What It Really Takes to Start Investing in Property, with Tayo Oguntonade

This transcript is auto-generated and lightly edited for readability, it may contain errors.

[0:00] Sammie Ellard-King: My name is Sammie Ellard-King and welcome to the Money Gains Podcast. We’re a show all about making, saving, and investing your money, interviewing the top minds in the industry to uncover their tips and tricks. If you’re new here, be sure to whack that follow button. And today my guest is Tayo from Brickz With Tipz, and this legit is an absolute masterclass in property investing. So we’re gonna go deep into the different types of property investing. We unpack all of the tips and tricks that you need to go through, how much money you need to have to be able to get into it. Honestly, absolutely love this episode. A different alternate form of investing instead of investing in the stock market, investing in property. It always gets banged on about what does it actually mean, and it gives us an absolute masterclass of it. But let’s

[0:45] Sammie Ellard-King: get started on the Money Gains Podcast. So Tayo, welcome to the Money Gains Podcast, man. How’s it going? You well? I’m good, man. How are you doing? Yeah, yeah, good, bro, good bro. Just back off a little trip. Just been smashing my own body weight in pasta. Um, I’m back at it today. You were like the first thing in the diary, and I was like, mate, what a good thing to have. I’ve like loved meeting you at the British Bank Awards. I’ve been following Brickz With Tipz.

[1:30] Sammie Ellard-King: Like, I am super excited to have you on today.

[1:34] Tayo Oguntonade: I’m excited to be on, man. I’m jealous that I’m jealous that you had a nice holiday eating loads of loads of carbs. But do you know what? You’re back to this random weather where we don’t know whether it’s sunny or raining. But yeah, this conversation was always overdue, man. It was good to meet up at, like you say, in the British Bank Awards. And I’m sure that we’re gonna have a really, really good convo today.

[1:55] Sammie Ellard-King: I’d love to like start to learn a little bit about you, but obviously how you’ve got to where you’ve got to. Because yeah, like the channel’s grown massively, but the business behind it is really what we want to unpack today as well. Um, so yeah, why don’t you bring us up to speed, man?

[2:12] Tayo Oguntonade: Yeah, so um, I guess uh if we go all the way back, I bought my first property in 2015 um and been in property ever since. Um, I guess when I bought my first property, I was just thinking that um I wanted to buy something that goes up in value. Historically, before that, I used to love to buy cars, and anyone that like gets cars know that you drive it around for a little bit, by the time it comes to sell it, you’ve lost money, you need to add more money on top. And I just had this thought that you know what, property will allow me to kind of like buy something that goes up in value. So I started buying property in 2015. Um got married, oh well, not I wasn’t married at the time, but with my girlfriend at the time, we were buying properties together basically, doing about one a year consistently.

[2:57] Tayo Oguntonade: Um, and through that, we decided to make our platform Brickz With Tipz because naturally, when you’re buying property at like 22, 23 years old, you get like a lot of questions, and we were always forthcoming to help. I think that’s something that’s always been our passion, which is just letting people know about how we did stuff, and that’s even before we’ve got to our destination. We always want to let um people know how we’ve how it was possible for us. So we decided to make content around that. Um, yeah, uh fortunately, people liked our content, right? Because I guess with content it’s tricky because they have to buy into you effectively. So uh started creating content, teaching people about property um and a little bit of finance as well. And uh yeah, people loved it and it allowed us to grow our social platform significantly, and

[3:42] Tayo Oguntonade: off the back of that, um our business propelled, and we managed to do a lot of like TV bits and pieces as well, which is really nice as well.

[3:51] Sammie Ellard-King: So the person that’s listening to this going, you know, I hear these people online, myself included, you know, diversify your investments, property’s a good place to invest. Like, what does that actually mean?

[4:07] Tayo Oguntonade: Uh, what property means to me, um, by way of investment, is that you really need something. We work for our money and we put we throw time and labour for money. We trade labor and time for money, basically. Investing in property or investing in general is that hack where it’s no longer your 24 hours in a day that you’re throwing that you’re exchanging for money now. Now you’ve sent your money that you’ve earned to work for you. And that may sound complex for people, but it literally just means that no matter what you’re doing, whether you’re in Sicily, like Sami was, or whether you’ve got an injury on your foot, it doesn’t matter. You’re not the person that’s working for the money. It’s actually your money that’s working for that money. It does take a little bit of patience though,

[4:52] Tayo Oguntonade: because sometimes you might put in, I don’t know, a thousand pounds and it’s giving you, I don’t know, a tenner in return, basically. But the key thing to always remember, and it should really excite you, is that that thousand pounds that you put in, you’ve put that in once, that tenner is coming forever because you don’t have to go to work for that tenner anymore. The thousand pounds is working for that tenner. Hopefully that makes a little bit of sense. And that’s kind of like what’s exciting about investment as a whole, but property in particular. I guess the difference is that property has is that it’s tangible. So no matter what the value of the property is, it’s always gonna um have some kind of value because it provides shelter, it provides um warmth, it provides a roof over people’s heads. So and that’s one thing that’s key about property, and one thing I’ve always loved about it.

