Property entrepreneur James Youell specialises in turning large rundown houses in his home town of Barnsley into HMOs and then refinancing and renting them out. His portfolio of five properties is valued at £1.3m and his future looks assured. Just one of his projects alone – the renovation of an empty 10-bed house share – is expected to generate a profit of more than £100,000 on the valuation and an annual income of £35,000. And yet it was a very different story before James, a gas plumber by trade, joined Samuel Leeds’ academy. His first ‘flip’ proved to be a disaster and he came close to packing away his tools for good.
‘Attending the Property Investors Crash Course was a lightbulb moment’
It was James’ wife who booked him on a £1 Property Investors Crash Course. He nearly didn’t go.
“Right up to that morning I wasn’t going. I said, I don’t need to. When I went it was just like bang, lightbulb moment. I came home and said we’re doing everything wrong.”
He then attended another course on the buy, refurbish, refinance, rent strategy, known as BRRR.
“I was hooked. I realised I needed to invest in my education because you don’t know what you don’t know. There were questions I didn’t even know I needed to ask that were getting answered for me. Then I joined the academy.”
That was in June last year and since then James has made huge strides. He likens the ‘property game’ to being in a corridor and having to break through one door after the other.
When he became an academy member Samuel Leeds was there kicking the door through. “I just walked through it, and I was like, oh that was easy.”
His journey in property began three years ago when he bought a property and flipped it into a house in multiple occupation (HMO). He took it on by himself and made ‘every mistake going.’
“I made it really nice, but I spent way too much money on it,” admits James.
Another problem emerged. The local council, he says, told him he didn’t need to get tenants in before an Article 4 regulation came in controlling the number of HMOs allowed in the area. All he had to do was finish the work which he did.
James tenanted the property, and it was going well until it came to refinancing the house.
“After I’d come to Samuel’s £1 event I thought, why am I paying a repayment mortgage? Let’s get it refinanced and pull some money back on it.
“When I did that, they wanted a certificate of lawful development and then the council declined it because our ASTs (Assured Shorthold Tenancy) didn’t start until after Article 4 [was introduced].
“I didn’t lose money, but I couldn’t keep renting it as an HMO. We had to drop it down to two tenants.”
James swore never to make the same mistake again. He came across Samuel Leeds and his training company, Property Investors, on YouTube.
“Every time I typed a question in, he’d pop up on a video and I thought this guy knows his stuff.”
Even so, before attending the crash course, James had believed he could go it alone.
“I’m a Barnsley man. I thought I’d do it myself and that does not work. You’ve got to have people helping you.”
That was certainly true of his first property. With the help of the academy and solicitors, James did some digging and found a loophole. He discovered there was a classification which would allow him to hand it over to an assisted living company providing residential care for the elderly and disabled.
“They will rent it off me for a fixed amount, completely hands-off. We can then refinance it and pull our money back out of it,” explains James.
From being lumbered with a property which he couldn’t let as an HMO, another door had opened for him.
“We’re looking forward now to moving on that one and that might be a strategy we look at doing permanently because we’re building a relationship with this assisted living company. It means we can start buying them in Article 4 areas. We can kit them out as an HMO and then hand them over to this assisted living company.”
‘We’re looking at a Gross Development Value of about £600,000’
After James joined the Property Investors Academy, he sold two deals. “It took a lot of time because it’s not as easy as you think it’s going to be to start with. But I got the training and made some quick cash.
“But then I thought I need to specialise in what I want to do and that’s BRR to HMO. So, we started investing into that.”
James had some money from when he was a gas plumber with his own business but realised it wouldn’t last very long.
“When I did Samuel’s Never Use Your Own Money Again training, I realised there are investors out there who will happily invest their cash into deals when you’re guaranteeing them returns and money back.
“Since then, it’s just blown up and now we’ve just completed on our fifth one which is about to start in three weeks with the refurb.”
The conversion of his 10-bed rental property is at the halfway stage and promises to deliver a bumper return on investment once it is refinanced, he says.
“Even fully managed we’re looking at a 1,050 per cent ROI. It’s nearly full money out.”
The purchase price was £275,000 and the refurbishment is costing £60,000. Once completed, he expects the house to be worth £460,000, based on conservative figures.
