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Dale Smith has become something of a regular on the podcast. He first spoke to us about his beginnings in property in 2017, after recently quitting his corporate job. We then caught back up with him last year to delve into the success of his first year of full-time investing. Now with plans to double his managed portfolio in just two months, he discusses the systems and teams in place to allow him to grow successfully.
Expanding his holiday-let portfolio
Whilst Dale started out with single-lets and commercial property, serviced accommodation is now the core of his day to day business. The jewel in his holiday-let crown is Burnsyde Beach House, which has achieved 92% occupancy and revenue exceeding £70k. Its phenomenal success persuaded him to make holiday-lets central to his growth plans. ‘When I look where revenue really starts to pick up, it’s April onwards,’ says Dale. ‘If you can hit April through to the end of August, that’s going to [be] the peak for the holiday-let market.’
He now has 37 units in his personal portfolio, across buy-to-let, commercial and holiday-lets. The latter is split between properties he owns and manages. He specialises in taking a freehold and convert it into multiple units. It involves creating a leasehold, refinancing the leasehold and in his own words ‘pull[ing] a significant amount of the investment back out and then ru[ing] those as holiday-let units.’ And he plans to grow fast, aiming to have 100 holiday-let units by the end of 2019, the managed units making-up a significant number of these.
Growing the business = growing the team
In order to ensure the rapid expansion goes smoothly, Dale has hired a property manager to oversee his growing portfolio and a business development manager to help him meet his property acquisition targets. ‘We’re always looking at what the traditional agents are doing, looking at properties on those sites that are attractive to us and looking at how they’re performing,’ Dale says. ‘[It] allow[s] us to pick off individual properties and be able to say to that owner it looks like you’re getting 50% occupancy out of this property and you’re charging £100 a night, well we think you could charge £150 a night and we could get you 75% occupancy. We’re getting to really granular details of properties we want to manage and being able to pick those off.’
Automating property management
By automating every stage of guests’ points of contact before, during and after their stay, Dale’s property manager can oversee up to 50 units at once. They only ever has to step in if there’s a specific issue.
‘If a guest books online directly via our website, payment will be taken automatically. A welcome email will go out automatically,’ says Dale. ‘They will get a check-in email seven days before, automated. When they check-in to the property, they will get a text to make sure they’ve settled in [automated]. They’ll get a message before they check out to make sure they’ve got check-out instructions and they’ll get a follow-up email to make sure everything is alright and collect reviews. That process is automated.’
In November last year, he switched to Guesty for his property manager and now uses Rental United as his channel manager. ‘Now every single piece of our guest communication runs through Guesty, so every element of our process can be automated,’ Dale explains. ‘We’re managing exceptions, rather than the bulk of things through manual processes.’
Customers and clients need different messages
To complement his growth plans, at the start of this year Dale launched two companies through which to drive his expansion. The first, Host North Yorkshire, deals with client acquisition, whilst the second, Stay North Yorkshire, is guest focused. The reasoning goes that clients and guests need different messages and two brands makes it easier to distinguish these.
Sourcing in North Yorkshire – rising prices
The vast majority of Dale’s portfolio is concentrated in North Yorkshire and he says finding properties there has become much harder. ‘Sourcing is really tough on this coastline at the moment. Prices are as high as we’ve seen for a long time in terms of units we’re looking at.’ Two bedroom ready-to-go apartments that Dale says he’d have been paying £145k-150k for eighteen months ago are now going for £180-190k. ‘Trying to find projects that are viable is tougher,’ he adds.
‘It’s either really add value to the project through significant refurb and conversion, or you’re paying the asking price but the plus side is it’s a fantastic property. It’s ready to go and start paying the income.’
Not being a passive investor
Plans for such rapid growth beg the question of Dale’s ultimate aim. And it’s clear sitting back on a beach somewhere, resting on the laurels of a passive income is not for him. ‘From my point of view I want to be involved in the day to day and seeing what’s happening on the ground, taking the businesses forward,’ he says. Nevertheless, he admits that serviced accommodation is ideal for those those wanting a passive income. ‘If I look at our clients, they’re getting anywhere from 10, 12, 15, 20 30% per annum, hands free on their capital,’ he says.
The key for success is putting in the processes early. ‘Process is key,’ he says. ‘Get it documented. Think about the processes to make it efficient, because without processes in place you’re kind of just hitting walls of problems all the time. If you hit a problem, step back, find a solution. What’s a process that’s going to solve it? Learn from it and move on.’
More Information
hostnorthyorkshire.com – for details about Dale’s property management services.
dale@investicity.co.uk – for any enquiries.