[5:38] Sammie Ellard-King: And when you when you hear about property investing, you hear about very like lots of different styles and the ways that you can approach it. You know, there was the old school buy it, do it up, flip it model, which still exists, and then there’s been a craze of uh, you know, the Airbnb channels out there. I know you uh you offer that as a solution as well, but there’s different styles, isn’t there, of property investing?

[6:04] Tayo Oguntonade: Yeah, absolutely. And I think that um it all stems from the fact that to be a property investor, I often say to people, you’re you’re you’re kind of like nothing more than a problem solver. You’re solving a problem for someone, basically, and getting paid for it at the same time, effectively. So that’s why there’s been so many different types of property investments that are out there. So some of the ones that people may have heard about, just for the people listening, um, Sam, you’re absolutely correct. Like one of the old school ones was a simple buyer to let you buy a property as an investment and you let it out to a family effectively. Um, now with legislation changing and interest rates increasing, people have diversified from that. So maybe they’ve noticed that by virtue of cost of living,

[6:49] Tayo Oguntonade: people there is a growing demand for people that want to rent rooms. So people might go down the HMO route, which is house of multiple occupancy. And that’s why someone might buy a five-bed. And instead of it, instead of renting out the whole house to a large family, they rent it out room by room. Um, and each tenant in the room who’s decided to rent a room by itself will pay the landlord uh a rent directly effectively. Um, as you mentioned, one of the big things, which is what I do, is service accommodation, which is where you’re not only doing it for holidaymakers, you put it on Airbnb and things like that, it’s not only for holidaymakers, it can be for um corporates or it could be for foreign students that can’t get a um standard buyer-to-lect

[7:34] Tayo Oguntonade: property. The key thing about Airbnb is that they’re going to be paying a nightly rate, which can make it significantly lucrative. Um, and you can do um Airbnb with my Airbnb properties, I own them, but I also have a portfolio of um Airbnb properties that I they’re properties that I’ve actually rented off a landlord. So that’s where you’ve got the whole rent-to-rent, which has been a new way to, well, not really new, it’s just been a really effective way of people to get into property investing without much uh upfront capital, effectively.

[8:08] Sammie Ellard-King: Okay, yeah, cool. We had Ibrahim on uh talking about his rent-to-rent model about this. I didn’t know that you did that too. That’s that’s such an interesting way of doing it because it allows you to get involved without as much capital, right?

[8:22] Tayo Oguntonade: Absolutely. So the the the way that I see it, and I think that I’m in a really unique position because quite often you’ll find people that you rent to rent, or you find people that own. And it’s quite interesting because I’ve got my portfolio of properties that I own that I’ve put on Airbnb, but I enjoyed that so much I wanted to scale up even quicker. And in a year, I built a company that has got several rent-to-rent properties, effectively. Um, and for those of you that don’t know rent to rent, I know you had someone on, but it’s effectively where you go to a landlord, you rent a property off them, um, you give them a guaranteed rent on a monthly basis, but then what you would go and do is go and put that on Airbnb and earn um a nightly rate off that property, effectively. So I’ve got a portfolio that I own and a portfolio that is actually rent-to-rent as well. And as you

[9:07] Tayo Oguntonade: mentioned, it’s significantly less capital required to get into rent-to-rent. The way that I kind of see it is that property investment is effectively you owning the property effectively. That’s why it’s an investment. Um, requires a lot more capital and it is something that’s great. But what you can do if you’re low on capital is start a property business. So that’s the term I like to use. It’s a property business because there’s no with rent to rent, there’s no element of ownership, but it cash flows really, really well, and you can use the cash flow to then buy a property effectively.

[9:40] Sammie Ellard-King: Okay, okay, cool. That’s really cool. So someone starting today does have an option, you don’t need a big wedge of money. You could start with the rent to rent and then move into owned, into service accommodation, or even into a buy-to-letter of things, you know, even out with the interest rates, which hopefully they are looking quite well. Uh fingers crossed, because I need to sell my house. So yeah, the um the interesting thing I find about the property investing is it’s slightly different to just going out and buying a house. So let’s talk about like that because there’s I believe, if I’m not wrong, you need a higher deposit, and there’s some

[10:25] Sammie Ellard-King: other things you need to bear in mind if you’re going down a buy-to-let or even a service accommodation route.

[10:32] Tayo Oguntonade: Absolutely, just an investment property in general. Typically, lenders want you to have a 25% deposit. Now that’s a stark difference from buying your first home where you could put down a deposit as low as 5%. And in some cases, you could put down no deposit for your first home nowadays. Um, but 25% deposit, which is a huge chunk of cash. Um, on top of that, you’re probably gonna need to pay additional stamp duty. So um I always give this example that uh uh additional normal stamp duty, the standard rate of stamp duty um on a 400k house is I believe 10,000 pounds. If you’re buying it as an investment property, it’s 22,000 pounds. So it can be a significant difference, basically. Yeah, so it can be a significant difference. Um, and

