5 Creative Ways To Finance Your Property Deals w/ Toby Spanier

Transcript

Unknown Speaker  0:01  

The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Christian Rodwell  0:19  

Welcome to Episode 171 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined today by our founder Mr. Kevin Whalen. Hello, Kevin.

Unknown Speaker  0:28  

Hi, Chris, good to be with you, again, as usual, in these highly troubled and turbulent times, right. So the good to good to see some creativity coming so that we don't have to batten down the hatches and, and kind of worry about this wind, there's lots of creative things we can do to cut our way through that. And we've got a great guest today. Somebody who I resonate with, personally very much, and his lovely, lovely wife, Kate. But you'll do the introduction to that one, I'm sure.

Christian Rodwell  0:58  

I will. Indeed, today's guest is Toby Spania, who has been a member of wealth builders for a number of years, first contacted wealth builders to set up a SAS and then joined the wealth builders Academy. And he will talk today about the five year plan he put in place which is executed on he's helped him achieve his financial independence. And he's now joining our team of wealth coaches to help other members to build wealth through

Unknown Speaker  1:25  

water journey. And of course, you know, he's a extraordinarily gifted and intelligent man, as you'll hear, you know, you can you can tell he's an erudite gentleman, and a gentleman as well. And I've been on the receiving end of his selflessness, him and Kate have been completely selfless with, with me and thanking me for my small contribution to helping them on their journey. And recently, as Toby marked his exit from Deloitte, you know, so really a prestigious organisation where he was a senior person. And you could hear when I went to the drinks party, what other people thought of him and that's just echoed and permeate through every fibre of his being is such a nice and a nice, able direct at times. But you want that, don't you? You want that directness because you're cutting through crap. And just as there's lots of crap right now, Toby, I'm sure he's got some great ideas to help you cut your way through.

Christian Rodwell  2:27  

Absolutely. And Toby is followed, followed the plan, as we mentioned, and, you know, wealth builders plan includes some some key components of a nine step, recurring revenue roadmap, one of those steps, Kevin is turning the wheel of wealth, and you'll hear Toby today refer to turning the wheel but for for listeners who perhaps are not familiar with it, should we just quickly explain what the wheel of wealth, you know, components are?

Unknown Speaker  2:55  

Yeah, so So I created the concept of the wheel of wealth, to try and act as a principle. And I imagined that the process of building wealth needs to be likened to either cogs in a set of gears or, you know, some of you can imagine a cog, imagine a cog that's broken into five separate components, or a wheel, whatever, just a circle. And you can break it down, like almost like pieces of cheese on a, on a trivial pursuit board, there's, there's five separate parts. And my view was, as I thought about it, you've got to turn the wheel completely, which means 360. So if you imagine a wheel then, and you imagine at the top at 12 o'clock, is where you start, and you finish at 12 o'clock, on the other side. And when you turn the wheel, I'll describe the elements of the wheel. And just a moment, the purpose of it though, the purpose of taking the wheel in the first place, which is to look at a strategy inside the wealth building activity. So any of the pillars and strategies that are underneath the pillars, so important to understand the pillars or the broad categories of the seven ways you can build wealth, and then each strategy and there are hundreds of strategies flow out from each of those pillars. So in this case, then, the idea is when the wheel turns 360. You can almost hear, or you should hear in your mind anyway, an audible click. And the purpose of the click is to say, right, I've turned the wheel fully, and that should deliver to me or my family, an outflow of either cash, a lump sum,

Unknown Speaker  4:44  

or capital might be an easy way to frame that capital or a flow of income. And whether you're looking for projects that give you a flow of capital, which is great, or whether you're looking for cash flow, which of course is the foundation of all wealth building is continual flows of cash that recur and recur and recur, then that's what we're trying to get to. So every strategy, if you turn the wheel, and those who work with us and wealth builders, Chris, they use a standard line down there that that we say to him Do you want to mention, what we say is you don't cheat the wheel, you don't cheat the wheel, you don't cheat the wheel, and people cheat the wheel, because they try and take shortcuts. So here's how to not cheat the wheel and make it work. Now, sometimes it doesn't work. For reasons I'll describe. So let's break it down. We've got our five portions, my five spokes. The first is education. You know, every form of wealth building starts with understanding of how does the asset work? How does this strategy work? Do I understand it? Because in order to create value, you have to understand where you're going to create the value from the first place? Where are the points of value? How do you apply your skill and existing knowledge to that, but more importantly, more often than not, you need new knowledge. So where's that new knowledge going to come from? And that's the first portion that's the first spoke is education. Now second is we know, I was talking to somebody the other day, and they said, what they loved about wealth builders was the fact they could go to wealth builders is a place of trust, that our USP is we've curated, outstanding people, people who are the best in their field. And she said, I feel safe there. Because otherwise, you know, my Facebook feed my Instagram feed, my email feeds, everything's about people wanting to sell me education, send me a call, send me a course send me a course. And there's a danger there isn't there that people can be tempted to buy courses that don't really turn the wheel, they just provide the one part of it, which is the education. So that second part is independent support, support from people who've got your back support from people are not just trying to get you to buy another course. But to help you apply and implement the knowledge that you're just learning. And wealth builders are just great at that support. Now, the third is the best way to learn, Chris, as we know, is not just the academics, but the practical aspects of doing that. And the best people to show you that are people who've already done it. And that's another USP. So we have hundreds, if not 1000s, of connections, connections to other people who are on the same journey as you who are willing to share. And we've talked about this in the past that we expect wealth builders to be have humility, to ask for help, but the selflessness to give help, and people are often surprised on the quiz by how helpful people are in the wealth building space compared to perhaps what they were in the employee space. Anyway, spoke number three is connections. So if you want to learn something, and let's say they're working with wealth builders, we will connect you to somebody who's executed that strategy well. So you can go take a look. And if you take a look, that's probably one of the first time as you'll realise whether you want to carry on. Because sometimes you go look at what needs to be done. You've understood it. You feel like you've been supported. You go and look, you physically go and look. And you go, Huh, that's not for me. And that's great. Because that tells you, maybe that's not the strategy for you. So if you again visualise, you've put the wheel onto a crankshaft, and you go not for me, and you take it off, you put it down, and then you put another one on, and then you start again, that way, you're speeding up your journey. Now sometimes the journey needs to have false starts, needs to have things that don't work, because you've got to be true to your own flow and who you are as a person. And you have that experience as well. Chris, I recall, when you originally went into looking at property as a primary strategy, and looked at sourcing as a way to do that, and then when you experienced it, well, what was your view? Yeah,

