John Howard: Ladies and gentlemen, good afternoon and welcome. There’s lots of you here and we’re delighted to see you all here today. I’ve got three very, very experienced people on the stage. No lady unfortunately, which is I think is a terrible shame by the way. One of them could have been replaced I’m sure, but with no lady today, which is a shame. However, North versus South. It’s a very, very old question and we’ll hear some very interesting answers today. Hands up everyone who at the moment invests up North. Oh, we’ve got to be careful what we say, some of us. And how many prefer the South? Now at the end of today, I think we should ask the same question again. What do you think? There may be a few different answers, there may not be. So, ladies and gentleman, without further ado, let me introduce you to Paul Mahoney, Reece Mennie and Kam Dovedi.
John Howard: Now, I’m going to ask them all individually, I’m going to sit down in a minute, don’t worry. And then, I’m going to ask them all individually what their thoughts are of North/South divide and how they think it affects them, what they do and how they think and operate, and then I’ll have an opinion at the end, but of course I’m chairman, so my opinions are only worth the same as everyone else’s. And then we’re going to open up to the floor, and as many as you as possible, we’ll obviously like to engage with and hear your thoughts and as many questions for as all as you can have. And they can be as difficult as possible, especially for these three, they can be very difficult. If you can make mine a bit easier, I’d be grateful. So, without further ado, ado I should say, Paul, would you like to comment on your thoughts North versus South?
Paul Mahoney: Okay. So, I think it’s important to clarify what we’re actually talking about when we say North versus South, because it’s a property based show, but there’s a number of different ways to invest in property. I suppose we can only really speak from our own experiences and expertise. And our approach is relatively passive buy to let property investment. So, when I talk about North versus South, that’s what I’m talking about. We started to move more toward the North about four or so years ago as we could see the London market was getting expensive. And the fundamentals, and when I say fundamental, I mean things like population growth, infrastructure spending, job growth, wage growth, all the things that make a strong property market in areas in the North or… I don’t know. Can we call the Midlands the North? It’s North of here.
John Howard: No, you can’t Paul. I know you’re Australian, but the North is the North, the South is the South and the Midlands is the Midlands.
Paul Mahoney: So, what? We just forget about the Midlands now, do we?
John Howard: Well, we can talk about Midlands.
Paul Mahoney: Okay.
John Howard: It’s the third way.
Paul Mahoney: All right.
John Howard: Yeah, okay.
Paul Mahoney: So, places like Birmingham, Manchester, and Liverpool in my opinion, from about four to five years ago, started to become the areas to focus on. And I’m glad to say that that’s been proven since then, because they’ve been the three fastest growing cities in the UK over the past three years. I think when you consider things like net migration in the UK at the moment, very strong away from the South toward the North. A lot of that’s being driven by affordability. We’re based in the city in London. I look at our grads that start with us that, on your average London grad wage, for them to buy a place in London is almost unachievable anytime soon. But, for them to go to somewhere like Manchester, they’d be on a very similar wage, the cost of living is probably about three quarters of what it is in London or less, and the cost of buying a nice property in a nice area is substantially less.
Paul Mahoney: So, you can see why that young profession, who is the future of our workforce, would perhaps want to move to an area like that, and there’s a lot of that happening at the moment. So, I think when you combine that with cheaper entry levels, higher yields and all of the changes in the market recently, and we can’t forget about things like Section 24, the Stamp Duty changes and Mortgage Service Ability changes that we’ve experienced recently. All of these things are hurting high value, low yield properties, and in a lot of ways they’re benefiting lower value, high yield properties, and therefore they’re benefiting those three cities I just mentioned.
Paul Mahoney: So, although I may not sound it, I am agnostic to locations. I couldn’t really care less where I’m investing. I want to invest in the area with the strongest fundamentals possible. And in my opinion, it’s those three areas that have the strongest fundamentals.
John Howard: Thank you Paul. I noticed that you’re not investing in Australia. I thought I just sort of mentioned that. Reece, what are your thoughts?
Reece Mennie: Well, just following on from what Paul said, it’s about talking about our areas of where we’ve invested and what we do. So, me personally, we invest in what we class as second tier cities; Doncaster, Wakefield, Pontefract. And we’ll take off these conversions and turn them into-
John Howard: You don’t sound like you’re from Yorkshire?
Reece Mennie: No, I’m from South. But, for me and for our investors, we get a better yield and we can give a better yield to our investors in the North.
John Howard: And do you find that bill costs are cheaper up North? I mean, are you converting projects [crosstalk 00:05:39] buying existing ones?
Reece Mennie: I mean, up North for me, I can buy an office conversion or an office block cheaper than I could buy the land and build it for. So, I’m already in front of, my investors are already in front in that instance. Up there, around 850K. Down here, same block, same criteria, probably 2.5 million pounds. That’s where the difference is. And the build cost is cheaper up there for us as well.
John Howard: Yeah.
Reece Mennie: But, there is some fantastic opportunities down South. We’ve looked at a few schemes, but we just haven’t gone with any at the present.
John Howard: Reece, you sound like you’re sitting on the fence to me.
Reece Mennie: I wouldn’t say I’m sitting on the fence. I’m from down here, so I’d love to do projects down here, but we work with investors and it works up North for our investors and for us as a company.
John Howard: So, you’re sort of up North? You’re sort of voting for the North?
Reece Mennie: I’m voting for the North, but the difference with me and what Paul just said is, we look at second, third tier cities. So, we wouldn’t look at the likes of Liverpool, Manchester. As I said, we’re looking at the outskirts really, Bolton, Wakefield, Pontefract, Doncaster, because there’s a lot of schemes there, unloved office space that we can convert into resi and it can give us the yields that we want, and we still need new homes in them areas.
John Howard: Interesting you should say that. And I hope Kam’s not going to steal my thunder here. So, as the last one, it’s always risky because everyone has said everything and then there’s nothing else for me to say, but that very rarely happens to me ladies and gentlemen, so don’t worry. So, Kam.
Kam Dovedi: Well, I’ll say the key about North and South is actually that there’s opportunity in adversity. And that’s the key that we always remember. Whenever we have a situation… Can hear me okay?
Audience Member: Your mic’s not working.
Kam Dovedi: Mics not working. But, You can hear me anyway, right?
Audience Member: Yes.
Kam Dovedi: Isn’t it just like life [inaudible 00:07:40], isn’t it? The ducks are never in a row. Would you agree with me guys?
Audience Member: Yes.
Kam Dovedi: So, you can hear me at the back, right? That’s okay. So, the key is, like I say, it’s about-
John Howard: It’s working now.
Kam Dovedi: Oh, yeah, thank you. You can hear me now. So, it’s opportunity in adversity. So, what do I mean by that? So, it’s about making the market work for you no matter what the market is, no matter whether it’s the North or the South, the West or the East or the Midlands, you can make it work right now. And I suppose I’m living proof of this. So, I fell into property when I was 19 years old. At that time, it was the peak of the market. Interest rates were 15%. The bank of England based rates. Some of you-
John Howard: They were?
Kam Dovedi: Yeah. You might even remember this, some of you can’t even imagine that, right? I mean, what are rates right now guys?
John Howard: The kind if you got a bridging loan.
