Transcription
My name is Samuel Leeds and I'm the owner of this lovely hotel. So I rent this building for £65,000 a month, but then I rent it out significantly higher. I mean last month we brought in about £82,000 revenue. So the profits are very high. And sometimes people see the quick 20 seconds Tik Tok video of "Here's how much I pay a month. Here's how much I get. Here are the figures. Isn't it fantastic?" But this is a behind-the-scenes video where I'm actually going to be showing you how I work in my company, the marketing behind it, because you can't just stick it on Airbnb and wait for it to get booked up. Take notes, enjoy. You'll learn a lot from this off-the-record behind-the-scenes, but I thought I'd share it with the world so that you can want it.
This hotel, I'll show you. Actually, we just got a new sign, a Samuel Leeds Hotel. So, the seller who was selling it was from Hong Kong. They wanted £2 million for it. They'd previously been renting it to an operator and I negotiated to buy it for £2 million pounds, but I had a 10-year option. So, I've got now 10 years before I actually have to exercise. Well, not even have to. I've got 10 years where I've got the option to buy it for £2 million. And in the meantime, I'm paying six and a half grand a month rent. Six grand a month rent is how much you'd pay just for a big house down here. I got negotiating with people in Hong Kong. From my experience, they were so slow that they they didn't care. The thing is they wanted £2 million for it, but they didn't care. And I said to them, "I'll give you 1.6 million." And they were like, "No, I want 2 million." I'm like, "Okay." They bought it for it was, I believe from memory, 2006, 1.5. Because of the exchange rate and inflation, everything. They just didn't want to lose money and they had got in their head £2 million, but they didn't care when they get it. So I'm like, "Alright, I'll give you 2 million. I'll give you the price that you want, but I'll pay you on my terms, which is in 10 years' time." They didn't put it on the market though. I found this from a guy who lives in Willingham who just so happens to be on the academy. And then when I bought it, the academy member that passed me the lead, I gave him 25 grand. As a thank you.
It's funny because when I was negotiating with the with the owners to buy it, my sister said a £1 option is kind of taking the mickey a little bit. Why don't you do a £10,000 option? And I said, "No, I want it to be one pound." And the solicitors were arguing about that's not normal. Like, just at least make it a few grand, just to it's it's a we a pound. It's it's But I wanted to buy it with a one-pound deposit just for the story, just to be able to forever say, "I bought this hotel with a one-pound deposit."
It was running as a hotel, but it was a little bit shabby. Just before COVID, it was used as a school. It was a college that owned it and the directors were based in Hong Kong. It really needed a vision and my vision for it was to turn it into a high-end hotel and rent it out. So, at the moment, we're charging about £110 per night. The plan is to increase that a little bit as we get more reviews, is to increase that to up to sort of maybe £120, £130.
So, Adam is the manager of the hotel. So even though it's service accommodation in a sense of we've got everything's all keypads and it's all systemized and automated and we don't have a traditional reception and things like that. Uh, we do still need Adam, of course, otherwise I'd have to do everything, which would be an absolute disaster. We've got six rooms up here that we're doing at the moment and it's, you know, the Victorian wing of the house and so we're sort of attempting to keep it as traditional Victorian as we possibly can do.
"How much do you reckon we'll get for this room a night?"
"Um, we'll be looking around about the sort of 300, 400 mark initially, I think. And I think as we progress the building and start bringing in some of the wedding business that we're trying to bring in, I think we can probably push that that little bit further. And plenty of land to put a marquee out there to do the wedding. We've got some outside caterers that I can bring in that will bring in staff and the kitchens and everything we would need."
"£350 sounds like a lot, but there's very little else in Cambridge that is this quality. There's a couple of really good hotels in Cambridge and there's a couple of new apart-hotels that are opening up, but they don't have this. Go into Cambridge and you can't walk on the grass. Come to Willingham House, you'd be the Lord or Lady of the Manor for a weekend."
"And I think that's the selling point that we have."
"So, 207 nights sold in August. Is that for August though, or if someone books in August for, say, September?"
"But that's just purely bookings in August."
