Transcription
Finding guys and welcome to your Wednesday dose of wealth wisdom with me, Daniel Kennedy, your host. Feeling slightly under the weather today, but I'm not gonna let that stop me from doing this video.
Today's topic is picking an area where we're choosing to invest or source. Like, where should you pick? What should you do? So, same detail, I'm gonna share this to various places, and we will share, then we shall begin. This again was requested by the inner circle. This was the highest, second highest voted subject, so this is what we'll be doing and talking about today. So hopefully, all those who voted, you will make use of what I'm about to share. Same, there wasn't some way that you can just share it to all the places, but that's not possible. It will be eventually. So, we always have this sort of pause at the beginning, right? So that's been shared to multiple places now.
And let me press record. Hello and welcome to your Wednesday dose of wealth wisdom. Today's topic is picking an area to either source or invest in, with me, Daniel Kennedy, your host. So, I've had, usually the first question is, when somebody wants to get involved in property, after they've learned multiple strategies and what to do, is where do I start? And with property, the way that we purchase them, we're not purchasing them at market value. So, 25% of a full 40,000 pound property is just the same as 25% of a 300,000 pound property. Only there's more equity in the freedom. 2000. So broadly speaking, you can do it anywhere. When you're looking for below market value deals, you're not restricted. And when sourcing, because I always recommend that people do sourcing first, because you need to get good at that before you gain credibility, because people are gonna want to know what you do, know what you're about, and you most likely you're gonna need to be able to raise finance and no one knows you. So why would they lend to you? So sourcing is a great way to build relationships with investors, because it, you can eventually build your own part and buy your own deals. So initially, I think you should just pick any area. Pick maybe your local area or an area that you're interested in the future, and really, really hammer down on that one area. That there are some people that do the whole country, and that's great, that works for them. But me personally, I think being really, really, really dominant in a small area is really beneficial for the way that I work. Could you build contacts or build relationships? You have your trades, and then you can expand when you start to do your own deals.
So for me, I would pick a city or a town. I wouldn't go to specifically villages or really, really small places because there's going to be rental demand. Like we are in such a huge deficit of the number of properties required for the population, and the population is only going one way, and that's up. That's not to assume that your units are always going to let. You have to bring value to the market. So be that HMO, you don't want to do HMO in a small town where there's no industrial base, because your chances are, you're not get it out. So you might have to do single let's in that area. But when deciding on an area, any, there will be multiple strategies that work in that area. So for Birmingham, you've got, we've got it's a fantastic area. Single let's, flats, HMOs, everything works here because of how big the city is, and the demand is huge. Also, the competition is huge. So you have to bring value to the market because other people will be supplying better products than you, and that will always be the case. But you just have to make sure you stay above the curve. Like, you're not at the bottom of the market, because then your rooms don't get left. But where I started in a town called Hartlepool, which is really, really deprived area. Had good areas, had bad areas, it still worked there. I was purchasing properties for 27,000 pounds, spending a bit of money on them, refinancing them, and they were letting DSS tenants, but they still paid the rent, and the returns as a percent were much higher. But when we came to sell those properties, we had to sell them to an investor, and the way that the investor purchased them meant we didn't really gain much on capital appreciation.