[11:17] Tayo Oguntonade: that’s something that people need to bear in mind. Um, on the flip side of it, there are things that can ease the process for um investors once you get over that hump. The key thing that you that can get you over that hump is that um the key benefit, should I say, is that A, you’re able to go interest only. So typically when you’re buying a home, the lender doesn’t want you to go interest only because it’s kind of like how are you gonna pay this mortgage off at the end of the term? Which is a fair question. When it comes to investment properties, they know that you’re not living in the property. So at worst, you can just sell the property to pay off the loan, should it come to that. And by doing that, you’re not making they know that you’re not gonna be homeless or whatever it is, basically, you can always pay off that loan. And a lot of people ask why would a property investor go

[12:02] Tayo Oguntonade: interest only and not pay off the mortgage? The simple reason is because they see it as an investment vehicle and solely that. So it’s all about leverage, and the quickest, probably easiest way to um explain leverage is that what a buy-to-let investor does is that all they need to know is that they need to beat the cost of borrowing. So if their mortgage is £200,000 and the lender’s charging them 5% per annum on that £200,000, all they need to have in their mind is that can I beat 5% in a year, basically? And more often than not, by renting a property out, you can. And that’s why that’s where all of these conversations about good debt versus bad debt comes in. Because what you’ll find is that

[12:47] Tayo Oguntonade: a lot of millionaires and billionaires and businessmen across the world, they will borrow money because they know that they can beat or they believe that they can beat the cost of borrowing effectively.

[13:43] Sammie Ellard-King: Okay, okay, that makes sense. So you’ve let’s say you’ve managed to actually let let’s talk about areas because obviously someone listening to this you know, London one-bedroom flat, which isn’t really gonna turn you much in half a million quid these days for something decent. Um, but other areas are can be fruitful. How how do you sort of look and balance this out? Do you have sort of a framework that you work through?

[14:15] Tayo Oguntonade: Yeah, absolutely. I think that um a lot of it is it has to be done through research yourself. You learn online, but it has to be done through research yourself as well. So, what I mean by that is that um, for example, the yield of a property, basically, the gross yield of a property, to simply explain it, is uh the value of the property compared to how much rent it brings in. So, like you mentioned, Sammie, like um a one-bedroom flat in London is like a stupid amount of money, and and relatively the rent isn’t that high compared to how much you’re paying for the property. Um, an area’s always top the gross yield charts is Liverpool. So uh Liverpool has really, really cheap properties, and the rent’s still decent up there. So you’ll find that a lot of people flock to Liverpool.

[15:00] Tayo Oguntonade: But the reason why I say this is that do your research and look for yourself as well, is that what you’ll find now is that because um Liverpool’s always topped the gross yield charts, everybody’s flopped there, and it’s had a knock-on effect on two on two factors, right? The first factor being that um the standard of rental properties is extremely high in Liverpool. So if you’ve got like a five-bed HMO for students, whereas in London um you make it comfortable for the tenants and give them everything they need, and that that that works. In Liverpool, is a case where you might need a TV in every bedroom with Sky, because the standards are so high basically. Um the next thing is legislation as well. So because there’s so many people there,

[15:45] Tayo Oguntonade: um, and so many people rush there, and so many newbies rush there, the legislation, like the things that you need to pay for, is really, really high, and and rightly so, right? Because um you don’t want this is where people are gonna live, so you want to make sure that the landlords are doing things correctly. Um the reason why I say search for yourself is that there may be an area that you’ve got a connection to, but you’ll find that a lot of people invest in cities that they used to go to uni, and not necessarily for a student accommodation, but just because they know the town, they’ve lived there for three years, they know that it’s upcoming, they were kind of aware of over the three years they were there, they saw how the town changed and can see the trajectory of it. So that can kind of like give you some insights. And a lot of it, um, the final thing I’ll say is a lot of it comes down to price. Um, sometimes

[16:31] Tayo Oguntonade: an area doesn’t work, but based on the price that you get for a property, a lot of deals can just change it upside down. So, for example, um, I I sometimes do joint ventures with um investors where we’ll buy a property together, and I had a task of buying a property for um um an investor or with an investor, should I say, and they were open to the whole of the UK, and it just so happened that I managed to like sometimes it just got put in a cheeky offer and I managed to negotiate um an incredible deal where I got about £55,000 off a property in Hull, and it just means that we’re going to Hull where a normal market rate property might not work in Hull, but when you get 55k off, it’s like we’re going to Hull, right?

[17:16] Tayo Oguntonade: So, yeah, so that kind of gives some um some insight.

[17:21] Sammie Ellard-King: Okay, cool. This is really cool. So we’ve made this step now, we’ve identified we’re buying in I don’t know, Burnley, for example. It’s good yield, got a good price on the property, we’ve done our numbers, it makes sense, we’re gonna drop the cash now. What’s next?

