Inside A Cambridge Super Deal: How Sam Carter Adds Value & Reduces Risk

Today I’m joined by Sam Carter of SJC Property Developments, who’s showing us that it’s absolutely possible to make property deals work—even in one of the most expensive parts of the country. Sam and his family are building a thriving business in Cambridge, and their latest project is nothing short of remarkable.

They secured a property that was originally on the market for £725,000 at a bargain price, applied a smart strategy with multiple exit options, and turned it into a deal that generated hundreds of thousands of pounds.

In this episode, Sam and I dive into exactly how they pulled it off, the key decisions that made this project such a success, and what it really takes to grow a profitable property business when many people insist the deals just aren’t out there.

So, if you’ve ever thought opportunities only exist in the cheaper parts of the country, this conversation will make you think again.

Here’s what we cover in the episode:

• 02:57 Sam Carter’s Background and Early Influences
• 05:47 Transitioning from Employee to Entrepreneur
• 14:44 Understanding Exit Strategies and Risk Mitigation
• 20:54 Dealing with Unexpected Challenges in Property Development
• 26:34 The Importance of Mentorship and Continuous Learning
• 32:49 Creative Strategies for Maximizing Property Value
• 35:42 Building a Personal Brand and Networking for Growth

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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 price and everything else you need to know to start scale and systemize your very own HMO portfolio now.

[00:00:40] Today I'm joined by Sam Carter. Now Sam's family run a business in Cambridge, one of the more expensive parts of the country, but they're making it work. They're finding great deals. They're making great numbers. Today I want to discuss a recent project that Sam has done that is absolutely.

[00:00:56] Incredible. They've made hundreds of thousands of pounds of a project that was on the market for 725,000 pounds. They bought it for an absolute bargain, and through a creative strategy and a plan with multiple exits, they have done something really very special with this. So if you're struggling, if you're not sure whether the deals are out there, if you think that you can only find good deals in cheaper parts of the country, today's episode is definitely one.

[00:01:21] You wanna stick around for today, Sam and I are gonna deep dive on this project as well as what it takes to build a successful property business. Please sit back, relax, and enjoy today's episode of the HMO Podcast.

[00:01:35] 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.

[00:01:50] 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.

[00:02:05] For the future. 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.

[00:02:21] 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.

[00:02:45] Andy Graham: Hi Sam. Thank you for joining me on the podcast today. 

Sam Carter: No, thank you for having me, Andy. Really appreciate it. 

Andy Graham: It's a real pleasure to have you here. We met a little while ago, I think, at some sort of networking event or an investor show or something like that, and I think I path have crossed once or twice, and you really struck me as somebody, and you're a young guy, Sam, who really, really knew what you were talking about.

[00:03:05] You had a huge map of experience when I met you. You've gone on to continue to gather more and I'm excited to have this conversation with you today, especially because. We have got an incredible case study that you've recently done and are in the process of doing that. I would love to sort of get stuck into and share with our listeners, but before we get there, Sam, could you tell us a little bit about you, about your business, about what you're doing in property and the backstory?

[00:03:27] Sam Carter: Sure. Yeah, likewise. I think it was when we met, like you said, at a networking event, and I think we met at the London Excel. Uh, what was it? I think it was the Property investor show. Was that there? 

Yeah, that was probably right. 

Sam Carter: Oh yeah. Both got nominated for that, so that's brilliant. It's a little bit about our backstory.

[00:03:43] I've always been involved in construction. My dad's had a construction company in Cambridge where we are based before I was born, so I've always been around it. I absolutely love it. However, he always told me he was gonna live my dream, so I worked on site from the age of 12 on a Saturday, helping him make cups of tea, sweeping up, et cetera.

[00:04:00] So I had you do just grow your knowledge base around that and you're around the tradesmen, so you start to pick things up. As I then progressed, I really enjoyed finance and I went to university to study business management. And then from then on I decided I want to become a financial advisor. So again, I went into finance, got my financial advisor qualification.

[00:04:18] It just wasn't for me more an ethically where I was working and therefore I actually took a step back from that role. However, I absolutely love helping people with wealth creation and finance. That just gets me going. So yeah, that's then when I came back and worked on sites and dad basically said to me, come on, you're better than this.

[00:04:37] You can do more of this, your finance knowledge, our property knowledge, how can we do something? And that's then when I read Robert Kiyosaki's book, rich Dad, poor Dad, which I'm sure most of your listeners have read. Or if not, definitely go and read it if you've got children as well. I believe there's a kid's version out now.

[00:04:51] I think it's a great book. It was like a light bulb moment as soon as I heard that. So from then on I went and uh, went to a local networking event and it just sort of transpired from then, and then just carried on, reinvesting in myself and my education. And then that's how we got started in the property journey.

[00:05:06] Andy Graham: Sam, you mentioned then there was a point which your dad gave you that kick that you perhaps needed. Was there a point where. You had been maybe thinking about this and had aspirations of, of building a business or were the reservations, perhaps even some limiting beliefs? Maybe you just thought that your dad has created this business, but maybe you were only ever gonna be an employee of a business or something like that.

[00:05:30] I mean, tell me about that process and how you actually decided to go from sort of employee or even working within your dad's business to really driving this yourself and doing projects and deals.

[00:05:39] Sam Carter: I think as you grow up growing up around a family company, you almost don't realize about the outside world slightly.

[00:05:48] And, uh, going from them working in finance in commercial, private sector. So then coming back on to the family company, it was a case of, right, this is a great opportunity. Now I'm old enough to understand it. I know I don't want to just become a tradesman and be labor and not there's anything wrong with that.

[00:06:05] I think to have a trade, especially as we go into a more AI dominated world, I think tradesmen are becoming to their own and be able to earn absolute fortune. That's a whole nother topic, but I think it was a case of, right, we've got this amazing opportunity and we can really harness it and take it to the next level.

