Property Investors Academy graduate finds his niche in rent-to-SAs

winners on a wednesday

Property Investors Academy graduate finds his niche in rent-to-SAs….

After running a succession of businesses, Alexander Price has finally found his niche, renting out serviced accommodation which is generating double-digit profits. The entrepreneur, who trained on the Property Investors Academy, took on his first rent-to-SA unit just as the world ground to a halt because of Covid. Despite this, he now controls 12 properties and has become an expert in the market, offering a luxurious alternative to staying in a hotel room.

Having nothing to invest was not a problem for Alex

 

It was not just the coronavirus pandemic that Alex had to weather when he started out in property. He had no money to invest and had to ask his parents for a loan to do his training. Then, there was another setback when an offer of finance to kickstart his business was withdrawn due to the backer having exhausted his funds on other deals.

Alex, however, remembered what his tutors on the Property Investors Academy had constantly encouraged him to do, which was to go networking. 

He recalls: “I just kept networking and meeting people either for a coffee or a drink. One day I was just chatting to this guy, explaining my story, when he turned around and said: ‘If you want some money to put towards your business I can help out.’ I wasn’t expecting that.

“I explained to him why I thought the business model would work, the research I’d done into it and the plans I had, and it started off from there.”

Since then, Alex, who belongs to several networking and mentoring groups, says he has been amazed by how much investment money is available for entrepreneurs like himself.

“I’ve had people reach out in the last few weeks to say: ‘Alex, I’ve got this lump of money in the bank. It’s not doing any good in the bank, I want to put it into property. I’m time poor but I’m cash rich. Can you help me look for some properties?’

“It’s blown my mind how much cash, especially after coronavirus, is available in the market. There are people with Bounce Back Loans or money they’ve inherited – or they’ve worked for and haven’t spent on holidays in the last couple of years. There’s millions out there. All you need to do is put yourself in the right environment to meet those people.”

Since being given his ‘break’ two years ago, Alex has established a highly profitable portfolio of rent-to-serviced accommodations units in Berkshire, Buckinghamshire and Hampshire. One flat alone made £4,000 in August but even in the low season he expects to make healthy margins.

The one-bedroom flat in Winchester is above a dental surgery and his business manages it on behalf of the owners who were previously renting it out for £1,000 a month.

“We managed to give them some really crazy numbers in August but obviously now we’re getting into the low season,” says Alex.

“We’ve just taken a booking for three months and that guest is going to be paying just under £3,000 a month. We take a management fee of 15 per cent and the rest goes to the landlord. So, they’re getting over £2,000 a month which is a 100 per cent increase on a standard single let.”

His target overall is to make a profit of £500 month per unit plus £100 for each room. So, for a two-bedroom property the aim is to generate a profit of £700. 

“Coming into November, we’re still getting a profit of around £700 to £800 a month on the two-beds and more on the three and four-beds,” Alex adds.

On average, each unit in his portfolio is yielding £500 to £1,000 per month after all costs have been deducted.

He defines serviced accommodation as a house or an apartment which is rented out for short stays, rather than being offered on a six-month or year-long tenancy. The property is furnished, and all the bills are included.

His original business model was based on guests staying two to five nights, but in practice some regularly stay two to three months. 

Alex either pays the landlord a guaranteed rent each month and keeps whatever he earns on top of that, or he takes a fee for managing a client’s property. 

The advantage of renting out serviced accommodation, Alex points out, is that is gives a property entrepreneur a business which can be scaled and systemised.

“It can give you that time and freedom we all talk about if the financials are looking good.”

He has a team member who deals with guests, as well as cleaners who look after the linen and ensure the properties are kept to a high standard. He also has systems in place which automate a lot of the processes involved in dealing with the rentals.

‘Even with Covid there were opportunities’

property Covid 19

Alex says he wouldn’t necessarily advise people to borrow money for training, but he had set his heart on running a property business. He spent six months researching what kind of job he wanted to do and knew that was the path he wanted to go down.

After completing the year-long academy, he launched himself into his business, working hard to get it off the ground, although he had doubts initially it would work.

“When the first lockdown came, I wasn’t quite sure. I’d just got my first unit live in March 2020, but we came through that and expanded some more. I spoke to a lot of mentors and asked them what I should do. They said go for it. It will pay dividends.”

