Transcription
Safe is an established property investor that has now completed over 400 property transactions. He owns a portfolio of BTLs and HMOs, and he has a very successful property trading business. But today, in this video, we sit down to discuss how he'd start from zero if starting a property portfolio again from today.
Safe, uh, thanks very much for coming on to the channel.
Thanks for having me. Always a pleasure. And um, yeah, today we're here in your house. It's been very nice coming up here today, and you've been on a few other podcasts, so I want to skip through what other people have talked about in the past by introducing you and saying that you've built a portfolio of BTL and HMOs. As of very recently, you have now passed the 400 property mark in terms of buying and selling 400 properties, which is a massive milestone. And obviously, it's safe to say you've um, made millions in property, which is uh, you know, a massive achievement.
Knowing what you know now and thinking more, I guess, from the investment side of things, because a lot of people ask me this question, I talked to a lot of investors: if you had the goal of earning £5,000 a month from property, yeah, and you were maybe sat here today with no properties, but you've got around £50,000 in capital, yeah, obviously that's quite a big uh journey you've got to go on, but what direction would you take in terms of trying to get to that £5,000 a month with that £50,000 in capital?
Yeah, I mean, the first thing I didn't do the traditional, you know, go on loads of courses, understand, learn. I kind of learned the hard way, which for me um I kind of regret in a way because it did mean that it took me a lot longer to get going. So the first property I bought was 2015. I then ended up buying another three properties in 2018, and then 2019 was when we kind of went out and and scaled big time. So there was a big gap, and that gap was all about learning, understanding, and just doing trial and error. And in all honesty, one thing that I would have liked to do is gone back and actually probably done more of a not just investment in education, but actually trying to be more of a community because I think if you're part of a community, they support you, and I had no support whatsoever. So I think even if it wasn't just the education, it was the support side of things that I thought would have been great. So I think for me, I'll be probably trying to spend some of that with someone that I kind of think that I have a lot of shared value with that couldn't, that's not necessarily just property; that could it be a business person, someone that that kind of has scaled or done done a business um, and that could be something which is indirect or direct. So it might be someone that doesn't do any training, but you go and you say, you know, can I pay you for your time? Right, there's loads of good business people out there. So that's the first thing I want to do because I think without a plan, there's nothing else that you're going to be able to achieve.
The second thing is, I'll probably, in my opinion, going back, I would not do BTL personally to start off with. I would first start to try and build that capital. So that 50k, I might spend 5-10k, whatever on the education side; that 40k, I'd probably look at trying to put that money into some kind of deal sourcing, deal packaging, something where I can put a bit of money into marketing, generate some leads, sell some properties, and actually try and create trading income. I first want to focus on the trading income. Now, once you've built up some trading income from there, that's when I'll start to look to put some of that money into BTLs, because we all know BTLs is all a long game; it's not about trying to earn enough money from it in cash flow; what it is is about is cash flowing it and surviving for 20, 30, 40 years to then be able to sell it and build up that capital appreciation. You're only really going to become wealthy by capital appreciation, not from rental income, in my opinion. So I think for me, that's the step-by-step of what I'll do: build up a trading business, which in my opinion I think deal sourcing is a great trading business; you don't have to have loads of capital to get set up. Um, yes, you need investors and leads, but that can be built up; you can network, etc., and that's where the education side of things comes in because if you're in a good network, there's going to be buyers there um, and then eventually go for property investment where it's more of a pension pot as opposed to kind of my day-to-day income.
Got it. Interesting. And I think that very much relates to me because I started by going, right, I've got to get BTLs, got a small amount of capital, and it was a real uphill battle for me because I wasn't thinking about earning more money; I was thinking about, God, how can I get BTLs when I got no money? And it took me a while, and then I'm trying to raise, you know, invest to finance and doing joint ventures, you know, trying different things. In actual fact, what I probably should have done was maybe started sourcing, maybe done some flips to build up that capital. And I don't know if you remember, but I have this saying which is like earn, amplify, invest, and then compound. So a lot of people, they earn money from their jobs, businesses, whatever it is, and what they end up doing is exactly what you did: put that straight into property, and you end up having a very slow journey of building up your property portfolio, whereas if you've amplified that money first by creating more trading income, doubling it, tripling it, whatever, and then investing it, you'll find you'll be going a lot quicker, and you'll basically be able to really streamline your whole journey, really, of building up your portfolio.
