From Music To Property Investment: Kane Andrews On Building His HMO Business

Ready to build your business empire?

In this episode, I’m excited to welcome Kane Andrews, a successful entrepreneur, property investor, and founder of Rockstar Property. We discuss his unique journey from musician to property investor and how he scaled his business using investor finance.

Kane shares his expert insights on building a strong team, implementing effective systems, and navigating the challenges of property investment. Whether you’re a new investor or a seasoned pro, you won’t want to miss his invaluable advice!

Topics covered in this episode:

02:55 - Kane’s transition from music to a successful property entrepreneur

09:08 - How he scaled his business by using investor finance

11:59 - The importance of raising finance in building a business 

14:52 - How he built a diverse business empire that goes beyond HMOs

20:59 - Get insights into Kane's unique HMO business approach

29:00 - Understand the role of a solid team and effective systems and processes

30:28 - Top tips for new property investors

32:24 - How to navigate challenges and adapt to market changes

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Transcript

[00:00:00] Andy Graham: Hey, I'm Andy and you're listening to the HMO podcast. Over 10 years ago, I set myself the challenge of building my own property portfolio and what began as a short term investment plan soon became a long term commitment to change the way young people live together. I've now built several successful businesses.

[00:00:20] Andy Graham: I've raised millions of pounds of investment and I've managed thousands of tenants. Join me and some very special guests to discover the tips, tricks, and hacks, the ups and the downs, the best practice and everything else you need to know. To start, scale and systemise your very own HMO portfolio now.

[00:00:40] Andy Graham: In today's episode, I'm joined by Kane Andrews. Kane is a proper businessman, a real entrepreneur who's invested his time and skills and experience into HMOs as well as other business models. Today, I want to find out how Cain has built such a successful business. I want to talk about his tenant model, his demographic, his whole strategy.

[00:00:59] Andy Graham: As you're about to find out, a lot of this is quite unique. So if you're building your own HMO property business, you want to scale your existing HMO business up. This is definitely an episode you wanna stick around for. Please sit back, relax, and enjoy today's episode of the HMO Podcast.

[00:01:16] Andy Graham: Hey guys, it's Andy here. We are gonna be getting back to the podcast in just a moment, but before we do, I wanna tell you very quickly about the HMO roadmap. Now, if you are serious about replacing your income, or perhaps you've already got a HMO portfolio that you want to scale up, then the HMO roadmap really is your one stop shop. Inside the roadmap, you'll find a full. 60 lesson course delivered by me, teaching you how to find more deals, how to fund more deals and raise private finance, how to refurbish great properties, how to fill them with great tenants that stay for longer and how to manage your properties and tenants for the future.

[00:01:48] Andy Graham: We've also got guest workshops added every single month. We've got new videos added every single week about all sorts of topics. We've got downloadable resources, cheat sheets, and swipe files to help you. We've got case studies from guests and community members who are doing incredible projects that you can learn from.

[00:02:03] Andy Graham: And we've also built an application just for you that allows you to appraise and evaluate your deals, stack them side by side and track the key metrics that are most important to you. To find out more, head to thehmoroadmap.co.uk now and come and join our incredible community of HMO property investors.

[00:02:27] Andy Graham: Hi Kane, thank you for joining me on the podcast today. No worries, absolute pleasure. I'm looking forward to this conversation. I listened to your talk at the HMO awards earlier in the year. I found it very interesting and you are obviously quite a unique individual and I thought it'd be great to explore not only what you're doing in the HMO space as well, but a bit more about your wider journey and business empire, I should say, because I'm sure there's a lot that

[00:02:53] Andy Graham: our listeners could learn from you, but maybe just tears up with who you are, Kane, and what your current business is and what you're interested in HMOs and what you're actually doing in the HMO space.

[00:03:03] Kane Andrews: Yeah, sure. Uh, well, firstly, thanks very much for having me on. So a bit more about me. Well, I actually started off my life as a musician performer from the age of 11.

[00:03:15] Kane Andrews: So I was professionally performing, going on tours and being in films and all that good stuff, and had an agent even at that age. So, you know, that kind of like that flair for creativity was instilling in me from a very, very young age. And I really took that into my business. So I ended up at the age of 18, starting a vocational business for children.

[00:03:38] Kane Andrews: This is form an arts type music classes, which I scaled and then exited from that. And then from the age of 22, I was on tour, um, in Brantford of all places. And I just had this urge to invest and buy a property for me. It was just one of those things that's ingrained as us in us as young children that it's a good move to make.

[00:04:00] Kane Andrews: So I did I saved 9,000 pounds from the tour. I put that into a property bit up in the North because it's all I could afford. I ended up with 80 pounds left in my account. And then that was fine because I bought the first house at 22 and I achieved that. So very, very happy with that. Essentially my sort of journey continued really quite rapidly in my twenties, where I was sort of starting these educational businesses and selling them to be able to fund the portfolio and properties.

[00:04:29] Kane Andrews: And it's really, I love the fact that we're talking about HMOs because the first one that I ever did, it was my second property, but first HMO was an accidental HMO. They call it accidental landlord, but this really was an accident. So I bought a house in Farman. Um, sort of down in Surrey and I knew I bought a cheap and the agent came around and says, This must be the only two beds on this estate.

