Transcription
So Mark, hello and welcome to the show. How are you?
Yeah, morning, Raj. Very good today, actually. Even though it's raining outside, it's still very good.
It's raining outside is getting to... well, it's a Friday when we're recording this, so that's always a good thing. You get to relax after that. Mark, we're going to, we're going to jump straight in. I want to optimize the time that we have together. I want to get as many questions in as I can to add as much value for people listening. And you've been in property for, for over 16 years now. You've got a wealth of experience and knowledge in the industry. But you were an entrepreneur long before property. What were you up to before? What business were you in?
Oh, wow. Where do I start? So, I started, I think, when I was 26 with my very first business. And that was, um, essentially a sales company. So we had a contract with the, um, what was then called the Southeastern Electricity Board. I think it's now Scottish and Southern, I think it might be. Um, and we were a subcontracted sales force, essentially. So, and we grew their sales from roughly about 400% year on year. It proved the model worked that, you know, if you put sales people into the position that was previously run by just standard staff from the shops, then, then you can increase sales. And from that, um, do a number of sales contracting roles before setting up my first company, which was a central heating company, actually. And, and all that happened there, very weird kind of how things happen. So, my, my plumber was around their house servicing the boiler at the time. He and he was chasing me chatting. I've known him for a few years. He'd done the same thing every year, the boiler and so on. But I've seen him outside that. And, um, he asked what I did. And I told him, I showed him some of the figures we were doing. And he said, well, I'm thinking of setting up a company, um, to offer service contracts. And by the sounds of things, you've got the sales knowledge. Do you fancy teaming up? And that was literally, literally it, over a cup of tea in my, in my, um, office at home I had at the time. And so we set up this central heating company. It's called the Gas Network. It actually still trades today. Um, and we focused very much on just offering gas service contracts. Um, but also the key driver for me was it was the first time that landlords were being asked to produce gas safety tickets. Right?
Yeah. Yeah.
That was the opportunity. And I thought, great, we can cream this. Um, so we, we were based in Camberley in Surrey. Um, and I lived just outside Camberley. And we got an office there. And within, I would say, six months, we dominated every single letting agency. Um, and, and we started to grow outside our own area. We picked up contracts with Help the Aged, with KFC. So we did the KFC restaurants country-wide. To help, help the agents throughout the South. And we had the, all these sales contracts. It was the beauty about it was it was recurring revenue. So it wasn't so much about putting a boiler in. It was actually the recurring revenue aspect. It was the attraction.
Yeah. Once you've got, once you've got the customer, once you've got the client on board, it's about keeping them on board, I guess. So they've come to us for other things as well. But whilst we were running that company, we came across another guy, also called Mark. Um, and he had a lot of the marketing skill I didn't have. I, I've never been a fantastic marketeer. Sales, yeah, I'm okay. But market, marketing was never appealed to me at all. And Mark came along and kind of opened our eyes to how we could expand. So my expansion, I talked about was with Mark. And he brought another person with him, a lady called Jackie, which was his partner. And between the four of us, we set up, I think it was about three, might be four other companies. Um, one was, one was seven telephone numbers. Uh, one was an IT company. One was a utility company. And one was a telecommunications company. And each one of those was set up for just because different opportunities arose. So the telephone company and the utilities company and the telecommunications company were all set up following deregulation. So essentially, when BT's monopoly was removed. Right, right.
So how, how did that tie in with the gas safety side of things? You know, how did the customers in transition into that, or was that just completely separate?
