Financial Freedom Challenge in Ireland With £0.0
Multi-millionaire property guru Samuel Leeds here. I recently embarked on yet another financial freedom challenge. A man named David from Ireland invited me to live with him for a week to help him make money through property. And you know me, I love a good challenge, so off I went. Due to the pandemic, the plane was empty, as was the airport, where David was eagerly waiting to pick me up.
David's home was about 30 minutes from the airport. When we got there, his mom and dad gave us such a warm welcome, and I immediately felt at home. “Why did you want me to come to your house?” I asked David, getting right to it. He explained that he had big dreams for himself, but life wasn't going as planned to the point of being unemployed and living with his parents. “I really need to be financially free,” he said.
In response, I suggested that we first look around the area and see what properties, if any, were available. But I was already facing some hurdles. There was no spare room, no Wi-Fi, and no Rightmove, i.e., one of the UK's leading property websites. And most of all, I didn't know anyone in Ireland, I had no clue about the property market, and David had no money.
Day One of the Financial Freedom Challenge
Goal: talk to various agents in Londonderry, find properties, and close rent-to-rent deals.
Day one of the FF challenge kicked off with a delicious breakfast that David's mum prepared. I also phoned Amanda, who was at the time pregnant with our third child, to update her on everything. I introduced her to David's mum, who had bought a blanket and other gifts for our unborn baby, which for sure made Amanda's day. She was curious how we'd go about finding rent-to-rents in the middle of nowhere. “We'll see what we can do,” I told her before saying our bye-byes.
“Why do you want to move out when your mum is so amazing?” I teased David as we headed into town. I asked him to fill me in on the property market in Derry, which is quite beautiful. I learned that there was a university in the area, which inspired hope that there was an opportunity for David to make passive income through rent-to-rents. The reason being, anywhere there is a university, you'll have students and professionals looking for a place to live hence a market for HMOs.
As soon as we got into town, we hit the ground running. We first spoke to a letting agent near the university who informed us that the surrounding area was great for renting rooms, but only to students and during the academic calendar. What this means is, when students go on holiday, a lot of properties are left vacant. So for an extended period each year, some landlords don't make any money through rent. And this was a niche David could fill.
After phoning several other agents, I noticed how friendly they were. It made me feel even more pumped to visit other letting and estate agents. The agency we went to next only allowed one person at a time, meaning David had to go in alone. The interaction was a success for various reasons, including:
- They understood the concept of rent-to-rents and were willing to give us properties.
- There was a potential 5-bedroom HMO available.
- They would allow us to view one of their properties that same day.
- They were okay with us filming.
Our First Viewing of the Day
As we made way to our first viewing, I couldn't help but compliment David for landing us the viewing. “David you're good at this. You're smooth … I think you've just got a real natural way about you,” I told home, giving credit where it's due.
Right next to the property we were scheduled to view was a property for sale priced at £147,500. So as we waited for the agent, I made calls to several agents claiming to be buying property in the area and was looking for help with letting. And like the first agent we visited revealed, they all said the student housing demand is high during specific periods. At the time, the student market was low, and the next peak would come in August.
“What do you think we should do?” asked David. In response, I threw out a couple of suggestions:
- We offer the landlord guaranteed rent each month as they're more inclined to accept since they're not receiving any rent at the time.
- We enter into a long-term agreement, say five years, but at a bargained rent.
- Convert the property into an Airbnb when the students are on holiday.
Shortly after, the agent arrived and let us into the property. I particularly liked the house because of its proximity to the university. Moreover, it was fully furnished and had at least five rooms we could rent. These are the rough estimates I came up with for renting the property:
Monthly rent for each room: £325
Monthly rent for all five rooms: £1,625
Expenses: £350
Monthly rent to the landlord for the entire property: £775
Profit: £500
However, David wanted to pay even less, so here's what we need to find out from the agent:
- Can we legally have five tenants living on the property?
- Can we offer the property as a short-term let?
- What's the lowest rent we can negotiate for the house if we could guarantee rent for four years with no voids or late payments?
The agent couldn't give us the answers we needed, so we scheduled a meeting with the property owner later that day. I made sure to remind David that “please” and “thank you” go a long way in establishing a cordial working relationship. So we thanked the agent for showing us around despite the short notice.
Londonderry Market for Serviced Accommodation
For us to avoid void periods each year thanks to students breaking for holiday, our focus was now not only on rent-to-rents but also serviced accommodation. We needed to research the current state of the serviced accommodation market in the area. David was concerned that due to COVID-19 restrictions, Airbnbs would not be operational. But I set his mind at ease when I showed him an entire house, which was at the time, booked out until April!
“Honestly, I never knew that,” said David, who was shocked that serviced accommodations in Derry were on demand during the pandemic. So assuming we charged £40 a night, that would be at most £1,200 in a good month. Although the likelihood of being fully booked in a month is low, David can still make some money when students are away.
How About a Lease Option?
One of my concerns with getting a rent-to-rent in Derry was unless the property is already an HMO, getting a license as well as meeting other requirements would likely be a nightmare. Not to mention, David was looking for a place of his own. So a no money down lease option agreement I'd say would be more ideal for his situation.
For this, we'd require to find properties for sale or rent in Gumtree, call or email the owners and schedule appointments and viewings, preferably that same day. And that's what we did; I covered the properties for rent while David was on the properties for sale end. We got to speak to several property owners willing to discuss selling the property after a specified rental period. And David even managed to get us a viewing after finding a property owner on Facebook!
Appointment to Discuss a Rent-to-Rent Agreement
We had an appointment to see if we can get the house we viewed earlier that day on a rent-to-rent basis. Pierce, who we had the meeting with, was particularly open to the idea as that meant a guaranteed income stream regardless of whether the property had tenants or not. He also informed us that we could make up to £360 a month for each room, depending on the quality.
So Pierce was to forward the following offer to the landlord on our behalf:
- £650 guaranteed rent for the whole house.
- A break clause, allowing us to terminate the tenancy agreement should things not work out.
If the landlord agreed to our terms, all that would remain was for David to pay £1,300 for the deposit and one month's rent. That's to say he was looking at at least £500 profit a month. “Well done,” I said to David as we fist-bumped and laughed with joy. “I can't believe we got a rent-to-rent within half a day,” I remarked in disbelief, “mate, this is like an untapped area … no one is doing rent-to-rents here.”
At this point, I already felt like I could have just gone home, and it would have been a worthwhile trip. But there's more yet to come in our efforts to “change David's financial freedom forever.” Stay tuned!
