Episode 2: Keys to Effective Property Management

What We Talked About

In our second episode of this property centric podcast, we are joined by John Kerr of Your Partner in Property. For those that are not aware of John, he is an incredibly experienced and wise property expert with years of property management under his belt. In the cast, we talk about the pitfalls of traditional high street letting agents, the essentials of staying compliant and John also details some tips and tricks that will help you get the most out of your properties. If you are looking to get into property and are not quite sure where to start, John is here to help.

You can reach out to him for mentorships here:

John’s Email Address

Your Partner In Property Website

If you are looking to improve the way that you manage your property or you are tired of your unresponsive, unprofessional agent then Oasis Living is here to help. We’ll help you find tenants, lower your void times and maintain and manage your property in a more cost-effective, efficient and transparent way. Forget the high street agencies. Switch to a better, online agency today

Visit our website to learn more.

In a Nutshell

  • John is a highly experienced property manager that likes to live in when renovating his properties as this allows him to understand what needs to be fixed and updated.
  • We talk about letting agencies – when are they necessary and what makes a good one?
  • John lets us know how he manages to get the best ROI for each of the properties in his portfolio
  • John offers mentorships, partnerships and Joint Venture opportunities

Watch Episode 2 – Keys to Effective Property Management

Episode 2 – John Kerr – Transcript

[00:00:00] Andy Masson: Hey guys, welcome to episode two of the property lighting playbook. We’re here with me, Andy. I’m the head of marketing at Oasis living. We’ve got Sam, who is the founder, Oasis Living and we’ve got, John Kerr. Who’s your partner in property. Nice to be with you, John.

[00:00:26] John Kerr: Nice to be here. Thank you.

[00:00:28] Andy Masson: So John Wood brought you in today.

Thank you so much for joining us. We just want to get a bit of a feel about, you know, your, your past experience of property and, and we’ll just go from there and keep it conversational. So if you just want to tell us about yourself.

[00:00:41] John Kerr: Yeah, well, I’ve done a number of things in my life, but mainly it’s been job wise.

I’ve always been interested in property. And sort of dabbled in it for 25 years, but in 2006/ 2007, I went to a property meeting and realized that there was no limit to the number of mortgages you could get. If you could take the right boxes and get them. And that might even replace a chief, my chief executive salary running a group of lawyers in London, if I did my deals correctly.

So between 2008 and 2010, I sort of bought a portfolio of properties from Maidstone in case. Right up to across the central belt of Scotland. And that’s been quite diverse and I’ve learned quite a lot as a result of that and had a lot of different property experiences. One of which has been the thing that I enjoy most, which is what I call self-catering accommodation.

[00:01:38] Andy Masson: Okay. Cool. So like, why did you enjoy that the most out of all the things that you’ve been involved in?

[00:01:44] John Kerr: That’s a very good question. Right. The first thing is kerching, you know, putting comes in and it’s money, you know, that is a motivational thing. I love processing. Which I shouldn’t be doing, of course, should I actually be scaling up my business so that I don’t, but you know what, it’s my property.

I’m not looking to go big, but the real reason of a substantive reason is that I’m quite into property. I like my properties. Properties tended to deteriorate. And they do deteriorate even under the best of tenants that can deteriorate really badly under the worst of tenants.

And you get them back every so often. And then you’re suddenly, and it’s not your choice. The tenant leaves when they choose not necessarily when you choose. And then suddenly you’ve got lack of rent and a bill to refurbish, and also the properties tend not to be up to my standards. Self-catering accommodation. You can continuously, improve it and keep it up to a good and high standard.

In fact, you have to, and that’s what I like. What’s the point of owning property that is not in good nick.

[00:02:52] Andy Masson: Hmm. No, it’s true. Just thinking like I’ve just moved into my first I just bought my first property and with the, we were in a let property for five years and we were, we were good tenants, but you’re right.

