot of risks to the operational side of your business. You need to be working with other indivuals and companies from day one and therefore you need to mitigate those risks to be successful.
This episode of the Serviced Accommodation Podcast is part one of those risks and how you can minimise some of the operational risks that come with working with other people. (Part Two out next week)
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
As the year comes to a close Chris and Ritchie give you a breakdown of the year of 2019 in Serviced Accommodation for them, including an update on what they are working on now within the serviced accommodation businesses they run.
It is so important to reflect on the year, so that you can prepare for an even bigger 2020 and that is what this episode is all about.
Enjoy, and have a very Merry Christmas and a fantastic New Year!
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.www.thesapodcast.com.
In a world where reviews are king for any industry, and especially important for a successful Serviced Accommodation Business your guests experience is extremely important.
In this episode Chris and Ritchie take you through the important elements for a great guest experience.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Do you want to be able to step back from the day-to-day running of your serviced accommodation business, and perhaps even sell it one day? "Built to Sell" is book by John Warrillow which explores how to "create a business that can thrive without you". This gives you more options - reducing your hours, retiring, travelling, or indeed selling - and a more resilient business. Our Winter Conference explores the central themes of the book with a number of speakers, including a talk by the founders of EweMove - Glenn Ackroyd and David Laycock - on how they built and sold a letting agent with 150 branches in just three and a half years... In this episode of the podcast we briefly hear a snippet of the story they will tell at our conference on the 6th of Decemeber 2019. If you want to grab some tickets or find out more, head to: bit.ly/sawinterconference2019 ... We'd love to see you there! Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode, Graham Lindley shares some of the key learnings from attempting to setup 46 properties in 5 days! (Spoiler: Unsurprisingly, the properties were furnished but not ready for guests after 5 days...)
As well as the setup process itself, Graham discusses the business impact of such sudden growth, the structuring of his team and how he's de-risking the deal.
This episode is an excerpt from our weekly Quick Start Calls. You can find out more about the programme at https://www.thesaquickstart.com
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
On the 14th September 2019, new regulations are coming in which will fundamentally change the way you take payments in your business...
However, there have been some updates with a government extension to banks, AND we now know how Booking(dot)com will now handle these changes...
Check out this quick update episode to find out how this impacts you and how to handle it with your SA business.
Do drop us a message if you have any further questions.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
There are often problems in Serviced Accommodation that we cannot deal with on our own, or don't know how...In this rare interview we were lucky enough to speak to Police Officer Joseph Skinner from the Hampshire Police Constabulary. We covered the problem of prostitution in Serviced Accommodation units and the potential setting up of brothels in our properties. PC Skinner gives us the official information on: - What to look out for. - What actions to take. - How to detect if this is happening in your SA properties. We are delighted to bring you this interview and information that is much needed in our industry, however please be warned as this episode talks about the sensitive subject of prostitution and sex workers throughout. Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
On the 14th September 2019, new regulations are coming in which will fundamentally change the way you take payments in your business.
In this episode, Chris and Graham discuss the new PSD2 and SCA regulations, the impact on your business and how best to prepare for these upcoming changes.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode, Ritchie talks to Johnathan, a copywriter who creates amazing listings for properties on Airbnb. Chris and Ritchie have been working with Johnathan for years for their Southampton properties. He talks about his past and then move into freelancing and finally moving into copywriting for Airbnb listings. Find out his thoughts on what makes good copy for an Airbnb listing, keeping people engaged and the importance of psychology in copywriting. Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode, Kane speaks to Taylor and Ollie of Grandeur Property who have gone through the SA Quick Start program. They talk about how they started their company and have quickly progressed to several stunning properties and growing their SA business with the SA Quick Start program. Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Linda runs Heathrow Apartments and her journey in Serviced Accommodation and property has allowed her to now focus on her passions in life.
Linda through SA now has a hands-off approach to property, which has allowed her to help inspire and empower Mothers in Business.
She is putting on an event in just a few days time for Mothers in Business, find out more about this brilliant event here: https://www.eventbrite.com/e/powerful-success-secrets-for-mothers-in-business-tickets-56432575352
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
HOW TO SCALE THE SA MANAGEMENT MODEL...
The Serviced Accommodation Management Model can be great as it is relatively low risk, brings consistent money and lets you give great value to clients...
However, growing your property list can be difficult and this causes problems with scaling an SA Management Model.
PLUS, get the free SA Pitching Guide we talk about here: https://www.thesapodcast.com/pitch/
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Our Top Business Books 2019, have helped us to push our Serviced Accommodation Businesses to the level that they are now and are still helping us daily to hit our targets, plan our goals and have the right mindset.
Check out our Top 6 Business Books of 2019... Not in any particular order though... that caused far too many arguments at The SA Podcast HQ!
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Scaling your Serviced Accommodation Business can be one of the toughest times in an SA journey. We have brought together a group of people that have successfully scaled their businesses over the last couple of years... We asked them how they did it...
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
If you are getting started in Serviced Accommodation or thinking about getting started, listen to two of our amazing people who have gone from zero to ten properties in just one year and have been able to quit their day jobs!
In this episode, we dive a little deeper into the Serviced Accommodation Quick Start programme.
Plus listen through to the end as we will have a free gift for you full of tools that will help you get started!
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show, we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode, we're back discussing our "learnings" over the years rather than mistakes and how you can overcome these to make your business even better.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
. In this episode of The Serviced Accommodation Podcast, we discuss our biggest \"Learnings\" over the years."}" data-sheets-userformat= "{"2":769,"3":{"1":0},"11":4,"12":0}"> For entrepreneurs, mistakes are a critical part of business, as they give you learnings which allow you to improve both yourself and your business.
In this episode of The Serviced Accommodation Podcast, we discuss our biggest "Learnings" over the years.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
In this episode we explore the 3 easiest ways to maximises your revenue over winter: revenue mangement, listing optimisation and speaking to previous guests."}" data-sheets-userformat= "{"2":769,"3":{"1":0},"11":4,"12":0}"> With winter a quiet time for serviced accommodation operators, keeping your properties profitable can be a challenge.
In this episode we explore the 3 easiest ways to maximises your revenue over winter: revenue mangement, listing optimisation and speaking to previous guests."}" data-sheets-userformat= "{"2":769,"3":{"1":0},"11":4,"12":0}">
In this episode we explore the 3 easiest ways to maximises your revenue over winter: revenue management, listing optimisation and speaking to previous guests.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Without sourcing, your serviced accommodation business would never get started - let alone maintain the growth you’d like to achieve. Sourcing is mainly about people and relationships, but it’s also important to analyse potential deals carefully.
In this episode we cover all our tips for successfully sourcing Serviced Accommodation.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Maintenance of your Serviced Accommodation can be a headache and without the right preparation and systems, sometimes can cause you to be out of pocket.
In this episode of The Serviced Accommodation Podcast we look at the processes and situations we have been in with our SA Businesses and how we overcome any maintenance issues, as well as how to prepare for them as much as possible.
To find out more head over to: https://thesapodcast.com
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
When setting up a new Serviced Accommodation Property there are a lot of processes, and we always split them down in to three key areas:
1.) Admin and Utilities
2.) Physical Setup
3.) Technical Background Setup
We always recommend starting with 'admin and utilities' as there are some things here that you need to think about setting up well in; advance such as internet.
To hear more tips on all of these processes, and find out the best way to setup your property, watch or listen to this episode either here or as a podcast in all podcast apps.
To find out more head over to: https://thesapodcast.com
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
It's the 12th day of Serviced Accommodation Christmas and for our final treat we have a Q&A with the team - Chris Poulter, Ritchie Mazivanhanga, Kane Nelson, Graham Lindley, Aaron Macadam and Chris Huskins - Digital Marketer & Podcaster.
From all the team, have a very Merry Christmas and a Happy New Year!
On the 11th day of SA Christmas, the podcast team gave to me... Kane Nelson and the Quick Start team under the treeee.. 🎶
Check out this snippet from our SA Conference all about getting started in Serviced Accommodation and the SA Quick Start program.
Find out more and download a free getting started resources pack at:https://thesaquickstart.com
On the 10th day of Christmas.. the SA Podcast Team gave to me... Some SA marketing gold from Chris Huskyyyy!
This talk from our SA Conference brings you some amazing points on your customer and brand values that you should apply to all your Serviced Accommodation Businesses! These will give you an advantage against any competition and in business in general!
Be sure to watch this one or download the podcast to get all of the marketing gems within.
For more information on the SA Marketing Services we offer head over to: https://thesaaccelerator.com/services/marketing/
Extra thanks to the amazing drawing skills of Andi Cooke and Alan Grosvenor.
On the 9th day of SA Christmas, my SA Podcast team gave to me... Some stylish dance moves from the legendary Ritchie!
With our 9th day we bring you a talk all about the models and processes that @sSouthampton Apartments have used to make 2018 a success.
Merry Christmas!
🎶 On the 8th day of Christmas, my SA Podcast team brought to meeee...
A Q&A session with some inspiriting ladieeees! 🎶
We finish off our Women in Business section of the 12 days of Serviced Accommodation Christmas with a Q&A from our inspiring women in SA business.
Thank you to Linda, Suzi, Ellie and Karen for the fantastic content provided and for sharing their inspiring stories.
Day 9 tomorrow we loop back to Ritchie to talk about the 2018 year for Southampton Apartments.
For more info and episodes head over to https://thesapodcast.com
On the 7th Day of Christmas my SA Podcast team gave to me... A inspiring story from Karen under the treeee!
Every day in the run up to Christmas we are bringing you amazing content from our Serviced Accommodation Conference this year.
On the 6th day of Serviced Accommodation Christmas my SA Podcast team brought to me... a fantastic talk from the brilliant Ellie!
Another inspiring talk from our Women in SA Business section for the 6th day of Christmas.
On the 5th day of Serviced Accommodation Christmas, my SA Podcast team gave to me... an inspirational journey from the lovely Suzi!
Hear from our section 2 of the Women in SA Business section with Suzi.
A new treat every day until Christmas!
On the 4th day of SA Christmas the SA Podcast team gave to me, an inspirational session on women in business for freeee!
The wonderful Linda Attram kicks off our Women in SA Business sections of 12 days of Christmas with this inspirational section from our SA Conference!
On the 3rd day of Christmas the SA Podcast team gave to me... a whole load of tools to make my life eassyyyy!
In this clip from the SA Conference we talked about why 2018 has been so busy and the tools we have pulled together to help you with every single aspect of your Serviced Accommodation business.. from bookkeeping to tech to marketing.
Find out more by checking out the podcast... or head to thesaaccelerator.com for more info.
🎶 On the 2nd day of Christmas my SA Podcast team gave to me... Highlights of what Serviced Accommodation has done in 2018! 🎶
This second video in our Christmas series shows the intro to our Serviced Accommodation Conference, talking about what has been happening in 2018! PLUS an insight in to the retreats coming up for Serviced Accommodation owners throughout 2019!
Have a look and listen to find out more.
You may have noticed we have started doing video... And obviously we have taken to it like a duck to water... Sort of..
Here is our outtakes real to prove it!
Over the next 12 days we will be delivering you a piece of content as a lovely little Christmas gift. Much of it will be from our sold out event last week the SA Conference.
To view the video of this head over to our Facebook group: https://www.facebook.com/groups/thesapodcast
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
We all would love more direct bookings for our Serviced Accommodation businesses. But in order to get those we need to work on our own marketing efforts, something that we often neglect as OTAs do this so well for us.
In this episode we get Chris Huskins - Digital Marketer & Podcaster, our Marketing Director, in to talk about inbound and outbound marketing and how we can increase our direct bookings.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Complaints... We all get them, it's part of the nature of a Serviced Accommodation business however we all want to limit them and the damage they can cause.
In this episode Chris and Ritchie cover:
- Different types of complaints
- Who should deal with them
- What processes should you have in place
- Complaint resolution
- Chargebacks
- Reviews
Following these guidelines may save you on hefty chargebacks and bad reviews.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
The team are all back from the brilliant Serviced Accommodation Retreat in Barcelona and have come together to bring you all the learnings they took away from the retreat.
If you weren't able to make it to this retreat then this episode is a must listen as we take you through:
- Business Strategy and setting goals
- Tax planning and de-risking
- Building a team and how to do this successfully
- Strategising your Serviced Accommodation Business
- How to put systems in place to save you time and money
- Revenue Management
- Build, Test, Scale
- The importance of using systems to scale
- Marketing your SA Business
- The importance of knowing your customer
- How to put together a customer persona / avatar
In this episode we hear from your normal hosts; Chris and Ritchie.
Plus we hear from:
Graham Lindley from The SA Accelerator Programme (https://thesaaccelerator.com/)
Kane Nelson from The SA Quick Start Programme (https://thesaquickstart.com/)
and Chris Huskins - Our Marketing Director (https://www.thesapodcast.com/)
Thank you to everyone that came along on the retreat we really learnt a massive amount. And to those that let us capture the key takeaways from their days on the SA Retreat. If you want to catch up on more learnings and get the full experience of the retreat, check out all the content at: https://www.thesapodcast.com/serviced-accommodation-retreats/
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
Each day the Serviced Accommodation retreat team take a full day to focus on one of the retreat clients SA businesses. On day 4 Alex Hillenbrand was taken through a long day of strategising, systemising and planning. Alex wanted to set his objectives out with a full strategy review, and a big part of that is to work out why you are doing what you are doing and what you want to get out of it, then work back from there. Let us know your thoughts and if these findings resonate with your SA business? Have an opinion or comment then do leave it below we would love to hear from you. Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
Chris and Ritchie come together on day 3 of the Serviced Accommodation Barcelona retreat to bring you a round up of some of the key points that have come out of the boardroom days.
Across the clients and mentors on the retreat they have over 250 properties so A LOT of value has been discussed, learned and shared.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
Each day the Serviced Accommodation retreat team take a full day to focus on one of the retreat clients SA businesses.
On day 2 Alan Grosvenor and Suzi Parker from Platinum Pillows Ltd were taken through a long day of strategising, systemising and planning.
Alan and Suzi has objectives covering the systemisation of their business so they could spend less time on the nuts and bolts. They also looked and learnt where they need to be with branding and having a clear message for future clients and bookings.
Let us know your thoughts on if these findings resonate with your SA business? Have an opinion or comment then do leave it below we would love to hear from you.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
Each day the Serviced Accommodation retreat team take a full day to focus on one of the retreat clients SA businesses.
On day 1 Ellie Smith from Blake Henderson Ltd was brave enough to step up and here are the key learnings from the day in video and podcast form.
Ellie was able to learn a lot and strategise both operationally and gain a fresh new perspective on the marketing approach, focussing on a clear avatar and target client.
Let us know your thought on if these findings resonate with your SA business?
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
The Serviced Accommodation reaches 40 episodes, and whilst on the SA Retreat in Barcelona we thought it was a good time for you to meet the full team, AND hear about all the exciting new products we are launching to make your lives as Serviced Accommodation Business owners a lot easier!
The usual suspects Chris and Ritchie are joined by the team members Kane, Graham, Linsey and Chris.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
The SA Quick Start Programme has opened and in this episode we are giving away free resources to help you kick start your Serviced Accommodation business, including:
- Deal analyser - snapshot
- Deal analyser for long term deals
- Book excerpt on Planning Use Class
- How to reduce your VAT bill
- Book excerpt on Revenue Management
- Trello To-Do List Template
In this episode Kane joins Chris as they cover the SA Quick Start programme as well as:
- Business Strategy
- Knowledge and Free Resources
- Advice and Accountability with Free template
- Business and Serviced Accommodation Systems
Download the FREE RESOURCES at https://thesaquickstart.com
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
Over the last 5 episode Chris recently interviewed 5 serviced accommodation businesses finding out more about how they scaled up.
In this episode Ritchie returns with Chris to look at a summary of those episodes. Between the 5 businesses interviewed they operate or manage just over 200 units, and they had lots of valuable advice to help you scale your own businesses. The key points can be broken down into the 5 foundations of scaling your serviced accommodation business.
Chris and Ritchie take you through those 5 foundations including:
1.) Setting your objectives
2.) Know your model
3.) Build Test Scale
4.) Systemise
5.) Build your Team
Chris and Ritchie are the last people to sing our own praises, and would never try to take credit for other people’s success. But the fact is that all 5 of these businesses also had a big positive impact from being involved in The SA Boardroom mastermind groups.
If you would like to find out more about The SA Boardroom, please go to www.thesapodcast.com/boardroom to book a free consultation.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
The final episode in the series of interviews exploring how entrepreneurs scale up their Serviced Accommodation businesses.
In this episode Chris interviews Lisa Hudson. They talk about Lisa’s struggles at the beginning with Technology, Structuring and Pricing. Before looking at the different models that Services Accommodation Businesses could use.
Lisa then talks about the model she settled on and how she is using the Equity JV model to scale up a serviced accommodation business.. They look at how Equity JV works and how it has helped Lisa.
Lisa runs Urban Square Property in the UK.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Find out more about Lisa’s business Urban Square Property – http://www.leedsurbansquare.co.uk/
Transcription:
Coming Soon.
This episode is the penultimate in the series of interviews exploring how entrepreneurs scale up their Serviced Accommodation businesses.
In this episode Chris interviews Andi Cooke, one half of Andi and Lloyd… well known names in the property community. He talks about how his relationship with Lloyd Girardi started how they bought a big list of properties very quickly including pubs and houses. The planning implications of the way they scaled and about the importance of relationships. Plus Andi brings in Ellie Smith who talks about how they positioned themselves to get big and long term contractor lets.
Andi along with Lloyd run White Box Property Solutions Ltd which is an award winning property investment company based in Northampton, UK.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Find out more about White Box Property Solutions here: https://www.whiteboxps.com/
Transcription:
Coming Soon.
The third in the mini-series of interviews exploring how entrepreneurs scale up their Serviced Accommodation businesses.
In this episode Chris interviews Karen Miknas as she talks about the ups and downs of her Serviced Accommodation business.
Chris and Karen then look at how Karen has been seen scaling up her Serviced Accommodation business; Jet Set Lets 4U.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Coming Soon.
This episode is the the second in the series of interviews exploring how entrepreneurs scale up their Serviced Accommodation businesses.
In this episode Chris interviews Graham Lindley as he talks through moving from being a mobile engineer to forex and crypto trading, and then finding his passion in Serviced Accommodation and Property.
Chris and Graham then look at how the journey Graham has been seen him scaling up his Serviced Accommodation business, and how it has happened.
Graham is managing director of Prim Short Stays in Nottingham, UK.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Find out more about Graham’s business here: https://www.primshortstays.com/
Transcription:
Chris: Hi, I am Chris.
Graham: And I am Graham.
Chris: And welcome to the Serviced Accommodation podcast.
Chris: For continuing our series on scaling up and how to scale up your Serviced Accommodation business successful, today I am going to talk to Graham Lindley. So Graham, thanks for joining us.
Graham: Hi, thanks very much, it’s my pleasure. I have been listening since the beginning, so it’s quite strange to now be inside here.
Chris: The strangest thing is when the podcast is released and you sat in your car listening back, and it’s like, that’s my voice.
Graham: Oh really.
Chris: Yeah, I am sure.
Graham: I have got all that to look forward to.
Chris: You do. Absolutely.
So could you give our listeners just a little bit background on yourself, like where you kind of came from, from a profession, and where you are based in the country.
Graham: Okay. I live in Nottingham, being there around eleven years, after growing up in Kent. And I have been an engineer all my life, since I left school, in fact, I started when I was still at school — and that was very good, I enjoyed it very much. I was always in different places, meeting different people, whether a country man or a council or state, I always find a way of getting on with everyone, and really finding ways to help people and being resourceful. And so I was a mobile engineer with my van and that’s what I did.
Chris: So when you say engineer; what type of engineering was that?
Graham: So I did security and fire, I guess the technical term would be a technician. In the trade we all call each other engineers. So for the first part I was mostly installing and then transitioned more towards maintenance side of it, so I didn’t really have to call around lots of space and things like that anymore.
Chris: No, but at the same time I imagine like, diagnosing and repairing stuff is a lot more difficult than installing in the first place.
Graham: Yeah. Really it was the thing of diagnosing and fault finding was something that I did excel at and that is a matter of just breaking things down and working out process of elimination, really. If you have got a huge fire system of course, a massive factory, with a random fault in it you can just keep breaking the system down into half and then walk out where the fault is and then go to that half and split it again — you know, it is possible.
And I think once you get the idea of how to find faults then really you can apply that to anything, and that’s something I had really try and teach my apprentices was, focus very much on the process not on the kind of particulars; if that makes sense. So you can then apply that skill to any system, whether you have seen it or not before — you can compare working parts with non-working parts and just work out where the fault lies. So yeah, that was something I enjoyed doing but it also meant I had more time on the road and a lot of people wouldn’t like that, but for me, if I had to go and help someone on an installation I would really notice actually being on site for ten, twelve hours, something like that, and then a little driving at the side of the day. I had noticed the difference really in the fact that I couldn’t listen to all my podcast in audio but a lot of sites now have banned earphones, so even doing that was impossible.
So for years I have been doing the job that I could do and to be honest with you, I had got to the highest point I could without then going more office based or more managerial, and I kind of knew it was something I had always done and so I could do it easily but not necessarily something I always wanted to carry on doing. So I kind of consciously decided to plateau, I guess, and have that quite nice space in the fact that, I was entrusted and I did do a good job and I did the very best I could, but it allowed me to focus a lot of time or mental energy — at least — on other things — my real passions — and that was initially a lot of forex trading, and stocks and shares, crypto, and later I have got into property and that’s when I really found my true passion.
So listening to business development podcasts and various audio books, I really started to kind of get an idea that that’s what I wanted to do and it certainly wasn’t going to be carrying on being an engineer, and I couldn’t see myself starting my own business in that field either because it’s quite a mature market and you have to start very small, you know, it would take a good ten years, I think, to start scaling in that industry I was in. So yeah, that’s where property really started to make a lot of send to me.
Chris: So when did you first become interested in property then?
Graham: I have always been interested in property: definitely. I mean my dad certainly always was. And I made a big mistake and I bought my first home, it must have been around ’06/’07, I spend a lot of money doing (it out). And then we just moved to Nottingham, we weren’t that familiar with the areas and it turned out to not be a great area and we weren’t very there at all. And we put it on the market and the end we just wanted to get out of there, I mean I briefly consider renting it out but we just wanted to wipe our hands off it, so we sold it for a loss.
And then went into renting, supposedly just for six months. And five years, I am (certain), I think (the one after), you know, trying to kick myself away from what the value would have been, what my mortgage would have been if I had put tenants in. So it did turn out to be a really good thing and they do say everything for a reason and certainly I won’t be where I am or living where I am now if I hadn’t made that decision but yeah, in the end it was six years of being in rented — which initially, you know, it was very nice, but once we had started a family and we wanted to settle and I only wanted to focus on the business, it didn’t make much sense.
The actual trigger for really deciding to become a property investor and focus some more time on that space was… I guess was really be committed to being a successful-professional forex trader and I was spending a lot of time on self-discipline, on proper strategy — that was my root financial freedom, as I thought.
