Property Investors student builds a portfolio of 8 BRRs in 2 years….
Rugby fan Ben Jones sacrificed watching England in the world cup final to attend a Property Investors Crash Course. His commitment paid off after he followed that up by joining the academy. Two years later he is about to complete his eighth buy, refurbish, refinance project in Liverpool. Once it is finished, the rents from the properties will generate around ÂŁ110,000 a year. Remarkably, Ben has built up the ÂŁ1.3m portfolio with a friend while holding down a full-time job.
âI was over reliant on a jobâ
For over a decade Ben depended on his salary, working as an engineer in a contracting business. Then in 2016, a downturn in the market led to him being out of work for six months, and then again for the same period in 2019.
It was at that point that Ben recognised he had been over reliant on a job. He read a book about building wealth through investing in assets, such as real estate, and then searched for a course to give him some ideas.
After googling âproperty course Londonâ, Samuel Leedsâ named appeared at the top of the search results, along with details of his free crash course.
Straight away Ben booked himself on the first event available, not realising it overlapped with the rugby world cup final taking place that November.Â
Ben recalls: âIâm a big rugby fan. I didnât know England would be in the final but as it turned out they were. The course was on a Friday and Saturday. Samuel let everyone know that to get anywhere youâve got to be committed. I really wanted to watch the game, but I cancelled my plans and came to the course on the second day.â
Ben says he made the right choice. âThe crash course was at Earlâs Court, with about 1,000 people there. I thought it was powerful that Samuel was able to attract that size of audience and felt there was a lot of value in it. I liked what I heard and thatâs why I signed up to the academy that weekend. It gave me a great foundation.â
By now he was working again and could afford to take up training with Property Investors. He also saw it as an opportunity to meet new people and pick up ideas from their deals.
âItâs given me a great network and Iâve also completed the property development course. Iâve really enjoyed it.â
Ben studied the strategies available to property entrepreneurs to make money in the housing market. Afterwards he started looking for a patch where he could put his knowledge into practice.
Properties in South West London, where he lives, were too expensive, so he headed north to Liverpool where he could get a much better return on investment.
âOne of the houses in our portfolio is worth ÂŁ90,000. It makes ÂŁ600 a month in rent. If you times those numbers by ten, there are lots of houses near me for ÂŁ900,000 but youâd never get ÂŁ6,000 in rent,â says Ben.
Liverpool appealed to him particularly because he felt the city had âsomething about it,â with its universities and football teams. There was also lot of development going on which made it an excellent hunting ground for investors like himself.
“We were in the right place at the right timeâ
On one of Samuelâs Discovery Days at his house he suggested Ben should recycle his money rather than sink ÂŁ100,000 into two buy-to-lets which would give him a minimal profit. So, Ben began knocking on agentsâ doors with his business partner to try to secure a buy, refurbish, refinance deal.Â
If he could find a run-down house and buy it at a knockdown price, he could renovate it and push up its worth. Then the property could be remortgaged to its new value to give him funds for another deal.
By chance they found an agent who was helping a client to buy a portfolio of 50 properties. They were in the hands of a receiver and the buyer wanted to sell some of them to release cash for refurbishing the remaining stock.
âThey were really dilapidated. She needed a quick sale as I think sheâd bought the whole portfolio using some sort of finance. So, it was quite expensive to her. She was really motivated to sell, and we were motivated to buy. We were in the right place at the right time,â Ben explains.
Initially, Ben and his business partner Mike pooled their money to buy three of the properties for just under ÂŁ40,000 each to avoid paying stamp duty. The asking price was ÂŁ40,000 but Ben managed to negotiate it down to ÂŁ30,950 which saved them ÂŁ3,600.
They spent around ÂŁ30,000 on refurbishing each one. Once the work was finished the end valuations came in at ÂŁ85,000, ÂŁ90,000 and ÂŁ92,000. After all the fees were paid, it meant they could pull out 95 per cent of their money. They then repeated the process until they had acquired eight properties.
âThe eighth one isnât tenanted yet as the refurb is still ongoing. Once that is complete the gross rent annually will be about ÂŁ110,000. The profit is roughly 50 per cent,â says Ben.
âPulling the trigger was hardâ
One of the biggest challenges for Ben and Mike was pulling the trigger when it came to purchasing the three properties. They wanted to achieve an end valuation of ÂŁ90,000 but other comparable houses in the area were selling for less.Â
Doubts set in and they worried their margins might be too low. However, they decided to go ahead. As the seller wanted to move quickly, they had to act fast as well. Â
âThat was one of the biggest things â learning to move quickly and make decisions. Youâve got to be decisive otherwise youâre going to miss the opportunity,â says Ben.Â
He adds: âThe builderâs quote came in pretty much on the money. There were a couple of little variations but nothing major. He started when he said he was going to start and finished when he said he would. It was ideal.â
The sale went through in early September 2020 and three months later two of the three properties were tenanted.