So I'm not saying you should hold out for capital appreciation. And personally, I think once you've bought a property and you've set it up, it's, it should be yours for life. That's how you should build a property business. I don't think flipping or developing is really great because it, for me, I want to build a systemized business where I don't have to do too much to keep it running. Where when you're flipping, developing, you're still trading your time for money, and I feel that that's not something that I want to go down. We want to try and keep all the properties and the business down to the next generation and so on and so forth, and they grow in the same manner. But for picking an area, the key things that you need to decide is what strategies you want. If you want HMOs, you're probably, like, Hartlepool isn't really a great market for HMOs. However, there were people who were doing HMOs and killing it in Hartlepool, but they were very local to the market. So they knew their nuances, they knew the streets. But HMOs, you need your student towns, your student cities, your industrial bases. You need places where there's going to be a transient population, where the population doesn't really stay there too long. And the big cities are really, really fundamentally perfect for this because people are moving in, moving out. Because you don't tend to build a sense of community with HMOs because people just haven't lived there during the week, live there for a few years, or whatever, build up their deposit, and then go to the places that they can afford. And I would always recommend specifically an HMO, so that you, you pick the best area in the city that you can possibly get. There's no point in buying that HMO is subpar just because you want to save 30, 40 grand, 'cause you're gonna spend all this money developing the property anyway. You might as well spend that a bit more, keep it for, because you can keep it for your lifetime. I don't recommend ever selling an HMO because it's only really valuable when it's ran correctly, and you should put a system in place so it's always running correctly. So you need to make sure that there's demand in the area. How can you make demand? How can you ensure that there is demand in the area that you pick? Because this is how I picked my first area. I went because I was really debating, I was trying to do some research, and I thought, this, I'm getting annoyed with this, I'm wasting time. Close my eyes, put them up, and it landed. But it didn't land in Hartlepool, it landed on the Headland, like nearby. So, but I said, why I'm doing that? I don't care. I went up there, did the strategies that I was taught, and I ended up building a portfolio of 11 properties using zero money, like, like doing balance transfers on credit cards because they were that cheap. I was able to purchase properties, rent them out, and the council had this really fantastic scheme where if a property was empty for two years, they'd take it off you, refurbish it, rent it from you, and then they take a portion of the rent from the refurb cost because it was interest-free, and you would have a guaranteed tenancy for 10 years. And eventually built up a portfolio of them, sold that portfolio off, came to Birmingham, and to play a bigger game in the HMO market. But from the word, the first deal, I was telling everyone what I did. I was really, really broadcasting what I was providing to the market. So I was unable to raise finance for the deals in Birmingham.
But what you need to do is basically have an area that's accessible, have an area that you can trust in, and that you're gonna be in the market for a long, long, long, long time. Because as I say, I'm always going to advise you to stay in the market. Never get out, even during the downward periods. Have your properties still working for you. Be sure that you can have access to lots of trades, because that can be an issue. So if you're living in a country location, so like a small village in Gloucester or something, or out in the sticks in Shropshire, the access to trades is going to be a bit more difficult. You don't think that this would be a problem, but it actually is. And I speak to the landlords who are involved in the country, and they have to do a lot of the work themselves because they just can't get the trade, or there's one bloke for like three, four towns, and he's fully booked. So that's also an opportunity for those who want to get involved in properties to set up in a sort of remote area, as long as you're willing to travel. So you're looking for a town, really, of a hundred plus thousand population, because you want to be able to grow your business in one area. People are going to argue the pros and cons of being everywhere. Once sourcing, you can source everywhere. But when you're building the property business, stay in the same town, stay in the same city. For me, I stay in the same area of my city. I've got one HMO that's outside of my area, and it's a bloody pain because 40-minute drives doesn't sound long, but it actually is when people don't turn over to viewings, people, trades late, and you've drove 40 minutes there. So you can't just nip round to another house to do bits and bobs. So pick the same town. A hundred thousand plus is a good number. And there's, you don't really need to be too concerned about the rental demand, because if you buy in the right area, or rent in any town, in any city, in any sort of area of a city that you want, as long as your properties are done to a good standard, you're able to systemize it, so you can increase your top line and decrease your bottom line, meaning there's more alternative investment.
So the practical steps that if you're picking an area is one that you have access to, and maybe in the future, if you're in a full-time job, you're going to move to that town. So pick a place that you'd like to live, because ideally, if you're going to build your business and you're going to be the go-to person in that area, you need to like it. And maybe live on the outside, or live in it. And for me, I did that to Birmingham, and now I've got friends who in the trades, I've got, I've got really good relationships with the council. I've a few estate agents come round for my house for a poker game. It's, it's all win-win-win. And that's because I'm in the area. If you really, really want to get involved in property, you have to be where the deals are, or where you want to source, and be known as the person to go to if you want to sell properties in the area. And their deals eventually will come to you if you take yourself and present yourself as a good pair, a good buyer, and you do what you say you're gonna do, because that's a real trait that you need to try and internalize and become part of you. If you're in an area and you feel that it's really deprived, and it's really like there's no work or the economy is going down, don't write off that area, because that's what 90% of the population will be doing. And for me, most people wouldn't have even touched Hartlepool. And when I speak about, when I talk about the street style is buying on, but there were solid rentals and replace my income with the portfolio of eleven properties. I've got mortgages on them, and they were fantastic. There was no maintenance, no anything. And it really, really furthered the continued because the strategy worked. No doubt doubled the portfolio. The only difficult part was the cash flow was a bit. I was only getting like a hundred pounds for a property where I did an HMO in Birmingham, and I was getting fifteen hundred pounds. So one property in Birmingham was beating the whole 11 that I had in Hartlepool. So I decided to sell up and then focus on that. But that's not to say that the strategy in Hartlepool was bad. It was just a slower, but also a lot, lot, lot less hands-off. So really, really easy to systemize it.