Even, even under. Good tenants. You just have general wear and tear and you’d do a hands-on approach to my landlord was a she, she self-managed as well. So it was she came in and painted everything. We’ve we’re still quite friendly with her. So I know what you mean when you’re saying it’s even, even the best tenants will, will leave their mark at the end of that.

[00:03:25] John Kerr: Yeah. And of course the good news about self-catering accommodation, there’s usually more funds to pay for. Yeah.

[00:03:31] Sam Ghosh: Yeah.

[00:03:33] Andy Masson: So when comparing they, what, what’s your. On on let and managed through an agency or, you know, in the traditional sense of a high street Foxtons agency, not to name, drop them or, or, or pull them apart from any of the rest, but like what, what’s your sense of them?

And do you have an experience with them?

[00:03:54] John Kerr: Yeah. What’s your thoughts? Well, the way I was trained to do property was to do as many good deals as possible. And using certain rules about, you know, buy where the strong rental demand, for example, make sure that you’ve got the property cash flows positive to meet your strategy.

And I could talk about my strategy for that later. And you hand them over to a letting agent, who does the management, the rent collection and all the repairs for you, and you should therfore all require a bookkeeper and you go on and do the more deals, et cetera. And you just have to make decisions.

And if something unusual comes up, so problem solving, unfortunately not all properties lend themselves to that. So I’ve got some pretty low grade properties in areas where letting agents don’t really do well because it’s housing benefit, low rent. So the profit you’re 500 pounds a week for a three bed for a month for a three bedroom house.

And so letting agents are not interested, but they do work well once they’re there, they’re there. Made into self catering, accommodation, and that’s where letting agents cannot help because they don’t, they don’t deal in that market. So there is a role for letting agents, as we know, I mean, there are so many of them, there is a role I don’t want to say anything on this podcast.

That’s negative about them. There are aging agents, just a little thing. One other thing that used to frustrate me when, for those properties that were managed by agents, they would never send a copy of the gas safety certificate. You know, I would constantly have to be on red alert to make sure that it had been done.

They didn’t seem to understand that I was the one who would go to prison if my tenants died as a result of the gas not being properly maintained. And they never, none of, none of them, I’m sure that there are great, great letting agents that do that. And the answer that they give is, well, many landlords just don’t want to be bothered by all that administration.

Well, then I think many landlords need to think about whether they want to go to jail or not.

[00:06:08] Andy Masson: Yeah. I mean, I think that. Yeah. I mean, what do you think is the reason for that lack of transparency that seems to sort of be quite pervasive in that traditional letting sense, what do you think it is?

Because to me that excuse of, well, they don’t want to be bothered that, that, that doesn’t, that seems more of an excuse than it does an actual reason. So what do you think the reason is? Is it.

[00:06:34] John Kerr: Oh I think I know. We did just start up a little business as a letting agency, 10 years ago and decided that it wasn’t for us. So I’ve had experience of the software run that time. It’s just systems and processes. It’s as simple as that, does this landlord want the gas safety certificate? When is the gas safety certificate due, is it overdue? Chase up, send it

it’s just a tick box processing effort. And I don’t think that’s in place in many of those offices. It would depend very much on the software that they might use as to whether that operates. And my, I don’t, I do not know, but I would be interested in any of your listeners who say, well, I’ve experienced with some letting agents software, and I can assure you that the software we use does in fact, prompt the agent to say, should we send this to the, to the, to the landlords?

I would be that interested in. Yeah.

[00:07:35] Andy Masson: Yeah. I’m, I’m unsure that without working with, with, for an agency director. I’m unsure of the actual systems that they use, but I am acutely aware of the, the holes in whatever systems they are and where I you know, that’s, that’s part of the reason that the, we, we, we exist and, and uh, why Oasis was founded is because we wanted to solve those, those holes in the, in the process and give more, give them more transparent for the landlords to be able to.

Even if they don’t want to manage the property, they should be able to see that it’s being managed.