So you do still believe in the model of investing 100%?
100%. You know, look, do I have as big of a portfolio as I set out to to have when I first started? No. I wanted to get thousands. Um, we got to about 100; we've kind of scaled that down slightly; we're at sort of 70 to 80 any one time, but I still think that having that for the long term, property is always going to go up in value, as everyone knows; it's a really good asset, and it's one of these you kind of set it and forget it. I don't know anyone that I've spoken to that's not said we regret our parents or whoever it is that, you know, that sold those properties, not hanging on to them. So sometimes just buying stuff and keeping it there, when you look at it 30, 40 years down the line, your kids will thank you for it; they'll be like, you know, thank you for actually holding it, not selling it. And my dad was one of those people that, not because he he wanted to, but by force, the recession sent him under, and he had loads of London properties, so prime City Centre properties in London, Marble Arch, it's etc., and it was when interest rates went up to 18%, and he took his eye off the ball 'cause he was traveling the world, stopped looking at asset management and, you know, ticking off to you get your rent every month, and basically ended up sending him under. So for me, he's trying to avoid all of that and make sure you can survive to make sure you get to where you want to get to for that capital appreciation; that could be a 30, 40-year liquidity event.
Nice. Was that in the 90s that he…?
80s. Yeah, 89, I think it was, wasn't it, roughly?
Yeah. My grandfather lost his his properties exactly the same time, so same reasons, difficult market.
Yeah, yeah. So in terms of your 70 to 80 properties, is that predominantly BTLs, or I know you own some HMOs?
I'd probably say 70% BTLs, 30% HMOs, but every single HMO we have is on a supported living contract or social housing; nothing is being managed with private tenants or anything like that. Uh, that's primarily because our focus is on our trading business, so we don't have as much mind space to put into asset managing, so we're happy with lower returns, but actually not as much headache, not as much asset management involved in that, and that's so that you can just put all the focus onto the business, and then I guess obviously get more results from that.
Correct. Yeah. And and as you know, with higher cash flow comes more problems, comes more operational involvement and everything else in between, and for us, we just thought rather than doing that and trying to maximize everything that we've got, let's put all of our time and focus into the trading side of things and just have these BTLs where you set them, forget them. Yeah, granted you're going to have problems with some of them; it's not all going to be plain sailing, but I'd rather I'd rather take on bigger problems that I get paid to solve, whereas here I'm not getting paid to solve these problems.
Yes. So that's the reason why I've done that.
Makes sense. And so your main business is now trading properties?
Correct, which very much interests me. I've dabbled in it and uh find it a very exciting part of property because it's like the the quick adrenaline rush, the adrenaline rush. So I've got my slow part, the portfolio, and that kind of ticks along in the background, and that still excites me, but I also like um, yeah, getting the adrenaline. And I think I've really come to realize, I thought when I got into property, I thought I really, I must love renovations; it must be that, but actually I don't as much as I thought. Um, I actually really love the transaction; I love reviewing the deal, yeah, um, the adrenaline rush of securing something with a discount and and securing that when no one else has found it, you know, that that side of it, and even deal sourcing, how amazing is it when you get an email saying deal complete, you know, that those are the small wins that you've got to celebrate along the way because there's never going to be this major event that people think is going to happen. I think these little wins of, you know, everyone's pushing, pushing, pushing, you've just got it exchanged, you've just got it completed, and celebrating that is really, really key because if you have multiple of them, that's what ends up forming a pretty nice business. To be fair, when you've had multiple properties exchanged, completed that you've worked on, and the whole team's has a sense of fulfillment, it's like I feel like all of that pushing was got me to a result of, you know, this has actually gone through. And the worst part is when it falls through; that's that's the negative side of things, right? But you've got to just be resilient and manage that.