But the key is not to dilly-dally on trying to pick an area. So as for those of you who know me, I'm gonna help coach in the mentorship, the Wealth Dragons. And those people who's been in the mentorship for a year, and they're still deciding on the area, like, I've, you've wasted so much time, there's wasted so much capital appreciation, there's missed so many deals because they still haven't found the area. They're thinking, oh, maybe I should go here, maybe I should go there, maybe I should go here. For me, I would recommend the key thing is to make a rash decision on the area, do a bit of sourcing, and then if you find it's not for you, go to a new one. But don't waste time on trying to pick the perfect spot, trying to pick the perfect location, trying to pick the perfect town. And 'cause property is so forgiving. The only thing that you need to really be concerned about is getting in the market as soon as possible. The best time to buy a property was ten years ago. The second best time is now. And if you're not trading or flipping, get yourself in the market. Even if you leave money in the deal, there are so many people who try and get all that money out of the deal, and then I see them six, seven months later, and they still haven't done a deal. But yeah, they've got that money of a bank doing nothing. Whereas if they'd purchased HMO debt, they may have earned their say, twenty, thirty thousand, then only have twenty thousand left in the deal. And that's very typical of a deal of an HMO deal. So just get in the market. Don't be too concerned about the area. If you're not sure about the area, source around, because they'll be somebody who will be willing to take the risk and buy those properties from you. And over and over and over again, people are really concerned about the investors. Anyone who's been involved in the property business knows that that's the easiest part of the business. If you've got 30, 40 genuine, not some wishy-washy numbers that we see out there, but a genuine 30% below market value deal, you'll sell that any day of the week. And if you can't find anybody to sell it, come to me because I'll believe you buy it off you if it's a genuine deal, because I've got, I've got money that needs spending at the minute. But just get yourself in the market, source some deals, and then if you can see that there's demand for investors, what does that tell you? Tells you that there's obviously a rental market there, because investors are choosing to invest, whether it be a local old boy or some new young buck or whoever is. Property tends to rent everywhere, as long as you're not out in the sticks. Testing rental demand, a great way to do this is just to call a letting agent up, say you're looking at building a portfolio in the area. What are the typical rents for a one-bed, two-bed? What are the basically the demand like? How many tenants do they have looking on their books? And obviously, there's a conflict of interest, of course, there is. They're gonna tell you what you want to hear. So call multiple agents up, call a estate agent top, get the information from the local people in the area, and they'll be happy to tell you. Like, and most people think that people were gonna guard their areas. Like, for me, I'll tell everyone where I am. It's mostly Kings Heath, and I'm gonna stick there for as long as I possibly can, because it's rental, it's so solid. And if people want to invest, they're great, because there's a real, real demand for properties, and the current stock, most of it's really, really crap. There's only one or two landlords providing good, clean accommodation, which is a shame, really, because you can't do every deal.