[00:08:10] John Kerr: Yeah. So I I’m sure that the big agents, you mentioned a big London agent a moment ago. I have no doubt that they will do that, but I don’t know. I tended to go for smaller agents or startups. And therefore I think probably, well, not startups, but agencies that had been were were, were small local agencies.

And there are quite a lot of new letting agencies start. But as a landlord, when I was dealing with it, I want two things from a letting agent. I want to, I want my monthly statement to know that how much is going to go into my bank account that month. And well, actually that’s about. But when there are problems, when there are problems, but the tenants not paying the rent, et cetera, I want to hear from them every week or more.

And you don’t, you don’t because they feel there’s nothing to report, you know, because we’ve traced the rent and it’s not re not reported, et cetera. But that’s where communication really comes into it. So, and, and, and that’s difficult. That’s different. Yeah. I mean, as it happens, I’ve got four tenants at the moment and we have a big problem in the property.

And communication with them. I mean, they’re looking to get rehost because it’s becoming uninhabitable because of a leak from above. Nope. Nope, Nope. Not complicated. And we haven’t yet got the insurance to say, you know, what, what alternative accommodation can we provide? And finding another four bedroom flat in central London.

You know, within half a mile of SW one?

[00:09:40] Sam Ghosh: How do you deal with something of that sort where there’s a leak, that’s come up from a flat upstairs. You, if you can explain to us more about the steps you take or you would take now, or the steps you should have taken, like in terms of insurance.

[00:09:57] John Kerr: W, well, I’m not going to talk too much about that because it’s happening right now.

But one of the things that I wish I had done, one of the things I’ve discovered is that the standard national residential landlords association room tenancy agreement doesn’t require me to accommodate them elsewhere. I was quite surprised to me.

[00:10:19] Andy Masson: . What is the requirement, then when would the requirement,

[00:10:22] John Kerr: I don’t have an obligation and the tendency agreement to rehouse in the event of a fire or a flood.

You know, I don’t have an obligation which is quite interesting. I may have some other as a property becomes uninhabitable, but that’s more statutory. I don’t want to go into that. And so. What I wish I had done. And what I will do from now on is it finds my tenants to take out the contents policy and alternative, which includes alternative accommodation.

Okay. So I don’t know if, I don’t know, I don’t know any tenants to take out contents policies. But

[00:11:02] Sam Ghosh: yes, I think that’s kind of not the case in the UK when I used to live in France. And I remember in countries like Sweden, et cetera, and almost all the Scandinavian countries. T and T and then take out a home or con contents insurance straight away.

It’s kind of a standard thing. And once I stayed in France for a bit, and I came to the UK, I realized, well, it’s not actually a thing that most tenants don’t do. So I think it’s just a cultural thing to a certain

[00:11:29] John Kerr: extent.

[00:11:31] Andy Masson: Yeah. I have a different experience. The last two left less that I live in. It was baked into the contract.

[00:11:38] John Kerr:

Contents insurance. I don’t think you can force some eyes, but then I really, you can’t force the tenants, but don’t forget. There’s a difference between a whole house Lex and a room only that correct. I mean, a whole host lit almost subtly. They’re going to take contents insurance, I would’ve thought.

But and that probably will come with alternative accommodation built into it. I would think. But I don’t know. I don’t know. I, I have contents insurance in this particular property. Because it’s a block policy and the block is managed by the council. It’s a large, you know, and they have a lot of property issue probably can imagine.

And I therefore only do contents and I I’ve got content. I’ve got, I just happened to have some in there for that, which is interesting, but we kind of digressing. Yeah, the detail problem that one has at the moment. I think

[00:12:30] Sam Ghosh: what would be also nice to know? You’re very correct. What would be very natural?

This is something I’ve seen John do for a very long time, is how he takes properties and with a myriad of strategies, uplifts, the rental value he gets from bear and with, which is what he’s known for, which is what I know about him when he’s quite good at it. Any tips or any word of advice you would have for the landlord or the ans amongst who look into our podcast would be great.

