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For the first podcast of 2018, we chat to Murat Haykir, founder of Moorview Property and the KHP Group. An entrepreneur from the get go, Murat and his business partner James have built a diverse portfolio of HMOs, single lets and SAs. They focus on high-end boutique properties with a preference for developing listed buildings. In this episode, we go over his career from start to finish, focusing on what drives his business-oriented mind-set.
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Where it all started
Reading the book Rich Dad Poor Dad at a young age inspired a passion for entrepreneurship and property in Murat. At high school, he started off by delivering a Kleeneze magazine service and running tuck shops. At Plymouth University, he started a book exchange service that helped students buy and sell second hand textbooks. Going on to win a business competition, he knew without a doubt that business was his passion. In halls he met his future partner, James, who was studying construction. Frustrated with the cost of student housing, they partnered together and bought their first house in Plymouth.
They purchased a 3-bed house and converted it into a 4-bed HMO with their own hands. By renting out the other two rooms, they lived rent-free for the rest of their student years. With a bit of beginners luck (naivety?), they managed to buy the house pre-auction with a residential mortgage. In two years, the value went from £145,000 to £185,000 with only a £10,000 investment. Not bad for a couple of 20-somethings fresh out of university.
Unaware of refinancing, they sold the property to buy another one in 2013. Still unsure how to play the game, they bought a 3-bed house and converted it into a 6-bed, because they “knew that you sorta had to add value when you buy a house”. They managed the work themselves by enlisting the help of some friends to dig out a basement and move the kitchen. By this time, Murat was certain that the corporate life wasn’t for him – he wanted to move into property full time.
Making the move
Diving deep into the world of property education, the two started attending seminars and networking events during 2014. They realised that James’s construction background and Murat’s business sense made for a good team. Going to a weekend property seminar was a turning point for the duo. They walked out having signed up for a masterclass and a year long mentoring program for 2015 that cost over £11,000.
“Rather than working for another 10 years and building the property on the side so it was passive and then I’d jump, I was like ‘well let’s just accelerate it and I’ll do it now.’”
Even though they both lived elsewhere, They continued to buy HMOs in Plymouth using deal sourcers through their mentorship program. They bought a 7-bed and a 4-bed HMO and geared them towards the professional market. Their biggest and most taxing project came in the form of a 6-bed house. They bought it for £200,000 and invested £140,000 to turn it into two separate dwellings of a 6-bed HMO and a 2-bed flat below it.
Their main challenge during this project was cash flow. James joined Murat and quit his corporate job, working full time as the construction manager for the project. Murat remembers the steep learning curve, “by the end of that we were maxed out on credit cards, we got my partner to take a loan out, it was real down to the wire stuff”, but it payed off in the end.
The property was revalued at £470,000, bringing in over £100,000 profit.
Forming the company
With both Murat and James working full time on their properties, they had to expand their business to maintain a healthy cash flow. HMOs take around 18 months before they start producing an adequate cash flow, so they consciously decided to stop at 18 rooms. By turning their attention to lettings and commercial conversions, they began to build the Moorview property brand.
Now they manage over 100 HMO rooms and a handful of SAs. Although this could be seen as aiding the competition, they believe the market is healthy enough to support it.
“We can’t buy all the deals that we get ourselves, so it’s good cash flow doing the sourcing, project management and the [letting] management on the backend.”
The letting agency came to fruition after the pair were frustrated with other agencies. They were not getting the updates or feedback they needed to progress and keep a maximum occupancy in their buildings. Realising that the student HMO market was saturated, they changed their focus to upscale, boutique rooms.
Short term lets (SAs)
While trying to solve their cash flow problem, Murat dabbled with a few ideas. After a brief, misguided stint with Amazon, he attended a Serviced Accommodation event. Inspired by the concept of SAs, they bought a 6-bed property that helped their cash flow problems.
In total, Moorview now manages 6 SAs, including a 2-bed flat that they own. Although it’s profitable, they’ve decided to keep their focus on HMOs and developments and won’t build that side of the business much further.
HMO occupants are happy for 6 months to a year, but SAs need attention every day, making the management more intensive. Murat agrees that the income is better in peak months, but the numbers have to be looked at over a 12 month period:
2-bed flat with a mortgage of £200-300 a month
- Single-let monthly rent: £650
- SA Summer month: £2000
- SA 12 Month Average: £800
- 6-bed HMO Monthly Income: £500-800
As you can see, the SA let is the most profitable, but it also needs the most upkeep. As a result, the flat is always in perfect condition while the HMOs get run down faster. The retained value of the 2-bed means they can sell it whenever they need to, because “it gives you flexibility and it gives you options”.
Development of Listed buildings
Murat and James joined with the architect, Phil Bailey, to create the KHP Group. The development company focuses on listed and historic buildings dating pre WW2. The fascination is shared across the board, but driven by Phil’s passion. The relationship was started when they met at a PIN networking event. Phil helped them out with their 6-bed HMO and they began working together on a few projects.
The listed buildings market is less competitive than traditional projects. Once a good relationship with the conservation officers is built, the projects go forward without too many issues. The revalues on them are generally more favourable because they are unique and the buildings net a sizeable profit. The challenge is finding them as the market is sparse.
The KHP Group’s current project is for the development of 30 rooms in one building. The historic building has been empty for 12 years and will probably fall down in the next three if no nobody stepped in to save it. The building used to be a church and was previously used as a gymnasium.
It’s a two storey building but will be developed into four floors with six separate flats totalling 30 bedrooms. The plan is to put a metal frame structure inside the building while keeping the windows and much of the original detail. The GDV is £1.5 million, and the expected cash flow is £180,000 a year. You can follow the development on instagram here.
Murat is clear about his strengths and weaknesses – he knows his knowledge of architecture and construction is limited. But he puts his strengths to work and manages the business side of their companies. “Find people that are good at things you are not good at and work with them” is how he has maintained and grown his successes.
We are told to work on our weaknesses and try become well rounded people, “but if you really wanna fly, really hone in and focus on what you are good at”. He mentions the importance of hiring the people you need. Their company is a little overstaffed with seven people, but they can expand easily and quickly without overwhelming the team. Even though cash flow is one of their biggest problems, Murat warns, “you’ll never grow if you don’t take on people”.
Optimising your time
Although Murat lives in London, his offices are in Devon. Murat admits that its a challange and is grateful to have a partner that supports his commute. He recalls when he used to drive with distaste, pointing out that it tires you out and renders your time useless. Now he takes the train where he can write his book, listen to podcasts and get some valuable quiet time.
He goes to Devon every week for 3 or 4 days, but a lot of his work gets done at home. To communicate with the office, he uses Skype, Google hangouts and other apps to stay connected. Living in London hasn’t been all bad for him, attending property networking events and meeting with investors that wouldn’t be as easy in Devon.
“You gotta design your life how you want it and build everything else around that.”
Rich Dad, Poor Dad by Robert T Kiyosaki – Initial inspiration in the early days
Property Magic by Simon Zutshi – How to get investors
Compound Effect by Darren Hardy – Giving things the opportunity to become profitable
Docusign – An electronic signature app that makes workflow easy.
Arthur – Not that expensive if you consider how much time it saves
Kigo – Great to manage your holiday rentals. Standardizes content across platforms.
Moorview Property Website: http://moorviewproperty.com/
Moorview property on Facebook: https://facebook.com/moorviewproperty/
Moorview Property on Instagram: https://www.instagram.com/moorview_property/
KHP Group on Facebook: https://www.facebook.com/KHPGroupUK/
KHP Group on Instagram:http://www.thepictaram.club/instagram/khp.group