There is a disparity between investors within the property industry.
You have group A, who are happy treating property as a side investment and growing their wealth over the long term. They are likely planning to use their portfolio as a pension pot or to eventually pass it on to their family.
Then you have group B, who I refer to as ‘property business owners’. They see property as a business, rather than just an investment strategy. They may try to ‘scale’ what they do, hiring staff, marketing themselves online and offering additional services to investors or clients, such as sourcing, management or consultancy. Even the way they grow and manage a portfolio is achieved using intelligent solutions, to systemise and optimise the process.
This article is aimed at aspiring or existing ‘property business owners’. After reading this, I hope you will have a clear understanding of the difference between being a property investor versus being a property business owner; how you can transition your investments into a profitable business and in the process, create a cash-flowing asset that you can eventually sell.
The strategies I’m about to outline are ones that I have used myself, to grow countless businesses related to the property industry, including an investment and management company, which I built to a seven-figure turnover and sold last year, a training ecosystem that includes The HMO Roadmap, which has just been finalised as ‘Best Content Provider’ at The HMO Awards, as well as a multi-million pound residential property portfolio.
But oddly, my background isn’t in business or property. Originally, I studied to become a physiotherapist. It was a good career that paid well (once I moved into the private sector) but in my early 20s, I started to feel it wasn’t what I wanted to do long term.
While studying, I lived in a house in multiple occupation (HMO) with other tenants and rarely saw my landlord, other than when he visited to read the meters. I calculated that he was making a good amount of money for very little work!
Meanwhile, my job was hard work.
But rather than grow jealous, I was inspired to buy my first property, which I turned into an HMO for students.
The next few years involved a lot of hard work. I stuck to being a physio while also buying more property and by the age of 26, I had three more HMOs.
It was around this time that I became quite ill; I felt run down, had lost weight and I had an uncomfortable feeling around my neck. Neither the doctors nor I could figure out the cause of it.
Eventually, they suggested it was stress related, but I’ll be honest, I wasn’t stressed at all and otherwise felt quite happy. The only thing bothering me, was my job as a physio, which was no longer fulfilling for me. So, with enough rental income to cover me, I decided to take a break and travel to Canada for six months. I love the mountains and wilderness. I’d worked hard throughout my early 20s and this was my chance to reset, refresh and live my dream, before finally going into property full time.
So, I quit my job, bought the tickets to Canada and moved in with a friend, to see out my time before leaving. But just a few short weeks before I was due to fly, my symptoms hadn’t improved, so my doctor agreed to do more tests. I remember going for the scan on my neck, optimistically expecting there would be nothing of any concern, but before I’d even received the results, I got a call from my GP, who said there might be an issue. I was told to cancel my plans as I was booked in for surgery and within a matter of days, my life was turned upside down – I was diagnosed with thyroid cancer.
Thankfully, with surgery and treatment, my cancer disappeared and I’m now fully clear.
Although I’m cancer free, the change that the diagnosis had on my life perspective has stayed with me.
I saw that many of the things we worry about are entirely pointless and that tomorrow is not guaranteed. We spend time stressing about the things that might happen or go wrong. But what if they don’t go wrong? What if we take the risk and succeed? We get one shot at this life and it’s up to us to make the absolute most of it.
This is what inspired me to go into property full time. I created a business model, got funding and scaled a seven-figure investment and management company, while continuing to grow my portfolio of HMOs. I focused, I took greater risks and I embraced the uncertainty that building a business often demands. I diversified into larger developments – one of our projects has a GDV (gross development value) of £12m – and I built the most extensive ecosystem of HMO property training resources, all of which helped to generate greater cashflow and equity.
A business only becomes a true business if it is something that you can leave for three months or more, while trusting that not only will it survive without you, but it will thrive.
It’s important to work towards this for two reasons:
Having a business that survives without you, is the only way that you will find someone to buy it!
The reason that you’re doing what you do is to have more time. It’s pointless making lots of money, if you can’t get time off to spend it doing the things you want!
Identify all the tasks that take up your time. E.g., instructing cleaners to visit your serviced accommodation units or collecting rent from tenants.
Every time you complete a business-related task, write it down, no matter how trivial it feels. After about a month, you should have everything.
Next, write clear instructions on how to complete each task (process). This way, you can delegate the tasks to a virtual assistant (VA) or employee and they can complete them without needing further instruction from you.
Follow the DSAD approach: Delete, Simplify, Automate and Delegate.
If a task can be removed from your business, then delete it.
If it can be simplified, or shortened, then simplify it.
If it can be automated, especially with technology (e.g., following up on offers that were rejected several months ago) then automate it.
And finally, if you can delegate a task to a VA, property manager or employee, do it!
Don’t be a busy fool. Focus on income-generating activities if you want to scale your business. Would you rather pay 10% to a managing agent to get your time back, or keep that extra £200 and answer late-night phone calls on the weekend?
Launching a business is like sailing a boat. You wouldn’t just jump on a boat with no destination, map or a crew. Likewise, you shouldn’t run a property portfolio or business without clear direction, prior planning or resources. You need to know where you’re sailing to, so to speak.
Take time to think about where you want to be and the lifestyle you want to live. Do you need high cashflow, or is your priority building a debt-free asset base you can pass on to your children? Knowing the answer to this will dictate what types of properties and locations you should invest in.
Always start with the end in mind. I have seen people skip this step and move straight on to replacing their income or investing all their capital. It’s only later they realise that they’ve created a portfolio which doesn’t achieve what they want. E.g., if you want your time back, investing at the other end of the country and dealing with lots of difficult tenants, isn’t the best strategy for achieving this!
Following your strategy might require you to invest in deals that don’t look good on paper, but strategically, they get you closer to your goals; leaving more money in a deal to secure an asset closer to home, or one with a better yield.
Property is a tough game. It’s slow, it’s competitive and there are always unforeseen circumstances shaking things up, like the energy crisis or rising interest rates.
You need to critically analyse your plan and your position. Look at the resources you have, like time, experience, capital, contacts or credibility. Identify your weaknesses so you can develop and improve them and always play to your strengths.
Stay focused on one thing and master it before moving on. I was focused on HMOs for ten years before investing in any other strategy. If you are distracted by the shiny penny, it dilutes your focus and the value you can give to your business.
Finally, you can’t manage what you don’t measure. Have key performance indicators (KPIs). If you have a target of how many viewings you want to complete in a week, or how many investor discovery calls you want to be on every month, then you can measure your progress and analyse if you’re falling short or hitting your targets. And depending on your results, you can adjust your actions.
I hope that you have found this article insightful and that it gives you some pointers on growing your property business. For anything related to property, business, HMOs or personal development, contact me using the details below.
Website: https://thehmoroadmap.co.uk/
Instagram: andygraham.hmo
Facebook: https://www.facebook.com/andygraham.hmo/
LinkedIn: Andy Graham
