Daniel Kennedy - £0 to £10M Portfolio in 8 Years

Hello and welcome to Investors Platform. Today's guest is a developer and HMO expert based in Birmingham, with a portfolio worth 10 million plus. Mr. Daniel Kennedy, thanks for coming on today, sir.

Hello, Joe. How are you, sir?

I'm doing very well indeed. Yeah, thanks. Thanks for calling on this sunny day. Um, I think it'd be brilliant. I can't wait for to dive into the podcast.

Yeah, it's a very comprehensive, uh, point of interest to talk through, that's for sure.

That's right. So I wanted to obviously talk about the portfolio that you built from scratch, 10 million pounds worth. Um, but the first question I wanted to dive into was, what did you actually do before property?

Well, prior to my property journey, I was very, very, very fortunate. From like, a really young age, I knew exactly what I wanted to do, which is a, which is a gift that most people don't have. And that was, join the military. I didn't quite know what I wanted to do in the military, but I, I just wanted to join. I had the unquenchable desire to join the the army. Uh, when I went to the careers office, they kind of directed me towards the combat medic technician. So I joined the Royal Army Medical Corps, did, uh, 12 years in there. And it, it kind of sort of leads on to property very nicely because I vaguely knew that property was a good business to get involved in, but not really knowing how to get involved. Uh, and I kind of wanted quite a lot more than the, the standard salary. I had like multiple scenarios where I was like, how, how is that person in, like, he's created more money in a day than I will ever earn in my lifetime? There must be a system or a game here that I'm not understanding.

And so I then started to really focus on how I could improve my income. And the military gave you incentives to learn languages. So I was like, right, which one can I earn the bloody most if I learn? And it was either Arabic or or Chinese. So I, I decided to start learning Chinese. And just by way of osmosis, I, I began to get a lot of friends who are Chinese. And those of you who don't know, the, the Chinese diaspora in the UK tend to be the, the rich sort of industrialists sending their children over to be educated. And they all having very different conversations. And they're all privately educated, where the, the conversations from the soldiers went from beer, women, and football to like investment, stocks, and long-term compounding growth. And I was like, okay, so this is probably how they're doing it.

It later turns out that was a horrible decision to make because I spent about four or five grand learning how to learn Chinese, only to get like a 30 pound pay rise. So it would have taken like 11 years for me to recoup what I had spent. But that was my first lesson in finance. Um, and then just, just by being surrounded by people who are taking a real proactive interest in their own financial future. And the key thing was, they were like, planning in decades and generations, as opposed to each year. Like, they were doing things today that they were going to get the benefit from in like 10, 15 years' time, expecting that the 20 years is going to pass and wind up, get yourself in a position where you're better than where you started. And that whole concept was completely foreign to me.

So no experience. And this is what I've, what I got from a video that you actually published, um, with the talking about your goal setting. And now you've actually got that 10 million. But no experience, no talents, no connection, no, no qualifications, just consistency and dedication. So is that originally how, how did you actually get started in the property game then?

Well, I, I signed on with one of the education companies, um, and I learned how to source from them. And I, I think, I don't know if it was luck or if it was just like divine intervention, but I, I got my first deal within a week. Um, and that was from knocking on doors because I'd spent some money to get on this course, and that put me in debt. And it's a very stupid decision to make at the time. Now that I'm a lot more conservative. And I needed to make the payment up by the end of the month because I just learned about how your credit file is really important and that you must guard it with your life. And then like the payment came out on the 27th, and I got paid on like the last working day of the month. So I was like, oh crap, I'm going to have a late payment on a credit card. My first month in property. What an absolute idiot.

So I had this real desperation of trying to not get that late payment. So I digested all the online material, and then I went to find my area. And I was really indecisive. I was like, oh, should I go here? Should I go there? And it was very much analysis paralysis. And I was like, is this a good area? Is that? So I was like, screw it, I'm getting annoyed with myself. So I just put my finger on the map, and it landed in Hartlepool, which is nine hours away from London. But the, the decision had been made. And I was really happy with it. So I drove up to Hartlepool immediately. And then I started knocking on doors. Initially, I was in like a suit, thinking I've got to be really, really present myself professionally. And I was getting really hostile reactions. And after like 50 doors, like the whole day, I was like, what's going on here? I'm obviously doing something wrong. I'm the common denominator here.

So I took responsibility. I said, this is my fault. What am I doing differently? And then I thought, ah, they probably see me as very predatory. So let me dress down. And I wasn't a builder at that point, but I am now. I said I was a builder. And I started knocking on the door, said, "Hi, I'm a local builder. I'm looking for work. If you know that any work that's doing, and you let me know, that'd be great. Um, alternatively, as we're builders, we also buy houses." And then I'd hand them like a, a just, it was just a, a scrap note of paper, and it had £500 written on the back, and then my number. "We buy houses. I said, if you put me in touch with anybody who sells, I'll give you £500." And I got a real positive reaction from that because I was trying to work collaboratively, rather than knocking on doors saying, "Hey, if you're interested in selling, I'd love to buy a house," in a suit. I got really negative reactions from that. As opposed to being the local guy around the builder, uh, everyone knows a builder, so there's familiarity. And then what really sort of like a force multiplier in building, um, rapport with people is when I'd mentioned that I was in the army. Because everyone knows somebody who's in the army, they were going to join if it wasn't for that injury. Like, that tends to be the, the initial story. It's a great in.

And I knocked on the door. I, I still remember the address, two Striker Street. And the first deal that I saw, again, it was a conk of errors. It's always been. Uh, every house on this road was like 40K, 42K, 40K. And there was loads of comparables. So I thought the GDV would be 40K. I knocked on the door, and the gentleman answered. He goes, "I am interested in selling, but I don't want to speak to you, uh, because I don't, don't know you." He was an elder gentleman. "But let me get somebody who can handle this for you." And then a gentleman came around, his name was Bob. And he handled everything for me. I don't even remember the vendor's name. I remember Bob's name.

And now the key thing here, Bob hadn't heard me say, "I'll give you £500 if you put me in touch and we do a deal." So Bob helped me negotiate the deal. We agreed £27,000. Wow. And it needed about maybe five, six grand. And I pulled that figure out of my bum because I didn't know any, any better. It just needed a spruce up. Now, again, I didn't have any money for the, the RICS survey because I tried to sell it on Facebook using my own name. But again, I have no credibility, no past experience. It, it, it's unrealistic to expect that people would hand over three and a half K for a deal that they, they didn't know. No one knew who I was. Nobody knew past experience. So I, I put it everywhere over Facebook, and no, no one was interested.

So then I, I got a RICS survey. But again, I didn't have any bloody money to do this because I had a credit card. But I did have, I borrowed my mum's car. So I pawned it at Cash Converters. Um, and then I had to stay in the property. I had to ask Bob, like, "Can I stay here?" Because it was like, half abandoned. And he's like, "Yeah, that's fine." He, I think he really appreciated the, the situation that I was, that I was in. So I stayed in this property for four days. After the, because the surveyor came around the next day, and the valuation came back. And it came back as a GDV of £60,000. And I was like, "H, £60,000? I don't understand that. Why the hell is it £60,000?"

Because at this point, I had somebody say they're interested, subject to valuation. And this gentleman's called Sven, was in Sweden. Never saw the property, but was buying cash in the North East of England because he liked high yields. And he agreed to pay me three and a half grand for the deal on the basis that it's 27, need six, and it's worth, it's going to be worth about 42. So when it came back and it was £60,000 pounds, I was like, "What, what mistake have I done?"