"Okay, that's quite a lot really, then, isn't it? Where are the long-term bookings coming from?"
"Uh, Booking.com, direct, and Airbnb."
"Be interesting how many direct bookings we're getting and where they're hearing about us."
It's got three acres and there's a there is the potential to get planning for houses at the back. But whether I want to do that or not is a different story. Certainly now I don't want to do that. It's always good to own land. Bill Gates is the largest landowner in the USA. Does he make money from all of his land? Probably not. But just having land is is is good, 'cause they can't take it from you and they can't make any more land.
If I got planning to build, I'll show you actually. Let's show I'll show you where I potentially could get planning to build. I I don't have an appetite to do it, to be honest. And the reason I don't have an appetite to do it is because I'm trying to be really popular in Cambridge at the moment. The last thing I want to do is start upsetting the neighbors. I learned this on Ribsford House, on Ribsford House. Remember the car park, the trees, and the trees and the neighbors being upset and then reporting me. And I don't blame them. So sometimes you have to not let the tail wag the dog and actually, you know what, I want to keep everybody outside here. I'm running a hotel. As tempting as it is to try and develop the land, I'm not saying never, but I'm not I'm I'm not even thinking about it. But I will show you where I could potentially develop if I wanted to. Look how beautiful it is. Look at this. I think I'd rather use this for weddings and can just see some events here going on. So, where we're standing now would be where potentially houses could be built. Not that I have any interest or appetite to try and do that on this beautiful ground.
"Is weddings a big market? If if the room could hold 60 people?"
"The room can't hold 60."
"No, no, no. If the room could hold 60 people, would we get loads of weddings here and make loads of money from it?"
"I think so."
"In that case, can't we just knock the room into two? What's this room used for at the moment, Adam?"
"Um, not a lot."
"So, it's basically a dead room. And this wall, why could we not just knock that out? If we had just literally five weddings a year and they were paying 10 grand a pop, that's an extra £50,000."
"How much is it going to cost the horror marquee? It's not cheap."
"I don't like the marquee idea personally 'cause I think if it's raining, you got to hire it when we've got perfectly good space here. And then you got this lovely little outdoor patio."
"Isn't it wonderful? Another option would be we could get planning permission to put a marquee permanently because we get planning for that because why would they say no? The thing is we're not quite we haven't quite got the vision for weddings yet. But if we could nail it."
"Hello mate. Just a quick call. Um, I'm just in a meeting with Willingham House team. Do you know if we would be likely to get planning permission if we asked for a marquee to be put in the grounds?"
"I think we would."
"Okay. Next question is if we decided, do you know the um like conference rooms that we've got? We've got like the sitting area and we've got the the boardroom. If we decided to knock one of those walls into two to make the room a bit bigger, would that be do you know if those any of those walls are um, you know, like a supporting wall?"
"They Yeah, they're definitely structural."
"What about Sorry, Ben. What about the wall that goes into the boardroom at the back?"
"That's structural as well."
"Yes."
"Oh, they're both structural."
"Yeah, they're both structural."
"Jeez, I was wrong. All right. Looks like probably marquee it is, to be honest."
If you buy a building and you refurbish it, that refurbishment, the vast majority of it is not tax-deductible. Because if you're refurbishing the building, then you're adding value to the house. And if you're adding value to it, there's a benefit in kind. However, with this building, we don't own it yet, and our company that's renting it, namely Samuel Leeds Developments, can't rent it out properly without a refurb. So, it needs a refurbish it in order to rent it. Therefore, the refurb is tax-deductible. The refurb is now a loss. And not only that, but we're benefiting because we're adding value to the building, which we've got a set price of £2 million to buy it.
I will not pay £2 million in 10 years, though. It will be less than 10 years 'cause as soon as this property gets becomes worth about four, I'm going to buy 'cause we have an option. Even if you got a 10-year period, if you wait until the very end and the house has gone up really high and it's doubled in value, they're going to be really resentful and drag their feet and try you. They have no leg to stand on legally, you're going to be able to get it. But if they're dragging their feet and you might have to go to court and you might have to to force, you don't want it. So as soon as it gets to a point where you're like, "Yes." And the way I've structured this, by the way, is through my pension. The option is with Samuel Leeds Developments, but the profits are going into my SASS fund and my SASS fund will be able to buy it because the option is an assignable option.
