Sourcing HMOs, Commercial Valuations & Taking Advantage of Article 4 With Kieren Goldie

In this episode, I’m joined by Kieren Goldie, a property investor focusing on the South of England, particularly in prime Article 4 areas. Kieren’s built an impressive business offering a full turnkey service—covering everything from property acquisition to project and property management.

We’ll discuss how Kieren got to where he is, the ups and downs of building a business like his, and how he’s overcome challenges such as Article 4 regulations, planning restrictions, refurbishments, and sticking to budgets. If you're looking to build your own HMO property business, this is definitely an episode you won’t want to miss.

Topics covered in this episode:

• 03:19 Kieren's Journey into Property Investment
• 11:54 Navigating Article 4 Planning Restrictions
• 18:15 Sourcing Properties in Article 4 Areas
• 21:27 The Importance of Pipelining in Real Estate Deals
• 25:48 Understanding Commercial Valuations
• 30:11 Managing Build Costs and Project Management

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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] 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] In today's episode, I'm joined by Kieren Goldie. Kieran invests in the South of England. He invests in Prime Article 4 areas. And Kieran has built a really great business, servicing a lot of clients, delivering the full turnkey service right through from acquisition to project management and property management.

[00:00:56] Today I want to find out how Kieran has done it, the ups and downs of building a business like that, how he's overcome the challenges of things like article 4 directions, planning restrictions, refurbishments, budget control, and a whole lot more. If you're building your own HMO property business, this is definitely one episode you don't want to miss. Please sit back, relax, and enjoy today's episode.

[00:01:19] Hey guys, it's Andy here. We're going to be getting back to the podcast in just a moment, but before we do, I want to tell you very quickly about the HMO roadmap. Now, if you're 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.

[00:01:35] 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.

[00:01:50] 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.

[00:02:05] 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.

[00:02:26] Hi Kieren, thanks for joining me on the podcast today. Thanks, Andy. Thanks for having me. Good to be here. I've seen you knocking around the community for a long time now doing a lot of projects and some really, really great looking stuff. So I'm looking forward to this conversation. And I think particularly because what you do and the sort of spectrum of your service in the HMO world, I think is quite extensive.

[00:02:51] And I think we can have a really good conversation about that whole process. So for any of our listeners today that may be getting into this time or just gathering their experience. Maybe don't have confidence that different parts of the process might be buying, might be the refurbishments, might be the refinancing.

[00:03:06] I think there's a lot of stuff that we can discuss today that I'm looking forward to. But before we get there, Kieren, for the benefit of perhaps our listeners, can you tell us a little bit more about yourself? What you're currently doing in property and how you ended up in property and particularly in HMOs?

[00:03:19] Kieren Goldie: Yeah, definitely. Yeah. Firstly, thanks for having me. As I say, great to be here, Andy. Yeah, my background will be not hugely extensive in terms of sort of commercial 25 years of operating. I can't say I have that. Due to my age. I'm 25, but got started in property sort of three and a half to four years ago, came out of university, studied physical geography.

[00:03:38] So nothing overly academic, that route didn't take me into sort of a professional role post university. Wasn't quite sure where I wanted to go. So moved into the estate agency space, knew it was somewhere within property, just didn't quite have a, an initial sense of direction other than I wanted to get started in some capacity and sort of get my feet on the ground with some professional experience.

[00:04:00] So worked for quite a high end estate agency in an area of Hertfordshire, starting in Lettings. Progressed in a couple of years that I was there into sort of sales and then I moved on to a self employed sales role. Fantastic in terms of building a foundation and getting an experience in that sort of professional world within property while I worked out what I really wanted to do sort of long term.

[00:04:22] As many people do, sort of started to look at wider resources, YouTube, books, people who are already sort of making movements in the property space came across rent to rent as a business model. I didn't have surplus cash funds behind me, so I knew that I needed to essentially look at building a cash flow based business in order to try and build up my own funds.

[00:04:42] To invest in my own projects and assets and whatnot. So that's sort of how I got started on my journey, acquired a few rent to rent properties around a few areas of London that were closer to home. And that's where I, again, got my feet on the ground in the HMO space and, and sort of started me on the trajectory to where I am now, which is obviously specialising in, in large HMO conversions, predominantly in article four areas in the South of England. Yeah.

[00:05:08] Andy Graham: So, where did the interest in property actually come from, Kieren, or was it more the interest in building a business, getting control of your time, maybe building an empire, like, where did that actually come from, because geography to real estate is potentially quite a big leap. 

[00:05:24] Kieren Goldie: Yeah, yeah, it's a fair comment. I think the sort of early initial sort of, Reaches into property and my interest in it came from twofold, both from family sort of motions. I have family who are based in construction and worked on construction sites as a laborer in my school holidays as a bit of spare cash. And then other family members have had two or three investment properties, nothing crazy, just sort of buy to let.

[00:05:47] That's probably the main reasons for it, at least opening my eyes to what is possible within property and sort of set me on my way with trying to create something for myself in that space.