[00:06:20] Also, not just for myself, but also for my whole family, and to be able to help mom and dad, they have given us an amazing lifestyle, an amazing life. But be able to give them back in retirement and create, you know, their retirement. Absolutely as I'd like it is what I wanted to achieve and what we set out to.

[00:06:35] And that's my biggest why. And of course my brother as well is to give him a lifestyle that he wants to achieve and, and be a part of.

[00:06:40] Andy Graham: And you've done quite a few projects now as a family, as yourself. Can you give us a flavor, Sam, for the sort of stuff that you have been doing over the last few years?

[00:06:49] Sam Carter: So over the past two years, our main core is, uh, PD rights because we love how fast we can go with them, especially having our own building company.

[00:06:56] And therefore, at the moment there's no article 4 in Cambridge. So we like to do HMOs because we can basically buy a three four bed and transfer that into a six bed. Pretty much within three to four months time if it all goes smoothly. And therefore that's our sort of bread and butter. But we've also done a church conversion into one bed apartments.

[00:07:16] So then as well as that, previously dad had a lot of commercial experience working in different sites in London. So he is worked on the Tower of London, the Ritz Carlton. So it's given real in-depth knowledge working on, you know, grade two, grade one list of buildings. Different shops as well. And then in Cambridge itself, we actually converted a warehouse into like a three story zinc building, which is beautiful.

[00:07:37] Uh, rooftop garden in the middle of Cambridge. So together. We've got a real good in-depth knowledge now and obviously I've come on board and that's where I know our USP, the managed to harness a lot of that knowledge and obviously that's what enabled me to get into it so young and learn from dad, which is brilliant.

[00:07:51] Andy Graham: I think that the background and all of that exposure, I think it's really clear to see why you have developed such a broad understanding about this industry. 'cause you are quite young, Sam, and you do know an awful lot and you've achieved an awful lot already. You've, you've won awards yourself as an investor and there's something interesting there because I think obviously this has been quite a unique opportunity for you growing up and around that sort of a business.

[00:08:14] For some people, a lot of our listeners, that's not necessarily the case, but I have always been of the opinion that those early stages of building a property business, depending on how far you want to take it, there's a huge advantage If you can get. Some of that insider knowledge, just piggyback somebody else doing something.

[00:08:32] Get that experience, try and get on site. And I got this from my uncle who was a builder. Mm-hmm. And I would labor for him and I would spend time around the sites over the summer holidays and you just pick up bits and pieces and. It was so useful, even though it was nothing perhaps like the experience that you got, even that experience was really helpful.

[00:08:53] So I think for anybody who is getting started and has the potential to do something like this, maybe just get a bit of experience with somebody or a company doing something. I think it's a really, really fantastic idea, especially for our younger listeners. They really wanna do this because. There's a rush to do things quickly and to try and leapfrog and, and actually it is a difficult, and we're gonna get onto this.

[00:09:14] We're gonna talk about this today, but this is a very difficult industry to crack, and that experience and those contacts and that network, it's really important, isn't it, Sam?

[00:09:22] Sam Carter: Definitely. And what I'd say for younger people is I thought I needed to know it all. So honestly, I thought I was gonna to go back to college and learn how to become sparky, learn how to become a plumber, all of that knowledge that I thought I needed to become a property developer.

[00:09:37] That is not the case. This is where you actually need to sit higher up and become an overall manager of everyone and just basically pulled the strings and that was a mindset thing that stopped me for a little while. So yeah, for young people out there don't think that you need all the experience of learning all different trades.

[00:09:52] Knowing them. This is where you can rely on your power team and we'll talk about that, about how it's so important to have a good power team around you. But likewise, shadowing I think is amazing. Little things, just like seeing how, where waste runs, it can help you so much on cost saving exercises, on floor plan, uh, when you're doing floor plan designs.

[00:10:08] So yeah, that would be my go to is just get as much experience as possible around people. 

[00:10:14] Andy Graham: I think one of the really great things that you can learn and pick up from people like yourselves or companies like yours is the planning process as well. It's a huge part of my business and your business. We all know how difficult it can be, but the nuances to how the planning system works and the way to kind of work through it, the things that you need to consider.

[00:10:35] The consultees, the reports that you need to get the costs that are involved. The timelines, yeah, and methods of actually engineering your costs down as far as possible through the planning process, because it can get pretty silly at times as well. And if you haven't done it before, that first planning application.

[00:10:52] Especially if it's a slightly more contentious one or a slightly more complicated scheme. It can be a real shocker. It can really, really surprise people, can't it? So that sort of experience as well, I think would be really useful for anybody to be able to pick up and just sitting in meetings, design meetings, even alongside an architectural studio or planning consultant, whatever it could be.

[00:11:11] I think that that would be. An invaluable tool. And actually it's something that I learned much later in my career, only really in the last five years, I think, did I develop that sort of thorough understanding? And I wish I'd have sort of exposed myself to it at a much earlier age. I think it would've helped me so much more.

[00:11:26] So Sam, you've got a huge amount of experience, lots of projects behind you, and we're gonna talk about this really interesting project today in Cambridge. Now for our listeners, Sam's case study, this scheme. It's inside the HMO roadmap. Now, with all of the before and after photos, the floor plans, there's a huge amount of detail in there, but I wanted to talk to some about this today and pick up some of the really important, what I think really interesting and really relevant bits from this case study to share with our listeners, and I'm sure a lot of people will wanna go and check this out straight after today's episode but At the very highest level, can you just tell us a little bit about this project in Cambridge?

[00:12:03] Sam Carter: Sure. So when the property come into market, it was listed, I think 725 or seven 50,000, and at that price, the numbers just did not work. So we know Cambridge is quite an affluent area and therefore the purchase price is gonna be quite high. This is where no matter where you're on the country, you can still make it work if you know different exit points and know your numbers correctly.