But also the guy, my mentor, the guy that I was learning from, he was maybe thirty-six/thirty-seven, gone fully grey from the stress, sitting in front of six PC monitors for twelve hours a day — you know, it would be a Sunday afternoon; his family would be out, having a barbecue he would be preparing for the markets to open the next day. And I am starting to think, you know, I am not really sure this is the future kind of future I want.
And my wife asked me a funny question — she was reading some book — and she said; “what is it you are doing when you lose track of time, because that’s where your true passion is?” And I didn’t much over it, I was just thinking yeah, forex, but only when I am winning, when I am not I am kind of getting up at 01:00 AM to check the yen against the dollar and you know it wasn’t healthy.
So we got offered single buy to let property, and at the time I didn’t know about property education, I didn’t know about the courses, and didn’t know a lot really. However, I knew it was something that we wanted to do and we were still at the time, so I was a strange. When I spoke to the broker he said well, there is not many people that don’t own their own home already and they are trying to get into buy to let, in fact, there was only two lenders that would even consider us — Natwest being the one that we went with.
And yeah we got offered buy to let, and that was, I nearly bought a dud actually, my whole strategy was going to be buying twenty percent below market value — I think I might have heard something someone was doing — and my way of doing that was going to be finding what had been on Rightmove for the very longest and of course I had been the most desperate, so I am more likely to accept an offer. And I thought I had found a gem and I would start to hold it up in my head that I was going to be buying it at a twenty percent below, I didn’t even consider that you might not want to go for that.
But my main concern was why I hadn’t been on the market so long, I really thought it was a Call KA, and you know, I had accepted at face value what the agent was telling me for rental figures. And yeah, I was just putting up the word about, you know, I was speaking to people saying, look, I am going to be going into property, I want to get a buy to let. And having that random conversation with someone he said to me, very randomly, I think there is something going on at Trent bridge cricket ground at the business centre there, I think it was a property event on tonight, you ought to pop along. So I went down to that — and I guess technically that was my first property meeting — but it was out on by state agents and really they were just talking about the state of the property market — this was 2015 — and I found it very interesting.
And I just reached out to a guy, he was in a suit, and I said, I am looking at getting into property — I have seen a property I think it’s call KA, I am not sure entirely why it’s still in the market. He said, “you know what, I love looking at property, (focus on viewing), and I am just going to come down and join you, you know, I will just do that”. It really was a nice thing for him to do. And he came down, and he pointed out a lot of defects. And a year later, I found all his notes that he had given me and he was absolutely right and everything he was saying was just… I understand why I would have done very badly if I had went for that.
So, well forwards, we got a different property: bought well. And we got quite lucky, we bought one that was (Hecks) house and association, and it was just a matter of treating a state agent professionally as potential business partners almost, if you are buying property you are going into business with that person, so having respect for conversations with them and also involving the when you are doing viewings.
And I was doing that and I think we had already kind of made enough to own a place because I am naturally (knee jerk) because of them, and then I thought hang on, let’s just see what else is out there, we went for another viewing, mentioned the (impulse) that we were scaling up and we were going to be buying our portfolio, just telling the agent everything they needed to hear. To then say, I might have something you are going to be interested in, it’s not gone on the market yet but we have just put the sign on the outside and the neighbours asked for a viewing, I am going there now and I said, “I am coming with you.”
It was great, (Hecks) housing and association. Fuchsia pink all over. It hasn’t been touched since the seventies, and yeah, very good price.
So we had the agreement and principle done, we had the deposit proof of funds on the desk of the agent by 09:00 AM that next morning, they couldn’t really go to market with t at that point, so we didn’t have to complete. And as I understand it was about two hundred investors that are after this (Hecks) housing and association properties, where they are offloading their old stock and buying newer stuff, and so we were very lucky there.
So yeah, well forwards, it took a while to get through conveyancing, throughout that whole time I was on eBay and I had gone through every night and buying stuff that I thought I would need for the renovation. I was an engineer, I had a big van, I had tools, and we had the company van as well, so it meant we could quickly — if we sort of (bargain) — go and get stuff.
I think the best part was we got a brand new bathroom suite from B&Q, it was the guy that bought it, left it in the garage, didn’t need it. Put it on eBay with a spelling mistake and we got the whole lot for thirteen pound, just amazing. The next first thing we got a second hand kitchen, but it was a high-end kitchen, with grounded worktops, appliances included — that cost £250. And then we sold the old one which was horrible, 1970’a kitchen; we just though you know what, we will try it on Gumtree for a hundred pound, someone bought it. And then we are just going to use it in the garage, you know, art studio, and for them it was perfect. So net it was a hundred and fifty pound grounded worktop kitchen. But at the time I knew, I had no concept of leverage or anything like that, I did all the work myself, so I was working every day and then going to the property at night, working from 05:00/06:00 PM till 10:00 or 11:00 PM — annoying the neighbours — and yeah, it was hard gruelling work.
Chris: Was it annoying the neighbours who wanted to buy the property?
Graham: Maybe that’s why they gave me such a hard time.
Chris: Possibly.
Graham: No, I was pretty respectful, but it was hard work, and I would probably age myself five years during that process. I got to the point where I was actually resenting the property, I was going in and just feeling empty; it was horrible. My wife thankfully… I just wanted to sell it, it wasn’t even ready and I said look, let’s just put it on the market I have had enough. And we had an agent man that said look, you at ninety-nine percent, just finish it and then we would value it properly.
And my wife said look, you didn’t do this to sell it and really after legals, forget home under the armour, when you look at what you are going to make after everything, even though we had only spent maybe four grand (£4,000) and had done everything, and we have made a very nice home for someone. We won’t have made much money at all, it certainly wasn’t worth all that effort I had gone through, and she said look, this isn’t why you did this, it was to start in your property journey so let’s just it, find a tenant.
So thankfully we did that, it took us two months, we were very (fassy), more (fassy) than we needed to be, but of course it was our precious first ever property.
Chris: Absolutely.
Graham: So we got a couple of teachers and then we went for a year. That was nice actually.
And after that whole endeavour, I had totally had enough of properties though, we got tenants in and I was like forget about that for at least a year, let’s see what happens to the market and I will start thinking about it; the (tiling) for next year. And that was my time to really then start getting into forex and really double down and focus very hard.
The biggest thing I have got out of that was the self-discipline. My mentor, he did meditate before even looking at any charts in the morning, he was very, very disciplined and focused and so I really kind of started to develop that side of myself, which I had never known before — to be honest with you — and that was really useful.
So I was really trying hard to be a very successful forex trader, and I wasn’t losing a lot to be honest with you but I was really trying to hone my skill before putting any significant amount of money in, but whether you are twenty pounds down or twenty grand (£20,000) down, I think once the emotions kick in they are very, very dangerous. So I was just learning to try and separate decision making from emotions. And I think the truth is I wasn’t really enjoying it and my wife asked e the question of; where do you lose track of time the most? And I wanted to answer forex but I didn’t really know the answer.
Coincidentally, that night I had seen on meetup.com, a weird thing I had never heard of before, it said property networking event — I was like not really so interested in that but I am quite interested in listening to the guy that retired in his early thirties using other people’s money. I thought well, he is either a corny man or he has got something that I could learn, so let’s go and hear him. And I would never forget, I said to my wife, you know what, it says networking from 09:00, I will be home just after 09:00, I am not interested in all of that. And I went along and it was quite a forced thing, there was the ringing of bell every couple of minutes and making you go and talk to someone else.
Chris: Be networking…
Graham: I had never known anything like it, and you know what, I met some really good people, some people that hadn’t gone into property, so I had advice to offer them and people that had been in it twenty years and twenty plus properties, and I loved it, I absolutely loved it. I met some good people, I met a plumber that I was getting on really well with him and you know people have been on these courses and I was arguing with them, you know; why would you do that. When that can be out towards a deposit and they were arguing with me saying well, how long I it going to take you to save another deposit before you can buy another property. And that’s how far detached I was with being a real property investor.
But the guy, you know what, the guy spoke — he was good — I wanted to say hi to him, there was a couple of people I wanted to follow up conversation with, afterwards. 11:00 PM we were getting kicked out of the bar, at 11:30 PM we were still kind of raveting on — to be honest with you. And I was really energized, I was buzzing, and I went home and say, I know where my true passion is, I lost track of time and I could have talked all night with those guys, though I have never met before and it was all around property. And I really knew my passion from there on, and in fact, this is it, this is what I am going to be doing, and it was very nice to have that kind of inspiration, if you like.
Chris: Yeah, definitely. So you kind of find your direction and in terms of property; and what was it really that attracted you to SA, you know, how did you go from this point where you go right this is what I want to do to actually establishing Serviced Accommodation, would sit you write well?
Graham: There was a guy that actually was doing a thing called Serviced Accommodation, not really heard of but I have heard of Airbnb, so I kind of understood it. We have been doing Airbnb from our spare room at times, it wasn’t something we enjoyed doing, but my grew up in a guest in New York and so for her it was always kind of a dream to go back to that, whereas for me that was just a nightmare that I do lots of strangers in your home and I was just not ever enjoying that, whereas Airbnb can be a bit more picky and choosy, enquiry only, for example, I was travelling a lot for work so we did have women only if we let it out at all while I was away.
And so I was exposed to that and then I had met a guy that was doing it more professionally, I just assumed with his own property. And I was aware of this thing that everyone at the time was doing rent-to-rent and HMOs, and it was quite funny actually because I had heard about that when it first… Well, when I first heard about it, it was getting going in London quite big and it was around 2013, and my mind-set is to show mind-set shift, at the time I just thought I went on too late, these people are already doing that, you have to be the first, otherwise, no point. And that’s where my head was out at the time.
And a while forwards, years and years, and everyone is talking about rent-to-rent, I am like oh yeah I know what that is. And I don’t really know, I don’t know if it’s arrogant, but I thought I had a brainwave, I thought I had a really good idea that no one else had had, what about if you combine these two strategies: rent-to-rent, but instead of putting HMOs, what about rent-to-rent for Serviced Apartments. And I spoke to someone, I then got to go another couple of networking events and I said to someone, oh I have got this idea and they kind of laughed at me, and they went yeah that’s what everyone is looking to do, I was like oh okay, cool, cool, cool. So that was it.
I will go back to an agent I met — the guy who first helped me out with that property I nearly bought — me and him kept in touch, I involved him in the buying of the successful purchase and the renovation, in fact, I invited him around when it was complete so I could show him everything and also he had me help him. He had a couple of offices and I did security lamp, CCTV, that kind of thing, so we got a business relationship going on and so that was good and keeping in touch, and we enjoyed each other’s company.
I do remember being at one of his offices and doing a repair, and (seeding) of the Serviced Accommodation thing, I said have you heard of this thing that people are doing and he said that sounds similar to the corporate lets, but you know that sublettings are kind of not allowed and it’s definitely frowned upon, I said oh yeah, I know. But I didn’t really move it forwards from there.
Well forwards many months and I get a phone call from him, I was his go to guy I guess and looking back — having now read Daniel Priestley’s book –his key person of influence within anything that was technical. And he had just acquired a block of apartments, just four apartments, and he was going to be giving the block management. And he asked me, he phoned me up, and he said look; what’s going to be my requirement for fire safety? And I said what have you got? And he explained. And I said you know what, it would be easier if I come down and meet you in person.
Chris: Of course it will be. I’ll have a look!
Graham: Yeah, brand new renovation in a listed building, not in the market yet, four high-end one bed apartment. I thought yeah, you know what, I am going to pop down. So I went down in the afternoon and I had a look round and it really was stunning — very, very nice, oak everywhere, massive windows; very, very central in Nottingham; fantastic location, and yeah the place was stunning. And I said to him you know what, I am interested. And he said “what do you mean?” Is everything alright Graham? If you didn’t split up with your wife, why do you want a one-bed flat in the centre of the town? I said no, no, no, I am interested in taking the block.
And so he kind of looked at me and he… I was a little bit gone out to be honest with you; to let you know no offence, eighteen months ago you were about to buy your first dod property; and now this? I was like yeah, you know, Serviced Accommodation; do remember that thing I was telling you about? So he was the first challenge, to honest with you, and my knee-jack thing was to phone that guy I had met at that very first networking event that was doing that thing called Serviced Accommodation, and he very quickly recognized it as a good opportunity and was right in my house that night. And actually we met with the agent quite quickly afterwards and you know what, he did a very, very good job of… He had been on the courses, he knew what he was doing and it just was getting going and he is very, very prepared, and he did a perfect job of convincing the agent that it was first of all a legitimate thing to be doing with the building but second of all, it was actually the better thing to be doing with that property, it would have worked better as SA a it would have worked under AST, which the owners were looking at. So that was fantastic, you know, the idea was to be doing some form of JV, it didn’t end up working out mostly because the guy really had to focus on his own properties which was quite a sensible thing and that was he advice he had received at the time from his mentor.
Now, I also saw the importance of having a mentor, and I wasn’t sure about doing the course, so I bypassed doing the course and I actually reached out to Mark Stokes — at the time he was quite heavily involved in Serviced Accommodation — and I said to him; would you mind mentoring me on the side? And from there that was very useful and I was getting to learn a lot. And the way I have always been is I do real deep dive in any subject. I would never forget; I wanted to buy s mountain bike, I had spent three months researching, I had to know about every single component, every single (back) on the market, the price points, the pros and cons, everything — and that’s just how I am, and of course then started my journey into Serviced Accommodation really.
And it was a bit of a blessing really, the owners weren’t too interested, they (popped) some cash in this big block and their main focus was on their business which needed their attention, so nothing was happening for months actually; however, the agent was fully on board and was representing us, he was the guy selling it to the owners, not us — and so that was very, very useful.
Well forwards, I was probably at risk of being the most qualified bystander in all of Serviced Accommodation in the UK and every day I was working towards it, no matter what; whether it was researching, or testing software, or reading books, and I was really focused on business development, I wasn’t using this as a property strategy. And I think, looking back now that was a sensible thing to do and I think that’s possibly not what everyone in the space has done — they have got their single lets, they have got their HMOs, and then they have jumped into Serviced Accommodation as the next best thing to do. And possibly some people might not have the right mind-set around everything when taking that journey; whereas, I was very much focused on, okay we are going to be starting a business here; how do we do this successfully.
And yeah, I was using the time very wisely but it took a very long time before we finally got that call the agents saying, “make yourself available 08:00 AM next week.” And Mark was kind enough to join me but it was like Alan Sugar’s boardroom and talking some very big successful guys about (capital allowances), it was a little but intimidating, so I was glad to have a partner by my side. And long story short, we got the block — they didn’t trust us — we had proper business plans and everything, we have done a lot work towards it and they could recognize that. Equally, I recognize that we were taking a chance, we really were.
We hit the ground running, we opened up and we were prepared and did everything right, and very quickly we were getting very good reviews and getting a good turnover. And we got offered quite quickly — by the guy we nearly did a JV with — another property.
Chris: Yeah, I did say what’s quite interesting there was these three key events which kind of happened prior to getting going which some people would call luck, but I think if you examine closely, it’s not really luck at all, it’s kind of point yourself out there and being in the right place at the right time. The first of all was being saved from buying the (dead, few at first) buy to let property. And you could say yeah, it stroke a lot but at the same time if you hadn’t been in that network building, if you hadn’t put yourself out there you wouldn’t meet the person that you then come along and say, actual you need to worry about this.
Similarly with the agent who kind of brought you your first single let property, it was kind of lucky, but again if you hadn’t been there, if you hadn’t been putting yourself out there, talking to the agents, being in that position with then when they said oh yeah, I got this one, you know, you might be interested in, then it would happen. And very similarly with when the block came through; exactly the same situation, if you hadn’t been building that relationship, maintaining that relationship with that person over time then it just never would have come through, really.
And I think it just highlights the importance in property, it’s a cliché to say but it’s completely a people business; isn’t it.
Graham: One hundred percent, yeah.
Chris: You know it’s not about (a person motto) at all, it’s completely about people.
Graham: Yeah, a hundred percent. Even we didn’t talk about tenants but a big part of my success was is having really good tenants and looking after them. So yeah, it’s definitely a people business.
Chris: Yeah, absolutely. So when you kind of started out then, what was this thing that you struggled with the most — do you think?
Graham: Initially, when I was still working, my hand was fun…
Chris: Struggle when you were running full properties.
Graham: Full properties and a full time job which was very demanding, there were long-long hours, I was doing sometimes eighty hours a week. A lot of those hours where on the road, I could make phone calls, but my hand was forced quite quickly to get help, so, it was a struggle but it was also what I needed, it was a kind of blessing really.
Chris: One of those blessings in disguise is what it’s like because you can’t do everything yourself, you are then forced to kind of leverage early; right.
Graham: Absolutely. So I found a UK based VA, and I was struggling to find one. Again, my wife was instrumental in helping me find my first VA. And she persuaded me to reach out to a contact in London who was growing a multi-million pound, massive, very successful business. And she said, “why don’t you ask Lauren?” And I said well, we are at very different places, I am not really sure he is the best person to ask. But you know what I did; and he said my very-very best PA has left, very annoyingly she has left to have a baby and she has now had a baby and is wanting to start working from home which I can’t do, I need someone in the office in London; and so why don’t I connect you. And I said, thank you very much.
And so that was Emma, so Emma joined us very-very early, initially just for a few hours a week, and it was research and it was this and it was that, and quite quickly I got her trained up on some of the software we were using, and it became a more regular position for her, and she enjoyed it. And it was something different for her — she had always been a PA — PA’s are fantastic at organizing things. However, she always wanted to double check everything, which was fine, you know, I was available in the phone most of the time, so having that job and being able to do it quite easily because I had always done it, allowed me to have the mental capacity to say well do this, now do that, and I almost micromanaged but it meant I had someone there available — and that went very well. So that was that was the struggle. I am trying to think of something else but that was probably the main thing at the time. Absolutely.
Chris: Yeah, because I mean you were quite well prepared. I love that phrase: “the most qualified bystander” and all of those accommodation. Because you basically spend about a year working on that deal before it came to a (finish).
Graham: Probably a good nine months. And really towards the end actually, certainly by the time mentor, I mean during that process as well we actually bought our first home, so that was going on, I renovated that, I had learned the concepts of leverage and using other people’s time while I was going off at doing what I was good at. And also we had got our second buy to let as well by refinancing the first one with the added value. So by doing all that work myself in the first place, it did build in the value, and so, looking back it was the right thing to do but it’s not something — I am not sure — I would like to do it again, if I am honest.
Chris: So the three stages that we talk about like start, systemize, scale, so you obviously got started, it sounds like very early on you had to start leveraging and to leverage you really need the systems in place; don’t you?
Graham: Yeah.
Chris: That was absolutely key if you are going to be working with other people, you are not just handing responsibility over to someone, you are putting the systems in place, you are plugging the right people into those systems and then you are kind of monitoring their performance on them. So at what point did you then start scaling the business from these four guaranteed rent properties you have taken on?
Graham: Well, very-very quickly actually, the guy that we nearly did the JV with, he introduced me to a landlord, at the time he was at full capacity himself and this other landlord he needed some investment in the property, he needed furnishing and decorating — nothing too major — but he didn’t have any. And it was his first buy to let, he was a London investor and he had had experience with Serviced Accommodation, so he knew what he wanted to do, and he needed help bringing it to standards which we were in a position to do. However, my whole conversation was around how much rent do you want, and he just didn’t want to do that. So he wanted the reward from Serviced Accommodation, that’s why he wanted to do Serviced Accommodation. So really, we ended up doing management for him, and looking back we did actually set it up perfectly, he was an accountant by trade anyway, and it was a very simple management contract. But yeah with the gentleman’s agreement on the side, you know, of a zero percent loan, so you get going, so that loan was going to get paid back from the income of running it as a Serviced Apartment.
Chris: And what party was that to, was that from you to him to get it going or…?
Graham: Yes.
Chris: Okay, cool.
Graham: And so, it was very quickly, we were adding some portfolio, I think that was within the first couple of months. In fact, I think we had only just gone live when I first met him, I remember him coming, I did an introduction and showed him around our first block, and we had literally just furnished it and started getting guests at that point, so it was very-very early, we were adding to it.
So very quickly, I recognised the importance of systemizing and I knew that was going to be essential. I have got another friend who was local to me in Nottingham, who was growing a very-very successful business completely separate, they are coders, they are in the games industry. But he put a book unto me, The E-myth. For him, as a developer, it’s what he needed to stop developing and look at the high picture, and look at the chaos around him, and starts putting things in order, and from there that’s when his business started getting successful.
So he said to me right from the get go, read this book and follow it — and really if you have not read it, it’s about really the franchise model and looking at what’s good about that, lost franchises succeed, most small businesses fail, and the main difference is the fact that franchises are systemized, you are buying a system and that is a set of instructions really. And if you are to break your business down and everything you do in that down into a set of instructions, then you can start to then give those instructions to others. And so I had to do that very early, I had no choice.
And that’s where we started to really build our own systems and processes and found our way of doing it. I had someone build me a flow diagram, I showed them everything I was doing, and they build me a flow diagram of — we called it guest work flow — and from initial enquiry all the way through to check out. And you know what, there were so many kind ifs and buts, you know, if it was an Airbnb, can we do this; and if it was a high value (booking), can we do that — and there was a lot of variables. And I also very quickly realized the flow diagram was not the best way of doing it. For example, if a guest and we have to 4.1 in the flow diagram and then no action to take for three months, you know, how are you going to record where they are on that journey and trigger the next action?
And so we looked at alternatives and that’s where, really, I started to build something and teach it to Emma and have her run it for me. And so yeah, that was how we got going for the whole systemization.
Chris: That’s cool. I think when we started working together; do you remember you have the four properties on the block plus one on the management, and you were going a bit crazy at that point looking (at those) different stuff, where you going to have a look at a hotel when we first had our meeting?
Graham: Yeah. I got to know a property sourcer who is based in Manchester and he had a contact that was struggling with a very small boutique hotel, near Manchester airport. And, I thought yeah, you know; why not?
Chris: In fact, it’s a couple of hours journey, yeah, whatever.
Graham: Yeah, sort of that. Don’t worry. He was quite local too, where it was located, and it would have had an office space which was what he needed — so he was going to be my guy on the ground. So there was some logic around it, like teach him the systems and the processes, and actually I was going to be sharing the management with him, and there was that, but also I had started to speak to some large property investors around my area in Nottingham. And one of them had muted the idea of just testing market with twenty-five studio apartments.
And so, I was like okay, I need a mentor because my time with Mark is always going to be just three months — that was just to help kick-start me — and that was months previous really. And so at the time I was then thinking I need a mentor. And so, I was just thinking, okay, I need to say yes to everything but I don’t know how I am going to do it; we have got systems but they are not ready for this amount of scale — we can’t go from five to thirty apartments in one hotel. One of which was in Manchester.