Now, across the whole terrace, and you can see this if you go on Google Earth, there's, it's a two-bed, two-bed, two-bed, two-bed. And then two Striker Street is a little bit higher, right? And I went upstairs, opened a cupboard, and there was a whole another floor that had been missed. It was a four-bed, not a two-bed. And I was like, "I've massively undersold this." And then I had a choice. I was like, "Do I cancel my deal and say, does Sven, I want more? Or do I just take the, take the three and a half K?" And I thought, "No, that's really, really dishonest if I do that. Let me keep my word." So, so Sven then gave me half the fee, and he was going to pay me half on completion. So he gave me £1,750. I made the payment, got the car back. So I was like, okay, I'm, I'm good here. And that happened all within like four or five days. The first four or five days of the property, just getting up there and knocking on a door.

And then I had like, the, the devil and the angel on my shoulder. Like, "Should I give him the £500 quid?" Or, and then the devil's like, "Now, keep it. It's all yours. He deserves nothing." But Bob, Bob really, really did help. He helped with the legals, he helped with explaining everything to the vendor. And I thought, "No, I'll give him the £500 quid." Now, unbeknownst to me, right, he was a local Mason. Now, a Mason is someone who's so well connected in a local area. So I gave him £500 quid. And then as I was driving back down to London, um, he called me up, and he gave me three more leads that, like, that week. Now, it turned out two of them completed, and they were pretty, they were not as good as the first one, but they were still pretty chunky BMV deals. And the third one was a complete dud. They wanted more than what it was worth. But then Sven bought both of them because he was so happy with the first, and he paid up front the fee. Yeah. So within the first week, I'd managed to pay back what I'd earned from the teaching from those three deals. So that's very, very fortunate in that case, just, just by getting out there.

So did you, that was your strategy to start with then? Source it and was it just literally just finding the deal and then selling it to an investor? There was no end-to-end process or? So your, your first strategy was finding these below market value properties and selling them to investors. So, um, over what timeframe did you do that before actually investing in property yourself?

Well, the first, yeah, I sourced 21 deals. Now that sounds pretty epic, but as I've come to learn now, like, I really undersold them. I should have sold them for so much more. There was like properties worth 80K that I was securing for like 30, and I was taking like a four grand fee out of it, where I should have been doing double settlements or flips or. But I, I just, I was very laser-focused on the sourcing. And Sven bought 13 of those 21. So I was very, I'd give it to him, and then he would be like, "Okay, I'll offer you this." And because he was a buyer and he trusted me, and we built up a relationship, um, he was, he was pretty happy. So when he ran out of money, that's when I had to go to other people. Um, and for the first year, so I managed to, well, make 48 gross, but I lost seven grand to a builder. Because Sven, we eventually had one that needed developing, and he didn't have anyone who could do it. So he was like, "Would you want to do it?" And I was like, "With no experience, no, no even inkling where to start, I was like, I saw property, obviously, I can do a build. Of course, I can."

So I found somebody on Facebook, his name was called Jimmy. And the, the real odd thing between civvy street and military is there's a massive change in culture. I didn't appreciate how much of a bubble the military is. Like, if there's a mistake in the military, somebody would admit to that mistake because solving the mistake is more important than looking good and trying to absolve yourself of responsibility. Where in civvy street with trades, it's complete opposite. Everyone goes, "It's his fault. It's his fault. It's his fault. It's his fault." It's, it's, um, completely from real glued teamwork where everyone helps each other to completely the opposite where everyone's for themselves, has been my experience.

And so I met this guy called Jimmy, and he was so charming, mate. He was like, I told him about what I was doing. He's like, "I'm going to be your builder brother. We're going to do things together. We're going to." And I was like, "I found him my business partner. I'm not alone." And I fell for it hook, line, and sinker, man. He had me, he had me in the palm of his hand. And so I had this money, and he goes, "I need some money for materials." He quoted the job, it was 11K. And I thought it was going to be at 13. So I thought, "Bloody hell, I've made two grand." Because that's what I quoted the client, it'd be around that much. And he, he came and looked at the site. He was really knowledgeable. Um, and he goes, "I need some materials. Can I get £7,000?" I was like, "Yeah, Jimmy, Jimmy, mate, Jimmy, mate, come on, you know me. I got you. Got you. Here it is, cash." And then he just walked, started walking to his van. I was like, "Jimmy, you, you going to get material?" He goes, "Yeah, mate, yeah, mate." And then as he closed his door, and then as he drove off, and then it just, like, the penny dropped. And I was like, "I don't know his second name. I met him on Facebook. I don't have a contract. And I've just given him seven grand." And then I checked Facebook, and he blocked me. And I was like, "Oh."

So I went to the police. And no word of a lie, what I said in my head, the guy on the desk said, "You met him on Facebook? You've got no contract? You didn't get his registration? And you don't have his number?" I was like, "I have his number, but he's blocked me." He goes, "I don't know. Like, it's your word against his. You're never going to get that back." I was like, "Oh, no." So that was my first lesson. Um, and like, I'm really, really glad that that happened early on. Because if it had happened on a much higher project, and it has done to people, you've heard it, people have lost tens of thousands of pounds. Yeah, hundreds of thousands of pounds. Now, you think that would be the only time that ever happened, but that actually happened a second time before I learned my lesson on my own project. And then I learned. And then I learned never pay upfront. Never in a million years do you pay upfront.

Now, that's why I started also the build company because I was trying to find builders that wouldn't accept payment upfront. And there wasn't really too many. So I, I created a firm that doesn't take any payment upfront. And then what I've come to learn is that it's quite easy because you get accounts, you can like spend 30, 40 grand in materials, and then you don't have to pay it till the month after. Right. Builders could have done it. It's really, really easy. Uh, I've learned a lot since since that. But yeah, I got, I got really, so I lost seven grand out of that first 40. But because I was online, and I was really preaching about all the hurdles, and when I look back at it now from my more experienced view, I just made so many errors. Like, oh, it was awful. Like, I couldn't believe how I even made any money. But it, it worked just because it was tenacious and really, really consistent.

There were moments where I was in a vendor's living room, and they would say, "It's freehold." And I'd be like, "No idea what freehold is. Let me, let me, let me go to the kitchen, look what freehold is, call the person, help me. He just said it's freehold. What does that mean?" Now, that's good. And then I'd come back, and he'd be like, "Oh, it's unencumbered." Sorry, let me just go into the kitchen again. Then had to work out what unencumbered was. And I think a lot of people just enjoyed me being an absolute cluster.

So before we move into like the cash, like we've talked about it before, but it was a catastrophe of the first five years you properly invested after Sven, that your, that investor that you found. And by the way, that's brilliant. You only one or two investors, don't you, that are serious, rather than the whole list? Correct. But where, where did you find the other investors apart from Sven?

After we ran out, when Sven ran out of money, and this is this is me being, I'll be, I'll be honest here, because I was dishonest. I put in a group that I'd put one of my best deals in a group that had already sold. So I put it, I said, "I've got this deal, it's already sold." And then I got my mates to say that she bought it to say, like, to create demand. And then I got found out instantly and completely roasted in the group. So I thought, okay, that's the wrong way to build up an investor list. But it was just Facebook groups. I put in, "I've got this deal, that deal, this deal." There was, uh, it wasn't as pleased as it is today. So I could just put it in the group and I'll get replies. But that first group gave me like, loads of people were like, "Oh, I'd love to. If you get any more, let me know. Let me know. Let me know." And then I got found out. But I'd already had the list. So it was worth it. I didn't take any money, but it was a bit of a dishonest way to build a list, right? Yeah. Yeah. And then I, I just had, as you say, two or three. I only had three people buy those first 21 deals. Yeah. So it was a mixed bag. It was quite.

