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Property Tribes travelled to Lincoln to meet up with property developers Kim Stones and Ryan Carruthers.The pair have gradually scaled up their property business, from single occupancy BTL to HMOs to mixed use.We joined them at their latest project - converting an old pub into a commercial unit, HMOs, and flats - to learn about their property journey and how they have taken it up to the next level.As mentioned in the video, the project was financed as follows:Kim and Ryan joined their own funds with a private investor to purchase the building.Shawbrook Bank provided a bridging loan to redeem the investor, plus a bit more to assist with the refurbishment costs.Shawbrook Bank then provided a term mortgage to redeem the bridging loan.Brooklands Commercial Finance acted as the broker.Some before and after pictures:If anyone has any questions for Kim and Ryan, please drop them here, and they will be pleased to answer them.SEE ALSO - How to grow a property portfolio UP NEXT - How to go big in property?DON'T MISS - How to move from residential to commercial?NOW WATCH: (Video recorded July 2016).
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
What a great interview with super down to earth guys. I must admit I don't know Ryan but I have been in touch with Kim for some time and hes a great guy. They obviously make a great team and its refreshing to see people doing deals - keep it up guys.
Stewardson Developments Ltd.
Burson Land Ltd. & Jennings & Gilchreaste Ltd.
Follow me on twitter - @philstewardson
I admire this.
But I have done similar and bigger in the past and I thought I was doing the right thing
Today I am not sure I did the right thing not because I got it wrong, but the Govt Changed the Playing field
Keep watching over your shoulders guys - the Bogey Man /Women is behind you!
Learn Change and Adapt ?????
Excellent day spent with PT guys yesterday!
Kim always speaks very highly of you Phil, we should arrange a meet up?
We will meet up at some point I am sure, i would like to meet you both.
Perhaps we could have a PT event and we could all meet up? Would anyone else be interested in meeting up if i could arrange something in Birmingham or Manchester???
Not to out a downer on the excellent works and layout of these HMO.
I just caution the potential introduction by councils of
Individual Council Tax Banding.
Such an introduction would significantly compromise the viability of such HMO.
We all know how Councils are desperately searching around for additional income without any significant electoral disadvantages.
Private LL fit that description very neatly.
No council will ever lose votes from taxing LL, apart from the LL themselves!!
HMO improved to a standard that the VOA considers qualify for ICTB make for a very juicy tax target for councils.
Which is why I won't even consider HMO type investments.
I say good luck to those LL that have invested in quality HMO..
For me the risk if ICTB is a risk too far!!!
if look at my comment you will see I agree with you 100%
Councils and Govt Don't like HMO and they will have no hesitation on taxing them one way or another
The Issue I have is who would buy a HMO when a landlord sells its a very narrow market indeed
I can see real issues for this sector in coming years
I believe anyone who is developing HMO now should be very careful indeed
If my gut feeling is right we will see HMO collapse and a great deal of the old HMO will come back as they were in the past Home for families ???
HMO's are not for me either. Kim and Ryan are very 'switched on' and are geared up for this market and if they have the demand and the resources to manage it thats great.
We have bought a number of HMO's from people that have failed and the reality wasnt was the course said. There are just too many HMO's in low demand areas so all investors get is low occupancy or poor quality tenants which is when the problems really start.
I see some crazy valuations on HMO's round here and you just know that when they fail the bricks and mortar value will be a fraction of that. ~Investors are just star struck by the supposed returns.
I totally agree on the HMO market being a cash cow for legislation and additional govt/council revenue.
Just to clarify on the point of Individual Council Tax banding and HMO's, Students are exempt from Council Tax.
Whilst we don't know what changes might come in the future, with the increases for students in tuition fees, i think any changes here will be a journey too far for a minority government.
But not for a Corbyn-led Labour government... If the polls are to be believed, be afraid. Be very afraid.
My questions for Kim and Ryan are:
1) how do you find people prepared to invest in your projects? As a small developer, this is my biggest problem in seeking to gear up: working out how to find potential investors who are not complete beginners and make it worthwhile scouting out small to medium-sized projects that I cannot finance on my own. I have had dealings with landlords who'e expressed interest in co-investment, but they needed a massive amount of time spent on basic development issues and general handholding, all of which came to nothing as they decided not to go ahead. I've also tried pairing up with developers but they were either comfortable with their existing team and finance arrangements, or there seemed to be too much overlap between my skillset - planning, legal issues, sourcing bank financing, project management and interior design - and theirs, and I got the distinct impression all they really wanted was my money and they were very much used to paddling their own canoe for everything else and didn't want to pool workloads and projects.
The best new small firm of builder-developers I've seen was made up of a complementary team: an experienced builder, an architect with planning and development experience, and a former banker who acted as MD and CFO for the company. The key things they has in common was, i) ambition - scale and complexity of project, personal fulfillment, and financial returns; ii) a willingness to invest their own capital and all have "skin in the game" in their company; and iii) a complementary willingness to pool their talents to build something greater than the world of their separate individual expertises. They could each have remained experts at what they did on their own, but they decided to put a certain amount of ego to one side and work together to share the work and the returns.
2) what vehicle do you tend to use to structure your co-investment? With the pub development profiled here, wasn't your investor severely cheesed off when you bought him or her out using the Shawbrook bridging loan? If I were in the investor's position, if I were to help fund the initial site purchase, I would expect to be involved right through to completion of the refurbishment, so that I would participate fully in the realisation of GDV. Or perhaps you redeemed the investor by giving them a fair profit whilst removing the risk for them of the project failing? It isn't clear why you felt the need to use the Bank and incur their costs when you already had an investor on board.
3) No mention is made of planning issues. Did you buy without planning - in which case you had a brave investor - or was permission for this mixed-use output already set up for you when you purchased the site?