So I reached out to Chris after listening to the podcast and after hearing him advocate management which by the way really started to recognize the benefits of that. Because everything we were doing was scalable, our systems were scalable, our processes were scalable. But also, I had been advised against taking the block because it was a big risk to take on the liability — you know, for me and my wage, it was more than what I was earning, so if it didn’t work, it was going to be very-very costly, especially after buying my own property. So I did recognize that that sort of things was not scalable. And so management landed in my lap, if you like, and from there I recognized it as being a much more scalable strategy. Yes, we (are making) less per property of course, but yes it was scalable.
So my mind was on that, I then was listening to this podcast and I heard about how great management was from you, Chris, I remember I reached out to you and said look, I have ended up doing management and I would like to learn a bit more about it, and also I am not sure I am going to kind of take on all these new properties that are coming my way.
So I still remember, it was here in Heathrow actually, first ever board room session with other operators. And the advice was quite strong, Manchester does not sound like a good idea at all. And there was a few red flags around it, which I was maybe glancing over.
Chris: Yeah. The key one I remember was that the guy who was still going to be living on site and that to me sounds like an absolute nightmare because when you do management, there is got to be a real clear distinction, what the roles are and who is doing what. If your person is still living on site, then clearly you are going to get involved and basically with everything that you are doing, so that was the biggest one for me. But there are some other ones around it, (not a list of all) like I say, Nottingham to Manchester is not a short journey, it’s not very close and having had experience running hotel before, it’s not very much fun. You are going have to be doing quite a lot of work around it, very hands-on, even hands-off hotels were remarkably hands-on, so there is a lot of stuff to do around there.
So I think that was kind of clear, kind of realigning of focus a little bit and obviously you realize that scaling up using the management model was going to be the way to go for you.
Now, generally, the challenge with management is… Although the model works brilliantly for you, as a management business; it works brilliantly for like an operator, developer, landlord — at the same time it’s a lot harder to kind of come across the deal; isn’t it. Because you are having to push people a lot out of their comfort zone to kind of understand how it works, compared to; oh yeah just give me this and that rent each month. Instead of saying well, I am going to manage it for you, it can go up, it can go down, you are probably going to make more money, but at the same time you are then going to be the actual operator, so you have got some liability around that etcetera.
Well, like I say that the management model is brilliant, the challenge most people have with scaling that up is; where do I find my clients? So how have you found your clients as you have scaled up the management model?
Graham: Well, it was actually a long while, so although we went from four to five very quickly, going beyond five took a long time and it was — I am trying to think really — it was a random comment on one of the Facebook groups, and it was an operator in London asking for cleaners in Nottingham. And so I reached out then I just asked how I could help, and they explained that they were actually trying to help someone else that was doing rent to rent in Nottingham. And so that’s how I got introduced to another London investor, this time instead of buying property in Nottingham he was renting property in Nottingham to run serviced accommodation.
So I met him and he had actually been using another agent and they already had one property of his and then he acquired a second property –giving them the keys — and it had taken a month for not much had happened and he was getting frustrated. He met me on the Saturday, on the Monday we had contracts drawn up and signed, and by Friday we were furnished and live, and Saturday night we got out first guest, so he was very-very happy with that.
Chris: No messing around then.
Graham: That’s it just kind of being ready to just absolutely hit the ground running, you know, and I guess that’s where having systems really helps as well; step one do this, step two do that.
To be fair, the on boarding process — as I call it — was chaotic, but everything else was just what we were already doing, so that bit was quite easy. It came naturally and I also had people that could do that and I could focus on the on boarding. But yeah, in my mind, probably a bit more chaotic that it should have been and it’s a bit like oh yeah we need to do that definitely. So I was already thinking this needs systemizing.
But from there we got to know another operator who was also using another agent, the same other agent, and yeah, they weren’t doing the very best job actually and although they have been growing for about a year on a block of apartments, the actual owner of the apartments haven’t really made much money. And the difference in the way that we structured, you know, complete transparency, and almost an open policy versus the setup he had, it looked like a breath of fresh air. Furthermore, the owner, he was a developer, he wanted to focus on development, he had a team in place to help with the development, although he had given the block to a management agency. A lot of his resources and time was continued to be used on looking after his block, and it’s because the agency was in a completely different part of the country, trying to manage something in Nottingham.
Chris: And that’s a fundamental issue with the national management companies; isn’t it? It’s actually very hard to have people on the ground and to have the same level of local knowledge with a local business.
Graham: Yeah, a hundred percent. So issues with cleaner, you need to find a new cleaner (please). You know, light bulbs going in the bedroom, a cleaner can’t reach; do you want us to send the call-out engineer, a hundred and forty pounds, or do you want to go down and sort tell light bulb and you know, it just comes through things like that. And then with the potential, I would say, just lack of clarity around other things as well. I guess my introduction to him was a breath of fresh air for him and it was just what we needed as well, I was already kind of getting to the point where it was going to be handing my (notice in) at work. And so, it all happened together to be honest with you, we went from six properties to me handing in my (notice in) and on boarding another seven properties and it all happened very quickly. From there we also got the second property from the first guy as well.
So yeah we were then really putting our systems to the test and on boarding more staff at that point as well, we had separated out the companies of course — operations with the first block and management — and that happened quite a bit earlier actually.
Chris: You mentioned like creating your job there, so that was something you have been putting off for a while; what impact do you think that had on your growth?
Graham: Yeah, massive. And I think it changed from; can I do everything? To should I be doing everything? So yes, I could do everything, I could have a full time job but I was at work for twelve to fourteen hours a day and run as successful business because of having the help and people, the very-very good people. Emma by now, by the way you know she had come on to working six hours per day, I think at that point, and she was a very-very high standard, high calibre. Initially her only weakness wasn’t really a weakness, it’s where she has always been a PA and she just want to double check things and that’s what being a PA is; should I do this, should I do that? And entrusted her, I said look, this is your thing.
And I guess for me, going back to the whole fault finding, when things went wrong it wasn’t a matter of like whose fault was it, it was more like well, which bit of this system is broken, and how can we stop that happening again.
Chris: I think that’s really critical. Most people when something goes wrong they inclination is to kind of blame someone. My first question is; what didn’t we do which would have stopped this from happening? As opposed to it’s this person’s fault. So if you have a cleaner that doesn’t turn up at your property, for instance, to create that massive problem in an SA business — now, most people turn on to blame the cleaner and go…
Graham: Well, we had it happen.
Chris: Yeah, absolutely, and that’s the thing. The correct response to that is okay; what haven’t I done which would have stopped this from happening and it might be that you didn’t have clear enough communication around, when you didn’t give the assistance to make it very-very easy, to see exactly what it is, you didn’t have the confirmations in place so that you knew a hundred percent that they knew about it etcetera. And it’s a very different response, of course, in way that’s kind of a natural because that kind of human nature just wanting to blame someone straight away. But once you kind of take that step back and start looking at things like that, you start developing your business very quickly; don’t you.
Graham: You have got to take responsibility and that’s it, it’s your business, it’s your responsibility, and it’s your fault if something goes wrong like maybe it’s the wrong person role but…
Chris: But you appointed them in that role.
Graham: Who appointed them?
Chris: It’s definitely your mistake.
Graham: Have you given them clear instructions then ask them to follow them and have they gone against those. And if they have gone against them, is it because you haven’t trained them well enough. So it might be the person but most of the time it’s not, actually. You know, that cleaner that did forget a second time as well, and that’s ends being a (full wave) onto the guest and moving yet if you can; it’s really embarrassing. But yeah we have got much more solid systems around the turnarounds now, things cannot get missed, and if it looks like they may have been missed, we have got four hours warning and everyone in the company is getting alerted to the fact that maybe we have got a cleaner that is not of the cleaning today. And so it’s very-very… Good systems we have got around that and those only come off the back of something going wrong, otherwise we would have just carried on, we (are) just letting them know when their cleans were, without any feedback knowing that they were aware of the cleaning the first place and knowing that they (off from) site.
Chris: Yeah, I think that kind of feedback in the business is critical, whether it’s things going wrong, whether it’s listening to your guests, listening to your staff as well, of course, but that feedback is critical to really grow and improve your businesses into.
Graham: Yeah, absolutely.
Chris: There is one thing I just wanted to pick up there. And with management you have really got two kind of different (avatars): one is focusing on people within — you might call it the property education community, the people who are kind of active and involved in what we are doing like this — and the other is people who are more kind of traditional landlords and developers. Now, how will your clients spot between those two and how do you find those two different (avatars) to work with?
Graham: Actually, I think the first avatar, as you call it, the guys that are in the industry already, that’s word of mouth, people get to know. And that developer that moved over to us he did a lot of due diligence with us and I think people really trusted him and of course then got his feedback as well — we had done a good job and that did reach other people. And actually coincidentally, that first guy that I was going to be doing a JV with ended up being one of our clients, it was great for us and it was great for him. And that’s what real business is about, it’s creating win wins, and Serviced Accommodation is a win, win, it can be a win for the property owner, a win for the guests — getting much nice accommodation than hotels — and it’s a win for us, as much more it can be a much better cash flow strategy.
And that for me is a real win, win and that’s where real business is. And so creating ways for other operators to come to us, to leverage our systems and our team, to then really help them kind of focused on what they want to do — whether it is acquiring more Serviced Apartments or focusing their other businesses or their other property strategies — really by enabling that connection to happen and finding a way that it really will be to the true mutual benefit, that’s where we have grown a lot to be honest with you.
So we have had four, I guess… Other operators join us now as clients, which is great. Yeah, working with the landlords is… We don’t really do any marketing, I mean we are getting a big and better name for ourselves now, and so we are becoming the kind of go to guys within Nottingham.
So it’s much more about personal connections rather than random marketing to be honest with you.
Chris: Yeah. And what has been your experience with the developer market; has that been something hard to break into?
Graham: Yes. Quite often because a lot of developers in Nottingham are building to sell right now, and you can’t blame them with the (passes) they have been getting, and actually if they are building to keep, they are then looking to refinance off the back of that and so it’s more difficult to then convince there lenders that Serviced Accommodation is a legitimate way of kind of having this work. And you see, because we are not offering any sort of guaranteed rents to developers, they really then kind of struggle. So yes, it needs much bigger developers to be honest with you; who don’t need to finance out of the back of each deal and can park some cash, or have got better and bigger relationships with lenders.
Chris: Yeah. And if my understanding is right, so you haven’t done any deals with developers outside the property education community, so far, but you have been working on these relationships for a few years now and you have got stuff now coming up the pipeline; is that right.
Graham: Yeah, absolutely. We have got two blocks of sixteen apartments in different areas of the city.
Chris: That’s sixteen each block.
Graham: Sixteen each. Yes. And we have got another block coming, it’s really early days but it will be a block of twenty-eight, we will get first (refuse) the number of apartments we would want to take in that block — and again, at a completely different part of the city. And so I think we will definitely be taking fourteen there because of the way he building is split, but we are going to be able to adjust the market there and potentially take more from that point as well, even if some go to (YST). But those relationships take a long time and I think developers will tell you their deals take a long time, a lot longer than they anticipate as well. So whether that’s the acquisition, the legals, or the kind of planning process, or even getting contract as on site to then finishing the site. Everything takes much longer than anticipated.
One of those blocks of sixteen was going to be ready before Christmas and it’s isn’t now, here we are in June, six months. So it’s just a couple of weeks away, so we will see on that one.
Chris: So it sounds like the kind of process you have gone through scaling up, it has been working with other operators, helping local people who were already involved in SA, and then continuing those relationships of course. But starting to build the relationships with the developers, which is really going to then escalate and take the growth to another level, you know, if you are taking on blocks of sixteen to twenty-eight at a time, as opposed to maybe individual properties at blocks of four/five, that type of thing.
Graham: Yeah, absolutely. But you see a lot of individual ones as well in much bigger blocks…
Chris: More issues around it, isn’t it. (Free holes), neighbours, etcetera.
Graham: Access. And look it is where we are very much found above board and everything is being done right and so, if you are not meant to do it in a big block then just don’t do it, it’s not really worth it.
Chris: There enough places out there which you can do it legitimately and it’s not worth the time, or effort, or money, which you are essentially going to waste if someone turns around and says, you can’t do this right.
Graham: Yeah. And look (Riggs) are coming, (Access Riggs) are going to be getting tightened up and you have got to be prepared for that. And I think doing SA where it’s not really allowed is going to be one of the first areas of attention from the authority, so it’s just not worth it.
Chris: Brilliant. So you have kind of taken us through the whole journey and show people how you scaled up, which I think would be really useful for people to hear. So what would you say was the most important elements to start scaling successfully?
Graham: Definitely the systems and processes. I mean we were absolutely over (queue), initially, on our processes and our systems. I mean I remember showing someone and he said, “well, you have just got five properties and you are doing all that.” And it’s like yes, but this will handle fifty easily without even thinking twice, and really we just need to plug the staff in. And that really is breaking everything down into like, step one do this, step two do that. And all those variables and having that system in place where we have got accountability within it, we know who has done well and when, so if there was something that’s going wrong, we can go back and just have a look again at the training and so on and so forth. But also if we need to slot more staff in, we have systemized the training now as well, and so we can just add people, (as in when).
Emma, she is ops manager now, so she is absolutely full time, plus, plus.
Chris: But you say she is ops manager but kind of really, she is more of, almost, general manager (to help you out); isn’t she. She is kind of essentially running the business for you with some oversight from you I would say.
Graham: Yes, certainly more recently. I think initially she came on full time as ops manager but I think…
Chris: It’s a role which is developed often, I have been absolutely critical with having one person who has that kind of responsibility for overseeing; right.
Graham: Absolutely.
Chris: And it kind of almost started as a PA role and then it evolved into an ops manager and now it has evolved into a kind of general manager.
Graham: Absolutely yeah. So she is handling all the girls: the coms assistants, the bookkeepers. Although I have got a relationship within, they know I am very open, an easy to speak to guy. You know there, I don’t have much to do, if I am to be honest with you.
Chris: You are not their line manager.
Graham: I am not their line manager. I mean I have a very much instilled company values of team work and we are all equal. I have taken my cleaners out to dinner, multiple times. We wouldn’t have a successful business if it weren’t for the cleaners doing a very-very good job in turning up.
Chris: And most people only appreciate that, when they do a bad job and they see the impact it has on the business. So, it is really-really important when the staff (going well), and to also appreciate the importance they have in the business and then reward that when that’s having it’s impact on what you are doing.
Graham: Yeah. So systems but also the team work, it has been essential. Emma has had, I have asked her what she wanted, and we have created the wall around her family life and requirements. So it meant that she is much happier in her role, she is being more responsibilities all the time, but she is rising to the challenge (at hand); the amount of money she can earn also rises with that. So it is a good thing to have.
And really instilling in everyone that if they have got good suggestions, make them, and if it’s an improvement, we are going to implement it across the business.
Chris: So kind of feeding on from that; what advice would you give to someone who is scaling up their business?
Graham: I don’t want to keep saying systemizing.
Chris: You can keep saying systemizing, that’s absolutely fine.
Graham: Well, how do you systemize? I guess that’s the question.
Chris: Yeah.
Graham: It’s teach someone. Even if you have got no one to teach, maybe do a screen recording on your laptop and read out the instructions of what you are doing. Because actually you will find those little bits in your head that you are just doing them without much thought, and maybe you have got three ways of doing the same thing, and it depends which day of the week and what mood you are in, as to the one you are doing. So actually; what criteria would you do this or do that.
And when you really break it down, I would say do ten minute videos, I aim to do lots of ten minutes videos and then you can even get a VA off People Per Hour or such like and get them to write a set of instructions from that video. And that’s the start of the systemizing, that’s getting it out of your own head and putting it into a process, do this if that, and so on and so forth.
And that’s absolutely essential because if you are going to add staff as you start scaling, they need to know what to do. And so you can then start identifying the higher value stuff and the lower value stuff. You know how Emma is being instructed to leave most of the comms and focus on the high value stuffs, so when we have got guests requesting a late check-out, it’s a science — you go to the cleaners, and you check their schedule, you check the next check-in, and you speak to the guest. And that’s a science where there was great management, maybe that’s a bit more of an art, and that’s high value.
Chris: Art-science; isn’t it.
Graham: Yeah. And so that’s a high value task. So we wanted to be able to focus on that without keep getting distracted about having an extra hour in the apartment.
Chris: I think when we look at how you have been able to scale up that quickly, I think it has been three elements really, and it’s again the things that we always all about when we talk about leverage it, putting systems in place — and you have clearly had those basically from day one — and getting the right team around it with the right culture and the right attitude, and tell following up with the accountability. And again, a lot of the accountability with what you are doing comes from the systems you have in place: using things like Slack where you can communicate easily with the team, you can also see if something hasn’t been done, if there is a problem, etcetera.
So it’s getting all the three elements right, which has allowed you to scale quite quickly; isn’t it?
Graham: Absolutely. Yeah. Definitely.
Chris: Brilliant. Well, hopefully that has been very useful for everyone and thank you for joining us today Graham.
Graham: It has been my pleasure. Thank you very much indeed.
Chris: Cheers.
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This episode is the the first of a series of interviews exploring how entrepreneurs scale up their serviced accommodation businesses. In this first episode Chris interviews Hitesh Mistry as he talks through the different ways to scale serviced accommodation businesses, and the ways he has personally done so with his own business.
Hitesh is owner of Vision Lets who provide rooms with a difference: Modern, Bright and Clean.
Hitesh runs Vision Lets with his wife and focusses a lot on the lifestyle that being a landlord gives, and the passive income it can bring.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Find out more about Hitesh and Vision Lets at: http://visionlets.com/
Transcription:
Chris: Hi, I am Chris.
Hitesh: Hi, I am Hitesh.
Chris: And welcome to the Serviced Accommodation podcast.
Chris: As you may have noticed, it is not Richie joining today, we have got our test results for our series on scaling up. So, we have been working Hitesh for a little while now and having been through the process of scaling up his business, and we thought it would be really interesting and useful (process) to talk about that painful process; right. So we are just going to have a kind of chat about the process you have been through, if there is any (parts) you can help people with — that kind of thing.
So it would be really useful for everyone, just to start off with — to kind of under a bit more about you; who you are; where you are based; what you have kind of been through; and tell us your background career?
Hitesh: Yeh nice one. Thank Chris. Thanks for inviting me today, I really appreciate that. I think when you said you have been working with me for a little while, a little bit longer than a little while. I think nearly around two years.
Chris: Really! That long.
Hitesh: Yeah, it’s been quite a long time and it’s definitely been a journey. I’ll tell you my background. It’s been a great journey though. Really hard.
My background, I am actually a corporate person. I work for huge corporate conglomerate, global company, for ten years. I haven’t been a serial entrepreneur at all. Hitesh ordinary average guy, you know, just…
Chris: That’s amazing. I find it hard to like envisage you in that whole corporate world. I guess the whole time I have known you, you have kind of been out of that you see.
Hitesh: Yeah, exactly right. That’s exactly correct. But you know, I have done a lot of academic studying, I have went through the kind of traditional study modes, the university, I have got an MBA as well. So academically, I have really studied a lot, I have really always (sealed) myself in the kind of corporate world.
But back in 2009, my wife and I, we started buying properties — our own properties — as buy to let. And that kind of got into the flavour of how we invested in property. And actually around 2004/2003… Sorry, 2013/2014, around there. Now we have we have get that decade…
I started getting a little bit itchy in my corporate role and I was thinking, we have started building up a property portfolio, and the income we were getting was quite good. If you kind of called it this passive income whatever. And I really thought of, you know, if I can do it more in property, and left in the kind of corporate traditional job side of things, I know it’s a bit of cliché but I read that kind of “Rich Dad, Poor Dad” book. It really did flick on a lot of light in my mind actually.
Chris: It might be a cliché but it genuinely does, kind of, I think the word is paradigm. I think it’s a great word, I don’t really understand it but certainly kind of, you can look at something and see it in a completely new light, and that’s certainly what it did for me. Because suddenly you will go, I can see the mistakes I am making, my money comes in and I spend it.
Hitesh: Yes.
Chris: In I just… The money comes in and I put even a fraction of that away to invest in assets and then start sending your money from that, that’s the wealth. It’s such a simple concept and yet so powerful; isn’t it?
Hitesh: Really powerful. Really, really powerful. And really resonates very strongly enough for a while. And also, at that time, 2014, my son has been born and he is three years old. My wife was, in 2015, pregnant with my daughter. And I thought to myself, you know actually, in the first three years of my son’s life, actually… In fairness, because my job was a (field) based role, I generally have a lot of time and freedom to manage my own diary and my customers I was working with, so, I do get to spend quite a lot of time with him, probably more so than an average kind of person.
But, I wanted more than that, I wanted to spend even more time with my son and my family, and I really saw property as a vehicle to do that. And those few things in my mind started to make me think perhaps I should leave my corporate job and go full time property and kind of just go through it and see what happens. Because another thing that I thought was that if I go through it, even if it doesn’t work out, I am young enough just to still go and get another job again. Very employable in that regard. So, if I don’t try that I might have a lot of regrets and that’s really my background and how I got into property.
Chris: So what was it that kind of made you take the leap then — the final leap if you like, from the corporate world into the entrepreneurial world? Did you kind of have something (lined up); did you just go — I have got focus?
Hitesh: I mean the property portfolio was supporting us, not obviously replacing the whole income (with me), but, it was a nice cushion.
Chris: Yeah. So it was kind of a safety blanket, if you like. Whatever happens you would have some money coming in, at least enough to kind of live on. Even though it may be not as much as you used to; right.
Hitesh: Absolutely. But even it was still a just in time because Kim, my wife, she was on maternity, so actually she was picking up a new kid. All of that was becoming — it was a bit of a risk, really.
Chris: Particularly, because she is on maternity. Even that child too is on the way as well.
Hitesh: Exactly. The cost are about to go through the roof. I kind of leave my job…
Chris: So, was that something that Kim has always supported you in or was it kind of a battle? Because I think that a lot of people struggle with is that, you kind of start to come into this entrepreneurial world and you have a kind of mind-set around what you are doing. And if your partner doesn’t share that mind-set, it can be very hard to kind of communicate on the same level.
So was that something that you struggled with or…?
Hitesh: Yeah. I think Kim was — she was so supportive, like really supportive. You know, if you really feel that something you want you want to do, and it’s a dream, then go for it, I will fully support you — we will find a way of doing it. She really gave me that extra confidence to take that step (how) you want and really go through it.
The other really interesting thing as I have always been involved with — personal development, and psychology, and mind-set, and believe (system), and things like that — being involved in practicing, and trying to improve myself, and make myself more accountable for man years. And I thought to myself, you know what, let’s just go through it, one way or another I will just make it work. Do you know what I mean?
I think when you really are focused on something, like very focused, I think then you really do make it work. Especially, if you then say to yourself, you know; we needed to kind of live a good life as well. I don’t need more pressure but, it is true that… For me, I thought I didn’t think working and going major on property was going to work for me — that I just don’t think I would have the focus. I need to really, really, really focus in one thing only.
Chris: Yeah. And I would say you are absolutely right. It’s very hard to really make something successful unless you have the focus around it. Certainly for years I have like two or three businesses, really. At least three businesses going on at any one time, and none of them really did (anything) because they didn’t get the full focus and attention that they needed to really start growth. So, now I completely understand that.