[00:12:28] So we put our offer in, it got rejected, actually sold, and this is when it's about having tech in with the property development side of the company. So we utilize a system where we get alerted when properties come straight back on the market. As soon as it comes straight back on the market, we spoke to the agent again when we rang them and said, oh, we're just about to call you it's come back to market and actually our offer of 623,000 got accepted, so we saved it by a hundred grand. Basically.

[00:12:54] Andy Graham: What was the gap there, Sam? How long did it take for it to you initial offer to be rejected and then it come back online and, and actually get your offer accepted?

[00:13:02] Sam Carter: I would say three to four months. And I would say up until probably the most recent deal, every single one of our deals has always been from the follow up. So most people know one in three deals fall through, and this is where it really is a game and getting enough essentially pipeline deals coming through that you can offer on them and know that eventually one is gonna drop.

[00:13:20] I think if took us staff first, when we started this journey, it took us 18 months to get one deal over line and then we got three in a week. So it shows you how crazy.

[00:13:30] Andy Graham: I think that this is such a useful point to highlight, and I've discussed this on the podcast many times before, but pipelining, yeah, it's one of the most powerful parts of this strategy.

[00:13:39] You have to be prepared to play the long game, and I've always said that. You've gotta be prepared to walk away for a good deal. Yeah. And I think that so many of us, myself included, I've been there, I've done this. We get really emotionally invested in it, don't we? There's nothing else there. We've got money in the bank burning a hole in our pocket, and we just wanna do it at almost any cost.

[00:13:59] And good developers are really logical about it. Good developers stick to the numbers and they're prepared to walk away. Yeah. And they have a system like the one you just described. To actually be able to follow up if it comes back around. And that, see sometimes just a good relationship with an agent means that they'll just pick up the phone and tell you, look, maybe the agent, the seller is, is having second thoughts.

[00:14:20] Something's fallen through. Would you still be interested? So I think that that is such a great lesson to share to kick today's episode off. But please, please continue, Sam, 'cause there's so much more to this case study.

[00:14:31] Sam Carter: Yes. So we then got offer accepted. Basically, this is the principle of our business model is that we always want three exits, and what we try to do is always get our first exit under PD rights.

[00:14:44] By doing that, it eliminates a lot of risk, so we knew straight away on phase one it was go from the original layout to a six bed HMO. And that, as I said, takes three to four months to be able to convert. And then the second phase then to be converted into an eight bed HMO. And then on this one, which like makes it an an amazing deal if you know it comes through in transitions, is that we can title to a split and get another three bed house in the back garden.

[00:15:08] So obviously straight away then. Depending on our exit on that, we can either build it out and sell it, we can build it out and refinance, or we can sell the land with planning permission on. So there's way more than three exits on this one. But even at phase one, we know that we can do that quite quickly and therefore it gives our investor comfort knowing this is like the worst case scenario.

[00:15:28] And obviously this is like the best case scenario. So, uh, that's how we like to do all of our deals. 

[00:15:32] Andy Graham: So this is about risk mitigation, isn't it, Sam? This is a technique that, yep. I use in my business regularly, and I really like and enjoy PD benefits for the same thing. It's almost like a backstop, isn't it?

[00:15:43] It's almost a worst case. This is where we'll end up and if we can stomach that. It'll be okay. It probably won't be the best deal in the world, but it won't be the worst deal in the world. Yeah, we'll be able to make it work, get through. Move on to the next one. And I think you also mentioned in your case study the speed that you can work through and not you, you've got a good team. You understand how this stuff, that's an important part of this strategy as well, isn't it?

[00:16:10] Sam Carter: Yeah. And this is one of the things I highlight to most people is, is. We sit on, obviously both sides of the fence. We sit on as a property developer and we sit on as a builder, and builders get such a bad reputation for overcharging and these hidden extras and all that sort of stuff.

[00:16:25] But what it says people is is, okay, I hear you. But have you given the builder upfront the exact spec that you want it built to? Because for example, most of the time what happens, and we see us, our residential clients as well, that they'll get us to come around and quote. They'll probably spend 15 minutes talking to us.

[00:16:43] You know what? In that bathroom over here or that kitchen there. We want to do this. Wanna open this up? Okay. Brilliant. So it is probably gonna be one of the most biggest expenses of your life. If not, you know, the biggest purchase ever of your life in terms of doing a renovation sort of scale that we do it to.

[00:16:58] Especially our residential clients and you spent 15 minutes just talking to someone about it and you're expecting them to extract all that information out of your brain into their brain just with verbal communication and remember it all for the whole process of the build. If you think that's really how it's put this real in that sense, then you just think about how many times you forget something or it's so easy done, and therefore what we say to people is, look, you need to build a spec out for that builder to come around and quote.

[00:17:26] So when they come round, you know exactly what walls you're taking out. You know exactly what kitchen you want in. You know exactly where everything's gonna go and therefore then they can quote more accurately. And the example I give is a white plug socket. Andy, how much do you think what plug sockets are?

[00:17:41] Just double standard one. A white standard face place. Um, two qui. Something like that. Two pound, two pound 50. Now, how much did a double USB? No, black Chrome's socket. 

[00:17:54] Andy Graham: I’m laughing because actually after our podcast recording, now I'm going over to a house that I have bought that is for my wife and my family and I have done.

[00:18:06] What you are talking about now, I completely get, and I've done everything, so actually I have fully, fully, fully speced out, down to the fixtures and fittings, including sockets. So black and I'm looking at bronze or some black fiction and fittings like that. But the sockets I'm looking at, I'm all like. 16 quid a socket 

[00:18:23] Sam Carter: And you see just that difference. Yeah, I know it doesn't sound much, but let's take that example there. 14 pounds difference. Yeah. It doesn't, a huge amount on one socket. Yeah. But you multiply this over 20 sockets and A HMO with, you know, six bedrooms, three in each room, that's 18 plus all the kitchen we're being conservative of 20.

