Kevin Poneskis outsources his serviced accommodation management to spend just two hours a week on it. He's converting guest houses into multiple studio units to raise commercial value and refinance, while using Section 24 tax rules to drive the shift from traditional rentals into SA.
Come in.
You've grown from having a handful of properties to now having a lot of properties and you've done joint venture with SA management companies. How much actual day to day running would you say that you have right now within your SA business?
I'm going to say maybe about two hours a week. Everything is outsourced to the team.
Were you really nervous when you started to hire because you're into like relinquished control? What was the progression from going from sort of the startup stage of this.
Process to growing for us? We went on whatever training we could get. So we were already experienced and established with traditional property investing, HMO, buy to let, etc. But we wanted to get into service accommodation because of. I don't know if many of your listeners have heard of Section 24, the Anti Landlord tax. Well, that was going to bite us on the bum big time because of the amount of mortgages, interest only mortgages we've got and the government were going to be removing the mortgage interest rate relief. The reason why we wanted to get into service accommodation is that if the same properties or if you're using property as service accommodation, you can still offset your mortgage interest. Even owning them in your own name, you don't have to put them into limited companies. So service accommodation is trading income, whereas either and HMO is investment income. So they're treated differently for tax. And so that's why we wanted to get into sa. And so we were learning the ropes ourselves initially before we start outsourcing the Meet and agree and actually I was shocked to the core to discover that even bog standard terraces work perfectly well as service accommodation. Mainly because of the trades, mainly because of the corporates who want to save money on hotels and when they're going on booking.com and Airbnb and this, well, booking.com, let's just isolate those guys. When they see how much it's going to cost for them to stay in your town, in your city for X number of months, then they can see a service accommodation unit that could, that could accommodate them just as well. Could be a two, three bedroom house and it's a significant saving for them.
Like you say, getting into an expensive hotel where you've got to then worry about food and whatnot, you can come in, you can get in, you've got your own kitchen, your own lounge, you can relax. What I would like to finish on then is that you've grown this. You've gone from your own property portfolio, you've moved on to doing sa, you've Grown that with Caroline and now you're at the level where you're teaching people.
How to do this.
What is the plan for Kevin Paneskis? What is the plan for the property soldier moving forward for the rest of 2019 into 2020?
Property investors should always future proof themselves and not have all their eggs in one basket. And so yes, we still do buy to let, we still do HMO and we do serviced accommodation. Obviously I earn money from teaching people how to invest in property and serviced accommodation as well. So there's literally, to coin the progressive phrase, multiple streams of property income going on here. Your question was in a couple of different parts, but future proofing. One of the things that we're also doing now is acquiring guest houses and B and Bs and using those as serviced accommodation. Now the reason why that's cool is because, don't get me wrong, I haven't gone start raving mad. I've got no intention of providing bacon and eggs first thing in the morning and be checking people in at 12, drunk at night and all that stuff. But the thing is with a guest house is that it's C1 planning. So you should target ones that are C1 or have got grandfather rights to do guest house. And you can acquire that and turn it into studio rooms. So all you need to do is put a little kitchenette and sometimes depending on local building control regs and fire regs, you might just put in something that's got a sink, kitchen unit, sink might just have a microwave in it. But ultimately all of a sudden you don't need to be doing baking and eggs now. You don't need the owner's accommodation, you don't need the dining room, you don't need the kitchen. So you just freed up a huge area in that property. And guess what you do with those, you turn those into studio rooms too. You can significantly increase the commercial value of it by converting this extra space into letting rooms. And then once you've significantly increased its commercial value, you just refinance that it's new commercial value and pull all your money back out.
So if there are any bed and breakfast owners watching who are looking to sell, where are you looking to purchase at the moment?
Personally, Kevin, we're actually using people that come on our trainings to go out and they source deals because they go back to their area and they can form the relationship. They might be family members or friends or the local BNB thinking about.
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