When you went full time in property then; what were you focusing on that time; was it single let still?
Hitesh: I went for the rent to rent HMO model. That’s what we went for.
So we did setup our own HMO that we purchased, we just completed it, it was getting it to go live, so that was really exciting time. And then really focused it on rent to rent HMOs — that was what we focused on.
Chris: Okay. So I guess that’s kind of natural progression, you bought an asset which is an HMO. You have kind of been through that process, seeing how it works. And so, you know what, I could benefit from a lot of these cash flow without a lot of our capital input by taking on rent to rent.
Hitesh: Yeah. Definitely. Didn’t quite go very straight forward though, it took me seven months to get my first rent to rent HMO.
Chris: Yeah, I am sure that’s quite a common path; isn’t it. Because here is an interesting thing, people think if they are going to and get, say, three properties. And you won one every two months and then after six months you are having three properties. But it took you seven months to get your first HMO, but, on rent to rent; how many did you get in the kind of six months or so after that?
Hitesh: Yeah. Then they started to come through. (They first start to flow) through after that, until we got another four or five, quite quickly after that.
Chris: So it’s amazing how that looks; isn’t it. And it is kind of putting the time on it first. And you know when we are working with people in the quick-start program, you have to keep reminding them that okay, you are paying the work, and you are paying the work, and it doesn’t feel like it’s paying back, yeah, but it’s exactly the situation which you found several months of work and after six and a half months you just have been going kind of mental. You know what we are doing.
Hitesh: Definitely. That really does reminds me of about pushing a snowball up the hill. Do you know what I mean, this analogy, you know it’s hard work — pushing up the hill. And you think; what am I doing? This is not working. You can see, there is (someone mentioned), but it’s hard sometime to really think, you know what, I am close to doing it. And then all of a sudden something happens, it starts to come together, and you get a break. And then that snowball tips over and it starts to roll down the other side of the hill, and the momentum becomes somewhat self-fulfilling. You know, you still keep the focus, you still got to keep going. But, things starts happening for you, which is really nice. But you have got to do that bit first, of pushing up the hill, and the belief, and to keep going, and all other things.
Chris: Absolutely. It doesn’t matter what strategy on a guaranteed rent, for instance, the kind of typical one way. You are having to get around with the agents and explaining what we are doing, you feel like hitting break all of the whole time. And just throughout you are saying, eventually, you kind of hit that critical marks; don’t you. Management is exactly the same. At first you are having to, (it will be out there), kind of trying to find people you might be able to help with it. And then eventually you kind of get to that point where really people are referring people to you, or people are giving you a ring. So, it doesn’t matter what kind of structures you are using, there is a way that kind of critical (mass point); isn’t it. And a lot of effort required beforehand.
Hitesh: Yeah. Very much that.
Chris: So, if you kind of quit your corporate life and went rent to rent, which presumably a cash flow strategy. So what was it that attracted you to then do another cash flow strategy on top of that, in serviced accommodation?
Hitesh: This whole thing was kind of around with rent to rent HMO that you are going to make at least £500 a month.
Chris: I was for about a thousand pound a month per property, and I was about to say that sounds very familiar. Often that’s said about SA as well.
Hitesh: Exactly. And that was powerful, it got me into the rent to rent HMO. And the reality is that it was really different, quite honestly, really different. My result weren’t like a thousand pound a month, not at all. My first one wasn’t even £500 pound a month. So, actually if you look at it (and) the breakeven point, because you got a furniture. Actually I am still trading at a loss, in the first… As soon as you go live you are trading at loss. You know, that takes at least twelve months to break even.
Chris: Yeah, that’s true.
Hitesh: So that’s really interesting because I thought, well actually this is not as great as I thought it was going to be. You know, if I was taking five out, which I end up being leveraging so that to finance the outlay for it, but this will take a whole year to break even. Well okay, I have got to hang in there, it’s a waiting game… it will come good, that’s fine. But then I think maybe naively I fell into a similar trap with serviced accommodation.
Chris: I was going to say because that sounded very, very familiar to me. Because people do guarantee rent and a cashless strategy, but, you have got to claw back all that cash which you presented in the first place, and that’s usually a six to twelve month period. And of course ironically, most of the people doing this are doing it because they need money now.
Hitesh: Yes, that’s right.
Chris: So it always depends how you look at it. You can look at the money as well but now we have got the cash flow. But in financial terms if you don’t have the money then you are going to have to borrow the money or come to some arrangement and work with someone else, which means that you are not going to get that cash flow from day one.
Hitesh: That’s correct and the other thing that attracted me to serviced accommodation or changing was, I am a sort of person that I write like to, if you like, diversify, so I don’t really want all my eggs in one basket anyway. So, having the HMOs that (will) build up the rent to rent, you know, that was good and I thought to myself, well, I have got a good focus on this but you we have got rooms got rooms that are filling with pushing the market rent, good properties. But, I always worry about tomorrow, (if it’s) going to change.
So, having a new strategy and a new property business, if you like, means I am kind of de-risking myself in that regard. So as long as I keep the focus on the other thing and have the focus on this new thing, and I felt it was contradictory, you know, but we had systemized quite well, the rent to rent business, the HMO business. So, I felt the time was right that I could spend some more time now, looking at a new strategy and serviced accommodation was what I wanted to do.
Chris: Yeah, I think you are completely right. You need to focus at first, to actually build the business up, but then once you know how everything works, you can put systems and teams in place, you know, leveraging quite (hard).
Okay. So you kind of make the position into moving to SA, so did you start looking for deals or…?
Hitesh: That’s a foundational kind of trading and stuff like that, reading up and trying to understand how it works and comes together conceptually and theoretically. And then went out and started to look for…
Actually, you know what happened was, the first deal was a rent to rent, which originally was going to be an HMO. Yeah, it was going to continue to be an HMO. And the builder who was helping to do the work said, oh, there is a lady –you know, it’s quite close by — that’s operating serviced accommodation. And obviously being fresh in my mind from reading and learning and trading and what’s not. The (word) as an interesting thing, I haven’t originally consider it for this property but (why not) consider it.
So, she and I had a really good chat and she has been doing it for about one year, so, she had gotten some good underground experience, and we went through some numbers with what she was doing, and I thought it was really interesting. I have done some further research and felt that this could be a really good opportunity. So, we then went for it and we tried to a serviced accommodation instead of HMO. That’s kind of how the first one started.
Chris: Cool. So tell us a little bit about that first property, you said it was like an HMO. So where you kind of doing it as rooms or studios?
Hitesh: Studios. So, it’s a rent to rent deal, doing the guaranteed rents deal. And seven units in that whole studio, self-contained units. So you have quite nice, quite attractive proposition for the marketplace. But I thought if I can create a mixture and get an amount of money running a serviced accommodation, it was well worth trying. And the numbers really look like they were going to step up quite well for it. So, that’s what we have done, we went for it. When I say we, that’s really me, but the lady was very much helping me. We basically agree that she would help me with the day to day operation, so it wasn’t very much a (we) operation. She came in and she was absolutely brilliant at helping to get things moving in that property. Really-really good.
Chris: Does she have like an interest in anything or was she just being helpful?
Hitesh: No.
Chris: Was she doing it for free?
Hitesh: No. We obviously set things up so that she would be rewarded on a commission kind of basis, so I set it as a commission type basis. Because I really wanted her to over deliver and really help us to… I wanted us to have some skin in the game. Do you know I mean. So, she is not investing any money in the property itself but if she is going to provide money from services if you like. I guess what it was really. And she was pretty much handy with everything, from the initial setting up on the portals and platforms, to the pricing, to the guest experience, the after sales, all that stuff, she was doing all of that. So, we set it on a commission type basis and we started… It flew out of the door, to be honest. It started really-really well.
Chris: Yeah. And it started with reasonable scale as well, you are not just like taking (on the)… I think the standard way would be take on a two or three bed apartments, and see how I have got to scale from there, so go in with seven studios.
Hitesh: Yeah. Absolutely.
Chris: So, what do you think you struggled with the most when you first get started?
Hitesh: In terms of that property or like…
Chris: Just common, in general. You know coming into SA, it is very different from anything else you might see in property, it’s a real whole business; isn’t it. So there is so many different moving parts to it, from the systems you might have in the background to the end product which people have to get right every time, or they get, you know, you don’t leave guests unclean towels, your (linen) or anything like that, Through to the kind of bookkeeping aspects for it. So it’s such a kind of high arena really, SA. Or was there anything specifically which you kind of struggles with, or it was new to you, or did you feel like it was just a big kind of learning curve but you took it all on board quite easily.
Hitesh: To be honest with you, I was terrible. I didn’t get very involved with the business at all. I went for an approach where I had leveraged this lady, because she has the experience, she knew what she was doing, and she was delivering pretty much everything, and I didn’t get involved really with it. I went back to this idea of spending a lot of time with my family and I was quite happy because I have leveraged out the whole function to her. But, in hindsight, I think that’s the bit I struggled with in that…
And the e-mist book is such a good book. Early on in that book they talked about delegation by abdication, you know, leveraging by abdication. You give someone a function but you don’t actually set the KPIs and measurable, to track actually how well they are delivering. It’s fine to leverage someone, but if you don’t really know what’s going on then what’s the point.
All I could (say is that) in a month money was coming in and I was making profit, (first of all), happy with that. But, by making tweaks and changes you can make that profit even greater, you know that’s the beauty of the business; isn’t it. So, in some ways and it sounds bad, I kind of leveraged someone. But, I didn’t really set anything up in terms of KPIs and measurables, to really understand the business myself in any real detail.
So I think I probably struggle with that because obviously at some point things started to change. You know demand changes, or the amount of profit I am making is changing, although I am actually…
Chris: And then you have no idea why the income is going down.
Hitesh: Yeah, I don’t know why. Because I don’t have a grasp on the business, and then you are really relying on someone to tell you about your business and it’s not even bloody their business. Sorry, I know that sounds a bit ridiculous.
Chris: That’s fair enough. It’s easy enough to kind of fall into, but then obviously at some point you kind of identify that risk and started involving yourself a lot more in the day to day operation of the business.
Hitesh: Yeah, very much so. And I think that’s probably about the time when you and I got involved because I am really a great believer of kind of working with people to kind of create best practice and systems, and have people that have good experience in what you are trying to do and we had a really great chat and I think (a) really good connection.
And it was from then that we started working together and you had helped me to kind of see the whole parts of the business, the different parts of the business, and to get me more involved in it, so that I have got more control — that was it — I think you really helped me to get more control of my business, but at the same time keeping this lady happy. Because (certainly) now I am starting to meddle in what she has been doing. But I have to because it is my business and I have got to get control of it, you know, and (deal) with myself in that regard and actually make sure that we are running a very smooth and profitable business for everyone. So that was the next kind of step, really.
Chris: Yeah. And it was taking it from a, you said, leverage by abdication, into the (thing) that we always talk about, the best way to leverage is you build a system get someone into the system and monitor their performance through KPIs.
Hitesh: Definitely.
Chris: And so, as I said, SA is quite a complex beast; isn’t it. So it’s just getting your head around all the different areas of that aspect and building your own way of doing things. It was what then kind of really built into a business for you as opposed to, essentially, more of a kind of hands off investment before, I’d guess.
So, what pointed you to say that you were going to start scaling up your business and from the kind of original units that you took on?
Hitesh: So, I always had in my mind… And again I think it’s one thing that we talked about in one of our mentoring sessions.
Because I had taken this lady on and I was paying her on a commission type basis. I was quite happy and understood that the concept of leveraging, you know, a staff member. So I was really happy, then I thought well, we definitely got capacity to take on more properties. And if I can do that I still have really good time free, but still making more money, we would be foolish not to do that. So, that was the idea that I really wanted to kind of move that forward and just take on some more properties. Yeah I obviously wanted to take more profit and be more profitable. But going out there and starting to leverage some of the relationship we have been building over for the last two years now, then it was good because some of the good properties were coming and we thought, okay well we can leverage this. Get more properties on, we have got the capacity to deliver and the expertise now, to deliver on a product. And that was just really a no-brainer to try that.
And then obviously with us working together, Chris, having more systems and controls in place, meant that I could be more kind of strategic, in terms of my involvement with the business and make sure that we are steering in the right way, and that we were really focusing on creating a very nice, really good customer experience, product, that was good for them, good for us as well.
Chris: Yeah. And that focus on the end product, which I think when you have got one property your first one and you are setting up you have such focus and attention to detail around it. And as you have started to scale this property, the biggest thing and the most important thing, which can kind of get lost along the way. Is that you have got people in all this different mechanical aspects of the business but you did have to be keeping an eye on the end product. You know, in the guest experience, (multiple) customers actually going in and experiencing. Very important for sure, very easy to get lost.
So when you were kind of going from that point and to scale up the business; what kind of models where you looking out for that?
Hitesh: Rent to rent. That was it, that’s all I knew, to be honest. That was it.
Chris: You had a bit of a false start with that really; didn’t you?
Hitesh: Yeah. And no one ever told me about something called VAT.
Chris: Until we spoke.
Hitesh: Until we spoke. And you said to me… are you joking; are you kidding me. Because that’s really a game changer, and not in a good way. You know that’s life.
Chris: Not a kind of positive impact really.
Hitesh: No.
Chris: So we kind of have a look at your portfolio and I have to look at the different methods around it. In fact I think yours was genuinely the first review I ever did, you know, a couple of years back. And we have kind of been introducing you to some of the other modules and management was certainly one of those modules. And I seem to remember when we kind of looked over it. You went well, this is kind of a no-brainer; why am I doing this when I could be doing management, taking a similar amount of money and not having to put any capital (in); right.
Hitesh: Yeah. Absolutely. And it’s also interesting because, you know, going back to like owning your own assets, this kind of obsession of, sometimes you want to buy into that property, we want our own assets and we get a yield that comes off it, Actually a management module… You know, you don’t have the assets but the yield, and it’s fantastic, you know, you get a great amount of money from an asset that you are just managing but you don’t have any of that necessary (recycled) with it. You know all the capital outlay (actually) get going either. And it’s a really scalable module as well, which when you opened my eyes to.
Chris: Yeah. And I think we were looking at your financial targets, and we went okay so you need X many management properties to achive that andyou were off then, going straight to find these properties.
Hitesh: That’s right.
Chris: Okay. So, you started to scale the kind of management module, so how has that been going for you now?
Hitesh: It has gone really great, really-really well, it has been really game changing. We have taken on some pretty quite diverse properties, we have got some one bed property, we have got quite a few two bed properties, we have also gotten really interesting units that, you know, quite a large scale, and the management fee on those have been really great.
So, it has been a really enjoyable journey, to move up from. And then also with our rent to rent properties, we have also restructured that — you helped me with restructuring that. So moving away from rent to rent to become a more management property. By selling them as investments to other people but retaining the management on them. So, which have helped me from that capital perspective, in terms of paying off on my capital debt that I secured into the business to get going in the first early days, helped me to get rid of some of that. But I retained the management fee on that as well, which was really-really nice. That’s very scalable than to do it that way.
Chris: (I remember) because of that impact, stepping away from that and taking it below the VAT threshold, actually making very similar amounts of money, but you are also getting this nice capital input from having sales and deals.
So, how many guaranteed rentals do you operate now?
Hitesh: Now we have two.
Chris: So kind of scaled it all team way back to below the VAT threshold and all the rest of your business is around the management module.
Hitesh: Yeah.
Chris: And so, obviously you have scaled your management business to a reasonable level now, and that’s kind of the point that this series of interviews is really talking to people and seeing how they have scaled up. Because I know there is, to some degree, a sentiment now around scaling up in SA, though it can be very tricky, and very hard; so what do you feel were the most important elements to you kind of scaling your business up to the level that it is now?
Hitesh: It’s really good question. I think there are few things… When you say there is one thing — there is a few things. I think when you start to scale up it can be quite daunting, you know when you are taking on more and more and more, it can be quite daunting. And actually you come to this kind of feeling, I don’t know if it’s a psychological feeling. And when you think oh crikey, things are moving quite fast now, and wow… You already probably can actually do it, you start to have a little bit of self doubt.
There is also responsibility, you always have responsibility to the landlord that you are representing. And you know as management, you have a lot of responsibility to your staff as you scale up and take more people on. You have a responsibility to the customers that are going to experience the product, and try to get that. And all that combined, for me, it starts to create anxiety and worry.
So the mind-set stuff was really important for me, very-very important, I really went back to my (ways) to always do, which was running in the morning, doing a really early morning routine, I am very much a morning person. And starting my day with time for myself, to really get my mind-set in the right place so that I can really perform on my business. That was honestly so important.
It’s hard because sometimes you can’t directly attribute what you are doing today to your mind-set or some other things that you do on a day to day basis, but for me I am convinced it’s helping me to perform and do really well.
Chris: So do you feel that a routine and it’s very important to kind of bring structure to an entrepreneur’s life.
Hitesh: Yeah, I do.
Chris: You know, on the basis that you have not go to be in the office at 08:30 or 09:00 and you have not got someone looking over your shoulder to see if you are working or not and that type of thing.
Hitesh: Yeah, I think so. I am very much a quite structured near kind of person, anyway, organised. So for me it’s very important. I mean I do think it is, you can easily lose days, weeks on end, if you are not careful and you can get so easily dragged into things you shouldn’t be doing. You know as you scale up and get more involved, you know, you can easily get dragged into organizing the cleaning rota. Fielding the calls for the customers that are not happy or really happy. And actually you have got to really be very disciplined to what you want to do with your day that’s going to deliver and add more value to the guest, or your business, or your staff, or whatever it might be. I mean that’s definitely one, the psychology mind-set side of things. That was massive for me.
The second thing was really your numbers and your accounts, and your profit and loss, and that sort of thing. For me, it’s a very critical area, such a critical area. I think there is many of us, me included, would go on this journey and have no clue whatsoever about that business. And I don’t mean in a harsh way… But honestly it’s such a major problem, I think that we go up there and we are so focused on getting more sales and bringing more properties, just go and get them, just go and get them, set them up, just go, go, go. But actually when you measure them, some of them could be performing not very well, or with some small changes you can make them perform really-really well. You know, with some, you got a cull and say this is not the right way I am doing things, get rid of them.
But you only know that, for me, you only know that through your numbers, and you have to be (so) on your numbers, also setting up KPIs, I never had KPIs. My only KPIs was the kind of occupancy (rate).
Chris: And we both say what a great gauge that is.
Hitesh: Having KPIs in place, having your accounts, and actually looking at them all the time, like all the time, and making all your decisions based on it, you know, it’s very-very important. I think for me, scaling up, that’s a massive part of it.
Chris: Yeah. Definitely. Because otherwise, it’s very focus on scaling and lose the performance aspect of it. And realizing you are not really performing where you need to be. And actually it’s part of growth, and that’s always going to happen to various degrees. But like you say that, what you found certainly is that the biggest impact you can have on that is by having focus around the KPIs, having focus around the reports, and checking in with them a couple of times a week to see where you are at, what can you do to impact things, make a difference, etcetera.
Hitesh: Yeah, definitely. And you can become very busy otherwise, just running around as you grow; but is good running.
Good way of measuring. So that was very-very crucial for part of scaling up. I think also really embracing and leveraging people, systems, technology — huge — and what can be done with technology is just (depending on that)… But so powerful because it can give you really low cost, automation, much smarter way of doing things, and then we have talked about… And low cost can really make a difference to a business. You know leveraging people, very important, you know, part of scaling up as well. You can’t do everything, you are going to have the right people in place.
Chris: You wouldn’t want to be there
Hitesh: No, you wouldn’t…
Chris: It’s very hard; isn’t it? It’s very hard to let go of various aspects, you know, controlling the business.
Hitesh: Yeah. A hundred percent. And then also having peers, people that are operating similar business to you and being in the right network of people, I think it’s really important too. You know, regular meeting up with people, having contact with other people. You know, having people around you that have best practice, and are operating best practice, that know their stuff, you know, it’s really crucial to surround yourself with people like that as well.
Then the part of the mentoring and the coaching that we do together for this few years that we have been working together, Chris, it’s been really vital, because it’s part of that network. And when you are not sure, because you don’t ever have all the answers when you are not sure, you got to better ask somebody. And get answers to that instead of reinvesting the wheel, you can implement things that other people have done that have served them and worked really well for them. You know, you put it into your business and yeah, great, you are seeing almost immediate results.
Chris: And it’s also a kind of motivation as well; isn’t it. I was talking with Graham, he is also a member of the boardroom, and he was saying how when he comes each month, it’s like if someone has come along and they have taken on an extra block, and he is like, okay I better get my ass in gear, I feel like I want to come back…
He sees someone else and they have implemented a system which (is working) really well in their business, he is like okay, I am actually going to do that. So there is a lot of that kind of peer driving your business forward as well, in terms of healthy competition, if you like. Or getting ideas and kind of wanting to do that.
And if I can put words into your mouth, I think probably the element in your case was just scaling, and we have already kind of touched on it really with just getting the strategy right, because obviously if you continue to scale using the (guarantee rent) around what you are doing, then that would have ended quite badly. And so it was (all the) things are fundamentally important but getting that strategy right, I think without getting that in the first place, there is no foundations to build off.
Chris: Very true. And that is a great way, Chris. Again I think if you try and fly on your own — somehow you would be aware of some of this stuff. And when you surround yourself with people that are doing same business, operating a similar way, ahead of you then you can learn, you can learn and you can review things and go, do you know what, this is not quite working, this is the reason why it’s not working, you know let’s change approach, let’s try something new, something different. And then you can explore it, and then implement it and try and see what happens.
But the strategy — that was a real big game changer, that whole VAT thing, changing the module, going in the management module, and scaling upwards, it was a really game changer for me. It’s a very massive thing, thank you Chris.
Hitesh: So we talked about (build) to a scale module, and we heavily recommend to people that (are often) just scaling up straight away. You build a module, say two bed properties using half (mile) of your city center, targeting trades, and (tourists)… Whatever your module might be, on each specific module you test that module and make sure it works in the way you expect before scaling up.
So if you are talking to someone who have maybe been through that process, who have been operating it, you know, two or three properties for six and twelve months and now they are looking to really push forward and scale their business in the same way that you have; what kind of advice would you give to them?
Hitesh: Set up your KPIs, early (days), really early (days). Get your measurables in place and how you are going to measure it — your growth — I think that’s really crucial. I would say get up your game, kind of like mind-set psychology wise, you know, really, when you go to any level, it is very (testing) of the mind; do you know what I mean. And I think you are going to be prepared for that, and I think that’s a big thing. And make sure you got the right kind of structure in place, strategy and support in place for that next phase. You know people that you can turn to, work with, (help) with, and have the right systems, and process, and people in place. That’s what I would say.
Chris: Thank you. Thanks for joining us today Hitesh. I hope everyone found that very interesting and also very useful.
Hitesh: Thank you Chris so much for your help. And thanks for inviting me today, I appreciate it.
Chris: Cool. Taking you.
Hitesh: Fantastic.