[00:05:57] Andy Graham: When you were planning that transition, when you were starting to make those movements into the property space, I imagine you were probably talking to your mates about this sort of thing and other people.

[00:06:06] What sort of reaction did you get? Because this is something that I, I remember. And I'm interested to hear your experience of this first. And maybe I'll share mine, but how was that for you? Did you know people that were already doing this? Did you feel like a bit of a lone wolf? Did you feel like a bit of an outcast? What was people's reactions when they started to find out that this is what you wanted to do? 

[00:06:24] Kieren Goldie: Yeah, it's a good talking point, very relevant in the sense that one of the people who actually were quite foundational in putting me on to other people who were doing well in space was a university friend. He actually gave me a copy of a Samuel Leeds book, Buy Low Rent High.

[00:06:40] Is that correct? I think that's the name of the book. That sort of got me on the wave of researching people and what strategies were possible. But at the same time, yes, all of my sort of graduate friends were looking at corporate roles, graduate roles, moving into the city for sort of corporate based career growth.

[00:06:56] Whereas I sort of took the opposite approach to that and definitely didn't want to go into the corporate space. I knew that. And you talked about sort of being a, a bit of an outcast I've generally always fitting in and what I've done played sport and been fairly sociable, but it is an interesting transition whenever you think you've ever known and everybody that you ever known goes one way, you go the other, there is a bit of working out today that they say, yeah,

[00:07:17] Andy Graham: It can be a bit daunting. I remember when my interest is similar to you, I used to do a bit of laboring, I used to actually love laboring and then I secretly sometimes wish I could just not do any of the business stuff and just pick up and brush around the site. But. I used to do some work for my uncle and I think that that's where my sort of interest in building came from.

[00:07:34] But when you leave university, not only do you often not have any money, you actually it's carrying debt from university. And it was the same for me. And my pals did the same. I went into a professional career, but didn't particularly enjoy it. And I remember really trying to heavily lean into the property stuff, trying to just figure out how I could do it.

[00:07:54] And perhaps even at points, it became a bit of an obsession, just trying to figure out how to break through. How can I actually generate the cashflow? How could I create the capital? And it was really hard. And I remember a lot of my friends. Taking the piss. And I think that I can take anything on the chin.

[00:08:09] I can certainly have a laugh at myself, but I think when I found out someone that would take in the piss when I wasn't there, I found that pretty hard actually, and I think that that continued for a number of years and for years, it was a lot of work for very little progress. And I think that one of the things that I learned through that process is actually that that is what it takes.

[00:08:28] And obviously now. However, many years on 10, 15 years on, I don't think that many people are laughing now, but I remember that that was a bit of a challenge for me. And I had to find a lot of people, I had to find a whole new network just to find that support and motivation and encouragement and just to bounce ideas off.

[00:08:45] And it was so different to anything that I had experienced before, but I just remember how tough it was. And I think it's interesting talking to people about this because there are so many people and there'll be a lot of people listening today. That perhaps make assumptions that it was really easy though, or that kind of, there was some sort of gifting or your pals are doing it so that it was just natural.

[00:09:04] But it's interesting to hear again that your story and your entry into property was also very different. So.

[00:09:10] Kieren Goldie: Yeah, I think it's a really good point for, as you mentioned, obviously the listeners out there to try and sort of get an understanding of it and how they might compare it to their own journey and their own growth.

[00:09:20] But no doubt, I think I'm pretty sure that you are being a big advocate for putting yourself out there in terms of brand and social media. It was particularly when I first started to put my face out there and use various platforms to promote my rent to rent services at the time, which is what I was doing.

[00:09:36] It helps if you're good looking as well, Kieren. Yeah, I'll give you that. I wouldn't know. But yeah, that was where a lot of my initial early stage pushback came from. When I started to put yourself out there and people are like, what's this guy? What's he doing? What's he trying to do? Yeah. Now, obviously it's a slightly different story because backed it up with what I've been able to deliver, but yeah, it's a very relevant point.

[00:09:57] Andy Graham: Absolutely. I think it's also interesting that you looked at Rent to Rent as that option, that opportunity, that almost gateway to get you where you really wanted to. And. I didn't do that because I didn't know about rent to rent. I know a little bit older than you didn't know about rent to rent when I was just getting started, but found it afterwards when I was experiencing the same issues of not having enough capital.

[00:10:15] How do I generate the cashflow? Actually for me, a big part of it was also how could I generate the experience and immerse myself in this industry, build contacts and networks and figure all of this stuff out. And I think rent to rent is still a great way to do that, but it absolutely does have its limitations.

[00:10:31] I mean, you've gone on to do a lot more and a big part of your business has been the whole turnkey service. So tell me a little bit more about that. So you and a lot of the work that you've done, Kieren, correct me if I'm wrong, but it's been on the South Coast, up around Portsmouth.