They were treated as completely separate businesses. But, um, obviously with one customer database, we would clearly contact them and say, we do have these other services that we offer as well, and see if we could cross-sell. But we, we tried that to a degree. And we were with the gas safety company, that was primarily residential market. Whereas the telephone numbers, the telecommunications, utilities, and IT were all commercial. All businesses. So there wasn't much of a crossover. And, and it's interesting how one company led into the other. So the telephone number company that we had, where essentially we were selling telephone numbers that spelled your company name, for example. Um, right. Yeah. But we would charge five thousand pounds for that telephone number, or ten thousand, or fifteen, or whatever it might be. So again, it was more of a sales type role that led us into, um, stumbling across the utilities side of things. And that was, that was again, where the markets were being deregulated by the government. So you can now choose who your electricity supplier is. Now, I know a lot of your listeners will be a lot younger than me, and they won't remember that period. It's now commonplace to choose your supplier. Well, guys, when I was your age, that young, we couldn't choose a supplier. We had to have the supplier in our area. And we had to get through our gas supply. So when it was deregulated, and the nature of the deregulation was that every competitor to British Gas and the electricity boards could undercut them. So it was a simple sale. Well, why would you say British Gas? We can save you 20%. Simple deal. But we were focusing very much on the commercial market. So we, we had a sales force of, um, wow, I think it was about 240 people. Um, and we were doing over 700,000 contracts a week. And during one of those sales visits, we went into a telecoms reseller. And he said, well, you're already selling gas, electricity, why don't you sell telecoms as well? So we, okay, we started to sell telecommunications products. And this was again, kind of the telephone number aspect of things, but slightly different to what we were doing previously, where we could actually earn revenue out of those telephone numbers this time on, on a regular basis. So we started selling these telephone numbers, which were 0870s. I can't remember what they've changed to now, but, uh, I think so, three fours now, but the, there were 870 numbers. And we earned a penny every time per minute, every time a phone call was made. Now, we started selling that. Of course, nothing happened after about three months. We ditched it. But then we got checked through the post for six thousand pounds, which was two weeks revenue from one telephone number. Because what we'd signed up, and one of our sales guys had signed up, was a company called Whitbread. Now, if you don't know the background behind Whitbread, they founded Premier Inn. And the telephone number we'd sold was their central reservation number. So we just suddenly had this revenue stream coming through from this one telephone number that was just mind-blowing.
And that's one telecoms company. It's funny the way you're, you're describing it, you know, the elements of, of luck. You know, the gas safety side of things, or selling that, that telephone number to Whitbread. But, you know, it doesn't give you justice the fact that you've tried so many things. Eventually, something, you know, you're going to get lucky at some point. And then you make your own luck from there, don't you? You still gotta roll it out. You still gotta scale it up. You don't get to the numbers that you're getting to without perseverance as well, right?
Absolutely. Absolutely.
And then the, I mean, we sold the gas company, that that still trades today. We lost the IT company, that just went naturally down. And so did the telephone number company. We kept the utilities company and the telecommunications company. The telecommunications company became our largest company. We sold that in, uh, 2009. Um, so we were doing some property, but we stabbed the company. But we sold that in 2009 for well over a million, um, pounds. And, uh, yeah, I mean, that was great. I'm seriously great. Gave us the, gave us the, the, um, starting capital to, to seriously do property.
Well, let's get into that. So you've got these successful businesses that you're running. Because we're winding a little bit. And what, what made you make the transition? What made you jump into property at this point?
We bought our first property in 2005. That's myself and Jackie. Because I, I didn't add, is actually Jackie's partner died. And so, and the other partner, we had left. So that just left me and Jackie. And so we bought our first vitality in 2005. I had no idea what we were doing, quite frankly. Just, it was, it was an email from somebody that says, is this property? It's, it's going to cost you virtually nothing, um, as long as you get the mortgage, obviously. And it's going to give you rental income. We thought, yeah, we've always wanted to do this. Let's do that. So we just jumped into it. Then we were going to every property event that we could find. We bought property in Bulgaria. And we were just kind of all over the place. No pattern or inclination of what we were really doing, apart from that general thought process that, hey, property makes money somehow. Let's just get involved. Um, and it was only when we got to 2009, and we sold the telecommunications company, a couple of things happened. And the reasons why we sold. One was, we, we lost one of our largest customers to someone that we knew. And we've been quite