[00:04:54] Kane Andrews: He said, I've been selling properties on this estate for 20 years, and I've never seen a two bed. He said, you could make this into a three bed. And the 22 year old me said, you can't turn a two bed into a three bed. He said, no, you can. You can put a partition wall down there. It's like, what's a partition wall.

[00:05:11] Kane Andrews: He said, you could put a window in that box room. It's like, no, you definitely can't put a window in a box. He said, no, you can. And he said, actually, what you could do is you can turn it into a four bed by dividing the kitchen and lounge in two and use that dining room as a bed. And he said, Oh, and there's the UCA uni down in town.

[00:05:29] Kane Andrews: You could rent the students for 550 pounds a month. Mind blown. That conversation probably lasted about 30 seconds and he said it that quickly and that changed the next 15 years of my life. Just that one slight comment about partitions, windows, getting more rent. What essentially happened was I did exactly what he said.

[00:05:54] Kane Andrews: Converted it into a four bed. I rented out to students at UCA 550. So I was getting 2,200 a month whilst the other properties exactly the same. We're getting 800 pounds a month in sort of buy to let money. And I sold it on the commercial yield for 80,000 pound more than I paid. And as a 22 year old, it's an incomprehensible amount of money, which I just couldn't believe it.

[00:06:18] Kane Andrews: So I bought two doors down, did the same. I bought 10 doors down. Did the same. And then that kind of whole, let's buy refurbish and sell HMOs on the commercial yield took up the next seven years of my life in my twenties. And the whole strategy was to buy, sell, buy, sell on my twenties so I can buy, hold, buy, hold on my thirties.  That really is the entry point into my journey into HMOs. 

[00:06:46] Andy Graham: Well, and is that exactly what you did? You did the first project, ended up shifting it on, did successive projects in a similar way, built up a bit of an equity base. At what point did you then transition to holding more stuff, Kane, and actually keeping it for the cashflow?

[00:07:00] Kane Andrews: Yeah it's a good question. And there was a very pivotal time where I had got to the year 2020 and, you know, had sort of quite a few dozen of these under my belt. And essentially these sounds great. There was money made. Oh my God, was it hard when you're starting off with 300 quid, you do the tour, you've now got nine grand and you've got to find money from places that you don't have it.

[00:07:26] Kane Andrews: I wasn't on social media throughout my twenties. I didn't engage with investors, very different time. Now I was really a lone wolf just going at it day and night, but there was a turning point. At 2020, I said, I moved back to where I was from in Buckinghamshire, and I said to my wife that I want to do this again.

[00:07:47] Kane Andrews: But I don't want to go through that hardship of having to come up with millions of pounds I don't have. I want to start another portfolio. I'm going to call it Rockstar Property Partners. But this time I'm going to engage with investors and they can assist me because I've got the knowledge. I've got the track record.

[00:08:04] Kane Andrews: I just need that lift up. And what I did is I sat down with a number of investors and said, this is my track record. Let me show you the returns. If you had hypothetically put in the money, the equity into these deals. On a 50, 50 basis, you would end up with about an eight to 12 percent return. It was very, very high.

[00:08:23] Kane Andrews: So on day one of launching Rockstar Property Partners on the 14th of September, 2020, we raised 800,000 pounds on that first day. And that was our webinar that we invited some people to. So that kept me busy. And I then started employing a sales director to help. And then it underscaled. I think we're up to about nearly 5 million pounds of equity gone in now.I mean, various different capacities, joint ventures, loan notes, et cetera. But yeah, so I essentially achieved in two years what took me 10 years with my own money. 

[00:08:54] Andy Graham: It's fascinating, isn't it? How just changing your priorities when you look at your business can so substantially change the result. You're the same person.

[00:09:04] Andy Graham: It's still the same model, but actually where you deploy your efforts and your times, and maybe even your skillset and energy can have such a different result. And it's interesting. I'm doing a talk next week for somebody and. In that talk, I'm sharing some of the qualities that I think make really successful business owners in our space.

[00:09:25] Andy Graham: And one of them is absolutely their ability to prioritise. And at the top of that list, and in almost all the cases and examples that I had known, people who've achieved great things. Accessing finance is almost always the number one. It's the thing that fuels, it keeps that conveyor belt moving. And actually, if you get very good, and I'm sure we're going to come onto this.

[00:09:46] Andy Graham: And I heard you talk about some of this at a talk in your deals, but. If you can then find creative ways of recycling that capital through, it's a very repeatable and very, very scalable method. And one of the cool things that I'm sure you found this cane, but actually, once you realise that raising finance, isn't actually that difficult, probably the idea is more difficult, it actually gets easier and easier, and you perhaps change your mindset and approach from maybe 50,000 to 500,000, and that's the.

[00:10:15] Andy Graham: It's the same conversation. It's the same piece of paperwork. You've just with a different number written on it. And sometimes even the same person, but because you're asking for something different or you're communicating a different message, you get a very different result, but just, I want to rewind a little bit and ask you first of all, about, You said there was a period of time where you weren't doing this and you were doing it the way that you kind of, the only way that you knew, really.