[00:10:47] Kieren Goldie: Yes. Yeah, absolutely. So predominantly done probably 75 percent of what I've done has been in Portsmouth today.

[00:10:54] I'm working Southampton, I'm working, uh, Paul and Bournemouth. And some new areas as well, which won't touch on for the time being, I'll speak about the areas that successfully delivered projects in. But yeah, those being South Coast areas, Article 4 predominantly as well, Paul is excluded from that, but the other areas that I've mentioned are Article 4 and impacted by the restrictions of Article 4.

[00:11:17] Andy Graham: This is something I want to talk to you about because I think for a lot of people that poses a huge challenge. And, of course, there are challenges to Article 4, and I've shared my own opinions and experiences of Article 4. I still invest in areas where there's an Article 4 direction, and have done for many years.

[00:11:32] Some people often struggle to just get lift off and article four is often the reason I hear why, but it's obviously not stopped you. So just tell us a little bit about the planning restrictions and that can be, I suppose, even more specific to a particular area and how you have managed to navigate that and even use it to your advantage to build the business that you have, Kieren.

[00:11:54] Kieren Goldie: Yeah. I guess from a starting point, I've only ever known article four. It wasn't like invest or work outside of article four and then make the transition to work within it once you've got comfortable and found your feet. When I originally started, I had a mentor for the first 12 months while I was investing in rent to rent as a strategy, but also investing in myself to understand HMO conversions as a turnkey business model.

[00:12:18] And that was on the basis of an article four area, which was Portsmouth. But in terms of, for me, why. You know, I'm a big advocate of Article 4 for various reasons. You've got your own, everybody will have their own. For me, main principle reason is Article 4 has been brought in for an obvious reason, that is to control and restrict the volume of houses that are being converted within an area to a HMO.

[00:12:40] that volume and demand wouldn't be being converted if there wasn't a demand there from a tenant's perspective to serve that need. So it tells you all you need to know in terms of there being a demand for the product that you're wanting to create. Now obviously that ask for introduction will also put a lot of people off who either aren't educated in it or don't have the time to educate or for whatever reason that it does put them off that obviously narrows down the market of people who.

[00:13:03] are prepared to do it and therefore you've got a better chance of creating a standout product and in turn hopefully grow and scale a great portfolio off the back of it. Other elements in terms of commercial lending come into it. If you're converting large HMOs, particularly within Article 4 areas, yes, there's other exterior elements as well, but a big element and tick box for commercial lending, as opposed to a brooks and mortar valuation and lending arrangement, obviously is having Article 4 in place helps with that.

[00:13:33] Andy Graham: And I agree with everything that you just said. I think if you were going to set up an ice cream shop, the place to do that is obviously by the seaside and you've got that foot traffic, you've got that foot fall and article four direction is almost, it's like the council literally saying, but we're going to let you do that.

[00:13:46] And we're going to limit the number of other people that can do it as well. It is great for business. To have that sort of restriction in business is brilliant. And actually I think the greatest value is in that long term plan. Short term, you know, it's expensive to get in the entry level is higher. That cost just to get into the market is definitely a bit higher, but long term really pays off and.

[00:14:08] Having that sort of security, that confidence in the market, that supply of tenants and that sort of restriction on the number of properties that can actually service those tenants, I think it is just such a good thing for businesses, but obviously, and you touched on this, the finance and the economics play a role here.

[00:14:26] And I said that the barrier to entry is often a little bit higher, costs a little bit more to buy the same house next door that's got the compliance, hasn't it? It's part of a bigger picture and you hinted at commercial valuations, and obviously the price that you pay is obviously kind of almost kind of a result of what you think it can be worth.

[00:14:47] Talk to us a little bit, Kieren, about. How do you get to that point? How do you actually figure out what it's really worth to you? And how do you navigate the planning challenges on have you been buying things and converting and changing the use of going through planning? Have you been buying existing HMOs? Have you been doing a bit of both?

[00:15:07] Kieren Goldie: Yeah, to answer that in short, it is a mixture of the two. And I guess that's one of the advantages of investing in Article 4 areas is that you don't have to take the full planning risk to convert from a C3 residential dwelling, which is effectively a family home, and take that full planning risk to go to C4 or sui generis use class. You can obviously buy existing HMOs, which is a little bit of a cheat code if you like.

[00:15:33] Yes, you will, rightly as you said, Andy, you'll pay a premium on that, a purchase price tax, because it's already got that use and that consent, but that obviously de risk the planning process for you, which obviously if it's your first or you're venturing into that investment space within Article 4 areas, does give you the peace of mind if you can pay maybe an extra 20, 30, 000 pounds subject to area.

[00:15:54] That would be relevant to the areas that I work within. It might be five or ten thousand pounds further up north, for example, on the purchase price. But in terms of navigating that process, as I say, I've done quite a mixture. Portsmouth is an area predominantly converted, majority of stock there straight from C3 to sui generis to seven bed and above use class.