transparent about. And they'd gone behind our back. And then that really sort of stuck us. It was like a, yeah, a stab through the heart. Oh my God, you know, um, what do we do now? I mean, that happens in business, all right? You know, the things, things do go wrong. Or you'd lose a customer. But when it's someone you knew, and you thought you fasted. Yeah, yeah, yeah. You know. And, and at about the same time, someone approached us to buy the company. And because of our frame of mind, we said, we thought, you know what, we don't need this anymore. Let's see, let's see what they can offer. And, um, yeah, we were a small company. I mean, we employed, it was myself and Jackie. And we had four other people. That was it. And when they came back with the valuation, we just fell off our chair. We thought, mass ridiculous. But we then started having conversations with potential buyers. And they were all quite serious. They were like, okay, all right, let's, let's, let's do it. Let's, let's do this. And then, then kind of gain the question, what we're going to do now? Because we were too young, really. I mean, 2009, I was 49. I thought, well, do I semi-retire, which is kind of the role I did do, actually, initially. Um, or do, do we just do something else? And we both decided that maybe now, now we've got a little bit of capital behind us, perhaps as now was the time to actually build some longer-term wealth and stick into property. And it was for the kids, primarily. So, little did we know that that capital we had was nowhere near enough money. That's property, isn't it? Really. Like you said, there's, you always need more. And we'll get into that, um, a bit later. But what was interesting is you never thought, you weren't thinking about selling the company before that happened. That situation happened with the competitor. And that kind of ties in with property quite well. Because people say, why am I going to approach some random about selling their buildings, selling their house, selling their commercial building? You have no idea when the perfect time arises. And that person does consider selling it. And if it's a good deal, follow up on it. You know, so I just wanted to touch on that because you just made a good point there with regards to situations can change overnight, just like that. So you started to, to get into the world of property, start realizing that this is the way you want to go. What were some of the, the initial properties that you started buying and started getting into? And what locations were you operating in?
Um, well, we focused very much on buy-to-let. I mean, what was, what was interesting, I can just backtrack a little bit there. And the reason why I kind of helped our decision to go full time to property was as we were selling the company, we got an invite to a Rich Dad Education seminar. And we thought, what's going on? Let's, let's try and find out, you know, this is what we're going to do. Let's go and find out. And, um, we signed up with them, actually. They're known by another name now. But we signed up with them. There's a lot of training with them. And we essentially followed what we were being taught. And the thoughts at the time was, where you focus them, isolate, get your portfolio built up, cash flow, and so on. And I'm based, uh, I live in the South Country, quite an expensive area. And we started doing some figures there. And we thought, Jesus, this ain't going to work at all. This is not going to work. How on earth are we going to replace the incomes we had with our companies, um, with buying the properties here? And we're not going to get enough of them. So we did two things, actually. One, we looked at where our money was going. And we slashed our expenses like there was no tomorrow. Is it right? We don't need that. We don't need to buy that. We don't need that anymore. We had, uh, children in private school. We took the decision to take them out of private school. Um, and all those kind of things. So we had, came brought our expenses right down to rock bottom. Um, and then reassessed and looked at where was the best place to buy. And we did a lot of analysis. So the good thing about having a business background is I'm not really drawn to this kind of only investment in 30 minutes of where you live. I, I think that's rubbish, quite frankly. I think you base your decision on a lot of technical factors and knowledge of the market. And so we started looking at different areas, cheaper areas around the country. And one of the guys that attended a training course with us happened to live in, um, uh, the Hull, Grimsby area. And he sent us, he was sourcing properties. He sent us a property. I said, no, you can't possibly buy a property for 50 grand. It's just like, I'm looking, I'm looking at a few hundred where I live. And you're telling me you can buy a house for 50 grand? And we started doing the cash flow. Because we were focused on cash flow. And I think the thing about having a pot of money is great when you, when you receive it. But if you don't have an income coming through, that pot money starts to disappear very, very quickly. And it did for us. And so we had a bit of a wake-up call that we've got to start generating cash. And that was one of them ways was through cheap buy-to-let's, cash flow. We, we currently own around about 60 of those. And we also did some deal sourcing at the same time. So we actually were generating active cash as well as passive cash. And to me, that was based on what we were taught and what we knew at the time was the best route to go. Would I go that route nowadays? Why? No. No. But it was the right route at the time.
