How to Build a Property Empire

By Paul Rothwell of Empire Property Concepts.

 

When I went to university in 2002 to read Economics & Financial Services the last thing on my mind was pursuing a career in property.

 

Twelve years later I own a £33m buy-to-let portfolio and last year launched a property investment scheme offering double digit growth which allows people to invest in my business model without actually having to own a property themselves.

 

I became a landlord during my third year at university when my father advised that I should buy a house and rent out rooms to fellow students, as opposed to paying for student accommodation, which made financial sense.

 

My father lent me £15,000 as a deposit on an £88,000 property. The idea was to sell it once I’d completed my course and gone on to pursue my intended career in Finance/Accounting. That’s not what happened!

 

What did happen was that the four bedroom house was turned into student accommodation with six bedrooms, including one in the cellar that I lived in for two years.

 

The rental income from the property covered my mortgage payments twice over, giving me a healthy yield on my father’s investment.

 

So why didn’t I sell up (especially since by the time I completed my studies the house was worth £145,000)? I put it down to reading the book ‘Rich Dad, Poor Dad’ which advocates the importance of gaining financial independence and building wealth through investment.

 

It was one of those lightbulb moments when you realise you have an opportunity that you have to grab with both hands and I guess that’s what I did. My property business, Empire Property Concepts was born.

 

But it took a lot of courage and determination. I’d been studying for 4 years and there I was, at the relatively tender age of 21 and with no business experience, looking at having to find money to invest in more properties.

 

I think a lot of people around me at the time thought I was crazy and that I was throwing away my future on a gamble; but I just didn’t see it that way.

 

It might be a hackneyed expression – but in business you do have to follow your dreams. What I’m saying is that you have to be determined and doggedly pursue the path you choose.

 

My next step was to buy a second property which I did with a bank loan of £38,000 which, combined with a further investment from my brother,  I used as a deposit on a second property.

 

Like my university house, this property was converted into an HMO (Houses in Multiple Occupation) property and the business grew organically from there with profits funding future purchases.

 

I can assure you that this business wasn’t an easy option – as HMO suggests, you end up with lots of tenants (1,000 in 750 properties in my case) and that adds up to a lot of issues to be dealt with.

 

I am often asked about my tips for success and right at the top is to get stuck in and don’t be afraid to do the things other people won’t do at the outset – or that you may not be able to afford to get someone else to do.

 

In my business the totally unglamorous jobs such as rent collection and repairs needed to be done. They were things that I could do – so I just got on with it. This approach saved me money but also allowed me to get ‘up close and personal’ with the properties and the tenants living in them. A great way to get to know your target audience.

 

The flip side of this is ‘learn the art of delegation’! Recognise that your time as the head of the business is precious. You don’t have time to do everything yourself – particularly as the business grows, so don’t take everything on.

 

It’s also important to recognise the areas where you need to bring in external expertise and take advice. It’s about recognising the things you can’t do as much as the things you can turn your hand to.

 

And so Empire Property Concepts had external marketing and business development advice almost right from the outset.

 

It’s also important to invest in the business for the long term and build a brand that resonates with your target audience. The further down the line you are in your business, the more important this becomes.

 

You also need to invest in your own personal development. None of us ever stops learning. I am constantly looking to increase my own knowledge and understanding and also that of my team (Empire Property Concepts now employs 12 staff).

 

I’ve attended courses about the property market but other subjects too such as personal development, property networking, business development, trading markets; all with a view to building a clearer understanding of the bigger picture.

 

Developing a strategy is certainly a key to success and has been hugely beneficial to the business and given me a clear direction and set of goals to achieve. I have short, medium and long term strategies in place.

 

These strategies inform just about every decision I make in the business. As anyone in business will know, opportunities come up all the time. My vision for the future allows me to assess each opportunity and ask ‘is this part of my strategy, does it help me meet my business goals?’

 

It makes reaching decisions much easier. It also gives me a benchmark to measure success and check that I am on track.

 

Sometimes market factors mean that you have to adapt and I’m all for keeping my finger on the pulse and adapting the business when it’s necessary and when the market demands it.

 

Two recent examples in the buy-to-let sector are changes to rules on permitted development rights and the tax changes for buy-to-let landlords.

 

I have adapted my business to take advantage of both.

 

I investigated the rule changes on permitted development rights in their infancy and realised it was a change that could benefit the business so we adapted our strategy accordingly. Our model was all about the purchase and conversion of residential properties but we are now taking advantage of the new rules and converting town centre office buildings to residential use.

 

The buy-to-let tax changes have also necessitated some adaptation.

 

One of the things I did was to develop and launch an investment business which allows people (some of them no doubt would-be landlords put off by the recent tax changes) to invest in property without actually having to buy a property themselves.

 

The new investment business, Empire Property Holdings, works alongside Empire Property Concepts.

The ‘Property Concepts’ business acquires and develops the properties with the new investment business, Empire Property Holdings, providing the finance.

We announced our first loan note offer earlier this year. This offer is now fully subscribed having attracted £5,997,000 in 10 months from private investors. Empire Property Holdings 2 (EPH 2), a second loan note offer, was launched in November.

EPH 2 has attracted £6m to date and offers up to 15% yield over four years with a choice between two year income, two year growth or four year growth.

My business has grown organically from humble beginnings. Market changes have presented us with some major challenges but we are forward thinking. As a small, innovative business we have demonstrated a willingness and ability to be flexible.

And because of this flexibility when we have been presented with challenges we have taken them on and they have led to innovation.

When you think about it, it’s the same across all sectors.

It’s been fantastic to be able to match my property development know-how with an investment business. I am really excited about the future.

 

Paul Rothwell - Empire Property Concepts
Paul Rothwell – Empire Property Concepts