Kam Dovedi: Yeah? 0.75%, right? Bank of England based rates. And, I had to make it work. So, the first property I bought was basically my cousin wanting to move into a property, and I was a mortgage host. And when the market fell, and it was actually negative equity, he said, “You have the keys. I don’t want it anymore.” So, what do you do? You want to be amicable, what do you do? So, I said, “Okay, I’ll have it.” And then, just out of the naivety, let’s call it, and I’ll keep a little bit of that right now as an experienced investor, because it keeps the doors open I find. I decided to come with [inaudible 00:08:53]. I didn’t know that was a [inaudible 00:08:55] 29 years ago, but it was. And, at the end of the month, the aim was to cover the mortgage-
John Howard: Or like they say-
Kam Dovedi: Yeah.
John Howard: … called bedsits, weren’t they in those days?
Kam Dovedi: Bedsits, yeah. You call them bedsits. I didn’t put a name to it. I didn’t know what to call them. I just wanted to cover the mortgage, to be fair. But at the end of the month, there was money leftover. And it was, if you’re like me, you like to create systems, and I created a system for that. So, what we find is, we do the same thing at Premiere Property right now. So, we actually have three specific areas. We invest in London. I live in London, I live in Chigwell actually, so-
John Howard: Oh, very nice too. Yeah. So, I have got some. Go on.
Kam Dovedi: I was brought up in Forest Gate. I was born in Forest Gate. So, we invest in London. We also invest in the greater London urban areas. [inaudible 00:09:38], or if you’re like me, you call it the M25. So, satellite towns around major cities work really well. And thirdly, we also invest in the North, but never say that to a northerner, because you’ll upset them a lot. North of Watford, let’s say. And each of them are a specific strategy. So, very quickly, in London the strategies that we’re really focused on, and you guys can focus on as well if you don’t already, are permitted development and planning gain strategies. Anything with planning gain is so exciting right now. All you got to do is make sure that your numbers work. Please make sure your numbers work. And the numbers that we look at as a minimum, as a bare minimum, on costs is 33.33%. So, if you can make your numbers work at 33.33% on any type of planning gain strategy, then that’s-
John Howard: What on earth is that to do Kam with what we’re talking about?
Kam Dovedi: South.
John Howard: Vaguely. Go on. Carry on. Well, I’ll let you carry on.
Kam Dovedi: Some will say London is south. Well, guys, is London south enough for you guys?
Audience Member: [inaudible 00:10:38].
Kam Dovedi: It is more south-
John Howard: We’re land strategy and you’re talking about land strategy. We’re talking about investment, and North versus South.
Kam Dovedi: Yeah. So, that’s North. And then South-
John Howard: Stick on point Kam.
Kam Dovedi: Yeah. So, the South one is, so versus is, we don’t do planning gain strategies in the North. So, in the Midlands we invest around satellite times where we are focused on buy to let strategies. Where, the minium that we’ll accept is 7%. But typically, we get around 10% on a single unit. So, completely different strategies, completely different areas, but we never mix the two.
John Howard: Okay.
Kam Dovedi: And on the fringe we have the buy to let with the potential of growth.
John Howard: Okay. Is it my turn? I think it is.
Kam Dovedi: I think it is.
John Howard: Goodness me, we’ve heard some different opinions. It’s very, very difficult ladies and gentlemen, when you hear all these different opinions, but I’m now going to give you, shall I say, the right opinion? Probably not. It’s an opinion. So, I’ve been investing in property 40 odd years. So, over the years I bought all over the UK as investment and also as development. The rule always used to be, the South for capital gain, the North for yield. The North for yield. The South, and this is what none of you mentioned which surprises me, the South, there is a massive housing shortage, massive housing shortage in the South.
John Howard: In the North, no shortage. Let me just repeat that. No shortage whatsoever. Unless, as Paul said to me the other day on the show, he said, “That’s all very well John, but in certain capital cities, big cities of the country, there is a shortage, because everyone wants to live in the center of those places. And it’s very fashionable now to live in the city center, coffee culture and all the rest of it,” which I accept that to a point. And I’m a bit of a dinosaur, ladies and gentlemen, so you’ve got to accept that. I’ve been around a long time. I’ve seen it, been it, seen it and done it and all the rest of it. And I would say that the North/South divide, if you like, which I don’t like the word, but it’s there. And the reason it’s there is because capital growth is for the South, yield, higher yields, the North.
John Howard: But, you won’t get the capital gain, unless you hit it right like Paul has, where he’s gone… Last four years he’s bought in the right cities in the North, and like Reece has to a great extent, because he’s getting… I bet Reece’s yield is higher than Paul’s, but Paul’s in a better capital growth area than Reece. And God knows what Kam’s doing, because he’s all over the place, isn’t he? North, South, buying land. I can’t-
Kam Dovedi: I’ll tell you right now, actually we’re very focused. The North, guys, look out for satellite towns, very focused on satellite towns. So, we’re doing typically a buy to let in the Midlands, 7 to 10 projects on monthly basis. Very focused. And you’ve got to be focused on your area. And absolutely right, you don’t want to be scattergun. Keep in mind, I’ve been doing this for 29 years. And in 29 years, we’ve got three areas. To be fair, that’s probably one or two areas more than you need. Yeah? We’re focused on specific strategies. So absolutely right, you got to be focused. You’ve got to be active now. And everything I’m sharing is what we’re doing of course.
John Howard: What I would say is when you say, North/South, yield at North, capital down South, it’s a general… I’m generalizing. There are exceptions to that rule. And Paul’s found those exceptions in the last for years. Reece has found much bigger yields in the last few years, and Kam has done the same over the last 30 odd years. At the end of the day, all this is opinion. It’s all opinion. And I was the director of Cambridge United Football Club, a massive, massive football club. Hugely successful ladies and gentlemen. I got used to losing on a Saturday on a regular basis, on the team coach coming. I’m very depressing at times. The manager and assistant manager even had a fight once and had to be split up by the players on the way back from [Towkey 00:14:46], that’s the sort of clubs we played.
John Howard: But the one thing the manager always said to me is, “Everyone can have an opinion. Only one matters. One opinion that counts while I’m the manager, and that’s mine.” And that’s the same with you ladies and gentlemen. All of us can have an opinion, but it’s your opinion that counts at the end of the day, because it’s your money and it’s your decision. And you cannot blame anyone else for getting it wrong, or getting it right, or whatever. It’s all down to you. And that’s what you got to remember.
John Howard: So, yield for the North, in my view, capital gain for the South. That’s how I was taught it, how I believed in it. And, it doesn’t mean I don’t buy up North, because I do. And I’ve developed up North as well a lot. But, my gains, my capital gains have been far outweighed in the South than they have the North over the last 40 years, far out gained. So, are we ready to open the floor up? Are we ready to… Mr. Mic’s there [inaudible 00:15:49] with his mic?
Paul Mahoney: Can I just make a comment on the junk of that?
John Howard: I’m sure you can make a few Paul. Yeah, go on.
Paul Mahoney: I actually agree with you. But the one thing I think is important to say, is I think far too many people look at the UK property market as a whole.
John Howard: Yeah.
Paul Mahoney: And they might even look at the North and the South as a whole, and they’re not.
John Howard: No.
Paul Mahoney: You really can’t look at the property market from a macro perspective and have any success. Because, you are right, historically, the North has been all about yield.
John Howard: Can you just repeat that again? Because, I think people might not have heard that. I was what?
Paul Mahoney: The North has generally been better for yield, and the South has generally been better for capital growth.
John Howard: But, there are exceptions.
Paul Mahoney: Of course, there’s exception, because the depths of Scotland is very different to-
John Howard: Oh, I’ve got a tip for Scotland later on by the way.
Paul Mahoney: … the center of Manchester for example.
John Howard: Yeah.