Christian Rodwell  9:19  

awesome for me, and, you know, following the wheel is a process that saves you time and saves you money. And unfortunately, we see a lot of people who, you know, are kind of drawn in perhaps from a good marketing or, you know, slick events have a certain strategy that you know, is the golden ticket. And you know, people go without understanding themselves first, as you say, and by following the will that can save a lot of a lot of wasted energy.

Unknown Speaker  9:43  

Yeah, and it's not for us to say and we never do. So what you should do or what you should not do is for you to turn your own wheel and there are plenty of wheels that I put on the crankshaft and understood them ago where it's not for me, and I don't really want to do that that doesn't fit with who I am, as a person, that's a really, really important part of the wealth building process. Anyway, step four, due diligence. Now, that means many things to many people. But it means fully documenting, and understanding all of the risks and how you intend to mitigate the risk. Because all investments, or wealth building activities carry risks, there's no risk free investment in the world. So you have to understand those risks, document those risks carefully, and make sure you've done enough diligence. And part of what we do is show people what due diligence to do in all of the wealth building pillars. Now our experience, Chris is for many people, particularly those with the more creative wealth dynamics. Those who make decisions from gut instinct, rather than due diligence, often will skip this stage. And that skipping of that stage, cheating the wheel, in other words, can lead to pain and trouble down the line when something goes wrong, that could have been picked up in the due diligence stage. So really important, then, as you're building your wealth to make sure you've covered all of these stages. And then finally, is what we call Guided Action. And what we mean by Guided Action is understanding that the purpose of building wealth isn't the single wheel term, you don't get wealthy on a single wheel turn, I don't think I've ever seen anybody turn the wheel once and become financially independent. It's not a single wheel turn, there are multiple wheel too, and sometimes the same wheel several times, sometimes you finish the wheel and go, Okay, now I see what that outcome is and what it might do something else. But either way, the purpose of the Guided Action is to take the action, in the right order and sequence with all of the tax consequences and other things, thought through and taking the right order to conclude, and then bank your capital or bank your cash flow, and then reevaluate what it is you want to do for your next wheelchair. That's the principle. So education, support, connection, due diligence, Guided Action, all of those things are integral part of a process that we follow. And we share and teach that. And we believe that when people make mistakes with their wealth, it's because they haven't followed that process. So whether you like wealth builders or not, maybe you could embrace that concept, and create your own wheel. And we've got links Chris got, haven't we to the visual of it. So rather than me talk about it, there's a visual and videos of us getting into a little bit more detail. And you can embrace that as your own philosophy if you want to. And we'd be delighted and thrilled if you did. Because then less people would make the kind of mistakes that we will often see. And when people make mistakes in wealth building that does a lot of damage, not just financial damage, you could lose money, but relationship damage, confidence, damage, community damage, there's a whole raft of things that can then stop you in your tracks, at the very first turn of the wheel, the very first hurdle you fall at. So what we want to do is support you to make sure that you follow the wheel properly, and you don't cheat the wheel. And that should get you the result. You want. We hope but if not definitely you bank all the lessons and turn a better wheel. And next time around.

Christian Rodwell  13:34  

Yeah, no, that's great. Thanks for explaining that Kevin. And, you know, the wheel of wealth is Step seven. And our nine step roadmap we call step seven focus because you need to focus on turning one wheel at a time and generate either capital or cash flow. And we've talked about the debits challenge we're running at the moment, that's really step two, in the process, that foundation stage, we've covered the roof, which is step three. So hopefully people can see that there is a tried and tested route. There's a roadmap that if people follow that they will get success.

Unknown Speaker  14:04  

I like Toby, you know that a five year plan. And if you think about as you listen to Toby, and hear that you work for a major company, senior, that wasn't a small income that he's trying to replace, you know, so to replace a significant income in a five year period, his testimony to what he does, but rather than me talk about Toby, why don't we hear from the man himself?

Christian Rodwell  14:27  

Yeah, let's do that. Let's head over to our conversation today with Toby Spanier. Toby, welcome to off talk. Hi, Christian. Good to have you on today, Toby. And we are very pleased to recently have announced that you will be joining the wealth builders coaching team for the wealth builders Academy. So congratulations on that. And you're looking forward to getting started. Yeah.

Unknown Speaker  14:50  

Now I'm really excited to get started getting stuck in and I just started helping people and it'll be Yeah, just really looking forward to it.