[00:10:39] Andy Graham: I relate to this by the way it came, because I recall getting started in a very similar way and it got increasingly difficult. I started in my early twenties, probably very similar time to you. And the first few, You know, I managed to get through and then it became increasingly difficult as I wanted to try and scale that up.

[00:10:55] Andy Graham: I just couldn't do it quickly enough. I didn't have enough time. I couldn't get my hands on enough finance, but I didn't know that that was a thing. I didn't know it existed. Was it the same for you? And how did you figure out actually I should go and raise finance? And perhaps this links to where some of your other empire sits at the minute, which I want to come on to.

[00:11:12] Andy Graham: Cause I know that you were building other businesses alongside the HMO stuff, but tell me about that and how. That actually changed what it was that actually made you think, Oh, I could do that, or I could perhaps do it in this way. So what else is doing?

[00:11:24] Kane Andrews: Yeah, it's, it's a really good point. I think by default, when you come from a very sort of modest slash working class, almost poor in some elements family, like I have, it's, you're not used to liquidity around you, even from a personal point of view as a child.

[00:11:42] Kane Andrews: So it was never on my radar. I never spoken to somebody with spare cash. I think one thing that I really did, a couple of things I found quite fascinating when I started to raise money was one, just how much some people have, as I say, when you come from such modest means, you think, how have you got that sort of money is lying around?

[00:12:03] Kane Andrews: And the second thing was about how willing they are to invest in you. Um, but I think that for my own personal journey, you're absolutely right. You'd like to think it gets easier. But I have the ability now to, I'm very grateful to be able to pick up a phone to some very close people and say very few words and they would agree.

[00:12:23] Kane Andrews: But let me say that does not happen in a year. That doesn't happen in two years. It was from me having that raft of 10 years with my own money that on many occasions I didn't have, just to give you an idea of just how little money there was around the first nine deals that I bought, I did not have enough money for, and I was all in for like the first 15, I mean, it was.

[00:12:48] Kane Andrews: Everything I had went in, which is ridiculous when you look back at it now, but actually really glad I did because. Not only did it teach me a lot of lessons, but actually I use that decade as leverage with investors by saying, I need you to understand 10 years of morning, noon and night weekends went in to get to me, to the stage of kind of what I know now.

[00:13:13] Kane Andrews: And it's like a 10 year university course, but a lot more high risk. Yeah. I'm very grateful that every exit went very well. Whenever I'm asked a question of. Come on then what's the big story what went wrong where's all the drama i'm really sorry it was a boring answer and i'm very very lucky not to have had that and i probably shouldn't it was very easy to when you're naive and but i just improved everything i just made sure that what i was doing i was changing by one millimeter every single time continually self reviewing but in answer to your question Andy in regards to the raising money side of things is I think that there is no easy way to get started, right?

[00:13:57] Kane Andrews: When you are starting out to raise money, that's the point where you need most help from people. But I went the kind of old school way where I just went into it by myself and actually it has got easier with that progression because of that hardship. My twenties, be under no illusion was very, very uncomfortable.

[00:14:19] Kane Andrews: I did things that I don't really know many people that would do. I mean, it was just ludicrous, but it was also lucrative as much as it was ludicrous. And I think that I'm grateful for that time, even though it was very, very difficult, but it's kind of built a foundation that is very deep and very strong within not just me, but rockstar proxy as well.

[00:14:43] Andy Graham: It strikes me, Kane, that you thought very carefully about. How you were going to continue leveling things off. This didn't happen by accident. You very clearly went out and proactively said, I need to go raise finance. And this is how I'm going to go and do it. And interestingly, you mentioned what I would refer to as a risk appetite there as well, which is one of the second.

[00:15:04] Andy Graham: points on that talk I just mentioned, one of those characteristics that I've seen in people who've built really successful businesses, they are prepared to take risks that a lot of people quite simply just wouldn't be prepared to take. Controlled risks with lots of risk mitigation, risks nonetheless.

[00:15:20] Andy Graham: And I think for a lot of people that risk can just be time. It can be For me, and I'm sure for you, it was It was actually stepping away from a professional career, which wouldn't have necessarily been that easy just to immediately step straight back into to really give it a go and kind of be able to kind of put the things that that business needed at the top of my list to do first that day.

[00:15:42] Andy Graham: It's very interesting to hear you talk about these examples and these qualities that I certainly relate to. Just to make sure that we've got a full pitch though, Kane, your business experience and empire isn't just HMOs, is it? There's a bit more in it, which I think is quite unique in itself.

[00:15:59] Kane Andrews: Yeah. I mean, Well, on the property side, I'm here in Dubai now where we're opening an office here, very different strategy here, Andy, I'll certainly won't be throwing some rockstar HMOs around this town, but, but yeah, we are opening an office here.

[00:16:14] Kane Andrews: We are building a portfolio here as well, very, very different angle, very different strategy, but that's part of the other side from here in the UAE to build that out and grow the team and everything else. Um, actually just about sign an office lease. So that's how early we are only been here a number of weeks, but I bought the first property here, which I didn't intend to, after being here for a couple of weeks, it was like getting a candy shove.

[00:16:37] Kane Andrews: You just can't help yourself, but that's the property side of things. And we've got the UK team there that are building the, Putting it out, commercial conversions as well as very much part of that. The HMOs is the bill payer, as I like to say it, services, salaries, but also, yeah, I'm very much in the educational space as well.