[00:18:40] That's still, you know, 320 pounds different on just one item. This is where. The difference comes from of what you'll get quoted from originally, then the end bill, because you haven't been able to comprehend upfront what you'd like. That's one example. But also the other example is, is when you get your three builders round, they're all gonna comprehend it differently, what you've told them.

[00:19:00] And therefore you're never getting, like for like quotes, you're getting their interpretation of it. And they might have said, oh, you know, we're not gonna put the kitchen here, we're gonna put it here. And then the other builder said, oh, well we are gonna put it here. That is, that's like comparing apples and pears until you've got the exact spec that you want to go off and build. You can't do that. So that's my advice to anyone is nail the brief and spec.

[00:19:20] Andy Graham: And so on this particular project, because you were looking at PD rights and you almost had that backstop in mind, you were able to price up what that job, what that conversion would cost to a very high degree of accuracy. And give you assume a really high degree of confidence of exactly what that outcome would be, if that was ultimately all you did or were able to achieve on the projects.

[00:19:42] Sam Carter: Yes. And I say this and caveat this because even with our experience, we still uncover things that we can't foresee. And this is where doing renovation works. It's a bit like, you know, you see a black hole in an apple and it's like, well, how rotten is it until you buy into it and see that it's rotten to its core?

[00:19:57] You don't really know. And it's a bit like that refurbishment works. You are buying something which you don't know, the nth degree of everything. So there is a very detailed breakdown of cost, but then also there is a bit of just risk mitigation. And on this one we did get stung. There was an extension where it had built up pretty much the whole backend.

[00:20:16] And it looked okay from, you know, visual when walking around it, et cetera. No cracks or any sign of anything that was wrong with it. And then as soon as we started working, we realized that it just wasn't built up to spec at all, and that the pad it had been built on, not even the footings, dead left.

[00:20:32] Around the border, basically a foot which wasn't connected to the original pad. And obviously that external foot is where all the weight sits, and that was only 300 mil. So we then saw it started to crack from the original pad. So we basically had to go underpin the whole backend of the house, which we hadn't quoted for and we didn't realize 'cause there was no signs of cracking or anything from an external point of view.

[00:20:54] And sometimes you can't see these things if it's you go on a viewing, you can't sort of start interrogating. And even a survey didn't come up. So, yeah, this is where. You are gonna win some, you're gonna lose some in in property. And this is where I think it's like an economy's a scales game and it's a case of allowing for contingencies, but then also knowing you will win some, you will lose some and that's okay. And that it's, you know, you're looking at your overall portfolio, not just one deal by one deal, basically basis.

[00:21:19] Andy Graham: I think just hearing somebody like yourself say that things like this can be found that you were not anticipating. Despite all of your experience and your family's experience in this game, I think there's a certain amount of reassurance that our listeners will get from that you just don't know.

[00:21:34] But also I think it's a word of caution, isn't it? You've got to have that contingency. I was gonna ask, did you have a contingency? You obviously did. You said it. You did have a contingency, but that's why this is so important. And I think even more so, the less experience you have, the more important it is to have that contingency.

[00:21:51] And look, I get it for a lot of investors who have limited funds, limited experience. The amount of capital available for the deal can be really, yeah, really, really quite restrictive. And sometimes that, and this is the truth, I think in almost any deal, it would be possible to convince yourself not to do the deal.

[00:22:10] There would be enough fault to find with it or reasons or uncontrollable unquantifiable risks that you could itemize that would lead you to saying, you know what, this is not the deal. But there is a point as well, and I think that this is also important to highlight. As investors, we have to acknowledge we have to find that line.

[00:22:30] We have to get to that point where we've done what we can with the right amount of cost associated to that with a contingency, but also the understanding that there could still be stuff that we don't know and don't quite understand. Will that be okay? Am I gonna be okay? And you've gotta take that leap of faith at some point. You can't get the risk down to zero. Can you? 

[00:22:51] Sam Carter: Never, there's always a risk in investing and a, you say you can always talk yourself out of the deal, and at some point you do have to go for it, but just be sensible and don't overstretch yourself. And this is where I think I'd say 95% of profit development is mindset.

[00:23:07] There is always a solution, even if run outta funds is always a solution with external funding or private funding, senior debt, there's so many different ways and it's just about being creative and this is where, yeah. When stuff happens, it's then a case of how we can overcome that. And it really is a rollercoaster and it's like, buckle up, we're here for the ride and let's go for it.

[00:23:25] And you will get ups and downs, probably more downs and ups, but yeah, uh, it's just a case of, of riding that wave.

[00:23:31] Andy Graham: Well, we said this actually, didn't we, before we, you hit record today. We were just catching up. And as a business owner in this game. 95% of the time I am, and I assume you are dealing with problems.

[00:23:45] That's the reality. And some of those problems can be really quite stressful. They can be quite, I mean, I'm low to say, but I, I got a call yesterday about an incident that happened on one of my sites, somebody trespassed on the site. They've been a really terrible, terrible incident. Like so unbelievable.

[00:24:00] You can't believe it. The sort of stuff that we might be in the news. It's just another problem to deal with that this, you could just never predict these sorts of things happening, but you've gotta be prepared, like they will happen. Like ultimately things will happen. Your job is to fix problems just again and again and again, and again and again. Until a little move there's no problems left. But it's hard work, isn't it? 

[00:24:22] Sam Carter: Definitely.And yeah, and sorry to hear you went through that. And like you say, you can't even comprehend some of the things that come up with that happened, but yeah, it's case of firefighting and then it's getting it. Systemized to the point where you're fighting less fires and trying to always constantly look ahead and build whilst also always keeping an eye on things because overseeing the portfolio.So yeah.