[17:39] Tayo Oguntonade: So, first thing you want to do is go and speak to an uh uh a lender to get your finance sorted. Now, um, the interesting thing, which I was gonna mention earlier when it comes to a buy-to-lect property, is that when you’re buying a home, typically people are used to lenders assessing your personal um income. Sometimes lenders may have a minimum requirement, they may say that you need to be earning at least 18k or something like that, but a lot of the time it’s nowhere near as strenuous as uh when you’re buying uh your first home. Typically, when it comes to buy to let’s lenders just want to know that the rent is going to cover the mortgage payments to a certain amount, they’ll have their own criteria that they base that off. But they’re looking at the income of the property

[18:24] Tayo Oguntonade: and not you, which kind of ties into what I was saying earlier because you are not paying the property. Um the pay the property, the pro the property itself doesn’t require you to pay the mortgage, effectively, is what I’m saying. Once you’ve got your um your finances sorted, you’ll go through the standard um uh process uh of the conveyancing process and going through that, and then hopefully you complete on the property, and then you’ve got your investment property. Now, what that investment property is, it could be a number of things, it could be a standard buy to let, it could be um a HMO, it could be service accommodation. I mean, from service accommodation, you could diversify to other things. So some people diversify to like providing social housing or temporary accommodation for um uh vulnerable

[19:09] Tayo Oguntonade: teenagers or adults, or maybe supported living for uh people that are older and need a property to be adapted to serve their needs effectively, which is something that I’m getting into a lot more as well.

[19:21] Sammie Ellard-King: They’re interesting, aren’t they? Because uh a friend of mine has one and the council pays him for a year up front. It’s mad.

[19:28] Tayo Oguntonade: Yeah, I got I I literally uh May the 10th, I think, sign a five-year deal um for supported living on one of my properties. So yeah, it’s crazy. It’s you you know it’s going to um kind of like to support someone, which is great, but you also got that crazy stability as well, which is excellent.

[19:47] Sammie Ellard-King: Yeah, no, absolutely. Okay, so there’s options. So you’re in that position, you get into the property, then hopefully you either go, you get a tenant in to cover that, you want to be trying to pull some money out of it. So let’s talk about the money side of it, because in that position, suddenly it let’s say you didn’t set up a business, you’re then liable for the income on it, aren’t you? So there’s there’s tax benefits and negatives, right?

[20:13] Tayo Oguntonade: Absolutely, absolutely. So typically, what I’d say to people is go and speak to um an accountant or a solicitor, but for most people, buying an investment property, you want to do it through a company. Um, simply because legislation has changed so much that if you’re a higher rate taxpayer and you’ve got properties in your own name, it’s actually gonna kind of like wallop you. I can give a personal um example. So uh when my wife and I were buying properties, this was before the legislation kind of came into play. So a lot of our properties are in our personal names. Um, and we were both high-rate taxpayers. So, firsthand I can tell you how painful it is. Um, and it’s really interesting because it’s part of the reason why I decided to go self-employed as well,

[20:58] Tayo Oguntonade: because the tax was killing me so much, is like, let me go self-employed and earn a salary of 10,750, you know, wherever the self-employed salary is, basically. So uh yeah, it’s uh I’d say to most people, like, definitely look into that. And if there’s anyone looking where to start, um, you can use a platform that I use, they’re not sponsoring me for this, but I’m just gonna say their name because it is a really good platform, um which is which is GetGround, basically. Um, it’s uh website called GetGround, it’s all online. I just feel like it’s up to date with how we do business now. So all of your company details are online, the your bank account is online, all on a website. Um, they do your accounting for you as well for a monthly fee, and that’s what I typically for all of the

[21:43] Tayo Oguntonade: properties that I’ve bought in a business now. Um, after I have the ones in my own name, I do it all through GetGround because it’s just all so simple. I I don’t I no longer need like a uh drawer of documents and forgetting where this and that is. Everything is all online, which kind of like suits me.

[22:00] Sammie Ellard-King: Okay, cool. We’ll leave a link to those guys in the show notes below because that’s that’s really useful for everyone. So thank you for that, mate. That’s good. Um, all right, cool. So we’re in, we’re making money, we’ve set up a limited company, we’re running everything through there. What’s next? How do we scale this? Because I hear lots about like, oh, you know, you you spend five grand on the new kitchen and you have it revalued, and then it means this, and you’re pulling money out of this, pulling money out of that. And I just think, what on earth? Like, how would that even work? Do you know? So, could you talk us a little bit through about that process?

[22:33] Tayo Oguntonade: Yeah, absolutely. So um that ties into a really uh uh a really popular strategy strategy called uh buy, refurb, refinance, rent. Um, I’ll touch on it a little bit. But how refinancing works is that lenders are quite comfortable. I think this is the best way to start. Lenders are quite comfortable borrowing up to 75% of the value of the property. That’s the key thing to remember. So when you buy a house for £100,000 and you put down 25k, the lender’s threshold is typically 75%, which in that case they’re happy to lend up to 75k basically. Now, gotcha. I often say to people that what you can

[23:18] Tayo Oguntonade: do is you can force the appreciation of a property. So whether that’s I often I always give the example, like these dated properties that still have like pink carpet in the bathroom. Yeah, yeah. Like it’s like no one wants to do it. The everyday person house, isn’t it? The nan’s house. Yeah. Yeah. The everyday person doesn’t want to do that. So like you come along, you’ve got the vision, you know that you know what? This is like really cosmetic. Like if I um rip out these