Christian Rodwell  14:58  

Yeah, and this marks a bit of a new chat. To in your life, doesn't it? So? It does, yes. It will if you just changed from from having done for quite some time, right. So

Unknown Speaker  15:08  

I had 25 years in with one employer in corporate as management consultants started back in 1997. And when I started, I promised myself that I wouldn't do any more than 25 years, obviously, this year was the 25th year. So I've now left and I'm now obviously fully self employed. But I had a five year plan to transition from being in full, full time employment to setting up my a number of businesses, which I was able to do over the last five years to sort of seamlessly transition.

Christian Rodwell  15:40  

Yeah, good. Well, we know, we know you need a plan. Right. And that's something you know, we we obviously work with our members very closely on creating their wealth plans. And that's one of the first steps in our process inside the wealth builders Academy. So how did you first come across wealth builders, Toby,

Unknown Speaker  15:57  

so back in 2017, I, I went to an event and a woman called Stephanie Aiken came talked about SAS pensions, and I thought I knew quite a bit about property at the time, I'd never heard about this SAS pension thing. And I was just, my mind was just blown away with the flexibility of suspensions. And so I was really interested. And I followed up from there through through Stephanie obviously met with Kevin Whelan, a very suspicious person, so had to come meet him personally, at your HQ, just check out it was a real business. And it was and, and the rest is history, I set the SAS up. And that was so powerful in helping me sort of funds my property, property journey over the last five years.

Christian Rodwell  16:44  

Yeah, which is exactly what we're going to be talking about today, which is five creative ways to help finance deals. And it was actually on our monthly mastermind. Just over a week ago, we had yourself on there, Toby, and you were sharing some of your story with our members. And you were talking about your your journey and property. And I thought it was really interesting, because you made the point about you know, why didn't I start 10 years ago, and I think that's something that many people listening are probably either saying to themselves, because they haven't yet got going. Or once they do get going, they think God, why didn't I start earlier? So you know, how did how did that bear out for you?

Unknown Speaker  17:18  

Yeah, I think it's, it's a fear of failure. And the longer you wait, the bigger the perceived failure can become, obviously, I had 25 years in corporate, I got to a senior level, I got a very good income coming in. But it was from one employer, which is not a particularly secure place for for the long time. And obviously, the longer I waited, the more money I would need to create in order to step out from being an employee. And so I think it's, it actually gets more difficult if you if you don't start earlier on, the barrier to exit gets more difficult. And that's why I realised I needed a five, a five year plan where I was pretty active for all those five years to build up a number of businesses while also being in full time employment. But it can't be done. I mean, once you've got a plan, right, the plan is not particularly odd. committed the plan is, is the key thing you need to do. And then you just work through the plan and stuff happens.

Christian Rodwell  18:18  

Yeah, yeah, I think Jim Rohn said something like, it's, you know, discipline is the bridge between, you know, the dreams and actually achieving the goals. So it's just taking those small steps every month. And we say never let 30 Days go by without doing something to build your wealth. So, you know, I think for our listeners today, it's gonna be very valuable, Toby, and you've executed on that plan, you've successfully now stepped away from corporate life, and you're focusing every day on the things that you love building businesses and property. So let's dive in. And let's kind of see how this property journey has bared out for you and some of the creative ways that you've managed to finance some of the deals. So I know we're gonna look at five different ways, Toby. So where should we kick off?

Unknown Speaker  18:59  

Well, I think we're to kick off is, obviously I'm in property. But the first thing I want to say is, you need to find your niche within property, I believe that there is a strategy for every area. So you just need to choose an area which you can get to easily when you then need to choose a strategy that works in the area, but also that works with you. And the first I had, I've had two portfolios. The first portfolio was in the Midlands, and it was an HMO strategy. And it didn't work particularly well for me. So I exited from that business. The second portfolio was much closer to home, you know about an hour away, buying derelict buildings and bring them back into use, and then just renting them out as family home. So quite a straightforward strategy, something not personally complicated, something anyone can do. But that was the strategy built sort of floating by boats. And that was the wheel that I turned in world builders language. And as soon as you turn it once it becomes easier. And then you start it 234 times and as you turn it, you realise there's more efficient ways to more efficient things you can do and it just becomes easier and easier to I really love that wealth builder analogy about turning the wheel. But I suppose where do we start and what's what's the first sort of creative lever that I was able to pull. And it's pretty straightforward. It is the suspension, you know, the suspension is just a complete no brainer, if you're on property, and the suspension, and they enable me to do low max to my limited company, and then buy properties in cash. So my strategy was to buy a multiple properties, properties was derelict and being a cash buyer, you already get a 1015 20% discount on what perhaps these properties really should should be going for. So that's the first thing that that really helps. And it's just the ease of, and also the commitment, the confidence it gives you that you know, you can offer on a property and you know, you can fund it at the point that you're offering. Whereas when you're reliant on on mortgage finance, you never quite know, if you're going to get a mortgage, whether this means reduction or retention. So that was the first the first thing that's pretty much open to, to most people. Romac

Christian Rodwell  21:03  

and I guess, you know, being able to move quickly, you build that relationship, then with agents and sources, and they know that, you know, you can move