Well, we'll get into that as well, actually. That's very interesting. What, so it seems very much that you're looking to replace that income that you had before. I think it's very interesting what you did with regards to slashing those expenses and bringing them right down and realizing that what you think you needed to replace your income initially, certainly wasn't the case. Just, it's survival mode, really. It's like, can, can I do this full time? At least cover that problem where you're not lying awake every night wondering how you're gonna pay your bills. So that's, that's a very interesting point. Point one. The other thing was, were you thinking about capital growth at this particular point of time, or was it mainly just about cash flow?
Purely cash flow. And, you know, the reason why was, was in business, cash flow is the most important thing. You know, all the businesses I've run, yesterday, they've grown. And we were fortunate to sell the last one for a decent amount of money. But was, was that relevant to me at the time? No, it wasn't. What was relevant was the cash flow of the business. And I knew if the cash flow was coming through, that will reflect at some point in the future in, in capital growth. So, you know, the properties that we bought in, in the initially in the Hull, Grimsby area are now worth 40, 50, 50 or 60 more than they were when we bought them. So capital growth has happened. But we've had much better cash flow than we would have had if we bought in the South. So it's kind of balancing it.
Yeah, it's interesting that you looked at it from a business point of view and looked at it from that point of view. Yeah, it's always going to come back to cash flow. That's what keeps business alive. That's what keeps things going, unless you're in the business of buying businesses and flipping them. But, you know, that's, that's a very different place to be altogether. So you managed to scale a large portfolio. And that's a big question that a lot of investors would have. I mean, you told us where a lot of your initial capital has come from. But people might get to two or three or four or five, and that's when they hit that wall. That's when they they need that, that next level of, of figuring things out. And what would you say were some of the, the key factors for you that helped you get past that, that next level of scaling?
For me, it was knowledge. I think the more we could understand about different strategies, raising money, uh, and so on, is what really made it happen. So, yeah, we did a lot of, um, creative contracts, so release police option type contracts. Did quite a few of those. Extremely profitable. Every single one we've done, those have been absolutely amazing. And we still do them today. Um, we also focus very much on talking to people, lots of people, um, to try and, I, I used to call it finding the money trail. I was, I was everybody for me had a target on their head. And it was the pound sign. And I needed to know how much money you had. And I probably did four network meetings a week in my early days. And these are obviously not another ones we have now online, but the actual face-to-face ones. Um, some of the largest ones in the country. I used to go to the Berkshire Property Meet, which was the largest in the country at the time. They had 300, 350 people there every single month. I go to some of the London ones. I went up to Birmingham to the large PIN meeting that was there, just to network and meet with people and find money. That was my sole goal. I was finding money. And we were fortunate enough to find a few really good investors that believed in us, saw what we were doing, saw that we'd already done quite a lot. And because of our background as well, recognize us as doers that we're just going to go out there and do it. One way or the other, with their money or somebody else's money. And they wanted to be a part of the, the, the, the, the gravy train, if you like. So, uh, we were fortunate to get those investors on board. Most of whom we'd never met previously. So these are all cold contacts. Not, not once, a single person until recently, uh, was a person we knew from other businesses or from early days in property. Which is very surprising because you would assume that being in business for so long before that, you would have built up some contacts and some other business owners who might have money to invest, might not be in property, but looking to go down that space. Um, why, why did you feel that that wasn't the case? That you found people that you already knew? Why did you think it was people in the property space?
Well, because the, we approached, we were right, we did approach those people. And the only answer we got coming up, Mark, you've just sold your company. What do you need the money for? Which is kind of a difficult one to answer. I said, because I'm looking to build a large portfolio of properties, and I haven't got enough money to do that. Um, and, you know, it's only more latterly that's they've came back to us and see what we've done and said, well, you know, we've got money to invest. Can we invest with you? And we can, we now kind of privileged positions with a certain term. And I said, well, okay, we'll bear you in mind for the next deal. Um, so we were forced to look for cold people. But one of the common denominators with all of these people, apart from one, I think, was they all had a business background anyway. So we, we would network. And I just happened to network much better with other business people. And if they're a property event, I'd ask something about the background, what they're doing. If they were new, what they're looking to try and do. And had they ever thought about investing in somebody else's project? And that's kind of how.