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It was almost a year ago that Chris & Ritchie first spoke about the business systems they were using. With technology changing so often, they have a whole load of new systems in place that are helping everything from productivity to time saving to automation of tasks.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Hi I’m Chris, Hi I’m Ritchie
And welcome to the serviced accommodation podcast.
–
In part 3 of this Q&A, Chris and Jason discuss awareness of Serviced Accommodation, guest types, consumables, specification levels, relocation fees, property management systems and much more.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join The Serviced Accommodation Podcast Community on Facebook, and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Hi I’m Chris
Hi I’m Ritchie
And welcome to the serviced accommodation podcast.
Today’s episode is part three of my Q&A with Jason Living.
—
What we’ve found as well though is the difference in age groups. I’ve found the older clientele who some people are really nervous about using Airbnb and Booking.com because they don’t think, they’ve watched the program on the TV where it’s somebody who’s gone in, taken it off of somebody who doesn’t really it’s being rented out by Airbnb and they don’t think they’re going to have somewhere to stay and they’ve handed their money over. They find it very reassuring to be shown around whereas younger people are very much more used to it and especially more international younger travellers who are used to going around the world with Airbnb very much want that quick just want to be in and, like you, just want to be in and done and thanks very much if we need you, we will call you. But the older people do seem to like it and we’ve got more repeat bookings from that older clientele who then recommended us to family and friends that come to stay in Yorkshire.
Yes. It’s a really interesting point and I think if you are think you are going to do meet and greet I think that’s a training issue for whoever’s doing it just to have that sensitivity to the guests. And as you say some of the indicators you know it might be yeah there clearly probably is an age bias but you know as long as you’ve got your wits about you, it’s not difficult to see those people who are quite happy just standing and chat for 10 or 15 minutes and those people who actually just want to be left alone and you know as I said, whoever’s doing it you’ve just got to make them aware that not everybody wants the same check in process. Some people just want oh there’s your keys, get on with it and other people want to be shown how everything works and what everything does.
I think it’s a really interesting insight there, whereabouts are you based?
In York
Okay. So tourist market, it makes sense. Our exposure to over 50s, absolutely none, across the entire portfolio.
Even the cruise brigade?
Yes absolutely. And that I think is down to the relative youth of the market if you like in terms of serviced accommodation is still a relatively new concept, we still get guests you know like phone up and go how does this work? You know we are exposed to it virtually every day on Facebook, at property networking events everything like that. We’re very familiar with the concept but a lot of the country aren’t and what you’ll find is that with any new concept younger people seem to be quicker to adapt it. And so yeah honestly we have virtually zero exposure to the over 50s market because if you look at our primary customer bases you are looking at contractors and then you’re looking at tourists, mainly 20 to 30s professionals or families at the weekends. So we’re just not seeing that. So it’s a bit of a side point but I thought it was kind of quite interesting to see that impact because it’s simply something we’re not exposed to within our business.
So basically there’s room in Southampton for someone to target the just over 50s?
I’ll be honest, last month that was pretty much my client base.
And I guess that’s because it’s not school holidays, that sort of thing. Yeah and I think we would probably mirror that with the cottage in terms of age demographic. You know we’ve got some contractors in at the moment but in terms of sort of leisure stays, out of peak periods, they tend to be older people definitely.
How do you find as well with like the things that you actually offer within your apartments? Do you just literally just do a basic? One lady phoned me up just to thank me for everything that we’d left in because apparently the last one they’d stayed in there wasn’t even a bin bag left for them, it was literally they walked in and it was just an apartment. I don’t advertise the fact that I always put fresh orange juice and milk in there. My background prior to having this is hospitality so the way I used to train people in hospitality was to exceed the customer’s expectations so therefore by putting it in and not telling them, I’ve already have set myself off on a big level. I tell them we have tassimo coffee machines, I put a couple of pods in, just so then it’s not this is what you could have won so there’s a couple to get them started but they’re also aware so if they want to bring more pods with them they can do as an example. Then just like silly things like sugar and a little bit of tea, yorkshire tea obviously! It’s just like little touches that they’ve found to be, I’ve put little face wipes like makeup remover wipes, I’ll be honest I did that because I was fed up with the white bed linen having makeup on it so I thought if I actually give them the face wipes to use on the off chance they’ve forgotten to pack them, it might actually help them stop destroying the linen. But what kind of things do you put in and do you think I should be marketing it that that’s what’s available? Or am I better to keep doing it how I’ve done? Which is not tell them and so that when they arrive there’s extras?
Do your reviews reflect the fact that they’ve found that?
Yeah the reviews are always really lovely and they put in things like oh it’s a nice touch that there was milk there and things like that.
Your guests are marketing it for you then, you don’t need to make the claim.
So serviced accommodation Sunderland, I think we’ve got sort of tea, coffee, sugar but that’s about it. We don’t provide anything beyond that and we’ve only very very rarely had an adverse comment about that because people have an expectation.
Interestingly, with the cottage and I think that’s also what whilst our Sunderland accommodation isn’t you know what I call budget end it is you know it’s lower margin and therefore our margin to provide that you know not just the physical cost but the whole you know systemization around that an organization around it because we’ve got so sort of 17 apartments across two locations and you know getting the cleaners to put the right stuff in the run locations, to be honest sometimes it’s a serious challenge to get them to clean properly you know to actually sort of put the stuff in the right places. You know we provide sort of loo rolls, kitchen rolls, bin bags and that sort of stuff. In the cottage we do, I think we just have a sort of standard thing of a loaf of bread, butter, jam, tea, coffee, sugar, orange juice, milk but we don’t market that we do that but we do tell them before they come in an email when I send the access instructions because what we were finding is some people were turning up with their own stuff and then it was a waste and interesting just simple things like you know the jam because a jar of jam is a jar of jam but if people are only staying for three or four days you know we were just ending up with loads of jars of jam at home with about that much taken out the top so we’ve now bought a bulk load of those little Hartley’s ones, not from a cost point of view but just so frustrating because you can’t then leave that half eaten jam for the next person. As I said we were just ending up with loads of started jars of jam at home. So yeah we don’t market that but that’s you know, have you looked and seen that other places do specifically market that?
Yeah they do, it’s like oh a continental breakfast is provided for the first morning’s stay. There’s quite a few of them in York so I did some competitive analysis and there was a lot around that area that were providing that. And then just looking at reviews, I don’t know how you train people to do it but I was just looking at reviews and seeing where negative reviews near to me were and seeing what those negatives were and trying to change that so say for example a hair dryer was provided but the hairdryer was useless so there’s was no point having the hair dryer so the ones that I bought were good hair dryers whereas the iron, if people steal it it’s not the end of the world but it is a steam iron and it’s sort of working out where to spend my money and where not to.
The key point from that I think is know your audience, know your market and that’s a brilliant way of doing it. Looking at competitors who’ve got similar customer segments for the property and look at their reviews, look at your reviews and that’s also the answer to the question really around orange juice, extra bits, do you do this, do you do that? Well does your customer want it? Does it make a difference to them, are they going to appreciate it? Is it going to improve their experience that will leave you a positive review. You know that’s the feedback loop really. The key point there is understanding your audience because are contractors really going care if we leave them orange juice? They probably only drink beer!
Yeah, if we’ve got decent long term contractor bookings we always give them a of beer to start with. And if you’ve got a decent corporate booking of probably four weeks plus we will go and get them a decent lump of groceries you know some fruit and biscuits and whatever you know probably £20-30 worth but if someone is staying for a month you don’t mind doing that but we wouldn’t do that routinely and again we don’t tell them that so there’s a bit of an upside.
If you’ve got contractors, make sure there’s a bacon butty van outside!
I think the second point is really one you answered yourself. It’s about expectation and exceeding expectations. And again that’s kind of what reviews are a measure of, what were their expectations and did you meet them, did you exceed them? And so if you’re able to set clear expectations to people and then you were able to exceed it then you consistently get good reviews. You know the problematic properties, the ones which don’t consistently get good reviews tend to be the ones where either guests don’t really know what to expect from it beforehand, for instance serviced HMOs which is not a favourite model of mine or you know that kind of property where people don’t really know what they’re going to get from it or where you’re consistently not delivering on what people expect. So for instance if you’re advertising a property on booking.com at five stars you should have very very good guest experience there because you’re going to get people who are very very picky you know and maybe actually they’re going to mark you down to a six because no one met them at the property or because they didn’t have a personal concierge service that kind of thing. So again if you’re setting very high expectations, it’s a real danger because it’s going to be very very hard to meet them. So I think what you’re doing there is spot on.
I also do like mini videos before so once the apartment has been cleaned, it’s literally 30 seconds, a minute, quick run around of open the fridge etc so we’re aware it’s fully clean before it’s let so touch wood we’ve never had it yet but I’, hearing from previous mentors that I’ve had in the past that have had people trying to get money back from Airbnb and booking.com saying that the apartments were filthy and it actually turned out there was like a label in a waste paper bit and that was it and they were trying to get a refund. Do you do something like that or do you not?
We don’t but we have been stung by it. So we had a guest once who turned up to the property and said oh no it’s you know it’s not clean. And so they got booking.com to relocate them and booking.com in their infinite wisdom relocated them to a suite at a five star hotel locally with a nice £600 bill which came with it. Now we had photographs you know we went in with the property manager, took photographs of everything to prove the condition but booking.com are still arguing the cost five months later. So I think in fairness that means they won. Yeah. So I can see the benefit of doing that but again it becomes how often does it happen. And is that the evidence because you know we’ve already got the evidence it was just after they left and it still doesn’t seem to be making a difference.
There are a surprising number of people who know exactly how to booking.com’s relocation process works and we get one every couple of months and you can spot them a mile off because they start talking about booking.com relocating them but that isn’t a language that anyone else will ever use unless you’ve talked to booking.com and been in that situation. So you need to be very very careful when that happens and deal with the right way for sure.
What sort of management staff do you use?
We use Toki, we used Alena on the hotel type sites. We started off, it’s kind of logic/common sense, you want everything under one system. So we started off doing apartments in Alena as well and that was a mistake because it’s great for hotel sites and it’s rubbish for apartments. So we went out there probably last October/November and we looked at the entire market for what was available for serviced apartments and our conclusion was that the best kind of value point for what we wanted was Toki, you know it’s relatively lightweight if you like in that it’s not got loads and loads of advanced features but the key stuff generally that you need is there. You know it’s actually got probably some of the best integration with the OTAs that I’ve seen, I mean bearing in mind that we were probably paying £500 a month for our Alena subscription on the hotels and yet you’d kind of push for a price update and it would take 20 minutes to go through or you’d have a booking come through on one channel and then there’d be a lag of you know 10-15 minutes before it pushed through now that’s opening yourself up to over bookings. And you know, over bookings and relocations, £600 bill not really what you want from it. And weirdly enough for the cheapest software on the market Toki seem to have the best integration because everything is instant you know and that for me is really really important. Having been stung with a £3000 relocation bill before that, that’s another story but Toki is great. The price point is and what we’ve done to kind of advance that a little bit, we’ve just built a software engine above that which handles a lot of the kind of workflow management stuff between kind of cleaners, telephone, staff, scheduling tasks and everything like that. That works perfect for us. You know if you want to take shortcuts then you’ve can use Kigo.
Yeah we use Kigo which is horrible. The challenge is as Chris rightly says the way I put it, what Toki does it does so much more simply and easily. From our point of view we did look at Toki quite seriously about six months ago and it just didn’t have some of the features that we need so payments particularly. Our payments are fully automated. So provided the credit card checks out and all the rest of it the payment comes through on booking whereas Toki, there’s a manual intervention required. I think, it’s difficult because I think Toki has come a long way in a short period of time so some of the things that were perhaps lacking when we looked at it they’ve caught up with slightly. I think the whole email automation in Kigo certainly was more advanced than Toki. I think it probably still is slightly more advanced but again Toki has caught up.
So I think our most recent podcast was on guest communication so there’s lots of tips there.
But in terms of automation, does Toki fully automate?
Yeah, it’s always been very good with emails so you know the key ones you want are when someone books in, a couple of days beforehand and check in e-mails, check up e-mails quite often on the first morning, checkout. So all those things you can automate and have sent out. If you use Airbnb you can pseudo-personalize them, just like make it chatty, make it seem like it’s a personal message when it’s not. And we’ve had like reviews from people saying oh they were really friendly and helpful when we didn’t communicate manually with the guest once, it was automated emails! But if you use language like oh hey it’s the day of your stay, just want to let you know here’s a few details, here’s where the local stuff is, if you need anything let us know. That kind of thing you know it’s getting onto a new topic but the Airbnb audience is very different to booking.com and you can separate that out. So we have completely separate automation flows for what messages are sent to booking.com customers to what goes to Airbnb and it handles all that stuff fairly easily. Set it and forget it.
Does it send texts as well?
It does yeah.
Yeah. So I think that’s something it’s sort of caught up better on. One of the big holdbacks for us was the lack of web integration in terms of a booking website and I know they have brought something relatively recently. From what I’ve heard it’s still not, it’s still a bit clunky and not very…
Yeah. I mean we built our own from scratch. Now we have introduced an API so it’s very very easy to run.
So can you now because what you couldn’t do and I thought was pretty fundamental and I’m quite surprised it’s taken quite so long to sort it out is in this day and age you know whatever website you’ve got out there it needs to be able to take you know direct bookings whereas for a long time certainly the inbuilt stuff was inquiry only and certainly from our point of view you know that was that was one of the big reasons we didn’t want to go forward with it but I know they have now bought out a sort of a booking widget that you can put onto a website as well as they’ve always had their own sort of self generated websites but again they were there were inquiry only which I just don’t think in this day and age cuts the mustard really.
That was definitely a major limitation. So they rolled out a couple of months ago that you can book on it and actually the Toki websites are pretty good, they look good. They’re instantly generated and you can customize them quite a lot. So you know that would save you a fortune in putting together a website.
Is there still only one person who works for Kigo in customer service?
I mean you had a nightmare with Kigo didn’t you but moving forward from that as I said I
I think the problem with Kigo from a software point of view it seems to me that it’s probably something that has its origins many years ago and they’ve just added bits on to it. What they actually need to do is take the functionality of it and just build a whole new platform with the same functionality and if they did that then, and to be honest we’ve had conversations with them about this and you know where Toki are very good is to keep very reactive to their market and people say we want this, we want that and they go away and you know within a timescale they do it, you know Kigo just you know seem much more of a dinosaur in that sort of respect.
The problem with it is if you’re building up to maybe 20, moving from one to another. Which ones do you recommend? You just get a blanket of oh this one’s best, this one’s best.
Yeah that’s the challenge, and if you Google it there’s 100 plus.
It’s just a case of finding one and we’re set up with a super controller now and she’s good but she ended up running 20 with just the booking.com calendar and then turning the rest off instant book until she could get her head around it.
I know you’ve had good experiences with a super controller.
I mean I’ve heard good things about Toki as well.
As I say the thing from our point of view is we needed some of the sort of higher end functionality I suppose that Kigo has got. Thankfully I’m not the person who has to get in there and make it do things.
If I could ask a personal question how much is your Kigo bill each month?
Well that’s an interesting one I’m quite happy to tell you because one of the reasons we started looking Toki was our Kigo bill was going up and up because their old pricing model was you paid a certain monthly subscription based on your number of units and it was so banded so I don’t know, 10-20, 20-30 whatever it was and then a per night booking fee which was something like 60 cents and it came down, the higher level you were on the monthly the less but actually it built up very very quickly and you know we were beginning to get up into the sort of low thousands of pounds. And so one of the conversations we had with them was you know we’re looking to move because you know this is just going to wind up way too expensive and about that time they started doing a beta test on their own payment processes. So we were using Stripe for card payments and they now have I think it’s called Kigo pay which is ultimately something else badged as Kigo pay but basically they have their own built in merchant account and what they basically said to us is if you test this we will then simply charge you for the payment processing.
So effectively we’re paying nothing for Kigo but we’re paying for the payment processing and to be honest I don’t know what our payment processing bill was before but I know because I just looked at the accounts that it was sort of two thousand quid but I’m sure it’s pretty similar to what we were paying stripe already. You know it would be because we’re processing something maybe slightly more but effectively we’re getting processing in excess of 100000 a month.
But now their model is what they’re looking to do bundle that in and charge people five per cent including payment processing. What I’ve said to people is go back and renegotiate. So they’re in a point of transition as regards their charging model but it’s certainly you know.
A good time to negotiate.
Yeah as I say we managed to do a deal out of it that has overall certainly saved us money.
I have just renewed my insurance for the business and I bizarrely got told by two insurance companies that I phoned up for a new quote they didn’t understand why I had PI insurance because they said they couldn’t see why it was needed.
Are you managing?
Yes they’re on rent to rent and I’ve got an unmanaged as well.
If you’re managing then I mean to be honest the risk I suspect is very low but technically you have a client to whom you’re providing a professional service. So yes you in theory do need professional indemnity insurance.
I’ve got it but it was the fact that two insurers went oh it’s really bizarre that you’re the third person whos called up, I don’t understand why you need it.
I mean the chances of there being a claim are very low risk is very low in that you know there’s all sorts of variations on things but essentially as I would say there’s sort of two distinct rent to rent models. One is actually management you know which people call rent to rent but it isn’t truly, the financial flows may be the same and the other one is where you are, you have a lease on a property. So you are technically the tenant and then you’re letting out. Now if you’re doing rent to rent via a lease you don’t need professional indemnity insurance because you’re not providing a service to the landlord, you’re simply renting their property off them. If you’re doing what might be called rent to rent but is actually dressed up as a management agreement then effectively at least in legal terms you are in theory providing a management service and if you fail to provide that service or provided it negligently then in theory your landlord could sue you for negligence in professional indemnity. If your rent or rent contract is actually a fixed payment one.
You do management management, the way whereby you’re just charging a percentage of every income and a guaranteed rent style. Yes. So under the guaranteed rent style as I say technically you’re managing and you’re providing a professional service because that’s what the agreement says you’re doing. The reality is that the only point at which they would suffer a loss is if you failed to pay them which is more of a contractual dispute than you haven’t provided the service. So again you know you may I would say you may choose not to bother with professional indemnity insurance if you’re doing rent to rent management agreement. If you’re managing then in theory if you did a crap job or you know let’s say for instance you know you had a booking inquiry and you for some reason just failed to deal with it you know and your landlord therefore lost out on a you know three month high money booking because you didn’t do your job in securing that booking then in theory they could sue you for that but the chances of it actually happening are pretty slim.
Do you have PI insurance from a management point of view?
Yeah we do.
The cost is negligible anyway isn’t it?
I got a quote down from one company who were a bit cheeky and say that if you contact them in the first instance they basically claimed the right to you so you’re blocked out of other so say if I phoned Dean and asked him to go and find me insurance he wouldn’t be able to go to certain people that this first company have gone to. They’d claimed rights on it which I didn’t know that when I’d found them and someone had recommended them on as SA page I’m part of.
I had PI for my personal training business and that is obviously all advice and people could probably die if they take that advice wrong! It was like £200 a year for about £10 million or something.
What sort of quotes were you getting for the PI?
The people who blocked me in and I didn’t go for them even if they had been the cheapest but they ended up quoting me £330 for it and I ended up getting it for about £180.
I think that’s probably typical sort of range and what I would say generally with insurance is you know I’m not saying that your coverage is in any way deficient but it’s often the case that the cheapest cover often isn’t the best cover.
Yeah I made sure it covered rent to rent.
And I would say and I always say the same with finance and insurance. I think it’s definitely worth going through a broker because as long as you’ve explained to them exactly what you want then if they provide something that doesn’t actually fit that then again you would be claiming off their professional cover and again within that serviced accommodation market as you’ve said people have run into problems because they’ve got insurance probably from people who don’t really understand what model they’re operating. So you know it is worth speaking to somebody who understands exactly what you’re doing and exactly how you structuring it subject of course not to tying you in and stopping you getting any other quotes.
Who was that out of interest?
It was a lady called Chloe.
As a simple matter of fact you got a quote off them and you haven’t realized that you effectively locked yourself in.
Yes I called another insurer for a quote and they explained to me about it and I think if we’d gone to that insurer we could have got it for £175 but she was charging me £300 and something so we can’t unfortunately go to that however they could then go to somebody else and it was another less than £200 so still significantly less than she had found but it was more the annoyance of people realising that if you go to that company first then that’s what their practice is.
So a recommendation with a vested interest. Not always the best ones!
That was the final part of my Q and A with Jason Living. Stay tuned for next week’s episode.
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In part 2 of this Q&A, Chris and Jason discuss the market and demand for short term accommodation, hotel futures reports, pricing, chargebacks, handling and preventing bad reviews, meet and greets, serviced and cleaning fees, and scaleability.
Tune in next week for the final part.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
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Transcription:
Hi I’m Chris
Hi I’m Ritchie
And welcome to the serviced accommodation podcast.
—
Welcome to part two of my Q and A with Jason Living. Hope you enjoy it.
My only experience of serviced accommodation is a holiday let which when we took it on serviced accommodation didn’t exist. It was a holiday let and it was abroad anyway so kind of irrelevant but in terms of managing something we understand that but we understand it from a holiday point of view so we’re looking at a load of property which we’ve got in different places, flats, houses mainly houses and we’re thinking so what’s the market for this stuff? Because we’re not in York so it’s not exactly the obvious person coming to York to indulge in some history, this will be somewhere a bit rougher or whatever.
Give us a for instance location just out of interest.
A flat in Halifax, on the outskirts of Halifax.
I mean I think the interesting thing is that you know because there are people who say oh it doesn’t work in some areas. I think in most areas there is a demand for short term accommodation and contractors is the obvious one.
I didn’t want to pin it down to one.
To me I think your location very much drives your market and therefore you know you take any location and I think that that will then drive who the guest is. And you know because let’s face it you know we have hotels throughout the country and as I said we’re fishing in the same pond. So if there are hotels in that area there is clearly demand for short stay accommodation and if there’s demand for short stay accommodation there’s this demand for service type accommodation whether you call it holiday let because pretty much there is no other.
But you can’t follow the hotel world or the B&B world.
Yeah and you know you’ve obviously got you’ve got your city centre market which is sort of higher end leisure, higher end corporate, you then get out into the more urban areas you’ve probably got more contractors and then you could go down to rural areas and provide they are nice rural areas you’d start to cross over into the holiday market and I live bottom end of Bedale and we have a cottage not far away which was a former house of ours and we’ve done that as holiday accommodation for the last 18 months and interestingly you know obviously it’s predominantly leisure but we still do get people working in the area whether for a week. We’ve got some people at the moment who are putting up a steel frame barn on a farm down the road you know. So even though if you like, it’s very obvious a holiday cottage, we actually get contractors staying there and we’re not far from Catterick Garrison we had some guys doing an IT project up there for a while.
So it’s it’s interesting. I mean I’m sure you have some great ways that you look at analysing demand and that sort of stuff?
No magic tricks or anything like that. It’s really about understanding the area. It sounds funny but actually a Wikipedia page is a really good place to start because that will give you an overall summary of the area, what kind of demographics is it, what kind of economics is it, a base for the area and then from there you can start to kind of explore and find out a little bit more. Every area is going to have different key drivers in the markets.