Once you had one successful case, and Sven, you'll see, he's like one of the first, um, reviews on my page. And he, that was really, really helpful because a lot of people contacted him to make sure that I was legit. And he would always give a nice review. I just think it's a much better way of doing business, you know, instead of having to go out and constantly find new investors, if you've just got one that you can trust and you can work together, and you go, "Right, Sven, you know, today I've got this deal. Do you want it or not?" You know what I mean? It's much more time effective just to have a couple than just have to go whole, whole list, build that trust every single time. Exactly.

Um, and for people who struggle, I understand this can annoy them a bit because whenever someone asks, "How do you find investors?" I'm like, "That's, that's like the easiest step out of all. The deal is the hardest, but it's not the investors. You just got to put yourself out there and explain what you're doing, and you'll be approached. People will come up to you and offer you money." Um, it's, it's quite bizarre because initially, when I'm begging for money and I'm trying to raise finance from everybody, and they're all saying no, and then versus now, when you've got a bit of credibility and experience, it's, it's almost criminal how easy it is.

We, we'll move into like the, um, raising finance and that sort of thing. Yeah. On, but, um, going back to the first five years of your catastrophe, property investing, what, so what were the first, what were the first few deals? What, what did they look like?

So the, the first one is obviously when I tried to refer. That was a real, real bad, bad scenario. But, um, my first deal was, was really good. So in the army, we had pen pals. Now, it's a very nuanced part of our culture that not many people know about. But when you go away, like random people write to you, and you get letters because you can only have communication through written letters in most cases. So you'll get loads of people who just write, you write to you, and you get given a pen pal. And could you've got a lot of time on your hands when you're away on tour? I was writing this lady called Susan, who was in Birmingham. And the, I'm the, she's the reason why I now invest in Birmingham. So I just went back on R&R, which is a two-week break from Afghanistan. And I'd done this course, I was sourcing. And I, you know, when you speak to somebody, I went to thank her. Um, and I could see that she had something on her shoulder, she was burdened by something. I could, something was bothering her. I was like, "Susan, what's, what's the matter?" And she said, "I've inherited this property, and it's, I don't really know what to do with it."

And in the back, in the back of my mind, I was like, "Okay, maybe I can help. I might be interested in purchasing it if you want to sell it." Now, it turns out the situation, she was on the state pension. And when a property goes in probate, if it has a mortgage on it, the payments compound. But like, the property was worth 210, and it had a mortgage of 60. But she was paying the mortgage because she was so nervous about it compounding to the point where she would owe money on it. I was like, "That's, that's definitely not going to happen because there's so much equity in there." So this is how nice she was, what a lovely lady. Even though she, she was using most of her state pension to pay this mortgage and living destitute, she was still sending stuff out and gifts and stuff. So she was a really lovely lady. Uh, so she'd gone from being quite comfortable from her house being mortgage-free to having to pay this mortgage.

We did the due diligence. I've still got this property. It's 12 Birch Close. And I, I, I thought, right, it's worth about 210. And I said, and this is what I always do. It's like, "How much do you want for it?" I never be the first to name the price because you never know what their expectations is. And she said, "Just pay the mortgage, and you can have it." Which is basically, it was £60,000. So at this stage, I was like, "I can't do that. That's, that's too little." Yeah. It'd be taking advantage of you massively. And I said, "It's worth about 210. If you put it on the open market, I, how about I give you £100,000 now, and I'll take it off? And then I'll also start paying the mortgage while we do the legals." And she was like, "Ah, that's, that sounds wonderful." Is what I thought she would say. But guess what her reply was? "How about 107?" And I was like, "Hold on, you were gonna give it to me for 60 a second ago?" And then she, she chipped me for seven grand. Really? I like, "Of course, of course, 107, you can have it. Excellent."

So that was, that's the first, that's the journey of the HMO journey then, Dan? Yeah, that's the first. So I, I, I turned it into a five-bed HMO. Yeah. Um, still six bed, but then the minimum room standards came in, so it went down to five. It's currently got planning to take it to five studios and one en-suite, which I'll do probably back end of this year or early next year. Now, that one was really good because we bought it for 107. We got a bridge because it was a bit more, um, lax then. We got a bridge for the true market value of like 150. So then I had a massive chunk to then develop the property. Yeah. And then it got valued at 325, post works. And that's where I got burnt by another builder. Um, and at 75% of that, I think it was 424, we pulled out. So from that one deal, I had like 87K equity, about 90K in the bank, and £1,500 net per calendar month. So that one deal, I'd made more than I had in the previous like six, seven years of my military career. And I was like, "Oh, I've done it. I am the king." But little did I know, it's, it, property is a thirsty beast. Yeah. Yeah.

So, um, you do HMOs slightly differently to most people out there. So yours is very much, because I've been to one of your construction workshops, same materials, you know, the same sort of style bedroom. So, it's got the studio, um, look to it, almost like self-contained units, right?

It is. It is. So Birmingham are very, very good. There's plenty of people who will moan about the councilors and how unhelpful they are, but Birmingham must break the rule because they're wonderful. They create a guide which tells you how much square meters of work surface you need, how much communal space you need to get a light. It's really, really comprehensive. And they tell you, "This is what you need to do to studify them." Now, I can't be the grandfather of this because everybody puts stud in the HMO. And it was Rob Bon that did it, did it first. Everybody copies him and no one gives him credit. Glad. Yeah. Yeah, indeed. Yeah. Yeah. Well, you should know, right? He's the one that sort of pioneered it. And now gave it away all for free. All the info. And now people, people sell that info on the back of his hard work.

So, that, that was a, that was a success in terms of that deal. But then what happened was, I preached about that deal. I met my first business partner. He said, "I've got 180 grand. Let's do some more." And we had really, really early success. We only had an architect. We put in planning, and we'd get it for like, six weeks. Wow. In six, it was fantastic. So I bought Jiggins, I bought Anderton, and then, then we had a builder who was doing really well. And then what tends to happen, for some odd reason, is builders will do really well, develop a cocaine habit, and then the service will drop. And then we'd promote someone else from the team, and exactly the same would happen. And that was my first lesson. Not everybody can handle being wealthy or handle making money. Um, and it, it actually, I feel quite a lot of empathy for the second guy because he was so, such a hard worker, a real family man. I said, "You want to step up and start doing these builds?" And he did. He did such a good job. And then he started making money, and his life derailed. And like, if he hadn't made all that money with us, he probably would have still been doing quite well. So I do feel a bit guilty.

So we had, go on, I'll just finish. So we had three good re deals. Plan sailed through. We refinanced them, and then they were good. So we thought, "Bloody hell, we're, we're onto something here." Let's raise money. Instead of doing one at a time, let's do three at a time. So we raised money, bought three, put three in for planning, and all three came back and failed. And we were on, we were on bridges. So we were like, "What are we going to do?" And so we had Park Road, we had the Yewood Road, and then we had King's Heath. And not only that, um, the King's Heath then developed. The builder was so terrible. I call it the Butterfield nightmare. So one of them, we turned them into a six-bed, even though we built out eight, we just rented out for six and said, "Let's wait for a year, and then we'll put it in again." Park Road, we said, "Right, let's go to appeal. Let's, let's, let's change it." And at this point, we realized our architect was a bit of a, a bit of a rogue. So we went and learned using Richard Little's course because he's quite comprehensive. How actually planning apps work. We learned about the planning consultants and all, all the prior works that you need to do to get the best case.