[00:24:41] Andy Graham: So you underpinned the extension, you fixed that there was some additional cost to it. You'd gone through PD and you got the planning, and this was to convert it into a six bed HMO, wasn't it? Yeah. What did you spend on that phase of this project, Sam?

[00:24:54] Sam Carter: Yeah, so just to confirm, what we did was we actually built out the eight bedrooms, but we only went for license for six, so that's basically got round it. So we spent 230 K roughly on getting it to six bed, and then also having two extra rooms, which will be the seventh and eighth bedroom. Months we going for planning on that. 

[00:25:14] Andy Graham: So basically you overinvested, didn't you in the project, knew that the backstop was six. You've got the six, you don't need the permission for that, but you, you built the eight because the economies of scale were there everyone's on site. Yeah. And then you've gone phase two from six to try and get the additional two rooms under full planning going to sue generics. 

[00:25:32] Sam Carter: Correct. And that's the process we're at now. So, and this is where it comes down to power team, most people go, you know, oh, we found over a plot of land, or we found a building, we can convert it.

[00:25:40] Let's go speak to an architect. I would say go speak to a planning consultant first hundred percent because the planning consultant will know exactly what you can and can't do in the realms of it. And then you take that knowledge and give that to the architect and they'll be able to design something within that spec.

[00:25:53] Luckily for us, our planning consultant, architect work hand in hand, so it's brilliant. And that's where with their knowledge, we said, right, this is what we're gonna do. All your thoughts, tell us yes or no. And straightaway said, yep, it works. But wait six months before you go in for planning for the eight bed, just so you can showcase it's gone from three to a six bed smoothly.

[00:26:12] The neighbors are absolutely wouldn't say absolutely fine with it, but it's now down and it's okay. They've realized it's not a terrible HMO where everyone's like leaving the bins out, overflowing, et cetera. It's uh, working professionals who look after property really well. There's no, amass of cars like everywhere.

[00:26:29] So yeah, it's, once you've gone through that process, it's a lot easier for council to say yes from six to eight rather than jumping basically from three to eight straight away.

[00:26:37] Andy Graham: Yeah, and my understanding, and again, this is the advice that I've given to my mentees and people I work with for years, Sam, looking for that non-material change of use because at this point you've established the use as a six bed, you've got the amenities on site.

[00:26:52] Going from six to seven or six to eight, it is fairly immaterial. The space already exists. You're talking about arguably one or two more vehicles, possibly a little bit more noise, possibly a couple more bikes, possibly a bit more in the way of refuge and waste. And the argument at that stage is much more difficult for.

[00:27:13] The council planning department or any objectives to build, isn't it? So your chances of getting it passed at that point are much, much greater. That is essentially the theory that we are talking about here. Exactly. That you got it. And this is such a great example of this. In fact, your case study here is the best example and the best demonstration of this.

[00:27:31] I've seen Sam, 'cause you laid it out so, so clearly in in the way that you referenced how it is all about risk mitigation and. I've had this conversation so many times with so many people. Even architects, even planning consultants who don't quite really understand HMOs, there is often a rush or the idea of, look, let's just put it, bunk it all in at once now because it's just gonna be easy to do it and, and you know, and ultimately gonna achieve the same thing.

[00:27:59] And it dismisses the fact that there is an element of risk here that you're not accounting for. You may ultimately get the eight, but it may go through appeal to get there. It could take 18 months. People don't understand just how problematic and how expensive these sorts of problems can be, do they?

[00:28:16] Sam Carter: I mean, you are so experienced and obviously do huge developments.

[00:28:19] I think I learned this pretty much early on with our church development, which we were converting a church into, ideally two, two beds, apartments. However, we got two one bed apartments. Again, so many lessons learned on that. From the purchase of, or when we purchased it, the actual completion took 15 months, which actually is pretty quick in terms of development timescales to do that.

[00:28:40] But even so, that's 15 months without any income coming in, not a penny. And you've gotta allow for all, you know, your finance costs and everything in that period. And that was a huge risk. It was brought at auction grade two listed and a conservation area. And we were banking on the fact that we kept planning.

[00:28:56] Don't get me wrong, we knew we could utilize that use class. It was in, if not, but there was still a lot of risk in that. And when you're at the start of this journey, I just think now I look back, we've done it. We've got through it. I would never do that again. If I was to do it again, I would co completely de-risk.

[00:29:10] And we can do the same types of deals, but with under permitted development, right. And there's hardly any risk whatsoever, and we can do them in three to four months. So that meant we could do multiple times, three, four times the amount of deals in that same timeframe and mitigate the risk. So why wouldn't you do that?

[00:29:26] And I think when you're getting started on this journey, just try and limit your risk. I'm not saying don't go do big deals. They are great deals out there. I'm just saying learn the ropes. The one thing which I just emphasize for people so much is cashflow. Cash flow. Cash flow. I hit it with people and mentees all the time saying, oh, we're gonna lose, like, you know, we leave our job, we've got.

[00:29:44] A couple of properties and I'm like, don't be in a rush to leave your job if that's the aim with property is, it's a long-term wealth creation tool. It's not a cashflow in vehicle. Even when you've got, you know, multiple HMOs, don't be reliant on that cashflow because you're gonna need it for, I don't know, when the roof claims in, you know, when the students had a party, et cetera.

[00:30:01] So this is where I say to people is, is you want a cashflow business as well as your, your assets building. And that might be that your HMOs are part of that cashflow, but don't rely on it constantly. For that or get to a very valid point where you can afford to take out the cash flow because your portfolio is so big and still have plenty in there for, you know, rainy days and when things go wrong.[00:30:20] So yeah, that always be my advice people. 

[00:30:23] Andy Graham:  I completely agree with that advice.