As they had owned them for less than six months, there were only a handful of lenders they could apply to for a mortgage. When the valuations came in, they were told each property was worth what they had paid for it, plus the cost of the refurbishment â so ÂŁ70,000.Â
Disappointed with this estimate, Ben rang his mentor Samuel for advice. âI thought this canât be right, but Samuel said my expectations were too high, not on the value but on the timescale.â
So, they bided their time, having already bought their fourth property.
âWe had the money to do the fourth one. We werenât overly concerned in the sense we were still progressing. So, we just thought weâd wait until weâd owned them for six months.â
Their patience was rewarded when they were given a valuation of ÂŁ90,000 by another lender.
Ben acknowledges that whilst he is building wealth through forcing up the equity in a property, the cashflow could be improved.
âTake one of those ÂŁ90,000 properties. Weâre probably making ÂŁ250 to ÂŁ300 a month. It feels like a lot of time and effort for ÂŁ300 a month. But itâs nice that itâs sat there. It should be ÂŁ300 a month forever.
âYou need to do a mix of things. Weâre focused on BRRs now but maybe we need to think of some other strategies, like Samuel says.â
Most of their annual rent roll of ÂŁ110,000 will be coming from their HMOs but they began by having some single lets.
âIf you do your first one as a BRR HMO, youâre going to be limited to a certain number of lenders who do that. We wanted to make sure we had a couple of single lets first. It makes your life easier for the HMOs because youâll open up a wider group of lenders. Also, BRRs tend to be more efficient if theyâre a single let because thereâs less to be done to them.
âWeâve got a four-bed HMO weâve refurbed. The amount of money it takes to convert that is quite high relatively. We spent ÂŁ30,000 refurbing a two up two down. It can cost double that for an HMO because youâve got to fit things like fire doors, smoke alarms and en suites.
âYou could spend ÂŁ60,000 to ÂŁ70,000 converting not exactly the same house but not too far off and then you wonât pull all your money out.â
On the flip side, the HMOs generate more rent. Itâs âswings and roundabouts,â Ben concedes.
âOne of the properties we bought was an operating HMO. There is the potential to do it up and probably increase the rent.â
âDeal sourcing may come nextâ
When Ben and his partner were buying their houses in 2020, estate agents were warning that the Liverpool property market was about to crash. It left them feeling nervous. However, they were reassured by Samuelâs prediction that prices would rise which proved to be the case.
Ben also felt the situation with the coronavirus pandemic would be short-lived and there would be a solution.
âWhen we spoke to agents there was still quite high demand for rentals. We were targeting families for our single lets, rather than students whoâd gone home because of Covid, causing landlords to have voids. So, it didnât feel like it applied to us.â
Ben rejected pursuing other strategies like rent-to-rent and deal sourcing which produce âa fast pound,â because he believed he would just be creating another job for himself. Now, with experience under his belt, he is looking at deal sourcing as an option.
âWe want to think about getting into deal sourcing because youâre assessing deals anyway. A deal might not necessarily be appropriate for you, but it could well be appropriate for somebody else. But saying Iâm going to quit my job and make that my job, weâre not ready for that yet.â
They also have another property deal lined up in London.
âIt has got a lot of potential to flip. Itâs a loft conversion and an extension. It is similar to some of the stuff weâve done in Liverpool but itâs on a bigger scale. It feels like a natural progression. The work isnât that much different but because of the location it makes it much more lucrative.â
He credits his wife for helping him juggle his property business with work. They have just had a baby, and she also looks after their other children.
âSheâs helping me not have to put in time with the kids so I can do this. Obviously, itâs for us at the end of the day. Having a partner helps as well. If I go on holiday, Mike looks after things and vice versa.â
Benâs tips
- When youâre approaching an agent about a BRR deal, just be yourself and have a chat. We call beforehand to make sure there is somebody available to talk to us.
- Weâve found independent agents are more willing to think out of the box than the High Street ones.
- Iâve learnt you have to put the hours in and sometimes things can take a little time in property.
Samuel Leedsâ verdict
âBen has shown incredible commitment over the past two years. I remember saying thereâs nothing wrong with watching rugby, but youâve got to be rooting for yourself to win. Thereâs never a perfect time to start in property. You can either find excuses or get rich.â
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