Paul Mahoney: So, it’s very important to understand that the micro components or many specific location, if you’re going to be investing there, rather than just saying, “Well, I’m going to invest up North, let’s just buy anything.”
John Howard: Yeah, I agree. I mean, I give an example, I could go and buy all of you, and you could all afford it by the way, looking around this room. Certainly, I could buy you all a small house in Burnley or somewhere like that. Burnley for 20, 22, 25,000 pounds. Now, I won’t personally advise you to go and do that in certain areas, but you can still buy a house for 25,000 pounds, but it doesn’t mean you should be doing it, in my view. But, again, it’s just my opinion. Someone else might say, “Well, John, I bought 10 for 25,000 each and I’m delighted I’m getting a yield of 10%, 12% and you’re wrong.” But that’s just an opinion.
Kam Dovedi: May I show a hack, a quick hack.
John Howard: Go on then, looks like you’re going to anyway.
Kam Dovedi: With your permission.
John Howard: Of course.
Kam Dovedi: So, if you look at the PRA changes that are happening right now, something happening in the middle of the North, which never happened before, is that we are finding our primary property there is growth as well. So typically, the areas that we’re investing in, we are finding on average 5% to 6% growth each year for the last three to four years, which never existed before. And I believe that’s because the PRA changes. Because of the stress tests, they don’t work in the South anymore, but they do work in the North. So, it’s about strategy, and it’s about being tactical.
Kam Dovedi: So, if we find, and you can find, areas where you are finding that infrastructure is in place now. The beginning of the infrastructure is there. And what’s happening is a lot of London money, or South money, is going into these Northern areas and is pushing the prices up. Just market dictating supply and demand. And because of this, we are finding that these prices are actually moving up. So, it’s never happened before. We’re finding over the last three, four years it’s happening right now. So, it’s a quite exciting time in the property market [inaudible 00:18:32].
John Howard: And Reece you have found that a little bit where you are as well, haven’t you?
Reece Mennie: Well, yeah.
John Howard: The market is going up a bit.
Reece Mennie: It’s the same as what you said. In your opinion up North, there’s not a shortage of houses, but I can’t produce enough apartments or enough houses to satisfy the needs. My portfolio up North runs a very high up-
John Howard: And that’s a very interesting point. You must do a very nice job on them to make sure that happens, because otherwise-
Reece Mennie: Yeah. We fit a nice level. Of course.
John Howard: I had a flat in Buxton recently. ANd Buxton’s quite a nice area in Derbyshire, isn’t it? Near Manchester. But, I mean, I had a flat empty for three months. That’s my own fault probably, because I wanted too much money for it. But, the demand isn’t really there on the whole.
Reece Mennie: Yeah, I understand that. But if you go into the same, if you’ve got your niche, it’s what you’re looking for. As I said, we go into second, third tier cities. There’s still people, the same as in Manchester, that want to live in the city center. People still want to live in the city center of Wakefield, Pontefract, Doncaster. We do a nice spec there.
John Howard: You’re showing off now those cities, aren’t you? Wow!
Reece Mennie: People want to leave home and get on the ladder, and we can’t produce enough.
John Howard: There we go, ladies and gentlemen. You’ve heard it from the experts, and me. And now, Mr. Mic man will… Just show up your hand right up, so we can see, because we’ve got lights in our way. Gentlemen down here I met this morning outside.
Audience Member: How are you again John?
John Howard: Oh, Christ! Yes?
Audience Member: I’ll try and be a little quieter.
John Howard: Thank you.
Audience Member: So, no disrespect to all the others. It’s more of a question for Reece really.
John Howard: Okay. Nothing personal, [inaudible 00:20:05]?
Audience Member: Not at all. No. I’ve heard Paul, I heard you speaking at XL. Kam, I’ve heard you speaking at XL as well. John, I’ve spoken to you earlier before.
John Howard: Yeah, thanks. It’s quite the same as listening to the other two, isn’t it? Go on.
Audience Member: Everyone is fantastic. Okay? Reece, you talked a lot about changing commercial to residential.
Reece Mennie: Correct.
Audience Member: Or, you’re buying a commercial building. What are the main things you do about that? Because, it’s regarding planning permission and so on. Is it easier up North or something?
Reece Mennie: Good question. So, what we specialize is in permitted development rights. So, it eliminates the planning risk. It’s an application, long as there’s four tests done; highways, noise, pollution. It’s an application, long as the cancel haven’t overruled it already. But in the cities that we work in, it’s an application into the council, so it’s normally a 60 day process with the application and you can convert office into residential. So, there’s no plan in risk whatsoever.
Audience Member: Do you need some [inaudible 00:21:12] around the locality as well?
Reece Mennie: No, not really. No. It’s just converting, long as, as I said, the surveyor’s reports and all of the reports are done correctly. It’s the same anywhere. Permitted development rights is throughout the country, but there’s some areas that don’t… Some councils don’t allow permitted development-
John Howard: Would you say Reece, that you are careful to… if you’ve got a PD rights, as we call it, on an office block in a very, very commercial area, that you’d be nervous about doing it, in a very commercial area, because the building siters may not lend to the end users.
Reece Mennie: Yeah.
John Howard: If it’s in a very commercial area, you’ve got to be careful. So, that’s a word of warning. I think it’s for everyone. Don’t just think, Reece is an expert, he knows what he’s doing, but if you pick an office building in an area that is very, very commercial still and not changing, you will struggle to get building siters to lend money on the end product. So, be very careful. And my advice always is to go and talk to some building siters before you do it and buy it. And say, “Look, would you lend in these areas?” And surveyors and so on, and get some advice before you do so.
Reece Mennie: But, it also depends on what your strategy is. See our strategy is to convert and retain. So, we don’t look to sell. We re-finance to get our investors out.
John Howard: But, even so Reece, even if people are doing that, and that’s one option, you still need to know that what you’re investing is going to be worth more when you finish than when you start.
Reece Mennie: Correct. Yeah, it’s about areas.
John Howard: Yeah.
Kam Dovedi: At Premier Property, when we’re doing developments and permit development, there’s three specifics that we look at. So, first of all is about the area that… Are the planners going to be amicable to that? So, for example, a recent development we’re doing right now is a shop with… a semi-commercial shop with four flats above-
John Howard: Not for sale, is it by any chance?
Kam Dovedi: No.
John Howard: Well, okay.
Kam Dovedi: Oh, boy. So, on either side, there is residential. So, the planners are very easily giving us planning. They gave us planning for that to build into that, and we’ve created another four flats. So, we’ve got a building with eight flats, because it makes sense. The planners are not fools, they will work with you and they’re looking at a common sense approach. So, that’s number one thing. Second thing is, when we’re looking at developments, we always gauge them between 1 and 10. A spectrum of one meaning that you can’t do it, 10 being that you’ve already got the planning. And where we get involved at Premier Property is between 8 and 10, so it’s a very strong confirmation, where an architect says yes. You had a pre-acquisition, which is yes. And it makes sense to you and you learn the proactive approach of it and you say yes, and that that’s where we get in. So, if you’re risk averse, you go for the, 10 otherwise the 8.
Kam Dovedi: Third thing is entry level. So, in the South, the entry level is higher, but there’s always people money. Of course, there’s a lot people here with money who are willing to invest in you. And in the North, if you’re worried about entry level, the entry level becomes easier, because your price points are lower. So, we have three things we look at.
Reece Mennie: But just going back to your question with permitted development rights, there’s no planning risk as such. It’s a lot easier to get the application through the net in value in a plan-
John Howard: And also there’s no social housing requirement either.