[00:16:12] Other areas, the planning strategy is very much focusing on buying existing stock because those local authorities are actually quite anti HMO or at least anti converting C3 dwellings to C4 or C3 generis. So a bit of an angle on the market there is sort of acquiring rundown student properties, buying them at a time when students are vacating at the end of an academic year, for example, sort of June, July time, typically.

[00:16:38] Entering the market at a point where you can get a purchase agreed, run through the conveyancing and try to complete on it in time with those students moving out into that academic year, picking that property up, then obviously running through your refurbishment schedule, converting, adding en suites, bathrooms. And then re letting that out, generally speaking, on a professional business model.

[00:16:59] Andy Graham: Just to comment, more of an observation than anything else, Kieren. As you're speaking, it's very, very clear that you have a really in depth understanding of your market on a very local level. And I often get a lot of questions.

[00:17:11] A lot of people asking me to look at deals, what do I think about this? My response is almost always, look, I am not an expert in that location. There's a lot of stuff that's translatable, how you stack a deal, how you maybe plan a refurb, some of the planning challenges, but actually at the end of the day, you have to be that local expert.

[00:17:30] And I think there's just a few little nuggets there that you shared, which are great examples of how important it is to really know and to really be that expert. In your local area. And I think for anybody listening that. There's looking at deals and doesn't have the confidence of, is this the right price?

[00:17:47] Or am I going to have issues with planning or what's this going to be worth? Or what can I actually get out of this floor plan? That is your experience telling you that you're not actually quite ready. You need to go and do a bit more work. You need to find out more. You need to go and find some support, some guidance, use the experts and the consultants, the planning consultants, the architects to help with this stuff.

[00:18:09] But it's really clear speaking to you that. That stuff is second nature to you. And actually, I can almost hear the agent coming out in you because you've probably spent so much time appraising deals and have so in tune with that local area. But I think it's a really important thing to pull out because a lot of people think that buying an article four areas is this challenge that makes it impossible.

[00:18:29] You can't make the numbers stack. And I think actually in a roundabout way, what you've actually done is really well demonstrate that actually sometimes it's just knowing. Where to push and pull, where the opportunities are, where the risks actually are, and how to actually execute on it. Let's talk about sourcing then.

[00:18:44] Another big challenge for a lot of people, particularly in Article 4 directions, it's not like there's a yellow pages of great deals to flick through or a catalogue. How do you source queue? And you've done a good number of projects over the last few years. How are you keeping that pipeline full? 

[00:19:00] Kieren Goldie: Yeah, mixture of strategies. I will be the first to say that. A good percentage of that stock has come from Rightmove. No qualms in saying that at all. I would argue that some people perhaps won't see what I see. In a totally respectful expense sense, that's just because of the time that I've spent analysing houses and floor plans and knowing what works and what doesn't work.

[00:19:19] Yes, there's lots of stock that pops up, which, you know, anybody can work that that house can be an HMO. But perhaps there's others that are slightly more intricate, that I've spotted something which I can utilise. Permitted development rights, for example, in some way or another. Prior approval extensions to gain that additional bedroom to make that deal work.

[00:19:36] Others have come through just relationship building with estate agents that, you know, have bought a few houses through from before. And they generally like to sort of come back around when they've got another opportunity and say, Hey, you bought the last one on X road. We've got one around the corner.

[00:19:50] Are you interested before it goes live? It's a win win for them because. They're almost selling it without needing to go to the market. They get a sale and their vendor's happy, good business all round. Have also done direct to vendor work, small percentage, probably 5 percent of deals has come through direct to vendor work.

[00:20:07] I know other people are huge advocates for it and only sort of focus on that. I guess the beauty of HMOs is that the majority of them tend to go online. It doesn't generally tend to be very discreet. So a lot of the stock that certainly that we've bought has been marketed online, which I think is a good thing for people looking to get into the space. The deals are out there

[00:20:28] Andy Graham: And I am not surprised in the slightest that you have said that because I have been saying this for years. Yes, there's direct to vendor. Yes, there's some slightly more creative ways of finding deals, but actually the foundation of any good strategy is just taking advantage of the online platforms.

[00:20:45] That is whereby far and above most of the deals. Coming from and again, I think just knowing what's looked for and then also maybe having that backed up with a good rapport relationship with agents and buying experience again, you can hear that agent coming through and you getting yourself to the front of the queue.

[00:21:02] Actually, it takes time to do that. It's very hard to do that on the first deal, isn't it? And also I think that. It's really important for anyone listening that's just getting started to be conscious that sometimes if you go in too hot, you can burn a few bridges. And I think it's important to manage agent relationships delicately, agents can be quite fickle.

[00:21:21] You know, they'll happily sell to anybody at the end of the day, but if you give them confidence and they can give that confidence to their buyers, then actually you can put yourself in that kind of favorable position, almost at the top of that list. But I'm glad you shared that again Kieren, because I think a lot of people, again.