So this is all about sharing, giving away your intellectual property, because people are begin to see you as a person of knowledge and come to you with their questions, their problems, and then these people become your investors. Because 99% of the people who watch this, who listen to the podcast, who pay for the education, won't do anything. I, I don't know why. I've discussed it with various people. Just people just like, they just don't take action. I'm really, really, really stumped at why they won't. But then the clipping in these meetings, when we put people's out who's marketing, the people who are doing deals, but that handle who delivered leaflets last week, month, or whatever, who sent letters last month, and those are the people that are doing deals. They're not special, we're not special, we're not different from anyone else. We just seem to that we can go out and market. There's a real, real simple process. So that's why I have no qualms about telling people there's a great HMO market is in, hate, King's Heath, mostly because also it's very expensive to gain entry to the market. You're looking at through from 200, for a six to eight bed, and really, you're leaving 60, 70,000 in a deal, and you're only making about 50. Still a great return. But when you build up enough of these, you can then the rents from the previous deals can pay off what you leave in the deal, and the investor gets paid, and then you get paid. And that's how it works. So that's why I feel you should stay in one area. Because I can tell you the history of Moseley, why it's called Moseley Village, how the industrial sort of like CEOs and the capitalists didn't want to live north of the city, because that's where the workers lived. So they came south and they built a bohemian village because they had an architect who basically, there was an architect who was a German architect, a bohemian art, he designed the village. And then they didn't like the workers being involved in socializing with them. So they built a private park that people, like, modern day, you're only allowed in this park if you have a B13 postcode. So you're only allowed a key, and there's a private park for everyone who lives in Moseley. Like, what a great selling point that is. And obviously, I play it up to the max when I'm dealing with tenants. I tell them, I, it's so, it's so ostentatious, you go there and you just say, good day, peasants, I'm going to my private park. And not really, really play on the fact that how it was and why Moseley was built. And the same for King's Heath. Like, King's Heath is like the cannon of Birmingham. It's got really, really great restaurants, really good pubs, loads of quiz nights, and it's a real great area for HMOs. And with the railway stations, it's only gonna go one way. So because I'm in one area, I can tell a story. I know all the agents, the agents all know me by face. I'm knocking on the same doors. When I'm pitching the sellers, I'm like, sometimes I'll open the door and I'll be, all right, Daniel, still not looking for selling? Like, I don't told you this last time. And then you just, people, I say, hey, that's fine. I'm just letting you know I'm here to do business with you. I can make you money if you want to. If you're interested, just, just hit me up. Here's my number again. And I'm seeing the same faces, and I'm becoming that familiar presence within these two estates. And now we get estate agents calling us up for deals that go up on the, on the books. Because if they can get it done, they know that we buy quickly, there's no hassle, they get a commission, and it's much more economical for them to rather to do loads of viewings. They'll say, right, let's, let's see if the KML guys want it. We go, we'll take it off the market. And that's how we've got our latest deal.
So stick to one area. If you're going to build a property business, don't be too concerned about rental demand or what the area is like initially. So to find out what the area is like, I want you to source or we could go to that area, knock on the door, speak to the estate agents, put up your signs, park me a van with your number across it, and then start speaking to the local residents. And you'll get a feel for the area. They'll tell you where the bad areas are, they'll tell you which streets you shouldn't go down after six o'clock, else to tell you where you shouldn't leave your car unattended. And you'll know the good and bad areas. And you can then give that because that's valuable information. Local knowledge is really, really valuable. And you've moved, present that. So when your investors come up to look at your deals, you say, no, we wouldn't go on that street because of this reason. These are the good streets because of this, this, and this. That's the student area. So if you're wanting to go to HMOs, this is where you're likely to buy, etc. And it positions yourself is a real, real expert in your chosen field. And your first job in any property business should be a sorcerer, to be able to generate cash. And so local knowledge is really, really key. There are some people who are doing it nationwide and they're making an absolute killing by building these relationships up, but not many people are going to be able to replicate that because of the systems that need to be put in place. Where everyone can build ego and deliver a leaflet and have a chat with somebody and build a connection face to face, it's a lot more localized and it's very hard to scale. But it's worked for me, it's working for countless other people. If you do decide to go nationwide and build a property person, it's nationwide. What you've got to realize that you're going to be paying your premium prices for your electric certs, your gas safety certs, your new boilers, and everything, because you're not going to build the local connections. So it might mean you say no to a lot of deals.
