A year ago, Dr Declan Murphy was working all hours under the sun as an NHS eye surgeon. Then he joined Samuel Leeds’ academy to learn about property investing. Now he has reduced his hours and supplements his income by renting out serviced accommodation in the north east. Recently, he branched out into providing emergency housing for vulnerable people, including asylum seekers. His latest rental is a 30-bedroom converted care home which is set to generate a profit of £15,000 a month.
‘Making my old wage is offensively easy in property’
When he was working full time as a doctor, Declan was earning around £2,300 a month. That was after paying his student loan and tax. In property it is ‘almost offensively easy,’ he says, to replace that kind of income. He already has.
In February, he stepped back from his medical career and breathed a sigh of relief. As a surgeon, Declan had a punishing schedule. He worked a basic 40 hours a week, but in practice the job took up far more of his time.
“I’d stay late at the hospital to practise simulation surgery, then go home and write research papers. Then also you’re trying to develop your clinical knowledge and all of that’s unpaid. It was just exhausting.”
It ‘blows his mind,’ looking back on what he was earning.
“It’s a reality that not many people who apply for it are aware of. In the UK, we have this perception that you shouldn’t be doing it for money, but you need to be paid for what you do.”
Declan studied medicine for five years and has four degrees. Two of these he completed during his training. After graduating, he was left with a university debt of £80,000.
Brought up on a council estate, Declan hoped when he was applying to study medicine that it would lead to a career where he could support his parents who still rent a council house.
To then be struggling financially was a bitter pill to swallow, especially as he had secured a job that was hard to get.
“People assume you’re making at least double what you’re making. I was on £42,000 [a year] as a trainee ophthalmic surgeon.”
Declan realised it was no longer where he ‘wanted to go.’
Many of his friends, he says, are similarly exhausted and burnt out. “I think most of them want an exit plan. No one’s going into medicine with the intention of that being their long-term career anymore.
“But taking that jump from something that you’ve committed to for so long is really quite difficult.”
They have already expressed an interest in investing with Declan, having seen how well he has done in such a short time.
After finishing his property training, he adopted the rent-to-serviced accommodation strategy and has since also clinched lease options to build up a portfolio of five properties.
Lease options give Declan the chance to own property
Declan applied the same work ethic to his business, as he did with his job. Any spare hour was spent trawling Gumtree, OpenRent and Facebook Marketplace for deals. The sites were accessible round the clock which suited his routine.
“I haven’t used estate agents as much as other people because I didn’t have the time from nine till five to make calls.”
The fledgling entrepreneur would go to view properties on his Saturday off.
“A component of my job, as well as doing the eye surgery, was research which gives you a bit more flexibility. I had two days a week of doing research. I was fortunate there. I’d spend my evenings writing up research papers and could give myself a morning to try to do some property stuff.”
Working from home meant he also didn’t have to travel.
His serviced accommodation bundle includes two properties which have lease option agreements attached to them, giving him the option to buy them down the line. One is a four-bedroom house in Gateshead and the other is a two-bed flat in Blyth, a coastal town in Northumberland, just north of Newcastle-upon-Tyne.
His guests are mainly construction workers employed on the plethora of building sites springing up in the centre of Newcastle. The creation of wind farms in the county has also increased the demand for temporary accommodation like his.
The power of lease options, says Declan, is that you can take on a property without having to put up much money, and you have the exclusivity to purchase it in the future. In the meantime, you benefit from the cash flow from renting it out.
“You also look at the market research and hope that capital appreciation comes with it and then you’re technically buying below market value.”
From the seller’s point of view, a lease option arrangement can solve a problem. The owner of the apartment under his control was in negative equity. Had the owner sold it, he would have been out of pocket. The property was also a liability to him because he had experienced issues with tenants.
“I was able to say how about my company takes it on. Here’s my credibility based on what I’ve already done. So let me purchase it to solve that negative equity problem.”
Declan pays the landlord a guaranteed monthly rent and maintains the furnished flat which he found through Facebook Marketplace. In return, he is allowed to rent out the place and make a profit from it.
The agreement, which expires in four years’ time, was drawn up by solicitors to protect both parties. If for any reason, Declan defaults on the rent, he can be kicked out in a week.
His main way of finding a lease option is through post auction, direct to vendor letters, he explains. The method involves identifying properties which haven’t sold after two to three cycles of being put up for auction.
Declan sends the owner a letter and suggests meeting up for a chat as he may be able to help them.