[00:21:37] Especially when you're talking about prime cities, like Portsmouth, like Southampton, wherever it might be, think that the deals aren't there that, you know, the article four direction, they just don't exist, but they are there. You just got to really know what you're looking for. Absolutely. You also talked about pipelining.

[00:21:53] Yes. Do you have any idea how many of your deals and offers were sort of rejected initially and then came back to you at some point? down the line? 

[00:22:04] Kieren Goldie: That is a good question. I've had a couple return recently that we offered on a little while ago. We weren't quite competitive enough. They've sort of gone into transactions that unfortunately have fallen apart for various reasons.

[00:22:16] So they do come back around. I think a good point is, is always having a. However you choose to store your information and data is having a log of everything that you've always, you've ever offered on or ever seen, just because HMOs, I'm sure you'd have seen the same Andy, but they are hard assets to sell and there is every chance that if something does get agreed, that there's every chance that it will fall apart, not once, possibly twice, three times before it even sells.

[00:22:44] So there's definitely big wins in following up on stock, even if it's looking like it's under offer online, there's every chance that there could be fractures in that deal, an opportunity for you to sort of sweep in and tidy up.

[00:22:54] Andy Graham: I think just to add to that as well, Kieran, a bit of advice that I give everybody is to say, look, at the end of the day, it's worth.

[00:23:01] To you, what it's worth to you, the asking price is the asking price. What you pay for it might be very different. Might be more, might be less. It might be the asking price. There's nothing wrong with putting an offer in at a level that you think works for you. Sometimes someone will be prepared to pay more.

[00:23:18] Maybe they've got cheaper costs of borrowing. Maybe they're in a different financial position or have a different objective view, that's fine. But a good portion do fall down. And actually, if you've got your hat in the ring, that offer is still there. You're in a great position. If that does fall over for them to come back, have that conversation.

[00:23:36] You might want to work your offer. You might say, look, my offer still stands, but I'm not going to change it. And I've bought so many deals over the years. And some of those deals have come back three, four years down the line. Honestly, they bumbled along. They've had a few sales fall over. They've decided not to sell it.

[00:23:50] Then they. Thought about selling it again, they picked up the phone and I think that there's a huge value in just doing that. So don't, anyone listening today, don't, don't overlook just how valuable putting offers in, getting hats in the ring and just building a pipeline, following up two, three funds down the line, just checking in, how's that sale going?

[00:24:10] Wish you the best. Look, if anything happens, just give me a call. I'd still be interested.

[00:24:14] Kieren Goldie: Yeah, I completely agree. And just to wrap up that point, just the relevance and importance of that, I actually saw someone post on social media some point last week. He just had an offer accepted on something.

[00:24:26] Originally, it was a huge commercial to residential development of sorts, but he'd originally offered on that and tried to negotiate it two years ago. This week, last week is obviously it's gone through the cycles, it's come back around and yeah, you think what was that person done for a two year period in between appraising deals, volume of deals, completely on deals and then something two years later has come back around, which they originally were interested in, which shows the power of a follow up, as you say.

[00:24:52] Andy Graham: It happens all the time, I think a lot of people are not prepared to be patient enough when it comes to deal flow, sometimes you just have to accept that a portion of your deals will come through pipelining and they'll come to fruition later in the year, in the following years, but if you give up too early, if you spend three, four, five months, get nothing accepted.

[00:25:14] And then walk away, then you've got absolutely no chance in that. You can guarantee what the result will ultimately be. It'll be zero, but you can stick it out and be patient. And just that, that belief of faith and just listen to what people like you and I are saying. Now there is a huge, huge amount of value.

[00:25:29] Let's talk about commercial valuations then. We touched on it earlier and obviously a key part of your strategy. We've talked about this on the show a number of times, Ellie our broker has been on and the way that lenders do it is sometimes different, but it's a very useful method, especially in the prime spaces of engineering the right sort of value to make these deals work.

[00:25:52] But can you talk to us a little bit about your approach to this, how you actually try and engineer those commercial valuations and how it tends to work with the banks that you refinance with? 

[00:26:03] Kieren Goldie: Yeah absolutely. Yeah. Again, similar to the article four piece commercial valuations, uh, again, all either really known.

[00:26:12] So it's interesting because again, not like a transition from a bricks or mortar HMO arrangement into commercial space. But yeah, for me, as you said, Andy, rightly so commercial valuations ultimately allow you to sort of. Drive that end number, that GDP that you're working towards and arguably like it or not to manipulate it to a position that sort of suits you.

[00:26:33] Obviously, within reason, there's a huge amount of work and due diligence and understanding of market data, rental data. Yields multiplies that goes into that to achieve that in number in a nutshell, all of that information, providing that you look in the right places, it is there through letting agents through Rick's valuation reports.

[00:26:52] If you're lucky enough to get your hands on some from other people and that due diligence piece when you are appraising deals and appraising investment opportunities. You are in a position to within reason sort of understand where that commercial valuation will take you to and, and really work back from there, what your purchase price needs to be, what your bill needs to be based on the number of units and the type of finish that you're looking to get to, and ultimately work back from the GDV to a point of which you deem that an acceptable deal from a 15 percent return, a 20 percent return sort of perspective or whatever your investment sort of you know, profile looks like.