[00:16:54] Kane Andrews: So I own a number of private schools as well, where they are full time independent schools that. Children age 3 to 11, and there's some nurseries in there as well. So it kind of goes back to my roots when I was 18, starting that first educational business and kind of just that love of a mixture of freehold interest, as well as just building out this most phenomenal education syllabus, really for children.

[00:17:20] Kane Andrews: And I've always knew I have documented this. I knew from the age of 14. I was end up buying a private school and I did, uh, the age of whatever it was sets of two or three or something like that. So we get there in the end, Andy, but it's your instinct. It doesn't leave you these thoughts do they over the years.

[00:17:38] Andy Graham: No, you sound like a real entrepreneur and you talked earlier about your creativity and actually the pursuit has never been for you. I think we may have been talking about this before we hit record. The pursuit has never been just the financial goals. It's actually been about servicing your creative side.

[00:17:54] Andy Graham: And I, I love that about business as well. Doing deals, finding deals, solving problems as frustrating as some of the problems often are. It's actually finding ways to get all these unusual pieces to try and fit together. And yeah, I have talked about this on the podcast before, but I think there's huge value in having trading businesses and other income generating strategies alongside real estate in the UK.

[00:18:18] Andy Graham: And I know that that's a challenge and it's easier said than done, but I've certainly found that that has helped accelerate the process of building my own portfolio. And actually over time, what it's done for me is allow me to be less and less. Rigid on my investment criteria, where in the locations that I have bought, particularly with my HMO is the prime stuff has got increasingly difficult to see that same return on paper in the short space of time.

[00:18:43] Andy Graham: So I had to adjust my model, but it sounds like you've been pulling on different things and different businesses to eventually build your empire. And it sounds like you're only just getting started with it now anyway. 

[00:18:54] Kane Andrews: Yeah. I mean, you're absolutely right. And what you said earlier that I think a lot of people might find me slightly contradictory in that.

[00:18:59] Kane Andrews: I've got very, very little interest in money itself in terms of like a personal gain. That's never been my driving force. I'll be honest, in the early days, I didn't understand why I was doing what I was doing. I knew what I wanted. I didn't quite truly, deeply understand why. Why was I getting off that stupid clock, finishing so late?

[00:19:18] Kane Andrews: I mean, I'm a 10 out of 10 person or a zero out of 10. It's one of the two. So, and that's something you learn a bit later in life. But I think that. You're absolutely right. You do grow to learn your true self and why you are doing these things at such a high level and such a fast pace. This really is fueling my creativity and that drives me.

[00:19:43] Kane Andrews: And if it wasn't for that, I need in my life, again, this might sound a bit odd to some that don't have this themselves. I need a problem to solve. And if I don't have a problem to solve, and it's all too easy, That's when I lose interest and things go downhill, like give me a problem and I'll solve it.

[00:20:02] Andy Graham: I'm sitting laughing to myself because in a sadistic way, I feel the same. Sometimes it's really frustrating and some of the stuff that happens, particularly on the bigger project that I do with my business partners, some of the stuff, I mean, there's a challenge this morning, which is, has pretty substantial consequences if we can't find a resolution. To it and in a weird way, I kind of thrive off dealing with those problems and those challenges.

[00:20:25] Andy Graham: And I think it says a lot about business owners. I can't remember where I read this or who said it to me, but a lot of good business is actually about how you deal with things when things are not going well. Business is pretty easy when everything's going well, when everyone's paying the rent, when the property market is going in the right direction, when builders are doing what you want, when tenants are behaving, but actually good businesses is about.

[00:20:46] Andy Graham: Handling things when none of that is happening. Builders are not doing what you want them to do and tenants are being difficult when the rent's not coming in, when there's changes in legislation and all that stuff, which I'm sure we're going to get to in today's episode, but obviously a very interesting background, Kane, and your strategy in the HMO space itself is quite interesting.

[00:21:05] Andy Graham: I heard you talking about this at the awards, and this was the bit that really caught my attention. But can you tell us a little bit about how you actually operate your HMOs and your business and the structure of your business? Speak to us again. That has been clearly built with a lot of intention to it.

[00:21:20] Andy Graham: It's now allowing you to live in Dubai. You still hold a lot of real estate and a team in the UK. So tell us a little bit about how your, your HMO model actually works. I think a lot of our listeners, particularly with the looming changes in legislation, we'll find this particularly interesting.

[00:21:34] Kane Andrews: Yeah, absolutely. So I said to you earlier that I've sort of ever so slightly maneuvered the model over the years. We're essentially, I'm going back to square one after 15 years. What I used to do is that I used to own a hundred percent the asset and go through the cycle. Using the money that I had from my latest sale, basically.

[00:21:52] Kane Andrews: And then I moved on to joint ventures where we done a lot of them. Uh, there was quite a significant amount, especially in the first two years, you know, many, and what would happen in there is the investor would put the equity in, which was made up of usually 25 percent deposit stamp duty and cost of the refurb.

[00:22:10] Kane Andrews: And then we'd have, we've got quite a significant number of debt facilities with banks. We'd put the team in, we'd get it all done and we'd go 50/50. But now we really sit essentially doing is that we have opened a loan note instrument, which allows investors to invest into this instrument on a fixed return basis.