“It’s brought a lot of leads and I’ve had many conversations where I’m hoping to secure more through that.”
While the property is being rented out, he can either save the money for a deposit, or take out a bridging loan when the time comes to buy it. Another possibility is to add value by improving it, using investor finance, and then buying it before the lease option expires.
“It’s like an umbrella where you can utilise all the different strategies within that but without having to put a huge amount of money upfront.”
Ex-care home fits needs of asylum seekers
From beginning with small deals, the surgeon-cum-businessman has moved on to tackling far bigger ventures.
The former care home, which he took over on a five-year commercial lease, is a 30-bed HMO with 12 shared bathrooms in Middlesbrough.
“I was offered the potential for a lease option but it’s not in an area where I would want to have ownership over the property.
“The net profit that one will bring in is about £15,000 (a month).”
Declan found the block on Rightmove. The landlord had been trying to rent the rooms out separately as student lets for some time without success. Sensing an opportunity, Declan asked the agent if there was scope to take on all the flats together.
“I thought maybe I can be the one person who can provide a solution here because they’d been trying to rent them for ages. They missed the student market as well in September. So, all the students at Teesside Uni had already got their accommodation.”
It might seem like a big risk to take on a large block of rooms if you then can’t rent them out. But Declan had done his groundwork. For the past nine months he had been fostering relationships with social housing providers in the north east.
Over a coffee with employees from various organisations, Declan explained that his aim was to provide high quality accommodation for vulnerable people, a cause close to his heart.
During these conversations it emerged that the Home Office has a ‘big pot of money’ allocated to it by the government to fund emergency housing for asylum seekers. That funding is then distributed to social housing groups co-ordinating the accommodation.
It was the perfect match. Declan acts as the middleman, dealing with all the contracts, as well as the cleaning and maintenance, having learnt how to systemise the operation.
“It’s basically a rent-to-rent. I’m giving the landlord market rent which he would not be able to achieve from anyone else on a 30-bedder. So, he’s making fantastic money – about £120,000 a year [on a property] which was sat doing nothing – and then subletting it to a large social housing provider.
“That one is £47 per night per room. That’s a below market rate for serviced accommodation but you get the occupancy.
“It’s on a commercial lease with the landlord and then the social housing groups have their own specific contracts.”
With the help of his solicitors, he negotiates the contracts to make sure ‘everyone’s happy.’
A library is being put in the building which will mainly be occupied by asylum seekers to help them learn English and integrate into society.
It is a perfect solution all round, Declan points out. “The Home Office has a pot of money. They need to utilise it. We have these people by international law who we need to protect and house in high quality accommodation. But dealing with a massive, serviced accommodation unit is not what these social housing groups want to be doing.
“Equally the landlord can’t be bothered with all that hassle. They need 24-hour security and 24-hour maintenance. The landlord wants a good, guaranteed rent. I’m happy to deal with all the headache, but then take a fee in the middle.”
Declan is also trying to negotiate a lease option agreement on a block of 59 ensuite rooms spread across 12 apartments. The owner of the block wants to sell it within five years. The entrepreneur is therefore hopeful of pulling off the deal.
“They want £35,000 a month for it. The number make sense at that point. If it’s a commercial lease I’m happy with that. It gives you that time where maybe you’ll take it on as a commercial lease over five years but at 12 months [you can say] let’s negotiate. Do you want to sell in the next four years and then convert it to a lease option?”
Enrolling on Samuel Leeds’ 12-month academy programme was essential in giving him the knowledge and support he needed to create a sustainable property business.
“Even when I was trying to secure a three-bed house on a rent-to-rent there’s no way I would have been able to have legally ticked off all the boxes and had the right contracts in place.
“When you’re trying to do large things creatively, having a variety of people with different experiences to bounce ideas off, and for them to say this does make sense, is invaluable.”
Declan is now working two days a week on average as a locum doctor. The rest of his week is spent looking for more apartment blocks which he can take on. He hopes to also accommodate homeless people with specific healthcare needs.
His end goal is to set up an international charity, providing free health care, including cataract operations in regions like Sub-Saharan Africa to help people live a productive life
Declan’s tips
- Initially you get a lot of no’s but you just have to push through that.
- You can improve people’s lives by providing high quality accommodation and making a profit from it. You can do a lot of good.
Samuel Leeds’ verdict
“Declan has achieved so much and he’s passionate about setting up health care for people who can’t see very well or not at all. I love that vision.”