So, and you want to share on

[00:13:06] John Kerr: that front? Yeah. Thank you, Sam. Yeah, that is true. So think the first thing you need to do is you need to be quite hands-on if you want to Get the best from your properties. I style myself as I’m turning into silk purses, and I have got a number of properties around the Midlands and, and in Milton Kings, but across the Scottish central belts, which are.

Low value house system, what we call council houses and in Scotland, they would rent for 500 pounds a month for a three bedroom toasts quite well built, but you know, none of my friends or family would be seen dead living in one. There’s the sort of social element to this. I’m a bit more relaxed about that.

I mean, you have some no-go areas, obviously. And I’ve been caught by them, but most, most, most places are okay. You know, they might not, Luke such, I mean, in Milton Kings was probably my worst property because it was an old, very notorious estate. Anyway, just let me give you a little story about that property.

So that was a three bedroomed house that I had bought 10 years previously. It had been. Yeah. And it had been occupied by housing benefit tenants who had successfully. Trashed it such that it had to be shut for six months. You know, it was crawling with stuff. It was unlivable, it was portable. The agent who sourced it, sorted that out for me, I eventually dispensed with their services, took it over myself.

They had. So they’d repaired it. And I went to look at that, no, I can’t let this property. So I put it in a new Holden’s kitchen and the place up and then let it to housing benefit tenants. And I learned the hose advantage. So I learned to multiple housing benefit tenants. So whereas the rent might be seven 50 a month.

I I. I got 1200 a month. I didn’t really enjoy doing that because I didn’t like taking my housing benefit applicants up to the council to process the paperwork. You know, it’s it, it just didn’t enjoy doing that. And and sometimes the relationship went wrong. And sometimes they were great.

I’ve got just that going and milk the Kings, another host of milk at the moment, a disabled tenant. And she thinks I’m fantastic. So that particular house I redecorated after a few years I’ve got doing this, but the tenant left, that was a great tenant. She left the house, absolutely immaculate. She was unemployed.

And she went off to she, she managed to retain as a HGV Loni driver you know, the big Arctics and that’s what she does at the moment. Anyway, so that was what, four or five years ago. So I took over the house. So what am I going to do? Put in some furniture and staged it, decorated. And then I did nothing because I thought this host wasn’t good enough for the market, that I was then beginning to focus on self catering, accommodation, and a friend was in hard, hard times.

So he stayed there for a best part of a year or so then he moved out. Then I put it on Airbnb, booking.com Expedia and. And indeed in January, 2019, that scuzzy house on one of Milton Keen’s most stories, most notorious housing estates probably the worst reputation than it deserved in the estate deserves was my best performing property by a long way in January, 2020.

January, 2020. Yeah. So that’s, that’s really what I do know. COVID comes along. You have to shut all our holiday lights by law. You have to shut out holiday lights, at least that’s what most people thought. But of course what we knew because we’d been in the short term rental accommodation is there was a demand for.

What became what rapidly became known as key workers. But the number of key workers that were working was huge. Most people, most people were key workers. You know, people fixing gas, mains people, keeping the roads open. You know, most people were at in fact key workers. But so some, but I, I, I went to, so I went on open rent.

And I put my properties on open rent. So rather than doing a week, three nights or a week, I started doing several months. And so instead of getting maybe a hundred pounds a night for a property or 80 pounds a night for a property, I might be getting something like two and a half times the rent.

Yeah. So in a house in Scotland set of 500, maybe 1200 plus they will be paying the energy bills or whatever bills I deem that, and I would give them a tenancy agreement to keep it all right. So the whole different way of doing it, a lot of paperwork on the ins and the outs, you have to protect the deposit as you probably know rentals.

Quite high, quite heavily regulated, whereas self-care short-term rentals. Self-catering funniest. Holy lakes is what they’re called for tax purposes are not generally speaking very much regulated or not similarly regulated at the moment. So that’s really what Sam was referring to when, so I looked to get more out of my properties and I quite like that because it enables me to stay there, stay in the.

