Working mum makes £7K a month from rent-to-HMOs in London

winners on a wednesday

Working mum makes £7K a month from rent-to-HMOs in London….

Property has done so much for Marcia Johnson. She lives in leafy Surrey, drives a drop-top Mercedes and is about to build her dream house near a beach in Gambia. And yet the single mum started out with so little. At one point she found herself unemployed with a string of failed businesses behind her until discovering the rent-to-rent strategy. Helped by Samuel Leeds’ training, Marcia today makes around £7,000 a month from a portfolio of nine rent-to-HMOs in South West London. Recently she even bought one of Samuel’s houses to convert into a house-share.

‘I kept believing I can do something great’

Marcia used to put up motivational slogans on the wall of her council flat when she was a young mother looking after her son. As soon as he was able, she made him read them too. 

Either we will find a way, or we will make one,’ was one saying. Other favourites, which she still she recites regularly, are: ‘Your attitude dictates your altitude’ and ‘Imagination is everything.’

They keep her going – not that Marcia needs to be motivated. She has always been driven. The father of her son died when she was still in her teens, leaving her to raise their child on her own.

“I didn’t have a mum and dad. I just lived for my son, and I kept believing I can do something great,” recalls Marcia.

Through hard work, she was able to support her son and her other children when they came along. It was when she had a property some years ago in Putney that she first become involved in renting out accommodation. Rather than letting it to a family, Marcia realised there was more money to be had by renting out the rooms individually.

Some 20 years later someone mentioned the rent-to-rent strategy to her and suggested she would be good at it. 

By this time both her cleaning business and a restaurant, which she opened, had collapsed and she had been let go from her job as a lettings manager. 

“I think it was a combination of things. I could feel it coming and I just wanted to get out. It was like a suit that wasn’t fitting me well. I used to sit at my desk and see this woman swan in, saying she wanted to see this and that for her client. Then she’d jump in a Range Rover and zoom off. 

“I’d be thinking I want to live like that!”

Now Marcia is the one pulling up in her sporty Mercedes AMG line with the top down. Recently, she also moved from Streatham in South London to Surrey, England’s most wooded county.

“It’s really lovely there. My kids have grown up. The last one left home. He’s 19. I had to downsize. So, I just got an apartment there,” explains Marcia.

She set up her property business five and a half years ago, teaming up with a joint venture partner to obtain her first rent-to-rent. 

“I got that one in the first three months of setting up the business through an agent and with a JV partner who had more experience in the rent-to-rent arena. He walked me through that one and did the introduction with the estate agent. Because I didn’t have references, they charged me a bit more on the deposit.”

With administration fees, the bill came to £8,000 which she found mainly from savings.

“I have got to credit my grandmother. She had this little house in Jamaica which was riddled with termites. My whole family was saying to me it’s not worth anything. Just leave it.”

Instead, Marcia spent seven years dealing with the probate and other paperwork so that she could sell it. 

“I even had to fly to Jamaica. Eventually that’s where I got my money from.”

winners on a wednesday

Portfolio consists of 45 units

After taking on her first rent-to-rent, Marcia says she has never looked back. The agent introduced her to the landlord of another property nearby who offered her two more as well. She took those on too, plus two others from the agent she was dealing with. 

Then, one of her handymen introduced her to the landlady of a flat who was looking for someone to rent it out for her as she was a doctor and too busy to manage it herself.

“I always tell my handymen, look out for a property for me and I’ll give you a referral fee. It was a decorator who introduced me to her.”

The flat required renovation, so Marcia sprang into action. “I put down a new floor and did a little upgrade. I got it for a really good rent, and no deposit because of the work that needed doing. I’ve been dealing with that one for about three years.”

She now manages a total of 45 units. The income fluctuates, she says, but across her portfolio it averages out at £650 to £700 per property. 

To assess whether a deal is good or not, Marcia studies how much she can get for each room, erring on the side of caution to make sure she doesn’t lose money.

“I always go for the lower estimate of what I can get, add those up and then take away what I think is going to be the expenses on top of the rent. What’s left is your margin, and you have to decide what is the minimum you want to make.”

Part of her expenses is providing cleaners every fortnight to make sure the properties under her control are well looked after. That is one of many benefits to the owner of allowing someone else to rent out their house or flat at a profit, she points out.

“Most landlords are working, or they’re retired and want to spend time with their family. If they’re working in demanding jobs, it can just be a bit too much to rent out the rooms themselves.