Unknown Speaker  21:13  

quickly, they, they don't mind how long it takes, they just want to know that it's going to happen. That's the important thing for them. They don't have to do all the work all over again, when something falls through. So I think once they've seen one transaction, you already in their little magic book, and that they phoned you up and say we've got something else coming along. So you just need to, you just need to transact once and it gives you huge credibility. So yeah, that's the first thing. The second thing I realised was because I was doing a strategy of buying derelict properties, they were derelict. And if they're derelict, then well, you can't live in them. And if you can't live in them, they're not residential, if they're not residential, the residential stamp duty rate doesn't apply. So there's a 3% surcharge for property investors buying residential property. But it doesn't apply if the building is completely uninhabitable. So already, I just found that there's another advantage to buy in cash and buying stuff that was multiple, that's another way of of saving some money. So tax mitigation is just a creative finance strategy that is open to everybody. And all you need to do is understand the rules and then just follow the rules. So that was really helpful. And then brings me on to the third creative thing that I did. And again, all these things, I didn't set out with a really clever strategy. I just found them just by turning the wheel. But the third one was using the council to help fund my deals it it sounds a bit amazing. But yeah, it happens and I operating camps. But you know, there are councils elsewhere who have similar schemes. But one of the schemes in Kent is if you purchase buildings which are uninhabitable, and you bring them back into use, then the council will give you an interest free loan for three years to do the works. So it's like having a another bank. But this is a bank that doesn't really care about your your loan to value, whether you're 75 or 85%. They need some kind of security to give you a loan, like any organisation, but actually found it's incredibly flexible. And I fell into it because the first property I bought, within my second portfolio near to me, I completed on the day that lockdown was announced and I thought, wow, I might not be able to finish this deal. I was gonna turn into an HMO, but then I realised I didn't really have the time to do that. And I've got to contact the Council of saying, Do you have any emergency housing that I can support you with? And then from there, the discussion just expanded and eventually I found they were happy to give me a loan to do the works, which was pretty amazing.

Christian Rodwell  23:46  

Yeah. So who would be the person that you would need to go and speak to at the council? So someone listening now if they want to try and you know, make those inroads? Where should they begin? Yeah, there's

Unknown Speaker  23:57  

there's normally an empty homes officer worth folding up. Although I have found that in the Midlands, I had a portfolio in Corby the you know, and Sir, quite in deprived areas, some parts are quite bright, there's no money at all. Whereas in affluent areas, such as in Kent, there's actually quite a lot of money, even though they're quite affluent areas. So empty homes offices is a good person. Also have a look at Derrick schemes just go onto the website. And the great thing about counsellors is it's all transparent. Just spend half an hour just on their website and see if they have any schemes available. They may have like a no use empty scheme or derelict property scheme. There may be a strategic regeneration person within the council, and you can give them a call. Like all these things, you've got to start with making a phone call or going to an event I went to a national landlords Association events and met someone on the council and just have a chat with them. Once they realise that you're not you know that you're for real. You're not just some flash in the pan. You're committing to an area and you want to invest in the area. Then all of a sudden they start to tell you things You can't find on the website. So once you've got that trust, they know that you're generally in this for the long term, then they kind of just open up. And once you got in, got your foot in the door, then they just keep on coming back to you. So they've done semi loans with me. Now, it's a kind of remember how many, but obviously, I'm giving them something they need, which is their derelict properties, they need renovation, it perhaps not like an economic, which is why they've remained derelict. And of course, once it's done, the council gets council tax. So they're happy with that. The loan eventually returns after three years. And with qualified properties, I put in LSJ tenants, so the council is really happy about that as well. So they're getting quite a lot out of it, too. And, yeah, so I think it's a bit of digging around. And to begin with, you may get a no, but just keep on just asking and building those connections and magic stuff happens. As I said, I didn't start expecting that is going to be free money out there. I just did my thing. And then the council went, Oh, this is quite good. Have you thought of this loan scheme that we've got? I didn't know about that. Yeah. So it's just about, you know, building your network and talking to people really?

Christian Rodwell  26:08  

Yeah. And you said they've got the money they need to they need to lend it right.

Unknown Speaker  26:12  

Yeah. I mean, that's it's kind of comic, there's a guy whose job is to get the money out. And he's really, really stressed until the money is out of his bank account or out of the council bank. And his job is just to give money out. So it's a very, a very interesting environment where you're working with the public sector, and they actually want to give you money. Because those are their metrics, they are not doing the job unless the money is out in the marketplace. And because it's one of these schemes, where it's a three year interest free loan, the money then comes back after three years, and they have to get it back out again. So here's here's my, my favourite person, the

Christian Rodwell  26:47  

top of your Christmas card list this year. Last a fantastic tip. That one. Thanks, Toby.

Unknown Speaker  26:52  

Yeah. And I think where it started was I did a refurb. I, I just did the quality that I always do. I then I took a small loan from the council I then, and this is what people didn't do or don't do, I invited the council come have a look at it. The normally people just take the loan, spend the money Council doesn't hear about it, but actually invited accounts come and have a look. And when they came in, they were just blown away with the quality what I did I mean, I can't do a worse quality, I just do a good job. And then they went, Oh, this is amazing. Oh, do you know we also have a scheme for due to commercial property, we've got a scheme for that old you do new builds, and they just start to open up. And that's the thing, once you've got your foot in the door, and you prove to them that you're for real and you're doing what they want, then they become much more amenable and tell you stuff that you normally wouldn't find out about. So that's the third thing, obviously, in different areas. There'll be different schemes. I don't know what they are outside of camps. But it's well worth just sort of building those relationships with with councils going to NRA and and other sort of networking events because the counsellor there and that's a good place to meet them.

Christian Rodwell  28:00  

Yeah. Can I just ask as well, Tony, Toby, how are you going about finding those derelict properties? Are you just going online searching or you know?