[00:27:27] Andy Graham: So what are you doing? You're taking an estimated gross rental income, are you? And then applying some operational costs. Yeah, typically 20%. And then capitalizing, whatever sort of the going rate is in Hortsmith, and that basically gives you there or thereabouts your commercial valuation. 

[00:27:46] Kieren Goldie:  Correct. Exactly that. And obviously fortunate enough that, yeah, have done enough now that I've got a nice sort of case study of commercial valuation reports in the back pocket to sort of evidence where.

[00:27:56] We should be arriving at in terms of the finished GDV. But yes, if you're not fortunate enough to have those, your sort of infrastructure for getting to that end goal. Yeah. Correct.

[00:28:06] Andy Graham: Do you recall how you felt the first time you were waiting on one of those commercial valuations versus perhaps how it is now with that experience? And I suppose all of these other valuations in hand that you can just present or use as data.

[00:28:19] Kieren Goldie: Yeah, it's a good talking point because obviously. If you're buying in cash, for example, and you're carrying out a refurbishment with your own cash, you're probably not going to have or you won't have a valuation done on behalf of a lender, which great if you don't need any lending.

[00:28:34] Yes, your numbers might be significantly better off due to no borrowing costs. However, the advantage of buying with a bridge or using a refurb facility is that you have a valuation undertaken on behalf of the lender. And obviously off the back of that valuation, that value will give you an indicative GDV based on local data, comps, rental rates in, in the area, which for me, especially if you're looking to get into HMOs within article four areas, or even with not within article four areas, having a, I call it a prebuilt GDV, basically having that as a good indicator of where you're going to arrive post completion of the development.

[00:29:10] Is a good way for sort of sounding out your market before you sort of get into deep effectively.

[00:29:14] Andy Graham: I think it's a great piece of advice just helps just manage those anxieties about where you might end up helps manage risk at the end of the day. And I've even before I advise people that have been buying cash, look, you're concerned about this because you just don't have the data.

[00:29:28] So the thing to do is just go and get a bit of data. You can actually instruct a valuation on your own behalf. Just send a valuer. Tell them what the plan is and go and get their opinion. They can do it from the desktop. They can go and see the property, whatever it is. But I think that that really helps narrow it down.

[00:29:42] And that's just, I think, one example of managing the risks in projects. Talked about build costs and I want to come on to actually project management. But the different things that we can do to actually try and mitigate the risks that come with building and the risks that perhaps come with where we'll be at from an occupancy perspective, location is a really criticalpart there.

[00:30:00] Let's talk then about build costs. You've obviously managed a lot of projects, Kieren. It's certainly in my experiences, the more challenging aspects, I think, about what we do. And usually the bit that I find that there is the most variation, it's sort of where all the color is between the lines. How do you keep on top of that?

[00:30:17] How do you manage projects, make sure that they come in on budget and you get the right spec and you end up with the right product?

[00:30:24] Kieren Goldie: Yeah, good point. So for me, we touched on briefly earlier, just before we got going, just in terms of sort of the tender package process. And I, I think in terms of running a successful project, so that particularly that it's more on budget, we'll come on to sort of timescales after is collating a, an extensive tender as great as contractors are at what they do.

[00:30:46] They are great at building. They aren't unfortunately so great at other aspects. So. My point being on that is that you need to show that builder every part of that process, from design to plans, to structural to specifications, how you want the color on the walls to be from the carpets to the tiles. You need to show them absolutely everything.

[00:31:07] And that comes with collating and extensive so that the on site thinking, how do we do this? Or how do we do that? And then that's from top to bottom, bottom to top in terms of all of the structural details. Your wall types, your fire specifications. I could go on. You need to tell them and make them aware of, of absolutely everything.

[00:31:23] So it's collating a full package to start with, to get off on the right foot of that project. And then it's quality control, it's site presence, it's being there, your health and safety, your site set up, from scaffolding to everything involved in that construction project from start to finish, it's site presence and the man management of that.

[00:31:42] Andy Graham: On builders, you made a good point. New builders are good at building, hopefully, but their strengths are not necessarily elsewhere. Some of that can actually be in costings. One of the things that I have found quite consistently is that. Builders are not particularly good at project managing either. And I think that there was this misconception that getting a contractor on site and expecting them to project manage is part of the same job.

[00:32:04] And actually managing a site is part of building, but actually managing a project. Procurement. Cost management, the program that is actually a different role. Now builders can do it or have a go and do it to some extent, but, and I can't remember who it was, we had them on the podcast, but when you're paying a builder to do building work and they're asking them to project manage.

[00:32:26] You're essentially giving them kind of carte blanche over the timeline, over the possibility of the ability to maybe charge extras. Really, that should be an independent piece of work and if you're not able to do that, it might be worth bringing someone in even just on a light switch basis to do project management.