“What I love to let them know is it’s a free service, unlike with an estate agent where they are going to charge them a fee. When a property is empty with an estate agent, you’ve still got to pay your mortgage. 

“We look after the property. There are regular inspections. You know how much is coming in every month regardless of whether it’s empty or occupied. 

“We reference the tenants and make sure they’re keeping it up. We have all the hassle of marketing, viewings, getting them in, contracts and all the compliance stuff. The landlords just look at their bank account and say, ‘Yeah Marcia’s paid me again.”

Her business is registered with the Property Redress Scheme, which offers protection to consumers, and she also has indemnity insurance. 

Rising energy costs have been a concern to her in recent months. She has been negotiating with energy providers to reduce their charges and will also be encouraging her tenants to minimise their consumption.

However, as bills are included in the rent, Marcia agrees with her mentor Samuel that if they go up it is reasonable to put up her charges too.

All but two of her rooms are currently unfilled. She puts that down to her policy of requiring tenants to give two months’ notice if they wish to leave.

“It means we’ve got a lot of time to organise ourselves. We’ve taken good pictures from the jump on the majority of the rooms. So, they’re always ready to go and we just get them out there on the usual platforms.”

Marcia employs someone to advertise her accommodation on SpareRoom and is about to take on a lettings manager too.

Despite her background in property, the entrepreneur has spent thousands of pounds on training with Samuel Leeds. She followed the Property Investors’ founder on YouTube and was attracted by his ‘energy and positive mindset.’

Samuel’s story of how he started out in property at the age of 17 and overcame hurdles to succeed also resonated with her.

“Then I got his book, Buy Low, Rent High. It was just very engaging. He’s from a humble background like myself. And he’s just straight to the jugular. I like that. No messing about.”

She enrolled on the training after buying one of seven houses which Samuel was selling off last year.

“I just thought what more could I learn. Let me expand my learning. Even with rent-to-rent you need knowledge. You cannot just rock up and say I’ve got some money. I’ve found some property to rent. There are so many moving parts, so many things that can go wrong.

“I’ve fought so many fires in my business. I’m managing about 50 people. Even on the way here today [to this Winners on a Wednesday interview] a boiler was down, and a toilet seat was loose. You’ve got to know how to deal with that and keep up with changes to legislation that might affect you.”

Marcia had to borrow £3,000 and give up some of her jewellery to fund the house purchase from Samuel. She has now repaid her backers and refinanced the property, pulling out about £7,000 from it.

“I’m thinking of buying another one nearby. I’ve already got the management team in place to handle that as well.”

Marcia admits having an empty room keeps her awake at night because she has to pay the landlord their rent whether it is vacant or not.

“There is an element of risk but he who dares wins. If I didn’t take that risk, I wouldn’t have been able to buy that property. I wouldn’t be looking for my second property now.

“Also, I wouldn’t be looking for land in Gambia right now to buy for my dream home with a pool – or my dream car.”

Marcia mitigates the risk by always carrying out due diligence before any investment. The rewards for her, however, are more than worth it.

“During the pandemic I was in Barbados for two and a half months. I don’t want to sound bigheaded, but it actually happened because I had my team here and I was able to run things remotely. Isn’t that part of the dream as well?”

Marcia adds: “I had so many years of going without. I was a pregnant when I was 16. One of my raisons d’être was, I’m going to show everybody. That’s not the end of me. I’m a winner. I made a mistake but I’m a winner. 

“It’s never gone away. I just want to keep winning.”

winners on a wednesday

Marcia’s tips

  • If you really want to be successful at anything, see it and believe it. 
  • Don’t think it’s a cushy number. A few months ago, I was down on my hands and knees soaking up mud and dirty water when one of my flats was flooded because I wanted it done as soon as possible. You will work hard. 
  • Yes, there is risk, but you’ve just got to keep going and put the hours in.
  • Do your own research. The information is out there. When I was coming up, we didn’t have the internet or social media. I had to overcome so many odds without having that kind of ability to network. You’ve also got access to gurus. I started messaging Samuel on Instagram and he responded. There’s nothing to stop you.

Samuel’s verdict

Marcia’s story is inspirational. She organically fell into multi-room renting and now she is looking at other strategies, as well as setting up a maintenance company which will give her another income stream. I look forward to seeing her continue to prosper.”

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