That way you get to know them better and you can, you can organize some better repairs while you’re there. And B the cashflow is quite good. You know, I just need look at the bank account for the various properties to see that every few days there’s a significant sum of money coming in. That does give you your bookkeeper a big of, a bit of a problem though, because there’s a lot more reconciliations.

I rent coming in regularly every month. Well, that’s easy. You don’t need to reconcile that it reconciles itself automatically on your whatever program you use, but all these unusual things need to be manually reconciled. That’s fair again. Deviate. So there you are.

[00:19:30] Sam Ghosh: It’s good information. I think I have just maybe a couple of allied questions on that.

So I think quite a few members of our audience in pod who will look at the podcast will probably be first time landlords, or maybe the first time they are going into a buy to let. And which is why they look to get some guidance and advice from us and from this podcast. So do you have any key advice you would want to give them or any key specific points that if you’re a, if you’re a first time buy to let landlord look into this or look into that and look into these four or five things and choose your pathway on the basis of that. So that’s kind of the question. That’s the question.

[00:20:13] John Kerr: I would, I, I’ve got a number of things.

Firstly is understand what the five golden rules are about buying property for investment. I’m not going to go through those. And read a book on it, you know I can recommend a book. So I would thoroughly recommend that before you do very much. You read Simon, Zutshi his book on property called property magic.

It’s into the sixth edition, that easy reading, and it teaches you all the things you need to do about buying from motivated vendor. Making sure that the cashflow works, et cetera, et cetera, et cetera. So that’s the first thing. Educate yourself with the correct knowledge to be a, to be a property investor.

Most people will buy retail from an estate stage. And we’ll buy at full market value. And that’s fine. But if they’re, if they’ve got a real strategy and want to build a property portfolio, they’re gonna run out of capital at some time and they’re gonna find it very difficult to top that up, unless they’ve got some private capital source or won the lottery in which.

Why would you want to be, become a landlord? I would ask then. So the most important thing is what kind of, what your strategy is, you know, so I have a simple strategy when it comes to property and that is that I don’t look at a deal that unless it’s going to produce 500 pounds a month, positive cashflow after all costs, right.

Including 10 to 15 pounds per month and per bedroom into the sinking, into the maintenance sinking fund. So don’t forget any costs. Don’t dilute yourself. So that’s 500 pounds a month. Profit cashflow coming into my into my account net after all the outgoings. And incomings any capital that I, or my fellow investors, not the mortgage mortgage, or any capital IMI fellow investors put into the property.

I’m looking for a 15% return on investment. Okay. When I started, it used to be 25, but we were buying significantly below market value. And we were able to, to, to pay for the deposits in in different ways in those days. No, you may have to do a re a remortgaged later on to get the higher return on investments.

And there are people that are people who get infinite return on investments because they don’t put any money into. But don’t forget, you always have money stamp duty legals fees as well as so yeah, so that that would be what kind of, what your strategy is, because if you don’t know what that is, I mean said like if you’re going into generally in the United Kingdom, it’s easy to go to.

But if you don’t have map kind of plan, then you’re going to get there. If you don’t know where you want to go to. Correct. And I could show you mean that’s how I started. So I got properties all over. As I mentioned earlier, from Maidstone to Glasgow. I don’t know that if I had to tighten up strategy, that that would have been the outcome.

I think I would prefer that not to be the case. So it’s my lifestyle, but I don’t think it’s an ideal and many, many investors have properties all over the UK because they that’s the way they bought. So, and then the third thing. So the first thing is. Now and the five golden rules, what kind of, what your strategy is and make it tight?

Not just wishy washy. I want it to be up. I want to do rent to rent, which I don’t like, but that’s not a strategy. That’s just a a business model. And then the third thing I would suggest that you learn how to source from motivating vendors, learn how to help people who. To give you their property or sell you their property because they have a, an overriding problem that they want and they want to move away from that property.