I said there’s no magic tricks. Actually there are. So there’s something called a hotel futures report. So this is where basically the council’s will pay these consultants like £40-50k to go and do an absolute comprehensive study on the local market you know supply, demand, what the different segments of the market are, where the potential for growth is, what needs to change in the area and quite often they will actually show these reports publicly then because they’ve paid so much money for it so they might as well. Now that for me is a fantastic way to get real high quality research about an area, get an insight into the competition potentially. They even report you know average occupancy and pricing, seasonality, all the different areas you want to look at and even if they don’t have these hotel future reports for your particular area I think it’s a fantastic thing to go and read one and look at what the experts look at when they’re doing an analysis in an area because you inevitably pick up some tips, advice, oh I haven’t really thought about this I haven’t really thought about that.
Now the one thing I find is that you might look at a city and go does it work here? Yes it works but that’s not really the picture you need to understand what customer segments are predominant in that particular area and therefore for what kind of product, which is what we’re doing with serviced accommodation is actually going to fit their needs better than the existing market. This is why it’s not just you get a property, you stick it on Airbnb and you’re done. You need to be a lot more tactical than that. You need to do the typical entrepreneurial thing which is find a problem and monetize the solution.
So you need to kind of understand you know take the Southampton market because it’s obviously the one that I know best. You don’t just get a random studio or a one bed in Southampton because quite frankly unless it’s on the high street or within a couple of hundred yards you’re probably not going to make any money on it. But if you start to understand the contractor market then you realise that actually they’re not very location sensitive. So really anywhere within that city will work if you’ve got the right quality accommodation at the right price. You start to understand what they’ll pay extra for. So typically three or four bed properties perform really really well, two beds work as well that’s the bulk of our stock but actually people are willing to pay extra to have a little bit separation, a little bit more privacy, potentially a few more people in the property. You start to understand what their requirements are.
So for instance when we started off we’d have one TV in the living room and we got quite a lot of feedback that actually the properties where we had one TV in each individual room as well was very popular because it gave them a bit more space. If one person wants to watch film and one person wants to watch football then that could go onl. So we started fitting out all the properties with TVs in all of the rooms.
So again it’s look at the area, understand the customer segments but then produce a product which is going to fit their requirements and the closer that is in terms of area, location, property type, finish level, pricing that it is to what they need then the better that property is going to perform.
I think the contractor market is a very interesting one because as Chris said they’re not very location sensitive. I mean we’ve had quite a lot of contractors over the last year who are working on sites that might be up to half an hour plus away from the accommodation and where we’ve won some of that business is because we’ve got a number of apartments in one location. So when they said we’ve got eight people and another five and we could accommodate all of that. One of the things we had to change was we had a number of two bed apartments that were two doubles and they just came to us and said can you provide accommodation? So you know rather than saying well we can only provide it in doubles, they basically said our guys are quite happy to share a room but obviously separate beds so we had to change all the beds and as I said you know they’re very price driven so you’re perhaps only charging you know in those instances you know £17-18 pounds per person per night which you know sounds quite low but then when you build that up and you say okay so in Sunderland that’s a two bed flat and it’s got four people in it, £68 per night, that’s £2000 a month on a property we would normally get £500 a month for.
And okay you;ve got a lot of extra cost to come out of that because these are longer term bookings but you’ve got 100 percent occupancy and actually you know it’s good for them because they’re getting accommodation for say £17/18 a night, we have been down as low as £15 you know which suits them because they are very price driven and these are typically you know sort of Polish German European contractors you know.
So obviously that’s got to come out as a cost from whatever project they’re working on. You know the example I always quote is a guy called Duncan Bolton who’s based on Teeside who’s been doing serviced accommodation for probably for about five or six years now and he has you know three bed semi detached ex council houses that he lets to contractors and he just keeps them on booking.com and AirBnB and he said it can be up and down you can have nothing, it’s empty but you’re making good enough money for two or three months that you’ve got three or four people living there again again it’s making that product appropriate to the market whereby you know it hasn’t got all the you know shiny furniture you know it’s just you know they’re just looking for somewhere clean and comfortable to stay for the period when they’re working whether that’s Monday to Friday or longer. It’s difficult because people say I’ll do test ads on Airbnb which Airbnb don’t like and they have closed accounts down and then that’s caused problems.
But the other thing is I mean I’ve found in Sunderland that we get very very little from Airbnb anyway. So if I’d used Airbnb as the test model because you can’t test on booking.com because it’s got to be a real property and a live booking you know I’d never have done it so it’s actually in my view quite difficult to test market.
Sometimes we use calendars on Airbnb if they are linked to calendars and they’re all synced if you look at the calendars and what the prices are and if the prices are too high, the calendars are empty. It does give you an overview but like you say dummy
Yeah I think they are of limited value.
So in your serviced accommodation units, you said you were kitting them out with TVs and all have you had many times when people have gone in and nicked everything?
That’s what insurance is for.
Would you just use insurance for that then? We do checks now before we release keys, to check passports matching credit cards because that particular one was a stolen credit card, stayed for 6 days and then got a van and took all the furniture and everything out of the flat. So it was £1800 worth of gear gone and when we tried charging the card it was declined and the card company actually charged us back for the stay. If we’d had the ID that matches the passport to match the credit card they wouldn’t have got in. We’ve stopped maybe 3 or 4 since that. If the credit card doesn’t match the ID, you challenge them and they just clamp up
I mean the reality is those instances even without being very rigid about checks those instances are very very few and far between. I think you know you hear about them and I knew that happened to you. I remember again talking to Duncan Belton about this two or three years ago and someone had said to me you know you do an inventory and he said you know at that point he said in three years I’ve had one good microwave go missing he said.
But it’s one of those things I think you know you think people immediately think of you giving access to somebody that’s who they say they are.
I was just interested to see how often it happens.
Oh it’s very market dependent I think.I mean if I was in London then absolutely I’d be very hot on fraud prevention.
We have had one in London with a television or two televisions. And again you know stolen credit card that whole thing was fraudulent.
I’ve had utensils taken recently, just all utensils.
You know obviously if it’s a major thing then that’s a bit of a hiccup. But I think part of it is regarding some of those costs is just the cost of doing business. You will get you know okay there’s lots of ways you can mitigate it and you can cut it right down but you probably will still get fraudulent credit cards or you will get chargebacks that you try and defend it and you won’t defend and you will get people who do extra damage that you try and charge for and you can’t and to me it is just a cost of doing business.
You know it’s like if you run a hire car fleet I’m sure there’s there’s a certain element of damage that is just you know it’s just very heavy wear and tear you know that you can’t charge for. And so whilst you know you can’t take it completely. I’m not saying you take a laissez faire attitude to it but it is just it’s a cost of doing business.
You can spend your life chasing people for £100 here one you know. And you know most of the time is wasted energy and I’m sure if you speak to people in hotels you know they must get the same of you know people leaving stuff or damaging stuff or whatever and know I’m sure again you know they make an attempt to charge them but if you can’t you’ve just got to move on.
The thing I think about all of that when you compare it to renting out property is it’s a very transient issue. You know we’ve had instances in Sunderland where the cleaners phone up and say oh it was a complete mess. What that actually means is two hours extra cleaning at £12 an hour whereas if you’ve got an idiot in an HMO that’s six to eight months of grief.
Which would you rather have you know take a couple of hours extra cleaning on the chin and you know maybe they’ve broken a lamp you know maybe it’s a couple hundred quid at worst.
I know what I’d rather have you know and I have experienced both and still do. You know I evicted a tenant three weeks ago you know we started that eviction last November and he’s not paid any rent since it’s like five grand of lost rent.
Well where we have a guarantor we will pursue them you know it’s the thing I like about serviced accommodation is that by the time there’s a problem they’ve gone.
It’s very immediate isn’t it?
Yeah it is and I don’t think we’ve ever had a property that we couldn’t turn around within 24 hours in terms of you know because usually it’s just a party there’s you know it’s just a mess. It’s not often worse than that.
I think if we think about chargebacks which is very closely related because there’s two real risks to credit cards is that it was fraudulent you know or they just could do a chargeback anyway. And again every area is going to be different as to how you want to look at it. If I live in London I’ll be taking ID and matching card from every single person in Southampton we don’t have a massive issue with it. But I did the analysis for last year 2016 being about two to two thousand pounds worth of chargebacks out of about £500k. So if you’re talking like 0.4% of your turnover on chargebacks well how much would it have cost us to implement the procedures so that we would have won every single one of those chargebacks that’s probably about £4000 or £5000. So to be doing that every single booking it wasn’t worth it for us but to some extent you’ve got to take a pragmatic view of it.
Now I’ve said exactly the same to people, talking about you know meet and greet obviously can be part of that process but clearly there’s a cost to meet and greet everybody and you’ve got to as you say balance that. We have sort of you know probably similar figures across Sunderland. You know I was a while ago I was looking at it and said look we’ve probably had you know 800 bookings even if it costs you £10 each to administer sort of meet and greet and security checks and all the rest of it. And again simply we’d probably had £1500-2000 of losses whether that chargebacks or damage that we couldn’t charge for. So we’ve you know saved the £8000 we could have spent and it’s cost us £2000 and again it’s not in some ways how you want to operate a business of sort of taking that attitude of well it just happens. But you know you’ve got to look at that sort of a bigger picture I think.
How do you manage reviews? I mean obviously you want good reviews but you’re not necessarily going to get them and sometimes you get mischievous people. Is there a way of managing that and dealing with it?
I mean I think the most important thing and it sounds so stupidly obvious but I guarantee 9 out of 10 people aren’t doing is asking every single guest for a review. Because what happens with reviews you think about it. When was the last time you left a good review for someone you know it doesn’t happen that often but if you’ve had a bad experience you go straight on and complaining about it. This is human nature. If we have a bad experience we’re much more likely to leave a review. So the simple process of asking every single guest for a review will mean that those get balanced out and you know even if people leave average reviews and some post amazing reviews, it balances out an awful lot and can have a big impact on what your review rating is. There’s lots of other stuff you can do around that but for me that’s the number one making sure you are asking every single guest for review and personally we combine that with Net Promoter Score and it’s a fantastic combination. Absolutely I’ll take you through exactly how it works it’s actually very very simple. So after every guest has left what it would do is 24 hours later we give them a call and the call simply goes on a scale of 0 to 10 how likely would you be to recommend a property to a friend or family. That’s what Net Promoter Score is, it’s literally asking that question they’re going to give you a number and based on that number you can do something different so if it’s nine or 10 you go well that’s fantastic. Glad you enjoyed your stay.
Would you mind leaving us a review saying you enjoyed it so much and you’ve got the commitment of yes from most of them still won’t go and do it but you’ve actually increased the number who were going to go and write a review by maybe two or three hundred percent.
I had a property a couple of weeks ago and he was, this guy was doing serviced accommodation and in a very short period of time he had a very small place but he won the best reviews on I can’t remember which site it was but because exactly because he did that, obviously if you get someone who’s going to give you a 2 you’re not going to ask them for a review.
Is that automated?
No no we do that telephone call because of course because the thing is when someone’s made a commitment to another person a lot more drawn to actually follow through with that action actually you know basic basic psychology on that. So yeah yes it’s something you know we have the technology and we tested doing it by text message but what we found is that you know although you can make it nice and technical and automate stuff and that kind of thing it just doesn’t have the same impact. So doing the telephones, okay it’s intensive but actually the impact on your business by the higher review score that you get and therefore the higher occupancy and rates which you can charge more than pay for itself. It also gives you a fantastic way of kind of mitigating some of the bad reviews.
And that’s half of it, catching the bad stuff before it gets out.
Exactly and what’s the reason that you leave a bad review generally is because you’re frustrated that nobody’s listening to you so you kind of want to tell the world if you’re giving people an opportunity to cull events and explain the issue you’re going to listen you can apologize and you’re going to tell them how you’re going to rectify it. Generally people won’t leave you a bad review.
I mean the ultimate I think you know one of the things that I think influences reviews quite significantly is that element of human contact and I guess in an ideal world you’d probably ring people before their arrival or at the point of arrival. In terms of nipping anything in the bud the probably the best point to contact them is the morning after they’ve arrived so if somebody’s got in at 6pm then to ring them at 9am/10am the next morning to say I wanted to check everything was okay you know and you know then they’re going to say actually something wasn’t clean or whatever and you’ve got the opportunity to rectify it. Obviously that’s quite labor intensive and you know that because I was saying to Lisa earlier obviously one of the frustrating thing is you have reviews coming through and it’s not uncommon if you haven’t had the contact to get certain for instance on booking.com to take the different elements to get a low staff review not because your staff have done anything wrong but just because there wasn’t any interaction, you know the only interaction they’ve had is via email so they won’t give you a 10 out of 10 for staff just because they’ve got nothing so rather than I think they probably can’t do not applicable. If they could do that but rather than do that they mark you down would choose which is frustrating.
The other thing about review management is it’s very very important as to A) to reply to particularly bad reviews and you get that opportunity on most of the platforms and not only to reply but to reply in the knowledge that actually the reply, of the people you’re speaking to are not actually the person who stayed but the person who’s then reading that review and how you responded to it who might be wanting to book so to see if there is a problem it’s always you know thank you very much for drawing that to attention. You know we’ve ensured, we’ve now put a process in place so that it will never happen again. It shouldn’t take a slightly extreme but obviously it is. You know we’ve made the cleaning team aware of these issues and you know we’re now ensuring that that doesn’t happen or sort of paraphrasing you know so that when somebody somebody sees that bad review they can they can see that you’ve responded in an appropriate way and actually the problem that occurred isn’t going to occur if they come and book in your in your property. But the bottom line is you will get them I mean you just you get some people for whom there is there is just nothing you can do to appease them.
Some people don’t want to be appeased, they just want some money back.
Yeah exactly. Sometimes it’s that and sometimes it’s like they’re just from a different planet.
So for example these days if you’ve got a mobile number for someone that’s stayed with you, you ring the number, I mean I now only answer calls that I know so what do you do.
My question is what about international numbers, is it the same really? Do you send them a text for example to say I’m just going to ring you then ring them or?
Sometimes international numbers are more likely to be answered because yeah they go OK it’s a UK mobile and I have lots of people like that, it’s not going to be a spam number. So yeah generally it would be a phone call, if they don’t answer the text goes out, that is just you know if it’s a text message it’s not the end of the world but you know you maybe do a follow up the next day to see if you can make contact with them.
I think the one crucial element around the reviews and it’s very easy to miss is that this is really about feedback and the feedback is what’s going to drive your business forward, make it more profitable make it sustainable. The thing is, it’s feedback you’re probably not hearing yet because what do reviews tend to be they tend to be really good experiences where people have loved the property yet or they tend to be really bad experiences where something has gone wrong and that’s not the key feedback. They key feedback for your business is in the middle. It’s the things where ah well the microwave was a bit old or you know the boiler makes a noise in the middle of the night or a smoke alarm beeps every 30 seconds. Yes these are things all real stories. These are things which they’re not important enough for them to phone you up and tell them they’re not important enough to leave a bad review but they’re fundamentally affected the guest experience.
Yeah. Thank you very much, what you just said , I’m going put this in place because it is so fundamental. It’s like a lightbulb moment for me.
Those things will come up when people say seven or eight. Yes this is what’s so powerful. The 9s or 10s, they had a great stay. The 6 or below there’s something serious need to sort out, the 7s or 8s it was generally great but there’s some stuff which you can pick up on. Now the reason that NPS is so powerful is because people won’t give you this kind of feedback. You know it bothered them but it’s not important enough that they feel they have to feed it back to you. What you’re doing with NPS is essentially you’re giving them permission and you’re making it very hard for them not to do it because they say oh probably seven and you say well what one thing could we have changed which would have improved your recommendation to a friend. That’s when they are going to give you the key insight into something they wouldn’t think to tell you. Well actually the neighbours were quite noisy, actually it was a bit of a faff getting into the property you know the little issues which affect the customer experience.
As we say, that intervention in a short period after they’ve checked in nips those things in the bud again doesn’t it. Because as you say it’s just not quite right. You know maybe it’s just not quite as clean as they would have expected or you know there’s some some minor issue. You know the chances are they’re not ring you up and tell you, they might still leave a review but if you’ve rung them first.
One of the problems with that is after that they just think oh I’ll just ring him and ask.
You always get customers like that but any business you’re going to have problematic customers. But I think this is one of the real key things around serviced accommodation that maybe people don’t grasp is that review scores, yeah they’re important. And what are they reflection of? They’re a reflection of the guest experience, they’re not a reflection of the property. So you can have really cheap you know not particularly well decorated properties which get 10 out of 10 all the time. Well you can have a lovely high end properties which are beautifully decorated which get quite low scores. So you know it’s not fundamentally about the quality of the property it’s about the guest experience and you know that is so many different things that it’s the initial contact they get from you that are you know the check in procedure. It’s how they feel when they walk into the apartment. The little touches the things that put them off. Yeah it’s a lot more than just the quality of the property so whatever property you have even if it’s in not so nice an area you can always have a great guest experience around it. It’s about small details and you have to pay real good attention to those small details if you want to work. And the great news is that doesn’t have to cost money. You don’t have to go and get you know a £1000 sofa bed or £8000 70” TV to get a great guest experience. It’s about the small things.
It’s like in higher end hotels, if you’ve got a problem you phone up and someone comes to fix it and then they call you after to say is everything ok? There’s always follow ups and they’ve been doing it for years.
And I think what that highlights the whole issue and that is what people need to understand this is a hospitality business it’s not a property rental business you know and I think you know there are examples of people who get on Facebook and rant about this and the other with their guests and all the rest of it. And whilst I’m sure they don’t necessarily rant entirely the same way at their guests, inevitably it must come through in the way they deal with people you know and the bottom line you know it is you know unfortunately sometimes it is one of those industries where up to a certain point the customer probably is always right. You know you’ve got to be seen to be, it is hospitality you know we’ve all stayed in hotels. But you know we’ve all stayed in hotels and had that really great experience and equally had that not so great experience of you know with the receptionist just having an off day and it does it colors you know and as you said it’s got nothing to do with the property but it just colors it so however you’re interacting with guests you know whether that is on the phone or in person or even via emails and those sort of things you know if you’re not careful it can come across as these are the rules you can’t do this you must do that. And that will color people’s whole experience. It’s getting back to that. You know it’s a hospitality business.
Based on that then would you say meet and greets are better or not?
I think overall I think my view has changed and I think initially when I came into this I wanted to do and to be the not meet and greet has worked for us I have to say in Sunderland in the main. I think where we’ve had issues with it is a block we’re managing in Birmingham which is the branding block of 16 and they’ve had real sort of party problems on weekends. And so now they’ve got someone on site Friday and Saturday evenings sort of doing the meet and greet. And to me the issue then is okay that’s fine how do we cover the cost? And I think Chris I’d be interested in your take on this and increasingly I think we’re seeing people adopting the pricing model of charging a service charge on top so you have to have your nightly rate and then per booking there’s service charge. When I was working with a guy in Liverpool and he’s always done this, he charges you know £45 and that covers his meet and greet and his cleaning you know and his nightly rate is then his nightly rate. And I think people have become used to Airbnb you know because Airbnb was very much set up as a room in a house model. You know you pay for that and then there’s charge for cleaning on top and you know booking.com does facilitate that.
You know I started from the point of view of well if you stay in a hotel you don’t get that but also if you had booked through booking.com, by the time you’ve got through and decided that’s the property you want to stay and that’s the reason not separate thing is probably going to say well I’ve decided that’s where I want to stay anyway. Have you charged any additional charges of that nature or do you just have an inclusive nightly rate?
We don’t typically, it’s very interesting because each market seems to operate virtually independently on that and if you’re the only person in your market charging a service fee or a cleaning fee you might find it hard to be competitive. Whereas if for instance you’re in London everyone does it and you would be leaving money on the table if you didn’t because it’s not a fair comparison. You’re looking at the nightly rates but with your property there’s no extra charges, on the other one there might be a £70/£80 cleaning fee.
To kind of look at meet and greets are they better? Well not not to embarrass you I stayed at one of your clients properties in Westminster probably about two months ago now and I found it because I searched all of London for the highest rated properties and actually came up top. You know it had 10 out of 10 after 28 reviews, when I checked into the property of this Colombian guy very proud of the property who showed me all the features in here, showed me the most wonderful Colombian coffee which was the best in the world.
And all these kind of things you know which was a nice touch but in all honesty I like a kind of two or three minute check in you know it was maybe 10-15 minutes, don’t get me wrong it was a really nice property, fantastic location it had views over Westminster Abbey you could see Big Ben in the background, so very nice. Was it a 10 out of 10 property?. Not really. It just had a few little things you know the main bed in there for instance was fold out bed you know which meant it wasn’t massively comfortable it looked a little bit strange there was no bedside tables or bedside lamps which didn’t make it practical. The TV was mounted above the sofa so I presume I’d get a bit of neckache!
It was a nice property but like independently there’s no way I would have left a 10 out of 10 rating but actually you met up with this guy, he’s so proud about what he’s doing. You’re quite aware of the fact actually he’s got a very high rating. There’s no way you could leave anything but a 10. You’d feel like I’ve mortally wounded him!
So yes, meet and greets can have a very positive impact on the review rating.
The bottom line is it’s not scalable unless you’re in a line of business where you’re able to charge a real premium on your nightly rate. It’s not a scalable model you can’t get 20 or 40 or 50 units.
I mean at the moment I think I’m not absolutely sure but I think those guys are just running two and they’re in the same block. All right. Well you know they were very keen to do that because I think they are very hospitality minded and I think his wife who I haven’t met, I think she’s very much the same but you know she wants to be there and schmooze people and all the rest of it.
When I stay somewhere I wouldn’t want someone to be messing about talking to me and that, I just want to get in, do my thing, do you know what I mean? I suppose in a way it could be subjective for each guest.
I’m exactly the same. So in all honesty I would have preferred a remote check in for that property but that’s not the same as what review would I have left it? Because even though my personal preference if you ask me would be to be remote check in I would still have given a higher review rating having had a think which I just think is really fascinating. It’s a kind of psychological impact it has.
That’s it for part two. Make sure you tune into the next episode for the final part.
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In part 1 of this Q&A, Chris and Jason discuss the future trends of the serviced accommodation and buy to let markets, legislation, Section 24 tax changes, the 90 day rule and mortgages for serviced accommodation.
Keep an eye out for part two next week.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join our Facebook group and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Hi I’m Chris
Hi I’m Ritchie
And welcome to the serviced accommodation podcast.
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Hi this is Chris and today’s episode is extracts from a Q and A which I did with Jason Living not too long ago. I hope you enjoy it.
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Evening everybody nice to be back here again obviously been a few times because I live not so far away and I’ve been investing in property for about 26 years now. So most of that time it’s been a real mixture of everything, single lets, HMOs, all sorts, a bit of commercial The last couple of years I’ve been fairly focused on serviced accommodation, well it’s part of what I do, have a large portfolio in the northeast and of that we have now 17 units as serviced accommodation . I’m also involved in a serviced accommodation management business called Service Lets that provides, the easiest way I describe it is the back end of serviced accommodation so all the systems end of things and through that we’re managing around 150 properties now in London, Birmingham, Sheffield, Cheltenham and treading on your toes a bit in Southampton as well. So that’s what I do so if we can help you and answer a few questions I’d be delighted to.