So me personally, in my hometown, ideal has come up that's going to be completing on tomorrow. Purchase price is 85, sorry, market value 85, and the purchase price is going to be 51k. That's a fantastic money and money out deal. But I said no to it because it's out my area. Even though it's in my hometown, I've said no to it because I want to stick to these two areas because the drive there and the drive back and organizing the trade trades will not be worth it. My time is more valuable than to 300 pounds per calendar month. If I set my life up where it can be in one area, I'm setting myself up for success. So if this plumber can't call out or electrician is unable to attend a property, I can go there and still provide a good service to my tenants. They're happy, I'm happy, and it's just a win-win for all. Whereas if someone went wrong in one of my Telford properties, which it has, and tomorrow plumber is going out, I'm gonna have to pay a premium for this bloody electric shower that's gone, as opposed to being having my guy look at a deal and then go, I actually, can you just quickly fix the shower for me? And most of the time they'll do it pro bono because I give them so much work. We've got a few comments. I'm, I'm not gonna try and bother, sir, bloody reading them again. The last time it was all higgledy-piggledy, and I lit up turning the video off. So I read them after, and I will answer any questions after.
So now that's my four process on picking an area. I haven't really give you any concrete steps or all I want you to do is not waste time trying to find the perfect area because nowhere is perfect and nor will it ever be. You need to like the human condition is all about dealing with problems and imperfections because everyone is imperfect and every deal will be imperfect. You've got to make the best of it that you can. And start sourcing in an area if you're not too sure about it. And then you'll just, through a process of being an area, you'll learn and you'll become the local expert. And then people will come to you for advice and questions about that local area. And just be happy to share everything that you've learned because eventually you're going to be selling the people those deals. Just be aware in the back of your mind, 99% of the people are not going to do anything. They're going to come up with excuses not to do things. They're going to come up with reasons not to go there. Though I'm not sure this is a bad deal. But then when a good deal comes along and it's genuine, you've got the evidence to back it up, you've got your conviction in your local knowledge, you'll be able to sell the deals all day long, absolutely all day long. And if you can't sell the deals, and that genuine 30% BMV, come to me and I'll help you sell them because there are so many more buyers than there are deals. Rest assured, it took me about three hours to sell that deal in Salford just by borrowing the network and leveraging therefore four people's connections. And that's how you do it. You get wealthy by helping other people and other people helping you. And everyone takes a bite of the pie because there's enough to go around. And then after you've sourced, if you find it's not for you, you've got no anchor, you've got no connection to that area, you can just pick up yourself and move to a different one and start the process again. But just stop wasting time trying to find the perfect area. Source, source, source, learn the area. If it's not for you, move. And also be aware in the future, you're probably going to have to move to the area. Just if you really want to be the go-to person and really get all the good deals and really sort of cement yourself as the person to go to in that area. It's just easier, it works, it's better. You build like your, your social group will be within the property industry. You can pass deals to each other, you can build a mastermind, leverage of other people's knowledge in the area. And, and then that's my fault on it. If you're struggling to find an area, drop me a personal message and I'm more than happily chat to you about some areas that you're looking for. But the key is to just stop wasting time picking area. Source or source or source, and then if it's not for you, move on to the next, and just keep doing that, and you will find an area right for you. Be that even if it's your local area, and you take a really, really long time to get a deal. Maybe you're in London, maybe you're in the South, and you have to source lots of deals because you haven't got the income yet just to be able to purchase the properties. Because if you're in London and you're sourcing deals are a million quid, you need to have the income coming in each month to be able to purchase those and add those to your portfolio. Whereas in Birmingham, you're looking at some areas, you can get properties for 60k and you can start and build up that way. We're fortunate for me, I had a few in Telford where they're dirt cheap, they're good renters, and now that we've moved on to bigger things, I can offload them and focus on the small area that I'm involved in. So also have that in the back of your mind. If you're wanting to build your portfolio in Knightsbridge, you, you're probably a bit, a bit too confident, if there's such a thing. And it's, you've got to realize that you want to be buying these deals. You don't want to just source because you like the equity and the capital appreciation and the growth. That's how you get real long-term wealth and hold on to it. Sourcing is still trading your time for money. So pick an area which you can eventually start to buy.