[00:22:30] Kane Andrews: And it's essentially like going back to the 100 percent ownership like I had before. But this time we're leveraging investors because of the significant experience we have. So how that generally works is that an investor would put in the money. We would probably put in the money for 25 percent deposit.

[00:22:46] Kane Andrews: We're doing that a lot nowadays and the stamp duty. And then the investor just funds the refurb essentially that's works very well. You know, we've got our GDV, we have a red book valuation. We know how much the kickbacks going to come from the refinance and we just allow a big enough margin to repay the investor's capital.

[00:23:05] Kane Andrews: Plus their interest. And there's usually some change there as well. So BRRR on loan notes for HMOs is our model right now. 

[00:23:14] Andy Graham: And who is your end user? What type of tenant are you targeting and are all of your properties and everything that you're doing, is it all in one location? Have you consolidated your management or is the operation a bit more spread out than that?

[00:23:26] Kane Andrews: Yeah, sure. So in answer to your first question, we have a niche within our HMOs. So we only have quite literally about two that we rent by room. That's never really been our model. Okay. We rent our properties to companies and a typical company would be the NHS, for example. So they would come in and they would say, right, we've got 80 Filipino nurses coming into this town where your property is every quarter.

[00:23:52] Kane Andrews: And we need as many rooms as you got, usually is what they say. And what will happen is that they will give a placement to that nurse that would consist of their job and accommodation, which they provide through us. And then every 12 months, they will replenish those nurses that go back to their own country.

[00:24:10] Kane Andrews: And then that happens over a five year contract. Essentially, we have incremental increases every year. And we've kind of just found this nice niche, you know, of company lets. We've got loads of companies, Andy, in terms of Building companies. We've got window fitting companies that put their stuff in warehouse

[00:24:29] Kane Andrews: Re fitting we've got doctors, we've got nurses. We've got quite a lot of different types of companies come in, but, uh, it's always their own employees that go into the property. We even have, believe it or not, a, one of the UK's biggest beef packing companies. I have to be careful. I didn't swore if I put it the other way around, but they packed beef and they are a multi billion pound company.

[00:24:55] Kane Andrews: They're massive and they rent some of our properties and that works really well. So it's just quite a quirky business. And I like, it's nice to have something different. So you're asking about the tenant type and then you said about the location. So we've got, I don't know, 15 or something in the Midlands.

[00:25:11] Kane Andrews: But the main point of our demographic is really the home counties of London. So we own properties in every home county now from Buckinghamshire, Berkshire, Kent, Essex, Hertfordshire, West Sussex, et cetera, Hampshire. So that's really our main areas. Um, so we're close to London, but not too close because those purchase prices are a bit high and those years are a bit low.

[00:25:34] Andy Graham: And I imagine a question that a lot of our listeners want me to ask at this point is how have you been able to do this and move out to Dubai with your family on a permanent basis, because you've obviously got a busy operation. With lots of tenants, lots of houses, lots of things that could potentially go wrong at home in the UK, but you've actually enabled yourself to transfer your life to an entirely different country.

[00:26:01] Andy Graham: And that's difficult to do. I think for a lot of people, just the idea of managing a HMO that's maybe, you know, over a couple of hours away is probably daunting enough. You're thousands of miles away. So how is it that you have done this, Kane? There must be an operation and a system and a process. That you have built over time

[00:26:18] Kane Andrews: Very much so, so I'm very, very process driven. The first answer to come to my head when you asked Andy, it's the team. I've had a number of people work for us over the years, and I've been wanting to jump ship at that time into another country, but I just didn't feel like we had the right team. So we developed my salary, the payrolls went up basically.

[00:26:40] Kane Andrews: And in the early days, my priority staff, I thought we're rockstar. We're young, we're dynamic. I'm going to find some very hungry, 25 year olds, and we're going to go out and smash it. Well, really now I kind of took a U turn on that and thought, yes, of course we do still have 27 year olds in the company, but there is a management team.

[00:26:59] Kane Andrews: There's a senior leadership team in that company, which consists of a managing director, a finance director, a sales director, and then they have their sort of teams underneath. And I really put the ability of me moving away down to their experience and ability to execute our business model. So team is number one systems is number two.

[00:27:22] Kane Andrews: So we are a full digital outfit. It really is an automated business. And I have obsessively worked on making this as easy to run as possible through technology. Uh, which has been tried and tested and improved along the way works incredibly well. And then I'd say that the third thing really is we've scaled.

[00:27:47] Kane Andrews: So I couldn't really put this team in place if we had 10 or 15 properties. I have always prioritised the cashflow in the business because that for me is far more of a powerful income stream than a lump sum from a sale. And when you prioritise the cashflow every month, and that has been over many, many years.

[00:28:07] Kane Andrews: Then actually you start to build something quite strong. And it is a strong business. It's strong in many ways, but I think the biggest strength is drawn from the team that run it. I mean, they are phenomenal, very, very experienced. They're all about 15 years into their role. Um, so I'm incredibly grateful for them.