And then I, you, you know Amy and Claire, the ladies that have the absolute monster, like the, like the 60-bed HMO in Derby, the sisters? No, no, I don't. I'm not aware of them. Farrington? Right? No, I'm not sure. So I did a bit of work with them. I say, "A bit of work." That like, they did a bit of mentoring for me where they helped me. Said, "Right, use this." Because I obviously heard about them HMOs. And I was like, "Brilliant, they're the people to go to." And they gave me their contacts, their architect, their, uh, planning consultant. And I just, they're expensive, but I use them because they're so effective. And slowly, we managed to like unplug. We got planning for Yardley, which was the six to eight. And then that, so that wasn't too much of a disaster. But we ended up with Park Road. It was like, year two, had to re-bridge again. Year three, had to re-bridge. Now, what was happening was, we tried to go in for 16 units. They, the planning officer would say, "Go to 14, change this, and we'll approve it." And then the planning officer would flip and change. And then the new one would say, "Right, no, no, I'm not agreeing to that. Go to 12, change it, and then we'll agree." And that happened three times until we got down to 10. And then we're like, "No, we're going to accept the fail and go to appeal."

Now, we went to appeal, and they rejected it on the reasons that the planning officer put into our app. They said, "Right, you need to do this, this, and this." And it was basically changing some of the windows. Now, appeal got rejected because of what they told us to put in. Now, we could resubmit that application, taking out what the council told us to put in, and we, we would, they rejected it again. Then we had to go to appeal again, only for it to be passed. So that took four years. So we bought it for four, 330. And at this point, there was other problems within the portfolio. So we had, as well as this happening, so we couldn't really afford the, the, the interest at this point. I had two deals, one that was being refinanced, and one that was going to be purchased. This is a 12-bed HMO and a nine-bed HMO. The 12-bed was going to be refinanced to purchase the, the nine-bed. Now, we exchanged on the Monday, only for Shawbrook to pull the funding on the Wednesday after we had exchanged.

I had a really good relationship with the landlord, so the landlord had let me start works early. Yeah. Yeah. Getting another valuation. At this point, I had the roof off, and it was back to brick. So I, I was 100% sure that this was going to work. But then they pulled the funding because of my source of funding from overseas. Um, and they waited, they wasted so much of my time rather than saying no from the beginning. They waited till after we exchanged. So I needed like three days before I was going to lose my deposit, which was 41 grand. I didn't have 41 grand to lose because you, when you exchange, you pay 41k. I was like, "Oh my God." And on top of this, the appeal came in, and our bridge on the Park Road, they said, "Right, listen, we're going to start repossessing." So that all happened in the same flipping week. Yeah. Yeah.

So just for context, this is five years ago was when you first started, right? No, no, this was probably year four. Okay. Four. Because we got early, like year one to three was pretty, pretty successful. It was just the builders that were developing drug habits, and then the service would drop, and we'd change them. And so all this happened within a week. And then I was feeling really sorry for myself. The stress was so bad, it changed my voice. Like, and bearing in mind, I was in a job where like, active firefights were less stressful than dealing in the property business. But active, active battles, I was more relaxed than I was dealing with banks and investors. It's, it's an incredibly different type of stress.

And the, the broker called me up, goes, "Right, listen, you need to sort this out." And I was like, "What do you mean, sort it out? I'm partially blaming you here. I told you not to go with this bank." He goes, "Ring around, raise the money." And then so I started ringing around, started ringing around, started ringing around. I called all my, every single contact that I have, and I, I couldn't, I couldn't raise it. No one, because it was so short term. Yeah. Yeah. And, and so what happened is my mum says, "Let me, let me call around." And then she found an investor who put 410K into the deal and completed on it. So I was like, "Oh, yes, come on. Seriously?" Wow. That's, that's incredible. So that's so lucky then. What, so what would have happened if you couldn't have found it? You just fallen out of bed and you would have lost so much money through that refund.

We would have lost, we would have had Park Road, uh, repossessed, and I would have lost 41K. Um, but what we managed to get out of it, by the people that put forward in 10K in were the people that had helped on a project that they had been shafted by a builder. So it was kind of through three points of contact. Now, the Park Road, I eventually sold to two, who's a prominent Birmingham investor. And all we wanted to do was walk away and not lose any money. But we spent about 430, and then we eventually sold it for 400. So we lost 30K. And part of that was we'd also do the build-out at cost. So it was difficult to get out of it. But we didn't lose too much monetarily versus what we would have lost if they fire-sold it. Um, because we, they were going to re, they were going to start repossession on the Friday. And we, no, this is, we were going to sell it for 330 because we had an appeal in that second time, not knowing if we'd get the 10 or not. Yeah. Now, on the, we had an exchange or completed. But on the Tuesday, we got told, "Yeah, the appeal is going to come back for 10." So we went back to the buyer, whose name was Irene, and say, "Listen, we want 400 grand now. It's going to, it's going to come." And there she was like, "Absolutely not." So she pulled out. So the bridger learned that they were pulled out. I said, "Right, we're going to start repossessing." But then two came in and paid 400 for it. Holy [ __ ]! And then we built it out, and it's glorious. It's an absolute glorious HMO on the corner of Park Road, beautiful. Um, but I didn't make anything. We actually lost 30K. I was working for like four or five years on that project, only to not lose money. Yeah. Yeah. To control how much I lost.

Which leaves quite nicely onto your, it's, it's not really, it's a concept, isn't it, of de-risking projects? Oh, good. Amen. So the only reason I was able to build Park Road out at that stage, because that wasn't the only mistake. We have King's Heath, which was a nine-bed. And in amongst all this, we paid 300K for it. Uh, this one actually came back with a planning. So out of the three, we managed to re-appeal this one, and we got the nine. But the builder that we chose was an absolute idiot. It's completely my fault for choosing him. Um, we just had two really successful projects, and then we brought that build around to this one. And he, he looked really nervous. Like he's, "Oh, this is huge. I don't know if I can do this." But he'd just done similar projects. So I didn't go for him, the, the tried and tested builder. I went for this new guy. And again, the gift of the gab. He brought this, uh, Romanian team over, and they worked so hard, but they didn't really know what they were doing.

And as I was leaving, this is when I was leaving the military as well, so I was going on trade courses. And they were like, "This is how you fit a kitchen. This is how you fit a bathroom. This is how you fit, like, this is how you do plumbing." And like, I caught them like putting in bathrooms when the first fix plumbing hadn't been done. And I was like, "Who, what are you doing? How are you going to connect the bloody showers?" And they're like, "Oh, yeah, yeah, yeah." And then, so it was almost ordained that I would learn this skill and just catch them messing up. And so we were, because we'd paid them, and that quote was quite competitive for obvious reasons, we dragged it along. And I would like fill in the gaps where they were, were failing. And I remember once story where, you know, how a light switch meant to be horizontal? This one is like a star with a switch in the middle. And I was like, "Alec, what the hell are we going to do about this?" And he was like, "Do not worry, you can put a big fridge there." I was like, "Every bloody socket is like this. We can't do this."