You know, so when you say you're networking, you're going to a lot of property network events. Were you also going to, just when you realize that actually business owners is kind of what I'm looking for, did you start going to non-property events to find people as well?
Actually, we set up a training company.
Okay. That's interesting. Because that was a question I was going to ask you, you know, was that, that way you started attracting the investors to you? So again, you get kind of two bites of the cherry. They either train with you and go off and do their own deals, or they train with you and they might end up doing deals with you and investing with you.
Yeah. So I'm often asked, and I'm sure a lot of training, uh, owners, training companies, I know Rob Moore, for example, has asked, has been asked as well, why not, why do you run a training company when you surely should be doing property? Well, the fact that my Rob has a pretty large portfolio, as well as we do, I think our answers itself. But the main reason is, you meet people. And you meet lots of people when you're running, when you're doing training courses. And we're a small company, so we don't meet as many as someone like Progressive. But, you know, we meet enough people. And we, we focus on those people. So that, the things that we do, so like our mentorship program, we will only take certain, certain types of people. We know it's not for everybody. We know it won't work for everybody. So we narrow that down. And generally, the people we're going to work with are either business people that join our mentorship program, or they've had a good, well-paid city job. And, and have the money there to work with, or to help them get out of their city job. Um, and so it's just a lot of people. And, you know, we've had people attend some of our training courses, um, and, and they've come back and said, look, I've got, we've got this deal. Can you help with it? So it's a way of not only finding potential money, but also potential deals that we wouldn't have found as well. And one of those, we're actually working on at the moment as well. So, you know, it works. There's, there's only so many deals that you can find yourself, right? And if you can partner with other people and do it, it comes back to relationships. I, I find property is the better you are relationships, the better you're going to be in property. I, I find.
And that brings me on to a question that I asked you before about one of the biggest lessons. You said you learned in property was picking the right joint venture partners. And I wonder if you can tell us a little bit more about that. And I wonder if there's a particular story there at all that, that you can share with us.
Yeah, I'll certainly show you, show you one with picking the wrong joint venture partner. I think, you know, most of our JVs have been pretty good. Um, and it's, it's all about, uh, agreeing what, what their expectations are, you know, what they're expecting out of it. We, we very much are the ones that want to take control of the deal. If we're not in control, we're, we will waver unless they've got a lot of experience, or, or, you know, they're contributing all of the money. So we're not, we're not leveraging at all. They contribute all the money. Okay, we'll, they'll need, they have to have some kind of control there because that's their money. But generally speaking, they're not. We're borrowing plus we're having some of their money as well. So we have to have control of the project. Um, and, yeah, most of them have been pretty good. But we have made mistakes. And those mistakes, and I'd say this to anybody that's looking at a potential JV, you need to take time. And we didn't. There's two deals in particular where what had happened was, because it taken so long to come to fruition, the original party that agreed to contribute the cash element was no longer interested. And so we're at stage where we're about to exchange contracts, and we don't have the cash to do it. So we're frantically then looking for a JV partner. And in two instances, because of that, we went with the wrong people. And so you're almost forced. Yeah, you, you're left with limited options. And you, you, you're so close to the deal falling through now, you've got to take the money, I guess. And then we became motivated buyers, which you should never become. So, and that was, and that was the big lesson learned, because the, on both deals, we made no money whatsoever. It actually cost us money. Um, because we went with the wrong people. And we, the thing is, if you don't spend the time to understand somebody, you don't know what their personality is like, you don't know what kind of triggers them, you don't know what's going to happen if there's a problem that we need to solve. If there's a financial issue where we need more money, or where we let's say, for example, it's on a part loan type basis where they're earning interest out of it as well. We said, well, actually, we can't pay the interest. What reaction they're going to have? All those kind of things. And, um, that happened to us. And we thought, okay, two one, we know we don't do that again. And we'll never work with them again, either.