Unknown Speaker  28:08  

So I've got yeah, I've got a sourcing agents who's brilliant sends me deals every day doesn't charge me at all. And they are absolutely instant. And he's called right move. Right? So I have my right move alerts. And most properties that I buy have been on the right move at some points. They may have gone on right move and then come off right move and then they're off markets. And then I followed up on I've noticed that they haven't sold by seeing the letter director vendor, so I bought a few that way. But you're pretty much everything that is on or off market. At some point, someone has tried to sell it through traditional means. And I've got a very visual memory and I can remember properties that have been on Rightmove and haven't sold. You know, I've checked after three, four months has this property sold? No, it hasn't. Right, let me write to the vendor. So that's the first thing. The other thing I do is I literally just walk around my area and take photos of properties that are in it. Go home and spend three pounds on land registry, find out who owns them, and write and write to them. And surprisingly, it works very well. People write back and say, yeah, they want to sell their properties. Excellent. So I mean, those things again, everyone can can do that. There's no sort of secret sauce, it's just about being a bit about being consistent. The other tool I have is something called an Excel spreadsheets is really, really high tech. I don't pay a subscription to use it. I've just got it on my on my laptop. And I just each line is another property. And I just have notes about it. And I follow up. And sometimes I follow up a year later. And I found Oh, I thought it's sold out hasn't sold let me write to the vendor. Oh, they want to sell it. So just that the money is in the follow up in the follow through and some just very basic tools that anyone can do. If you just follow them consistently. They do work. So yeah, that's sort of the third sort of The area the fourth area, which I think there's a creative financing strategy, and I think really good as we go into a recession is just the social housing aspects the FHA tenants, which traditionally, private landlords have wanted to steer away from. But normally they want to stay away from them, because they don't understand it, they got all the money's rubbish. So why would I possibly want to do that? They don't really understand that. There are massive advantages. You never have any voids, you never have any letting agent because the counsellors your letting agent, and they don't charge you, you're very low maintenance, because you have very low voids, you have no bad debt because the council pay you directly. If the tenant doesn't pay you, you can set up how you want, you can say that sometimes the tenant pays me directly. Sometimes they prefer if I'm paid directly by the council. So I know I'm always there's no bad debt. So that's really good. Also, NHI is in an excellent, isn't it every year, the LSA rates go up, should be by inflation, we'll find out if they do get inflation this year, but they'll still go up pretty significantly. And the other thing we should the big thing people miss is they look at the FHA rates for property and go, Oh, I've got a too bad property, therefore, it's the two bed right? Oh, that's not very much. But what they don't realise is, it's not what your house is, it's what the eligibility is of the tenants, and the tenant is eligible for a three or four bed property, and they choose to take your property, then they're eligible for the three or four bed rates. So people are comparing the wrong thing. They're looking at the two bed rates for NHS tenants, and they're looking at their two bed property. They don't realise that the two bedrocks, you could be classed as a three bed property by the council because it has a downstairs room that doesn't lead anywhere else. And therefore, actually, they're comparing that the wrong thing. So I've invariably found that you can get more money from lhsaa tenants than you would get from just private rental. And that really confuses most private landlords, because they think how can that possibly be, but it's about understanding how the NHS system works and what tenants are, are entitled to.

Christian Rodwell  32:06  

And in terms of tenant aid, defined as any more problematic issues with LH a tenants and then the normal,

Unknown Speaker  32:14  

you're working with a counsellor and the counsellor is your letting agent and its relationship with them. And if you're not happy with the person they put forward, you can ask for someone else, I find that I haven't taken the first person that the council is recommended. But I do, I like to give my properties to families who really need them, you know, and will appreciate it. And if you find out about the family's background, that the council discloses that some of them I've been there haven't had great backgrounds, and it's nice to be able to know that I'm using my properties to help people who are really in need. So that part's really good. And I think that the family lead is, is backed by the council, you're always gonna get paid, you're always gonna get paid on time, if you don't get paid on time the council will pay. So the main issue that landlords have is they think, Well, if I don't get paid, if someone's not working, then how am I gonna get the money? Well, actually, it's kind of the opposite. You know, sometimes my private tenants don't want to pay, even though they've got plenty of money. But on the NHS in France, if they don't pay for one month in one day, then I just fit in the formal line, and the council starts paying me directly. So you know, it's actually a lower risk methods of securing long term rates, and it will, you know, it will go up every year with, you know, with some measure of inflation.

Christian Rodwell  33:33  

Yeah, no, that's really good to hear. And during COVID, did you have any Lhh tenants during that period of time?

Unknown Speaker  33:40  

Yes. So the first property I bought, which I bought, during lockdown, I was going to turn into an HMO, I thought, I thought the government may stop all building work. They didn't spend the time I thought that might might happen, I thought, Do I really want to rip out a perfectly decent property to make it into a seven bed HMO and then find halfway through that I'm not allowed to do it? That's probably not a very good idea. And that's when I found out the council and said, Do you have any schemes, you know, refugee housing or emergency housing, things that I thought would go with the government would allow it to happen during the COVID lockdown period. And it turned out they just had an FHA tenant who was in desperate need of a with lots of kids. And she had her five kids, and really needed someone to move into. And the tenant liked her, knew her story. And I thought, yeah, fine, let's go down this route. And because the person really needed the property, and she felt like it was like, all our Christmases would come at once when she came see the property. You just got that gratitude when they go in and then they don't they don't bicker about things not being totally perfect. It wasn't the best refurb I was doing it during lockdown. We couldn't get supplies. We couldn't get carpets that matched. Every room was a different colour carpet, you know, so that there was some constraints, but the tenant was totally happy with that. So yeah, it It worked out pretty well. It turned out not to be an emotion to housing tenant just a normal tenants. But who's getting the as an announcement from the council? But yeah, it worked out really, really well.