Sam, I have for a long while believe that developing is an extremely tough gig. It's so capital intensive, it's so time and resource heavy and I personally wouldn't do it without. Cash flowing assets or cash flowing business alongside me.

[00:30:41] Whether that's a job, whether that is a portfolio of properties, whether that is a trading business, whatever that is, it's so important because it is a bit like being out in the desert when you're developing, isn't it? It does take time. It sucks your resources, most of all cash, and it's really, really hard and it's very, very stressful if you're not expecting that.

[00:31:00] So I think that that is really, really, really solid advice. So on phase two. So I think that kind of the phase two numbers jumped from obviously phase one. You overinvested with a plan in mind. Turner Capital employed was actually 6% on phase one. Yeah. Phase two jumped straight to 20%. Turner Capital employed.

[00:31:19] Yeah. Fantastic deal. And let's not forget that this is in Cambridge. Yeah. One of the strongest cities, towns in the country from a sort of professional demographic perspective and a really great place to own property. I think that that's clear. So that is an incredible result in its own right. And then there was phase three.

[00:31:35] Now phase three is where things get a little bit more complicated and there was a whole sort of additional kind of package on the side of this deal was. Tell us a little bit about this one, Sam, because it's very creative.

[00:31:47] Sam Carter: With the phase three, it's where we're up to now. So we're titled Split and we are going in for planning on the the three bed.

[00:31:53] But what we did was upfront, again, you know, before we even brought the property, we had our planning consultant and architect look over the deal and say, right, what are the chance of us actually getting planning on this plot? And straight away we knew we had a high possibility of doing it. As I'd done it about 50 meters down the road, it already had a drop curve in the back garden, which went straight into where we'd have.

[00:32:13] Essentially the parking, there was over 50 meters of amenity space for a garden. And what we actually were, and this is where having the paling around you so good, is the way I sort of visualized it, is that it would just be, uh, the same positioning of all the other houses down that road, which meant there was a possibility the neighbors could have contested it as effectively, the light reduction could be an issue.

[00:32:35] So what our architect said was, oh, we'll just twist it and therefore it'll be closer to our own HMO. Further away from the neighbors and straight away it was like a light bulb moment. Like, why did I not think of that? And this is where even with my creative skills and sort of being in it, sometimes you just don't see it.

[00:32:48] And by having them, people around you to bounce around ideas straight away, you know, again, it mitigates risk and that we're not gonna obviously content against our own, you know, kick us thing against our own planning consent. So yeah, so that's where we're at currently with it. So yeah, we'll wait and see now, uh, how it goes through.

[00:33:04] And again, if we get it brilliant. If we don't, we're back to drawing board and go again.

[00:33:08] Andy Graham: It’s a new build house, isn't it, Sam? I think it's a three bed house. Yeah, three bed detached house. What will it cost to build this ground up?

[00:33:15] Sam Carter: Yeah, so. Cost wise, we allow about two and a half thousand pound a square meter, which I know is on the high end.

[00:33:22] That's just because of the spec we build to and also being in Cambridge with the labor expense, et cetera. So we, we've allowed roughly about 250 K to build this out. And then we've been really conservative, the GDV, so we're always conservative on the back end of 500,000. And yeah, that's what we presume.

[00:33:38] Hopefully we'll be able to achieve about, let's say all costs and fees, et cetera. Let's say 200 grand profit. And so is that about a 500 pound a square foot? 

[00:33:46] Andy Graham: Is that ultimately what you're the sort of figure you're achieving down there?

[00:33:50] Sam Carter: I see you got me here Now, square foot, a meter ridge. I work on meter ridge, but yes, it does the conversion.

[00:33:54] Andy Graham: Then yes, round it to about 5,000 square meter or 500 pound a square foot ish, roughly speaking, but yeah, yeah, absolutely. You know, it's an arbitrage model at the end of the day, isn't it? If you can buy and build for X, do something and make it worth Y at the end of the day, the economics don't have to be really that complicated to see whether or not this sort of thing works.

[00:34:12] But of course, this part is all just in the black for you, so all of a sudden your return. On capital and this project just kind of literally goes through the roof. Yeah. And it is an unbelievable project. By the time that you're all in, I'd encourage all of our listeners to go and have a look at this today.

[00:34:28] It's a really creative deal, but actually it's a very. At its foundation, it's not an overly complicated deal. It's quite a simple deal, looked at very creatively with a really sensible strategy of risk management approach to it, and it's a, in a really, really profitable deal, assuming of course, the planning comes off, but it sounds like the likelihood is really, really quite high there, Sam.

[00:34:50] I mean, you've talked a lot about understanding your numbers, knowing the right people, getting the right advice. I know that you've invested heavily in this sort of stuff from your own perspective, haven't you, Sam, education, mentorship and things like that. Can you tell me a little bit about how that has shaped your journey, how that has molded some of the decisions that you've made and the choices that you've taken as a developer and an investor?

[00:35:15] Sam Carter: Yeah, I can happily sit here and say, without the mentorship, I wouldn't be sitting here and having this conversation with you. Yeah. I'll be honest, probably spent probably a hundred thousand in the past couple of years on personal development now, and it's been the best investment ever. Mm-hmm. I'm not this in university or I went to university myself, but I think there's other avenues now, and I really believe that you need someone in life, whatever it is you're going to do, not just a talking property, but whatever it is, is have a mentor that's been there and done it, and they can just pull you up to that next level.

[00:35:43] It's almost the opportunity cost. You won't know how much money you've saved because you won't ever have to see it. But I can't tell you enough of just with their contacts or with their procedures or their system, you are gonna save so much time and money, especially in property development, where developing it wrong or not having the right people, it can be really costly.

[00:36:01] So yeah, that's where I just say. There's so many different strategies out there, and I think some people can get too bogged down, but I'm just gonna focus on this strategy. I would look at the strategies like a toolbox and be like, okay, there's this property deal here. What could we do with it, and how many exits can we get?

