With change comes opportunity.
In late 2011, I was looking for a business to invest in. Aged 42, I wanted something I could grow and develop into an exciting enterprise which would satisfy a healthy ambition for success and time no longer appeared to be on my side.
Property had always appealed, although continued price rises appeared to make the acquisition of a good-sized portfolio far out of reach. In my early 30’s I’d owned a bespoke furniture and joinery company, and we had supplied lots of goods into some fantastic building projects. The seed had been sown and there was a latent wish to be involved in property.
Although I had some money and access to additional borrowing, funds were quite limited, so I needed to find an opportunity which was not capital intensive and which generated a good return. It was by surprise that I came across rent to rent/HMO management. I hadn’t thought of a property management business since development had always appeared more glamorous, and for that matter, more profitable (or so I thought).
However, as a sideline, while looking at several other opportunities, I had started to rent out rooms in a property I owned to bring extra money in. The demand for the rooms was high, and the prospective tenants were of a good quality. Having recently refurbished and extended the house, it was of a good standard, and the rents the rooms achieved were good. The margins were enough to get me thinking about whether there was an opportunity to scale this. Scaling the management, without owning the property.
As I researched the local and regional markets, I began to read avidly, any material I could find on property management and HMO’s, a business model was under development. There was a flutter of excitement, because the more research I did, the more opportunity there appeared to be. In particular, because the market for shared living has grown but has also changed. The demand is high, but the traditional shared housing offering is of a poor standard, while many tenants now are looking for a better standard and don’t mind paying a fair price for it.
Old school landlords continue to serve up magnolia walls, cheap saggy carpet and bathrooms with half a dozen tiles and yellowing vinyl flooring, however, now that rents have risen so much this no longer hits the mark. Even when renting house shares, the money a tenant spends on their rent represents a large part of their hard-earned income, and it seems a fair trade that the standards inside should be better.
Improving standards in house shares is what I decided the business should stand for and to do that, the business would only manage rooms in shared houses and not single, family lets. From a personal point of view I have always had an eye for detail and gained satisfaction from doing things well and raising the bar for standards makes good business sense too. Better accommodation generates better rental values, attracts better tenants, who in turn demand less management and bring fewer problems with them. Offering ‘more’ and ‘better’ is a great point of difference for marketing and promotion and, in addition, generates referrals.
I have always thought that the best way of approaching competition in a marketplace is to do things as well as you can, that way you have out-manoeuvred a large part of that perceived competition.
Raising standards and offering good quality is good business. It also makes for a more rewarding and enjoyable business. The ROOMS® franchise business was now in its embryonic phase and starting to take shape.