Explaining how the BRRR strategy works, he says: “We generally buy properties at a low value when they need a lot of work, so we can add value.
“We’ll approach a lender when it’s completed. They’ll send a new guy out to value it. We kind of sell it back to the lender and they’ll release us 75 per cent of the total value. It’ll pay off all the refurb money minus £5,000.”
He adds: “It will leave 25 per cent in the deal on a standard HMO or commercial mortgage. We’re looking at a profit of about £35,000 a year. We usually knock off about 40 per cent for bills.
“We make them really well – it’s insulated and has a good high efficiency heating system. I’m a gas plumber by trade, so I know what system to put in to try to keep bills down.”
James is carrying out the work as part of a joint venture. An investor is putting in the money, while his contribution is the ‘sweat equity.’
The investor will receive a minimum of 75 per cent of his money back on the refinance, according to their contract.
“If for any reason it got down valued, which is very unlikely, he gets a larger percentage –
75 per cent of the rent income.
“I’ll manage it and do any repairs until he’s got 75 per cent back and then we split it. The investor’s covered every which way. They can’t possibly lose out but looking at the figures he’s due to get his full money back in less than eight months.”
There is a risk element, he concedes. His risk is wasting his time. He is up late at night ordering materials and organising the project, and is hands-on most days.
The investor, meanwhile, risks losing his money but has nothing to do other than wait for his return.
James met him at a Property Investors Academy dinner on his first day. He happened to sit next to a student who had signed up at the same time. He told James he wanted to invest in HMOs.
“I said to him if I get any good deals, I’ll throw them your way if you want, so he said yes. It was during that time I started looking at this property. Once I’d learned how to run the figures and get my ROI sheets together it didn’t matter which way I put it down, it just kept coming out as a fantastic deal. I showed it to him, and he said I’m in.
“Since then, we’ve done another together, so we’ve got two going at the moment. On the GDVs (Gross Development Value) with both of them we’re looking at about £600,000.”
Coming from a council estate, James says he has to pinch himself sometimes because these figures seem surreal to him.
“I can’t believe we’re in this situation, but then my wife says we’re in this situation because I’ve put so much time and effort into it.”
‘Every day is a school day’
James’ portfolio now consists of 29 units including a six-bed HMO on four floors with en suites in every room which is about to be completed and will again be refinanced. He is also looking at buying another two properties this year which are already classed as HMOs.
James believes the strategy is one of the most difficult to get to grips with because of all the regulations in force. It is why training is so important, he says.
“Even now I’m on my fifth one I’m still learning tricks to make it happen quicker and easier and to get better returns. Every day is a school day.”
When James was refused a certificate of lawful development on his first house flip, he was warned he could face a fine of up to £30,000 if investigated.
“When that happened, it was before I joined the academy. I was teetering on the edge of just thinking, I’m done with property. I’m going to go back to plumbing because I was earning good money.
“But I was working very hard for it, and I knew there was going to come a time in my life when I couldn’t do it any more, when my knees packed in or I wanted to retire. That money would have just stopped unless I’d built a plumbing and heating business up.
“I started to employ people. But I soon realised that took more time up than it did actually doing the work. I thought its very difficult to make that a hands-off business.”
Eventually, James wants to hand over his HMOs to management companies so that he can take time off and go on holiday with his wife and children – or just sit at home if he wants to.
“I’ll probably never do that, but I’d like the opportunity to be able to do that. For me that’s it with property. If you do it right, it’s very passive. It takes a lot of work to start off with and you need people in your corner. You can’t do it alone.”
A mentor gave him invaluable advice at one point on removing a problem tenant. It has also been ‘fun’ and given him a network of friends, as well as speeding up his progress.
“The position I’m in now, I think it would have taken me another 25 years to get there and I’ve done it in eight months. The investment in the academy was the best thing I’ve ever done.”
- The key is to get the knowledge and get people around you who are going to help lift you up.
- You need successful people to pull you up quicker.
Samuel Leeds’ verdict
“I’m over the moon at James’ success and grateful that he has shared his golden nuggets on my Winners on a Wednesday series on YouTube. James has been so popular we’re going to put him in a mentor box. We do that at every programme for anyone who’s struggling to have one-on-one time with a more experienced person.”