[00:32:42] I know for some people that can feel like an unnecessary cost, but it's very easy for bill programs to run over by 20, 30 percent, cost you a lot of money and interest, lost rent. Lots of extras can be racked up and easily sort of accumulate quite a chunk on top of your original budget. So something to think about, but I thought it was a good point that you made.

[00:33:01] Let's talk about the programs as well. And how do you manage to stay on time and bring those programs in? And do you almost work to kind of a bit of a palette here? And have you almost systemised and optimised this process though, that it is a bit more predictable for you?

[00:33:16] Kieren Goldie: Yeah, it sounds like a fairly simple point, but a schedule of works in a detailed work that is your best friend for managing that time frame.

[00:33:25] Yes, you can ask the builders to produce one or yes, you can give them one, but unless you're tracking week by week where they are in terms of what's complete and you valuing those works effectively against the overall schedule, you're very right in the sense that you can easily run over by 20, 30%.

[00:33:39] Candidly, at the earlier stages of my journey, I probably wasn't as sort of experienced and adept in that sort of area that I am now on the quality control measures that bought in and that you've grown generally just for experience. But yeah, the types of contractors as well on these types of projects, you know, they're not tier one contractors.

[00:33:57] They're not going to be used to working with QSs or independent project managers. They are smaller outfits, respectfully less professional, but ultimately they're going to charge you less for that because they haven't got extensive overhead. So. It is playing you as the investor or investor or having that person as a project manager is sort of a bit of a hybrid role at this sort of scale when you're doing smaller HMO projects.

[00:34:20] It is vital to delivering them on time. And obviously, we haven't really touched on it yet, but another contractual point from sets up with contractors, minor works, JCTs. It doesn't protect you full circle, it's there to protect you and to protect the contractor. But it's certainly a starting point for putting in some infrastructure in place to hopefully try to deliver it on time.

[00:34:41] Andy Graham: Absolutely, couldn't agree more. And I actually think that a builder or contractor who didn't want to work under JCT is a red flag. Why not? They will usually be because they want to find ways of stretching the program, stretching the budget. Maybe they don't want the liabilities, proper contract, like in my works, JCT actually sort of outlines, I think, especially for anybody starting the early stages.

[00:35:07] Yes. There's a bit more work in getting a JCT set up. Yes. It can cost a bit of money. Yes. You might need a contract administrator to do it, or you're an architect, someone who knows what they're doing, but the amount of risk that that can offset is so significant. I think it's a complete no brainer. And like I said, a bit of a red flag, if a builder really didn't want to do it, but I'm glad that you've mentioned that Kieren and also the measured works.

[00:35:30] I'm just going to circle back around to that quickly, just for the benefit, perhaps, of some of our listeners that might not be aware of that. Guess what you're talking about, Kieren, is if you're working with a bank or a lender, they're typically not sending you all of the money for all of the refurbishment all at once.

[00:35:43] They like to drip feed it to you and often what they will do is they will want to send somebody out to review the works or even if you're just using a private lender, you may want to do this yourself or have someone do it, but when the builder is putting in an invoice for, let's say 50,000 worth of work, have they actually done 50, 000 worth of work?

[00:36:03] You talk about measuring the work, you're quite literally against, I imagine, the line items. How much of the plastering have they done? How much of the six electrics have they done? How much of the lighting is in the store? You're actually measuring off what they've done, they put an invoice in, there might be a couple of things that need changing, and then you make a payment based on that

[00:36:20] And another great way of just managing that risk so that you are Always paying in arrears, your builder is always working in advance, so that if anything does go wrong, you haven't financially kind of put your foot in it, so to speak.

[00:36:33] Kieren Goldie: Yeah, very point in terms of making sure that you're always effectively ahead, because if you're not, that leaves you sort of open to exposure with a contractor, you know, potentially walking off of a job, you're out of pocket essentially, and they're walking off with.

[00:36:48] A bit in their pocket, plus maybe some materials. Whereas obviously, if, as you say, you always keep it in arrears, you protect yourself so that if anything does go wrong, you're not financially out pocket. 

[00:36:57] Andy Graham: Absolutely. And no matter how big or small that project is, that piece of advice, I think is just as pertinent. This has been a really interesting episode, Kieren, because I think we've walked through like the whole sort of. Process through acquisition, right through to refurbishing and refinancing. And I think there's a lot of value in here for our listeners. You've been doing this for a while now. And I know before we kicked off, you talked about the way that your business has been growing and how you're now transitioning to perhaps doing a little bit less client work and a bit more stuff for yourself, but with this experience behind you, I'm sure there's a lot of people listening today.

[00:37:32] That would like to emulate some of your success and achieve some of the stuff that you have. What advice would you give for aspiring investors or even investors that have been doing it for a little while, but just not not finding a rhythm with it. Just not being able to sort of create that scale that they won.