[00:36:17] And it might be, all right, well, one option is a purchase lease option. We can do this one option's a HMO one option is sa. And look at it like that. Rather than going, I'm just gonna focus solidly on SA or just gonna do purchase lease options as, yeah, you can just do purchase lease options, but are they hard to find?

[00:36:33] Yeah, it's like a needle in the haystack. And therefore, unless you're willing to wait a very long time and play the long game, then you need to be creative with it. That's what I'd say by having the knowledge of lots of different strategies and then being able to look at them and say, what's your exit?

[00:36:47] Okay. That's how I'd look at analyze the deal, and but one mentor said to me, it stuck with me ever since. You'll pay either way. I'll pay for it by not taking the mentorship and not taking the courses and learning it and doing it yourself, which I think is valuable experience. And you've gotta do some of that.

[00:37:01] And you'll pay with essentially mistakes or you pay for a mentorship and it'll take you up to the next level and it reduces your mitigation of risk. Don't get me wrong, we still make mistakes. Everyone's human, but it does really reduce it and have someone there to lean on that's been there and done it.

[00:37:15] It's a bit like when you're going through a problem and you hear someone else has been through that, I don't even need to tell you that they found a solution and that, because hearing someone's almost stuck in the mud with you. It's very much like that when you have a mentor. He said, oh, I've done that and been there.

[00:37:26] I've come through it. It's okay. It almost makes you feel at ease. And I dunno, anyone that's successful in life that hasn't been challenged at times or running outta cashflow, running out of funds, that hasn't then had to come up with a creative solution and sort of work their way through it. So that's what I'd say to everyone is, is, and having a mentor there who goes through that with you, I think is invaluable.

[00:37:47] Andy Graham: Do you think having a mentor. Made you or helped you think differently about things, Sam, in terms of the overall objective, the method of getting there, you've obviously got a really level head, which as a young investor is quite unique to see. I, we said it before, a lot of people, a lot of us we're in a rush to get results very, very quickly and sometimes in has we make the wrong decisions.

[00:38:09] We overinvest in projects. We rush to make mistakes, but you don't seem to have taken that sort of approach. Is that an inherent trait of yours or is that something that you've learned along the way as well?

[00:38:19] Sam Carter: Well I think we did. I think we first, Roger, we went all in and you know, it is great Elistic conservation area, everything can, from that I learned my lessons of, okay, we don't need to rush this.

[00:38:29] We can take our time and do it more with better risk management, shall we say. So yeah, I would say that the mentors have helped me with my mindset and. I think in the UK, just as a general, we are very blinkered. We're on this track. We've gotta go to university to be successful and take us to the next level, or we've gotta get there as quickly as possible.

[00:38:50] And if you're not doing it by a certain age, you're doing it wrong. And I think we can be quite blinkered into that. And I think by my mentors also having mentors from different parts of the world, especially the USA. It's good and bad. I think that they have an amazing outlook on entrepreneurship, and once you take off the blinkers, it just opens up your mind so many more possibilities.

[00:39:09] And I think that's half the battle is you only know what you know. Right? And if you don't know these sort of things. It's no good, see yourself. But once you know this and you can just pick little bits out and here, open that mindset, it really makes a difference. And that's where all my mentors have been amazing at.

[00:39:24] Whether it's looking at the economy, whether it's looking at financing, whether it's looking at different strategies. Yeah. And just having them there for guidance. I can remember one that we were looking at buying and it had a restricted comment on, and we were just getting the pressure from the estate agent, you gotta buy it now and put it back on the market.

[00:39:38] Being young, they tried to put the hammer down a little bit harder and I was prepared to buy it. And it was only my mentor was like, no. Like end day, you can walk away from this deal. If you buy it and you can't get that carbon taken off, then you brought a lemon. And as soon as I said that, I was like, whoa.

[00:39:52] And I took it off. And don't get me wrong, there was a huge amount of pressure. I was on holiday and I was trying to sort this deal out and eventually we managed to get the council to remove it within a matter of weeks, which I thought was unheard of, but. Without having that person there mentoring me, that could have been a complete disaster and brought something that I couldn't even developed into a six foot HMO with pd.

[00:40:10] So this is where they stop you making big mistakes as well. Yeah, but like I said before, 95% it's mindset and. Like yourselves, what you guys have created is amazing. And to see from, I can remember looking at your projects and seeing the visual elements of it. It's like, wow. And that, that's what I think for a lot of this.

[00:40:26] It's like, yeah, you can see it and it's like, okay, how do I do that? 

[00:40:29] Andy Graham: I think sometimes when you step back and look at some of the projects and the transformations, and that does look incredible, and then I look in the mirror and I can see the exact opposite has happened to my face and I realized there has been a definite cost to it.

[00:40:42] You've gotta have a thick skin in this game, and it's great to hear you talk about the ups and downs of it. Share a really sub honest and transparent view of kind of what it's like. Just stepping back, Sam, for our listeners, what would you say the key ingredients to making this work are? 

[00:40:55] Sam Carter:  Key ingredients, I think.

[00:40:59] If you're just getting started, investing in yourself is the best investment you can make. Once you've got that knowledge, it's then about creating a power team around you. And again, that obviously can come from the investment you've made into yourself with, you know, learning from other people that have done it.

[00:41:14] But if not, it's about putting the time and energy into finding that power team that build team. Once you've got them, hold onto them and yeah, like it's so difficult to find a good build team right now with the economy that we're in. And therefore, if it is gonna cost you slightly more, but you're gonna have the best team, they're gonna save you so much money and time and dividends and you know, this game really is about building on time and budget and going at a nice pace where you can just keep on going.

