Our last interview of the month is with a property investor from Liverpool, Karl Beddard from LMKB Property service answers our questions here:
Can you tell us about yourself and how you got into your current role and what you like about your job?
So I’m Karl and my partner is Louise, we own and run LMKB property. We started about 15 years ago when we bought a couple of properties in Liverpool. At the time we had good careers, working for MBNA, then Bank of America as Program Managers. We didn’t have any intention, at the time, of doing property full time as we both enjoyed our jobs and wanted to progress our careers in our chosen professions.
During this time we have managed various strategies on our properties, from student accommodation, rent 2 rent, serviced accommodation, to standard BTL, which is our current strategy. Skip forward 13 years and Louise and I had the opportunity to take voluntary redundancy, which we jumped at as it was an opportunity to try something different.
We set up an IT consultancy business, which Louise runs but I wanted to try something different. After looking into a few different business ideas, we decided to get serious about property. So we started to listen to as many property related podcasts and read as much as we could. All the fact finding told us that we wanted to focus on 3 things. We needed to get educated, we needed to have a property mentor, and we needed to build a network of people around us that we could learn from and seek guidance from. So after careful research we went out and paid for the best possible training we could find, we joined Legacy, which is now Asset Academy. This gave us the knowledge and confidence to operate in the property market, it gave us a network of like mind people, as well as access to property investors who are very experienced and active in the market. Along with this it gave us our 1st mentor, Mark Dalton, whom is a very successful property investor who focuses on BTL and HMO and is part of the Asset Academy team.
Since then we have continued to invest in our training to grow our knowledge and we are now members of the Prosperity Network, which is owned and run by Danny Inman, a very prominent property investor in the North West. We continue to expand our network via the Prosperity Network community and also by getting out there and attending as many networking events as we can. Through the Prosperity Network we now have our 2nd mentor, Michael Almond. We feel its important to work with different mentors as we get different perspectives of how to invest in property.
What we like about property is the pride we get from building something from an idea. Its down to us to drive our business forward and that’s exciting and sometimes scary. We have complete control as to the direction we want our business to take and that’s a special feeling. Our business represents us, our values and who we are. For us its not just about building a portfolio, its about giving our tenants a home that is safe and feels comfortable to live in. We also use investor money to finance the deals and that gives them a great return on the money they lend us so its a winner for them as well, especially in this current climate. And I guess its nice that we get a property out of the deal as well.
What is that your company currently does and what sets them apart from their competitors?
Our current strategy is BTL and HMO’s in Wirral and Liverpool area. We also source for clients. I guess our overall strategy is to buy to keep but our next deal will be a flip to replenish our capital.
Our latest project is a 4 bed end terrace that we are turning into a 5 bedroom HMO, with 2 en-suites. That should be ready in the next 6 weeks. We also have another HMO about to go through. We intend to keep this one, if we do then our next deal will definitely be a flip.
I wouldn’t say we do anything that sets us apart from any serious investor. We work hard and we stay active in the market. What we think sets apart from a lot of amateur investors out there is that we are educated and we continue to stay educated. We keep abreast of what is happening in the market, we attend regular networking events, consistently build our network and ensure we have mentors for support and to guide us. We have met far too many people who just jump in and call themselves investors with no training and sadly no idea. We think this approach is crazy as most of the deals they are looking at are just prospecting deals and are deals we really wouldn’t consider.
How has Covid-19 affected the company?
I would say the main impacts, apart from the lockdown at the beginning, has been the loss of finance and mortgage products at the start of covid. A lot of lenders became very cautious and withdrew their mortgage or finance products, which meant securing lending was tricky due to the lack of products out on the market. This is when the value of a good mortgage broker cannot be over stated. We also incurred higher than normal finance costs because of this, but that’s just life, as long as there is still a deal then you keep moving forward.
It was also tricky at first doing viewings as many of the estate agents would only do virtual tours. It felt a bit funny putting an offer in on a property you had seen in a video. Saying that, our latest project was bought that way. The same situation also applied with getting quotes from builders. This caused slightly more challenges as its hard to know if a wall is addled from a video so the original quotes ended up being more, once we finally got into the property to inspect it, however we had built a contingency into our budget so not to have our over returns impacted.
We also heard rumour’s that there were shortages of building materials, which subsequently drove up prices, but we haven’t seen any evidence of this around where we invest.
The biggest impact we have faced is the supply and demand of the housing stock in our area, which is being created by this artificial property buddle. Properties that might have been around 120k before the lockdown are up at around 150/160k, which means the deals are harder to find. The speed at which houses are coming onto then going off the market is very evident at this time. Saying that, we have noticed that things are starting to slow down slightly over the last couple of weeks and a few properties are starting to be reduced.
What would you say your local property market is like at the moment?
As mentioned in the last question, the house prices have shot up. What was a good deal before covid just isn’t there now. There are still deals out there but we have had to change tact on how we find the deals. We’ve also adopted other strategies to give us access to wider range of housing stock in our investment area. Recently it looks like the market has starting to slow slightly but its nowhere close to what it was like before covid.
Can anything be done to help the property sector at this moment in time?
So far covid or the threat of a further recession hasn’t dampened the publics desire to want to buy and sell property, which means the market is moving and why we are still in this bubble. As long as lenders don’t panic and pull their products then property investors can keep doing the deals. Also the drop in interest rates is bring private investor out of the woodwork as having their money sat in a bank just doesn’t make sound financial sense right now, which is obviously good for property investors as we all know that investing in property is best.
Do you think Covid-19 will have a lasting affect on the property market?
We honestly cannot answer that, our gut feel is no but then we’ve never been through a pandemic before. We’ve been through recession’s but this is new to us. The one thing we always go back to is supply and demand and the fact that there is always a shortage of properties in the UK. As long as there continues to be a shortage then the government will continue to need property investors to help plug the gap. As nasty as covid is, and its certainly has had a massive short term impact on everyone’s lives, we think in the long run society will get back to normal and people will still need somewhere to live so the property cycle will continue.
Where do you see yourself and the company this time next year?
Still doing what we are doing now, buying houses, doing them up and either keeping them or selling them on. Although if you listen to all the conspiracy theorist the end is nigh anyway so none of this matters. But seriously, Lou and I thankfully don’t go in for all that, the world has to keep on turning and so we will. We will do our hardest to keep abreast of what is happening in the UK and our area and adapt our strategies accordingly. Facts will drive our business forward not speculation.