[24:03] Tayo Oguntonade: carpets, put down some flooring, paint all of the walls white, strip off the rubbish wallpaper, paint all of the walls white, um, add value in the kitchen and the bathroom, which is the main places people want to see. Like I’ve got a guy that can do a bathroom for four and a half K, and with the kitchen, the kitchen bones are nice. It looks ugly, but the bones are nice. So I’m not even gonna rip out the cabinets, I’m just gonna take off the doors, spray paint, spray, uh paint the doors, and then uh put on new handles, and it’s gonna give the kitchen a completely different look. And I’m gonna put some laminate down. I’ve done a refurb that hasn’t cost me that much money. Maybe the refurb costs £20,000. Um, but now when the property is revalued after the work is done, and I’m just using this so it’s a very simple um example to

[24:48] Tayo Oguntonade: understand. But now the properties you’ve put 20k into the property, now surveyors come out and they’re saying the property is worth 160. So at the same point, remember that we said that a lender is going to lend up to 75% of the value of the home effectively. So at that point, the lender is willing to lend 120k, which means that how that actually works is that I always give the example of this when it comes to refinancing or getting new money for a lender. You already owe lender A 75,000 pounds basically. You’ve now come to a position where you’ve increased the value of the property to 160k, and you go to lender B and say, hey lender B, I want 75% of the value of

[25:33] Tayo Oguntonade: this home. They say, Yeah, cool. 75% is £120,000. But I can see that you still owe lender A money. So what I’m gonna do, I’m gonna pay lender A £75k, and I’m gonna put the remaining amount of 45k in your bank account, and that’s literally how it works. And I think that’s what people don’t get that the money goes into your bank account to either do again or pay off people that you borrowed money for in order to do the project, whatever it may be, the money is the remaining after you’ve paid off your old lender, actually goes into your account, and that’s really interesting because it allows a lot of investors to repeat that scenario over and over again. Now, the obvious thing to notice is that you’ve gone from owing a 75k

[26:18] Tayo Oguntonade: mortgage to a 120k mortgage, but once again, you want to make sure that whatever you’re doing with the property, the rent or whatever it may be, is going to be covering the cost of borrowing that 120k.

[26:32] Sammie Ellard-King: Hopefully that makes sense. Yeah, no, that didn’t that no, that definitely made sense. So lender A is your first thing, lender B comes in on the revalue of the house after you’ve done it up, and then obviously you’re then taking into account what the value of the house, the rent could be once you’ve done it up. That’s probably the smart thing to do in that situation, right? Rather than doing the calculations of what it looked like when you know Gene or Karen lived in it for 15 years old.

[27:00] Tayo Oguntonade: Absolutely, absolutely, because when you’ve done it up as well, it can achieve a uh a greater rent as well, which is excellent.

[27:06] Sammie Ellard-King: So, yeah. Okay, so then we were at that point, and we’ve got the 45k in our account, and we can go again. Absolutely. Ah, okay, this is really cool. So is that and it actually sounds like quite a lot of fun as well.

[27:22] Tayo Oguntonade: Don’t be don’t be uh don’t be fooled. Refurbs are headache, or they can be headache, because you’re all I guess with anything, when you’re dealing with a lot of third parties, and I guess uh with refurbs as well, time is money because lender A might be a specialist lender, um might be a specialist lender if the property is run down, right? So you may even need it to get bridging finance, which means that on every single month it’s costing you money. And you may go around to the property and your builder is uh running behind schedule, or you go around to the property on the day that they’re meant to be there and they’re not even there, or maybe you you’re not even in a position where you can go around to the property. So the property is 200 miles from you, and you’re just hoping that they’re looking after your affairs up there. So that’s why it can be quite stressful, but it can

[28:07] Tayo Oguntonade: be really fun as well, and it can be really, really rewarding. The example I gave is a really, really good example. Sometimes it doesn’t come into a case where, because in that example that I gave, you pull out all of the money that you put into the original deal. That isn’t always the case, but I always use that example because it helps you clearly understand the fundamentals of that strategy effectively.

[28:28] Sammie Ellard-King: Yeah, yeah, yeah. No, and that is important to know that there are obviously some risks involved, which I want to get into, but you mentioned it there, and I don’t want to let it slide because it’s a big, big part of this for many, many people is the bridging loans that you can get. What are they and why are they important and when would you use them and not? Absolutely.

[28:49] Tayo Oguntonade: So, in order to uh add as much value as possible, sometimes you want a super rundown property. I mean, maybe a property that’s got like a hole in the roof, and you’re the hole in the roof is you had rain come through it, and it’s created a hole in the first floor, and now you can stand in the kitchen and look into the sky basically. And the thing is that um some of those properties, right, your average lender, your average high street lender would deem them um uninhabitable, basically, which means that you can’t live in it. And as by virtue of that, they won’t lend on it effectively. So, what you’ll do is you’ll go to a short-term lender, um, uh someone that provides bridge and finance, and what they will do is that they’ll bridge the finance until you’ve brought the property up to a habitable standard, basically.