Christian Rodwell  35:10  

Excellent. Well, there's four creative ways WhatsApp, number five, Toby.

Unknown Speaker  35:15  

Well, I think the the fifth crack away is the fact that after six months I'd bought in cash, I've had six months of added value, and I can refinance. And normally we refinance, you've, you purchase a property with a mortgage, so you're only getting a small amount of money back each time you refinance. But if you're buying and cashews in a loan back, you get this massive injection of, of cash that more than covers the purchase price, or your refurb costs and, and a bit more, and it just enables you to go great, I can now buy another property, or I could buy three properties with mortgages. So it's kind of linked to the loan back, but it's going from the loan map, which is alternative finance into the traditional finance system, and just providing, you know, your vanilla lenders with exactly what they want, which is, it's been six months since you bought the property, the property is all perfectly refurb looks lovely. There may already be a tenant in place, which means they've got evidence of of what the past and rent is. And you can just turn the wheel again, one of the things that also helped was, as we're turning the wheel, I had a team of people, I was able just to run from project to project to projects. And that just became more and more efficient. And as prices have gone up, people have had real issues getting hold of, of labour. But I haven't had that issue because I've just been able to keep my team busy, from project to projects. So again, turning the wheel just gets easier and easier and easier. And I hear from a lot of my colleagues, or they have to pay more and more and more to get labour to turn up. Right down. I've already got the team there. But that's all about turning the wheel and repeatedly turning the wheel. So yeah, I think I don't think there's anything in there really that that people listen to this couldn't do themselves. I mean, everyone can set up an alert on Rightmove, everyone can set up the council everyone can set up. Most people we've got a bit of a property business, consider per assassin and do loan back. People can choose to go in on a social housing strategy. There's nothing really in this, that's that complicated. But once you start to stitch them all together, it just makes deals that previously you might not want to do deals that are totally doable. And especially with me buying derelict property, sometimes I think, is this going to work, but when the counsellor happy to give you you know, 40,000 pounds in cash to, to help fund it, it just makes the deal work so much better, or at 1000s they've done in the past, just just just helps just make the back wheel easier and easier to turn.

Christian Rodwell  37:46  

Yeah, that's fantastic. No really, really great examples there, Toby. And, you know, very pleased to see your journey accelerating now. And interesting. You know, you said at the beginning, you know, everybody's wealth plan is different, right, you need to first understand yourself. And we obviously do the wealth dynamics assessment with all of our members. So you know, if you're kind of creative ideas person, or you're a very meticulous detail, process driven person, and you build the team around you to support that, right, so that you're in flow, you're doing what you love, you're doing what you're good at. And there's many, many different property strategies. I'm interested because you mentioned HMOs, were a strategy that you obviously spent some time on at the beginning, and then you decided that wasn't for you, you know, what was that decision in particular? And why do you feel that didn't fit you particularly?

Unknown Speaker  38:33  

Yeah, so there's a guy called Peter Drucker is a management guru. And he said, there's nothing more efficient, there's nothing more useless than doing efficiently that which should not be done at all. And I realised that the HMO strategy, I'd kind of outsourced everything, it was a long way away from our lives, it was seven hours to get there and back, I was very reliant on on other people, and I couldn't really take direct control myself. And I realised I could make everything better I realised I could get a better letting agents I could perhaps be more efficient with my utilities and you know, get a better scheme, etc, etc. But all that is just doing something more efficiently something which I thought actually shouldn't be done at all, which was the HMO strategy wasn't performing brilliantly for me, it was making more more money then, by to let's but it wasn't making sufficiently more money to justify all the additional management time and once you used to have to pay a different cleaner, and then a gardener every week, and then you've got all these other costs and all these moving parts, just paying people takes time I realised I got up to 50 rooms very quickly, and it starts becoming another job as opposed to a more passive form of income. I don't mean pass, I mean recurrence without lots of management time. And I just realised that when I looked locally at property prices, they weren't really that much different to the Midlands, and that when I looked at the cheaper financing, you have just normal buy to less, less all the costs of us. No bills, etc, that actually was only a couple of 100 pounds. Now, I can still make 500 pounds a month per property with the isolettes. And I was making seven or 750 cash flow after all my costs on an HMO, so it wasn't really worth another 200 or maximum 250 pounds a month for all the additional work that had to do and the answer was, was no. So that's why I shifted my strategy. But some people do the HMO thing really, really well, you know, they're able to get 1000 pounds plus per month, which is brilliant. And, yeah, I mean, it, as I said, You just did the strategy that fits your area, and also a strategy that fits who you are. And for me, I just wanted a more recurrent type model with less moving parts. Because I love come up with the creative ideas, but I don't like all the management stuff around it. That's not my genius.