True, true. No, I actually probably don't reflect enough on that, like in terms of completions; we've we've had three this week, and I don't always stop and go, oh, that's that was really cool. Yeah. So um, so yeah, in terms of the trading then, because this is like a word I feel like that's getting used more and more, and maybe it's because, you know, when you hear something, when you see a yellow card or you hear the word yellow car, you only see it a lot more; maybe it's that because I'm I'm more aware of it, but um, for someone that hasn't heard of it before, because a lot of my channel is around BTL and flipping properties, what is trading a property?
So effectively, it's buying and selling a property, right? And traditionally, people think of flipping where you're buying, renovating, and selling, whereas trading, it's all about trying to be buying it and selling it as quickly as you can, right? Ideally, now that can be creative ways, so it could be trading contracts or getting a creative contract in place, or it could just be traditionally buying a property, completing on it, and then selling it on, but effectively it's a quick transaction where you're buying a property and you're selling a property on; that's it. Typically without renovation, typically without doing much to the property at all. Um, so that's kind of and and I think most of the traders in the industry, you won't know them; you won't see them, even the biggest traders in the industry; you'll never hear from them or see them; they don't have a profile online; all they have is accounts on Companies House. Um, they do like, I think the biggest one of the biggest ones does about 60 a month um, because they don't want to talk about it. So I'm probably one of the kind of early people, if not the first person, that's actually openly talked about property trading, and the biggest reason for me was if you don't tell people what you do, how are people going to know how to add value to you? How are people going to know how to bring you deals and stuff like that? And that's why I thought, you know what, is someone going to open up a bit more about and and share?
So they certainly are mysterious people, a lot of them. Um, the ones I've met that aren't out there on social media, they don't like to be.
So yeah, you are right; you're you're probably one of the first that sort of come forward.
In terms of then flipping a property, why would you not add the value and flip it? Why would you sell it straight on?
I mean, the main reason is operationally it's going to take too much time and effort for us to be doing this on a mass scale. So just remember our model is all about volume, so we're doing typically 10 to 15 properties a month. If we're doing 10 to 15 flips nationwide, very, very difficult to scale, and we know we're leaving money on the table; we've got no problem with that whatsoever. As a trader, we're good at negotiating a deal, and then we'll sell the deal on, and whoever buys it from us then typically we'll go on to buy it and flip it, buy and hold it, but we've got to leave enough meat on the bone for the next person to do that. Um, and a lot of what we do is all about efficiency and scalability, um, and we just found that it was going to be very, very difficult to do that with flipping, so we thought we are the traders; we're making less margin, but we're working on higher volume, and and operationally it's a lot easier to do for us than actually flipping every single house.
Yeah, in a way, um, it's it's slightly similar to sourcing because, you know, I can't physically buy every property.
Correct. And um, and obviously we we're moving them on at a high volume, aren't we?
Yeah. And look, there's some there's some flippers that we work with that make hell of a lot of money from the deals that we send to them, but they work within a certain area; we work in this in these in this region; this is what we're looking for, and that's bread and butter, but they've got very good builders or team there, etc.; they know the estate agents well; they know the areas very well, and they buy from us quite regularly because they know exactly what the product that they're trying to deliver is um, and they're happy to pay the prices that we we're happy to sell it for, and it means they don't have to go out to auction and open market and try and obviously get these deals secured; they want to just focus on flipping it and selling it.
Yeah. So then if you if you are flipping properties, obviously you've got to get enough discount where you can then add the value through the refurb and then sell it for your profit margin. If you're then trading it, you've then got to get even more of a margin off of or discount, yeah, in order to allow for the margin to sell it on to someone else for them to make their their profit.
Why would someone actually sell you a property with that amount?