That's so interesting. You've answered the question that I was thinking about with regards to, you know, the holy grail and unicorn situation is, you borrow money for a deal from someone, you you give them on a loan basis with interest, you might add value to the property, use the, the BRR method, or the BUR method, refinance it back out and give it back to them. And that's the ideal scenario. But if it doesn't, or if that first exit doesn't work quite that way, what is exit 2? And, you know, can they afford to have their money in a little bit longer? Can they wait to receive some of them, all these things? You know, you ideally don't want to get to that phase. But it can happen. And I guess that goes back to making sure you've got the right partners on board. What would you say is some of the ways that you can filter these partners out for you? What are some of the questions that you might ask them?
Um, to be honest with you, I would ask about your family, your background. That's all I'm interested in to begin with. Now, when I started out, I was just interested, how much money you had. And that's the wrong tack, let me tell you. Having learned from experience, the wrong tack. I knew I could sell somebody into a project because of my sales background. But I learned that I, I didn't need to do that. I needed to find out more about them. They need to find out about us. We'd get a few drinks, maybe go for a meal, show them some of the things we're working on. And make it more of them coming to us than the other way around. So that we become the chooser, rather than us, rather than them. Um, us has been the other way around, where we are forced into choosing them because we're desperate to get that deal over the line. And that's, you know, these, obviously these deals a few years ago now, but it still sticks in the back of my throat that we made those mistakes that, um, we should never have done. And when we looked at it, we did the same mistake twice. Is we went into a deal that we should have walked away from. Um, but because we became motivated buyers, we were, we were forcing ourselves into a situation we should never have been in. That's a whole, yeah, another conversation with regards to the whole motivated buyer situation. But for so many different circumstances, like you said, that's one, another one is a market like today, when you're like, well, I need, I need to buy something. I need to get in. I need to, you know, and you learn a lot about yourself going through through different cycles of different stages in the property market. Um, I'm not going to get into that. I think maybe we can follow up on that another time. But following on this, this theme of lessons and challenges, you said that, well, actually, what would you say has been one of the single biggest challenges that you've had more recently in property?
Yeah, the most recent one is we've been trying to put a deal together where there's 41, uh, owners. And this is a plot of land of which we're one of the owners, by the way. So it's a plot of land in Surrey. It's inside the M25. So it's kind of always been in our minds, prime, absolutely prime for development. And, yeah, we bought this before we were trained, just, just as we got some money through from the company. And Paul land. Yeah, sorry, go to work. Must work, you know. And all it was was a guy that bought this plot of land, and he subdivided it and just sold off these plots. Actually worth nothing. Okay. And I see this now. You see them on Rightmove. You see these little parcels. Oh, yeah, looks good. We'll buy that. And people are buying them. This is, this is a silly thing. And they'll never develop on them. So we, we're kind of now 10 years on since we bought, 11, no, 12 years on since we bought that plot of land. And about a year or so ago, 18 months ago, decided that we'd start to get everybody together and see if we can make something work here. And because when we contacted everybody, myself and Jackie were the most experienced property people there. That these other people were just people who bought plot lands, but they could build their own house on it. And it'd be part of their pension. So we've kind of led the way of putting the deal together. And I said, look, the only way that we're going to get someone to talk seriously to us is if I can control the whole thing. Okay? No one can, not, not a single developer or even the planning authority is going to listen to us, 41 different people. But if we can act as a collective and then work together, then they will listen. Because it is a prime plot. It's seven acres of land inside the M25. Right? You don't find that every day of the week. So, um, we're just literally, we had the conversation, uh, two days ago about the option agreements that are now going to be signed. So we're going to have 41 option agreements signed. As soon as I get those all signed. So that's going to, I'm going to post that everywhere. I don't think I've ever heard of 41 option agreements being signed. Like you said, like that. That's going to be for houses, right? So I assume the scheme is going to be a housing scheme, by the sounds of it.