Paul Mahoney: You do need to be careful on the finance side of things though, because I’ve seen developments that have pretty much just been blacklisted. You wouldn’t have expected it.
John Howard: Correct. I agree.
Reece Mennie: Sometimes the bills are too small, there’s developers out there. They’re making the units too small, so you can’t get a mortgage on them. So, if you’re working with the right team and you’ve got the right people around you, they steer you in the right direction.
Audience Member: Would you always recommend getting a planning consultant?
Reece Mennie: Definitely.
John Howard: Always work with the best people you can find. Surround yourself with the best people. I haven’t managed it today. But normally, try and find the best people and you’ll find that makes life a lot easier. And if they’re bright and better than you, as my guests are here to say on the stage, even better. Ladies and gentlemen, lets have another question please.
Audience Member: Thank you very much for that.
John Howard: No problem. Who should we pick? What about making you work hard? Up the stairs please, on the left, right? It’s good exercise for you Steve. Up there, hang a left. That’s the gentleman there. Hope it’s a good question after all that. Yeah.
Audience Member: Yeah, hi.
John Howard: Hi.
Audience Member: What’s the panel’s view on co-living? Meaning, in the Southeast, in London, there’s quite a few lucrative co-living schemes. JLL issued a report last week about co-living as a growth phenomenon up North. I’m just wondering what you guys think as you are the sharp edge.
John Howard: Who wants to start with that? Paul, do you want to start with that, or Reece? Go on Paul.
Paul Mahoney: Well, obviously it just depends on the location, whether there’s a market for it. Obviously, it works really well in some locations, and doesn’t work at all in others. And some areas you might think it works, but there might already be loads of them. So, the whole sort of co-living HMO type stuff, that has been a bit of a buzzword for a while now. And a lot of areas that probably it does work quite well have been flooded. So, it’s a bit of a minefield to sort of navigate that and make sure that it does actually work in that particular location you’re thinking of doing it. All right? I don’t think there’s much difference between the North and the South in that regard. It just depends on the specific location.
Reece Mennie: Yeah, I think it’s about location for co-living. It’s more big city centers that it should work in, but most of them have already been done I suppose.
John Howard: Yeah, you can easily oversupply I think, and that’s really what we’re getting at. Kam, you’ve done a lot of this over the years?
Kam Dovedi: I haven’t done co-living.
John Howard: All right.
Kam Dovedi: Co-living is a new strategy.
John Howard: Right.
Kam Dovedi: By the way, keep in mind that the new strategy is always the old strategy.
John Howard: Exactly. There’s nothing new. By the way, like you said Kam, we’re old, but there is nothing new in property.
Kam Dovedi: Talk about yourself mate.
John Howard: Well, I’m a little older.
Kam Dovedi: I’m just getting started. Anybody here just getting started by the way. Yeah. 50 is the new 21, isn’t it?
John Howard: Yeah.
Audience Member: Yes.
Kam Dovedi: And if you’re 21, look at you. So, what was I saying? I just saying, co-living is a strategy that many people think is a new strategy and it is. But strategies are just repackaged, remember these guys, strategies are repackaged again and again. They’re the same strategy that people were doing 30 years ago, 20 years ago, 10 years ago. So, what I like is the basics. Keep it simple, but not simplistic. Get it right. Get the information within that, the detail, but keep it simple. To be fair, you only need one strategy. I’m a developer myself, an investor, I have many friends that investment developers. I could class these guys are friends, maybe.
John Howard: Yes, definitely.
Kam Dovedi: Right? So, everyone’s got their flavor and their opinion, but you only need one maximum two strategies throughout your life to make it really work.
John Howard: Sometimes, don’t you think Kam, and I’ve changed my strategy when people have sort of caught up with me and sussed it, I’ve gone on to a different one.
Kam Dovedi: Well, it depends how we live. So, I live a life of abundance. I have with, God’s grace, I’m allowed to say that. I have everything that I need, everything in my life that I need. My wife is watching me right now, who’s on my vision board, by the way, in this room like this.
John Howard: She’s the boss.
Kam Dovedi: Isn’t that shocking?
John Howard: She’s the boss.
Kam Dovedi: Do you want to give us a wave.
John Howard: She’s the boss.
Kam Dovedi: My daughter’s in here and my extended family, my mentees and people that work with me are here. I have everything I need. I have enough to eat. I have a lovely home. I have a lot of-
John Howard: Next time you’ve got a really good deal, can you pass it onto me?
Kam Dovedi: Yeah. I have a lot trust.
John Howard: Steve, next question.
Kam Dovedi: It’s okay to share with people.
John Howard: Thank you Kam. I’m looking forward to getting that deal. Yes.
Audience Member: You were talking about tier two and tier three up North.
Reece Mennie: Yeah.
Audience Member: And I know that tier one have actually increased in value. But, do you foresee that tier two and tier three will follow the same way?
John Howard: Who would you like to ask that to, first?
Paul Mahoney: I can answer. No. And Reece might disagree with me, but again, I’m speaking from my perspective of relatively passive buy to let investment, where we encourage people to obviously, achieve a decent return but also invest safely. Invest in properties they’re going to rent pretty well every day of the year regardless of the state of the economy and will grow at a decent rate over the mid to long term. In my opinion, there’s a lot of safety in desirable centrally located properties in major cities. That’s the focal point for depth in things in demand essentially. The further you go from that focal point, the more that debt thins, and second and third tier cities are often driven by one company or one industry.
Reece Mennie: Correct. It’s about your strategy and what you’re looking for. For me, second and third tier cities work, because I’ve got no competition. All of the big developers want to be Manchester, Sheffield, Birmingham. These players, they’re not interested in Pontefract, Wakefield.
Audience Member: Reece, you talk about Doncaster as being one of the places that you’ve invested in.
Reece Mennie: Yeah.
Audience Member: And then, I know that there’s a lot of investment that has gone into the infrastructure of the town and it is carrying on. So, surely that must reflect in house prices, doesn’t it?
Reece Mennie: Yeah. I mean, it does reflect in house prices, but my strategy is different. My strategy is to buy and hold, so I don’t sell. I mean, we’ve bought 99 apartment… No, 120 apartments in Doncaster City center. And occupancy is running right now probably about 89%. So, we could still produce more there, but we don’t look at it in terms of selling them units off, so we hold them. So, yeah, you’re right. The price is increasing-
John Howard: But Reece, would you agree with me when I say that, it’s all about risk and return. So, if you want a really, really safe investment, you’re more likely to go with Paul than you are Reece you probably. On the [inaudible 00:31:04], your yield would be probably the better than Paul’s.
Reece Mennie: Correct.
John Howard: But, a lot of people who work with Paul want to sleep at night and don’t want to worry, which is great.
Reece Mennie: The difference with working with me is you know what you’re going to get. You get a fixed-
John Howard: But some of yours, may be a bit livelier now.
Reece Mennie: No, you get a fixed return with us.
John Howard: Yeah. Okay.
Reece Mennie: So, you’re not buying the property.
John Howard: That’s another strategy. Yeah.
Reece Mennie: So, I’m not selling properties in them areas. What I’m doing is giving investors or landlords a different opportunity to not deal with the voids, not deal with attendance, not deal with the boilers going wrong. You get a fixed return.
John Howard: Kam, have you got a-
Kam Dovedi: Yeah. So, the rule is, the rule of thumb that we start with is, good quality at the best price.
John Howard: Yeah.