Christian Rodwell  40:50  

Yeah, yeah. Now, Toby, you'll obviously be working with our members as one of our coaches, as we mentioned. And, you know, we have people of all different stages, right, people who are quite advanced already, and they're moving from security to independence, or even independence to abundance, and then people who are right at the beginning of their journey as well. And you know, in the current economic storm, that we're finding ourselves in someone who's perhaps brand new to property, they're looking at the interest rates, which have just rocketed this year, what would be your advice to them in terms of, you know, getting started now in property,

Unknown Speaker  41:23  

I think it's a great time to get started, I think anytime it's a great time to buy a property, you just have to buy property at the right price. There's a lot of uncertainty at the moment. And so this isn't a typical situation, but you know, you know, mortgage prices have shot up, and it's gonna be a while before they come back down again, and they're gonna go up a bit more before they do. So, you know, we always teach people to use the figure of 6% on their mortgages, but people have gotten used to ultra low mortgage at 2%. If it doesn't work at 6%, then you shouldn't do it. And now it actually turns out the mortgages are at 6%. So it means you need to work a bit harder on buying things for the right price. But it doesn't mean that there are opportunities out there. You just got to back yourself. And also think when you're starting out, you know, you've got you've got other sources of funding, when you first start out, you have a little cash pile. And you know that that will get you through your first property, all you need to do is buy one property, once you've bought one property, you've turned the wheel once you realise it's not that difficult, and you realise you can do it better next time. But no, for 10 years, I could have gotten to property. And I didn't, because I had this fear of failure. And it only changed when I surrounded myself with people from that network. And then people who are buying properties, people who are self employed, and then I realised what they can do, how difficult is it and it just gave me that confidence to get started. And I wish I just got myself into that kind of network 10 years earlier, because I'll be 10 years on but it is what it is. But for me, it's really just surrounding yourself with people who are like minded. And that just gives you the confidence because it's a lonely job being a property investor, you've got to back yourself, you've got to make the decision of do I offer this price? And if I do, can I make it work and yet, so it's a big decision. But the more you surround yourself with people who've done that before, the easier it is to start believing in yourself.

Christian Rodwell  43:17  

Yeah, great words to live on there, Toby. Welcome to the team. And thanks for being a great guest on wealth talk today.

Unknown Speaker  43:22  

Thank you very much Christian really enjoyed it.

Christian Rodwell  43:27  

Okay, fantastic tips and ways that Toby has managed to build his way to financial independence and will plenty for us to dive into there. Kevin. Before we do that, let's head to Trustpilot as we do each week, and we've got a great review that's coming in from Peter, who says wealth builders were excellent at helping me to set up my SAS. They trained me in the complexities of the rules and regulations involved, and helped me to develop a strategy to suit my company and my own needs. A pension is such an important subject in anyone's life, which requires a great deal of trust in a company like wealth builders. Luckily, they have been extremely helpful and trustworthy.

Unknown Speaker  44:10  

I like that word trust to use the word Trust twice, trust and trustworthy and to be worthy of trust. You got to have integrity, you've got to do what's right. And a lot of people you know, out there will criticise wealth builders from the point of view of saying we believe in education, we believe in the power of good education. And they'll say oh, no, you can do a SAS on your own. Without that help. But nobody who's ever had a SAS has ever been a SAS trustee before, has ever been a trustee and owner with leadership and diligence to run their own pension scheme. And I don't think you can do that without good instruction. It'd be like giving someone a Formula One car or high performance vehicle and saying Get on with it. He couldn't do that. He simply couldn't do that. You have to have instruction. So I make no apology. For the fact that we encourage us owners to become compliant, confident and capable trustees, and we do that with a process, which is turning the wheel on SAS. Okay, so I'm glad he's done that. And we've helped 1000s of people turn that wheel successfully, Chris, and we'll watch with great interest what Peter does with his house as Toby was doing some excellent work with his that you manage to pull out of that interview?

Christian Rodwell  45:29  

Absolutely. Well, that was the first creative way that Toby shared with us. And I think in his words, he said, it's a no brainer if you're in property, and, you know, we're advocates of people taking control of their pensions. And even if that's not where the SAS is just taking control, and really making sure that you know, you're reducing your charges. And, you know, you have you have good oversight of what's what's happening.

Unknown Speaker  45:51  

Yeah, and for most people pensions are one of those grey, dreary, opaque subjects that seem to get consigned into, or must look at that someday, but they don't and consequently, get a much worse result than they'd expect, which is why, you know, part of the contributory factor that 95% of the population don't become financially independent, because there are over reliance on pensions that for the most part, are extraordinarily bad value for money. Which is why one of the steps in our debits process, the S for stock market s debits that education bills, insurance tax and stock market fees, is to help people reduce those costs conscientiously reduced the cost, often by as much as 50%. Chris, so anybody out there, if you've got a UK pension, and you're not sure what your charges are, go find out and then take a C and go Bloody hell, I didn't realise they were that expensive. You know, we're think we're doing on the debit challenge next week, Chris, the seven layers of charges that most people are paying in their pension, it's terrific. Anyway, I'm glad Toby spotted that. And as he said, it's a no brainer, it's not a no brainer for everyone, of course, not for everyone, but you get the point, he's done a really great job with that.

Christian Rodwell  47:12  

Yeah, and the T of the debits challenge is for tax, and that was point number two for Toby. His strategy involves the purchase of derelict buildings, and he said, there's no stamp duty to pay there. So you know, a tax saving?

Unknown Speaker  47:28  

Well, look, anything you can do to get a tax saving, I mean, SAS is a tax saving, because you get your corporation tax back. And your companies like the government, giving you some money to go and build your wealth with the thing is great. But I think if you can discover for yourself a rich niche, where you can find pockets of opportunity, not just in what you deliver as a service to the end user, but also how you can get access to other people's money to help you do that. And if there's no stamp duty, on derelict buildings, and I think he goes on to talk about the fact you can get loans, you can imagine an interest free loan from a local authority to bring a derelict building into good use. I mean, how smart is that. And that's available, not every local authority is going to have the money. But that's the skill of a wealth builder is needs to go find out, you know, so go and check that out wherever you live in the UK. And maybe there's some parallels in other countries, but you could go find out from your local authority. exactly whether there's any funds available to bring derelict buildings into into life. And breathing new life into buildings is good for society. You know, because they're an eyesore there, they attract bad things, don't they? And there's lots of good reasons. So I'm impressed with not just what Toby is doing, but but the impact is having in the area in which he works.