Because you will open your eyes up to a completely different world of opportunity for property investing, residential property investing. And I could S I’ve got no end of stories of, of that. Where, what I didn’t, when I started, I didn’t realize what I was walking into. And I walked away from the deal.

I thought, how did I, how did I get that deal at that price? No, I know because behind the scenes, the money was just not important to the vendor. And in some cases, in the case of Hackney council who took over Roy who want to take Roy into care and it was a property that was extremely hard to sell because it was a sheltered, a company.

You know for and I was able to, to buy it. The council were desperate for the capital out of that flat, you know, one bedroom flat. And there was nobody else in town at that particular to buy it. And the estate agent was just really that the percentage was just set. Setting the terms, but I bought it at 29% below the severes valuation and in London and one it’s possible.

[00:25:22] Andy Masson: Yeah. Okay. That’s, that’s really, really helpful. I should say for the listeners, like any anything that John recommends or anything that any of us recommend as far as reading. W sites or anything like that, I will put in the description below on YouTube and Spotify, and anywhere else that you’re listening to this I will put that Simon, I link to that Simon Zutshi book cat on that as well.

Maybe some links out to the five golden rules as well. We’ll find that.

[00:25:48] John Kerr: Yeah. Yeah. So that’s the see things read up about educate yourself, learn the basic rules. Get a strategy in place, really not difficult. That’s what, sorry, not that easy, but it’s got to be your strategy and it’s got to suit you and it’s gotta sit you in the longterm.

And I mentor people in that regard. And then finally learn how to source property. Okay,

[00:26:09] Sam Ghosh: John, it’s also probably correct to say you work with landlords. I mean, you don’t work with so many of them, but you work with landlords is as a partnership as a mentor slash advisor in some way.

What do you want to say anything about that? Or if someone who’s listening to this podcast would want to reach out to you. How they can work with you, stuff like that.

[00:26:36] John Kerr: So I do work with people in a number of different ways. I somebody asked me if they would manage their property for service to commendation in Milton Keens to three years ago.

And I thought that’s not something I do, but I, I do it. And I question, I quite enjoy it. I probably would I do any more. I might do. It just depends. I worked with people that I like and get on with obviously I have a joint venture operation. Again, the same rules apply. What I’m really looking to do is to work with young people who want instead of mentoring them, we put together a company and we take advantage of the opportunities that I see, which is probably.

In the low value places of, of Britain where you can buy a three bedroom house or maybe even a two bedroom house, but under well, under a hundred thousand and opening, it was up to you know, doing them up really nicely in Townley and then renting them out. Short term or during service for several months, et cetera.

That is a great way of getting great cash flow and actually having a good quality property. So that will be my ideal. And I mentor people too, just to check, to see whether they would be suited. To work with on that basis. My aim would be to be, you know, to so effectively they would get free mentoring and maybe some free investments, but it’s all bought within the company.

So it would be a long-term joint venture.

[00:28:01] Andy Masson: Okay. And if somebody wanted to get in touch with you, how would they do that? Like, because I can put this in the link below as well, so they can get in touch if they, and any listeners want to click through and get into,

[00:28:12] John Kerr: I say to Airbnb guests sort, as you knew, are not allowed at.

Make contact with you. I put in John care, your partner in property, but nobody ever Googles that. So you just put John care property and you’ll find me. But yeah, john@yourpartnerandpropertyismy.co.uk. Here’s my email address. So.

[00:28:33] Andy Masson: Okay, well, I’ll include that in the description below so that people can get in touch with you if they, if, if they want.

But yeah, that, that was really helpful. John is it’s really interesting this night to talk to you. I know we chatted the other week for a bit and yeah, it was just to get a little bit more insight into your knowledge and and your experience. So thanks for

joining

[00:28:50] John Kerr: us. Thank you, Andy. And thank you, Sam.

Good to talk to you.

[00:28:54] Sam Ghosh: Yeah. Good. Good to talk to you, John. Thank you very much.

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