[00:41:38] It never happens like that, of course, in reality, but it's about trying to make that happen as best as possible. So that would be. Finding a good team around you.

[00:41:45] Andy Graham: We've talked about finance before. You have various different points. It's obviously a really key part of your business. How do you approach that, Sam, and how important is that to what you are doing and the plans that you have?

[00:41:58] Sam Carter: Yeah, so with my background in financial advising, we utilize a lot of SaaS pension money, which is great and you can be really creative of that. But also we raise a lot of private finance, and the reason being is bridging is expensive, so I don't mind bridging. We initially purchased the property as it's called, obviously significant investment when you're buying sort of properties we're buying.

[00:42:18] We don't ever bridge the development costs, and that's just because we build so quickly. We need the cash there to be able to go, and I just don't want to have the, again, the hassle of having to basically have a tranche. Spend it and then have to get someone out and surveyor come and utilize it and say, okay, yeah, you spent it on that.

[00:42:34] Or simple things. Let's say you've done up the first fix, but you haven't fitted the windows. And they might say, well, you haven't fitted, the windows not gonna give you that amount. And it's just, it holds us up. So therefore, that's why we always utilize product finance, that we can go at our pace and speed rather than the pace and speed everyone else.

[00:42:48] And I think in an ideal world, you're buying cash. You'd use only cash and you wouldn't have to utilize any of the banks if it's the ideal scenario. Relative of that is obviously very different. And that's where I just say is try and take as much control as yourself in-house with finance as as soon as you start.

[00:43:03] And I'm not saying don't finance at all, because there's so many creative strategies out there. It's absolutely awesome. Just be aware of when you are financing the full implications of it. And I see a lot of people get onto these bridges not knowing the costs that are racking up in the background. And if you don't know your exits, that's where people can get hurt.

[00:43:21] If they get stuck on them. So I'd just say caution is just no multiple exits and how you can get off that have like plan A, B, C, D, all the way down to his dead in your back pocket. Yeah. So that's what I'd say.

[00:43:31] Andy Graham: I think that that's really, really good advice. The exit is so, so important and ultimately projects don't.

[00:43:38] Necessarily go wrong 'cause people don't make as much money as they want. Projects go wrong because they just run into a cashflow issue because they simply cannot exit the deal. They can't redeem their investors, they can't redeem the bank, they can't do things on time like that. So it's so important. And you've obviously invested a lot of time, Sam, in building what I would describe as a personal brand.

[00:43:57] I have seen you doing various things sort of around the edges of your core business. You obviously invest a lot of time in going to certain events and you know, we've met things like that. This is obviously a really important part of the process for you. Is this in part about the ability to raise finance?

[00:44:14] Sam Carter: Yes and no. I think we are always after investments just to take us to the next level and continue to build our own portfolios. We work with investors, we JV with them and effectively continue to build our portfolio like that, which can happily, if anyone's interested, explain to people how, what model works.

[00:44:33] Also with the talks and speaking around the country, now it's about giving back. It was at a property event that I went to that inspired me to get into property, and now we're at a level where we can help and give back and have conversations like this, which hopefully someone can listen to and get inspired by and take them on their journey and hopefully can mitigate more risks because they've listened to our pitfalls and our journey and stay away from touring that basically.

[00:44:55] So yeah, that's where the personal brand comes in. Obviously trying to also raise finance. 

[00:45:02] Andy Graham: Sam, it's been an absolute pleasure to catch up with you today. Really fantastic to listen to the story. Really great to discuss this project in Cambridge in detail. Such an exciting project. I'm, uh, got my fingers crossed for you for the planning.

[00:45:14] I hope all that comes through and, and everything goes the way and that it should do, and I'm really looking forward to watching your journey. For anyone who's been listening today and would like to connect, maybe consider or discuss sort of options or maybe finance, whatever it might be, Sam, where would the best place for them to go to be?

[00:45:31] Sam Carter: So you can follow us on any of our socials, so on Instagram, on LinkedIn, on Facebook. Uh, also you can go onto our website and you can find our contact details on there. And please feel free to reach out. Thank you so much Andy for having us on? 

Thank you, Sam.

[00:45:50] Andy Graham: That is it for today's episode. Guys. Thank you for tuning in. I hope you enjoyed that conversation with Sam, and I think a few good takeaways from that episode for me are, first of all, being prepared to negotiate, but being prepared to walk away if you wanna get a good deal, Sam got a fantastic deal, but it came back to him.

[00:46:06] Building in phases, trying to find ways to mitigate risks and taking advantage of permitted development rights, I think is an incredible strategy, one that a lot of people should be doing far more of. And it's easy if you know how, I think Sam's advice on making sure you've got that power team around you, the right people to help you through the challenges, to accelerate the process where possible and to mitigate more of the risk.

[00:46:28] And I think finally for me. Just understanding that despite the experience that you might have, things can still go wrong, and it's never possible to get the absolute risk to zero. I think it was really comforting to know that someone with Sam's experience and his family's experience still find challenges that they weren't expecting on size.

[00:46:47] Should make us all feel a little bit better. Thank you, Sam, for joining us today. I really enjoyed that. Thank you to you guys for tuning in and listening. I appreciate. All of your time. If you are building HMO property business, don't forget to go and check out theHMOroadmap.co.uk. Everything you could possibly need, including all of my personal contacts to build your power team, are waiting for you inside the roadmap, as well as all of my downloadable resources and templates to save you thousands of pounds and hours and hours and hours of times.

[00:47:16] It's all there to help you accelerate the process and make less mistakes. Go and check it out. Finally, if you're just looking for a bit of guidance and support, a bit of a shoulder to cry and perhaps a bit of advice and experience, make sure you check out the HMO community. That's our free group on Facebook.

[00:47:30] If you haven't already joined, come and check it out. There are over 10,000 of us on hand to help you. That's it guys. Thank you 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.