And so the top floor had no heating because the water wouldn't go there for some reason. It's something to do with the balancing. So we had to put electric heating in there. We bought it for 300, we spent 180 on it. Um, and it got bowed at 350 because we're at the end of our bridge. So in amongst all that, so that, that caused me to be really sort of, I've screwed this investor over because it was all investors' money. Um, I redid all the bathrooms myself to collect it, to sort it out. And I did a lot of the work, just to bring the cost down. Um, and then we got it, we, we had it on a mortgage for ages, but it was earning quite good money because of the mortgage was so low. And then we got planning from 9 to 13. And we're currently building that one out. And I sold that one to two as well. And after that, dealing with that person, I thought, "I'm never ever going to be in a position where I don't know what I'm doing."

So that's when I started my build team up. And again, I just went around on Facebook, met a few people. People that I liked. Kissed a few frogs before we got a good team. And that, that exploded because of the service that we offered. Like year one, we did like 600,000 in revenue. In year two, it was like 1.3 million. And then it just, it grew into a bit of a behemoth. But then when I would do the accounts, and I'd be like, "Hold on, I've only made 350K here." Obviously, that sounds good, but like, just by holding those properties and doing nothing with them, less stress, I've made 350K from those two HMOs because the equity's gone up. And I've spent six hours on that this year. And I've spent thousands of hours in the construction company. So I've, I've given that away to somebody. And now I'm only building for myself. Apart from this final one, because two twisted my arm. And it, it's basically myself accepting that all the things that go wrong, whenever a trade steals from me, whenever a deal falls through, it's always my fault. And how I can mitigate that and prevent the inevitable, because it's always going to get worse, because it always does.

Like during that period when we had two mortgages pulled, we'd exchanged, and then not only that, the, the project got down valued. It was an absolute catastrophe. Couldn't have been, nearly lost it all. Nearly lost it all. And then we'd grown it all from investor finance. So it was very close to having a conversation with them all. We've lost all your money. Right. Yeah. But thankfully, just by getting that last deal bought, then selling Park Road, then also selling King's Heath, King's Heath funded the nine-bed, we were able to get out of it. And now we're in a very good position. Like the first five years was absolute, like catastrophe, catastrophe, catastrophe, catastrophe. And then finally, we got it right. And the only way we got it right was learning about sourcing, learning about planning, learning about building, learning about managing, and doing everything in-house and not outsourcing any of it. That's the only way when we started making really good money, because we didn't have to charge the margins on everything.

Yeah, I think, I think like you say, if you don't have to have contractors that you don't rely on, right? That's what I currently do now. So you're saying that if you've got it all in-house, it's more efficient? Do you think, um, it's more a case of you can, because they're still going to steal from you, they're still going to make mistakes, and things are going to cost more. Um, but you're able to mitigate the, the mistakes. Like, in terms of planning cases, that having a planning consultant is expensive, but it's not expensive if it stops you from buying a bad deal. I'll spend a, a thousand pounds analyzing a deal, and my planning consultant will say no to nine of them and say yes to one. So I'll have spent 10 grand, only to then be able to make an offer. But that one deal will absorb all those losses. Whereas if I would have bought those 10 deals, all 10 of them, because you can, when you're in a position where you're on social media, you're demonstrating success, raising money is the easiest thing that will happen. It's not that difficult to raise money. You'll get offered it all the time. Like getting into a deal is quite easy. It's getting out successfully that's the hard bit.

Yeah. And this, and this is what I was going to wanted to ask you about as well. Like, how do you structure a deal that's that's attractive to an investor? And do you, do you go to the investor and say, "Look, this is the amount of money I need. Don't worry about the fine details, I'll sort it." Well, how do you?

Do do it with, you know, bigger projects like the ones you're talking about now. So if you're wanting to raise money, what you've got to do is you've got to build up the profile online, go networking, and show yourself in complete and total transparency, like your mistakes, your successes, and your hurdles. Cuz like, whenever I see somebody in front of a Lamborghini advertising the life, I just know they're full of [ __ ] and they're not actually in property. Because everyone who I speak to who is in property has had a had a moment where they're like, "I'm going to go bankrupt. Oh my god, what have I done?" I haven't spoken to anybody who has a successful portfolio that didn't go through that phase where they're like, "What the hell am I doing? I had a job. I had a comfortable job. And now all this, all this, all this hassle." Like they have those moments where they're nearly broken because having a business will mold you into somebody who's so resilient. Like, property is not easy. You're not going to get financially free in seven days. You're not going to get financially free in 12 months or even a few years. It's just complete hor [ __ ]. As well as like the whole rent-to-rent model. Again, people peddling that is an easy way in. They're only doing that because they want to sell you a course. If somebody says rent-to-rent is good, they usually have a course that they want to sell. No proper investor does rent-to-rent because their money isn't in the cash flow, it's in the capital appreciation of the property over the long term. The cash flow is insignificant. It's just there as the stuff that keeps the company going.

Um, and and for me personally, I did an audit of what, what, very similar to the bill company, and this is why I don't do it anymore. I was like, "Where do I make my money?" And 6% was made from the sourcing, the construction, and the cash flow. 94% of the increase of net wealth was me doing absolutely booger all and just owning the property and it going up. Yeah. And I was like, "What the hell am I doing? Wasting my time." Get rid of this company, get rid of that company. Out you go. And and now I have more time to do sourcing for myself, and it has resulted in the portfolio growing and the net wealth growing. Um, and so just be very, very mindful of those who want to sell you the dream because it's, it's not true. It's not realistic. It takes years and years of compounding success before you even have any noticeable change in your income. Yeah. You, you touch on a lot about consistency, reputation, and branding for yourself and your own personal brand. And you talk a lot about the money is not the finite resource, it's the, it's the people that are finite. Yeah. So I didn't even answer your question. Apologies. So how do I raise finance? So showing everybody what you're doing, being very transparent with your mistakes. Allow the great thing about social media is when you post stuff, you allow people to meet you without you actually being there. Now, some people are going to really like you, some people are going to find you detestable, and that's fine. It's a time-saving exercise. Uh, and when you go out, if you've got a really prolific profile, you'll get people approach you and just offer you money. Like, it's so flipping bizarre. Um, you, you being the person who can find the deal, get the plan, build it, manage it, you are the finite resource. Not the money. The money is everywhere. Somebody presses enter in a bank and the money gets created. The person who can create the assets can create the wealth. That's the finite resource. So early on, when I didn't have as much knowledge as I did, I would do 50/50. Uh, but now, with people who want to JV or people who want to do deals, I, I say no. I say, "You've got to lend me money first for a period of time. See if we get on, and then I'll pay you back, and then maybe we can do something." Because I've gone through business partners, hot dinners as well, and there's a lot of people who will talk the talk, but when it comes to action, will be absolutely like useless. I had one initially, straight off the course, who said, "Let, let's be a, a business partner." And we were in Hyde Park because that's where the barracks was, and there's like a tower block. And I was like, "Let's, let's spend this weekend and let's get into the, into this the software and learn everything." And then, no word of a lie, he said, "Oh, I don't have time for this. I've got work in the morning." And then on the back of that sentence, he like looked out the window, because it was in the winter, looked at the Alice in Wonderland funfair and said to us, "Shall we go and have a pint to celebrate our new business?" And I looked up at the laptop. I was like, "This guy's a bloody [ __ ] right." Because I'm not, not partnering with him. Uh, and I just found that people were not willing to put in the work. And yeah, like there's, there's been like four or five partners now that I've gone through who have been like talking the talk. Um, and only a few have been able to sort of sustain the work level that's required. Now, if somebody puts in the money and doesn't want to do the work, that's different. But we had people who were wanting to raise the money, and then the work tended to fall on me. So I'll tell you one story. I was doing all the back garden from one of the, the properties. And I said, "Right, I need some help up this weekend. Let's, let's come up because you all own some of it." And the two partners came up. They set off at like 11, they stopped in the Birmingham city center, had had lunch, sent me a picture of lunch. I was like, "Yeah, yeah, we're doing some content." And then turned up at like three o'clock after I was like, covered in dirt. And then just criticized the work that I was doing. I was like, "You what the... you're doing?" So one of them, I'm still a partner with. Al, we, we laugh about it. I, I was very close to ringing both their necks. I said, "Just go home. I'll finish it before I say something that I can't."