[29:34] Tayo Oguntonade: Now they’re slightly more expensive, but they’re super flexible. So, what that means is that you could get bridging finance for four months, dip in and dip out. You’ll pay quite a bit of money on the monthly, but it allows you to dip in and dip out. Once you’ve brought it into a um uh habitable standard, that’s the new value that you want it to create. At that point, you’d go to lender B, which lender B would be your high street lender, and say that, hey, look, I’ve just done a refund on this property, come round, value it, and want 75% of the value. They go around, value it, say, yep, it’s worth 160. We’re gonna give you 75% off. Um, so we’re gonna give you 120, and then you’re like, cool, 120 goes back to the bridging finance, and you’re not you’re no longer on bridging finance, and you’re more you’re now on traditional

[30:19] Tayo Oguntonade: finance. But to answer your question, bridging finance as a result becomes a superb tool for investors to be able to get that finance um while they are doing the renovation on the property effectively. So can you just go in straight with the bridging loan from nothing? Yep, so 25% deposit. Um, bridging finance is that they’ve got a unlike your traditional lender, they have got like a much more how do I say investment mindset basically. So they will look at your numbers basically, and um they will effectively they kind of are like they want you to make sure that they get paid back as well. So they kind of have like a vested interest as well. So they are very used to lending on these projects. But to answer your question, yes,

[31:04] Tayo Oguntonade: if you’ve got the deposit, you can go straight in with bridge and finance, and it’s often the way that people do it. You go to bridge and finance first when you’re doing a renovation, and then you then refinance onto standard lending.

[31:17] Sammie Ellard-King: So they would want you to have some capital, you couldn’t just walk in there with no no money in the bank today and go, I want £120,000 to £100. No, no, no, okay.

[31:27] Tayo Oguntonade: No, no, no, you’re gonna need you’re gonna need some some kind of money, yeah.

[31:31] Sammie Ellard-King: But to answer that, okay.

[31:33] Tayo Oguntonade: So to answer that question, though, it’s really interesting. This is what I mean about properties become very um innovative, and if you are resourceful, you can get away with like buying a property with no money whatsoever. The reason why I say that is that a lot of the money is in the deal, and I often challenge people, like I always give a crazy example, but it’s kind of like if I asked person A, for example, um, do you have 300k to buy a property? Um, you need a 50k deposit, they might say no, right? But all of a sudden, it’s like if I say that, do you know what? My friend’s uncle owns the property, but he lives in Spain and he just wants to get rid of the property ASAP. So the property is actually worth

[32:18] Tayo Oguntonade: 300k, but he’s willing to let it go for 150. And it’s almost like this is why I try and remind people that the money that the value is in the deal. Because if that was the case, I’m sure a lot of people listening to say this cool at that point. If you don’t have 150,000 but you know the value is 300k, you’d possibly be able to find 150,000 to get that deal over the line and everyone’s happy. And this is what I this is why I often try and say that you can raise money from investors if the deal is that juicy. Does that kind of make sense?

[32:53] Sammie Ellard-King: Yeah, yeah, yeah. You’re getting some like mad price on the house. Exactly, yeah. Because it’s like a you know, you can’t lose almost in a way.

[33:02] Tayo Oguntonade: Exactly. Yeah, so what what you’ll find is um, and I actually did um I was part of a panel four documentary um about this recently, but what you all find is that there’s a lot of people out there that aren’t the ones putting money towards their deal. They’re becoming an expert in the craft, doing all of the research, maybe finding a mentor, and then they’re finding deals, packaging them right, and saying to investors that have 50,000, 80,000, 100,000 knocking about, what are you doing with your 100,000? It’s in the bank, it’s doing nothing. Give it to me, I’m gonna give you 8% back in 12 months. They’re then using the money to buy a property and maybe flip it or refinance it and pay back the investor in 12 months basically, plus their 8%, and that’s allowing people to buy these properties without any income whatsoever,

[33:47] Tayo Oguntonade: which is crazy. And we’re seeing a lot of that.

[33:49] Sammie Ellard-King: Yeah, yeah, you know, I’ve said I’ve seen quite a bit of it on Instagram, quite a few people talking about it, and it’s interesting for sure. There’s obviously a lot of work that goes into something like that, and you’ve got to be present presentable. You can’t turn up at the investor’s door and go, yeah, I’m buying a property. You’ve got to kind of know what you’re talking about a little bit, otherwise they’re just gonna be like, Well, I’m not giving you 100 grand because you’re gonna mess this up. Absolutely, you know.

[34:13] Tayo Oguntonade: You need to have significant skill in the game, and I think that this is something that a lot of people um a lot of the time people see the end product, right? And it’s just it’s just a reminder that you’ve got to be working when no one appears to be looking as well. The reason why I say that is that a lot of the people that are able to raise that, raising finance on Instagram sounds mad, but the people that are able to write raise finance on Instagram, a lot of the time you’ll find they’ve been putting up Instagram stories of what they’ve been doing in the property space for three years straight. But someone’s been watching. Someone’s been watching. We might have only seen it in the last two months, that’s why we it looked crazy to us, but they’ve been putting in work for three years straight, relentlessly, every single, every single day or every single week. And that investor with 100 grand’s

[34:59] Tayo Oguntonade: been seeing that for three months for three years, basically, and that’s why they’re comfortable investing, basically. So I guess it’s it’s one of those things that nothing look, nothing comes easy. Um, but a lot of the time, if you’re willing to put in the work and um put in the time and the consistency, um, you can see some uh fruits of your labour.

