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Today I am joined by Jonathan Ioannou in a coffee shop near his home turf in Nottingham. At 27 years old, he has almost reached his goal of 100 HMO rooms, two years ahead of schedule.
In this episode, we delve into how he manages a full-time job while rapidly growing this portfolio, and what his plans are for the future.
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How it all started
At the age of 16, Jonathan took great interest in his mum’s friend who was renovating a property. Reminiscing, he says the interaction “sparked something in me” and he found his passion. From there, his only goal has been to get into the property market.
He went on to study architecture at university in Nottingham, but after graduating and almost three months of rejecting unpaid internships at architecture firms, he turned his attention back to the property market.
He started work at an estate agency for a few months to gain some real-world experience, and during this time a few of his clients (successful investors) would show him the ropes of the property world.
A year later, one of these client asked him to become a full time sourcer which lead to a branch management position in Nottingham – his buyers bring him deals to analyse and he audits the properties.
How he got into the market
Jonathan has gone through every aspect of how the residential market works. He has experience in construction right through to sales, and it’s this knowledge that has helped him build his portfolio so rapidly.
But he didn’t have an easy start, coming from a home with no expendable income, he had to save every penny to afford his first house. “Saving money when you are 21, 22 is pretty hard – everyone else is just going out and getting drunk” he laughs.
He scraped together the funds to buy his first property in 2013 when he was just 23 years old, buying a single let that he still owns today. The property was bought for the low price of £57,000. The lady who owned it was willing to take the offer because she didn’t want the hassle of keeping it on the market – proof that deals are out there if you’re willing to look for them.
All in all, Johnathan spent £8000-£10,000 on the refurbishment and had it revalued 6 months later at £95,000. An impressive profit for his first investment, and a result he managed to replicate in other deals!
Into the big leagues
In 2017 alone, Jonathan completed nine deals and already has four in motion for 2018. He has 56 operating rooms in his portfolio and another 30 in progress.
Most of his projects are now JV funded, with the most common structure being a 50/50 split on profits with the investor.
We were lucky enough to discuss some of the numbers involved in managing these properties. Jonathan reveals that his 8-10 bed properties generally bring in £2000-£2500 a month, while one of his smaller deals, a 4-person HMO secured on a Lease Option, brings in a very reasonable £700 a month.
Although he still keeps the first house he bought (a single let), he won’t take on any new projects that don’t make him at least £500 a month.
Some of the projects we viewed:
- 10 bed HMO – Purchase Price: £205,000; Refurbishment: £140,000; End Value: £435,000; Monthly Income: £2500
- 6 bed HMO – Purchase Price: £116,000; Refurbishment: £30,000; End Value: £180,000; Monthly Income: £1200
- 6 bed HMO – Purchase Price: £125,000; Refurbishment: £75,000; End Value: £295,000
- 8 bed commercial conversion – Purchase Price: £145,000; Refurbishment: £100,000; End Value: £340,000 (estimate); Monthly Income: £2000 (estimate)
As he is fast approaching his 2020 goal of 100 rooms, he’s thinking of going into development where he can use his architectural skills to build houses from the ground up.
The people around you are important
One thing is clear about Jonathan’s experience. He isn’t afraid to put time into something he feels is worthwhile. He has been working with the same builder for 2 years and they have built up a comfortable rapport. No time is wasted with small decisions, and the system for ordering materials is well laid out.
When he started with HMOs, there wasn’t a specialist agent around. After spending time training an estate agent on the in and outs, he no longer needs to worry about letting his rooms.
By spending the initial time to educate people around him, he has increased his investment 10-fold.
- Don’t be afraid to go for stale properties that have been on the market for a long time. The owners will be desperate to sell, and you might see something that others don’t. You could just find a little diamond. The key is to look closely at all the details and make an informed decision.
- Accountability is a driving factor when looking to kickstart rapid growth. Gaining a mentor through the Mastermind program helped push him to keep working hard. “Property is a lonely environment, and having Billy there to chat is a great help,” he says. He regularly runs things by him to get a second opinion and some grounding input.
- The most important thing is persistence. Rejection is normal, but if you persist, things will start to go your way. Remember, “No doesn’t mean no – it just means not right now”. If you persist you can solve any problem, you’ll even be able to find a good builder.
Apps and Software
Wunderlist App – Useful to communicate with builders
Google SketchUp – quick tool if you want to play around with designs and layouts
Autodesk AutoCAD – More professional software but takes time to learn
PIN Mastermind – Where Jonathan found his mentor
Arnold Schwarzenegger Biography – To help mindset and ignite a spark
The Values Effect – Dr John Demartini