[00:28:25] Andy Graham: A great insight there into how you can actually build a business. I think for most people and most of our listeners, this is their objective actually allows you to have your time back. It's, I find it really, really difficult and often upsetting to see people work incredibly hard to try and transition from a professional role with a long term objective of actually having more time back and actually, you know, without the right approach, without prioritising the right sort of actions.

[00:28:54] Andy Graham: They get dragged into so much detail that they inevitably build themselves a cage that they end up living in. This portfolio that they build, yes, it's generating income, but it requires so much time and energy to continue running effectively because those people and those processes and those systems had just not been put into place.

[00:29:15] Andy Graham: And I think it needs a certain approach and attitude. You really have to acknowledge that sometimes the most important thing you need to do is design and write a process and then teach somebody how to do it as opposed to just doing it yourself, which is often sometimes the easier and the quickest solution to do.

[00:29:33] Andy Graham: And there are so many examples out there and the types of businesses that we run where you could do that, what you know, it would just be quick and easy if you picked up the phone or you just dealt with yourself, but actually you just end up building that rod for your own back. But how many times do we see people just getting sucked into the businesses that they build and unfortunately never actually realising.

[00:29:53] Andy Graham: That time and that freedom of choice that they want. I mean, for most people, when I sit down, I'm sure same with you. And we sit down and ask people, why do you want to invest in HMOs? What is it that you really want? They almost always say, I want my time back. I want to be able to choose how I spend my time.

[00:30:08] Andy Graham: And of course, I'd like a few more quid in the bank, but actually, no, I don't want that at the expense of working nonstop, feeling like I can never go on a holiday, feeling like I'm just stressed all the time. And obviously with the type of business you've built, you have done that very strategically over time.

[00:30:24] Andy Graham: I mean, for anyone just getting started, Kane, maybe at that earlier stage, they got the first couple of properties under the belt, but want to be able to potentially like you move to a different country, retire early at a young age, just have that choice and that flexibility of how they use their time.

[00:30:39] Andy Graham: What advice would you share to them at that early stages, perhaps the sort of stuff that you and I took longer to realise that really it should have, but we've got the benefit of being able to share that with people now. Yeah. My advice is

[00:30:50] Kane Andrews: Yeah. My advice is get comfortable being uncomfortable, unless you've got a trust fund waiting for you. You just, you're going to have to graft. I mean, it is just, you've got to become like water. You've got to just be able to get into everywhere. You mentioned at the beginning was a really good point about having lots of different skill sets, but I failed my maths GCSE. In fact, I got a D which was the highest grade because I did a foundation paper because that's how behind I was on maths.

[00:31:19] Kane Andrews: Massive weak spot for me. So what I did, I've left school at 16 and by the age of 17, I just very quickly got this thirst for knowledge. So I turned my biggest weakness into my biggest strength and now I'm very, very much a numbers person. That's like a big, big thing for me. But I think that that is my advice.

[00:31:40] Kane Andrews: Be aware of what you're weak at. And either make it your best or replace that weakness with an advisor. And that's really kind of what I have done over the years, but there is no quick route unless you just are very lucky. I know a couple of people that won the lottery. But then that's great. And I know a couple of people that have got, or one person in particular, got 2 million pounds on his 21st birthday, Andy, which was very nice.

[00:32:06] Kane Andrews: Still a very good friend, but he doesn't know what to do with it. So you don't realise what you are learning as you go. But something that we always need to remember is that property investment is a blessing and a curse. It can look after you for life. Providing that asset is performing in the way it should, and tenants are paying.

[00:32:27] Kane Andrews: But problem is it's such a capital intensive business. And my approach to business is tell me the biggest problem and let's go and resolve that in the hardest way possible. And like you said before, capital is your answer and capital is that key to the door to get you down that corridor. Like it is the answer.

[00:32:48] Kane Andrews: It just is. When you release that and pull the lid off of that capital requirement, suddenly you can very quickly own quite a significant portfolio, but cracks the code of money as well as lots of other things. What are we? We're architects, we're interior designers. We're investor relations, we're marketers, we're sellers, we're not, you know, property management legislation, all this stuff we need to know.

[00:33:15] Kane Andrews: But the biggest mountain to climb in this game is raising the money or making the money, making money from property. In my view is really easy. The difficult part is having that money to begin with. So address that first and graft your way. The more you do on your own, I promise you that providing you're still successful and you're still eating, the more that investors will respect you later down the line, there's nothing better than to just go in at something safely as you can.

[00:33:49] Kane Andrews: Leverage advisors, only listen to those that have walked the path that you want to walk and for other people that have no idea what you do, do not listen to them. I've just, I've seen it before. I've been given some advice based on someone that wish they had done what you and I have done and it's not ever going to be good advice. So yeah, that's my,

[00:34:08] Andy Graham: I think there's some fantastic insight there and I agree with it all and perhaps just to build on it as well. And we may have touched on this before, but the consistency piece I think is so important. It's just getting up. Every day and just repeating it. It's often like looking in the mirror, a million quid doesn't drop into the account every day.

[00:34:26] Andy Graham: It takes days and weeks and months and years of work. And I remember looking back when I first started, one of the things that I'm really, in a way, quite proud of myself for doing as a younger guy was just believing in the ability to do something now and do it consistently well for a longer term benefit.