Yeah, well, we've already been offered, um, six, seven million for, for the, for the land already. We've got an offer in from Barratt's, Barratt Homes as well. But the more we thought about this, although it's, it's certainly the biggest thing I would have ever done, and we're just giving an idea of GDV, so gross development value, for those who don't understand, or sales potential sales value of the end product, is going to be around about 50 to 60 million pounds. Wow. Yeah. So it's a big old scheme. Absolutely. My comfort zone, a little bit. But we were talking about this with a couple of guys I've got working with me on it that are from also own plots as well, because they, we kind of come together. We were pushing this forward. And I said, like, you want to come help me because you seem to be interested in pushing forward. We were talking about the other day about doing ourselves. So originally, it was like, we'll sell this to Barratt's or someone similar. Now we're thinking, you know what, I think we can do this. Uh, we need a bit of money because it's going to cost us a few hundred thousand pounds to actually get this through planning. One of the partners told me he's got a hotel he's selling. And he's happy to put the money in. I thought, right, now we're talking. Yeah, now, now it's viable to start looking at that avenue, isn't it? Really. Employ the right people because we will need top dollar people on this one. It's metropolitan green belt. We know that the local people don't want it built on. So we've got, we've got immediate challenges. But the housing authority, the local authority, hasn't got the five, six year supply they're supposed to have. They're well behind, in fact. So they've got to put, agree to more housing.
Well, that, that's, you know, it always comes down to that, doesn't it? Was it 300,000 homes or so, or more, that we're meant to be building every year? Especially in the M25 area, like you said, there's no way that their portion of that is is being covered at all. Um, I'm sure you're going to have consultants flocking to you if you, if you manage to get this together and get those options together, really. So, um, I'll be very interested to see how that unfolds in the future. And all the luck that, to be honest. Thank you. Mark, we've got last few questions now before we wrap things up. And I want to finish on a few fun scenario questions. We're going kind of full circle a little bit, because you said that you, you hinted at a couple of things at the start. But first question is, is there any advice that you wish you had when you were first starting out on property that you can share with us today? If you had podcasts when you were starting out, what's the one thing that springs to mind that you wish someone had told you when you're starting?
I think if there was, um, one thing, I mean, when I started the training, I did. There was, there was a way, a set way that they suggested you did things. You know, you start with buy-to-let's, you then do HMOs, you'll then do commercial, you then do development. And we've kind of turned that on its head. And so, well, actually, you're investing in property, and it's about spotting the opportunity. And whether that opportunity is a buy-to-let, whether opportunity is development, shouldn't matter whether you've started yesterday, or you've been doing it ten years. And I firmly believe, and I've, we've just launched our development mentorship to prove that point, that you can start as a new person doing development from day one.
That's interesting. Like you said, that definitely flips things on its head. Because I've talked about this recently, and I think you actually joined me in Clubhouse on a conversation where having about one strategy versus multiple strategies and things like that. And, yeah, that, that's a completely different perspective. And I like the fact that it's a different, uh, different perspective. Get my words out there. Following on from that, that kind of leads perfectly on to this question. If you were starting again in 2021, right now, you have the knowledge, you have, but you don't have the portfolio. Where would you be focusing your efforts? Commercial property and development? Elaborate a little bit for us. Tell us why you feel they're good opportunity space.
Well, I think development, um, is certainly on the risk scale. Development is certainly riskier. There's no question about that. But you can limit your risk. So you can, for example, like I've done a couple of times, where, um, secured a plot of land and then got planning on it. And I've just made the planning uplift. So I've not, you know, taken it from to the builds phase. We're now taking some through to the build phase, which is again, a risk, a risk element. So I think, you know, as long as you're aware of the risk element, then there's no reason why you can't start with development from day one. And we've had this without some of our mentees who said, I don't want a rental portfolio. I just want to build. I had a young lad the other day, he's 29, right? He's a carpenter. He wants to come off the tools. And he said, I don't, I don't want to build a rental portfolio. I want to build houses. This is fine. We'll show you how. So I think it does turn a lot of things on its head. So that's one of the reasons. Of course, the returns on development are can be quite good. If you get it wrong, that's another issue. Yeah, yeah. With commercial property, I think commercial property is very misunderstood. You know, most of the training companies, we're not, no different, really, teach primarily residential. And every, whether you listen to a podcast, whether you read a book, it's all residential based because they don't understand commercial property. But if you understood commercial property, why wouldn't you do it? The tenant pays for everything. So it's for repairing, ensuring, lease. In other words, they insure the property, they pay for repairs, they pay for maintenance. Use the landlord, collect the rent. What can you not love about it? Residential, you pay for the maintenance, you pay for the repairs, you pay for the insurance. Oh, the onus is always on you, isn't it, when it's residential, um, landlord? And it's getting, there's more and more things being put on you. At the end of the day. So I can completely see where you're talking about from that point of view. But also the uplift on commercial property, because an empty commercial property, unlike an empty residential property, has much less value. Whereas an extra residential property versus an occupied residential property is the same value, assuming it's in reasonable condition and so on. But a commercial property is empty. As soon as you put a good quality tenant in there, you could get 100 uplift, 200 uplift, and more. And it's understanding those things. And then once you do understand them, and there's a lot of, there's quite a lot about commercial properties, a lot more involved than residential. Um, but understand the basics, then you can make quite a lot of money. And it's, and it, it's got to be that shadow of doubt, the closest thing to passive income in property. Because residential property, to me, is not, it's not passive. Commercial, well, let me see. I haven't got to repair the property. I haven't got to maintain it. I've got to insure it. If they ring me up in the middle of the night and say, light bulb's gone, I don't, so replace it. I don't return the call. They, and I get rent once a quarter in advance. Yeah. What's not to like about that?