Kam Dovedi: So, what I mean by that is [inaudible 00:31:48]. I like to follow people that are on another level. So, let’s look at Lord Sugar. Lord Sugar, if you notice what he’s actually buying and his commercial properties, he’s actually focused on EC-1. He doesn’t focus on West, or Southwest, or North, he focuses on EC-1.
John Howard: There are also other key problems in some of his property portfolio Kam, so I wouldn’t hang my hat on him completely.
Kam Dovedi: No. Am I allowed to share my view?
John Howard: Yeah.
Kam Dovedi: Yeah? Not my view, what we’re actually doing.
John Howard: Yeah.
Kam Dovedi: So, what we do is we buy best quality at the lowest price possible, which means that we look for fringe cities and we also look within a city at the fringe element of it which actually works. So, in the South, we are looking at the… so the Timsway corridor. If you look at many developers, like my good friends at Gallad Homes for example, there are along there. If you look at in the North, in the Midlands [inaudible 00:32:37], we’re focused on satellite strategies. So, there’s in fact like a ripple effect. We never buy in a town center, because it’s already overpriced. That’s what we do at Premier Property. So, we’re always looking slightly outside that to make the maximum kind of pivoting point. If that makes sense, I hope I’ve answered your question.
John Howard: Yes. Next question.
Audience Member: Hi. You mentioned it’s all about risk and return, but I’d probably argue it’s about risk return and effort and stress levels, because you mentioned that you’re in these satellite towns and things like that. When you start to look at these as investments over a longer period, so a 10 20 year term, and you start to focus on the operational expense as a percentage of your rent roll, I mean, if you’ve got to fix a door, or put a new fire door in Doncaster, or you’ve got to put a new fire door in Mayfair, it’s essentially going to be the same cost. But as a percentage of your rent roll, it’s going to be hugely different. So, over a short term, yes, you can start to see nice returns. But actually when you look at this over the lifetime of a 20 year term in a property, and I’m someone who’s got a portfolio in London, Manchester, Leeds and Sheffield, it’s what I’m finding is actually, over that long term down in London, you start to get a lot more benefits than you would short term up North. What would you say to that?
John Howard: Who wants to answer that? Reece, do you want to have a go?
Reece Mennie: Well, it’s strategy again. It’s what you’re looking for. As I said, we give an opportunity to take all of that away from yourself, the operational risk of dealing with buy to let, where you can lend your money to us as a developer. We deal with all the stress of that. The security is the first charge over the assets that we purchase.
Audience Member: What loan’s the value?
Reece Mennie: Pardon?
Audience Member: What loan’s the value?
Reece Mennie: It varies on different projects. So, we can talk after, but anything up to 85, sometimes 90% as low as 65%, depending on what the project is and where it is.
Audience Member: Do we get a debenture and a share charge over the company in a personal guarantee too?
Reece Mennie: Correct. In some instances, yes. Not personal guarantee. We don’t need to, because there’s there’s a debenture over the company. But, if you wanted one, we could look at that. But yeah, we give a different opportunity to buying a physical buy to let. So, it depends what each individual person’s strategy is and what their longterm gain is and what their appetite is. Everybody is different.
John Howard: Reece, sorry. Thank you. Paul?
Paul Mahoney: Yeah. Okay. So, I take your point so far as maintenance. And I think you’ll find the door in Mayfair will cost you more than a door in Leeds, but I get what you’re saying. But, I think what we always look at, well, I know what we always look at is return on equity. So, if you look at the amount of cash you need to put into buying a property in Mayfair or London in general, let’s say the average London property price of 500 grand odd, and the fact that you can only borrow about 55 to 60% against that property now given the finance changes, means you’re putting 200,000 pounds at least into an asset that’s only just going to break even. You can take that same 200 grand and buy three or four properties in Manchester that’ll give you a 10% net yield on your cash and is growing at a stronger rate than London is as well.
Paul Mahoney: Now, expenses is one thing, but so long as you’re accounting for those expenses, it’s noise. It’s all about net returns and net returns on the cash applied in our view. So, that’s our take on the question.
John Howard: Paul, if I might just say something. I mean, what we haven’t touched on of course, is that surprisingly, there are cheaper properties in the South as well ladies and gentlemen. There’s places in the South that aren’t that expensive. And if you want to get a foot in the property ladder, you do not have to travel up the M62 to so. So, I think we must remember that. So, the South, there’s places in the South where properties are not quite as cheap probably as some in them North, but they’re not that far away from that.
Audience Member: Where are they?
John Howard: Where?
Audience Member: [inaudible 00:36:33].
John Howard: There’s places in Kent, for instance, that aren’t that expensive. Ipswich in Suffolk, where I’m based. An hour from London, there’s properties that… I’ve just agreed to buy a little house at 102,000 pounds. It’s not a fortune, is it? So, I wouldn’t say you could buy a flat for 50, 60, 70,000 pounds quite comfortably in places in the South. So, it’s not just about the North, but I just thought I mentioned that and throw it in there, because it’s something we haven’t mentioned. Kam?
Kam Dovedi: I didn’t catch your name sir?
Kam Dovedi: Rod. Yeah. Rod, really good question. And you know what? Before we actually went into the Northern areas, I actually thought about this myself. So, what we’ve done at Premier Property is we’ve actually made-
John Howard: What’s your company called again? I mistake.
Kam Dovedi: We’re Premier Property.
John Howard: Oh yeah, Premier Property. Yeah, go on. Sorry.
Kam Dovedi: Yeah. So, what we’ve done at Premier Property… Are you going to do this at every question?
John Howard: No, you’re okay. Go on. Just checking.
Kam Dovedi: Yeah. So, what was I saying now?
John Howard: Premier property you were saying.
Kam Dovedi: That’s it. What we’ve done at Premier Property is when we went into the North, right? Literally, the properties that we’re investing in is all of the things that these guys hare mentioned, and we’ve made those properties really in real terms into cash dispenses. What are you talking about? Let me explain. So, the cash on cash return. Yields are great, brilliant. Your capital expenditure minimized, absolutely brilliant. But the key that we can focus on in these areas is that, your cash on cash return is returned back to you within 36 months. So, what we do is we put a timeframe in your cash actually being coming back to you by refinancing and by money coming in. Does that make sense?
Audience Member: [inaudible 00:38:13]… cash flow rather than capital value?
Kam Dovedi: Absolutely. So, the capital value becomes the extra benefit, and we’ve got the yield coming in. And what we make sure, the key is that your cash on cash return becomes infinite when you’ve got no money in that deal, on every single deal that we do.
Audience Member: [inaudible 00:38:34] the debt?
Kam Dovedi: You’re saying what?
Audience Member: What houses did you [inaudible 00:38:35] the debt?
Kam Dovedi: Oh, if you sign [inaudible 00:38:38] for the debt-
Audience Member: [inaudible 00:38:39].
John Howard: And what happens if the market goes down 30%.
Kam Dovedi: That is a really good question.
John Howard: Thank you.
Kam Dovedi: By the way, these are questions I answer on a day that I do. It’s called the Property Investor Success Day.
John Howard: Do you want to just repeat that again? Just so, everybody…
Kam Dovedi: It’s called the Property Investor Success Day, and it helps people to move forward in their journey. Now to be fair, we have a maximum of 70 people in the room. I’m doing two seminars today. Done one this morning, one is this afternoon. But, anybody in this room who would like to come along, there’s probably a handful of seats, I don’t know exactly how many right now, email me. My email is Kam, K-A-M email@example.com.