Christian Rodwell  48:55  

Yeah. And that rolls into his fourth point, which was, you know, really helping people in need. So working with the councils to find tenants. And, you know, one of the benefits there is, you're not going to have voids, you know, the council is going to make sure that you get paid. And so yeah, again, have a feeling of doing some good in the world, which, of course, is an important aspect of building wealth.

Unknown Speaker  49:17  

Well, I mean, a lot of people who buy property will decide and then have to do that due diligence and whether they're going to manage and maintain the properties themselves or use an agent. How about getting the local authorities your letting agent? That's pretty cool, isn't it? If somebody else becomes your paid, letting agent, or unpaid or rather, an unpaid letting agent? I mean, that's just a great thing to know. And I think that's, again, you're seeing now the cutting edge of smart people is to find these distinctions that will make them more profitable. So there's there's value in the mission, but also, there's there's value for the wider society and that same mission And so, and there are many other ways to do that, including supported living and, and other aspects where you're bringing good to the world. So we've had people on this podcast, Chris talk about supporting living and providing accommodation and care to a whole group have different types of tenants that we think are very valuable in society to support. And yet they're working with local authorities, and housing associations or care providers. And that means there's greater security in terms of the tenure of the tenant, but also when you're getting paid as a landlord. So that keeps the sustainability of your profits. So all very good things. Yeah,

Christian Rodwell  50:42  

that's right. And, of course, Toby's adding value, we know that's important when it comes to building wealth. And because he's adding value, he's able to remortgage those properties after the six month period, and recycle his cash. And that's how he's obviously moving forwards to acquire more properties, you know, quite some, right?

Unknown Speaker  51:02  

Yeah. And if you think about the principle of adding value to a property, which is appreciation, okay, so the asset is worth X, and it's worth one and a half x or 2x. You can tap into that, and one of two ways, can you now you can tap into it in this way that Toby is doing. And that's not necessarily the only way. But by essentially raising refinance. And by refinancing, that leverage is then used to be able to acquire more property. And that's great. And then if you're making more profit, then you can come back to the table and almost start to reduce your debt equity. So you start off with a high level of debt leverage. But as you make more profit, you start to reduce that. So that's one strategy. The other is not to debt leverage too much, in other words, to leave money in the in the property itself, but at some point, come back and take the equity out as income tax free, you know, so if you raised 100,000, from a real mortgage on a piece of property, you can spend that money, now you've still got the debt, but if you're growing, or your income is coming in, you've got tax free income there. So there's many ways that you can use the equity and property which is back to home capacity, which is pillar number one, and then pillar number four, building a property portfolio. So all of these things work together, Chris, to help people understand you can be creative, to build wealth. A lot of people who talk about not building their wealth, say I don't have the money, I don't have the resources. It's not the resources that's lacking here is resourceful Ness. And you get resourcefulness. By being in a community, by being inside a trusted group of people who share with you the distinctions and differences, the intellectual shortcuts they found, that they share with you in a trusted environment, that you can go and follow yourself when you didn't even think of it. You couldn't even think of it because your brain isn't wired that way. And that's the power of community, which I know also is an important point for for Toby.

Christian Rodwell  53:10  

Definitely. Yeah, Toby ended up saying how important it is to have like minded people around you. And Toby knows that because he's been a member of the wealth builders community for a number of years now. And, you know, if anyone listening, Kevin is thinking, wow, you know, there's some really great ideas today. I mean, imagine having Toby as your coach, right? Every month, being able to have a one to one and have Toby give you, you know, his experience, and help you on your own wealth building journey. So if anyone's listening, that's exactly what we do inside the wealth builders Academy. And, you know, feel free to book a call, we can have a chat you and I, we can see if we're a good fit for one another, and invite you into the academy. And we'll be there to support you.

Unknown Speaker  53:50  

Yeah, and we don't want to promise that the support and that level might be Toby himself, because we've got a number of other equally good and proficient coaches in our in our coaching community, Chris, so we don't want to promise Toby, but Toby is a new addition to our coaching community. And we're thrilled, delighted to have him as he marks a new chapter in his own life. And that's given him also the freedom to be able to buy and acquire more properties to build even more wealth, which is really when you moving on from financial independence into financial abundance. And that might be the subject of another podcast.

Christian Rodwell  54:28  

Absolutely. So, really enjoyed today's episode. Hope you enjoyed listening. If you did, and you think someone else might enjoy that, then please hit share on your podcasting app. And if you have been a regular listener over the last few months, then why not head to Trustpilot yourself and leave us a little review. And we'll be more than happy to read that one out in a future episode.

Unknown Speaker  54:49  

Okay, that was a good episode, Chris. Yeah. Good. Well,

Christian Rodwell  54:53  

we'll be back Same time, same place next week.

Unknown Speaker  54:56  

Okay, then and until then, my friend See you later. All right.

Unknown Speaker  55:02  

We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside a wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk/membership right now for free access. That's wealth builders.co.uk/membership

Transcribed by https://otter.ai