To be fair. Last question then, Mark. Same question, but would the answer be different if you had limited funds available? So let's just say you're starting again, 2021, you have your knowledge, you don't have the portfolio, but you only have 10,000 pounds. Would the answer still be the same?
Yeah. Let me share, let me share with you, right? Three deals I'm working on, okay? Where I don't need any money. Go for it. All right. So I've got one in Dover. We currently got our second pre-amp going through. The deal was brought to me by someone attending one of our training courses. Met with the vendor. So we're doing directly with the vendors off of my off-market deal. And the deal we've done with the vendor is he gets paid when we build and sell the land. Has cost us absolutely nothing at the moment until that happens. When we get planning, it all goes into a company. So there's no, no cost again involved. And we can borrow 100% for the development cost. The planning money is actually from an angel investor. So we put no personal money in. We've got, um, another one, which is a commercial conversion. So converting an office into into residential here. It's fairly local to us. The vendor wants 3.8 million for the building. GDV is around about 9 million. And he's got a million pound mortgage on it. Now, in order to make this deal work, and to get to that 9 million GDV, we can't buy the property because we have to buy the property. The interest cost will outweigh part of the benefit we're going to get. So what we've said is, are you open to a JV? He's in his 70s. He's, he's selling the property to essentially retire. Now, so he is open to a JV. So all we've got to do is, uh, fund the development costs, which we can 100% finance. And we've only got to borrow a million pounds to repay his mortgage, rather than 3.8 million. So again, no money. And that's just knowledge, knowledge, and negotiation skill.
I'm so glad that was your answer, by the way. Because a lot of people would assume that you have to go, you'd step back and go to less capital-intensive strategies, you know, to to start up using that 10,000. Um, and that's not wrong either. It's just, it comes down to appetite and what you're looking to achieve. But the fact that you said, no, that's where I want to be in commercial and in development from the start. I assumed you would use that money just to get in front of the right people, basically. Because once you're in front of the right people, like you said, knowledge and negotiation and sales skills, your sales background, it will take over from there, I'm sure.
Yeah. Absolutely.
Mark, that has been brilliant. Thank you very much for your time today. I really enjoyed it, learning about your lessons, your experiences, and how you got started in property. If people want to follow you, Mark, and get hold of you, where can they go?
You can follow me on Facebook, on LinkedIn, on Instagram. On all of those. Uh, Instagram, my Instagram handle is @marklloydproperty. Facebook, if you just look at Mark Lloyd, I think it's number six, I think. And LinkedIn, it's M L L O Y D P A. Um, you've got our, um, our website, which is propertymasteracademy.co.uk. And also our crowdfunding website as well, which we've not even talked about today.
No, I, you know, I will talk about it in the introduction. But, we've run out of time. That's a whole other topic. And maybe one that we can dive into a little bit more another day.
Sure. Happy to.
Mark, really enjoyed it. Thank you once again. And we'll speak soon.
Thanks, Raj.