John Howard: Okay. You’re not going to repeat that again by the way. So, can we have another question? The gentleman has had his hand up for a while.
Kam Dovedi: Yes.
Audience Member: I have a small in London.
John Howard: Congratulations. Very good.
Audience Member: And I’ve been trying to explore going to Manchester, Leeds kind of areas.
John Howard: Yes.
Audience Member: But, one of the problems is not having local knowledge.
John Howard: Yes.
Audience Member: And you find that, for example, I almost bought a property just last week at an auction at [Mostin 00:39:52]. So, I had two phone people in Manchester, who live in Manchester to find out. The question here is this, what I want to find out from you is that, for people who are migrating or wanting to migrate from high capital growth to high rental yield, knowing fully well that capital growth in Manchester is lower relative to London, and rental yield is lower here. What should be the primary incentive other than having to have ease of access? The incentive is the issue. Money’s been made here. Money could be made there.
John Howard: Okay.
Audience Member: There’s different-
John Howard: If I may come in first for a change, and just say this. First of all, anyone’s looking to buy up North, getting a car, or if you’re in London, you may not have a car. Paul’s ordered his car. It hasn’t arrived yet. Get on the train, get up to London… get up to Manchester, wherever you want to go. The first thing you do is get in a taxi, because that taxi driver is going to tell you more about those areas than any agent will ever tell you. In 15 minutes ride, he’ll drive you around the areas, tell you what they’re all like, tell you which ones the police won’t go to at night, which ones they will go to and everything else. So, that’s the first little tip I can give you.
John Howard: Now, in terms of the yield, the capital growth is never going to… If you’ve got a portfolio in London, so I have to question why you want to, you’ve done the hard work as it is, which is fantastic. You’ve got a portfolio in London, why you’d actually want to probably go up North to be honest with you, because you’ve done it. Most people go up North on the whole, not always, because they can’t buy in the South or the can’t buy in London. So, they tend to want yield, higher yield in the North and so on. And they will substitute the capital growth for the higher yield. But, you’ve got it right. You’ve done it incredibly well. So, I’m not quite sure why you’d want to do that. But, obviously, totally your decision.
Paul Mahoney: So, could I jump in there, John?
John Howard: Please do, Paul.
Paul Mahoney: So, we’re London-based. Our head office is in London, and most of our clients are based in London. And the vast majority of them have London properties, and the vast majority of them want to invest in the North. And the main reason I’d say that is, is yes, perhaps they’ve created equity over the past decade or so within their London portfolio. But the return on that equity, especially from a yield perspective is terrible.
John Howard: Yes. [inaudible 00:42:22].
Paul Mahoney: So, now that they can see that actually there is growth in the North, in the right locations, which is over the past three or four years better than London, and the yield is more than double, they want to access that equity and get more from it.
John Howard: Okay.
Paul Mahoney: And we’re helping hundreds of people do that. You re-mortgage their properties in London, take that equity they’ve created within their London portfolio and better allocate it both from a growth and a yield perspective to help them work toward the actual end goal, which in general, is to create a certain amount of income.
John Howard: Thank you, Paul. Kam, do you want to have a go?
Paul Mahoney: I work for Nova Financial Group right there.
Audience Member: [inaudible 00:42:58] as well.
Paul Mahoney: Yeah, I’ve been around. Talking at 2:50, we’ll be hosting the drinks after. [inaudible 00:43:05].
John Howard: Kam?
Kam Dovedi: Yeah. Coming back to your original question, how do you find the local area? So, a great way that you can actually do this is by using resources with within that area, such as really good letting agents. Now, if you find people… Are you noticing the passion by the way on this panel? We could talk about poverty all day long, couldn’t we?
John Howard: We could. We have been talking about it 40 odd years some of us. So, yeah.
Kam Dovedi: So, what you can do is find really good letting agents. Make sure that you find the independent letting agents. They tend to be the best, because there are people like us. People are passionate about property, and usually they’re investor developers, over time, have become letting agents organically. So, you find a really good letting agent, and what you’re going to find is, if you go along to them with a map of the area, very quickly they will actually share with you what is where and what areas to be investing in, what streets to avoid, which areas the right areas, which are ones [inaudible 00:43:57]-
John Howard: That’s all you could get out of a taxi.
Kam Dovedi: Yeah. So, that’s one. So, you’ve got one letting agent. You repeat the process with a second letting agent. Because, keep in mind, that different letting agents will have different views and points, and there’ll be serving a different part of the community, if you’re following what I’m saying. So, if you can get one, two and three different letting agents and what you can then do is amalgamate the information and find the common ground. And that common ground is invaluable, because what you’ve really done in a morning or an afternoon, is you’ve actually got probably 15, 20, 40, 29… You’ve got typically 50, 60, 70 years of experience that you’ve accumulated in one morning or afternoon. Then, no one can pull the wool over your eyes. You will become very knowledgeable in the area really quickly.
John Howard: Kam, that’s very good advice. Next question, please. We’ve got a lot of people still want to ask questions, so we need to get through them. We’ve got 17 minutes left. Yeah.
Audience Member: Hi, this is for Paul. I’m just wondering, is the smart money now to still go for these first tier cities up North, or is it time to maybe look at the close commuter towns and maybe hope for a ripple effect?
Paul Mahoney: Good question. I think you need to be a little bit careful in that… I assume the reason you’re asking the question is if you look at the city center, right in, places like Deansgate in Manchester, they’ve become expensive. And we’ve invested there ourselves. we have clients invested there sort of four or five years ago and we’ve seen 60, 70% growth in that timeframe, which is really-
John Howard: That is fantastic growth.
Paul Mahoney: … as an investment over that timeframe. But, then you look at that now and you say, “Well, is that going to happen again?” The answer is probably no. So, you probably wouldn’t buy those particular properties, but using Manchester as the example, you can go 500 meters away and buy the same property for 30% less. So, they’re the sorts of areas we’re focusing on now, the fringes of the city that are still walking distance to the center. They still offer a very similar utility, but they’re not quite in the premier location, if that makes sense.
John Howard: Okay. Reece, would you Reese, in the row, in the towns you are in now, would you go to the next town down? Well, I don’t mean to say down, it sounds bad, but I don’t mean it derogatorily, but would you go to smaller towns than you’re in now in newer areas?
Reece Mennie: If the opportunity was there, yes.
John Howard: So, if I can find you a deal you’d be happy to-
Reece Mennie: Yeah.
John Howard: Good. That is excellent news.
Reece Mennie: Definitely.
John Howard: Okay.
Reece Mennie: And I would look at the towns up as well.
John Howard: Yeah. Okay.
Reece Mennie: But, it’s all about your strategy. It’s all about what you’re looking to do to.
John Howard: … to achieve, yeah. I agree.
Reece Mennie: If you’re looking to achieve income and growth, you need to be in top tier cities.
John Howard: That’s interesting. Yeah. I can see what you’re saying. Then, Kam, your view on… Would you go one step further out, if you like, from where you invest now and what you do, or you’re just very comfortable with what you…
Kam Dovedi: Well, it makes sense. Building upon what these guys are saying is three keywords really. It’s your strategy, number one.
John Howard: Aren’t we sick of that word? It goes on and on. Strategy, strategy. We need a new word, that’s for sure. Go on.
Kam Dovedi: That’s why you’re the Property Investor Success Day muffin. So, number one is strategy.
John Howard: Yeah.
Kam Dovedi: Number two is making your strategy tactical.
John Howard: That’s two strategies. Yeah, go on.