So I’m Chris, I’m not anywhere near as experienced in property as you. I came straight into property as an entrepreneur so I’ve had different businesses down the years. Started off as a music producer and then funnily enough there’s not a lot of money in music so I started doing some other things to boost the income and ended up doing car repair business for five years and found myself doing serviced accommodation.
Obviously a natural progression.
Absolutely and I think a lot of the teachings are very good about starting small with single let’s, try an HMO, try to flip the development kind of working up. The point of that I shut down the previous business to focus on full time needed to get the income in. So with my business partner we started our property journey with a twenty nine bed hotel you know starting small for you. From there we’ve kind of built up that the business and moved on to a management business which is in Southampton and I run the serviced accommodation podcast with my colleague Ritchie as well as the mastermind groups and doing some consultancy in and around serviced accommodation.
I think Chris and I have always sort of seemed to sing from the same hymn sheet a lot of the time because you’ll understand with the whole sort of emergency serviced accommodation market and that being of obviously a hot topic and lots of people training around it and all the rest of it. You know there’s an awful lot of nonsense quite frankly that flies around some o it perpetrated by people who are held out as as experts. Chris is very much like me not taking stuff at face value and actually going, to be honest it doesn’t take an awful lot of effort to get on Google and actually research you know the truth behind you know just things like bits of legislation and whether it’s business rates, planning whatever you know I think the podcast is very very good and I like listening to it. So I think I agree with most of it whereas some of the other nonsense that’s flying around is just nonsense.
Someone said earlier we were long lost twins.
Q: What’s the podcast called?
It’s the serviced accommodation podcast
So what are we doing, I think we’re just going to answer my questions so fire away.
Q: My question is what is likely to happen over the next two or three years? We have been doing it for four years starting very small from one room in my house now I have 14 different listings. But you know in York, four years ago when I started we were one of 6 or 7, now a year ago I know there were 650 hosts on Airbnb, just on Airbnb I don’t know about booking.com. So obviously there’s something happening, a lot of people on board and I’d be really interested to hear what you think the next two years will bring in this particular field.
I think you know obviously I think it’s a growing market anyway and I think part of the growth in numbers is simply driven by demand and a lot of that demand I think is driven by awareness in the sense that the way always sort of describe it is that I dont think were directly competing with hotels but we’re fishing in the same pond. So I think what we provide is different from what hotels provide and I think part of their marketing is to differentiate that. But I think a lot of people who are now beginning to use serviced accommodation were using hotels because they just didn’t have an awareness around serviced accommodation and quite frankly I’d put myself in that bracket you know going back two or three years if I went down to London to pick a hotel. Now I’d hardly ever book a hotel in London and I would always stay in serviced accommodation and that’s just because I’m aware it’s out there. So I think there’s this generic growth and if you look at Saville’s produce a study every year you know they’re talking about a massive growth in serviced accommodation partly fuelled just by growth and partly fuelled by nicking business off hotels to some extent so that’s fueling that growth. And obviously the whole section 24 situation in terms of property investment and whether people are aware that if you operate a property as what HMRC defined as furnished holiday letting which a lot of serviced accommodation would fall into then you can still offset all of your mortgage interest as a cost. Which if you’re doing buy to let and you’re a higher rate taxpayer effectively you can’t so that’s undoubtedly also fueled some people getting into it you know plus the fact that it’s just within the property world became the latest sort of hot topic bandwagon, whatever to jump onto because potentially there is great cash flow. So all of those things inevitably have fuelled it and there’s you know there’s no doubt there is concern in some areas as to the extent to which it’s going to start removing housing stock from the normal housing stock and everyone’s forever banging on about the housing crisis, haven’t got enough stock.
Well if you’re now actually finding a way to diminish that stock then then there may well be a concern and you know if the growth carries on as it is then it wouldn’t be a great surprise if they start looking at ways of legislating and I think planning legislation is the obvious way to go. You know in a lot of people were in a sense confused about the London situation and what people term the 90 day rule, in London actually since 1973 you have required planning permission to do short lets, any lets under 90 days so that’s just in Greater London hasn’t ever been anywhere else and actually the 90 day rule is a relaxation of that. So what they’ve now said is rather than saying Right you have to get planning permission for any lets under 90 days. What they’ve now said is we’ll let you do short lets for 90 days so you know most people think that was a clamp down actually it was it was part of the deregulation act. In fact it was a de regulation or a release of the legislation but I don’t think it would be a great surprise if they took that and tried to put that out nationally.
But I suspect they would probably do it in the same way that they’ve done C4 and HMOs whereby they will probably say you can switch from one to the other so they might create a new use class for lets of let’s say less than 90 days because that’s the London model but I wouldn’t be surprised just like HMOs where they say nationally you’ve got permission to develop rights to go from you know C3 residential to short term accommodation and back again but then any council can bring forward an article 4 direction which obviously they have in a lot of areas about HMOs restricting that change probably from C3 to short let, probably won’t restrict it going back unless they particularly want to say it wouldn’t be a great surprise but then with HMOs if you’re already operating a short let then that is your lawful use. So you’re not suddenly going to have to apply for planning permission, you will already have that as your established use.
I don’t know what your view on all of that is?
Yeah yeah absolutely. I think we are probably going to see quite a lot of change in the market over the next two or three years and this is just very much personal opinion. I think for me it’s not so much legislation driven but market driven because as you’ve kind of touched upon before with Section 24 changes, with a lot of the changes which are coming to clamp down landlords what it means is we all know it’s becoming less and less profitable to be a landlord in this day and age. We’ve seen reports where you know half a million landlords are looking at selling up. And I think what’s inevitably going to happen is actually the pool of rental property in this country is going to be decreasing now.
Which is good news for rents if you’re a landlord that wants to hang on.
Hopefully it is. And that I think is the key change we’re going to see, the rental pool if you like is going to be decreasing. We’re still seeing a continuing trend particularly in younger people towards renting as opposed to purchasing so there’s only one thing which can happen here when of course the rules are going up for landlords and the demand is being driven is that you’re going to see a substantial increase in rents. And for me I think over the next two or three years I wouldn’t be surprised if you saw that maybe 20 25 percent increase in single rents as a reaction to everything that’s going on in the market, it might take a little bit longer to kind of settle at that level but that really wouldn’t surprise me at all because we’ve seen such fundamental changes in the market. I don’t think we’ve really seen the impact yet. If you look at what we’re doing in serviced accommodation, I mean I call it arbitrage. You take it from one market and you sell it on another. So we are entirely dependent on the single let market in order to generate a profit. Now if that single let market has gone up by 25 percent then it makes it a lot harder for operators to come in and make a profit. So while yes we’ve seen a massive amount of growth in the number of properties over the last couple of years it’ll start to equal out as more and more areas are going to become marginal when it comes to profit. So the stock’s going to dip a bit. Prices are going to go out and as always happens in markets there’ll become a kind of equalization point when you have a reasonable number of operators offering fair value on the market. Now if you want to look at a model of that and we were discussing this a little bit earlier then I think London is a good one because already in most areas I see in London are extremely marginal you know you might make a profit on one or two units but as soon as you start scaling up you start hitting VAT thresholds, you start having to have bigger teams, higher overheads your profit is gone.
Now that I think is probably a pattern you’re going to start seeing over the country, over the next couple of years as those single let rents increase, I think that’ll probably stabilize the market a little bit so for me it’s a sustainable market.
No it’s interesting so effectively what you’re saying is that there’s a flow of stock from the single let market into the SA market because the margins are perceived to be higher in the serviced accommodation market but as you say if those margins get impacted and at the same time and as you say it’s either if people are rent to renting their margins are being eroded by the higher rent. But even if they’re not even if as I am operating properties you own then you know if your rent suddenly suddenly goes up 25 percent and your SA doesn’t or is perhaps slightly under pressure, you may say I’m better off getting back to single letting anyway. So as you say you know the market will self correct in that way.
That’s just my personal opinion but I think you see the logic behind that. Great question to kic us off thank you.
Q: Can I ask you a question about funding? We’re in the buy to let market, single let HMOs and buy to let mortgages appropriate to those markets. SO we’re sitting there thinking we’re going to use some of these as services accommodation but what will a mortgage broker say? Mortgage companies say sod off, they don’t allow it. So do we have to change so basically buying the property ourselves? And if we’re going to do rent to rent to do it we’ve got the same problem because almost certainly starting from a piggy back position where the actual owner is either on a residential mortgage, unlikely but possible, or a buy to let mortgage and once again can’t do it!
So that’s just my personal opinion is that thousands of people out there are winging it on the back of buy to let mortgages, they’re breaching their mortgage terms which also means they’re breaching probably invalidating any insurance policy in place and the shit’s about to hit the fan!
Thank you for that it would be interesting to get your viewpoint because obviously you own properties in your own name, how are those funded?
They are on commercial mortgages. And interestingly I think the loan agreements were not worded in such a way, obviously they were they were worded before any idea of serviced accommodation and all the rest of it. Now I’ve looked through it and the particular terms in my loan agreements says that if you create any tenancy then it has to be an assured shorthold tenancy. But I’m not creating tenancies.
Mine and you know I know I’m splitting hairs legally because clearly that wasn’t what they meant but you know I think a strict interpretation, and they are commercial loan agreements, they’re all with Northern Rock, one’s with IBS. I don’t think they’d have an issue with them if push came to shove. I think I’d have a conversation with them saying I’m actually generating more money, I’m better able to pay you but with a commercial lender you can, I’ve had run ins with them but it’s not it’s not the sort of computer says no.
Having said that yeah I mean you’re absolutely right that you know I’m pretty sure there’s an awful lot of people out there particularly those operating sort of individual units in blocks where they are buy to let mortgages so technically it is a breach of terms and conditions.
There’s one particular distinction that it’s worth making. I’ve repeatedly said when this has been discussed sort of on Facebook and those sort of things I’ve repeatedly said to people I’d be very interested if anybody has got any instances you like not man in the pub sense but anybody can actually tell me of an instance they genuinely know of where a lender has called in a loan on a buy to let mortgage that’s been serviced accommodation and I’m not saying they haven’t. But nobody’s managed to come up with that.
I’d look at it from a different point of view, from this side of the equation. Say there’s been an accident. I’m going to my insurance company and saying I’ve just had an accident, I’ve got landlord insurance. And they say, can you show us the tenancy agreement and your terms of your mortgage please. Because any insurance companies first port of call is how can we get out of this. And if that accident is bad, that’s bad enough in itself but the repercussions are that I could be in prison or wherever because I’ve breached those terms.
I agree and I would always say, I’m not in any way encouraging people to breach the mortgage terms and conditions. I’m just saying that the reality is that that’s what people do. But I absolutely agree with you and what I always say to people is understand the risks and the mortgage situation and I’m not I’m not saying do one thing or the other but the risks on the insurance side are far far greater and absolutely you know you need to make absolutely certain that you’ve got the right insurance and that you’re not in any way invalidating that all insurance claims.
On insurances and stuff it sounds very much like if there was a death, worst case scenario. They’re going to go through all your stuff, fire regs. If they found a breach of mortgage, would that have saved the person’s life? If someone for instance had a residential mortgage ad they were running, say it was a 5 bedroom serviced accommodation, has that breach changed anyone’s life? Because insurance companies, yeah they would look for ways around it but in my opinion they’re not going to be that bothered about the mortgage. Whether you know about something that was you.
They want a way to mitigate their risk and if you’re in breach of your mortgage terms and this should not have happened because what’s going on should never have been allowed.
Interestingly in residential you don’t need a carbon monoxide alarm.
I know you don’t and I’ve just had a house of mine looked at by a council who said put a carbon monoxide alarm in.
Do you think the lenders are going to start giving out more buy to let mortgages for serviced accommodation?
Yeah. They haven’t yet. I think that the impression I get is that they’ve they’ve looked at it they haven’t quite got their heads around, you know their perception is I’ve got a six month AST, the security of income then you know the reality is as we all know how secure that income really is is open to debate you know whereas they look hang on you’ll see here on day one and you’ve got an empty calendar for six months but yet you’re trying to convince me that you’re going to be able to pay the mortgage. You know we know as operators of experience that yes you know we’re comfortable we’re going to get those those bookings but they, looking at it from a very sort of productized basis they have not got their head around them. If you talk to the commercial lenders obviously who are used to lending on B&Bs or hotels or whatever and understand and not all but you know you may be paying higher rates they’re probably going to want to look at some experience of operation. You know it’s probably not going to be, high LTVs, there is a guy in London called Mannershar who’s trying to put together a buy to let style mortgage for serviced accommodation buildings. Yeah the number of lenders who they more come at it from the holiday end of things. But I think Leeds for instance won’t lend to you if you’ve got more than four properties full stop with any lender. So yes you can do you know if that’s all you’re doing you can do the first four with them. I think Cumberland have a holiday product, I’m not familiar with the details. Cambridge will do it who are more of a commercial lender. You know they’re up at 6 percent plus in terms of rates. I don’t know what their LTVs are on serviced accommodation. I think they stack it up on the basis of AST.
This is okay if you’re going to buy it and you’re making sure that your finance is in place.
I just want to go to them and say here’s what i’m going to do with it, this is the crack. Because when I’ve had a residential mortgage, years ago when I bought the first house intending to live in it then I decided to rent it out. I’ve now changed it to consent to let, is there anything similar?
They’re still scared about it not being let. It’s the uncertainty.
To answer your question, yes we’ve got landlords who we work with, with a management company who’ve got permission from the lender to operate as such. Yes there are lenders who will do it. So a lot of the Santander ones even five years, had specific terms in there around well if you’re going to use it as a holiday let then you’re not allowed anyone to stay in it for more than 30 days for instance so it was a clear you know allowing you to do it but with certain kind of conditions attached.
Santander is one that I’ve heard of that is quite compliant. Obviously you’re managing quite a few on behalf of people rent to rent
Cambridge, they’ll send a surveyor round, do a market evaluation even if it was an AST.
And that’s getting in at the front end but what about sort of existing mortgaged properties?
And it is actually surprising how many unencumbered properties there are. I mean there are certainly owner occupied I was trying to get the stats on investment properties and obviously they’re different but there are owner occupiers more than half are unencumbered which is quite surprising.
I think it’s around 50 50 with buy to let.
Is that right? I think it was the annual survey of English housing that I was looking at and certainly as I say owner occupier rather than the market overall but I couldn’t find a split down into investment property but it’s surprising. For instance I have two rent to rent well actually it’s exchange at delay completion in Sunderland neither of which have got a mortgage on.
We’ve found a lot of people are moving abroad and leaving their house here and if they go abroad for 6 months or something like that then they come back then they could have a block of 4 weeks, there are a lot of people who are doing that now.
So if I just come back to the original question again quickly about finance, I think we’ve covered off quite well what the situation is at the moment to again kind of look at a helicopter view of the market if you like we are really where we are with serviced accommodation right now where we were probably 4 or 5 years ago say with buy to let mortgages for limited companies you know it was very very hard to get hold of product. You know in fact limited lenders they had a lot of strict criteria about debt and the bottom line is when we’re talking about big picture stuff markets how they change well people want to do it, there’s money to be made. They’re going to move into those markets so in the same way that after the tax changes came in, the mortgage companies had to adapt and you look at how many of them do limited company mortgages. Now what I’ve often think so you know with a situation now it’s the mainstream but it takes them a while to catch up. Now that’s exactly where we are with funding for serviced accommodation right now.
Yeah they’ve got to be finding it difficult to get their money out. And similarly probably going back even further than that the HMO market if you go back probably perhaps you know 10 or more years. You know there were very few you know mortgages that you could genuinely use for HMO whereas a lot of the lenders said actually it’s a market we want to be in. You know we have a specifically different product or we’ll tweak our existing products and I guess you know the interesting thing will be as as those products do come to market whether those lenders who are currently being inflexible on buy to let mortgages might develop ability what’s going on then.
So if you’ve got something and say I want to use this as serviced accommodation will you let me and they say no you say okay that’s fine I’ll refinancing because there’s another company over here. They may all of a sudden decide to be a bit more flexible about it but yeah we are in a situation that’s not entirely know good really in terms of where we are with the serviced accommodation market because there is an obvious route to say yeah that’s you know that’s exactly how you do it and as you say you know the undoubted reality is there are a lot of people out there operating in breach.
One point I was going to make because I think it is you know somebody will say it again sort of splitting hairs but I don’t think it is as I have heard relatively first hand of an instance of somebody applying for a number of buy to let mortgages but with the express intention of using them for serviced accommodation, there was never any intention of using the buy to let and those mortgages being called in and that is mortgage fraud because you are applying for money under a false premise and I think that that is fraud because basically so you are gaining gaining financial advantage with express intent. And that’s mortgage fraud which is amongst other things a criminal offence.
Whereas some people say well is it really different but I think it is legally different. I’ve got a buy to let mortgage I have had for five years and I bought this as a buy to let, I’ve been renting it out for five years. I’ve now decided to do serviced accommodation oh I’m in breach of the mortgage terms and conditions which is clearly a civil matter, a contract matter and to me is very different you know in a way the overall intention.
Exactly exactly but I think that and that’s why you know I’d be interested to hear if people have come across instances of what what has happened where an insurance company has found out you’re doing serviced accommodation on a property that was originally by buy to let and now you’ve changed it. You know again having conversations with people who perhaps have worked for lenders in the past, their general view was you know you’re probably going to get a letter telling you to stop doing it and or saying well do you want to charge you more interest. Exactly the same as they tend to do with residential to consent to let, if you go ahead and do it I think it’s unlikely they’d just call the mortgage in. I think it’s more likely you’re going to get a letter saying remedy the breach but I suspect that’s what happens with serviced accommodation. But I’m hypothesizing to be honest and I’m just really interested in actual market feedback of actual instances of things happening and that information seems to be a bit thin on the ground these days.
It’s all about precedence, we don’t know what’s going to happen until something does.
That’s all for part one. Tune in next week for part two.
In this episode Chris and Ritchie talk the three main corporate structures of setting up in a Serviced Accommodation Business: Sole Trader, Limited Company & LLP. They will discuss the different pro’s and con’s of each legal entity including risk, taxation, VAT, and selling the business.
Chris and Ritchie will also talk about the separation of trade, and why it’s so important.
Show Notes:
The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we help you Start, Systemise and Scale your Serviced Accommodation Business.
If you would like to ask us a question or discuss anything in this episode, please join our Facebook group and ask away. To listen to more episodes or get more information go to www.thesapodcast.com.
Transcription:
Hi I’m Chris.
Hi I’m Ritchie.
Welcome to the service accommodation podcast.
Today we’re going to be talking about corporate structure.
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What are we going to cover today Ritchie?
So today we’re going to be talking about the three main entities that you would use in serviced accommodation. You’ve got a sole trader, limited company and LLP which is a limited liability partnership. And the second thing we’ll be talking about today is separation of trade so keeping these trades in different entities where you don’t have the crossover between rent to rent and management in one company, just separating them accordingly.
So as Ritchie says we’re going to kick off by looking at the three main types of entity you might choose to use for your business. Sole trader, limited company and LLP and I think it’s important to have a think about the key factors which we’ll be looking out when we think about what basis we’re going to kind of make a decision on how we can compare that if that makes sense. So there’s kind of different elements of each really.
So the first area we’re going to look at is control. So what kind of control do you have over that entity type, talking about protection of the trading name and thinking about what impact that has. Allocation of profits as well, very important.
We’ll think about the trading risk associated with each type of entity. You know I talk about it all the time, I think I should coin a phrase and really that kind of breaks down to two key areas really, the financial risk so you know what happens if this business makes losses basically and the legal risk. So what happens if someone sues the business or what happens if God forbid criminal charges are being brought which obviously shouldn’t happen if you are running the business properly right.
So then we’re going to have a look at taxation obviously a very important part of when we’re choosing how we should structure our business and obviously have a profit to tax is very important as well. And from there we can kind of derive how tax efficient is it for what you want to do as a business because there’s lots of different things you might want to do. You might want to withdraw the profits from the business. You might want to kind of retain all the profits in there and go and use that for reinvesting into other things offer for growing the business and as a separate thing if you’re claiming capital allowances and that can have a big impact on the taxation. So what’s the impact if you’re looking to claim capital allowances.
On top of that we’re also going to look at VAT and the impact of VAT in the entity and also selling a business. How easy or hard is that.
As you can see there’s quite a lot of different factors involved in this and that’s why it’s not that easy when you’re kind of working out the best way to do it is it Ritchie?
And so as a whole you can’t really give you specific advice on your situation but we can kind of generalize.
Yes yeah but based on your personal situation and what you are looking to achieve this.
Yeah very much and hopefully we can give you an idea around the factors which you might want to might want to consider when you were choosing what you what should work best for you.
So it’s not one size fits all. It’s basically you need to choose the shoe size that fits your business or fits what you want to do. So we’ll start off with sole trader and this is the most basic form of trade.
It’s basically just doing it in your own name right?
Yes income and guest contractors in your personal name and you are fully responsible so personally responsible. And to set this up you just need to register as self-employed. It’s very straightforward really. Yep and you trade under a name without registering it as long as there is no infringement so as long as you’re not using a name like Microsoft you know which is already being used by someone else. And you as a sole trader you’re personally liable for any financial losses. So the business is in your name your sole trader, you’re self-employed so you’re liable. You’re responsible. So if you ever have any like legal disputes as well you’re liable because everything is in your personal name. Not much protection as a sole trader.
Yeah and that’s probably why it’s the big downside around being a sole trader isn’t it. You know it’s quite quick and easy to get set up, it is not necessarily inefficient for tax as I’ll talk about in a second but it does mean that you’re taking on quite a lot of this kind of risk. So unless you’re happy and comfortable with that risk you might want to think about some of the other structures.
So in terms of a tax situation as a sole trader well it’s essentially personal income. So any profit which you make within the business because of course you can claim all your costs against your turnover, any profit you make in there is basically personal income so of course what that means is that if you are a higher rate taxpayer then that can be relatively inefficient because you are going to be paying 45 percent tax on all that money which is coming in.
Now again there’s other situations where it can be very tax efficient. So for instance if you want to use it as your main income and you’ve not got money coming in at the moment then it can be quite a good way to do it because if you did that through a limited company, you’d also have to pay employers national insurance. So there is quite a cost saving there in terms of being a sole trader if you want to kind of live off the income which it generates if that makes sense.
Now another strange quirk around the sole trader is that if you hit the VAT threshold then it means that you as a person go VAT registered.
So any income you make above that from other sources in your name is VATable. Yeah yeah absolutely once you register for VAT, any income other than wages obviously which is separate would be would be VATable and that might not affect a lot of people but other people might you know maybe do a bit of freelance work here or there whether that’s kind of I.T. or consulting or anything really it would mean that even that, even though it’s a different trade they would then have to charge VAT on it. So again I think it’s it’s an important consideration in terms of will that affect you personally, will that have an impact on what you’re doing and therefore something you should avoid.