So the cities that aren't Birmingham, like Cambridge, Oxford, they're really, really difficult to be to purchase in, because you're not going to have potentially, you're not going to have the income to add them to your portfolio. Whereas a hundred thousand pound property, a hundred thousand pound property, much easier to add to your portfolio than a six hundred thousand pound property. It means you have to source less. We take your first one on, and then once you take your first property on, it's really easy to get your second, your third, your fourth, because it compounds. Like the rents from the first properties plus your wages, then the rents from the two properties plus your wages, then the rents from three properties plus your wages. So you want to try and buy as soon as you possibly can. And what I've seen is really interesting. It's when people break through the ice and they take the action. So there's one gentleman who bought his first property, and he was stalling, he was all the excuses crap. He bought his first one, and it exploded. And now he's just buying, buying, buying, buying, buying, buying. And the first deal was just okay, it wasn't great. I wouldn't have gone for it. But since then, he's sort of like got the book for it. He's just doing deals left, right, and centre. And he's, his real inspiration. And that's why I'm really keen to get people to just do their first one, because you learn so much by doing as opposed to reading on paper. Everyone could read what to do, but actually getting up there and doing the work and controlling a property and then making that step to being a landlord or a landlady, it will give you like your successes give you energy, give you filter for more successes. It's like a snowball effect. Like with one success, you're excited to meet another and another and another. So that's why I say set the bar pretty low in the beginning. Just get a deal done. If you leave a bit of money in there, okay, that's not ideal, but it's better than not having anything and just doing, leaving the money in the bank. And that's my take on picking an area. Don't dilly-dally, get it done immediately. Start sourcing in the area. So you don't have no long-term connection if you're not sure of it. Then if the area is right for you, really hammer down on it. Become Mr. or Mrs. Birmingham, or South Birmingham. I think anyone who's in the property industry knows as already Mrs. Birmingham, she's beat me to it, but she's really works a lot harder than me. That's Sue Sims. So I'll be hardly Mr. Moseley. And get people to associate you with that area. Learn, like get your tentacles and every sort of local event, get people knowing you that you are available for this type of deal, you're the person to come to if there's an issue. And be, be genuine, actually try and help people. And a lot of, 90% of the time with the deals that is telling them to go to an estate agent and say, listen, you've got enough time to go to the market and get market how are you? You want to make you the last position, so you need to eliminate the estate agent. If they can't, you need to eliminate family and friends. If they can't raise money to maybe do the property up to get a premium, you need to maybe eliminate changing mortgage providers so they can maybe keep the property and get a cheaper rate. If none of those things are possible, then they come back to you, and you've presented yourself is genuinely trying to help somebody. And it's much easier to negotiate a position when you're on their side of the fence as opposed to offers at them. And when you've created that sort of environment where they trust you, you've helped them, you've gone back and forth, because for me, I've never closed a deal on the first conversation. It's always been the back end after we've gone through loads of avenues. So I'm investing a lot of time with these people, giving them free consultation advice. And some people I never hear from again. The vast majority I don't. But I keep their details on my database and I hit them up once a month for every fortnight, just asking them how it's going, do they need any help, can I help in any way, are you still looking to sell? And then the deals, they just come along like London buses. And it's, and that's how I source my deals. I just keep going from remaining contact. And a lot of them sell on the open market, great. Delete them. But a lot of them won't. So if you've got any more questions, or if you've really got a great nugget of information of how you pick an area or how you analyze an area, do let me know. Be really curious to see. Thank you for joining me and spending your Wednesday evening listening to me rattle on about choosing an area, and I hope we've got some value from it.
If you are wanting to get involved in property but not ready to take that step, we've got a great development coming up where we're opening the opportunities for you to get involved by investing with a company. We'll show you how we source the deal, what architect we've used, what builder we're going to use, what contract we use, and then you'll get to come and visit the site. It's gonna be free, eight-bed HSR, e36 bed HMOs. So you can come and have a look. I'll show you where we buy our bathrooms from, we'll show you where we buy our paint, what everything to do with this specific deal. You'll see it from the beginning where we've sourced it and bought it, till the end product where we're renting it and putting it to the open market, and how we refinance and the brokers to flow that. So if you want to learn how we do for here things here at KML, get in touch. Obviously, it's not free, you have to invest, you get paid as well at the end of the project, and you can really share in our journey, and we can both make money together. That's something that you'd be interested in, let me know. And until then, I shall see you next week, which I'm going to put a poll out for the public to decide what we discuss. As I have a fantastic person who's gonna come and join us next week. We were going to touch on taking action, but I feel that's a bit of a small subject that's I touch on each week. So we're also going to be answering questions from the public. My phone's going off, and I guarantee that's a tenant with a problem. So [Music]