The SASS fund, let me explain how I've structured this thing with the SASS fund. When you make a lot of money, like I'm doing with this hotel this month, our revenue from this hotel is £83,000. Now, £83,000 in a month, assuming that we continue doing that, will be a million in a year. If we do more than that, fantastic. If we do less, no problem. That's the target. If we do a million, I'm only paying six and a half grand a month on the rent. I'm only paying £32,000 a year on business rates. After that, the running costs are relatively low. It's all service departments, so we don't have to have full-time cleaners. We haven't got a kitchen. and we haven't got so the overheads are very low. So our projected profit is going to be around about half a million pounds. Now that is before tax. However, what I will do is I will put half of that into my SASS. Now there are is a limit on what you can put in your SASS. However, the limit is per member. And the SASS has me as a member, my wife, my brother, his wife. So, we're all putting the max we can, which is £60,000 a year, which means we can put £240,000 a year just from into the SASS. That means after 10 years, that's £2.4 million that's gone into the SASS. Not only when we're putting money into the SASS does it mean that we're not paying tax, but it also means that when we buy through the SASS, it means that any future income that comes in, we don't pay tax. So, and also if we sell the building and make a big lump sum, it goes into the SASS and we don't pay tax.
So, question, ChatGPT. Do you think £1 million revenue next year over a 12-month period is realistic for a building like Willingham House Hotel?
Congratulations on your brief moment of peak performance. If you actually invest in real marketing, optimize your pricing, squeeze in events and weddings, you could get past the £1 million line. But that's not passive income, my dude. That's hustle.
"How much do you think the building will be worth once I've been able to show multiple years worth of proven revenue at the hotel?"
"With clean books, decent profit, and no major red flags, £2.9 million to £3 million conservatively. Could it be more? Absolutely. If your branding is strong, then sure, £4 million isn't a fantasy, just a very demanding one."
"is if it's if it's worth £3 million in 2 years, I'll probably buy a little bit. When it gets to worth £4 million, I'll buy it."
All right, let's let's talk about the Willingham House Instagram then, shall we? 'Cause that is just dead. It It's hard because it's faceless. It's never going to bang. Why don't we do an open day here and say if anyone in Willingham's curious to come and have a look around, we're going to host We're going to host an afternoon tea, a little tea party. Don't have to pay anything. No obligation. Just come down and then we can give them some wedding flyers. Have to be from Willingham to come. From Willingham come and then we can just hit that get get that in the newspaper. That's what we do.
"You can reach out to influencers and stuff and get them to do that. Oh, hidden gem."
"That's what we should call a hidden gem. I like that."
"It's a little hidden gem. Just driving down some little quaint village and then, bam."
"So, do you think I should talk about the fact um about the the the the the flag thing?"
"Yes."
"I had a recently had a complaint for an English person, a guest, and their complaint was the fact that we had a very small English union flag. This guest has reported us to the council. We have a little souvenir. Got a whole bunch of these in every single room in uh in Willingham House."
"Right. What do you think about the flags? Do you think we should leave them off? Take them down?"
"I think we should leave them for a little while."
"Do you?"
"Yeah."
"What do you think of the uh you know, big one? Do you want to go have a look at it? Tell me where you think you go. I would have happily just had one or, you know, two little. But when when people kind of annoy me, it makes me kind of want to I don't know, maybe it's the rebel in me. It's quite a big one, isn't it? So, where I mean, we could maybe just put it up for a couple weeks or something. Maybe like here. Where would it go, though? I don't know. Or is it designed to blow in the wind?"
"This is serious, isn't it?"
"What you mean?"
"Yeah, this is serious. You thought you thought I was joking or something, but no."
"Okay."
"Not there."
"Like here, right at the front."
"Seen from the road. The driveway."
"I don't know how to actually fit it. Do we need like a maintenance person? Should I send somebody out? No one knows."
"Oh my goodness."
"I like it."