Rolling with Rent-to-Rent

CASE STUDY #3 - JACQUIE & ANTHONY

Jacquie and Anthony didn't start with much money or any property, so pursued an aggressive cashflow strategy.
  • 2 joint ventures with a previous Masterminder, £550/month profit
  • 9 Rent to Rents agreed, £8,471/month profit
  • 2 purchases in process, £1500/month profit
  • ​3 Rent to Rents in process, £1978/month profit
  • ​£11,949 total monthly profit.
It is customary that at the final workshop of each Mastermind Programme, some of the departing Masterminders get up on stage and talk about their experiences and results. Here is Jacquie and Anthony's contribution...

WATCH JACQUIE & ANTHONY'S CASE STUDY

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TRANSCRIPT AND SLIDES

ANTHONY: Good morning!

CROWD: Good morning!

ANTHONY: How is everyone feeling?

CROWD: Good.

ANTHONY: Great! So, I'm Anthony DeSousa.

JACQUIE: And I'm Jacquie Edwards.

ANTHONY: And we just wanted to share with you today our journey from where we built our property foundations on. You're going to hear quite a few people speak about some amazing journeys and it's really great to share and we're hoping that we'll be able to give you a bit of a different view and perspective on things. So, who thought, by a quick show of hands, that this year was just going to be about property? And who thought it was going to be one of the most amazing personal development years of our lives?

JACQUIE: And who just didn't know what to expect? Yeah, me either.

ANTHONY: So what we're going to share with you today, is a bit of our reason why. So, why property and why we did the strategies that we did, what we learned about the environment along the way, and then a few hints and tips that make what you're doing a bit easier. We'd really like to thank Simon for inviting us up to be here today, it's really an honor to be able to stand before you. We'd like to actually also thank everybody in the room that's helped us to be up here today, we wouldn't be able to do it without you. So, thank you very much.

JACQUIE: We're going to start with a little bit of background about us. I was an accountant for ten years, I worked with one of the big four accounting firms and that's actually what brought me over to the UK to start with. From there, I switched to freelance accounting, but I felt like something was missing. It was a really great job, but I was sitting at someone else's office every day. It was kind of like being in a car when you get into that trance on the way home. So you get into the car to drive home and the next thing you realize, you're at home but you don't remember how you got there or any of the details. When I look back at the last few years of my life, that's what it was like. I sat and wondered, "How did I get here?" And I knew it was time for a change.

ANTHONY: For me, I joined a small technology starter company as Person Number Three. I think there's a Google book titled something like that. "Person Number Four," or something. I've been lucky enough over the last nine years to grow it up to 50 people. I absolutely love what I do, which is a bit of a different story to some. Absolutely love what I do, but it takes a lot of time, it's more than a full-time job and I wanted to look for a way to start getting my time back. So we decided to start looking at options to do that, we thought that property would be a good one and I decided to commit to our education.

JACQUIE: We didn't have a lot of money at the time and we didn't have any property yet, so we needed to a bit of research. Of course, I read Simon's book, "Property Magic" and then I went to the Oxford pin meeting, where anybody that's met Judy Barlow knows how motivating and inspiring she is. So, within a couple of months, we had signed up for the three day Mastermind Accelerated Programme.

ANTHONY: So, that's a bit about us. Now for our reason why, so the first thing that we learned on Accelerator was you need a really big reason why. Your reason why acts as your compass, so when you're trying to be there making those decisions, it keeps you going in the right direction. As Stephen Covey said, "Begin with the end in mind." If you're not sure where you're trying to get to, not only can the journey be a bit rocky and bumpy, you can end up in completely the wrong direction. So the very first thing that we learned was one of the most valuable lessons, what's your why, where are you trying to get to?

For me, my big reason why was to get some of my time back to spend with my friends and family doing the things that really mattered.

JACQUIE: And a lot of that was hopefully spending a bit more time with me. The only times we get to spend a lot of time together is at these property events. I take him to lots. For me, it was a lot about the holidays. I really love to travel and especially if I get to go home and visit friends and family. I don't know if you can see the other one up there, the alpacas, that's one of our goals because we're going to have an alpaca farm.

ANTHONY: Just 'cause they're really fluffy.

Okay, so the start of our journey was in June 2013, it was a misty day. Some of you, actually, were here with us in the room on that Accelerator and we were absolutely pumped to get started straight after. So what we decided to do was keep it easy and work with the previous Masterminder. So we did some joint ventures with Paul Preston, I don't think any of you all know him. We got some invaluable learnings and some mentoring and he also got us going in the right direction on our property journey.
JACQUIE: We also started our advertising right away after the Accelerator. So like Simon said, we got our ad in the newspaper and we started a short leafleting campaign. I also was so excited that I quit my job in September 2013, so that I could focus full-time on property and just make sure I made it work. So I spent every day running around doing everything that I could possibly imagine doing. I also took a lot of training courses in that time, so I thought that I'd learn every strategy that was out there. I thought we could do a couple of rent-to-rents, do a few lease options, do a few flips in there. We were looking anywhere in-between Oxford and Swindon.