Yeah, look, I'd say 19 times out of 20 when a sourcer brings us a deal, they're astonished at the price that we pay for properties or the offers that we give them, and we say to them, it's all numbers; there's no emotion involved in it whatsoever; it's a numbers game; we know that, and that's because they're not used to working with traders; they're used to working with investors and developers, but the reality is, like you said, we've got to have that extra margin to allow us to make something and then sell it on. Uh, ultimately, the the way is very simple; it's basically working with people that need to sell and have to sell and not just wanting to get the best possible price or basically wanting to take their time, etc. So you're not looking for someone that is effectively fishing for the best possible price, right? So we say to people, if you've got all the time in the world, if you don't need the certainty or the speed, our service is not for you whatsoever, and we understand that, and you need to go open market. And what we don't want to do is, you know, put a a sort of pigeonhole someone into something that they don't need, so we're very, very vocal about 60 to 70% of the deals and people that come to us do not need our service, and we push them away straight away because operationally there's no point of doing anything. There's then about 30% where I'd say roughly about 60% of those 30% are sit in the middle; doesn't really work for us to buy, but it also is a good deal, so we kind of then try and do something a bit more creative with those people, so we might be doing things like overage agreements or backtack or whatever it is, so we're limiting our what we call frictional cost, stamp duty, legals, finance, because we can then pass that on to a buyer because there's not as much margin on it, and then there's a 40% of that 30% where it does work for us to buy; we'll buy it, pay the stamp duty, whatever we need to pay, fin, etc., and then we'll sell it back on, right? But typically um, we call it in the industry of 3Ds: death, debt, divorce, right? So typically someone needs to be going through something where they have to sell, and they'll come to us, and you think about it, you genuinely need to liquidate a property right now, right? You've got something that has created an environment where you need that money within 3 weeks, for example; you can't go to an estate agent because they take 6-9 months on average; one in three sales fall fall through; you can't go to auction because typically they need a 28 to 56-day marketing period, depending on what the property is, and then obviously it might or might not sell. So this is why our industry is born, and what we call the cash buying industry is people that can give you money quickly, take a view on stuff, and complete when you need them to.
And how long on average does it take for you to buy a property?
The the reality is we say to people we can complete in 7 days, um, and we can, and we've completed the quickest transaction ever in one day.
Is that normal?
No, that was a one-off transaction that we we did. Um, we had it at a cheap enough price that we could take that risk on; did nothing apart from just sign contracts, and that was it. And but typically we're we we're completing in seven days. Now, that seven days is set from when we receive contracts, not seven days from when the MO goes out, because if we haven't received contracts for seven days, well, we're not expected to complete on the same day we get the contract, so we say seven days from receipt of contracts, and a lot of the delays normally come from the vendors not actually filling out the paperwork, sending back to solicitors, etc. So yeah, typically seven days from receipt of contracts.
Yeah, which is insanely fast, and it just comes down to be able to fulfill that person's need, isn't it?
So it's all to do with what is that person's motivation?
Correct. Correct. And don't forget, just coming back to that point, when you think about like probate properties, right, you've just inherited a property; you've not bought it; you've not had to invest into it; it's effectively free money for you that you've never had; you might have already needed to spend that money in your head, so you just need to cash out that property; you're not looking to maximize it; that's a perfect example of why someone has to sell, not needing to sell.
It's exactly like why I'm buying one right now, and the two brothers selling it are happy to let it go at such a discount because it was a it's a relative um, and they don't really want to deal with that, but also be it's money they've not had before, and obviously they're just happy to to let it go through quickly and obviously for me to buy it and and them to get the money basically.