[00:34:47] Andy Graham: And a cute example could be as soon as I kind of realised that social media could be a good place to network and build contacts and demonstrate my credibility and experience. I took it really seriously. And I would post regularly and engage regularly. And I was to some people that I would actually write posts, informative information, authoritative content.

[00:35:07] Andy Graham: And that helped that it took a lot of time and people don't necessarily realise this, and it wasn't just doing it for three months. And we see this so often people onto social media platforms and they make loads of noise and all of a sudden they're the expert you can't believe you never knew about, and you said it yourself, all of a sudden they disappeared again.

[00:35:26] Andy Graham: But I think just consistently doing those things to help keep driving you towards that goal is so important, but also so difficult to do because it often just feels like you're hammering away for very little, but it does come. So I would just encourage everyone to stick at it no matter how hard it is, because you are right, real estate in the UK, it is such a forgiving asset class, even if you don't get it quite right, as long as you're prepared to keep hold of it, it'll probably do you very, very, very well.

[00:35:53] Andy Graham: Over time and we're an island, a finite number of properties, despite all the promises, we're still not building anywhere in it near enough. There are challenges ahead, but I think fundamentally the model, the necessity to provide spaces for people to rent is not changing. In fact, it's probably just increasing.

[00:36:14] Andy Graham: So yeah. So really great advice that you shared, Cain. But perhaps before we wrap up and very quickly, but I just want to ask you what your approach to what looks like a challenging period ahead for, for landlords. Property business owners in our space in the UK looks like, are you doing anything? Are you worried? Do you see it as a threat? Do you see it as an opportunity?

[00:36:33] Kane Andrews: Yeah. So let's talk specifically, obviously about HMOs. I think that here's some advice I want to give to your listeners that you have to be very careful of. During the BRRR model, Buy refurbish refinance and rent looks great and at the front end, I call it the front end, which means right at the beginning of that journey of your asset that you've just acquired, it can look phenomenal.

[00:36:55] Kane Andrews: And here's something you really need to be careful of this. Let's say you put that on a three year fixed rate. What is the value on in three years time? Shawbrooke have just released some legislation about how they are valuing HMOs now. They call them HMO1, HMO2, HMO3, HMO4. HMO3 and HMO4 are the only two that are given a very specific commercial valuation, whereas HMO1 and HMO2, which maybe you can Google it, have a look, they are not being given a commercial valuation, or they're certainly at the surveyor's discretion.

[00:37:28] Kane Andrews: So my advice really about how to avoid any sort of negative equity in terms of the second time you refinance property is not particularly sexy subject, but capital repayments will always be the best way. De leverage. I actually spend my life de leveraging and moving our mortgage balances down and overpayments that that was ingrained in me from a very, very young age.

[00:37:55] Kane Andrews: It's when you start looking at a significant portfolio at 10 percent loan to value, you're never going to have to work another day in your life. I mean, it looks phenomenal. And what I'm continually sort of chasing. It's to get to that point now. So what you said about sort of legislation and things coming in, now you're going to have certain people like Keir Starmer coming in that are going to sort of put a spanner in that journey of trying to de leverage and trying to get an unencumbered portfolio.

[00:38:24] Kane Andrews: I do see challenges ahead. I think the labor government have come very heavy in with tax side of things. I think it is putting a lot of people off. However, this is where the optimism comes out of me. I've always stuck with the sort of investment thesis that when everyone is going in, you come out and when everyone is pulling out, that's when you go really hard into it.

[00:38:48] Kane Andrews: And for example, labour government have bought in BAT on private school fees. And what happened is that I picked up so phenomenal deals within the, uh, private education space because of this, what people call downfall. A lot of people right now are looking at risks on property and they talk about low returns because of interest rate.

[00:39:09] Kane Andrews: But what you've got to remember is property investment is just a puzzle and there's, they're all different pieces that come together. So yes, I do see interest rates as an issue. Do I believe they'll come down in the next couple of years? Yes, minimal, but I do believe they will. But now is the time because the way I look at this is you could have, let's say number one, Andy Roach, right?

[00:39:32] Kane Andrews: That house is sat there on a six and a half percent interest rate commercial with Hampshire Trust Bank or Shawbrook. You've got a tenant in there that's paying you three grand a month. That same asset in say two or three years time with an interest rate halved, but also with the same tenant paying the same rent, it's in the same condition, same maintenance issue, that investment could look really, really promising.

[00:39:58] Kane Andrews: My sort of way of looking at it is that Yes, there are issues in the market right now. If you hold on long enough, those issues should hopefully not exist in a few years to come. For example, if in four years, the conservatives come back in and they might change some things again, which work in our favour.

[00:40:16] Kane Andrews: And I've seen it happen very quickly. Portfolio or interest rates and turn what looks like mediocre returns into double digit returns because of a very slight small change in legislation. So there's quite a lot of bits in there, but, you know, generally be careful, deleverage, be careful on that second refinance, especially with commercial values. Check out Shawbrook's new legislation that's come in. And that's just about all I wanted to say on that.

[00:40:44] Andy Graham: Well, I mean, look, none of us have got a crystal ball, have we? And I think there's some good practical and sensible advice there. I think the way that I look at a lot of what I do in both property and business, it's weighing the whole package.