Kam Dovedi: Okay? So, tactical meaning, so let me clarify what I mean by-
John Howard: Third one coming, isn’t there?
Kam Dovedi: So, if I could clarify what tactical means. So, for example, if you’re looking at stamp duty, and the stamp duty is an issue for you, then you can look at commercial property in areas where under 150,000 pounds, as we know, there is no stamp duty. So, that’s what I mean by tactical. There are many different ways that you can make it tactical.
John Howard: There could be a very good reason why there isn’t any stamp duty of 150,000 and below, remember that ladies and gentlemen.
Kam Dovedi: Absolutely.
John Howard: It could be a very good reason, because you couldn’t do anything with it, you can’t let it, you can’t… So, be careful.
Kam Dovedi: Yeah, you absolutely got to be careful.
John Howard: Yeah.
Kam Dovedi: Come along and speak to me. I mean, we’re doing this day in, day out. Absolutely. I’ll show you lots of projects like this. And the third thing is about your entry level. So, does your area actually allow you to enter into that level? Yeah, people will give you money. The people invest with us and so on. However, people want to know that you’ve got a track record. So, one of the things that people like about us is the case studies and things we’re doing. They want to see that, as we are doing on the panel here. So, the third thing is, how can you make it easier for yourself.
John Howard: Okay.
Kam Dovedi: I will help you to define that.
John Howard: Thank you. Steve, next question please, because we’ve got 14 minutes left.
Audience Member: Hi there. I’m Seneca from X [inaudible 00:48:40] Technology. I was going to ask you guys, so we’ve got a robot that basically creates a one or two bedroom department under the garden of an urban house. So, to unlock value from your plot, have you guys ever bought a row of houses as opposed to an office building say, and if you’ve done that, how difficult was it?
John Howard: Okay. So, in the old days and I harp in back to… Anyone heard of Derek Hatton in Liverpool? Who heard or remember Derek Hatton? Okay. Well, Derek Hatton left, he left the council, funnily enough, at the time and became a property consultant. And he was a property consultant. We gave him retainer every month to find his deals and work with the Liverpool City Council to find deals. And a lot of people I know, in those days, used to [inaudible 00:49:34] for specialties to buy whole streets. So, they’d buy the whole street literally. And then, they get big grants from the local authorities and then rent them out and so on. So, that used to happen many years ago.
John Howard: Today, buying big whole streets up in Liverpool, Manchester, Bolton is hard to do, because they’ve all been broken up these days. But in those days, landlords owned 200, 300 maybe houses and they’d… and they’d sell the whole street to you. So, that’s what used to happen. Paul?
Paul Mahoney: I don’t have any personal experience with doing this, buying a row of houses. I suppose, the difficulty with it is, as you mentioned John, that they’re individually owned.
John Howard: They are these days.
Paul Mahoney: If there’s five of them, you buy four, and the fifth one gets a sniff. Well, he’s going to charge you a fortune for it, isn’t he?
John Howard: Yeah. Dangerous game that one.
Paul Mahoney: Yeah. So, it’s always going to be tough unless you buying from one or two owners.
Audience Member: So, you’d recommend actually trying to work with owners rather than-
John Howard: I don’t know how the panel feels, but I think you have to, because if you get… if you manage to sign four up, the fifth one’s going to want double. And, if there’s five in a row… So, I think that’s… Can we have a question from a lady, because we haven’t many ladies ask some questions. And, there’s a lot of ladies in property. So, here we go. Lady up there.
Kam Dovedi: Just a quick, can I make a little comment on that one?
John Howard: Quickly, yes.
Kam Dovedi: Because, we’re actually buying these now. We’ve just bought four properties this month, which are actually next door to each other. So, they are smaller chunks properties. Yes, they are absolutely separate title deeds, but you can buy them. Now, usually the problem is the lender. The lenders don’t necessarily like you having properties next door to each other with each title, so-
John Howard: Well, what sort of bank are you borrowing the money off? Not being rude, but-
Kam Dovedi: Traditional banks. Yeah.
John Howard: What? So, you’ve got a bank that won’t lend you four properties?
Kam Dovedi: You really lead the Property Investor Success Day, stop it.
John Howard: So, you don’t have a bank that will lend you four properties in a row?
Kam Dovedi: No. Because, what happens is with the title, what you find is-
John Howard: What?
Kam Dovedi: With the title, they’re independent titles and banks do not lend on, traditionally, banks do not lend on individual titles. However, there are certain lenders, now I can’t give you financial advice, but I can share with what we are doing. So, for example, we are using one company, which for example, which is precise-
Paul Mahoney: Kam sorry, [crosstalk 00:51:41] financial all those one deal? Is that why they don’t-
Kam Dovedi: Yeah, they don’t like the fact that you’ve got titles next door.
John Howard: What for?
Kam Dovedi: They don’t like that. That’s a fact.
John Howard: I’ve just refinanced a portfolio for, I won’t say how much, and they’re not… The bank can care less where they all are and how many they’re all in a row. In fact, they want them in a row. They’re very happy. When you buy a block of flats, you don’t go, “Oh, I can only do five with that one and four with that one.” A clearing bank, a normal clearing bank will lend you the money on the whole block. So, with all due respect, you need to change your bank. Now-
Kam Dovedi: Traditional banks, let’s just take that one out, maybe not money.
John Howard: Enough. Question there please. Yes.
Audience Member: Hello.
John Howard: Hi. You’re on. We can hear you.
Audience Member: Okay. So, most people, what we do is just invest where we know, because we know the area. And I’d love to invest in the North, but my question is, is that how do you actually project manage it if you’re in the South? I mean, it’s all very well jumping in a taxi, you can find the area, you can go and do all the research, you’ve got the money to invest and then it’s right. Okay. So, you buy something that needs a lot of work on, and we’re builders ourselves, so I know how to do it. But, how do I actually-
John Howard: Well, that’s a really, really good question. Who would like to answer? Reece, you get your hands dirty up North. Yeah.
Reece Mennie: Personally, I would stick to where you work in, if that’s where your team is and your builders and you’ve got your team there.
Audience Member: But, it’s expensive.
Reece Mennie: It’s expensive, but is it working?
Audience Member: Yeah.
Reece Mennie: I would stick to what I know [crosstalk 00:53:15].
Audience Member: The pace is slow, because you have to wait for the house to be done before you can release the funds, because we buy and hold as well.
Reece Mennie: Yeah.
Audience Member: But, it sounds like you get much higher yields in the North.
Reece Mennie: You do, but you’ve got a builder team up-
Audience Member: … and you would like to go up there, and I’ve got no team up there. I don’t know.
Reece Mennie: That’s the problem. If you got to build a team, it becomes expensive.
John Howard: Yeah, if I can say what I do, because I buy up North and I’m refurbishing eight, now converting eight, nine flats in Buxton at the moment and bits and bobs. And what I tend to do, I get to know local people. I get to know the local builders. If they’ve got a planning consultant architect on job, I find out who they trust and work with. I then meet them. I then talk to one or two people who’ve worked for them… they’ve worked for, find out… get some good recommendations, do a fixed price contract, so that there’s no jiggery pokery full schedule of works, fixed price contract. Let’s get on with it. Okay. We know they’re going to be a month late, two months late, but we can cope with that. That’s the best way of doing it. Individually on a small house, I agree that’s harder to do. And I wonder if Kam’s got any ideas on, if it’s one house Kam up North, how would you look to refurbish it?
Kam Dovedi: Well, we refurbish typically 7 to 10 every month.
John Howard: Yeah.