What advice would you would you kind of give for sifting through the [ __ ] when coming when it comes to finding business partners? Then I would say, take it slow. Um, I, I rushed into business partnerships that were difficult to get out of. Um, they're like marriages. It's, once you're in one, you, it's got to be like a life thing. You will got to have the same sort of vision. Like, I, I say to any business partner, like, "I want our kids to also be running this business." That's how long-term I want it to be. I don't want it to be a short-term thing. Um, and that means never exit. The, the ideal position in property is never to exit. It's only when you have to. I would say is, is to exit. That's the ethos that I follow. Follow. Just because it keeps going up with compounding, it's just the rents go up. The longer you hold a property, the more money you earn, and you just don't have to do it. You just have to maintain it and do asset managing. Um, so my advice is, just get them to loan you a bit of money and see how they are through the course. If they're wanting constant updates, if they're wanting real, sort of detailed analysis of what you're doing day-to-day, if they're speaking to you in a derogatory way because they've loaned you money, like that's happened before. Um, it's, I was very glad that they were fixed-term loans and not JV partners. Uh, we've had people who invested who all of a sudden, after they'd signed like a 12-month contract, three months in, they'd been done over by a crypto scam, and they demanded all their money back. And we're like, "Okay, yeah, we'll give it back." And when we initially said, "No, we're not giving it back. We're going to say, I'll put you all over the internet as you're a bad payer. You're, you're." And that's, that can be catastrophic. That can be a catastrophe for you if you're relying on investor finance. Uh, so have a real easy way to break apart initially would be my advice. And if you can, try and try and do it alone. Try and.

So you're saying if, if you can do it alone, but money through investment finance and stuff like that? Correct. Yeah. Fixed return. Try and get a few assets that you can just do fixed return as opposed to JV until you are fully aware of all the pits. Because if you JV with somebody and it's a bad deal, they have to shoulder that as well. Well, where if it's fixed term, you're going to learn something. You can do another deal and another deal and potentially get out of that hole, just like, just like we did. Yeah. Um, there's a piece of advice from yourself that that's really stuck with me, and I wanted to bring it up because I think it will bring a lot of value to people that are looking to get into developing stuff from, you know, just single B&Bs. But I said to you, "When's the right time to get into development? When, when's the right time to get to bigger projects?" And you said, um, "It, it, you need to get your portfolio paying for the interest." Right? Yes. Correct. Yeah. I'm glad you told me because I, I give out loads of advice and maybe I have changed it. So if, if I'm doing a deal, let's, let's take the farm for example. The interest on the farm was, it was £78,000 for the 12 months for the bridge. Now, if my portfolio net income wasn't £78,000, I would consider that deal too big for me to do. And what it does, it stops me making a choice where I'm in a deal and I can't get out of it. Or if I can't get out of it, at least my portfolio can pay the interest. And it's just a fail-safe because I'm expecting the worst thing to happen. I'm expecting the market to crash. I'm expecting it not to be let out. I'm expecting. Because, because what can happen is when these things do happen, and you're prepared for them, and you got a nice chunky reserve, you're not going to go under. It's very, very easy to go under if you get that sort of post-elation where you think you can conquer the world. You get in loads of deals, they turn out all to be duds, you've done it through investor finance, and your career is over before it's even begun. The other advice would be is I have a few real, like rules that a development has to go through. And the first one is it must have planning. And if it doesn't have planning, it must have PD rights where there's a pathway to get off the bridge onto a long-term commercial product that doesn't require planning. Now, if it needs planning and it's not income producing and it's not washing its face, then it has to be bought cash. But if it's income producing and it needs planning, I'll also follow through with that. So like City Road, for example, we've got planning for 14. But while it was in planning, which took 18 months, it was earning just enough to cover the interest until the interest rates went sky-high because I was on a variable. But now it's losing money. But it's not losing massive amounts of money. And we've, planning farm, for example, we had a pathway from permitted development to get onto a long-term commercial product. Now we're in, we've done phase one, we've refinanced it, we've got all our money out, and now we've got a massive chunk of land that has no finance on it that we're now going to subsequently go and get planning for.