[35:17] Sammie Ellard-King: Yeah, 100%, 100%. It’s it is it’s a different strategy, completely different strategy, like where a lot of you with stock market investing, you can just pick an index index fund and go about your day. But if you’re getting into property, you have to do the work. Like you cannot not do the work unless you’re just fronting the money up and somebody else is going out and doing the work for you, and you’re just becoming an investor in that way. That’s also an angle here. If you don’t want to get involved, you can pass the money over to people that do know what they’re doing, and you know, that’s not again if they know what they’re doing, it’s not a bad option. So you don’t always have to go in full like four feet first, is what I find with a lot of these things. But if you are with property, just kind of like individual stock picking, I say the same thing, you’ve got to

[36:02] Sammie Ellard-King: know what you’re doing, otherwise get burnt, and so um just be prepared for that. And if you learn, look, you know, success stories like yourself is uh and that 80 something percent of millionaires own property, it says it all, right? And so I think um I obviously with this you can scale quite fast, and what sort of the time frames of something like this that you feel like you know, because you I I saw a video the other day and it was like you can do one a year, is that right?

[36:33] Tayo Oguntonade: Yeah, absolutely. You could do if you’ve got the right I’d say set up a plan. I often tell people that like, and you I know you’ll agree with this for sure. Um often work with where your your goals, where you want to be, and then work backwards. That kind of makes sense. And if your goal was that do you know what I want to replace my income for work and I want to do it in 12 months, and that requires I don’t know, three properties. It’s like you can then work backwards basically and find out exactly what you need to do to um buy three properties, and what you’ll probably find is that if you work back this is the key thing about doing that because you may work backwards and it’s like 12 months,

[37:18] Tayo Oguntonade: three properties. At least you’ve cancelled out the fact that you know in in most people’s cases, you know your job isn’t gonna save three deposits, right? So maybe your thing is that right, cool, I already know that my salary

[38:38] Tayo Oguntonade: isn’t gonna be able to do it, but I’ve worked backwards and I know that I’m gonna find something else. Then maybe you decide that raising finance is what’s gonna do it for you, or maybe you’ve you’ve you’ve decided that you know what, I’m gonna try and take on three uh rent to rents in the first three months of the year so I can be cash-friendly a lot more that’s gonna allow me to save more money to buy properties, basically. So, all about like starting with your goal and working backwards. But look, I’ve heard crazy stories, people buying 10 properties in 16 months, or people creating a rent-to-rent portfolio of uh 20 properties in uh 12 months, or whatever it may be, like the numbers are out there, and it’s just about how how much sorry, how much time you can dedicate towards it.

[39:23] Sammie Ellard-King: Yeah, totally, man. I you know, I think, and how much capital you can raise or how much capital you’ve got in the first place, but there are options, and this is why it’s so cool, like, and that’s why I really wanted to have you on and do this kind of little like mini masterclass because it just goes to show that like if you put the time and the effort in, property investing is possible for any of us sitting here listening to this today, and I’m super excited about it. Um we’re we’re gonna be looking at jumping in later this year and been doing all of our research, been like um the missus as well is taking a few courses, like she wants to do it full time, so I’m like, cool. Well, like let’s let’s go for it, you know. Um I’m I’m in, and obviously it does help me doing personal finance.

[40:10] Sammie Ellard-King: But I wanted to talk a lot about the risks because there are risks, and it’s important to obviously talk about some of the darker sides and some of the things that you need to be aware of. What are some of the big main ones for you?

[40:22] Tayo Oguntonade: Yeah, so um I’m gonna talk about two separate strategies. So um I kind of put it into two buckets, right? There’s one where you dispose of the asset and one where you keep the asset. I typically keep the asset, so I can speak about the risks of that. And the risks of that could be anything from not receiving rent effectively, which means that, and that could be for a number of reasons. It could be that I don’t know, your tenant’s gone missing, maybe. When I say gone missing, they might have maybe had a tenant that isn’t based here and they’ve gone um, they’ve gone back to the country they call home effectively, and now there’s no one in the property effectively, or maybe it’s uh a case of damage to the property,

[41:07] Tayo Oguntonade: uh, or maybe it’s a case of um the legislation in the area has changed and it can affect your ability to earn off the property. I think with a lot of these things, um, there’s two ways to counter them um research and insurances, quite quite honestly. Um you can get anything from um you can get um rent insurance effectively, which is something that a lot of people don’t discuss. But um what they’ll do is that they’ll ensure that your property has been rent out in the correct way, uh, making sure that you’ve complied by all of the rules. And what it just means there is that in certain cases where you don’t receive rent, the insurance will kick in and ensure that um rent is paid and effectively your mortgage is covered. Um where by way of protecting your asset,