Right from the beginning, he decided to focus on the serviced accommodation strategy which has led to him to building up a wealth of information about the sector. He has also been able to get advice from Samuel Leeds who lives near to him. 

Unlike other strategies such as HMOs and buy-to-lets, where there are professionals who can advise owners on rent levels, Alex has had to rely on his own skills and resourcefulness. This was especially true during the lockdown when hotels were shut and sites like Airbnb and booking.com closed their platforms because of the stay-at-home restrictions.

In normal times, both sites provide an indicator of what to charge but he says you cannot depend on any one platform to obtain bookings.

“You’ve got to have multiple streams of enquiries. So, you go to Airbnb and booking.com for your basic research. You then want to be phoning local companies. Corporate travel is starting to happen again now. In the last couple of weeks, we’ve taken two one-month bookings off one group working with a big corporate company in our local area.”

Far from resting on his laurels, Alex is about to take on another serviced accommodation unit and is planning a further expansion in the new year. In terms of what areas work best, he looks at whether the location attracts tourists or is in a commuter belt.

“The areas I’m looking at are just outside London. We’ve got a lot of countryside and tourist attractions. There are also some big travelling companies all along the M4 and A4 corridor. If you’re on the coastal routes, it’s going to be quite touristy, and you’ve got to try to maximise your rates in the high season. You’ve also got to work out a plan for mitigating the effects of the low season.

“If you come more inland, particularly into areas just outside of the inner city, you’ll find a lot of places that will still perform really well in the summer but will be more consistent with less of a downward trend going through the winter.”

During the lockdown, he had to adapt his approach but was still able to make a profit by renting out his properties to contractors working on critical projects and infrastructure.

“We could only supply certain markets, so we had contractors who were working to refurbish hospitals and other contractors who were working on the railway lines.

“There are always opportunities. Even with coronavirus, when the whole world shut down, there’s always an opportunity to give a good service and make some decent money.”

However, it has not all been plain sailing and mistakes have been made, he admits. 

“In the coronavirus period we needed to open ourselves up to any good paying guest because the supply was limited, and we wanted to see this business through to the summer when we knew we could keep expanding. So, we didn’t vet the guests as well as we should have done.

“Unfortunately, we had some people who didn’t behave themselves well and we had to take some lessons from that.”

As a result, they now carry out ID checks and demand a security deposit which is refundable. 

“We also get them to sign our terms and conditions, do a phone call with them and have CCTV surveillance in the properties and sound monitoring.”

It is all part of the service which his business provides to landlords who either lack the knowledge or time to rent their properties and deal with the myriad of procedures involved. 

“Everyone is motivated by different things. We work with some landlords who like supporting our business model and we like supporting their assets, so they’re happy to do the maintenance and they charge that back to us. 

“We’ve also got other landlords with full-time jobs who want someone to keep an eye on their property. Our cleaners go in regularly to make sure it is being looked after and we have a maintenance team on board.”

Over the past two years, Alex has thrived by offering his renters flexibility and ease of access. Apart from the ID check, all they need to do is pay the invoice and come and stay.

“It is an interesting segment in the market where people generally want more than just a hotel room. They want a living space rather than just being sat on the edge of a bed watching TV.

“They also want to have a dedicated kitchen area where they can cook for themselves and have a self-contained space where they can come and go as they please. That’s where the market is changing.”

He concludes: “If you’re passionate about giving a good service and making sure you’re doing that for both the landlord and the guest it’s a great business to be in.”

winners on a wednesday

Alex’s tips

 

  • The serviced accommodation market is going to be regulated in future, so it’s really important to keep a high standard of property.

 

  • As change comes it will be easier to affect that change if you’ve got good relationships with your landlords and guests.

 

  • Through people there are possibilities. I went to a speed networking event on the academy and made some powerful connections. It helped me start this business and expand it.

 

Samuel’s verdict

“Alexander gets paid handsomely now because he offers value to the landlords and guests and has got good systems in place. It’s impressive that he has been able to make money when people weren’t even allowed to leave the house. His business is almost recession proof.

“The fact he has been focused on a particular niche in property is why he’s become an expert in serviced accommodation. If I want help in his area, I’ll pick up the phone and speak to him. He’s got a lot of good content and information in his head.”

Alex’s Instagram: @alexander7price

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