A few months later, I was really really disappointed because we hadn't done any deals. I thought, "I know all these strategies, I know everything I want to do. I'm looking in such a big area, I should have one deal by now." And then I had a coaching call with my amazing coach, Andy Haynes, and after I whined and cried to him a little while about how I wasn't getting anything done, he asked me, "Why don't you plan your business the same way you plan your holidays?" We had just come back from six weeks of holidays, so I was really good at planning those. For us, that's when the penny dropped. Like it has for a lot of you, we realized we needed to focus.

ANTHONY: So what we did is, we sat down and we put our plans on paper. I don't know about you, but actually writing things down on paper makes them seem a bit more real and you're more likely to commit to them. So, we wrote down our strategy (which was rent-to-rent), the area we were going to operate in (which was Oxford), the time frame (which was the next 12 months for the Mastermind period), and what the target was going to be (we were hoping to achieve £100,000 passive income). So that was our strategy, we committed to it, that's what we were going to do for the next 12 months.

JACQUIE: We were looking to find motivated landlords and there are three main reasons we chose rent-to-rent in Oxford. First, we lived in-between Swindon and Oxford and while Swindon is a bit cheaper and less highly regulated (because Oxford has Article 4 and additional licensing), we decided on Oxford because it has massive rental demand and I just knew my way around slightly better than I knew my way in Swindon. Second, we chose rent-to-rent because Oxford is one of the most expensive cities to buy properties in in the UK. So we probably could've bought one HMO in Oxford but by choosing rent-to-rent, we were able to put our funds into multiple properties and basically, exponentially increase our cash flow. The third reason was we were looking for a cash flow generating strategy. I had quit my job, we needed to replace my income quickly.

So we were really lucky that by the beginning when Masterminds started in February, we had our strategy all mapped out, we knew where we were going and what we were going to do. Because I don't know if many of you feel the same way, but those first few months are quite tough. You feel like you're doing a lot of work, you're running around, but you're not achieving a lot of results. You're spending lots of money, you're telling everyone that you're a property investor, but you just don't feel that way on your inside. We kind of describe it as you're pushing a rock up a hill. You're working and working and working and you set these high goals for yourself, but you're not achieving them as quickly as you think. Everybody's an expert in what you do now, so you think you can quickly become an expert in property. But it takes time and it takes hard work and it takes the support to get the momentum going.
ANTHONY: Sometimes you can feel that the ball might slip and crush you under the weight of your expectations and lack of experience. It can be really hard to keep going and you tell yourself, "Actually, it's a bit too much and I feel like giving up." And we did have those moments along the way. Not just once, actually, quite a few times. We shared on the microphone a couple of times about that and it was the support in the group and hearing the other stories and your other journeys that you're all having the same thing and feeling the same things that allowed us to pick ourselves up, get inspired, dust ourselves off and get going again. We learned about the support of the group and thank you very much for everybody that's helped us along the way. When things do slip now, they don't slide all the way down to the bottom, they just move a bit, you can take some of the weight off and then get back going and get the results that you deserve.

JACQUIE: All the hard work is worth it because once you get that rock to the ledge and you get your first deal, it all starts to happen. Once it starts to happen, it just keeps happening and happening and the momentum builds and it just pushes you along. That's what happened for us in April when we got our first rent-to-rent deal about three months into the Mastermind program. After that, the rock was rolling and we had so many deals that the next learning curve was figuring out how do we manage all these properties, how do we even set up an HMO?
ANTHONY: So a little bit about our journey, so I'm going to talk to you about the results that we've got. Already mentioned that we did two joint ventures with the previous Masterminder. It was a brilliant source of mentoring, got us going in the right direction and also, £450 a month profit cash flow, which is great. We've got nine rent-to-rents agreed, which bring in just under £8,500 a month profit. We've got another two purchases in process, so we just now started to switch our strategy slightly and again, keeping it simple, we're now looking to buy houses. So we're buying these in Swindon, we haven't done it before, so we're working with a previous Masterminder that's done it before. We're getting the learnings from them. That will get us another £1,500 a month profit and we've got another three rent-to-rents in process.