[41:53] Tayo Oguntonade: just standard buildings or landlord’s landlord’s insurance is uh a specific insurance that you should get if it’s an investment property, but that in itself can protect your asset. Um when it comes to like doing refurbs and flips and doing up properties, there are a number of risks. I mean, um, if the project takes too long, if it sometimes if a project gets extended by like six months or there’s delays on the build, um, it can have a significant impact on the bottom line, and if the whole deal was worth it, um, it could even eat into not only the profits, but it could actually make you start falling into a loss depending on how long it takes. Or sometimes there’s set sometimes there’s setbacks in a property. Maybe you’re doing some works, and in the midst of doing some

[42:38] Tayo Oguntonade: works, um you’ve uncovered a new problem, or maybe the works has created a new problem. And these are the things that you kind of have to deal with. But I think that it’s one thing that I always say that um it’s two things I say, right? One of them I said already is that being in property is you being a problem solver. But the second thing is that property is a people business. This is why it’s really, really important that if possible, when you’re taking on a build team, try and get recommendations. The next thing is that when you’ve got your build team, you’ll find that a lot of people don’t let them go because you want that level of consistency. You don’t want to, if you’ve got a build team that you know the pro what they produce, you don’t really want to go and try risking it with anybody else, basically. You kind of want to stick with your team. So property is

[43:23] Tayo Oguntonade: a people business as well, and and your network can really, really help you be successful. But yeah, absolutely there’s risks, man. Even risks of builders running off with the money. So you also need to ensure that um, you’ve got like some kind of way that you could track a builder, but b, you also just want to make sure quite simply that you’re not handing over all of the money at the same time, and in order to avoid stuff like that, you kind of need to know the build process as well, effectively. So this is why you’re absolutely right in that your research needs to be done. So let’s say you just start a project and your builder’s asking for money for flooring. You know that flooring is like kind of like one of the last things that’s done, so it’s kind of like hold on, I’m not gonna pay for that now, I’m gonna pay for that later

[44:08] Tayo Oguntonade: when the flooring’s done, so on and so forth, basically. So, with some research, these are the kind of things that can assist you, um, help you mitigate risk. But like any investment, as you know, there’s always risk. I mean, risk is in in uh inherent in any investment.

[44:24] Sammie Ellard-King: Yeah, absolutely. I mean, we didn’t even touch on like the rising interest rates and what that did for the let market, even when we touch on it very briefly. But I mean, uh, that in itself, these are things that are outside of your control. But if you’ve managed to, you know, when you do the calculation on the yield of the property, you’re not necessarily gonna just go, that’s what it is, wicked, we’re bagging 400 pounds a month from this or whatever. You need to factor in the changes in there too. What’s what’s scenario two look like, three look like, four look like? If these things happen, what does that mean for my bank balance? Essentially, am I gonna be paying money out? And if or uh, you know, even if that’s 50 quid a month, suddenly you’re paying for that property. What does that

[45:09] Sammie Ellard-King: mean for you? Um, and yeah, I think these are just making sure you’ve got all of your due diligence due diligence done and and your calculations uh as best as you can, and building out worst case and best case scenarios, it helps mitigate these risks. Definitely, couldn’t agree more. Mate, I’ve absolutely loved this. Thank you so much. Like uh honestly a pure masterclass in it, and uh I think anyone can walk away from this with a little bit of a better understanding now, which is exactly why I wanted to get you on. Um, but you do offer some wicked solutions, and I’d love for you to to to help push those now, man.

[45:48] Tayo Oguntonade: Yeah, I appreciate it. Yeah, so um I actually uh run a two-day workshop for anyone looking to get into property investing, just generally speaking. So if you don’t know which investment strategy you want to get into, we cover all of those. And the key thing that we do as well is that we teach you how to package those deals and sell it to investors, our our list of investors, so you can start earning straight away. So um just DM me at Brickz With Tipz uh property investing if you want to get into our property investing uh program. And then what we also do is a 12-week intensive course uh which shows people how to get into service to accommodation. Um, by the end of that service to accommodation 12-week course, you will have a service to accommodation property. So, and and we’ve proven that we helped so many people start their

[46:33] Tayo Oguntonade: businesses, it’s all on our socials as well. So if you want to get into service accommodation, just DM me saying service to accommodation, and then just let me know that you came from um the um from Sami’s podcast, and yeah, we’re good to go.

[46:48] Sammie Ellard-King: Wicked man, I um loved meeting you guys, love seeing the rise. When you mentioned the channel four documentary, is that out? Can people go and watch that now or is it yeah, yeah.

[47:00] Tayo Oguntonade: So it’s an untold uh uh channel four documentary. I can’t remember the name of that, but in channel four TV shows, I’ve got a TV show that’s on channel four, that’s um live right now. It’s called Make Your Move. Um, that’s uh one that I’m heading up, so check that out on YouTube as a channel four digital TV show called Make Your Move.

[47:19] Sammie Ellard-King: Love that, love that. Well, mate, thanks so much for coming on, and I can’t wait to get you back on and and and dive a bit deeper into some of these. Thank you, Sami. Appreciate it. Speak soon.