[00:41:00] Andy Graham: And sometimes it's kind of pursuing an opportunity, but simultaneously protecting the downside. And actually it's easy to look at things like what's happening now. Assume it's all doom or gloom or see lots of opportunity and actually I think there are some challenges and definitely some opportunities.

[00:41:16] Andy Graham: I think some landlords will be squeezed and they'll throw the towel in. I think for some people with the right attitude and commitment, we'll be able to level things up and take advantage of what is clearly a decision to commercialise the private rental sector. They want to really professionalise it.

[00:41:35] Andy Graham: And so I see that as an opportunity, but I think there are ways to actually maybe cover off some of the worst of what this could be quite literally down to. Changing the way that you do the tenancies, if you're letting to students, but also trying to get yourself into a position where you might be able to take advantage of some good deals coming to the market, where you might actually be able to just put a bit more in the bank, just in case things don't quite pan out.

[00:42:01] Kane Andrews: This is a really good point and here's sort of my thoughts on it in the 2021, 2022, we were refinancing it 4.25 % and where we are now is that, I mean, I just quite literally just before coming on, I think I've had about four or five mortgage offers. So I'm gonna have a look at those rates. But I think we'd be knocking around 6% something.

[00:42:19] Kane Andrews: Let's say, for example, let's make up some numbers. Let's say that investors are looking their returns, plugging in the current interest rates at a high rate. And let's say, for example, the rate's gone up and it's costing 5,000 pounds a year more. In repayments than it would say a couple of years ago. So a lot of investors would say, well, it just doesn't make the returns that I want.

[00:42:39] Kane Andrews: I might like six, 7 percent return. I want eight, nine, 10, 11, 12, that for a grand extra a year across 36 months, like a three year fits as 15,000 pounds extra in mortgage payments. Well, no one's talking about why don't we just say that 15 grand off of the purchase price and just sort of, as I said, it's puzzles, it's all pieces.

[00:43:01] Kane Andrews: And that's the way I look at it. Instead of saying, I don't want to buy this because you're getting seven, eight percent, what about the purchase price? Because as you know, we buy, we make money by buying. That's the first point of where we sort of gain from these properties. So that's really, don't just take one thing and make a decision on that one element.

[00:43:25] Kane Andrews: The investment side is made up of lots of small pieces. And if it's a seesaw around it, I see it is when something down, if you can make something else go up, well, maybe you can balance it out and it's a viable investment, but it does, it might not look it right now. Hold on to it. And it could look really, really promising.

[00:43:43] Kane Andrews: The other thing I just wanted to say just on this point to your investors and people listening. Don't try and put a square peg in a round hole. And what I mean by that is if you want to own a HMO, you're not going to buy and sell it nowadays anyway, over six months, the longer you own these assets, believe me, the better it gets, especially when you're on capital repayment.

[00:44:04] Kane Andrews: So just be aware that you're getting into an industry or you've certainly on that train already. And the longer you on that journey, the better it will become for you. Words, capital appreciation, and what with the mortgage balances coming down, because you want to throw that equity out and the cashflow on 20 percent notes of value. I believe me is wonderful thing.

[00:44:26] Andy Graham: Well, there you go, guys. It's some very well balanced advice from Kane. Kane, it's been an absolute pleasure to have you on the show. We should have done this a long time ago and perhaps we should pencil something in for the future. For anyone listening today, best way to contact you, social media, email?

[00:44:41] Kane Andrews: Yeah, well my email is kane@rockstarproperty.co.uk and yeah, Kane Andrews on the socials.

[00:44:51] Andy Graham: Brilliant, Kane! Thank you for coming on today. Thanks for sharing all your insights, opinions, and experiences. It's been an absolute pleasure and I wish you all the best of luck in Dubai as well.

[00:45:02] Andy Graham: It's been fantastic. Thanks so much. 

[00:45:03] Kane Andrews:Thanks Andy. Appreciate it.

[00:45:11] Andy Graham: That's it for today's episode guys. Thank you for tuning in. I hope you enjoyed that conversation with myself and Cain, I know I certainly did. What a great guy doing some really, really cool stuff and do some very unique stuff. But what is clear, I think, from talking to Kane is how he approaches business differently.

[00:45:26] Andy Graham: Kane is very clearly not a landlord. He's a businessman. He's a business owner, and he runs his portfolio like a business owner. I think there's so much to take away from that. Don't forget, if you want to level things up yourself, heading over to theHMOroadmap.co.uk, you'll find dozens of masterclasses from architects, planning consultants, interior designers, and a whole lot more.

[00:45:46] Andy Graham: You'll find dozens and dozens of videos by me about how to fund your deals, how to find deals, how to repair and refurbish them, how to manage tenants, how to improve your rent, everything you could possibly need to build and run a profitable HMO portfolio is waiting for you. Plus, get your hands on all of my documents and resources, all of the templates that will save you hours and hours of time and thousands of pounds.

[00:46:07] Andy Graham: It's all waiting for you inside the HMO roadmap. It's an absolute no brainer. It'll cost you less than the price of a cup of coffee every single day. Go and check it out. I promise you won't be disappointed. That's it, guys. Don't forget, I'll be right back here in the very same place next week, so please join me then for another installment of the HMO podcast.