[00:37:46] What advice would you give them Keiren from all these ups and downs that out of these projects that you've been doing? 

[00:37:52] Kieren Goldie: Yeah for me, I think a big part in sort of. Growing and scaling to where I have has been sort of personal brand. We touched on it earlier, again, in terms of when first putting yourself out there, you should get rejection.

[00:38:05] You get pushback people within your own sort of social group, but like, what are they up to? What are they doing? But ultimately it doesn't matter to them. It matters to you. It matters to your future and potential business partners that you may find along the way. So getting yourself out there, building a brand, being sort of recognised for who you are and the value that you're able to provide to other people and in terms of the product that you might create, be it student let or professional let or any other sort of model.

[00:38:28] And my second main point would just be action, take action. I've seen, unfortunately, so many people talk about this and talk about that and go to this event and go to that event and do this training training and in two or three year time ahead in the journey there, unfortunately, still done or perhaps not got quite where they want to be.

[00:38:49] And candidly, again, it is probably through lack of actual action and just taking the steps that you need to progress. I know that comes with managing risk and potential risk. I'm perhaps taking wrong turns, but if you don't take action, then you certainly want to be sort of on that upward trajectory. So action is a big point for me.

[00:39:07] Andy Graham: Yeah, I think they are two brilliant pieces of advice, and I've seen that myself. I think a lot of people that procrastination, that hesitation sometimes boils down to a combination of mismanaged expectations and just not actually understanding your market well enough. To put the two together and there is no deal.

[00:39:28] There's no scenario where the risk is absolute zero. There's always a risk. And I think the key thing is, look, what is the best case? What does the worst case look like? Realistically, where were you likely to end up? Have you done everything that you can to control the risks? At that point, that's where you've got to take action.

[00:39:45] There is no crystal ball. And I think that's where a lot of people struggle. And especially I think where people are trying to recycle. All or a lot of that capsule out because they're so focused on the next deal. They don't even do the first deal. So for anyone listening today, heed Kieren’s advice today.

[00:40:01] I think it's really good advice, but don't be that person that hesitates and procrastinates because. You are so worried that the deal is not going to be perfect and it's not going to line you up exactly as you want for the next deal. Sometimes you do have to stick your neck out, but property, certainly in the UK, it is quite a forgiving asset class.

[00:40:18] Try not to put too much pressure on yourself to do everything all at once. Sometimes it does just take a little bit longer and sometimes the route to get there is not completely straight. It's not a completely clear path, is it? It's been a real pleasure to have you on the show today, a really interesting conversation for anyone listening that wants to find out a little bit more about what you do, maybe is interested in investing with you, or maybe how you might be able to perhaps help them invest, how best can they get in touch?

[00:40:47] Kieren Goldie: Yeah. So I'm on various sorts of social media channels, as we mentioned and touched on earlier, I'm not doing really any sort of client facing work, but I have got sort of mentees that I've coached previously. And in the process of coaching as well, if that's something that you'd be more so interested in, but yeah, I've shared a lot of sort of value and information on my social media channels being Facebook, Instagram, and a little bit on the YouTube channel as well.

[00:41:12] So if you're looking for some more content around those aspects, then that's where you can find me.

[00:41:16] Andy Graham: Brilliant. Go and give Kieren a follow. Kieran, thank you once again. It's been an absolute pleasure, a really interesting conversation, and it's been great to have you on. Really enjoyed it, Andy. Thank you for having me.

[00:41:32] Well, there you go. That is it for today's episode, guys. Thank you so much for tuning in. Hope you enjoyed that conversation with myself and Kieren. I certainly did. What a great guy, obviously tons of experience behind him, really kind of leaning on that real estate experience and really clearly understands his local market.

[00:41:49] I think if there's one thing you take away from today's episode, just take that away. Kieren really is an expert in the area that he is investing in and obviously that helps him manage the risks, it helps him  manage the numbers, and it's helped him build a really successful property business. That's it for today's episode, guys, though.

[00:42:05] Don't forget that if you do want to level things up, head on over to thehmoroadmap.co.uk. That's where you'll find everything you need to start scale and systemise your own HMO property business. We've got the 80 case studies from community members, masterclasses from experts like planning consultants.

[00:42:18] interior designers, architects, and a whole lot more. We've got the deal stacker, got all of my downloadable resources and templates, and so much more that'll help you at every step of the journey. And guys, if you have enjoyed today's episode, if you're a regular listener, or perhaps even if you've just found us for the very first time today, if you've enjoyed the episode, if you find it useful, if you're finding that the HMO podcast is helping you.

[00:42:41] build your own property business, then please, please, please leave a quick review of the show. You can leave a review on Spotify and on Apple podcasts, and it helps more than you could possibly know. It helps us continue to bring great guests onto the show like Kieren, and it helps us continue to spread the message about all the great work that people like you and Kieran and everyone else in our community are out there doing in the HMO space.

[00:42:59] That is it. Thank you once again for tuning in and don't forget that 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.