Nikki and her husband Mark have got over 35 years experience in the property world through their construction business, creating bespoke homes for their clients.
But in 2020 during the first lockdown they decided it was time to put their experience of developing properties for other people to better use for themselves, and started to build their own recurring income by investing in their own deals.
They joined our Inside HMO Investing programme, and since then they’ve moved quickly, acquiring a portfolio of single lets, HMOs and serviced accommodation.
In today’s episode, Nikki shares exactly what they’ve been up to over the last couple of years, including what’s worked for them and what has been more of a struggle.
So I hope you enjoy, I hope you get inspired, and if I can be so cheeky, I hope you take 2 seconds to leave us a review wherever you’re listening to this today.
They make a huge difference to me in terms of helping new aspiring investors find the show, so if the podcast has been in anyway helpful to you, I’d love for you to pay it forward. I really appreciate it.
Now let’s get into the show – oh and by the way, if the audio sounds a little funky, I was recording this in my car in December during that really cold spell on my headphones microphone, so there you go.
What we discussed in today’s episode:
- Nikki Smith spent 14 years building a career in logistics, before she fell pregnant and realised the 2 hour daily commute wasn’t what she wanted to spend her life doing anymore. Her husband, Mark, has been in construction for over 30 years, so the decision was made that Nikki would join his business and, as she puts it, ‘become a builder’. Really her role was in sales and business development, and together they grew the business by specialising in luxury home renovations. Along the way, Mark had also dabbled in a few flips with an investor partner, but it was done in a fairly casual way and nothing serious ever developed from it.
- After a few years working on the construction business and being a present parent for their son, Nikki stumbled across some property profiles, including ours, on Instagram, and the rest is history…
- Or not quite! But it started her down a path of exploring how they could use their skills to invest in their own deals, and high-end HMOs stood out to her as a great investment option.
- Mark was happy to go along with it, and brought a lot of insight to the process, but was ‘an old-school builder’ who had previously been too busy managing a team of 20+, and delivering projects for his clients to think too much about doing anything else. In fact, the decision was made from the start that his build team wouldn’t get involved in their own personal projects as they didn’t have the capacity to work on projects for both businesses.
- Their first project was funded in part by the sale of a house Nikki still owned from a previous marriage that she’d been renting out since her and Mark moved in together. She jumped straight onto Rightmove, scheduling viewings, and generally looking for ‘stinky’ houses, until she came across one in South Yorkshire that ticked all her boxes.
- That first Buy to Let was purchased in February 2021 for £80,000, with an 8 week renovation planned to get it ready for renting. 6 weeks into the programme, Nikki realised that the builder (a sub-contractor they had an existing relationship with) had probably only done about 6 days work! It was a stressful time (albeit reassuring to us non-builders that things can still go wrong for them on projects), but a new build team were brought in to save the day and get the project finished 2 weesk behind schedule.
- Despite the delays, Nikki was able to refinance it and pull a chunk of cash out, making her realise ‘this thing works!’. It also gave her a 34% ROI, which is pretty good going for a single let and enough to make any of us think ‘this thing works’.
- The next project came quickly after, and only a mile down the road from the first, but Nikki’s negotiation technique backfired. The house was on the market for £85,000, and she had an offer accepted at £80,000, but tried to use the survey to negotiate a further £5,000 off the asking price. The vendor took the opportunity to go back to the other interested parties and offer it to them at £80,000. Over the course of a weekend, Nikki lost the purchase!
- She kept following up with the vendor every couple of weeks though, and after about 3 months it paid off as the new sale fell through, and Nikki was back in the game (albeit at the higher price of £80,000).
Lesson learnt, or worth the gamble – what do you think?
- It turned out to be a great purchase, as after the works were complete they refinanced it and were able to pull all of their money out, giving them an infinite return on investment!
- The 3rd property was in West Yorkshire, also bought for £80,000 (there’s a bit of a theme here), and also threw a few problems at them. The first was rising damp hidden behind some panelling that spread throughout most of the ground floor. What Nikki thought was a design feature, turned out to be a cover-up job! The second cover-up job was with a roofer who had claimed to finish repair works to the roof, and over a dry summer Nikki could do little but take his work for it. When the rain started a few months later, it transpired that nothing had been done to fix the leaks, but the roofer was long gone, along with the money he’d been paid for the works.
- Despite the higher than expected renovation costs, they’ve still made a success of this project, in part by testing it as serviced accommodation rather than a simple single let. Over the first 2 months of it operating, they’ve seen 70% occupancy despite it being in a very non-touristy location, and they’ve made the decision to outsource the management to an SA specialist, as Nikki puts it, she ‘didn’t want to create any more jobs’ for herself.
- When talking about the numbers of these 3 deals, it’s clear that even with the additional work the SA requires, it’s considerably more profitable. The two single lets make about £250 profit per month, whereas the SA, even after a 15% management fee, generates around £600 profit, with scope for that to increase as occupancy rates go up.
- In September 2021, when Nikki was working on her second BTL, she registered for our Inside HMO Investing programme with an idea that they would soon move on to the more profitable world of HMOs. Nothing in property is an overnight success, but she put in the work to identify the right areas for her, and by early 2022 had found their first project in Barnsley – a ‘truly awful’, run-down 4 bedroom house. A previous sale had fallen through at £100,000, and Nikki saved the day with last minute offer of £85,000 that was accepted.
- Along with their interior designer (and another questionable build team), they’ve been working to transform it into a 5 bedroom HMO, which she expects to generate around £2,500 per month in rental income and be worth about £180,000.
- Despite some battles with imposter syndrome, and a few dodgy builders, Nikki (and Mark) have achieved a lot in a really short space of time, and have no plans to slow down (at least until Mark retires in about 5 years, hopefully with a decent recurring income behind them from their new property portfolio). You can keep track of the progress and see more details of their previous projects on Instagram at Mr And Mrs Smith Developments.