Kam Dovedi: And, it’s actually a very good question.
John Howard: It’s a very good question.
Kam Dovedi: So, what we look for number one, so my sources, I train people in sourcing, finding properties. So, I’ve got a couple of guys who actually live in London, in Kent actually. And what he does is I create a system for him where literally the thing is you don’t need a lot of time to invest in that area. So, he travels up once a week. Sometimes it’s once every fortnight. We call it the eyeball check, just to see what’s going on. And really building upon what you said there earlier, having that local team is really valuable. I mentioned letting agents, having a good letting agent who actually will help you to build a team.
John Howard: They’ll find local builders. They’ll know local builders, who they worked with already. So, it gives you a good start.
Kam Dovedi: 100% right. So, that really helps. And you can really manage that [inaudible 00:55:08], because the myth in property is that you need a gazillion hours to actually make property work. No, you don’t. Most of the time, especially in developments zone, you’re waiting for things to happen. So, your time is about making it effective, and you can do this part-time. I mean, I’ve helped so many bankers who say, “Well Kam, how am I supposed to do it? I haven’t got any time.” They’re buying properties in their lunch times, because they’re working with their time effectively. Half a day a week, half an hour, hour, a couple of hours in a week, you can focus it. So, that local team allows you and helps you to make it work for you in a distant area.
Paul Mahoney: So, as someone who’s sort of buying and doing heavy works or even just renovation and you want to do the work yourself or at least be heavily involved in it, that’s obviously going to be more difficult if you have to be on site. You can find a team, but we get very similar question from professionals who are time poor and do want to invest in the North for example. And say, “Well, I just don’t know the North. How do I go about knowing it and getting to understand it?” And, not to [inaudible 00:56:11], I’m going to plug my business, but that’s exactly what we do, is we give the right information to our clients to help them make more knowledgeable and educated decisions about something they probably would have found difficult to do themselves just by doing internet research, for example. It’s about taking away the guesswork that often goes into making decisions about a new location.
John Howard: Can I just say, you’re very kind to do all that.
Paul Mahoney: And I’m loving it.
John Howard: Amazingly kind. One more. Last question, make it a good one. That’s what I used to say to the kids in the car when have asked 10 questions, I said, “There’s one left. Make it a good question before we get there.”
Audience Member: Hopefully, it’s a good one. But, I think you’ve touched on it as well, Paul. Is he Paul, the guy in the red tie?
Paul Mahoney: Yes, Paul.
Audience Member: You’ve had good gains in the North, fiscally Manchester, Liverpool, and Leeds, I believe. Where do you see that going in the next five years, and what other areas should we be watching out for in terms of growth over a similar period of time?
Paul Mahoney: Okay. Well, as I mentioned before, I don’t think you can pull all of those locations into one basket, because there’s different driving factors and they’re each at a different point in the cycle, if that’s what you want to call it. I think Birmingham and Manchester are at a similar point, in that the centers have got expensive. And that’s why we’re moreso looking at the slightly further out cheaper locations that are still very much walking distance to the center. In those areas. I think there’s just as much growth potential as there has been in the center over the next five years for example. And we can see that already happening through what’s often referred to as the ripple effect.
Paul Mahoney: Liverpool, capital growth wise, is a little bit behind, and I think that we’ll catch up. And when you look at things like job growth and population growth in Liverpool over the past few years, that’s has to have a big impact. And it hasn’t really had a major impact yet as much as it has in the other two cities. And I’d say Leeds is one to keep an eye on now as well, in that there was an oversupply of properties in Leeds city center. That’s caught up, and I think that that’ll be the next sort of growth city over the next few years.
John Howard: Reece, your thoughts?
Reece Mennie: Exactly what Paul said really, there’s not much more.
John Howard: What about the South? There’s places in the South that aren’t that expensive. And if you’re just over an hour from London, yeah? By train, they are the properties… so, they’re the cities and towns I would be interested in the South, because we’ve been very North orientated.
Reece Mennie: Yeah, we are very North.
John Howard: And actually, like I said, there’s nothing wrong with the South. An hour or so from London by train, hey, it takes you sometimes an hour to get here from the other side of London. So, there’s places, great places like Ipswich. So, where I come from, and other places like that. But, there are. There is Kent, there’s [inaudible 00:58:59], there’s Peterborough. There’s other places.
Reece Mennie: Croydon is probably a place that I think would do well.
John Howard: Sorry?
Reece Mennie: Croydon.
John Howard: I don’t know much about Croydon, but I mean-
Reece Mennie: The problem you’ve got with the South is, the growth that you were seeing, you’re not going to see anymore, wherever you buy. You’re not going to see what you’ve seen historically, in my opinion.
John Howard: Not for the moment. [crosstalk 00:59:20].
Paul Mahoney: When you consider the fact that property prices are about 12 times the average wage in London.
John Howard: Okay. Kam, just briefly and then I’m going to ask you all one question, if I may, before we finish. You go first, just quickly Kam.
Kam Dovedi: Well, yeah. So, to answer this question-
John Howard: Yes, please do.
Kam Dovedi: So specifics, look at right move.
John Howard: Yeah.
Kam Dovedi: Look up properties under the value of 250,000.
John Howard: Yeah. Look at price.
Kam Dovedi: When you look at that, what you’ll find is that those properties become in the realms of what you can actually purchase, where you’ve got good yield and you’ve got some growth in there, so you can find an area. So, that’s a really good place to start.
John Howard: Great. That’s a really, that’s your best answer so far, because it was quite concise and accurate, very, very accurate. Now, I’m going to ask the panel and myself one question, because I think it’ll be good fun for everyone. And that is, if you’ve got 100,000 to invest today, in 10 seconds, where will you go and invest it? 10 seconds Paul. Quickly, that’s five.
Paul Mahoney: All right. Two bedroom apartment, half a mile from the city center of Manchester.
John Howard: Very good. Reece?
Reece Mennie: Lend it to me and I’ll get you a 12% return.
John Howard: That’s not what I asked. I’m dreading this. I’m dreading Kam’s answer. I’ll tell you. It could be anything.
Kam Dovedi: There’s so many things.
John Howard: We know it’s got Premiere in it somewhere.
Reece Mennie: My company is Hunter Jones by the way. I haven’t gone it out there yet, everyone else has.
Kam Dovedi: All right guys, 100,000, right? 100,000?
John Howard: 100,000.
Kam Dovedi: This is so exciting. Well, 30,000 you could put into service accommodation, which will get you eight apartments rent to rent. 30,000 goes into a buy to let, which builds your track record. Now, you can talk to other people. They’ll give you money, because they know that you’ve got a track record and they trust you. The other 60, how much is left?
John Howard: Not long.
Kam Dovedi: 30, 30. 40,000. 40,000 you invest in fringe areas, satellite towns where you’ve got that growth and you’ve got the yield. Now, you go HMOs coming in such as student accommodation 15 minutes within that distance. No matter what campus are being built, you can actually make it. Then, you have your track record-
John Howard: Ladies and gentlemen.
Kam Dovedi: Then, you got as much money as you need.
John Howard: Thank you for that. Now, if I had a 100,000 pounds and I was feeling brave, I would go and buy five flats, you need to write this down madam, in Lanarkshire, which is in Scotland. And for that, you can get a 20% yield on every property.
Audience Member: [inaudible 01:01:39]?
John Howard: Lanarkshire. That’s the tip for today, ladies and gentlemen. Now, may I just thank Kam, Reece and Paul, because I think they’ve been great sports. Thank you very much.