So, and then you're going to plan to rebuild up, build flats up from on that? Or what's the plan with that land on the, on the farm? The 10 barns with the new Class Q. I'm waiting for that to come in. So there'll be service accommodation. Will they then? Or maybe, maybe it's not service accommodation isn't doing as well as I'd initially hoped. But again, phase one, I didn't plan to make money. I wanted to just get off the bridge and wash its face. So the, the more, the the bills are about six, and I earn between eight and five. So I'm floating around month to month to month. Yeah. So, um, I was going to, the next thing I was going to talk about that was, um, it's really interesting because obviously we follow your own Facebook now. And, um, you basically document all your offers that you put forward. And it's really interesting to see because I don't think you've done that before. And obviously you're looking for the next project now. But it just goes to show how much deal, how many deals you put, you sorry, how many offers you put forward. And, um, you just document the rejections as well, which I really love because it's real, realistic, isn't it? So can you talk a bit about your pipeline, how you find your deals, you know, and how you know, you manage the offers? So what I like to do is be really kept abreast of different planning changes. So I'm really, really thankful to Ian Warmsley for his planninggeek.co.uk. So the new Class Q, which is going from five to 10 units for 100 square meters. I think there's always a few years before that it catches up and it becomes the next successful strategy that everyone's peddling on a course. So I'm looking for estates now that have agricultural barns. So that's why I'm looking for these, these sites. And I'm offering on them now. For that criteria, to fit within my rules, I have to ignore the barns completely. So I afford no value onto them. So I only offer on the main farmhouse, what I know I'm going to get for it. And I'm not cheeky, it's just a 20% developer's profit. But very often, they'll be up for 1.9, and I can offer like 900, 1 million because I can make 20% on The Farmhouse. Yeah. Worst case, I can sell it. And that's why I get so many rejections. But I can't do every deal anyway. Anyone can buy deals if you offer the asking. Um, and how I find the deals are, I just take a map of Birmingham and I plot every single farm that I think would, I'd be able to get between seven and 10 barns on it. And I just go and approach them. I just go knock on the door, go send them a letter. So I even had, um, a rejection of a real lovely one yesterday, like, Long No Hall. It's the building is older than America. So it would have been a really nice one to get. And I got the vendor's details. They had bought it for a million, chopped 30% of the site off, and then wanted 1.7. And that's pretty, pretty ballsy considering there's no planning. They're planning up for nine units. And the outskirts got rejected. Yeah. Um, and so I made them an offer, and they didn't quite understand it. And it was going to be 100% vendor finance for 1.3 million for the, the 10 acres rather than the seven. So we went around, like explained it. And he was like, "Hold on, you want me to lend you all the money to buy this? You get the planning and all the uplift, I get all the risk. What happens if we don't get planning?" I was, "I'll give it back to you." And then, "That's how vendor finance works." And he was like, "Well, I'm glad we haven't wasted anyone any of his time." And then he just walked off. Um, and that's what most of them will be now. He'll put that on the market for 1.7, and you won't get a sniff. Just because most vendors don't understand what's happened with the construction industry. Now, build costs haven't gone up 2x. The materials have gone up 9x, 10x. It's that, it's that catastrophic. Like, wood that was being sold for 280 was now like 156. But it's coming back down. But stuff hasn't come back down, like cement, concrete, um, bathroom supplies, especially gas boilers. Everything has gone up massively in a huge way. So whereas previously you might be 20% purchase price, 50% build cost, and then maybe 30% is your GDV, and then 20% is your finance and transitional costs. The build cost is now taking up like 80% of a deal. It's just ex, so extortionate. Now, labor is actually going the other way because everybody's feeling this pinch. And those of you who have properties or have done any RBs will know the change has happened. People are calling you up saying, "If you got any work?" Like, that hasn't happened in in years. And I've definitely experienced it now. People are still calling me, "You got any work? You got any work?" Yeah. But the material price still hasn't come down. So the overall cost of the build is still 2-3x of what it was pre-COVID. So it's interesting what you said there. You, you literally knock on the, the, the vendor's door, which is a, I've, I've only heard that from yourself, really. You know, most people send direct to vendor letters. But you go there physically, you knock on the door, go, "Hey mate, yeah, I've just seen your site on Land Registry. Yeah, selling it." And how did some of them conversations go? Is that well met? Or every single one is negative initially. Um, but, but what, what I found is I tried to do the letters, I tried to do the advertising, I tried to do the Facebook ads, and I just got really demoralized because I didn't get any leads. The leads were just waste of time. I was spending like hundreds of pounds on marketing and getting nothing, like absolutely making nothing. I remember, and this is why I don't do it anymore, uh, one of the business partners, it was pretty useless. We spent £3,000 each on a radio ad on Facebook ads and, and, and we both spent in the same town. Yeah. And we used the same phone. And what we did is like, every, I would take first call, they would take second, third for, and that's how we'd split it. So we pulled our resources. And I got nothing. We did, we got one call which was a dud, and then a second call that was a lead. Um, and you just have to spend tens of thousands of pounds to get these leads as opposed to two or 300 or three, four grand. And that lead turned out to be an absolute waste of time. We went there and it was an old gentleman. He was there with his misses. We were on the table, very young, 26-year-old, didn't really know what we were doing. He had a bungalow he wanted to sell. And he would like, "I do deals. I do. You, you two would have liked me when I was younger. I do deals." And then he'd point to his wife, tell him about the deals we used to do. And she'd go to speak, and he'd be like, "Shut up. Actually, I'll tell him. We do deals." And he'd like, "Give me the number. If I like the number, I'll do the deal." And he just kept saying, "I do deals." We were like, "What, what the heck? How are we going to monetize this?" And so I spent like 3,000, 3,500 each, sorry. Um, and I kind of thought like, "Oh, this is, this is a bit useless." Whereas I'd had quite a lot of success knocking on a door previously. Like I got all my first 21 deals knocking on doors, doing leads, and giving out business cards. And I've never been able to close a deal on the phone ever. Never been able to do it over emails either. It's only ever when I've been in front of them. I have a chat. I try and get the fact that I used to be in the army as soon as possible in there, report. And then we, we close the deal. I just get way better deals when it's face to face and it's off market.

What's the percentage of closing rate on the first meet rather than the follow-up? Oh, I've never, never had a deal accepted on the first meeting. Wow. Never. Never. It's usually a couple of months after. So like the farm, for instance, I approached the, like the, they bought it in 2019 for 2,000, sorry, 1.9 million. Now I bought it in, in 2023. No, it wasn't 2019. It may have been 2019, but anyway, you can search The Farm address. It, I have it all over the place. It was previously bought for 1.9. Now I bought it for a million 40. Why would somebody sell it after doing very little to it for like half the price? So it was just personal circumstances. What happened is the, the husband had a really terrible accident. Um, it was a husband and wife. They'd got planning on The Farmhouse. They got planning for a service accommodation unit. They had an office, so then I had Class E to C3. So there was three units there, a pathway to long-term commercial product. And the husband had a terrible, terrible accident. He tripped and fell. And his wife's secretary, she found out and completely destroyed their nuclear family, right? So she won it out, and they want it out quickly. And initially, they, because of where their house is, you have to like climb a gate to get to the front door. There's like an automatic gate. So when I got around there and I knocked on the door and I gave them the card, they were like, "Bloody hell, I got a really aggressive reception." But they had that card. And then she called up one day, and then that was how the deal was done. Right. She said, "I said, what do you want?" H, she said, "1.1." And then I said, "How about a million 40?" They said, "Yep. Deal. Deal's done." Amazing.

So do you keep like a CRM system or any kind of Excel sheet? Or just? Yes, I have an Excel sheet. And what happens is every, I do it every three months. Uh, there's like a date that's green, and then as it comes towards one month, it goes yellow. And then when it's after six months, it turns red. So once a month, it takes me about three, four days. I go through all my lists manually, and I just drop them an email. I drop them a text. So after my follow-ups are email, text, or there might be a phone call and stuff like that. Brilliant. You mentioned earlier about vendor finance and actually like securing it that way. Would you ever use like lease options or to get? So what, what is that like the, or do you ever just use cash? What, how, what's the normal way you, you secure deals? It's, um, it's dictated by the vendor circumstances. So if they need the money now, so I always offer three, three offers. I'll offer a cash offer, which is always the lowest. I'll offer, um, part now, part later, which will enable me to buy it using 100% finance. Or then I'll offer a lease option. Now, the lease option or vendor finance is typically the highest offer. That's what most go for. In some cases, I'll ask the vendor what they want, and the price will be so good, I'll just say yes. Like with City Road, when, how I got that one was, you know, when you may have heard Birmingham Housing Associations, they had a cut to all their funding because they weren't providing the services that were being paid for by the council. Now, I knew this building was rented by a Housing Association. Now they had their funding cut. So I went to every Housing Association that were in a commercial unit and I contacted the landlords of those units, knowing that they were going to get a call to say, "These are going to be empty soon." Now, City Road, not only had the offices rented by the Housing Association, they had all five flats rented by the Housing Association. So when I went down to Essex and knocked on a door and said, "Hey, I'd like to buy this building if you're ever interested. Here's my card." And then she was like, "Go away. What the hell are you doing? This is ridiculous. I'm not selling anything." They then weeks later got a phone call saying, "Listen, we're moving out of the building. There are five tenants here that we're no longer getting paid for. You're going to have to evict them." So then that's when she called me. We had a conversation, and they just said, "I want 950." I was like, "Oh my God, that's a steal. Yeah, I'll take it." Um, because I knew we'd get planning there. I was really, really confident. And we have done. So we, we evicted the tenants, we swapped them out, we took it from like 4,000 income, the L rate, took it to like 6,400 by doing TUP. And now, after I built out a few smaller projects, I'll be setting my teeth into that one, which will be 14 flats, hopefully service accommodation, depending on how, how well the market is. But what I'm learning from other people is that it's not as good as it used to be. Yeah.