Now, this is a bit of a funny story, stopped looking for rent-to-rents, thought "Right, we've got enough rent-to-rents, now we're going to start buying." And as soon as we said we're going to stop doing it, three came along. It's like buses, isn't it? When they're finished, and we think they should be finished by the end of the Mastermind year in February, they'll be another £2,000 pounds for a total of £143,000 profit per annum or just under £12,000 pounds a month income after costs.
JACQUIE: I'm proud of that. Thank you! A couple of quick case studies so you can see a little bit more of how we did it. You can see from the first bullet-point, it took us six months to get from the initial call from the vendor that came in through our newspaper ad to getting the cash flow on this property. We also had to go through HMO licensing and planning. We were lucky enough to turn this from a rent-to-rent into a lease option because we built up the report with the owner. He had bought this property as an investment property, all he was looking for was a return on his investment. He didn't want to do the management. He'd actually called one of the universities to talk about their long-term leases as well. So we were lucky I was able to build a report with him and we've got a great relationship now.

A few of the numbers, you can see at the top there, we did have to pay a deposit at the beginning of this one. We didn't have the background and the experience, so to make him more comfortable, we had given him a deposit. We had quite a lot of costs, you can see the painting and decorating. This is one we did ourselves with the help of one guy. Big mistake, listen to Simon when he says hire someone else to do that. Anyways, total set-up costs about £12,000. This house has five bedrooms now, we'll make a monthly profit of just over £1,000 per month. Sorry you can't see it very well, but it's lots of information. This gives us a return on our investment of about 110%, which means we get all of our money back within the first year. It worked for us, we're quite excited. Yeah, that's our first one.
The second one is a bit different, this is one probably a lot of people looking at rent-to-rent wouldn't consider doing because it needed a lot of work and a lot of investment put into it. I don't know if you can see from the picture, but there's so much rubbish there. It cost over £1,000 just to get all the rubbish removed from the inside just so we could almost start with a clear slate. And in the second picture, I don't know if you can see, there's a nice hole in the kitchen. That was the water feature for the waterfall that came down from the shower upstairs. We decided to get rid of that, we patched that up. And then the bottom picture is just what it looks like now. The owners are really happy because this used to be their family home and when they left Oxford about ten years ago, they'd been managing it ever since remotely. They'd been struggling with it, really. So when they got our letter through the mail that said we could guarantee their rent, we'd take care of their property, they were thrilled.

Again, set-up costs, they were quite high. We did put about £20,000 into this property just to get it up and running and into good shape. We make ... just under £1,300 a month, so it's got six double bedrooms, one of which is en suite. That gives us a return on our investment of 75%. Again, a lot of people might not look at this, but because we got this on a five-year lease, the owners already talked about extending the lease and buying more properties in Oxford for us to manage. So, it was a really good deal for us, it met our criteria.

ANTHONY: One of the things that really resonated with us about the Mastermind program was Simon's spirit of giving. In the beginning, we learned a lot from the group, we're like human sponges getting all this information in. We found as things progressed and we started to see results, it was only natural to start wanting to share and give back to the group. What we found is, the more we shared, the more we actually learned ourselves. To the point where sometimes, we weren't actually focusing too much on our own businesses because we were helping other people. A big learning for us was actually that even when you're helping other people, you can still achieve your results, which is a bit of a mindset shift from previous lives.
Another really surprising thing for us was that we never would've believed when we gave a small share on the microphone about how to meet everybody at your local pin meeting that it would be people's biggest learning of the day. Especially with the likes of Dan Hill and Sally Lawson there also speaking on that day. We were driving home at night pinching ourselves going "How's that possible?" The really really good thing is that somebody came to us after and said, "Look, I used your tip. I went to my pin meeting and I actually got a joint venture partner out of it!" How amazing's that? Just something that you thought was not even that important. We've got a load of other hints and learnings and tips that we've got along our journey and we're really happy to help people. Go and have a look if you haven't already.
Just a few top tips. The first one, and these are things that have really helped us, they're quite high level things. The first one: FOCUS (Follow One Course Until Successful). Once we found our focus, we really started getting results. You think you go out there, pick a strategy, commit to doing it and keep doing it until you've got results. The other question we get asked quite often is, "When would be a good time to do this?" Or "When would be a good time to do that?" Nearly the best time in all cases is just act now. Do it now. As Andy Gruen told us, "Taking massive action consistently, doing the right things gets you the results." If you're not getting the results you're looking for, then look in one of those areas for the area that's not quite there and work on that.

JACQUIE: The third thing is, spend time with people that inspire you. There's a quote that says, "If you're the smartest person in the room, you're in the wrong room." And I've definitely been in the right room this year because I've been in the last 12 months, stretched beyond what I thought would've been possible. My hero, Zig Ziglar, he has an amazing quote that says, "You can have everything you want in life if you just help enough other people get what they want." I think we've helped a lot of landlords and tenants and hopefully some of you along the way.

ANTHONY: Overall, we'd just like to say that the main thing to do, to focus on is to just follow the program. Do what Simon says. It works! It's really worked very well for us and we'd like to just say a big thank you to everybody that's helped us on the journey along the way.

JACQUIE: And the journey's just starting, so we hope you'll choose us to share it along the way.

ANTHONY: Thank you very much!

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