Absolutely. Um, but no, interesting to hear your thoughts on that because I've done a couple of trades in the past without really knowing that I was trading; just I'd had a few things going on; didn't really want to jump in and do the the refurb; sold it on to another buyer. Um, obviously, if I knew what I knew now, I'd have been able to do the more effectively and save myself more money, but when I maybe made videos on them, I'd often have people comment and put like you can't get discounts like that; why would someone sell it for that discount? So I think it's it's really important to touch on why that might be; that not everyone's in the same circumstance; not everyone has the time to list it and get the full market value, um, which is like you said, why the trading industry is born, uh, which is really important. And just remember as well, this happens across all the sectors; it happens across the car sector, watches, jewelry, you know, there's there's a market for everything. If you want to maximize the value, you want retail price, you obviously put it into a shop window, and there's always a "we buy any car," "we buy any watch," "we buy anything," really; that's why that industry exists in the UK. I think it's a very UK-centric thing, the whole "we buy"; it's brilliant if you want stuff sold quickly; that's where you go.
Yeah, where where I um rent an office for my business in the same building; that's a "we buy any car," and I can't believe the volume of transactions; how well they've got that like operationally locked down. Yeah, and people bring in Teslas, BMWs, Audis; I'm like, these are nice cars, but people just want speed and convenience; people just need money, and they want to move on. And I've sold my car to "we buy any car" before because I just couldn't be bothered to maximize; it's not my industry; I can make elsewhere, so I just wanted to get it sold quickly, gone, and then moved on.
Yeah, makes sense. So what does, I guess, the future look like for you because you've done a lot of transactions, yeah, you've got a big portfolio, like where does this hunger continue to come from, and and where do you want to take the business going forward?
Yeah, I mean, to to be fair, for me, I enjoy the trading side, so I genuinely enjoy that; I'll happily wake up and do that every single day, whether it makes me money, doesn't make me money, I'll do that. Um, and I'm not the type of person that wants to go and retire or sit on the beach somewhere; not me. I'm I've come to terms with the fact that I want to work for the rest of my life; maybe that means, you know, reducing my hours as we kind of go through getting older, etc., but eventually I've always wanted to to work and always will work. I think for me, growing the trading business but having it way more less dependent on me, so taking the dependence out of me, which means I can then focus on two things, which is the most important thing is finding the deals and getting the buyers, basically getting the property sold and overseeing that. And for me, the most important day-to-day of my business is finding the deals, so that means growing the team that is obviously doing all the direct vendor marketing; that means making more relationships and new relationships with auction houses, auctioneers, agents, sources, wherever it is, wherever there's a deal, we're happy to get that deal in, um, and that's that's what it looks like for me. So we want to grow, you know, ideally we want…
To be doing 2025 a month; that's where we want to try and get to. Um, but it's all about trying to basically grow and scale, but do it quite organically, cuz we don't want to kind of go out and take on loads of overheads, do all of this without being able to increase our income. So we're kind of trying to create a bit of a steady approach: increase income, increase team, increase income, increase team, nice.
And the final thing for you really is: if someone's watching this and they're like, "You know what, actually, I probably should build up my pot before I go out and invest in property. I fancy trying what Safe's doing there," how would you, or what would you suggest they do as that first thing? Is it going down the source route? Is it trying their arm at trading? Is it to do a flip?
Where would you—for me personally, I would be doing one thing: I'll be going out and trying to do direct vendor marketing. That's the first thing I'll be doing. Whatever it takes—leaflets, if you want to go old school; letters, whatever it is—it's not going to cost you too much. You don't need to have much of a skill set to do it; anyone can do it. You don't need to have property knowledge. Um, or maybe, you know, trying to target empty houses—we call in—in America they call it, um, you know, driving for dollars or whatever—here is kind of different, but it's basically going out and trying to target empty properties, trying to find out who the buyer is. You're basically just doing all the investigative work, and then if they find a deal, the reality is there's loads of people that will buy that deal. But it's finding the deal in the first place; it's the hardest part. So for me, I would start there: direct vendor marketing, try and find a deal, and loads of people will fund that deal, whether they'll buy it, pay a fee, with a little joint venture on it, whatever. But that, for me, is probably the most important thing for anyone wanting to start.
Brilliant, really good advice, and thanks very much for your time.
Cool, thanks very much, Sa. Cheers.