So you also run, um, at one of these offices, you, you run sourcing and construction workshops as well? Is that something you're looking to push forward as well? I don't advertise it as well as I, as well as I normally do because it's like the least, it generates the least money throughout the whole group. So, uh, we, we kind of do it as a half-assed effort. Like, but the teaching is good, but we don't push it out as much as we can. It's only when we have enough people like asking us, "Can I do a course? Sourcing course? Can I do a sourcing course?" And then we'll run one. So we do like two a year. Um, but, uh, it's the construction skills workshop is good. I do that more as a, just to prevent other people the mistake that I made when the builders just saw me, saw that barrel gently, took me over, bent me over, pulled my pants down, and had me. Like, "Oh goodness, didn't they?" Just never going to happen again. That's right. So, um, you've also got like, got education company, got a construction company, sourcing company. You've got, we've talked about before, but I'd like to go into like the group structure and how you, like organize your, yeah, sure, hierarchy of people. Um, so the way when you've got multiple companies and you've got multiple JVs, this is kind of why you need to have 75%. I don't do 50/50 anymore with my JVs. It's 75/25 because we can move properties within the group. So I'll show you how I've got it. Um, can you see that? Yeah. So what you're meant to have is, and this is all thanks to Adam Lawrence, teacher, not me. I'm not saying you should do this, but this is what I've got. So there I am. You own 100% shares of this holding company. Yeah. Now, all this, all this company does is hold shares of other companies. So this is the parent company. Got you. So I have Steadfast, which is the construction company. I have Property Company One, Property Company Two, and Property Company Number Three. Now, I will, so these are all owned like, oh, sorry. I, I also have my development company as well. This is where, this is what I build in. And then I have my lettings. There you go. And then in here, I also have an MMA gym. Jesus. So I will have the, these might go up to like 10, 15 as I get more JV partners. Now, my JV partners will also have their own holding companies. Yeah. And their holding companies will own shares of the property companies. And that's how it works. Um, I have a development company where I do all my build-out because I don't want to develop in these companies where they hold all the assets. Right. Yeah. Yeah. Just because there's danger there. If this goes south, they'll take this with it. Now, I've seen portfolios where they've been developing in really substantive companies, and the whole portfolio has been repossessed. Um, I have the construction company here within this because I can transfer the losses. So say if the comp, the construction company makes a loss on my build because I'm doing it at cost, for example, there's losses in here that when I do this build, I can charge that property company more to reduce my tax burden. So there's loads of little nuances like that. Now, if I want to split a title, you can't split a title in the same company, right? So you'll have one company for your freeholds, and then you split the leaseholds into a different company. You would, you sell them on to the other company then from? But, but, but because you've got 75% of the asset, there's no SDT duty to pay. Got you. And that's because it's in a holding group. Yeah. The owner, the overall ownership hasn't changed. Yeah. Now, if you didn't have this in a holding group and you owned the companies directly, you would have to pay stamp duty. Oh, yeah. So that, that's why it's really, really good to have a holding company. Now, the lettings obviously manages all this. The development company is again, that's sort of like the sacrificial lamb in case it all goes wrong. Um, you want to hire your staff in either the service-based businesses rather than the asset-based businesses as well, just to de-risk any sort of like suing that goes on. Because risk can't go up, it can only go down. So if the holding company goes under, all this goes under. Yeah. All that does is hold shares. There's no activity that goes on in there. The service-based businesses go on in the lettings and the, and the construction and the, the MMA. And then you have your property businesses and then your development. So this is why when you look up at somebody who is declaring to the world that they're successful and they have loads of companies, yeah, should be very, very easy because these will tell you. And Companies House, what properties they own. It's very easy to do, do diligence on somebody. Although if they're in the personal name, you're not going to know. Um, and more people, I think it's like over 90%. Adam Lawrence said that landlords still have property in their personal name. That won't show up. Oh, Jesus. Yeah. Yeah. Over 90%. I think so.

Did you always have this structure in place when you were just starting? No, no, absolutely not. Um, again, I, I did the, what do they call it? He has it like a, not a boot camp, a property retreat. Um, and then this, they talk about group structure, how to manage multiple companies using KPIs, um, and, and stuff like that. It's really about scaling. Oh, yeah. Sorry, we also have the sourcing company as well. Three, five, six, nine, nine companies. Oh, there's more. There's more property companies. Yeah. There. Um, and you want to, you want to keep it separate, really. No, that's really valuable then. Yeah. So, sorry, yeah. And so your service-based can get lettings as well. Sorry, your service-based companies will eventually be VAT registered. And there's so many benefits to being VAT registered, especially in the build company, when you can claim it back. Brilliant. So while we're on this now, it leads quite nicely into your future plans and what you want to achieve in the next 10 years because you've achieved 10 million in eight years. So in the next 10 years, what is it? 100 million? Well, hopefully, we'll get to Property Company 100. And then we'll see. Maybe the current partners that I have now will be, I might not need any more because of where we're going. Because the planning apps alone will take me to 20 million. It's just building out what I've got without buying anything. Yeah. Yeah. What I'm trying to do is like larger and larger deals now that I'm more confident in managing the nuances of all property. So it's the 100 million in 10 years is just an arbitrary number. Um, just because it's something to aim for. I think I'll get there by almost by accident by just doing what I'm doing. Like, the, the current deal that we're negotiating with Deutsche Bank, for example, is a portfolio of over 1,100 units. We're going to take it to Deutsche Bank, hopefully then get the management. And there's a massive chunk of that portfolio that they don't want. And then we want to try and get that for free. And that'll be worth like, when it's built out, about seven million. So we're going to do creative things like that. It's an old friary. Um, and it's 135 bed HMO. And we want to studify it all. Um, so it should be good if we get it. They've already said yes, but now they're doing the due diligence on the portfolio. Yeah. Which is a lot more stricter than us because we obviously have an interest in making it look as good as it can possibly look to the, the fund. So they're now doing their own due diligence on it. So fingers crossed our numbers aren't too far from what they come up with. Brilliant. So more companies with JV partners and also investor funding as well? Yeah. It's not necessarily now. I'm going to build out what I've got. And then because we're sitting on quite a lot of cash now because of the planning apps, as I say, I make more money developing what I've already got versus buying new property. So I'm, I'm going to be sitting on quite a lot of cash after I build out, maybe a couple million. So I might self-fund. Um, the next, like with two or three million, you can buy projects that are 100, 150 units. Um, and get them with no lending on, only the debt finance. That's what I'm aiming for next, a much larger build-to-rent sites. Looking forward to it. Dan, been an absolute pleasure. I've really enjoyed this podcast. Um, if anyone wants to reach out for yourself, um, whether it be going on one of your sourcing or construction workshops, or just generally want to connect, uh, how can the people find you? Well, you could jump on Facebook, that's where I document all my, you said earlier, my offers that go in and how many I do each week. Um, and also there's Instagram, which is Daniel Kennedy Official. Same, same with the Facebook. Um, and then you can just follow what I get up to. And I, I talk very openly about all the deals. I'm completely honest with what I'm negotiating because I kind of feel like if somebody could steal it from me, it was never mine anyway. So I don't try and hide anything. I say, "I'm going to this bank looking for this mortgage." I'm really, really transparent. Um, because I really detest gatekeeping of information. Um, I also have a YouTube channel where I have a podcast as well, where I talk about everything of what I did over the last maybe like year one to year six of how I raised finance, how I did developments, how I learned about the planning. It's recorded on a phone that is similar to a potato, so the quality is bad, but the information is there, all completely free. Excellent. And, uh, I'd, I'd also like to come down with my videographer and do a bit of recording on one of your next sites as well, Dan, if that's all right? Absolutely. Well, if we get, we get the 80 million pound site, that would be a good one to do that. A good one to start with. Yeah. Yeah, it would be. It would be brilliant. Well, I appreciate your time, Dan, and thank you. Cheers. Thanks for watching today, guys, and I'll see you next episode.