I think another aspect to consider when it comes to sole trader is that it is quite tricky to sell the business.
You can’t just sell your name.
Well that’s the thing because the upside is you can use any name. But the downside is you’ve not really got any rights over that name that anyone could come along and go oh they’ve set up a good business, start a business called that and basically nick it off you. So there’s not a lot of protection around it and it means when you come to sell the business well you know the name might not be protected and you have to essentially sell the individual component parts so you I’m selling on my client list, I’m selling you know how I create my product or whatever it is that you do within the business and so on. So it does make life very tricky compared to a limited company for instance.
Yes definitely. And that is a second trader we’re going to be talking about and with a limited company, setting it up is very easy. You can do this online in a matter of hours really and the costs are quite low, cost about £20 I would say.
Yeah and HMRC or any of the other sites that you can do, you can set up for less than that. Personally I would say don’t use HMRC site. It has all the options in there but some of the other sites just have a few extra defaults for you to use, you know sample documents and it’s little stuff like with the HMRC website last time I set up a business through there I had to retype the same address three or four times just like you know what I don’t care about paying a couple of quid extra just to save time. It does save a little bit of time doing that.
And when it comes to control of a limited company it’s controlled by one or more directors and owned by shareholders. So you can have a director as a shareholder as well but yeah it’s owned by shareholders.
So with the limited company your company name is protected, it’s your name when you register that company yet no one else can use their name elsewhere.
The good thing with a limited company is in the name really, limited. So you’ve got limited liability and you’re not personally liable for any legal disputes other than criminal actions including things like fraud when obviously defraud money or any wrongful trading so when you’re not solvent so there’s no future for the company like no potential as you guys making a profit and then you continue to trade anyway. And if you’re not minimizing risk to creditors as well, that is deemed wrongful trading as well. So if you see a company going downhill and you know you’re going to be losing money you’ve got creditors your money too but you then go out and make an extravagant purchase without any consideration for your creditors, that is wrongful trading.
Yeah absolutely. I’m hoping that no one listening to the podcast would ever get involved in kind of wrongful trading or criminal actions but still it seems worth pointing out that you know although you do have this limited liability, it doesn’t extend to criminal actions.
So in terms of tax with a limited company then essentially what happens is at the end of the year you kind of do the usual calculation to work out what your profit is and here you pay corporation tax on your profits now that’s currently at 19 percent and I think it’s going to be until 2020 now. So basically you pay 19 percent on your profits and then you’ve got I mean accountants call it wash money you know where it post tax and you can kind of do what you want with it. Now what you can do and this then becomes very efficient if you want to reinvest that money because you’ve only paid 19 percent tax and then you’re free to reinvest it.
Now you can reinvest it through that same limited company maybe by going and buying assets in there whether that’s assets to help the trade of your company or even property or offices that type of thing. Alternatively you can actually lend that money out into another LTD company which can then or LLP even which can then go and buy the assets so once you’ve paid that corporation tax which is relatively low once you’re talking big numbers compared to income tax then actually you’re very flexible about what you do with that money.
Chris could also just tell us about what’s was the benefit of things like director’s loans as in the tax benefit?
Okay so directors loan is a good way to kind of do a short term oh I bought this, I bought that so you know let’s stick on the director’s loan account so that can get paid back at a future point. Now there’s a bit of a danger of you know abusing that because if you think about it, if you take money out the company then you meant to pay tax in one form or another. Otherwise there could be a loophole where basically you go oh I’m not taking money out the company it’s just lending me money at the rate of £100,000 a year, I just don’t plan to pay it back ever. So obviously they have to have rules in place to prevent that. So essentially if is a directors loan in place at the end of a tax year negative balance e.g. you as a director owe the company money then it has to be paid back within I believe nine months at the end of the tax year. Otherwise if you start getting hit with some very very significant taxes which albeit you get paid back when they eventually when you pay off that loan but it makes it an administrative nightmare and it’s a very heavy deterrent from kind of over using that directors loan.
Cool so if you’re not looking to reinvest that money instead you’re looking to withdraw it then you do have to then pay more tax on it. Now the first £5000 at the moment it’s tax free. Unfortunately that’s going to down to £2000 at the start of the new financial tax year. Yeah yeah unfortunately and of course over a year of that kind of tax perk has been eroded really, dividends used to be extremely tax efficient. And now that in all honesty a lot of the time it’s a little bit marginal although it really still works out a little bit better to take money out through dividends. So yeah at the moment the first £5000 is it is tax free on dividends, it’s going to be £2000 from April 2018.
Then if you’re a basic rate taxpayer you going to pay 7.5 percent tax are above that and if you’re higher rate taxpayers pay 32.5 percent tax. So you are going to be taxed you know taking money out of the business.
One of the great things about limited companies is just kind of how flexible you are with it because you can decide to sell part or even all of your business quite easily just by selling shares. So it does mean that if maybe you’re growing a business which you plan to kind of grow the IP of, you want to turn it into something valuable in its own right and potentially sell it in future then a limited company is always a good route to go down for that really.
Another company structure with limited liability so to speak is a limited liability partnership and the limited liability partnerships set up is quite straightforward as well.
You can do that online and it’s not as instantaneous as a limited company set up because this could have a several day delay and it’s a bit more costly because there it’s about £40.
They say it takes a couple of hours but I mean we won we’ve set up an LLP it’s taken a couple of days to go through. Yeah it’s still not a lot of money. I thought it would be really expensive actually it’s not bad at all.
The same company formation websites will set you up an LLP as well as a limited company
And the structure of their company is in the name really, it’s a partnership so it’s controlled and owned by two or more members.
Yes to state is obvious. That means that if it’s just you then you’re not going to be to start an LLP. Now just to complicate things even further, the members don’t actually have to be people you can have companies in there. But it starts to get very complicated once you start to look at entities where you’ve got a limited company as a member of an LLP so we’ll pretend I didn’t just say that and you can move quickly on.
So with the limited liability partnership, your company name is protected so yet again this is your company name, no one can steal it, no one can use it and you are not personally liable for any financial losses just like a limited company and you are not personally liable for any legal disputes just like we explained just in the LTD company.
What makes LLPs very different is that from a liability point of view, they are very much like a company. But from a personal attack point of view, they’re almost like a sole trader. So the personal tax is applied to all the profits. So in essence what you get to do with isan LLP is you get you say okay our LLP made £50,000 profit this year. How do you want to allocate that across the members and you go well you know £20,000 for this member, £15,000 for this member, £15,000 for this member and then each person is taxed as personal income on that amount of profit that they’ve been allocated.
So that can then be very beneficial if you’re looking to be flexible. For instance if you’ve got a partner or family member who is not earning a lot of money compared to you then you can make it flexible and make sure that you’re taking money out of that LLP in the most tax efficient way.
Another major benefit really around that is if you’re claiming capital allowances and I know we’ve only talked a little bit about capital allowances so far and I’ll try not to go too much into it other than saying it’s a way of saving quite large amounts of tax and you can then apply it to whatever entity is claiming their capital allowances. So for instance if you had capital allowances £50,000 that would allow you to essentially not pay tax on £50,000 worth of profit so obviously quite beneficial in that respect. And if you look at capital allowances with an LLP there is a very big advantage compared to them compared to a limited company if you want to take the money out because with a limited company if you claim capital allowances that will save you 19 percent on tax which is great if you want a kind of reinvest it, absolutely fine but if you’re looking to take the money out, you still need to go and pay some tax on it. Now with an LLP because it’s personal tax that means that if you apply the capital allowances to the profits from an LLP it means you have no tax to pay at all and it’s now in your name.
That means that if you’re taking money out of it and you’ve got capital allowances then you might actually be much better off with an LLP.
If it’s too confusing then just jump on the Facebook group and let’s have a chat about it.
So one of the downsides I guess of an LLP is again it’s not got shares, therefore it’s quite difficult to sell it as a business. We’ve we’ve looked at a few developments for instance which were struggling and based on an LLPs and developers were looking to sell them off and it does become a lot more difficult and a lot more complicated to sell an LLP than it is a limited company where you can just sell all the shares.
It is worth knowing and understanding that so if you are looking to build something which you think potentially one day you might want to sell on then probably the LLP is not going to be the right route for you to go down.
If you have a rent to rent business and then you’ve got a serviced accommodation business or serviced accommodation management business, it is always good to have a separation so separate these trades into different entities because you’ve got various risks and things that may affect them so first and foremost things like trading risk.
If you have an issue with a problem in the guaranteed rent business, someone falls over whatever, the liability and then it’s the whole company that’s impacted you know. If there’s rents that haven’t been paid or people haven’t been paid that’s a risk on both your entities, both your businesses that could have been divided into separate entities with various different liabilities.
And then you’ve also got things like bookkeeping and accounting. Yeah we’ve seen quite a few books and it does get a bit messy. It’s a very strenuous activity as it is on the serviced accommodation side of things but if you’ve got the rent to rent business as well it’s just very complicated. It becomes very extremely long winded and can be very expensive because you’re paying for someone’s time to do that.
You’ve also got things like a VAT. So if you’ve got a rent to rent business, rent to rent as we know that’s not liable for VAT because it’s residential property whereas serviced accommodation is a business and as a serviced accommodation business you are liable for VAT, you can go over the VAT threshold. So if you’ve got all your income in one business and then shoots you up to the VAT threshold, your rent to rent business is also liable for VAT.
Yeah if you’re doing flat rate and otherwise well it might not be rent to rent or it’s exempt, you might have for instance an SA rent to rent business and a management business both of which are VATable turnover so if you’ve got them in the same entity then you’re going to hit that threshold a lot quicker.
Exactly. Whereas if you’ve got separation of the management business or the money coming in, your holding in the trust of people doesn’t constitute as part of your turnover then yeah it’s going to take you a lot longer to hit the VAT threshold in that business.
And they’re genuinely different trades and therefore you’d always want to put them in a separate entity where possible.
It’s not artificial separation. They are genuinely different trades.
Exactly so I think the key question you’re likely to ask is what type of entity would you use in what situations. And again we said we can’t really give advice but we can make some generalizations. So for instance if you’ve got a rent to rent serviced accommodation business then generally you’re going to be looking at a limited company to state the obvious it kind of limits the liability but it also does mean it’s quite tax efficient and flexible.
So whether you’re kind of looking to keep funds in there or take them out as profits it can work quite well. You know either way from a tax perspective, it is also quite a flexible structure so it means that you can work with joint venture partners or maybe you want to sell a share of the business or even the entire business and that type of structure will allow you to do that. So generally but that’s probably the structure we’d look at for a rent to rent business.
So for a management business again for all of the same reasons generally you’d be looking at a limited company in terms of limiting your liability, tax efficiency, structure everything like that. Again you know it’s probably more chance of you selling a management business I would guess because if you look at the property world and agents for instance then it’s kind of well-established that letting agents have quite a high value compared to their turnover in terms of business valuation. So if you looked at SA management businesses in a similar light then you would say a management business with say 100 clients is probably going to be valued relatively highly. It could be at some point you want to cash in and go retire to that yacht in the Mediterranean right.
So it’s quite important I think from that point of view.
Now if you think about purchasing and you’re specifically purchasing for serviced accommodation then perhaps you might want to be looking at an LLP type structure instead. Now this is still going to limit your liability but the key thing here is that it’s going to maximize the capital allowances which you most likely going to be able to claim. And it’s really going to be very tax efficient for bringing the profits through to you personally.
And again for the same reasons an LLP can work very well for development. A lot of the time we see developments going on even when they’re not going to serviced accommodation for instance if it’s a commercial conversion then often you’re able to claim capital allowances on commercial building which you’ve purchased and so they’ve done an LLP because it’s much much more tax efficient.
So just to confuse things even further if it hasn’t been complicated enough already so then you can kind of get to multi entity structures which is really where we’re kind of combining different legal entities together to kind of really optimize what you’re doing. Now I think maybe the easiest way to understand that is the type of scenario where for instance you already own a portfolio of properties lets say maybe five or 10 properties which you’ve purchased over last 10 years and they’re all in your personal name and then you’re looking at what’s the best way to operate serviced accommodation.
So this would really be a multi entity structure because what you’ve got is you’ve got the properties owned in your own name and you’re probably going to want to put another another company of some form in place. So really if we start to think about this situation and what you could do with this specific scenario you’ve probably got two main options. So first of all you could set up a new Ltd company and then you could rent those properties off yourself and that way all the trading would actually be going through this new Ltd company so you’d essentially be rent to renting or guaranteed renting from yourself. Now when we do this and we have a company which is operating directly with the customer so that’s that’s the company who is ultimately responsible for the customer then we call that an OPCO. So if you hear us chucking that around here there and everywhere that’s what we mean it’s a company which ultimately has responsibility for the booking when it comes to the guest you know.
And so with these OPCO then the advantage is that actually all the trading risk and I know we’ve talked about that a lot today but that’s real critical when we’re talking about corporate structure, all the trading risk both financial or legal is passed from you in your personal name into that business.
Now that’s really really critical because if you own assets in your own name and you have a serious financial issue with that business then potentially they could go after your properties and repossess them to pay off your debts. Now if you’ve passed that financial risk into a separate trading company then that can’t happen as long you play by the rules.
It’s exactly the same as legal issues. You know if you have a major legal issue to do with your serviced accommodation business and that’s been separated out into an OPCO then the buck stops with that and ultimately the worst case scenario is that you have to shut down that company but you still have your properties. Now if that was in your own name then again potentially banks could come after repossess your properties in order to to repay court settlements. So you know that’s a great reason to kind of put it in an OPCO.
Of course it also means that you’re taking another profit away from you in your personal name and putting it into a Limited Company, which if you’re going to be reinvesting those profits or if you don’t need to be taken out on a monthly basis as income to live on can be very tax efficient way of doing it.
Now the alternative to the OPCO where you’re kind of rent to renting it off yourself, would be a management company or sometimes we call that that an agent because that’s what essentially they’re doing, they’re acting as an agent on behalf of the owner. Now the reason this can be very beneficial is because if you’re dealing with multiple entity. So for instance you own some properties in your name, your partner has some property then their name, maybe a family member or a friend. It’s much easier to be dealing with one company which deals with all the operational aspects of the businesses and that would be this management company.
The other thing is that it can be a lot more VAT efficient when you’re dealing with multiple entities. So for instance if I have some properties in my name and Ritchie has some properties in his name and we have a management company together then each of those properties have got a separate VAT status which is depending on how much we’re turning over. Yeah if we had an OPCO together so rent to renting them then that would actually mean that the combined turnover would push us over the VAT threshold where separately it might not. So it does mean that VAT efficiency can be better if you’ve got an agent company or a management company in place instead.
But of course the downside of that is as we’ve discussed throughout the episode today that means you’re taking on the trading risk yourself so you need to be relatively comfortable with that and what I would generally say is that a lot of the legal risk can be covered by insurance but that means don’t skimp on the insurance, don’t just get the cheapest cover. Use a really good broker and make sure that they know what risks there are associated with it and that they’re genuinely covered because in my understanding having spoken to people in insurance is that 50 percent of policies aren’t worth the paper they’re printed on because they’ve just got clauses here there and everywhere that they’ll be able to get out of anything. And if that’s you know going to take away your home, your portfolio, your livelihood it’s really not a good place to be.
It’s also about being very open and honest as well when doing the fact finding and explaining the details of how you work. You don’t want it to be just generalized like this is how we work and in serviced accommodation we’re doing this but you have to be specific about how you operate and work so that the insurance policy is very personal and covers your business accordingly.
Yeah and also working with someone who does understand serviced accommodation because you’ll find a lot of insurance brokers don’t. So very very important to work with someone who specialises.
So if you can cover off that risk the legal risk you know that probably 99 percent of it covered then it just comes down to the financial risk. Is that something that you’re comfortable with, is it a completely new model? Now we always talk about build test scale, is it a model you’ve done before and you know how it performed financially and you’re comfortable with that financial risk? Or is it actually something completely new and you don’t really know if it’s going to work or not? And I would suggest that if it’s something completely new then maybe you don’t want to be doing it and taking that financial risk in your name because again as we say if those debts start to pile up cause it’s not working out you are going to be personally responsible.
I hope this episode hasn’t been too confusing, very comprehensive very detailed and I’m sure it’ll help you guys moving forward.
Yeah and it is it is a critical area to get right. I think it is one thing we always cover in the strategy review because when you’re looking at you know what you want to achieve and how you’re going to achieve it then obviously getting the right structure right is critical and can save you tens of thousand pounds worth of tax, even hundreds you know as time goes on and you grow your business.
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In the last episode before Christmas, Chris and Ritchie talk about their top five business books – some great suggestions for a last minute stocking filler! They talk about the key learnings from each of the books and how they can apply to your business, and also discuss some great books which didn’t make the […]
Chris and Ritchie have put off making this episode for a long time, as it doesn’t seem like the most exciting topic! However, they have had a few issues and stories come up in the last couple of weeks that made them see there is some real value in covering these topics. Chris & Ritchie talk […]
Chris and Ritchie are back after a few busy weeks with episode 25. Within this episode they talk about their last few weeks of Serviced Accommodation Property Management, including: adding exciting new properties, renting furniture, day-to-day operations, cleaners quitting and properties being used as…. brothels?!? Plus Chris & Ritchie talk about the new ventures […]
Guest communications are a vital part of the guest experience – and the better your guest experience, the better reviews you’ll receive, the more you’ll be able to charge for your property and the more profitable your property will be in the long run. In this episode we cover all aspects of guest communications including […]
In this week’s episode Chris and Ritchie show how to optimise your listings on sites such as airbnb and booking.com. Hereby increasing bookings and therefore profit. These sites already have a huge amount of traffic, listing your property in the right way can have a huge impact on you Serviced Accommodation business. Have a listen […]
In Part 2 of this Live Q&A, Chris further discusses the management model, getting listed with booking.com, revenue management, the future of serviced accommodation, property management systems and the importance of strategy when starting out. Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at […]
In this live audience Q&A, Chris talks about the difficulties of scaling the guaranteed rent model, the impact of VAT, the management model, the 90-day rule in London and the impact of Section 24 tax changes on serviced accommodation. Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and […]
If you’re looking to create large amounts of cashflow from serviced accommodation, you’ll need to scale up your business. There are many pitfalls to avoid and areas to focus on if you want to scale up profitably – we take you through the five key areas you should be focusing on. Show Notes: The Serviced […]
Don’t you hate those rehearsed pitches you hear, where is sounds like they are reading from a sheet of paper? Good pitches are nothing like this – they are conversations around the benefits of what you do, and how it impacts others. In this episode, we explore the benefits of Serviced Accommodation and how and […]
Business rates are the commercial equivalent of council tax, and apply to all commercial property including retail, office and industrial. Qualifying as “Furnished Holiday Lets”, serviced accommodation is eligible to pay business rates rather than council tax. As a widely misunderstood area, we look at how business rates work and how to minimise your business […]
Getting feasibility – or deal analysis – right is critical to your success as a serviced accommodation operator. You need profitable properties in order to scale successfully, and detailed feasibility reports will ensure you can identify which properties will be profitable and which should be avoided! You can download the deal analysers which accompany this […]
This episode of the Serviced Accommodation podcast is all about Strategy, this is the second part of a 2 part episode. So if you haven’t heard the first part, jump back to http://www.thesapodcast.com/15-strategy-part-1/. This second part covers what Chris considers the most important part of business, creating a strategic plan. The strategic plan allows you to […]
This episode of the Serviced Accommodation podcast is all about Strategy, the episode is split into two parts and this first part covers what Chris and Ritchie learnt in strategising for their previous businesses and how it can apply to your serviced accommodation business. Making sure you are doing ‘the right things in the right […]
In this episode, Chris & Ritchie look at the best methods for managing your properties to maximise the revenue. Basically they tell you how to make more money, and who doesn’t want that from their properties?! From pricing research methods, to seasonal or weekend pricing plans, plus that all important last minute pricing. If you […]
In this episode we talk about VAT (Value Added Tax), an area that so many people in Serviced Accommodation get wrong. No Ritchie this week, so Chris takes you through ways that you can legitimately reduce your tax bill! We will also cover the things you shouldn’t be doing to avoid VAT in your serviced accommodation […]
This week we have an interview with Heather Gatrell of HGI Insurance. Listen in to find out all about insurance involved in Serviced Accommodation letting and why a broker might be important for your business. Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new […]
In this episode we hear a recording of the talk that Chris gave at a serviced accommodation conference about one of their favourite models; Hands Off Hotels. Who in the accommodation market wouldn’t want to own a hotel? In this 45 minute talk, Chris will convince you it isn’t that difficult to own a hotel. From […]
Following on from our episode on Monday on what should be in your welcome books, we have an interview with Henry Bennett of Your Welcome. Listen in to find out all about their business and the Your Welcome Tablets they are using to help you increase your revenue streams. Show Notes: The Serviced Accommodation Podcast […]
In this episode we delve into the welcome books that you leave, ready for your next customer. What is the first thing they look for in them, what should be there, and what cannot be missed? Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed […]
There are many different business systems that can help you in your serviced accommodation business. Here is a list of our top 5 business systems: Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga aimed at new and experienced property investors alike. With each show we […]
Wondered what type of property to use when starting your Serviced Accommodation business? Looking to expand and what to try a different type of property? The team takes you through all the different types of property you could use; as well as the features, pro’s and con’s of each. Show Notes: The Serviced Accommodation Podcast […]
Chris and Ritchie run mentoring groups across the UK, and from those there are many questions that we think you could benefit from. Have a listen to hear their Top Five Tips from the latest mentoring group. Show Notes: The Serviced Accommodation Podcast is a show brought to you by Chris Poulter and Ritchie Mazivanhanga […]
Happy customers equals a happy business! Finding the right customers for your serviced accommodation business is key, and there are many different customer segments that can be targeted. In this episode we explore the different customer segments, how to target them and what’s important to each group…. A clue: GOOD WIFI!! Show Notes: The Serviced […]
Residential tenants are heavily protected by law, and even if they violate the tenancy agreement, it can be a long and costly process to evict tenants from your property. Many landlords have been stung by this, and as a result are extremely wary of who they hand possession of their property to. One of the […]
PLANNING FOR SERVICED ACCOMMODATION – THE DEFINITIVE GUIDE Planning for serviced accommodation probably causes more online and offline debates than any other area. As a confusing and poorly understood area, it’s probably no surprise that people have such strong opinions that aren’t necessarily backed up by facts! We feel it’s important to have an accurate […]
Reviews are vital to your serviced accommodation business: get great reviews and you’ll get more bookings and be able to charge more, get poor reviews and guests will start to dry up. Despite this, most serviced accommodation operators don’t have a strategy around review management! To listen to the podcast, please click play at the bottom […]
In the first episode of The Serviced Accommodation Podcast we talked about the different models of ‘Rent to Rent’ Serviced Accommodation, and how they can benefit you. To listen to the podcast, please click play at the bottom of your screen, or keep reading for the accompanying article… The Four Models of Rent-to-Rent Serviced Accommodation […]